Volume 622 Week 77 - Tuesday 14 December 2004(continued on Thursday 16 December 2004) 
Volume 622 Week 77 - Tuesday 14 December 2004(continued on Thursday 16 December 2004) 
[Volume:622;Page:17901] 
Tuesday 14 December 2004 
( 
continued on Thursday 16 December 2004 
) 
Public Finance (State Sector Management) Bill 
In Committee 
Debate resumed. 
Part 5 Operation of Crown entities ( 
continued 
)  
BRIAN CONNELL (National—Rakaia) 
: 
 Good morning! It is nice to be back here in the Chamber digging in for another 3 or 4 days of hard yacker until Monday at least—and that is exactly what the conservatives intend to do. Last night when I was taking a call I talked about clause 157 “Crown entity to be good employer”. I looked at subclause (2)(g) which provides for “recognition of the employment requirements of women;” and I had to think of Judy Bailey. Now there is a Crown entity that is an outstanding employer for women—Television New Zealand. 
ROD DONALD (Co-Leader—Green) 
: 
 It is also a pleasure for me to be back after a spirited night last night. I would like to offer Mr Connell some even more PC amendments to this part and in particular to clause 157 because I do not think that the Crown is being a good employer. It is falling down particularly in relation to pay equity and I intend on behalf of the Green Party to put forward an amendment to fix that particular problem. If members care to look at clause 157(2) they will see that it currently states that: “… a good employer … operates a personnel policy … including provisions requiring— … (b) an equal employment opportunities programme;”. In our view that does not go far enough. We want the Government to have a pay and employment equity programme and in case members are in any doubt about what that means our proposed amendment to clause 157 provides for “a programme that is aimed at the identification and elimination of all aspects of policies procedures and other institutional barriers that cause or perpetuate or tend to cause or perpetuate inequality in respect of the employment and remuneration of any persons or group of persons.” That is something that should be incorporated into this bill because the public service should be a leader in pay equity for a start. 
Unfortunately to the embarrassment of the Government not only does the public service fail to be a leader but the gender pay gap is wider in the public sector than in the private sector. One reason for that is that the public sector employs comparatively more women than the private sector but that is not an excuse. It is time that this Government faced up to the need for a proper pay equity programme and it is time that it put some money where its mouth is. Senior people in the Government often talk about the need for pay equity—the need for women to earn the same as men for either work that is the same or work that is different but of equal value. I say to members on the Government benches—particularly to those members of the Government with a union background such as Lynne Pillay and others— that this is their opportunity to show that they are committed to pay equity and that they do recognise that women still earn only 80c for every dollar that men earn despite improving their educational attainment. So let us deal with the structural discrimination that exists in the labour market. 
The Government of course acknowledges that we have a problem. It is not even as though we have to convince the Government that there is a problem. It has been doing something about it. Its usual strategy is of course to set up a task force so it did that. The Government had one of those in 2003 and since then it has established a unit within the Department of Labour to look at the pay equity issue and to find ways forward. Well let us actually implement some changes. Yes pay equity is a complex issue but there has been sufficient work done for the Government to proceed to put pen to paper and to legislate for pay equity. It should take the first step today by supporting the Green Party amendment to clause 157 so that a pay and employment equity programme becomes part of what is expected of a good employer. It is all there in the task force’s report; it stated what needs to be done. 
Let us face a few facts and look at why pay equity needs to happen. At the moment there is the classic example of nurses and sworn police officers. A nurse’s starting salary is approximately $30000 a year while police start at approximately $40000. At the top of the scale nurses are paid just over $40000 while police earn $60000. That is simply unacceptable. The Government knows that and it should be doing something about it. But pay equity is not just about men and women. There are significant differences in pay between different ethnic groups. The average hourly earnings for Pakeha men was $19.88 in the year to June 2003 while for European women it was $16.96 for Maori men it was $16.29 for Maori women it was $14.53 for Pacific Island men it was $13.90 and Pacific Island women earned the lowest hourly rate of $13.79. That is unacceptable for a Labour-led Government—one that claims it is committed to helping people who are poor or disadvantaged in the community. 
The Government has the opportunity today to fix that problem. It can become a leader and fix the problem in the public service where the average salary was $43163 for women and $52436 for men. 
DEBORAH CODDINGTON (ACT) 
: 
 I would like to carry on with what Rod Donald was speaking about and with what Lockwood Smith was speaking about just before midnight last night when we adjourned for the evening. That was clause 157(2). We will not be voting for the amendment that Mr Donald has put forward. He may take another call and explain it further but he has not satisfactorily given a good reason to justify pay equity. 
Rod Donald 
: Cut your salary by 20 percent! 
DEBORAH CODDINGTON 
: That is the point. People who advocate equality for all— 
Rod Donald 
: Equity! 
DEBORAH CODDINGTON 
: —equity for all want to drag the top people down to the bottom. They do not want to encourage people at the bottom of the heap to aspire to get to the top; they just want to drag everyone down to the bottom. Pay equity to someone who argues like that would mean taking Judy Bailey’s salary down to the lowest salary level paid at TVNZ. That is what pay equity means. 
Hon Member 
: Bollocks! 
DEBORAH CODDINGTON 
: Well that was a very intelligent reaction from someone who probably should know better than that. However Rod Donald talked about the value of those people but I ask to whom they are of value. How can one person say that the value of a nurse is exactly the same as the value of a police officer? I absolutely totally agree that nurses need to be paid more but it is nothing to do with the inequity of the pay scales that leads to there being low-paid nurses. It is to do with unionisation and the one-size-fits-all approach of the union and it is the same with the teachers’ pay scale. 
There are other issues in clause 157(2). It starts off OK. It provides that: “ … a good employer is an employer who operates a personnel policy containing provisions generally accepted as necessary for the fair and proper treatment of employees in all aspects of their employment”. But it then goes further and directs the public service in various areas. That always starts in the public service but then it moves into the private sector and the private sector is required to follow those requirements too. Clause 157(2) provides that there is to be: “(d) recognition of—(i) the aims and aspirations of Maori; and (ii) the employment requirements of Maori; and (iii) the need for involvement of Maori as employees of the entity;”. Apart from being race-based legislation that provision is totally meaningless. What on earth is in the heads and hearts of Maori that is different from the aims and aspirations the employment requirements and the need for involvement of any person of a different culture or different ethnic background from Maori? That is insulting to Maori. It sets them out as being not quite as good as everybody else; therefore they need to be targeted for special assistance. 
But even more insulting is clause 157(2)(g) which provides for “recognition of the employment requirements of women;”. What are the employment requirements of women? Which women does the provision refer to? Is it all women individual women large women small women white women or brown women? We cannot collectivise a group of people like that without it being an “-ist”. This is sexist and racist legislation. It insults women Maori and ethnic minority groups which are also mentioned in the clause. This legislation is being promoted and driven by the Minister who is meant to be ferreting out all that sort of drivel in legislation—the whole ethnic filter that is creeping into legislation. This is an example of the Government paying lip service only to that. After the Orewa speech the Government came out grandly and said there would be no more race-based legislation yet here it is written large in clause 157(2). 
I go back to the pay equity issue and the issue that people should be paid the same amount for work that is the same or for work that is different but of equal value. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I move  
That the question be now put 
. 
Hon DAVID CARTER (National) 
: 
 I also want to talk about clause 157 in the Public Finance (State Sector Management) Bill. I am astounded to come into the Chamber today to find that a clause such as this is even in legislation: a Crown entity is to be a good employer. That sort of legislation would not have been required until this Labour Government came to power. I want the Committee to remember the treatment that Helen Clark gave to one State employee Kit Richards. Kit Richards was a valuable member of Timberlands but because he disagreed with the Prime Minister she drove him out of his job. She hounded that man. Now that incident has been quietly forgotten and into the legislation we are putting this sort of politically correct clause requiring a Crown entity to be a good employer. I just hope Helen Clark herself takes note of this clause. In future when another person like Kit Richards has the audacity to disagree with the Prime Minister we will see what sort of treatment he or she gets. 
It reminds me of the debate that is going on in the newspapers now about one Judy Bailey; it is on the front page of the  
Dominion Post  
for the second day in a row. Here is a person who is negotiating with her employers and now Helen Clark has decided that that salary is something that she has the right to set as well. 
If I refer back to clause 157 I want particularly to look at subclause (2). The subclause states that for the purposes of this section a good employer is one who “operates a personnel policy” moving down to paragraph (d) that requires: “recognition of—(i) the aims and aspirations of Maori; and (ii) the employment requirements of Maori; and (iii) the need for involvement of Maori as employees of the entity;”. Are not Mr Mallard and the Prime Minister on record as saying they have engaged in a process to get rid of race-based legislation and to base Government policy on need? That is what they say they will do yet today what we see in the detail of this bill is absolutely the opposite. I do not recall any legislation that is as specifically race-based as clause 157(2) which states categorically that for a Crown entity to be a good employer it must develop a policy recognising the aims and the aspirations of Maori. 
How can that not be race-based legislation? I want the next Labour speaker to deny that that is the case. No Labour member will be able to do that. The Prime Minister is so busy spinning the message about the need for equal citizenship yet her Government is quietly back in Parliament and under urgency forcing through a huge bill that specifically requires a Crown entity to establish race-based employment policy. 
I say to Phillip Field that that is absolutely wrong. That is wrong on two counts. First it is condescending to and demeaning of Maori. Why do they need a clause such as this? They can get on in this world like the rest of us. 
Dr the Hon Lockwood Smith 
: Labour thinks Maori are inferior. 
Hon DAVID CARTER 
: Labour feels that they are inferior so it punches through legislation such as this that just demeans Maori. I ask Phillip Field who is going to take the next call and make an attempt to answer this to explain to the Committee today why we have to put this sort of wording into legislation. The answer is we do not have to. The answer is we should not have to. 
JILL PETTIS (Senior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
JIM PETERS (NZ First) 
: 
 I listened with interest last night as I left the Chamber just before midnight and heard quite an impassioned comment about the very subclauses that have just been referred to by the last speaker—namely those in clause 157. I went home after midnight somewhat confused by the trend and the tone of Dr the Hon Lockwood Smith’s comments. 
I am even more confused by the Hon David Carter. As an employer in the State service as a school principal who employed many teachers and other staff throughout the late 1990s I recall such aspirations as these being quite clearly set out in the then Government’s requirements. I also can recall a very impassioned debate with an education consultant about why the Treaty of Waitangi obligations were being fostered upon the education service by the National administration of the 1990s. All that I can say very briefly is that what I see here is a watered-down version of what I saw the last Government enshrine in day-to-day requirements of employers in the State service throughout the 1990s. 
Dr the Hon Lockwood Smith 
: Rubbish! 
JIM PETERS 
: The call of “Rubbish!” could be answered by documentary evidence of exactly that. This measure to me personally is demeaning. It need not be there. But all that I see in that clause is a watered-down version of a far stronger obligation that was imposed by the last Government upon the State services throughout the 1990s. So let it rest where it belongs. Dr the Hon Lockwood Smith knows exactly what I am talking about. As a Minister of Education he set in train such obligations and burdens and he knows that. It was because of his impassioned call last night that I decided reluctantly to get up and say that National was not only the godfather the grandfather and the grandmother of these clauses but enshrined them bill by bill Act by Act throughout the 1990s. For those members to attempt now to come to the Committee with very pure and clean white hands is just not on. 
Hon TAITO PHILLIP FIELD (Minister of State) 
: 
 I move  
That the question be now put 
. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 We are debating Part 5 of the Public Finance (State Sector Management) Bill and I want to draw the Committee’s attention to clause 148 “Power to direct Crown agents to give effect to government policy”. This is where Helen Clark picks up the phone rings Bill Ralston and says: “I think Judy Bailey should be getting $800000 a year.” And what happens? It is in the headlines the day after. 
This is an interesting clause. I do not know whether the Minister is able to tell us whether it is new or whether it has been in legislation for some time. If it has been in legislation for some time then electricity consumers in this country would have to wonder why their power bills over this past winter were so big. The State still owns 85 percent of the electricity industry. The State returns enormous profits to the Government coffers—all those electricity bills helping to build up the almost $7 billion surplus that the Government currently says is so small it is unable to give any relief to taxpayers. That surplus comes from things like big electricity bills. 
Then of course is the issue we have seen in the last couple of days where the Government has decided to apply a new tax to oil and other fossil fuels so we can have a guaranteed supply. I would have thought that the Minister when he was alerted in October 2002 that New Zealand was facing a crisis in its oil supply—in other words our 90-day stocks were well below that level at that time and continued to be all of that time—might have said to the bodies responsible: “Let’s get ourselves involved here.” and the ministry could have been directed to ensure that that level of supply was available to the country. 
But this Government is absolutely terrified of the bureaucracy. It knows that the last remaining strong union in this country is to be found in the State sector. So a clause like this one clause 148 is put into the legislation and we know it will have absolutely no effect whatsoever. The Labour Government enacting this legislation will not pick up the phone to tell Mr Ralston to cut the pay rate afforded the country’s most highly paid newsreader. It will not say to electricity companies: “Calm it down fellas calm it down. The people out there who actually own you would like to have a better deal during the winter months.” And they will not go to the Ministry of Energy and say: “Get us a 90-day supply and make sure it’s maintained.” 
I want to know from the Minister whether this is new and whether we can expect a lot more Government direction on these matters in the future. I say quickly that the National Party would not operate in that way. We would not want to see taxpayers sold the idea that a television company was of such importance that it had to operate under a charter but then had to maintain its commercial position to such an extent that it had to lead the market in the salaries it pays to its people. We would also want to ask what the point is of the Government having such a huge stake in the electricity industry if New Zealanders have to go cold because they do not have deep enough pockets to pay the bills electricity companies render. 
This bill is very very interesting and Part 5 seems to be the most important part of it. In fact I believe that after this we will begin the debate on the schedules or are the schedules being taken as we go through? 
Simon Power 
: There’s Part 6. 
GERRY BROWNLEE 
: I am sorry. We will be back on Monday for Part 6 and I hope I can take call on that part. I know that this legislation is so important that we are having to do it under the cloak of urgency. By the way the Government has had this bill on the Order Paper for—how long? 
Jim Peters 
: 11 months. 
GERRY BROWNLEE 
: This bill has been on the Order Paper for 11 months. 
SIMON POWER (National—Rangitikei) 
: 
 Two questions leap to mind while we are discussing Part 5. The first unanswered question is what does the United Future party think of Part 5? The reason I ask that question is that that party supported the urgency motion that had us here until midnight last night will have us here till midnight tonight tomorrow night until midnight Saturday night and we will be back on Tuesday— 
Rod Donald 
: Monday. 
SIMON POWER 
: We will be back on Monday as well. I probably will not leave. Senior whips do not leave. I will not leave. United Future has a responsibility to have its representative in this Parliament rise to his feet to explain to this Chamber why it is—at least Rod Donald has the decency to rise to his feet to make a contribution during the course of this debate. We may not agree with him. He supports urgency. We certainly do not agree with that. However United Future sits there dumbstruck is trampled over and refuses to make a contribution on Part 5 and more particularly on the crucial clause 148. 
I tell members who are present in the House this morning that I cannot wait—and I know that Clayton Cosgrove cannot either—to get on the platform with United Future candidates before the general election later this year. National members will have great fun with them. That party which proclaims a principled and reasonable approach to politics puts up an amendment to reduce tax paid by New Zealanders and then votes for a bill that does exactly the opposite. It could have pulled the Civil Union Bill from the clutches of the Government but sat on its hands and did nothing. 
This morning a bill comes before the Committee whereby a clause is included to give the Government direct power over Crown agencies to affect Government policy and what does the United Future party do? It sits on its hands and makes no contribution to this debate at all. If a party supports the Labour Government on matters of confidence and supply Mr Copeland should rise to his feet to justify to this Parliament and to New Zealand why the United Future party supports this House sitting under urgency and is supporting legislation particularly Part 5 that will do nothing more than centre in Helen Clark’s hands even more power to direct the bureaucracy. 
David Cunliffe who let us face it is very disappointed about Monday’s announcement sits there and says nothing. He does not take any calls. He could end up with the customs portfolio but it is unlikely. He should get on his feet to answer some of those questions. As a graduate of the John F Kennedy School of Government at Harvard he should reassure the Parliament and the country that this will not affect the way in which neutral independent democracy works. We know what will happen if one becomes a close personal friend of the Prime Minister when one is in the bureaucracy. Just ask Ross Armstrong what happens if the Prime Minister’s directions are not followed when one is in the bureaucracy. What happens is that one is hung out to dry. 
Members should wait until later this morning when the TVNZ board—this is my prediction—will be hung out to dry over the Judy Bailey fiasco. This is what happens and officials in this Parliament should be worried. When one gets too close to the Government as one will under clause 148 bureaucrats officials members on boards of Crown agencies and State-owned enterprises will be hung out to dry with whatever political expediency Helen Clark believes is necessary to pursue her own narrow-minded agenda. 
That should be worrying for what historically has been a proud and independent public service in New Zealand. That should be worrying for those who have been independently appointed to boards of State-owned enterprises and Crown agencies throughout New Zealand. The Tertiary Education Commission is a classic example. The Government cannot help but get its fingers on every little board agency and now deep into the bureaucracy of New Zealand because it simply is a group of people who are total and complete control freaks. That is the only way to describe it. What happened? United Future let it happen week after week after week in this Parliament and with important legislation like this refused to take a call. 
CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 157 be agreed to: 
to omit paragraph (b) of subclause (2) and substitute the following new paragraph: 
(b)A pay and employment equity programme. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 157 be agreed to: 
to omit subclause (3) and substitute the following new subclause: 
(3)For the purpose of this section a pay and employment equity programme means a programme that is aimed at the identification and elimination of all aspects of policies procedures and other institutional barriers that cause or perpetuate or tend to cause or perpetuate inequality in respect of the employment and remuneration of any persons or group of persons. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to Part 5 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 5 as amended be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Part 5 as amended agreed to. 
Part 6 Crown entity reporting and financial obligations 
JOHN KEY (National—Helensville) 
: 
 Part 6 reflects exactly what is wrong with this legislation. It is full of weasel words and drivel and a whole lot of stuff that has been jammed into a very long document in the hope that no one will actually read it. I will start by making that quite clear in a number of interesting facts that have come forward. First I draw the Committee’s attention to clause 192 “Disclosure of payments in respect of members committee members and employees”. This is the clause that essentially states that remuneration must be declared in bands and there is the ability for people who pick up a set of accounts from a Crown entity to understand exactly where there is remuneration and how confidentiality arrangements work. 
I raise that because on page 1 of this morning’s  
Dominion Post  
is quite an interesting article about Judy Bailey’s $800000 pay deal but more important about Ian Fraser’s appearance before the Commerce Committee in which he said there was only one confidentiality arrangement in relation to Paul Holmes. In fact that is not correct. It now turns out that there was another confidentiality arrangement in relation to Judy Bailey. No doubt that will be part of the discussions held this morning with the board of TVNZ. I point out that that is exactly the situation in clause 192 where the law will not be being followed and where there are plenty of out clauses. 
I also want to raise the issue around the ministerial involvements in the statements of intent. The reason this is very important is that Crown entities have really prided themselves in being part of the overall Government process but being autonomous and independent and set up with the view that the boards can control what is happening in the—[ 
Interruption 
] That is right. That was the theory. Back in the good old days when National led the Government the Crown entities were able to operate in the way they should. They were responsible to the boards and if the Government did not like what was happening in the Crown entities it knew what action to take—get in there and sack the boards change them do something about the matter. That is a very simple example and we will see the Government in action no doubt when the board of TVNZ gets the flick. But and this is the point— 
Gerry Brownlee 
: But they won’t. 
JOHN KEY 
: They will not because there will be a U-turn or an out clause or something else. 
Gerry Brownlee 
: Another flip-flop. 
JOHN KEY 
: Helen Clark will find another reason to flip-flop. But let us look at clause 185 which is extremely interesting. Despite a Crown entity being independent reporting to a board having its own autonomy and all the rest of it paragraph (a) states that a Minister can actually put into the statement of intent whatever he or she wants—“a responsible Minister may agree with the Crown entity that information additional to that required by sections 181 and 182 be included in the statement of intent:”. It gets a little bit better. Paragraph (c) states that the Minister can just chip whenever he or she wants: “a responsible Minister may make comments on a draft statement of intent …”. It is a matter of “Here we go we’ve got the board. We’ve set it up. Away you go. Go and run this autonomous Crown entity but by the way we can put in the statement of intent anything we want any time we like—and by the way while you are putting out your statement of intent we can sit like the Muppets on the sidelines and chip along.” 
Then the real doozey comes in paragraph (d) because although the Crown entity has been able to put in what it wants with the responsible Minister chipping in along the way the Minister can actually change what was put in anyway—and we are somehow meant to believe in this Parliament that the integrity of Crown entities established under their own Acts of Parliament will somehow be OK! Well that just does not make sense. 
I also want to draw the Committee’s attention to clause 181 “Content of statement of intent” which sets out what statements of intent can contain. I wonder whether the Hon David Cunliffe might like to pop to his feet in a moment and explain to me paragraph (e) which states: “how the entity proposes to manage the organisational health …”. What on earth is the organisational health? I understand that on Monday a book is coming out containing new weasel words and that the library has bought it because it needs to understand what is going into legislation in this Parliament. Steve Maharey the third-wayer has been in there with his whole range of weasel words that are now drifting in through the Parliamentary Counsel Office into our legislation. What on earth is the organisational health of a Crown entity? 
Jim Peters 
: He lectures in sociology. 
JOHN KEY 
: That is right. It gets slightly more interesting as well. There is clause 188 “Amendments to statement of intent by Crown entity”. First the good news is that a Crown entity can change its statement of intent any time it likes. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I will carry on from where my good colleague John Key left off. I ask the Minister in the chair David Cunliffe whether he is hell-bent on bringing Parliament into derision. Some of the clauses in Part 6 are simply derisory. I will give members an example of what I mean. The Labour Government now finds it necessary under clause 186 to put into our law the process for providing the statement of intent to a responsible Minister. The Labour Ministers are so incompetent hopeless and useless that the law has to spell out how a statement of intent is to be provided to them by a Crown entity they are responsible for. 
Is this serious stuff? Here we are debating this under urgency just before Christmas. If it were April Fool’s Day I would say “OK you caught us out. Fair enough we were fools to think you were serious about this.” But it is not April Fool’s Day and clause 186 is bizarre garbage. How hopeless useless and incompetent are Labour Ministers that they have to put that into legislation? It is not simply a set of recommendations. It is the law of New Zealand. We pass the law of the land in this Parliament and Labour finds it necessary to spell out how a statement of intent is meant to be provided to a Minister. For goodness’ sake a Minister worth half a pinch of salt can pick up the phone and say that he or she wants the statement of intent tomorrow and it had damn well better be delivered. Oh no Labour is so useless that its legislation spends great paragraphs spelling it all out. 
But there is worse. That is just the farcical bit. Let us look at some of the serious stuff. Clause 180 “Statement of intent for new established Crown entities” states in subclause (3): “The responsible Minister may give directions to the Crown entity on any matters referred to in section 181(1)(b) to (d) (g) and (ga)”. I have no problem with the Minister being able to give directions as provided in clause 181(1)(b) over the “scope of the entity’s functions and intended operations”. Clearly there is a responsibility to make sure a Crown entity is proposing to carry out functions consistent with overall Government policy. But paragraph (d) states that the Minister can also give directions on “how the entity intends to perform its functions and conduct its operations”. So under that paragraph the Minister can give direction to a new Crown entity as to how it is to perform its functions. He or she can meddle absolutely in the management of a Crown entity. 
That is totally contrary to what Crown entities are meant to be all about. They are meant to be at arm’s length from the Government with a board of directors able to perform independently of Government political interference. Clause 181(1)(d) gives the Labour Government the chance to meddle absolutely in the management—how it intends to perform its functions—of a Crown entity. That is not just farcical but bad legislation. 
While I am talking about statements of intent I want to come to clause 185 which puts in the law of New Zealand under paragraph (c) that a “responsible Minister may make comments on a draft statement of intent”. What on earth does the law need to state that for? I just cannot believe this stuff. I spent 9 years as a Minister and promoted a lot of legislation. If a department had come along to me with a bill with that sort of junk in it I would have told it to take that garbage away and get rid of it. 
Why does the law of the land of New Zealand need to state that the “responsible Minister may make comments on a draft statement of intent”? What dopey dopey dopey stuff! How much more does the Government want to denigrate the laws of New Zealand? It is demeaning our laws. To have this junk in the law simply demeans it. 
DEBORAH CODDINGTON (ACT) 
: 
 I want to comment on clause 210 “Offences” too. Tertiary institutions were deeply concerned about these provisions. If we take that clause and clause 211 “Penalties for offences” put them alongside some of the other clauses relating to statements of intent—whereby a responsible Minister can direct a supposedly stand-alone Crown entity as to what can be in the statement of intent and can amend it—then relate them to clauses that have been debated in earlier parts we can see a pattern emerge. That pattern leads to the final nail in the coffin for Crown entities being stand-alone and at arm’s length from the executive. 
The definition of what now comes under the control of the executive includes not just universities but also the Symphony Orchestra the Historic Places Trust and all those stand-alone entities. Sure they have always been Crown entities but this legislation gives far more power to the responsible Minister in terms of interfering with those entities. 
An example of how that is manifest today is the Government’s huge embarrassment over what is happening at TVNZ. First of all the Government appointed Ross Armstrong as chairman of TVNZ. That turned to custard. It appointed Craig Boyce as chairman. Do we have an effective board? No we do not. Another Government appointee Ann Hercus who is also on the financial committee signed off on Judy Bailey’s salary rise. Those negotiations have dragged on for so long and have been so ineptly handled. There was no poaching of Judy Bailey by any other company. It was simply the ineptness of the board that led to the situation whereby her salary was doubled. 
So what happened? The board signed off on it. Then one of the board members rushed to the Minister of Broadcasting to tell him what had happened and what did the Government try to do? It tried to manage the situation and pre-empt it with damage control by leaking the story to the media. Well has that not backfired hugely? We have only to look at the letters to the editor in the  
Dominion Post  
today to see how it has backfired for the Government—a Government that campaigned on ending the culture of extravagance. The same Prime Minister who said the public was revolted at Paul Holmes’ salary will now say that heads will roll at the board but it is a bit too late for that. 
What will happen when a vice-chancellor or the council of a university does something that gets up the nose of the Government of the day—any Government—under this legislation? Will the Government come out swinging have a little hissy fit and say that heads will roll at that university because it has not followed the responsible Minister’s interference and meddling in the statement of intent? What will happen if the Symphony Orchestra—which as I said yesterday is under the Associate Minister for Arts Culture and Heritage Judith Tizard—plays the music of what she calls “dead white men”. Beethoven and Bach she said have had their day and should not be played. 
Hon Member 
: Extraordinary! 
DEBORAH CODDINGTON 
: Absolutely. 
Hon Member 
: Who said that? 
DEBORAH CODDINGTON 
: The Minister with responsibility for Auckland Issues and Associate Minister for Arts Culture and Heritage. 
Craig McNair 
: She didn’t! 
DEBORAH CODDINGTON 
: She did. The member should go back through  
Hansard 
. The point is that the Government should not have the power to meddle in day-to-day affairs. 
Of course it suits the Government very well not to provide information about what goes on when it does not want to. If for instance one submits a written parliamentary question about the policy of TVNZ in checking the background of senior employees in charge of hundreds of millions of dollars the Government does not want to know. 
JIM PETERS (NZ First) 
: 
 In the debate on the previous part I mentioned to the Minister of Education that he was obviously waiting to put into practice those provisions relating to the actions of the present Teachers Council—a council that has reached an all-time low. But in clause 192 in this part I detect something else. 
I recently read a number of Education Review Office reports and I saw a trend developing in those reports that is completely contrary to the Education Act but allowable under clause 192—that is that a member of a board of trustees apart from the principal or staff trustee may be an employee of the board. As I understand it the Education Act expressly states one cannot. 
Recent Education Review Office reports on schools have outlined where a ministry direction has arisen surreptitiously by virtue of a board member. In one particular report express mention was made that that board member was being paid. When I searched through the Education Act and its relevant amendments I did not quite see how that could be and I am composing a letter to the Minister of Education on the very issue at the moment but now I see a sudden light in relation to clause 192. 
The provision says contrary to the fundamental Act regarding boards of trustees that such employment is possible. Not only is it possible but so long as the total value of the remuneration is disclosed and the employee is known payment is also possible under this clause. For boards of trustees that marks a significant departure and gives some legality to what was said not to be possible under the previous Act people worked with—so much so that the Ministry of Education has given advice to its advisers that they should not be on boards of trustees. 
This legislation goes far beyond that. It allows expressly for State control in the old-fashioned Labour sense. That is the problem with this Labour Government: new Labour and old Labour are all mixed up. That goes right back to the ministry having pernicious influence—almost by stealth as it were—over individual boards which now gives legality to those actions. Subclauses (1)(a) (c) and (d) in particular give that ability which is a significant departure. 
If that is so for boards of trustees and groups I know of in the education sector it will also be so for others. When we combine the trends in this legislation for State direction and control that we hitherto had not seen but that are now being compressed legally provision by provision and when we have the ability to pay in a way that before was not legally possible we really start to see—although I am not a believer in conspiracy theory at all—why this bill marks quite a departure from the past despite its ordinary everyday mundane provisions. New Zealand First will be opposing the legislation on that ground. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 This part of the Public Finance (State Sector Management) Bill deals with Crown entity reporting and financial obligations. I will pick up on the theme established by Mr Key and Dr the Hon Lockwood Smith in their contributions earlier. It seems to me that they were fundamentally asking why we need to have 100 pages of legislation that set out how a Crown entity must report when it has always been implicit that that agency must report anyway. 
What does that suggest? Does it suggest that somehow this Government is stacked full of incompetent Ministers who do not know how to go through the reports of the various departments and entities they are responsible for and find the information they need? I do not believe that. I think they are capable of doing that. I think most people in this Chamber are capable of doing that. But this 100-odd pages of legislation is about the philosophy of the Labour Party and the Labour Government in trying to make the State bigger and in having greater control over it so that it can meddle much more directly in the everyday lives of New Zealanders. 
United Future members might sit over there grin and say that that is a ridiculous and preposterous suggestion but they have not yet bothered to make a contribution to this debate. They have been good enough to put us into urgency until some time next week so that we can get this legislation passed but they have no opinion on it whatsoever. As far as United Future is concerned whatever Helen Clark says is the rule. That is it—one just goes by it. One just takes on board whatever Michael Cullen says too and runs with it. I think I am right in suggesting that the Labour Party is about growing the bureaucracy in this country and gaining greater control of it so that it can meddle more directly in individual New Zealanders’ lives. 
I refer the Committee to clause 190. 
Gordon Copeland 
: Are you for or against? 
GERRY BROWNLEE 
: The United Future member wants to know if National members are for or against. We are against the bill; we are opposed to it. 
I refer the Committee to clause 190(4): “A Crown entity must publish its annual report”—it is a preposterous suggestion that it may not anyway—“as soon as practicable after it has been presented to the House …” etc. The clause then states that the Minister may have some effect on how that information is reported under clause 213. If we look at clause 213 we see that the Minister will receive the information from the Crown entity or department and can then determine just what part of it will be reported to the public. If that is not about trying to control the information flow to prevent New Zealanders from knowing what is going on in the entities they own then I do not know what is. 
Clause 213(1) states that the Minister may: “(a) prescribe minimum requirements concerning the publication of information …”. He can tell the entities how much to publish what not to publish and when to publish. As other colleagues in the Committee have pointed out the clause also gives the capacity for the Minister to ignore official information requests and to obfuscate any expectation that an answer to a parliamentary question may be given correctly. Overall the clause is consistent with my view that it is about saying to New Zealanders: “We are the Government; we know best; listen to us and we will do what we think is right for you. You New Zealanders do not need to have a say in this.” 
Just to point out how ridiculous petty and pathetic this entire part is we need look only at the tiny little clause that deals with the issue of gifting. Clause 206A states: “(1) Any money or property that is gifted to a Crown entity may be accepted or disclaimed by a Crown entity.” What on earth do we need to put that in the law for? Entities may accept a gift or bequest or they may not. If that were not in the law what would be different? 
I raise a point of order Madam Chairperson. Noting that neither the Minister in the chair David Cunliffe nor the chairperson of the Finance and Expenditure Committee seem particularly interested in participating in this debate I seek the leave of the Committee to ask questions about this important part of Mr John Key who has done an enormous amount of work on the select committee and knows a terrific amount about the bill. 
The CHAIRPERSON (Ann Hartley) 
: Leave is sought for that purpose. Is there any objection? There is. 
GORDON COPELAND (United Future) 
: 
 I must say that that speech from Gerry Brownlee the deputy leader of the National Party was a bit more constructive than the one we had from Simon Power a few minutes ago. Simon Power spent three-quarters of his 5-minute speech criticising United Future and the other quarter slamming the Minister in the chair David Cunliffe. I have never heard such a lot of bluster with such a lack of content in any speech on any occasion in my 2½ years in this Parliament. At no time did National member Simon Power tell this Committee why his party is opposing this bill. It was a novel way to discuss a 500-page bill—never once to refer to the bill’s contents but just to huff and puff to see whether the hot air generated might eventually ignite the bill so that it went up in smoke. It was hardly credible. 
Let us take clause 190 for example which was just spoken on by Gerry Brownlee. Does National really think that Crown entities should not publish their annual accounts? Because I think they should. Let us take clause 192. Does National believe that Crown entities should not tell the New Zealand public what they are paying their staff? Because I think they should. Maybe we should look at clause 196 and ask whether National believes that Crown entities should not have their accounts audited. Is that the proposition that the National Party has brought to this debate today—that Crown entities should not have their accounts audited? Because I think they should. Let us take new clause 199. Does National believe that Crown entities should not have a bank account—that we should operate the agencies of this Government without bank accounts—and that because bank accounts are mentioned in this bill we should oppose that provision? I actually think that bank accounts might prove to be quite useful for most Crown entities and most organisations to operate. 
Here is a really good one: clause 208 in Part 6. The National Party believes that Crown entities should not pay tax. It believes that they should operate make a profit and simply keep the money whereas other entities in this country those in the private sector should pay tax. Well I think that Crown entities should pay tax and that this is a good bill. The provisions in it are constructive. They move things forward. If National members disagree with that then for goodness’ sake they should get up and tell the Committee for once why they are opposing the bill because all we have heard is hot air and bluster. 
It is a sad thing that the once-proud and constructive National Party now bereft of policy and unable to make a reasoned contribution to this Parliament is simply resorting to bluster and hot air. Mind you there may be a secret behind all of that. We have heard recently on a number of occasions to do with a number of policy initiatives that the National Party will keep them secret until nearer the election. I think that when Simon Power goes out next time on the hustings in Rangitikei to campaign for re-election in 2005 he will tell his electors why his party members voted against this bill. Then perhaps at last this Parliament and the New Zealand public will find out why they are opposing the bill. I have listened very carefully to this debate and I have not yet heard one decent reason why those guys are opposing it. But they should keep trying because I have an open mind and maybe they can convince me if they really work hard. 
CRAIG McNAIR (NZ First) 
: 
 In speaking to Part 6 I want to alert the Committee to clause 212 “Regulations under this Part”. I will read it out very carefully because there is something very very important in it that I think most politicians have overlooked up to this point. I believe that there are many important parts but this is an extremely important part: it has the possibility of being very very dangerous. Clause 212(1) states: “The Governor-General may by Order in Council make regulations for all or any of the following purposes:”. Members should listen to this: “(a) requiring Crown entities to include information in a statement of intent or annual report that is”—and they should listen to this—“additional …”. So after they have done everything after they have complied with everything that this Minister and this Government have wanted them to comply with after all of that the provision states they may be required to include information “that is additional to the information required by this Act:”. 
Brian Connell 
: It’s an outrage. 
CRAIG McNAIR 
: That is right. I say it is a constitutional outrage of gigantic proportions. That is what it is. It is the epitome of State control. It is what Gerry Brownlee was talking about—nanny State coming in and taking control of our lives. That is what the Government wants to do. It does not just want people to have to comply with certain requirements and so on to a certain degree; it wants to go one step further. The Government wants the authority to send the KGB in with its guns and regalia in order to have a look into every nook and cranny of our lives. That is what this bill is about. 
Jim Peters 
: Draconian socialist legislation. 
CRAIG McNAIR 
: Draconian socialist legislation of the worst type! That is what it is. I have members over on this side of the Chamber agreeing with me on that—because they know that it is true. The members over on that side know that it is true as well. It is a fact and they know it. I want to talk to the Committee regarding clause 212 because despite all the guidance this bill is supposed to provide to State entities the Government had to add an additional clause to it. The Government threw it in when it thought nobody was looking. 
Brian Connell 
: They hide it in a huge bill. 
CRAIG McNAIR 
: The Government hid it in a huge bill when it thought no one was looking. It was hidden in a bill that is 400— 
Brian Connell 
: 500 pages. 
CRAIG McNAIR 
:—exactly 500 pages long. 
Hon Maurice Williamson 
: How does the member know that? 
CRAIG McNAIR 
: Because I just read the page numbers. I read the bill unlike some members on the Opposition benches who have not even read the bill but who are supporting this draconian legislation. It is an outrage and it will provide more power to this Government to have more impact on our personal and social lives. 
ROD DONALD (Co-Leader—Green) 
: 
 The amount of hot air that comes out of the mouths of those members opposing this bill is extraordinary. I wish they would shed a little more light and a little less heat on the subject. I am still waiting for the National Party the New Zealand First Party and the ACT party to put forward any amendments to this bill. If the bill were so terrible one would think they would want to try to fix it. But has there been a single initiative on the part of those parties to improve this bill? No there has not been whereas the Green Party has engaged constructively in this debate. I would like to thank Simon Power for acknowledging that in his last speech. 
My last constructive contribution is to Part 6 because the Greens have another amendment that we would like to put on the Table. I am pleased to advise the rest of the Committee that the Minister of Finance has decided to support our amendment. It is an amendment to clause 199(1)(a) which will insert after the words “registered bank” the words “or registered building society”. It is an extraordinarily positive step forward for the Government to acknowledge that building societies play a crucial role in the New Zealand financial sector and that they are appropriate institutions for Crown entities to deposit their funds in. If members read the commentary on this bill they will see that the bill was amended in the select committee to accommodate the Taranaki savings bank TSB Bank Ltd in which I declare an interest. It is a fantastic institution where not only I do my personal banking but the Green Futures Superannuation Fund does its banking. So the bill has been amended to ensure there is no discrimination against the Taranaki savings bank. I would like to say that now as a result of the Government agreeing with my amendment this bill will no longer discriminate against building societies. 
That is an important step for building societies. At the moment there are numerous bank preference clauses in many pieces of legislation that stop Government departments tertiary institutions hospitals and schools from investing their hard-earned savings in building societies. So adding building societies to clause 199 is a significant step forward in recognising that building societies not only play a crucial role in our society but should not be discriminated against. Indeed we have had the reverse situation up until now. By only banks being referred to there is an implied Government endorsement which I think is unfortunate and unfair. 
So I am pleased to propose amendments to clause 199 and clause 177 to fix this anomaly and in proposing those amendments I acknowledge what an important role building societies play in New Zealand. I do declare an interest. I have a $10 account with the Southland Building Society and I am currently studying that society as part of the Business and Parliament Trust which is an excellent exchange for members of Parliament to learn more about businesses. I can tell members that there are 10 building societies in New Zealand. They have 150000 members. They have assets of $2.7 billion. The oldest was established in 1862. The Southland Building Society which I am studying had a record year this year. I was pleased to be at its AGM. Its assets were up by 12.7 percent to $1.5 billion which is roughly half the assets of all building societies. Its equity was up 14.6 percent. Its advances were up 19 percent. Its pre-tax operating surplus was up 11.5 percent to $18 million. 
Thank goodness it still exists and thank goodness Stephen Franks did not get his way when he was acting as an adviser to the old board and advised it to sell the building society to Westpac! Chapman Tripp which he worked for at the time was paid $290000 for its advice and thank goodness the parochial Southlanders ignored that advice and decided to keep their building society in local ownership instead of selling out to yet another foreign-owned bank. We need our building societies and Kiwis recognise that. They do not like foreign-owned banks. They do not like profits going offshore. They want to support local financial institutions such as building societies and the TSB Bank Ltd. The Minister in the chair Harry Duynhoven comes from Taranaki and I know that he has been a strong advocate of that bank. 
I am pleased that the Government has agreed to support my amendment to enable Crown entities also to save with their local building society. 
Hon DAVID CARTER (National) 
: 
 I also want to speak to Rod Donald’s amendment to clause 199. I just imagine now in Auckland Judy Bailey pulling up to TVNZ’s office in her Audi convertible thinking that the first item on the news tonight will be that Rod Donald has successfully moved this dramatic amendment in Parliament today—this dramatic amendment whereby we are going to add the words “or registered building society”. What an achievement for a man who has been here for 6 years! Six long years! 
Simon Power 
: Eight! 
Hon DAVID CARTER 
: Eight long years! Rod Donald has been here in this Parliament for 8 long years and he comes up with this dramatic amendment that can justify his— 
Hon Maurice Williamson 
: He’s been working on it. 
Hon DAVID CARTER 
: Yes he has. It must have taken him a long time. Not only does he achieve this monumental step in his parliamentary career but he takes the opportunity of revealing to Parliament today that he may have a vested interest because he has an account with a credit of $10 at the Southland Building Society. I say to Barry Coleman that as he is preparing the next NBR Rich List he needs to check out this man. He needs to check out Rod Donald and show what a remarkable capitalist that man has become and the progress he has made with this huge amendment in Parliament today. 
I also want to comment on the incredible contribution I heard from Gordon Copeland. He said he is supporting this legislation because it empowers a Crown entity to open a bank account. What are we doing rushing a bill of this size through Parliament today? Gordon Copeland says his party United Future is supporting it on the basis that he has found a clause in here that states that Crown entities must establish a bank account. 
I am more worried by the level of Government interference in Crown entities that can occur if this legislation is passed today. There are clauses like clause 213 “Minister of Finance instructions”. Subclause (1) states: “The Minister of Finance may issue instructions to Crown entities that—(a) prescribe minimum requirements … (b) prescribe the non-financial reporting standards …” etc. What we have seen over many years is the establishment of Crown enterprises as a means of getting politics out of their operations so that they can operate to the best economic performance and deliver to the shareholders—in other words the New Zealand taxpayers. But what this Government does with this legislation is put its ever-increasing political manipulation into the operation of State-owned enterprises and Crown entities. I say that is fundamentally wrong. We will see issues like the performance pay of Judy Bailey become something that is decreed by the degree of political embarrassment that the Prime Minister feels. She appointed every one of the board members of Television New Zealand. They are all well and truly recognised as Labour Party lackeys. 
Russell Fairbrother 
: Did the Lyttelton voters appoint you? 
Hon DAVID CARTER 
: No. The Lyttelton voters do not exist. The electorate I tell that member is actually Banks Peninsula. It is a Labour electorate and I am proud to represent the people who have the sense to vote for me every time we have a general election. 
Rod Donald 
: And you lost that seat. 
Hon DAVID CARTER 
: Rod Donald has stood in that electorate on four occasions and he hardly gets his deposit back so he can chip in all he likes. I will make one guarantee to Rod Donald: he will never win the Banks Peninsula electorate as long as— 
Brian Connell 
: He’ll never win an electorate. 
Hon DAVID CARTER 
: That is true—but he may now because of this remarkable development today. He has done a deal with Labour. He has said the Greens will support the urgency motion and will let Labour rush this huge bill through Parliament provided that he can have the audacity to include the words “or registered building society” in clause 199. I say to the Committee that it should take note of this monumental achievement from the Green member Rod Donald. He has been here a long time and has achieved very very little but today he has his first significant win and the words “or registered building society” will now be included in the legislation. 
RUSSELL FAIRBROTHER (Labour—Napier) 
: 
 I move  
That the question be now put 
. 
PANSY WONG (National) 
: 
 I cannot help reflecting on the fact that Judy Bailey was attacked by the Prime Minister for getting paid $800000 a year for 4½ minutes’ work on 5½ days a week but Rod Donald a co-leader of the Green Party just demonstrated to us that he has earned his whole year’s parliamentary salary of over $100000 by producing an amendment containing two little words—“building society”! I thought that was very interesting: if one aims low one gets to where one wants to be. That member has proposed a lot more amendments during this debate that were totally ignored. Those two little words are his Christmas gift from Dr Michael Cullen. At least he got something but the Minister would not give any tax reduction not even a small one to the hard-working New Zealanders. 
I would also like to take up the challenge posed by the United Future member Gordon Copeland. I suddenly realised that he is a sensitive new-age man. He was offended because the National Party whip Simon Power asked United Future to answer the question why United Future supported this part of the Public Finance (State Sector Management) Bill. I am feeling a bit sensitive too. Gordon Copeland and I are both members of the very prestigious Institute of Chartered Accountants. I thought that we as chartered accountants understood statements of intent and financial statements. And of course Gordon Copeland and I happen to be fellow committee members on the Finance and Expenditure Committee. Even Air New Zealand a publicly listed company has come before that select committee to present its financial review and we certainly have done financial reviews of Meridian Energy and numerous Crown entities for as long as the chairman has allowed us to. So what makes Gordon Copeland think those Crown entities would not supply Parliament with their financial statements and statements of corporate intent without this 500-page legislation? 
I want to raise an issue of concern and that is the overkill in this legislation. First of all clause 195 spells out what a statement of responsibility which a Crown entity has to provide should comprise. One would have thought that what it provided would be enough for the responsible Minister to get all the information he or she wanted. Further on this provision also allows him or her to interfere by directing additional responsibility. But after all those stringent requirements we then find clause 209 “Power to require output agreement”. On top of all those provisions requiring Crown entities to say what they want to produce—what sort of outcome—and how they intend to achieve it and to report whether they fail or succeed in achieving it a Minister can have the authority to “require a Crown entity to have in place an output agreement for any or all outputs that the Crown entity intends to provide that do not qualify for an exemption …”. I wonder why the Minister does not just put in a clause to say that the Minister can request whatever he or she wants! 
BRIAN CONNELL (National—Rakaia) 
: 
 It is really good to see the young guns of New Zealand First start to hit their straps. It is good to see a bit of energy and a bit of passion in stark contrast with the drivel we heard from Gordon Copeland and Rod Donald. 
Hon David Carter 
: Did they win? 
BRIAN CONNELL 
: Rod Donald has put $10 into the Southland banking society. My advice to him is to get his money out before he goes broke because that will be his last $10. It is very good of him to invest everything he has in it but we suggest he should get his money out now before it is too late. Gordon Copeland was really upset because Simon Power suggested we did not need to legislate for Crown entities to open bank accounts. 
Hon David Carter 
: I don’t think we do. 
BRIAN CONNELL 
: I do not think we do either. I think Gordon Copeland was very right to say with such gusto passion and determination that he was really upset. Let me say this to Mr Copeland. Producers in the productive sector of this country are fed up to the back teeth with red tape and bureaucracy. This bill is a classic example of it. This bill is 500 pages long and most of it is repetitive. I think I could reduce this bill to at least one-third of its size by cutting out some of the nonsense that we see in it. The United Future members get to their feet and want to legislate for more of that sort of nonsense. 
I will tell Mr Copeland this for nothing: National is voting against the bill. Gordon Copeland and the United Future party purport to support the productive sector and small business in this country in particular. But he stands in the Chamber and wants to legislate for this type of nonsense. Let us look at some of the stuff that I am talking about. The statement of intent starts on page 229 and goes right through to page 236. There are seven pages in the statement of intent. In anybody else’s language it is just a forecast. Any board member worth his or her salt would look at that and wonder why he or she should bother. The Minister in the chair Mr Duynhoven knows what I am talking about. He is a man who has been around a little. He knows that we do not need to legislate to tell people how to do up their shoelaces before they go outside. That is exactly what this bill does. 
Let me look at clause 181. Someone has already mentioned subclause (1)(e) which states: “how the entity proposes to manage the organisational health and the capability of the entity:”. Will a Government member stand and take a call—maybe Mr Copeland will stand and take a call—and explain exactly what that means? Maybe Mr Donald will stand and take a call because he is very keen on supporting this legislation. Then subclause (1)(g) states: “the matters on which the Crown entity will consult or notify its responsible Minister before making a decision …”. That is like having a dog and barking too. Why would any self-respecting board member want to get involved in a Crown entity that gave the Minister that type of power—that type of interference? What we get is boards of inferior quality because their members are the only types of people who would take the job on. It is no wonder that Judy Bailey was able to snow the board of Television New Zealand. Because of the quality of that board which is made up of Government appointees—ex-Labour hacks—she was able to snow them by convincing them that she would go somewhere else. All the competing organisations said they were not talking to her and did not want her. 
Hon DAMIEN O'CONNOR (Minister for Racing) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 177 be agreed to: 
to insert after the definition of  
registered bank 
 the following new definition: 
registered building society 
 means a building society within the meaning of the Building Societies Act 1965 that is registered on the register of building societies kept under that Act. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendment agreed to. 
SIMON POWER (Senior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I missed the vote from United Future and I ask that it be repeated. I apologise. 
GORDON COPELAND (Whip—United Future) 
: 
 Eight opposed. 
The CHAIRPERSON (Hon Clem Simich) 
: I ask the member from the Green Party whether there is a vote from the Maori Party. 
ROD DONALD (Musterer—Green) 
: 
 I apologise Mr Chairperson. I was just trying to clarify for the benefit of Mr Copeland that having voted to incorporate building societies he is now voting against the definition of building societies. I apologise for interrupting the vote. 
SIMON POWER (Senior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I accept the member’s explanation in his point of clarification but the Committee needs to be assured that United Future is not being persuaded to vote in a certain way by other political parties in the Chamber. 
ROD DONALD (Musterer—Green) 
: 
 I give an assurance that I was not trying to persuade United Future; I was just concerned about how inconsistent it would look when its votes were examined. 
The question was put that the following amendment in the name of Rod Donald to clause 199 be agreed to: 
to insert in subclause (1)(a) after the words “registered bank” the words “or registered building society”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 199 be agreed to: 
to insert in subclause (1)(b) after the words “registered bank” the words “or registered building society”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 199 be agreed to: 
to insert in subclause (5) after the words “registered bank” the words “or registered building society”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the following amendment in the name of the Hon Dr Michael Cullen to clause 188 and the amendments set out on Supplementary Order Paper 315 in his name to Part 6 be agreed to: 
to omit from subclause (2)(b)(i) the words”given by the Governor-General by Order in Council”. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 6 as amended be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Part 6 as amended agreed to. 
Part 7 Miscellaneous provisions 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I raise a point of order Mr Chairperson. I seek your guidance in respect of Part 7. You will note that the clauses go up to and include clause 236 “Amendments to other enactments”. The enactments referred to in clause 236 are set out in schedule 8. Schedule 8 amends a large number of Acts. The guidance I seek from you is whether it is intended that the debate on Part 7 will cover the contents of schedule 8 as well because the schedule contains a very large set of amendments to a very large number of Acts. I seek your advice. 
The CHAIRPERSON (Hon Clem Simich) 
: Indeed it absolutely does cover that schedule. I was just about to give that explanation. Part 7 clauses 217 to 236 includes debate on schedule 8. 
PANSY WONG (National) 
: 
 The Minister in the chair the Hon Harry Duynhoven really must take a call on this part. I am very worried about clause 222 “Existing members exempt from qualification requirements” as it has very serious implications. It states: “Every member of a statutory entity or Crown entity company or a Crown entity subsidiary in office at the commencement of this section may continue in office for the remainder of his or her current term of office …” and be exempted from the requirements specified in clauses 72 and 132 which are very obvious reasons for disqualification. Under clause 72 a person cannot be appointed to a board if he or she is an undischarged bankrupt “a person who is prohibited from being a director or promoter of or being concerned or taking part in the management of a company …” “a person who is subject to a property order …” “a person in respect of whom a personal order has been made … that reflects adversely on the person’s—(i) competence to manage his or her own affairs …” “a person who has been convicted of an offence punishable by imprisonment for a term of 2 years or more” or—I am not sure for what reason—a member of Parliament. Clause 132 “Criteria for appointments by shareholding Minister” states that a shareholding Minister may appoint a person who in the Minister’s opinion: “has the appropriate knowledge skills and experience to ensure the sound management of the Crown entity company …” will be carried out. 
I think the Minister should take a call on this. Why should the existing board members under this provision continue their terms and be exempt from these very basic and obvious requirements? Is the Minister trying to tell the public that some existing members of the boards of these statutory entities and Crown entities etc. would be barred from holding that office because they have had a prison sentence of 2 years or are not competent to manage their affairs? I hope that the Minister instead of laughing smiling and talking away will take a call and state categorically that this provision is totally unnecessary in terms of exempting those members from clauses 72 and 132. All it does is send a message to the public that some existing board members may be incompetent or bankrupts or alternatively that the Minister is trying to protect some existing board members who should be disqualified. It is quite a concern to us on this side of the Chamber that such people may be appointed to a board. We have questioned the appointment of the Labour Party president Mike Williams to eight Crown entities but we hope he has not infringed any of those obvious requirements that exclude people from being board members. 
The other thing I want to draw to members’ attention is clause 226 “Continuation of existing board committees”. I wonder whether the Minister is lamenting that the Government is missing an opportunity to remove this clause—to support National’s call for it not to proceed. Changing this clause to say that the Minister may choose to discontinue existing board committees may help the Minister of Broadcasting out of a very tight situation. The Minister once again finds himself helpless under the current requirements. He told Parliament that he could not do anything to the TVNZ board even though the Government was not very happy with the continuation of the culture of extravagance in that entity. I think the Minister should take a call and answer my two questions. 
JOHN KEY (National—Helensville) 
: 
 I want to draw members’ attention to clause 229 which looks at the liability provisions. I think liability is an issue that is worth at least exploring today. It is a well-known fact that indemnity is provided for directors of Crown entities—and in fact for employees of Crown entities in certain instances; there have been quite a number of cases. I note from an earlier part of the legislation that it has been decided that the liability indemnity and insurance should be registered and made clear in the statement of intent. In a situation where a board member is covered under a liability indemnity or by indemnity insurance the process is that if a board member say contracts with a Crown entity and there is some form of liability or there is an action taken against that Crown entity the action is against the entity itself. Therefore the compensation payable by the Crown entity will be paid by the Crown entity or by its insurers and not by the individual directors. 
I raise that point because we are increasingly moving to a litigious world where people are likely to take legal action. So I think that in the first instance those who look to be appointed to Crown entities will be relieved that—and it is pretty standard business practice—indemnity insurance will be provided for them. But I wonder whether listing in the statement the extent of that liability insurance is a wise thing. I say that because if one looks at a number of large institutions overseas one sees that that is not in fact the case there. It is well understood that the directors will have liability insurance and it is well understood that they act as agents for the company—or in this case the Crown entity. But I do think there is an issue about specifically stating what the extent of that insurance is. 
This is why. When I was engaged by a former US investment bank that had a number of lawsuits undertaken against it the feeling of internal counsel was always that when it was known how large the indemnity insurance was the bank was likely to become a target for legal action. So the Minister might want to think about the provisions under clause 229 and the way they relate to the statements of intent for Crown entities. He might want to consider whether it is actually sensible to spell out the full level of liability insurance or whether it would be better just to say that there is a presumptive condition that liability insurance will be provided. As a director of a number of companies myself I have obviously made it clear that those entities have liability insurance but I do not think spelling it out specifically in black and white is always necessary. 
I also want to make reference to another aspect of clause 229. Again the Minister might want to look at this and proffer a view on it. The clause seems to me to be saying that liability insurance or indemnity may be provided for an action taken by a person before he or she was engaged by a Crown entity. I just need to understand that completely. One can imagine a number of scenarios where someone may be engaged by a Crown entity and thereby come within the ambit of its liability insurance. This clause seems to me to be saying that in some circumstances—and I cannot see in the legislation exactly what those circumstances may or may not be—indemnity for a past action may in fact be provided. 
It would be quite a remarkable situation if someone who is invited to join a Crown entity board and for some reason—whatever unusual scenario could possibly be dreamt up—has an action taken against him or her might be covered by the Crown entity’s liability insurance. 
I want to make reference to schedule 8 which as you commented earlier Mr Chairperson will be included in Part 7 of this legislation that we are debating under urgency and will be debating for quite some hours to come. I make reference to the huge number of Crown entities that will be affected by this legislation. It is a hugely broad range of entities ranging from arts councils to alcohol advisory boards. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 The debate we are now having on Part 7 of the Public Finance (State Sector Management) Bill is possibly one of the most important debates with regard to this bill. I believe the Committee should look at and spend some time on the complexity of what we are debating right now. Clause 236 brings in schedule 8 which as my colleague John Key has just said amends a whole plethora of Acts. Of greatest significance to New Zealand are the amendments to the Education Act 1989. In order for these matters to be in a schedule they should be purely consequential amendments I would have thought and should not make major changes that are not purely consequential. 
I would like the Minister in the chair to give some thought to this. The particular part of schedule 8 that I am concerned about amends the Education Act 1989. The particular sections in the Education Act 1989 that are being amended that I would like the Minister to focus on are those relating to section 203 which is repealed and substituted in schedule 8. That schedule lays out how this bill affects our tertiary institutions because section 203 refers to the institutions being Crown entities. That is covered in section 48 of the Public Finance (State Sector Management) Act 2003. 
The bits that I wanted to look at particularly are the new unanimous sections 203(2) and 203(3) to the Education Act. Section 203(3) states: “The provisions of that Act set out in Schedule 6B of that Act”—which refers to this bill that we are now debating. I would like to focus on schedule 6B which is obviously part of this debate too because schedule 8 brings in schedule 6B. Schedule 6B which relates specifically to the tertiary education institutions sets out the number of sections derived from this bill that will apply to tertiary education institutions. One that is included is section 51. 
I will trouble the Minister to look at clause 51 of this bill—through that convoluted process we are now back to clause 51 of this bill—because it sets out a number of interpretations including the interpretation of “direction”. What troubles me about this and I think where our tertiary institutions will be getting pretty concerned is that through this convoluted pathway—schedule 8 which amends the Education Act 1989 which brings in schedule 6B of this bill which relates to the various clauses that affect tertiary institutions—we get back to this issue of direction where a Minister can direct an entity under this legislation. 
Hon Dr Michael Cullen 
: The interpretation clause does not give the power of direction. It defines what “direction” means if it has got the power and it has not. 
Dr the Hon LOCKWOOD SMITH 
: But the interpretation clause spells out the kinds of directions a Minister can give. If it was not intended to apply to tertiary institutions why does schedule 6B specifically mention section 51? The Minister could assist here by showing us where in schedule 6B the tertiary institutions are specifically excluded from ministerial direction. It would certainly ease concerns if the Minister in the chair could point out which of the sections that apply to tertiary institutions in schedule 6B specifically exclude ministerial direction for a tertiary institution. Clause 51 shows the breadth of a direction that the Minister can give and it can be right down to employee level. We are talking about the potential possibility for the Minister to give a direction to a tertiary institution that could breach the issue of academic freedom. I see the Minister shaking his head. I would be pleased if he would take a call—because I imagine that tertiary institutions are very concerned by this—and point out where schedule 6B specifically excludes such direction. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I would hope that tertiary institutions do not come up with that argument because I would hope they would use their law faculties before they did that. Schedule 6B includes those things that do apply. If it is not in schedule 6B it does not apply and the power of direction is not in schedule 6B. In other words the power of direction is not in the schedule that applies to tertiary institutions. The power to direct is outside this schedule and therefore does not apply to tertiary institutions so the Minister has no power to direct tertiary institutions. 
Dr the Hon Lockwood Smith 
: Why is there not an exclusion? 
Hon Dr MICHAEL CULLEN 
: It does not need an exclusion. Schedule 6B is an inclusive clause of what the powers are. It does not include the part of the bill that gives the power to direct. The fact that the interpretation clause is included is irrelevant. The interpretation clause does not relate to the power to direct; it only defines what direction means should the power be in there. But the power is not in there. One would not go through the interpretation clause and take out every little word that is not included in the rest. This is an inclusive statement in schedule 6B not an exclusive statement. If it is not in there it does not exist. The power of direction is not included in schedule 6B. It is absolutely clear. 
BRIAN CONNELL (National—Rakaia) 
: 
 I will start by making a point of clarification. In a previous speech I spoke about the Southland Building Society and on reflection I regret having made some statements about it. I want the record to reflect that I have every confidence in that organisation. It is a very well-run organisation with a very fine balance sheet and I want the record to reflect that. Under this part I will talk about clause 222. I raise this issue now that we have Mr Cullen back in the chair because it is an area that needs some clarification I think. It concerns me. I am not sure that what is written here can really be the Minister’s intention. 
At the moment the heading of clause 222 states: “Existing members exempt from qualification requirements”. That is the issue that my colleague Pansy Wong raised and I think it needs to be re-canvassed. If I am reading the legislation correctly the new qualification requirements state that no one who has had a 2-year prison conviction or is an undischarged bankrupt can be a member of a board. My interpretation of clause 222 is that current board members who have that type of history can continue. If that is what the Minister intends then I seek for him to take a call and clarify that because I think it is a confidence issue. It worries me and I am sure that others who read this clause and give it close scrutiny will also be concerned about it. We are really saying in essence that some board members at the moment who have had prison convictions of 2 years or more or who are undischarged bankrupts can be board members of Crown entities. I do not for a moment believe that that is the Minister’s intention but if it is I would like that to be clarified. 
The next point I will raise is about clause 227 “Continuation of existing employment”. I have criticised this bill throughout the course of this debate for putting into legislation things that seem to be repetitious and unnecessary. I think this clause is another example of that. It states: “A person who is at the commencement of this section an employee of a statutory entity does not cease to be an employee because of the coming into force of this Act.” Surely current employment law provides those protections now and this is just more unnecessary drivel and repetition. 
The next clause I will talk to is clause 230 “Existing insurance cover”. Mr Key also raised that clause as being an issue of some importance. I am in two minds on this issue. Yes I think on the one hand that board members should be indemnified. On the other hand they have a fiduciary responsibility to conduct the business with which they are charged in an appropriate manner. If they do that according to the charter of their entity then indemnity insurance is fair. But I am reluctant to advocate that they should be indemnified if they make poor decisions or decisions that are quite clearly contrary to the charter of the entity. Why should we provide indemnity for board members who do things that are illegal for example? That relates back to the first point I raised about clause 222 concerning people with criminal convictions. Let us be clear that a criminal conviction of 2 years’ imprisonment is a very significant conviction. Someone on a board at the moment could under clause 230 potentially be indemnified for conducting an illegal act while serving as a member. When I go on to clause 230(3) I am a little confused with regard to what is intended. Subclause (2) provides that existing insurance cover for members applies but then subclause (3) provides: “However if the insurance cover expires or the member office holder or employee is reappointed or re-employed …” the measure does not apply. That also needs to be clarified. 
DEBORAH CODDINGTON (ACT) 
: 
 I ask the Minister of Finance whether he could please clarify how clause 218 in Part 7 relates to schedule 6B. I would also like him to clarify whether schedule 6B refers to clauses that apply to tertiary institutions—whether that is the situation. I ask the Minister whether those clauses do not apply to tertiary institutions. 
Hon Dr Michael Cullen 
: It’s an inclusive list of those that do apply. 
DEBORAH CODDINGTON 
: They do apply. Then I take it that the Archives Act 1957 does apply to tertiary institutions under this Part 7. I ask the Minister whether that is correct— 
Hon Dr Michael Cullen 
: Yes. 
DEBORAH CODDINGTON 
: —because it is included in schedule 6B. 
Hon Dr Michael Cullen 
: Well that’s being replaced of course very soon. 
DEBORAH CODDINGTON 
: If it does apply then there is something that Professor Stuart McCutcheon has brought to my attention. 
Hon Dr Michael Cullen 
: Is that who you’re speaking on behalf of? 
DEBORAH CODDINGTON 
: Well yesterday the Minister of Education interjected and called the Vice-Chancellor’s Committee a bunch of fairies but that is typical of the sort of language that the Minister of Education uses to dismiss those who disagree with him. However as Stuart McCutcheon said an early impact of the change in this legislation will be to bring all tertiary education institutions under the Archives Act and the Public Records Bill which means that potentially all teaching and research drafts will become public records. As he said that would be a nonsense if it were strictly enforced. 
None the less it does bring those bodies under the Archives Act. I have the Archives Act here and I would just like to remind the Committee that section 2 of that Act provides that: “ ‘Public archives’ means all public records that have ceased to be in current use in the Government office in which they were originally made or received or in the Government office in whose custody they have been placed or that have been deposited in the National Archives.” and “ ‘Public records’ means all papers documents or records of any kind whatsoever officially made or received by any Government office in the conduct of its affairs or by any employee of the Crown in the course of his official duties;”. There are penalties under the Archives Act for destroying those public records without the permission of the Chief Archivist. 
There are two implications from that. One is the nonsense one where—as has been noted—all teaching and research drafts etc. could be required to be held unless permission was given. The Minister is shaking his head so I would like him to clarify that is not the case. The other implication is for intellectual copyright which many universities potentially gain remuneration and financial benefit from and individuals’ copyright on research that is conducted while individuals are at a university. It is a grey area because public funding goes into it. But if we want to reduce pressure on the public purse and on taxpayers then we should have a balance that does not damage the involvement of private investment in tertiary research and the development of intellectual property. It is not limited to universities; it extends to institutions like the Auckland University of Technology and Unitec. 
As an aside it is an interesting situation that under this legislation universities polytechs and tertiary institutions are all classified as being the same yet simultaneously the Government is pushing through this House a bill that will ban Unitec from being a university. On the one hand those bodies are allowed to be and have to be all the same under this bill while on the other hand the Government is pushing through another bill in a last-minute attempt to stop Unitec—having crossed every hurdle placed in its path—from becoming a university. 
However I would like the Minister to take a call and explain why the Archives Act should apply. 
ROD DONALD (Co-Leader—Green) 
: 
 Spurred on by David Carter I would like to offer the Committee another amendment. I found David Carter’s words of encouragement—and his enthusiasm for my $10 deposit in the Southland Building Society in particular—after I had put forward my last amendment in relation to building societies so gratifying that I checked with officials to see whether there was anywhere else I could insert building societies into this legislation. I was delighted to find that there is an opportunity in schedule 8 which is covered by clause 236 in Part 8 which members are currently debating. 
The reason we need to insert an item relating to building societies into schedule 8 is that the Government has graciously agreed with its Supplementary Order Paper 315 to remove from schedule 6B the item section 199 relating to bank accounts from the requirements put on tertiary educational institutions. The unintended consequence of that is that the addition just made in the last part which enables Crown entities to have a bank account with a building society does not apply to tertiary educational institutions. I am not requiring tertiary educational institutions to have a bank account with a building society but they should have the opportunity to open one if they so wish. I know in particular that the Southern Institute of Technology would love to have an account with the Southland Building Society. I see the local member Mark Peck is nodding vigorously. I know that he is a strong advocate of both the building society in Southland and the institute of technology; they are two superb local institutions that I am sure every member in this Chamber supports. 
So I am pleased to advise the Committee that the Government has generously agreed to my further amendment to insert in clause 201(1) after the words “registered bank” the words “ or any registered building society with which a Crown entity may establish maintain or operate a bank account under section 199 of the Public Finance (State Sector Management) Act 2004.” That would give all tertiary educational institutions in New Zealand both universities and polytechnics the opportunity to open a bank account with their local building societies. I am sure there will be crowds in the streets applauding that initiative. I know that it will become a widely known initiative once David Carter takes a call to congratulate me yet again on providing a major step forward for the building society movement in New Zealand. I am sure that the building societies’ $2.7 billion in deposits will grow rapidly as a result of this change. 
Hon DAVID CARTER (National) 
: 
 I do rise to thank Rod Donald for his amazing amendment. I have to say “Well done!” to him for having been here for so long— 
Rod Donald 
: Eight long years. 
Hon DAVID CARTER 
: I know. He has had 8 long years here in Parliament and to have achieved two such significant milestones in a parliamentary career is something that the member must remember when he gives his valedictory speech in the not too distant future. 
I want to take the opportunity of asking the Minister of Finance to clarify two clauses for me. One is clause 216 which concerns gifts and was deleted by the select committee. Clause 216(1) stated that any gift or property that is gifted to a Crown entity may be accepted or disclaimed by the Crown entity. The reason I raise this as an issue is that I have discussed this with my colleague John Key who was on the select committee and I have looked at some of the material that John Key received from officials at the select committee. There appears to have been no discussion at all as to why clause 216 was ever included in the legislation and even more revealing there seems to have been no discussion or paper trail as to why it was subsequently excluded by the select committee process. 
The reason I raise this is that this deliberation by the select committee occurred at the same time that the honourable John Tamihere was embroiled in an absolute scandal regarding his receipt of gifts. I think at one stage he attempted to justify one of them to the New Zealand Parliament by saying it was not a gift but koha—a couple of hundred thousand dollars of koha as I remember. I just want the Minister—I know that he will be embarrassed by this and I do not mean to embarrass him too greatly right on the eve of Christmas—to take the opportunity to explain why clause 216 was ever included and why subsequently it came out during the select committee process. I want to know whether there was any paper trail to suggest that the reason was that the Government did not want any further embarrassment associated with John Tamihere and his rather inventive approach towards the gifts that seem to come his way even though he is inclined to say when he is a not a member of Parliament— 
Pansy Wong 
: What clause is it? 
Hon DAVID CARTER 
: Clause 216. My point is that the honourable John Tamihere said that in no circumstances would he accept the koha then subsequently once the papers had revealed that he was too fine and upstanding a gentleman to accept the koha lo and behold we find that the koha had been paid to him. 
My second question for the Minister refers to clause 220 “Local Authorities (Members’ Interests) Act 1968 does not apply to Crown entities”. Again I have no idea why that particular clause is included. I am led to believe that it may be associated with the register of interests that Ministers are required to fill out which Michael Cullen is proposing that members of Parliament be required to fill out and which local government members are now also required to fill out. Again there appears to be one rule for most of the executive and one rule for John Tamihere as a member of the executive. Mark Peck is shaking his head but if I have been reading the newspapers correctly—and I congratulate the  
National Business Review 
 on running the story very well—members of the executive are required to file an annual register of interests. Mark Peck might not have realised that although he has been here for a long period of time and is shortly to leave this place having never been a member of the executive. However I do not wish to knock Mark too much because he is not a bad guy. My point is that everybody in the executive fills out the ministerial register of interests but John Tamihere did not. He defied the law. He did not want to reveal all his koha. Maybe we have found out about only one of them. Maybe there is a lot more to come when Mr White presents his report in the next day or two. But why was John Tamihere the only member of the executive who was exempt? 
MARK PECK (Labour—Invercargill) 
: 
 I move  
That the question be now put 
. 
JOHN KEY (National—Helensville) 
: 
 I cannot say how thrilled I am to have a second opportunity to speak to Part 7 of the Public Finance (State Sector Management) Bill under urgency and I am absolutely delighted that I have been given another opportunity to speak after my first contribution. This contribution will be even more revealing than the first. I want to thank you Mr Chairperson from the bottom of my heart.  
 I want to draw the Committee’s attention to a very interesting clause in Part 7—clause 235 “Existing investments borrowing guarantees indemnities and derivatives”. I see the Minister of Finance’s ears have perked up. He is looking very engaged and for those who cannot see him he is flicking through the bill to make sure he has not missed anything. 
Hon Dover Samuels 
: He looks very happy. 
JOHN KEY 
: He looks happy and contented—he will be sitting on $1.5 billion of additional cash next year over and above all his operating and capital expenditure. Members should be happy. I hope that as he sits in the chair and has a moment to reflect he will consider taking up my suggestion for the New Zealand people this year which is that he gives every New Zealander $75 so that they can put a turkey on the table and a present under the tree and we can all go to Christmas and be very happy. That would cost only— 
Darren Hughes 
: A turkey on the Table of the House would be very nice. 
JOHN KEY 
: Mr Hughes should not talk about the members on his side of the Chamber in that way because they are not turkeys. He should not call them turkeys. If he is going to call them turkeys he should do it in his Christmas card to me so it can remain private and confidential. 
Darren Hughes 
: It’s on its way! 
JOHN KEY 
: Oh it’s on its way. I go back to clause 235. What is interesting about clause 235 is that it states that the terms of investments borrowing guarantees indemnities and derivatives may be amended and will be taken up when the Crown entity comes into place or when this bill passes. The clause states further that those terms may be amended by the Minister of Finance after this bill goes through. So let us think about that scenario. The Crown entity undertakes a derivative transaction—let us say an interest rate swap where it has some borrowings and decides that it is going to swap from a fixed rate liability to a floating rate liability. Then all of a sudden after passing Part 7 and clause 235 of the Public Finance (State Sector Management) Bill the Minister of Finance looks at that transaction and decides he wants to alter it as he may under Part 3. 
Now altering financial obligations does not come for free and the Minister of Finance himself will know that depending on interest rate movements and the various issues there could be a significant cost in altering that transaction. If that were the case and it may happen under this part then I would question that if a financial liability is incurred by the Crown entity that changes or amends its derivative transaction and it is then not taken up or the alteration is made by the Minister of Finance who is going to pay for the liability? Who will go to the Crown entity and say: “Well OK you’ve amended this derivative transaction and there’s a lot of money at stake here.”? There may be hundreds of thousands or millions of dollars. Who will pay that liability? It is not at all clear from clause 235. 
Now I am not suggesting that the Minister of Finance is likely to alter the range of investments borrowings guarantees indemnities or derivatives that will be in existence when this law takes place but it is possible. If it is possible I think the Minister should rise to his feet as we are sitting under urgency at about 20 past 11 on what is technically Tuesday but most New Zealanders would know it is Thursday to debate the Public Finance (State Sector Management) Bill and tell the Committee who will pay the price of that alteration if he does amend a guarantee a liability a derivative or anything in relation to a Crown entity. 
When the Minister is on his feet I think it would be interesting if he could share with us whether he is likely to cast his eye over all these borrowings investments guarantees indemnities and derivative transactions and whether he is likely to ask Treasury to provide him with a list of those. The transactions will be stated in the new statement of intent as we saw earlier on in the bill. But I wonder whether the Minister will—over his Christmas holiday possibly—ask Treasury to deliver to him a listing of all those transactions so he can cast his eye over them. It is possible that during his Christmas break he will have a look and see that there are some transactions he would like. I can see the Minister is eager to get to his feet and answer those questions and I look forward to that. 
HELEN DUNCAN (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to Part 7 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 7 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Part 7 as amended agreed to. 
Part 8 Amendments to State-Owned Enterprises Act 1986 
JOHN KEY (National—Helensville) 
: 
 Part 8 is obviously a very small part of this 500-page bill. However the fact that Part 8 is small does not make it any less important. 
Simon Power 
: Belies its importance. 
JOHN KEY 
: It belies its importance and like a lot of small things in life it is easy to take them for granted and to wonder whether they are as significant as big things. 
Lindsay Tisch 
: Like Mark Peck. 
JOHN KEY 
: Well Mark Peck—yes. For instance in All Black terms people might not have taken Grant Batty who was a very small All Black seriously. 
Simon Power 
: Dave Loveridge. 
JOHN KEY 
: Dave Loveridge is another example of a small All Black who could be taken for granted. 
Simon Power 
: Gary Whetton. 
JOHN KEY 
: Gary Whetton was not small. 
Hon Dr Michael Cullen 
: Lindsay Tisch. 
JOHN KEY 
: Lindsay Tisch is small but he is not an All Black. He could be. One never rules someone out from being an All Black. 
Hon Dr Michael Cullen 
: He used to be the ball in the game. 
JOHN KEY 
: Oh I do not think one could say that Lindsay Tisch was the ball; he was the pride of the game. 
Part 8 is small but it has an interesting part to it and that is clause 238. Part 8 amends the State-Owned Enterprises Act. New Zealanders will know there are—roughly off the top of my head—17 State-owned enterprises in New Zealand and they range from power generators such as Meridian Energy Genesis and Mighty River Power those sorts of enterprises to the coal operator Solid Energy and New Zealand Post. There are a number of entities that fall within the State-owned enterprises group. 
Clause 238(2) is interesting in that it states: “Before entering into any collective agreement under the Employment Relations Act 2000 every State enterprise to which this subsection applies must consult with the State Services Commissioner over the conditions of employment to be included in the collective agreement.” 
Firstly my understanding is that that clause is new. In other words we have a situation whereby our 17 State-owned enterprises—which are large organisations many of which already have collective arrangements—are now being told that under clause 238 their power will somehow be diminished by the dead hand of Government in this Public Finance (State Sector Management Bill) that is being rushed through under urgency at 25 past 11 in the evening. So in this situation before a State-owned enterprise agrees to its collective arrangement it will have to tell the State Services Commissioner that it is about to negotiate a collective arrangement and what the conditions are within that collective arrangement. 
The first question that comes to mind is about what that will do to the process. What is it likely to do? Anyone who has been involved in collective arrangements will know that they can be quite slow and tedious to negotiate. They can be large can involve quite a number of parties and can certainly take a long long time. So one can imagine situations whereby a collective arrangement is being negotiated on behalf of one of our 17 State-owned enterprises. That process could be dramatically reduced or slowed down because there could be a situation where the State Services Commissioner did not agree to the terms of the collective agreement. 
We are now in the middle of an interesting little furore—if one likes—over Judy Bailey’s salary which is of concern to some people but not necessarily to others. 
Darren Hughes 
: Small fry. 
JOHN KEY 
: Small fry—yes. What is interesting about that scenario is that it is a debate over whether Judy Bailey should get $400000 $500000 $600000—or whether the number should have been $800000. But that absolutely is chicken feed compared to the numbers that will be paid through a highly negotiated collective arrangement. So that is the first issue. 
The second interesting issue it raises is the question of what happens in the instance where there is a dispute between the State-owned enterprise and the State Services Commissioner. Maybe the Minister might want to clarify this but I cannot see what will happen when a State-owned enterprise is wanting to negotiate its collective arrangement and cannot agree with the State Services Commissioner over the terms of that collective arrangement. 
One could imagine a situation like the incident with Television New Zealand and Judy Bailey. The board—I have to say at this stage that I have some sympathy for the board—is arguing—[ 
Interruption 
] A huge amount of its revenue may be gone but a huge amount will come from a commercial activity. As I see it on the one hand the directors are doing their job to preserve that income but on the other hand they are trying to resolve a situation that clearly for political reasons may be uncomfortable or unfortunate. That situation is not impossible to imagine. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I will also pick up on clause 238 in Part 8 of this Public Finance (State Sector Management) Bill because it has huge implications. As I am aware for the first time the Government is proposing with this legislation that if our State-owned enterprises are to negotiate a collective agreement with their employees they must consult with the State Services Commissioner. 
Just to be on the safe side clause 238(3) states: “The Governor-General may by Order in Council apply subsection (2)”—that is the clause I just read out—“to any State enterprise named in the Second Schedule.” That means the second schedule of the State-Owned Enterprises Act. I am looking now at the second schedule of the State-Owned Enterprises Act because the Committee needs to be reminded of the scope of New Zealand’s activity so to speak that is covered by State-owned enterprises. 
If we look at the second schedule of the State-Owned Enterprises Act we see that we are talking about electricity generating companies and Transpower. Now they are at the heart of New Zealand’s economic success and we are talking about a whole range of them especially those that have a huge impact on New Zealand such as those involved in our energy sector not to mention the forestry sector. Landcorp farming is a large hunk of the agricultural sector. They are significant economic businesses and energy companies and Transpower have a huge impact on New Zealand’s economic success. 
The Government is suggesting here that in those major economic entities in those State-owned enterprises that have that significant impact on our economy the State Services Commissioner will be able to interfere in their employment arrangements. “State Services Commissioner” is just another term for “lackey of the Government” I think it is fair to say; I do not want to be unkind to the current State Services Commissioner but obviously the person in that role does the Government’s bidding. 
It is important for Parliament to consider that the State-Owned Enterprise Act was passed back in the 1980s under the previous Labour Government. It set up those State-owned enterprises for one very good reason: to get such important business activities out of the clutches of politicians and Government. But what is this clause doing in this Public Finance (State Sector Management) Bill? It is bringing that crucially important function about employment arrangements back within the realms of political interference. That is a very backward step. 
The Minister in the chair the Hon Margaret Wilson who I am told is to become the Speaker of the House— 
Simon Power 
: She is Speaker designate. 
Dr the Hon LOCKWOOD SMITH 
: The Speaker designate—OK. The Minister in the chair ought to have a real interest in legislation if she is to become the Speaker of the House. 
Why is the Government moving to bring back those important economic entities under political influence? A large chunk of the energy sector is owned by the Crown under schedule 2 of the State-Owned Enterprises Act. Why is the Government moving to bring back those important economic entities into a situation where the Government can meddle in their employment arrangements? One can only assume that it is because the Government wants to push its agenda and we know from various parts of this bill what that agenda is: the Government wants to force those entities to employ certain people of certain racial backgrounds and it wants to force the entities to address diverse interests in their employment arrangements. 
Those may be things this Labour Government considers important and matters of ethnic origin are important in some areas but when it comes to employment employers should be colour blind. Employers in those vitally important companies like Transpower New Zealand Ltd Mighty River Power Ltd Meridian Energy Ltd Landcorp Farming Ltd should be colour blind. They should be employing people on the basis of their skills and of what they can contribute to the organisation. People should be equal in terms of their employment opportunities in these hugely important economic entities. The Minister in the chair should get to her feet and explain what the Government is seeking to do with section 8(2) inserted by clause 238. 
DEBORAH CODDINGTON (ACT) 
: 
 I would like to follow on from what Dr Lockwood Smith was saying on Part 8 because he is right. The implications of section 8(2) in clause 238 are important for the future in terms of what it does and what it drives. I would say that this is being driven by the unions. Dr Lockwood Smith failed to mention another really important State-owned enterprise New Zealand Post Ltd. In 1986 the Lange-Douglas Government made a big mistake with State-owned enterprises in that it did not sell them. They were only ever set up as a halfway house as an interim measure to restructure old Government departments that were costing the taxpayers billions of dollars and turn them into successful commercial enterprises so they could be sold with maximum return to those taxpayers. Most of that money was used to reduce debt. We had crippling debt. We sold off those State-owned enterprises privatising them and reducing masses of debt in the process. Unfortunately we did not sell off enough of them. We did not sell off New Zealand Post or Television New Zealand. 
Look at what has happened to Television New Zealand since the Government started meddling in its affairs and appointing its boards. In 1999-2000 Television New Zealand was still a successful company returning a profit of $68 million I think it was. Governments have used Crown entities as cash cows sucking the money out of them to the extent now that the current Government is propping them up again with taxpayers’ money. What a crime it is that such a successful company returning such a good profit is now reduced to going to the Government cap in hand to grovel for more taxpayers’ money. 
We will very soon again be amending the State-Owned Enterprises Act. When more legislation comes into force—when more labour and employment legislation that brings back de facto compulsory unionism gets the royal assent—we will see more amendments. This will be seen as being a way to boost unions like the Public Service Association which has suffered hugely in terms of its members voting with their feet. So what do we do when we bring in State-owned enterprises like Meridian Energy Ltd Solid Energy New Zealand Ltd and New Zealand Post Ltd? We reduce hugely the ability of those commercial enterprises to compete in the market. They will be trying to compete with their hands tied behind their backs in terms of directives from the Government about what they can do regarding employment relations and collective agreements. 
Let us face it under this Government the only way employment agreements will be allowed to operate is as collective agreements. We will see the end of individual agreements because under this Government employees are deemed insufficiently capable of negotiating their own agreements with their own employers. They have to go into a collective agreement and because of the patronising attitude this Government has they must have a union representative to negotiate that for them. 
Lockwood Smith was quite right. The State Services Commission is a lackey of the Government. Under this Government the State Services Commissioner will have to have his or her say on every collective agreement under the Employment Relations Act that any State-owned enterprise enters into. We have already seen the implications in terms of directives to public servants and employment opportunities for Maori. Pacific people are totally excluded. They do not matter obviously in the public service. I suppose they are generally included under ethnic minorities. This is the start of the slippery slope. Next will be the private sector. 
JIM PETERS (NZ First) 
: 
 I have recently been reading a study—the most recent one—of Queen Elizabeth I. One of the issues she had continually throughout her reign was the issue of religion particularly the desire of her newly converted in many cases Protestant Ministers to delve deeply into the religious life of her subjects. Her comment to them was and it is very relevant here: “I have no wish to peer into the conscience or the soul of my subjects.” Despite the best efforts of her Ministers she managed not to do so. 
Here we have a contrast. The bill before us throughout its whole length—and we are now looking at Part 8—has a different philosophy entirely. That philosophy is an embracing desire by the State to peer down and to peer into every relevant section as the Minister sees it of the day-to-day life of State-owned enterprises. The last two speakers have been correct because section 8(2) in clause 238 embodies again the strange industrial bargaining that we have seen in recent years in some segments of State operations whereby there is never any proper negotiation between relevant parties—namely employer and employee. 
Instead above and beyond with a draconian hand at times stands the hand of the State. The reason for that particularly in the cases that I have been a party to is not quite known. There is no discernible reason why there should be a third party between two operating groups namely the employer who is given full powers under this legislation to agree and those who are employed. Here there is the clearly expressed desire that “every State enterprise to which this subsection applies must consult” with the Minister’s personal appointee in this regard the State Services Commissioner. 
My experience of the States Services Commission is not that it has an even-handed proper approach to industrial matters. In actual fact as we all know it complicates what should be a reasonable 2 or 3-year undertaking to resolve the industrial conditions under which people work day to day. Instead there is the unknown where there should be certainty and at all times there is a greater or lesser degree of political interference. That has always been so but these provisions propose a strengthening of that relationship. We in New Zealand First believe that is not sound industrial negotiation. It intrudes another imperative into what should be a proper discussion about the future conditions and salary or wages of workers; that is what the Minister thinks in the form of the State Services Commissioner. As I said this clause embraces the total controlling philosophy that the bill displays. New Zealand First will oppose it vigorously. 
The CHAIRPERSON (H V Ross Robertson) 
: Kia ora morena good morning honourable members. I call the honourable member Pansy Wong. 
PANSY WONG (National) 
: 
 Good morning to you too Mr Chairman. We always appreciate you in the Chair because you are very generous in ensuring that there is a thorough discussion during the Committee stage which is very very important. Even though Part 8 as my colleagues have said may have only two pages it refers to schedules and has huge significance in terms of the future financial well-being of State enterprises. 
There are very delicate issues around collective employment agreements. Clause 238 introduces an additional party in the form of the State Services Commissioner between the State enterprise and the union in negotiating a collective agreement. I am pleased to see that the Minister in the chair is the Hon Margaret Wilson who is the architect of the Employment Relations Act and who also has a law background to her credit. I want her to explain to the Committee what section 8(2) inserted by clause 238 really means when it states that a State enterprise before it enters into any collective agreement has to consult the State Services Commissioner. What is the extent of that consultation? Will it simply be someone at say Transpower picking up the phone and telling the State Services Commissioner that he or she might want to introduce a new offer or incentive to a group of staff in Transpower that might not be extended to another? If the State Services Commissioner said that was not acceptable would that be the extent of the consultation? Or would the State Services Commissioner have the authority to turn down say the offer the State enterprise intended to make? What is the obligation for the State enterprise to reject or accept that particular advice? 
I am quite concerned about how much intrusion and authority the bill intends to give to the State Services Commissioner given that section 8(3) in clause 238 states: “The Governor-General may by Order in Council apply subsection (2) to any State enterprise named in the Second Schedule.” That is actually quite serious. Any organisation listed in schedule 2 may also be affected by that requirement. The fact that the Governor-General may extend the authority of the State Services Commissioner through Order in Council might actually mean that the Government today wants to give the State Services Commissioner a lot more authority in association with that word “consultation”. 
I hope the Minister will take a call and tell us what the significance of the word “consult” is when it is preceded by the word “must”. What is the extent of the consultation? Is it just a chat a written statement a rejection or a “take it or leave it” statement? Also in what stages would the State Services Commissioner be involved in the actual negotiation of the collective agreement? 
BRIAN CONNELL (National—Rakaia) 
: 
 Throughout the course of the debate I have been railing about the repetition and the absolute drivel we have been asked to support by way of this bill. I made the point and I think it bears repeating that the public complains day in and day out about the size and cost of bureaucracy in this country and the sheer amount of red tape. I say to members that this bill is just another example of how out of touch the Government is when it seeks to pass this type of legislation. By my estimation the bill could have been about a third of its size. The fact it is not is an indictment on the Government which intends to legislate for every conceivable consequence whether or not it is relevant and whether or not an existing law is already in place. 
So members will probably wonder why I do not support Part 8 given that it has only four clauses and that out of 500 pages it takes up only one and a half. The reason I do not support it is that it concerns amendments to the State-Owned Enterprises Act. I caution members that “small” does not mean “not significant”. A couple of speakers have taken calls and dealt with the issue. The reality is that we all have to deal with the issue because it is the only pertinent clause in the part. It has huge implications for the productive sector and for the rest of New Zealand’s citizens because we are now playing around with the economic powerhouse of our economy. 
This section deals with huge businesses which in lots of cases run our infrastructure. What will be the situation if we come to an impasse whereby the entity concerned is recommending to or has negotiated with its employers certain terms and conditions and the Government’s lackey says that he or she has been told that the Government is not happy with that? This is the worst type of Government interference one could imagine. The Government is now legislating for huge levels of interference. Members of the Committee should think about that very carefully. That Part 8 has been truncated into one and a half pages does not make it insignificant. Why is this happening? The short answer is that this Government wants control. It craves control. It can do nothing without having control. It is trying to control and manipulate its own PC agenda. 
Craig McNair 
: It’s disgraceful. 
BRIAN CONNELL 
: It is disgraceful. If it were not for the fact that we are here at 11.50 on what is technically Tuesday morning but what the rest of New Zealand knows is Thursday morning after being in this Chamber until midnight last night and starting here again at 9 o’clock this morning under urgency I might have more energy to argue this point more powerfully. The fact is that this part has significant implications for New Zealand. New Zealanders are being snowed by it. I have asked what will happen if we get an impasse. Who will tell the people of New Zealand they will be cold this winter—if we are talking about an entity that deals with some of our power generation—because the Government wants to interfere? 
HELEN DUNCAN (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
A party vote was called for on the question  
That Part 8 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Part 8 agreed to. 
Schedules  
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 1 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 1 as amended agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 2 and the following amendments in his name to Part 1 of schedule 2 be agreed to: 
to omit the item relating to section 195B(5) of the Education Act 1989; 
to omit the item relating to the Police Complaints Authority Act 1988; and 
to omit from the item relating to section 39A(3) of the Reserves Act 1977 the expression “section 44” and substitute the expression “section 45O”. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 2 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 2 as amended agreed to. 
A party vote was called for on the question  
That schedule 3 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 3 agreed to. 
A party vote was called for on the question  
That schedule 4 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 4 agreed to. 
The question was put that the following amendment in the name of Rod Donald to Part 1 of schedule 5 be agreed to: 
to insert “Guardians of New Zealand Superannuation” in the list of Crown agents. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Rod Donald to Part 2 of schedule 5 be agreed to: 
to omit “Guardians of New Zealand Superannuation” from the list of Autonomous Crown entities. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 5 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
The CHAIRPERSON (H V Ross Robertson) 
: I remind members that there is to be no comment at all during the taking of the vote. I refer members to Speaker’s ruling 61/2. 
A party vote was called for on the question  
That schedule 5 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 5 as amended agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 6 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendment agreed to. 
A party vote was called for on the question  
That schedule 6 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 6 as amended agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 6A be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 6A as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 6A as amended agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 6B be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 6B as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Schedule 6B as amended agreed to. 
A party vote was called for on the question  
That schedule 7 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 7 agreed to. 
The question was put that the following amendment in the name of Rod Donald to schedule 8 be agreed to: 
to insert after the item relating to section 195B(5) of the Education Act 1989 the following item: 
insert in section 200(1) after the words “registered bank” the words “ or any registered building society with which a Crown entity may establish maintain or operate a bank account under section 199 of the Public Finance (State Sector Management) Act 2003. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 8 and the following amendment in his name to schedule 8 be agreed to: 
to omit subsection (7) from the item relating to section 19 of the Hazardous Substances and New Organisms Act 1996. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 8 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 8 as amended agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 9 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendment agreed to. 
A party vote was called for on the question  
That schedule 9 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 9 as amended agreed to. 
Clauses 1 and 2 
JOHN KEY (National—Helensville) 
: 
 We are engaging in the title debate on the Public Finance (State Sector Management) Bill. There are a number of parts of this bill that I think New Zealanders when they reflect on them during their Christmas holidays will have major concerns about. The first concern will be around the Fiscal Responsibility Act which is now to be embedded in the Public Finance Act. We should take just a moment to reflect on our history and on why the Fiscal Responsibility Act played such an important part in the backdrop of New Zealand’s financial management. Let us remember that in 1990 when National came into office the then Minister of Finance Ruth Richardson was delivered a set of books by a Government that frankly had cooked them. Those books were full of lies and deceit. They were not accurate not correct and not a reflection of the financial health of our country. They were quite the opposite of that and they were delivered by a Labour Government that was very happy to have a set of books— 
Hon David Carter 
: Dr Cullen had his fingers all over them. 
JOHN KEY 
: That is right. Dr Cullen’s fingerprints were all over those books and they were a disgrace. 
Ruth Richardson stood tall and she said that books like that would never be presented to the public of New Zealand again. She said a future Government should never have to come in and inherit a situation that was so badly portrayed to the people of New Zealand and an incoming Government should not be cheated and deceived by a set of accounts that it should be able to rely on. That was the history of the Fiscal Responsibility Act which was a tremendously important piece of legislation. That legislation went on to set out a whole number of conditions that are met today on everything including the Fiscal Strategy Report. There is some transparency about the way the Government is to spend money and more important about its debt levels and its intentions as it goes forward in managing the Crown accounts. 
What this Government is going to do if it passes this legislation is to surrender the position that the Fiscal Responsibility Act had as a pre-eminent piece of legislation by burying it deep in a 500-page document so that it does not see the light of day. It was embarrassed by the fact that the Fiscal Responsibility Act was brought in by a National Government because of the actions of a Labour Government in years gone by. It does not like the fact that it presented a cooked set of books to an incoming National Government and now it is going to render the Fiscal Responsibility Act not into stand-alone legislation not into something that stands proud and tall to guide our country but into something that is buried within a 500-page document that is being rushed though in urgency. When New Zealanders think about the implications of that they will be not only alarmed but concerned and very disappointed indeed. 
I think that New Zealand is taking a retrograde step with this move. The Government should reflect on that and leave the Fiscal Responsibility Act as independent legislation so that it can do its job and do it properly. The Government of New Zealand has a huge responsibility to get this stuff right. Every day the Government is out there taxing New Zealanders. It has $46 billion of taxation revenue coming in. Every day the Government is out there stripping New Zealanders of the incentive to work hard and be paid a fair day’s pay for doing a fair day’s work. This Government is an overtaxing Government. That is what it is and it is not proud to have the Fiscal Responsibility Act show exactly that. 
There are some other elements of the Public Finance Act that I want to make particular reference to in terms of the aggregation of output classes. When the Public Finance Act came in in 1989 it was landmark legislation. It set out best practice for the New Zealand State sector to follow. That Act played a significant part in the transformation of the economy. We reap many of the benefits of having a stronger economy today because we have managed to get a very important part of our economy the State sector working properly and firing correctly. What is to happen is that under the new legislation we are to abandon the specific output classes and we are to start moving towards a measurement term known as outcomes. We all know that those outcomes will be woolly and grandiose. They will sound fantastic but when the day of accountability comes— 
Hon David Carter 
: All spin. 
JOHN KEY 
: It is all spin. This is a Government that likes spin. That is why I know for a fact that yesterday the library bought a new book on weasel words. Steve Maharey is putting out a grandiose document on what he has done over the last 5 years and the library needs to detox it and understand it. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In speaking to the title of the Public Finance (State Sector Management) Bill I think we have to reflect back over the history of this legislation. I was one of the few who was in this Parliament in 1990 prior to the passing of the Fiscal Responsibility Act. I was one of the Ministers who faced the consequences of the dishonesty of the outgoing Labour Government. That Government presented a Budget and Dr Cullen was one of the finance Ministers involved. It was Mr Caygill who presented the Budget but Dr Cullen was his Associate Minister. They presented a Budget to this Parliament that claimed from memory a $79 million surplus. When the books were opened after the election far from a $79 million surplus this country faced a deficit climbing to $5 billion. Back in those days that was a large chunk of our GDP because it was a smaller GDP in those days. The consequences of that were just colossal. 
The incoming National Government determined that that should never happen again that it should not be possible for a Government to deceive the taxpayers of this country the public of this country the way the outgoing Labour Government did in the late 1980s. That is why National introduced the Fiscal Responsibility Bill and that Act has served this country well. It has provided the opportunity for everyone involved in the process of Government for taxpayers and citizens of this country to see the Government’s books opened regularly to see how the financial affairs of their country are going. 
What we see with this bill is a moving of that iconic legislation and the burying of it within the Public Finance (State Sector Management) Bill. We have to ask ourselves: what is Labour trying to do here? We know that Labour does not like scrutiny and transparency. We know that Labour likes to be able to fudge things. We know that Labour likes to be able to interfere. If we look at this bill we see it coming through. The Minister will be able to give more directions than has been possible in the past. Our State sector reforms in this country during the 1980s and 1990s were recognised worldwide as being at the cutting edge of good government. What we are seeing now is this Labour Government saying: “Oh we want to have more opportunity to meddle here.” 
It seems that the Labour Party loves getting its political tentacles into these things and this legislation provides for much more ministerial direction. It will enable the Government to fudge things much more because the output classes can be aggregated with this legislation. There will be less transparency. We know that Labour likes handing out money. Look at its Community Employment Group handouts that have embarrassed it so much with the hip-hop tours and so on. We know that Jim Anderton’s handouts his corporate welfare have had the Audit Office saying there are some real problems around the handing out of this money. We know that Labour loves doing it and wants a legislative framework that fudges all of this much more. 
National is saying that it is bad for this Government to be making our financial affairs in the State sector less transparent to be providing for greater political interference. It is sad for this country that we are dealing to iconic legislation like the Fiscal Responsibility Act. I suppose when we think about it Dr Cullen hates the fact that the Hon Ruth Richardson was the author of the Fiscal Responsibility Act. Dr Cullen hates to have an iconic piece of legislation with the name of a Minister like the Hon Ruth Richardson on it. The best way to change that is to repeal the legislation and bury it in this Public Finance (State Sector Management) Bill that will bear his name. That kind of pettiness does not serve this country well. The Fiscal Responsibility Act was serving this country well. It could have been amended slightly perhaps to sharpen up some of the procedures but the transparency was hugely important. Its iconic status was hugely important. I suspect what we are going to get from Labour if it ever wins another election is something like a “Social Responsibility Bill” that will have all the soft woolly wonderful stuff that these left-wing Labour politicians want to have. 
Brian Connell 
: The PC Act. 
Dr the Hon LOCKWOOD SMITH 
: My colleague Brian Connell says it will be the PC Act. It will be politically correct diatribe. National is opposed to this legislation not because of some of the ideas being sought but because the detail is bad. 
JIM PETERS (NZ First) 
: 
 I rise on behalf of New Zealand First to speak to the title Public Finance (State Sector Management) Bill. New Zealand First sees this legislation as an all-embracing controlling inquisitive framework developed under the present group of Ministers. This could take effect from 25 January 2005 and indeed is an important Act in the innate traditions of the controlling Labour Party. To a degree many of the organisations that were created by the Labour Government in the late 1980s and that continued through the 1990s will not find a great deal of change in some sections. But there is one group in this country that does believe earnestly that there is change—the tertiary education institutions. I want to take the Committee back to why that might be so. 
The Education Act of 1989 very clearly expressed the intention under that Act of giving as much independence and freedom to make academic operational and management decisions as needed. Section 161 states: “(1) It is declared to be the intention of Parliament in enacting the provisions of this Act relating to institutions that academic freedom and the autonomy of institutions are to be preserved and enhanced.” Section 161(4) states: “In the performance of their functions the Councils and chief executives of institutions Ministers and authorities and agencies of the Crown shall act in all respects so as to give effect to the intention of Parliament as expressed in this section.” The question is: where is the statutory duty to preserve and enhance institutional autonomy and academic freedom? 
I quote Professor McCutcheon who was reported in the  
New Zealand Herald  
this week as stating: “In a democratic society we cannot allow state control of our free-thinking institutions.” When the Minister in the chair last night was queried as to the intention of Part 3 “Preliminary provisions relating to Crown entity reform” and the actual impact of that provision there was no answer. There was no answer to the questions about clause 46 in that part which talks about reforming the law. The questions: “What law what intentions and when?” were not answered at all. Again I turn to the comments made by Professor McCutcheon. His answer to that question was this: “No nation in the Western world has universities under state control. The pillars on which New Zealand academia is built are being eroded by creeping Government control.” That was his answer. 
We know that this move is but part one of a two-phase action on the part of the Government. It is proper that universities should be very very concerned as to where part two will take them. Advice has been given to Ministers and changes have been proposed that are not revealed in this bill and that is the unanswered part of the preliminary provisions in Part 3. That will be revealed in time—probably a year from now should the Government unworthy as it is be returned to where it is now. The conflict that those proposals would cause in our community and our academic society will take place for the first time then. That intention in this bill is dishonest in regard to academic institutions. Personally I cannot conceive as to why that should be so. 
It was so strange to hear Mr Mallard one of the three Ministers involved say that most taxpayers would think that the spending of taxpayers’ money should be transparent and there should be accountability. We have been in the House week after week and have heard those very issues raised here. It has been shown that under the present provisions the accountability of some institutions has not been at all clarified and it has not been an issue for Ministers. The Hon Bill English who sits to my right has said over and over again in regard to the case in Christchurch that that is not so. This deserves further attention. 
DEBORAH CODDINGTON (ACT) 
: 
 I rise to speak on clause 1 of the Public Finance (State Sector Management) Bill which should rightly be called the “Public Finance (State Sector Control) Bill”. The Government thinks that control and management are synonymous. The honourable member Jim Peters was absolutely right when he argued on behalf of academic freedom. This legislation breaches the spirit of the Education Act 1989. No good reason has been put forward as to why sections 160 and 161of the Education Act 1989 should be overridden by this legislation. 
The Vice-Chancellors Committee has met with the Government on innumerable occasions on this matter but it has not been listened to and yesterday in the Chamber the Minister of Education dismissed that committee as a bunch of fairies. That is how the Minister of Education who has had the privilege of a tertiary education treats academic freedom. It is an absolute disgrace. The Minister argued that the status quo is preserved. If the status quo is preserved why do we have page after page of amendments to the Education Act 1989 in this legislation? If the status quo is being preserved why do we have those amendments? Why are we bringing tertiary institutions under the same executive control as other Crown entities for which academic freedom and autonomy are not an issue? They are an issue with tertiary institutions. 
Adequate measures are already in place for accountability and transparency in the spending of taxpayers’ money it is just that this Government has not bothered to ensure that that accountability is put in place. For example Christchurch Polytechnic The Open Polytechnic and various wananga are under investigation in relation to conflicts of interest. Nothing ever happens unless an Opposition member brings it to the attention of the public and the media and then the Government steps in with the appropriate audits that should have been conducted properly in the first place. That is one major issue in this legislation. 
The other major issue is that no good reason has been put forward for the Fiscal Responsibility Act not remaining as a stand-alone law. The bill as it is now is considerably better than the bill that went to the Finance and Expenditure Committee and New Zealand taxpayers have the Clerk of the House to thank for that. He made a very strong submission because under the bill that this Government sent to the select committee it wanted to be able to spend public money without the authorisation of Parliament. Because of the Clerk’s strong submission and his arguments we have at least got back to the situation where money should be spent only with the authorisation of Parliament. 
However the executive has not been restricted enough. It still has the unfettered power to spend money. No measures have been brought in to prevent that. We could have built on the Fiscal Responsibility Act. We could now be debating a taxpayers’ Bill of Rights under which every bit of Government spending of public money is subject to a value-for-money test and where there are constitutional restraints on the spending of public money like targeting it to not increasing the rate of inflation or population growth and ensuring that to go above that there has to be a referendum with more than two-thirds of the population in favour. We could be debating those issues but instead we are passing legislation that considerably waters down the Fiscal Responsibility Act. Yesterday the Minister of Education and Minister of Finance blathered on about the need for transparency and accountability in the spending of public money. 
Hon DAVID CARTER (National) 
: 
 As we debate the title and commencement of the Public Finance (State Sector Management) Bill I want to say at the outset that this bill will deliver less transparency to the spending of taxpayer money. This bill delivers less transparency because this Government has been embarrassed so many times by the rorts and rip-offs that have occurred under its policy. The Committee needs to realise that what we are talking about here today is really the “Fiscal Responsibility (Abolition) Bill”. I feel very strongly about that because I was the member who came in at a by-election after Ruth Richardson had shepherded through this House the Fiscal Responsibility Act of 1994. I know the history of that legislation. 
National won the general election in 1990 and Ruth Richardson was appointed the Minister of Finance. When the National Government got to see the country’s books it found that the New Zealand people had been hoodwinked. What had been declared by the Associate Minister of Finance Dr Michael Cullen to be a Budget surplus of some $79 million was in fact a massive Budget deficit of around $5 billion. Without doubt those facts had been kept from the New Zealand public. When Ruth Richardson saw them she was determined to ensure that the people of New Zealand would never be hoodwinked in that way again. So the last piece of legislation that she wanted to see passed in this House was the Fiscal Responsibility Act which I think finally passed in July 1994. 
That legislation was iconic. Not only has it served New Zealand exceptionally well for a decade but also Ruth Richardson was then invited to countries all around the world—to other democracies that saw the benefit of being honest with people and showing them the true facts as to the health and robustness of the economy. 
Ruth Richardson took that legislation to a number of other countries which have followed us and enacted similar fiscal responsibility legislation. 
We see now after 5 long years of a Labour Government that the Government does not want transparency. It is totally embarrassed by the rip-off that has occurred at the Christchurch Polytechnic with $6.5 million going to a company of which one Vicki Buck the well-known former mayor and large Labour Party supporter was a significant shareholder. More recently we saw this headline in the  
Dominion Post 
 only a week ago: “Jobs machine out of control”. That headline was referring to the way Jim Anderton has absolutely wasted around $50 million of taxpayers’ hard-earned money on corporate welfare. Audit New Zealand asked Jim Anderton’s “jobs machine” what study had been done to evaluate the success of the $50 million that Mr Anderton splashed around the country earning himself photo opportunities in our newspapers. It was staggering to learn that no evaluation has been carried out. The major reason for that admission is that Jim Anderton and his officials do not even have a list of the people who have received the money. That is just a staggering admission that his Government has no respect for the spending of public money. 
I say to members today that history will repeat itself. After the next election when the new National Government resumes the Treasury benches we will see—as happened in 1989 and 1990—that the legislation we are debating has been largely designed to make sure that the public of New Zealand do not know the truth. The Fiscal Responsibility Act has worked well and it should remain. 
GORDON COPELAND (United Future) 
: 
 I would like to cover a few points that the member Deborah Coddington mentioned during her contribution on the title clause of the Public Finance (State Sector Management) Bill. Firstly I think there are a number of different issues in relation to tertiary education. We need to face the reality that unless a tertiary education facility is privately owned then the only other option is that it be publicly owned. If it is publicly owned then obviously the Crown accounts which capture on a consolidated basis all assets and liabilities of the Crown must record the assets and liabilities of our various universities and tertiary institutions. One of the submissions the Finance and Expenditure Committee received from the tertiary sector basically suggested that that should not happen. But the select committee explored that suggestion in some depth and found that it has no factual basis. Therefore the assets and liabilities of tertiary institutions obviously must go into the Crown accounts. There is no doubt about that at all. 
To link that to the question of academic freedom is therefore purely a nonsense. Just because the Crown incorporates in its accounts the assets and liabilities of those institutions it does not ipso facto follow that the Crown is interfering with academic freedom. [ 
Interruption 
] I have read the whole bill and I was also at the select committee when we heard the submissions. 
Deborah Coddington 
: Read the Education Act. 
GORDON COPELAND 
: The member suggests that I read the Education Act. I was just about to say that the relationship between the institutions and the Government is of course set out in that Act. As far as I am aware—and members may correct me if I am wrong—nothing in that Act suggests in any way that the Government has the ability to interfere with the academic freedom of our universities. That is the very point I was making. 
The third point concerns accountability. Here I find myself in strong agreement with Deborah Coddington and Bill English. It is a major concern that when taxpayers’ funds are paid across to tertiary education institutions—Christchurch Polytechnic included—there ought to be proper accountability. Looking at outcomes really goes to the very heart of what this legislation is about. What outcome at the end of the day has the taxpayer received from Christchurch Polytechnic for the money that has been put in? The answer is: a lemon. That was a rotten deal for taxpayers. Therefore they are quite legitimately saying that the legislation is in place but the next step is to make sure that we implement it properly and use a bit of common sense in terms of not putting money into dopey ideas for programmes that are run by dopey people and have dopey outcomes. That is really an absolute no-brainer. 
The other issue Deborah Coddington touched on that I thought was quite interesting is whether this legislation should make reference to certain other things. One of those things is what should happen when the Crown collects more revenue from taxpayers than it needs for its budgeted expenditure. In the state of Colorado in the United States the equivalent legislation has a clause stating—I have not actually read it but it goes something like this—that if the state collects more tax revenue than it had budgeted at the beginning of the Budget cycle to spend it can use that revenue in only one way: to compensate for shortfalls from prior years. The law then states that once that condition is satisfied any surplus must be given back to taxpayers by way of a tax cut. 
Would that not be a great idea for New Zealand? The ACT party should fully support that proposition because it is a low-tax party. How would we ever get there? In Colorado they got there through a citizens initiated referendum. That is a cause some party might like to take up: a citizens initiated referendum in this country about legally stipulating—and this would go way beyond even Ruth Richardson’s legacy—that the Crown should set its Budget at the beginning of the year and live within it; that the Crown has the right to collect the revenue necessary to satisfy the Budget but that if there is something over as has been the case in previous years it should give it back to the hard-working taxpayer. 
GEORGINA BEYER (Labour—Wairarapa) 
: 
 I move  
That the question be now put 
. 
BRIAN CONNELL (National—Rakaia) 
: 
 I start by saying that I believe that the correct title of this bill is the “National Party Envy Bill”. That is the only explanation I can offer as to why the Government is repealing the Fiscal Responsibility Act. That Act as we have heard from other speakers is seen as iconic. It puts the brakes on Government expenditure provides some control and provides some confidence to the general public that the Government is spending money in accordance with some conditions and restraints. That it is being repealed now is an absolute travesty. Let me make it clear to the Committee that the Fiscal Responsibility Act is outstanding legislation and the reason it is being repealed is simply envy. 
We are told by the proponents of what is taking place that we should not concern ourselves because parts of the Fiscal Responsibility Act are being incorporated into this Public Finance (State Sector Management) Bill. I say to those people that perception is reality and that if we repeal this Act we will do a lot of damage to investor confidence. I think that is something New Zealand simply cannot afford to have happen. Our international reputation as a place where people can invest with confidence is intact at the moment but unless people continue to have confidence that reputation will be damaged. 
We should be in no doubt that Michael Cullen and his cohort are enthusiastic spenders. Some members of this Chamber will recall the fact that the books in 1990 were cooked by the outgoing Labour Government. The person at the heart of that was none other than Dr Michael Cullen. [ 
Interruption 
] It is right. Now he is asking this Committee to accept that the Fiscal Responsibility Act is no longer needed. He is asking this Committee to condone it being repealed. That is why the National Party will vote against this legislation. 
The other point I raise is the arrant PC nonsense around leadership and management capability in the public sector. We are now being asked to legislate for standard human resource management practice. Any organisation worth its salt would engage in succession planning career planning equal opportunities and minimum ethics standards but this Government says that we now have to legislate for that. That is the major reason why this bill is 500 pages in length. The amount of repetition and arrant nonsense that I find when I look at this bill leads me to believe that an alternative title could simply be the “PC Act”. This Government is pushing its own political agenda and PC nonsense through this bill and the rest of the country is being asked to swallow it. I can tell members that the National Party certainly does not accept that. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I move  
That the question be now put 
. 
PANSY WONG (National) 
: 
 The title of this bill is the Public Finance (State Sector Management) Bill. [ 
Interruption 
] If the member of the Labour Party wants to make a constructive contribution he should stand up and do more than move the end of the debate. 
The title of the bill is the Public Finance (State Sector Management) Bill yet I think the Government or the Minister in charge of this bill has forgotten the meaning of public finance. It means taxing the public and accounting for spending. 
I will raise two points about Part 1 that have become quite obvious during the Committee stage although we have not received answers from the Minister. We found out that the Clerk of the House had saved the day for the supremacy of Parliament by forcing a raft of changes to Part 1 in the first draft of the bill. As it stood the bill would have given the executive unbridled power to spend without accountability. 
The second point that National felt equally strongly about was the collapse of the independent legislation the Fiscal Responsibility Act. We learnt from the Hon Lockwood Smith a former Associate Minister of Finance that the real reason why the Hon Michael Cullen is so hell-bent on collapsing the Fiscal Responsibility Act is it was introduced under the name of the Hon Ruth Richardson. That bill has served New Zealand well for the last 10 years by keeping various Governments accountable for how they have spent the public’s money. Although we are grateful to the Clerk of the House for forcing a substantial rewrite of Part 1 we are still not very happy with the fact that the Fiscal Responsibility Act is losing its independent status. 
Part 2 of the bill which amends the State Sector Act raises serious concerns because of the use of the phrase “whole-of-Government approach”. When the Labour Government talks about a whole-of-Government approach it sends a very strong message about interference in the independence of the public service. The public service is supposed to be apolitical and supposed to be accountable for achieving outcomes that can be expressed and translated into outputs that are meaningful and that can also be assessed as to whether they are successful. The phrase “whole-of-Government approach” should lead to major concern. It has the connotation of mega-ministries being created or of the State Services Commissioner together with Treasury simply overriding the independence of various Government departments as they carry out obligations and responsibilities under their charge. 
We are not convinced by a Labour Government whose policies have in the first instance caused some of the worst scandals we have seen. They were unravelled by two hard-working National MPs. The Hon Bill English unravelled the Christchurch Polytechnic Institute of Technology case concerning community education and Katherine Rich looked into all those hip-hop tours. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Clause 1 agreed to. 
New clause 2 Commencement 
The question was put that the amendment set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to insert new clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
New clause 2 agreed to. 
Hon TREVOR MALLARD (Associate Minister of Finance) 
: 
 I move  
That the Committee divide the bill into the Public Finance Amendment Bill the State Sector Amendment Bill (No 4) the Crown Entities Bill and the State-Owned Enterprises Amendment Bill 
 divided into Public Finance Amendment Bill State Sector Amendment Bill (No 4) Crown Entities Bill State-Owned Enterprises Amendment Bill  
pursuant to Supplementary Order Paper 316 
. 
A party vote was called for on the question that the motion be agreed to. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I note that there was a hesitation on the part of the junior whip in casting two votes on behalf of the Progressives. He was unsure whether he was casting or had the authority to cast votes in favour so I seek clarification with regard to that. There was a hesitation and I see that he is on the phone at the moment. Maybe that matter can be clarified. 
The CHAIRPERSON (H V Ross Robertson) 
: I say to the honourable member that it is entirely up to the members themselves as to how they cast the vote. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I raise a point of order Mr Chairperson. I seek your clarification on how members can vote. I am unaware of whether members in casting votes can cast a vote for the time being or for now. Votes are cast on the vote but the Labour member in casting the votes for the Progressive party said: “Two votes at least for now.” or words to that effect. I do not believe that one can record votes that are not actually made definitively with regard to the question at hand. 
The CHAIRPERSON (H V Ross Robertson) 
: I say that a member must just cast the vote. So if the member did say that I would ask him to desist in future and to make sure votes are cast correctly. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. The point I brought up earlier which my colleague Dr Smith has reiterated is whether the junior whip had authority considering the hesitation he showed at the time to cast that vote when he said: “I hope in the meantime.” Did that mean that he had authority to cast it and that the vote was in order? 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I am happy to clear it up for the Committee. I have the authority to cast two Progressive votes in favour of the motion. We were slightly distracted at the time by the late arrival of another member and that may have been why the members thought I was hesitating on the Progressive vote. There are two Progressive votes in favour. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member for clarifying the situation. It is much appreciated. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Motion agreed to. 
Third Readings 
Hon TREVOR MALLARD (Associate Minister of Finance) 
: 
 I move  
That the Public Finance Amendment Bill the State Sector Amendment Bill (No 4) the Crown Entities Bill and the State-Owned Enterprises Amendment Bill be now read a third time 
. The provisions contained in what was formerly the Public Finance (State Sector Management) Bill represent the most significant enhancement in public sector management in New Zealand for over a decade. I thank members of the House for their cooperation in progressing this important legislation through the House. This is the Government’s legislative response to the early work done by the Hon Simon Upton enhanced by the recommendations from the 2001 Review of the Centre. That review concluded that the New Zealand public sector management system was fundamentally sound but identified three areas for improvement: first achieving better integrated and people-focused service delivery; second addressing fragmentation and improving alignment; and third enhancing the people and the culture of the State sector. This legislation benefits New Zealanders. 
The Public Finance Amendment Bill reinforces the existing principles and objectives of the Public Finance Act and the Fiscal Responsibility Act strengthens accountability to Parliament and improves flexibility. It will ensure that Parliament gets a wider range of information about what is intended and about the actual performance of departments. Similar requirements around statements of intent will also apply to non - public service departments the Reserve Bank and Crown entities ensuring a consistent approach to reporting across the State sector. Greater consistency in reporting is one key feature of the bill that will contribute to reducing fragmentation and improving alignment across government. Multi-class output appropriations will increase flexibility for Ministers and departments and enable Parliament to focus its scrutiny on significant policy changes. Requiring the approval of the Minister of Finance for those appropriations will provide a safeguard. 
Integration of the Fiscal Responsibility Act has been one of the more debated aspects of the Public Finance Amendment Bill. The Government firmly believes that consolidating the legislation regarding public finances will ensure that the current level of transparency is maintained by future Governments and that New Zealand continues to demonstrate international best practice in fiscal reporting. New Zealanders rightly expect that people working in any Government organisation will adhere to high ethical standards. This bill will broaden the State Services Commissioner’s mandate covering departments outside the public service Crown entities and the Reserve Bank. The commissioner will be able to provide advice and guidance on matters that concern the integrity and conduct of people working in the State services and may issue appropriately customised codes of conduct. I might say that during the Committee stage I have never heard so much nonsense spoken as I heard spoken on that area. 
The commissioner’s mandate will also be extended to provide leadership across the development of organisational leaders and senior management across the State services—outside the public service of course the commissioner does not have responsibility. 
Good governance and effective accountability arrangements are the key to ensuring that Government organisations perform well and deliver results. The new Crown Entities Bill replaces a patchwork of provisions applying inconsistently across statutes governing different Crown entities with a coherent framework for governance accountability and performance. In the area of board fees for example disclosure of fees will be required and any compensation for a loss of office will be precluded. 
I think the essence of this part of the legislation probably goes back to the work of the Hon Murray McCully and his relationship with the Tourism Board his gross interference in that area and his causing of the paying out—on an illegal basis—large amounts of money to get rid of a board. This legislation makes it clear that that sort of ministerial interference cannot occur again. 
There is currently some uncertainty among Crown entity chairs boards and staff around exactly how Crown entities fit into the Government and what is expected of Crown entities regarding Government policy and processes. This bill will clarify the roles and responsibilities of Parliament Ministers Crown entity chairs and boards ensuring that governance standards are comprehensive transparent and consistent. Through judicial use of the whole-of-Government direction power Governments will have a greater scope to set expectations across the State sector. I do not think it will be used often but when it is used it will be used transparently. Again this is something that is particularly important. This will contribute to reducing fragmentation and as a Minister who has some responsibility for e-government I think it can be particularly useful in reducing overlap and fragmentation in that area. 
The Government is mindful however—and this is a point that comes through from the work of the Hon Simon Upton—of the significant differences in the types of Crown entities and this legislation does not attempt to impose a one-size-fits-all approach. It is crucial for example that the independence of entities such as the Commerce Commission be both protected and be seen to be protected. Amendments to the legislation proposed by the Finance and Expenditure Committee have further strengthened the legislation in this regard—for example by explicitly defining “just cause” in relation to grounds for removal. The Government also recognises that the very different business needs of Crown entities depend on what they do. For example we have some tiny rural schools with as few as four or five pupils that are Crown entities running right through to entities such as the Accident Compensation Corporation and district health boards that are responsible for budgets in the hundreds of millions of dollars. 
So the umbrella framework of the legislation has been carefully designed to include mechanisms for tailoring provisions to the varying business needs of entities while ensuring that the fundamental principles and standards for accountability and governance are met. 
In summary this legislation forms the foundation for a new level of excellence and cohesion in public sector management in New Zealand while retaining and strengthening the fundamentals of the current system. I would like to thank all those people who were involved in developing the legislation. While being aware of the Standing Orders I would like to acknowledge a group of officials who are currently in the gallery for the years of work they have done. This legislation goes back well before the time I became Minister of State Services. People have been working on the principles and there have been various draft bills around now for pretty close to 5 years. I want to thank those people for their concerted efforts on that. 
I welcome the enactment of the Public Finance Amendment Bill the State Sector Amendment Bill (No 4) the Crown Entities Bill and the State-Owned Enterprises Amendment Bill and I look forward to the resulting improvements in transparency accountability and effectiveness. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In speaking to the third readings of these bills I must say that this is important legislation. The public finance issues and the size of the State sector itself make this hugely important legislation. In my view the State sector in this country is too big—it is huge whichever way we look at it—and therefore its management is vastly important. During the 1980s and 1990s New Zealand led the world in reform of our State sector and public financial management. I know from my work internationally at the OECD that New Zealand was recognised as having implemented world-leading reforms and I remember one day in Washington a Deputy Secretary of the Treasury saying to me that New Zealand was an international public good in the way we had led the world in State sector reforms and reforms of public finances. 
There is no question that even with the very good reforms that New Zealand implemented in the 1980s and 1990s—reforms like the Fiscal Responsibility Act brought in by the National Government in the early 1990s and like the State-Owned Enterprises Act of the previous Labour Government in the late 1980s which at the time were excellent legislation—we accept there will always be room for improvement. The State sector is so huge in New Zealand we could almost qualify as a communist country not a market economy. It is so huge that ongoing reform of it is important. Of course it started under the last National Government as the Minister has mentioned. He pointed out to the House that the Hon Simon Upton started this work. 
But the tragedy is that the good work on improving the public financial management in this country and the management of the State sector has been hijacked by this left-wing Labour Government. The Public Finance (State Sector Management) Bill caused such concern when it was introduced into this Parliament that the Clerk of the House made an unprecedented submission to the Finance and Expenditure Committee and the result of that was such that major portions of the bill were struck out and replaced. That shows the extent to which this Labour Government ran it off the rails—it ran this vitally important improvement of the management of our State sector right off the rails and forced the Clerk of this Parliament to intervene and make a submission to the select committee. 
The problems that have emerged with this legislation—the original 500-page Public Finance (State Sector Management) Bill—are because we have a Government that wants to meddle more. There is nothing wrong with the way this legislation provides for better coordination. We do not object to some of that material in this legislation. The objectionable parts are the way this legislation in quite an insidious way—in clauses spread right throughout it—enables this Labour Government to meddle much more in the State sector. 
Let me give this House examples of what I mean about this power to meddle more and the increased control that is given to this Government. I guess this is led by the control freak the Prime Minister—that is what the public call her. It diffuses right down through this Government and we see it in this legislation. 
The first example is the ability that this legislation gives the Minister to direct the affairs of Crown entities. There is nothing wrong obviously with Ministers being involved with the board of directors in determining the statement of intent for Crown entities. Obviously Crown entities’ statements of intent should reflect the objectives of the Government. That makes good sense. There is no objection to the parts of the legislation that facilitate that. But the bits that enable the Minister to direct a Crown entity right down to employee level is objectionable. 
We know what this Government does to employees. We saw what this Government did to Kit Richards. When he did not agree with what Helen Clark wanted she drove him out of his position. This legislation gives the Minister the power to meddle far down into the organisations. It gives the Minister the power not just to be involved in setting the broad objectives and the statement of intent for Crown entities but to get involved in how they will deliver them. Again that is unprecedented meddling in the management of these entities. So that is our first concern—the increased control that this legislation gives the Minister over Crown entities when the whole idea of the reforms of the late 1980s and the early 1990s was to enable those Crown entities to be less influenced by politics and to get on with doing the job they were meant to be doing. 
The second problem that emerges and flows on from that ability for the Minister to direct is that this legislation gets right down into the employment arrangements of some Crown entities. This legislation for example incorporates blatantly racist provisions that I would argue are demeaning to Maori. I am referring specifically to clause 156 in this legislation. The clause requires certain Crown entities to specifically look at the employment aspirations of Maori. I am unaware of any other legislation that does that. It is racist. The legislation does not require the Crown entity to examine those aspirations for any other group of New Zealanders. That is racist whatever way one looks at it and it is objectionable to have it in legislation that is being passed in this House under urgency in 2004. 
What is also bad about this legislation is the prescriptive claptrap in it. Maybe if I can engage your interest in this area Mr Speaker as someone—and I know I should not bring you into the debate but just in passing—who I know has a particular interest in the English language and the structure and grammar of it. I invite you Mr Speaker to look at some clauses in this legislation that provide for Crown entities to “do an act”. 
This bill uses that phrase. It provides for Crown entities to “do an act”. I invite any member of this House to tell me what part of the English language the phrase “to do an act” comes from. Are we so legislatively hopeless today is our knowledge of English so appalling that we are reduced to putting into the laws of this land such a phrase. Clause 59 “Acts must be for purpose of functions” states: “A statutory entity may do an act under section 57 …”. I believe that one can perform an action in the English language. However I would be interested when one last heard of someone doing an act. It is jargon and should not be put into our legislation. 
Finally I shall focus on a hugely important part and that is the removal from our legislation of the Fiscal Responsibility Act. That Act has been hugely important to the economic well-being of this country. When I became a Minister in 1990 prior to the passing of the Fiscal Responsibility Act the first thing the financial controller of the Ministry of Education told me in my office on the first day was that there were things I needed to know about how the Government—this was the previous Labour Government—had been spending money illegally. 
The Hon Phil Goff was the Minister I replaced. His financial controller in the ministry wanted me to know on the first day about the Mickey Mouse stuff that he believed was illegal that he had been forced to do by the Minister the Hon Phil Goff when he was the Minister of Education. The Fiscal Responsibility Act made that kind of thing impossible. It was iconic legislation that has led this country to a period of fiscal surpluses and sound financial management. One would ask what the motives are for that iconic legislation to be wrapped up into this legislation in this way. I believe that it has a lot to do with this Government actually wanting less transparency. We know how this Government likes to hand out money to all and sundry. It is not helpful for the future prosperity of New Zealand. 
MARK PECK (Labour—Invercargill) 
: 
 If anybody was doing an act frankly it was the last speaker. At this time of Christmas pantomimes and things of that ilk I refuse to believe that a member of his standing in this House could be so perpetually angry. It is Christmas after all. 
Darren Hughes 
: He used to be good. 
MARK PECK 
: Yes he used to be good once. He was on the Finance and Expenditure Committee when I was chairing that committee. I say to that member that his acting ability is well known. He sits there with a Pepsodent grin knowing very well that he does not believe a word he says. There is only one thing that is making that member perpetually angry about this matter as with all pieces of legislation even with legislation that he agrees with. He gets perpetually angry about it. I do not know whether he thinks it sounds better but the reason he is so grumpy is that the only plank of the economic change of this country that the National Party can put up its hand and take credit for is the Fiscal Responsibility Act. 
There is a saying for people who are perpetually angry and acting up in ways like that and that is “Build a bridge and get over it.” It has been said in this debate and I agree with the honourable Minister in his speech this legislation is not repealing the Fiscal Responsibility Act at all. It integrates several pieces of legislation into one piece of legislation. I agree with the Minister that officials who have worked on this and Ministers who have worked on this including Simon Upton did a remarkably good job in putting into place legislation that will stand the test of time. 
We in this House should not say that this legislation removes fiscal responsibility. That is irresponsible in the extreme. I know that John Key will not use those words. I listened to John Key and the way he has been performing lately. He is the only one on that side of the House who has any financial understanding at all and is making any headway in terms of the way in which he is running his portfolio. I know that he will not say that. I know that they are grumpy that Ruth Richardson’s legislation is now being integrated into the Public Finance Act but that is just the way it is. Legislation does not stand still and neither should it. 
I say to members of the National Party that it is Christmas. For crying out loud stop the act stop the pantomime recognise that we have some very strong financial and fiscal legislation in this country that ensures very clear transparency and let us celebrate that. We actually lead the world in that respect. I do agree with Lockwood Smith about one thing. When we travel overseas we get great kudos for the financial reform that we have introduced in this country. So let us not badmouth it let us celebrate it and let us all have a good Christmas. 
CRAIG McNAIR (NZ First) 
: 
 By the looks of it the Government has the numbers stitched up with the United Future party in this third reading debate and this legislation looks as though it will be enacted. As we all know by now these bills are supposed to cover the main legislation that governs public finance and the management of the State sector. The legislation is the culmination of a review of public sector management and has been questioned from time to time in the second reading debate the Committee stage and in this third reading debate. The Review of the Centre suggested initiatives to support better integration greater flexibility and an increased focus on results without losing the system’s current strengths of transparency accountability and financial management. Like all members on the Finance and Expenditure Committee I had to ask whether this legislation would achieve the transparency the accountability and the better financial management that this Government said it would. At the end of the select committee process after looking through the legislation tirelessly after looking through the submissions and after the submitters had talked to us and we had also asked them questions the answer I came up with was a big fat resounding no. 
I found that to be quite sad. New Zealand First always wants to support good legislation. We will always oppose bad legislation. Unfortunately the make-up of this legislation was too far from what we would call good. The New Zealand First members wanted to see whether the legislation did what Michael Cullen said in a press release quite a few months ago now that it would do. We also wanted to hear submissions on whether the legislation would achieve its goal. Sadly as I have just said I do not believe that it does achieve its goal in any way shape or form. The legislation amends the Public Finance Act and the State Sector Act and creates a new Crown Entities Act as we all know. It is said that that Act will improve all the transparency and accountability around that legislation by bringing in the Public Finance Act the Fiscal Responsibility Act and so on. Unfortunately given the way that the legislation has been drafted and so on I believe it still needs to have a lot of work done on it. 
This legislation represents more State control. If one asks what the legislation stands for and represents at the end of the day one learns that it represents more State control from this Government. That is clear and simple; there are no two ways about it. In respect of clause 212 in Part 6 of the original 500-page bill I shall read out something that concerned me greatly. Clause 212(1) stated: “The Governor-General may by Order in Council make regulations for all or any of the following purposes:”—members should listen to this—“(a) requiring Crown entities to include information in a statement of intent or annual report that is additional to the information required by this Act:” 
That clause states that after the Crown entity has fulfilled all its requirements after it has fulfilled everything it has been asked to do and after it has dotted all the i’s and crossed the t’s a million times the Government still wants to be able to delve into its life and get additional information from it no matter what and no matter what the Crown entity thinks. That is what clause 212 stands for—that is what it means. There are no two ways about it there is no way through it and there is no way over it. The fact is that the statement “requiring Crown entities to include information in a statement of intent or annual report that is additional to the information required by this Act:” means that the Government wants to be given additional information—it wants to have extra information. The entity may have done everything required of it and everything set out under the law but the Government wants more than that. 
That is what this Government stands for in this legislation. That is what the legislation does and it is one of the many reasons why I am fundamentally opposed to it. The Government wants to have a stronger grip on anything and everything in our society and that is what it is slowly doing little by little in legislation such as this. It wants to have more State control over our taxes our education system and our other organisations. There is one issue that I want to speak to the United Future members about which is the whole area of academic freedom. I say that United Future’s supporters and voters would want their party to stand up for what they believe in and for what they voted it into Parliament to represent them on. We all know how scary it can be if academic freedoms are not upheld and I believe that this legislation opens the door to the stifling of those freedoms. Representatives of our educational institutions came to the select committee and they were very concerned about this legislation in terms of academic freedom. They were very uneasy about Part 3 of the original bill. I admired the way the tertiary sector stood up against the bill. Overall the Government has changed a few things in this legislation but the legislation has ultimately kept the same shape that it had at its first reading. That is why New Zealand First will have to vote against this legislation. 
DEBORAH CODDINGTON (ACT) 
: 
 The ACT party is still voting against this legislation in the third reading. It is legislation that cannot be fixed by a few amendments here and there. It repeals the Fiscal Responsibility Act without any good argument being advanced as to why we should repeal it. The Fiscal Responsibility Act should remain a stand-alone Act. New Zealand has led the way in terms of showing the world how we can have legislation that restricts the power of politicians to spend money. Politicians whether from central government or local government love to spend other people’s money. It is very very easy to spend other people’s money. We should be passing legislation to further restrict that spending instead of passing legislation to make it much easier for politicians to spend money. The Hon Ruth Richardson’s intentions when the fiscal responsibility legislation was drafted have remained valid. They were that the Act would be a discipline on Government expenditure as well as providing information to Parliament and to the people represented by Parliament about where and how taxpayers’ money is being spent. We should build on the principles of the Fiscal Responsibility Act not weaken them. The legislation before us does weaken that important check on politicians’ temptation to spend public money recklessly. 
Fortunately the legislation as it is being passed now is somewhat better than the bill that went to the Finance and Expenditure Committee. We still have the situation whereby taxpayers’ money can be spent only with the authority of Parliament. The changes made to the legislation by that bipartisan select committee were driven largely by Dave McGee QC who put in strong submissions to the committee. The executive is restricted but Parliament still has unfettered power to spend other people’s money. As I said we should be building on the principles of the Fiscal Responsibility Act rather than as the situation is at the moment passing legislation whereby Parliament votes to spend money on generalised and basically unprincipled spending such as that in the areas of education social entrepreneurship regional development or arts and culture. The discretion on how money should be spent in those areas is passed on to unelected public servants. 
What do we get as a result of that? Under the education spending we get degrees courses and certificates in nonsense topics like Twilight Golf and singalong Maori lessons on the radio. Under social entrepreneurship we get spending on hip-hop tours of the United States— 
Craig McNair 
: Hawaii. 
DEBORAH CODDINGTON 
: Yes the United States. Under Maori development and Maori culture we get the spending of millions of dollars on kapahaka competitions that skip a year and do not happen because the budget has blown out. Under regional development we get Jim Anderton’s “jobs machine” where his officials spray money around like confetti so that he can try to get votes and photo opportunities. We get spending on places like the Warehouse and millions of dollars go to Hollywood moguls who come here to make movies as a reward. In retrospect the money is spent but where is the regional development in that? 
Under Vote Arts Culture and Heritage half a million dollars of taxpayers’ money is spent on so-called art—assemblages such as a port-a-loo that makes a noise like a donkey. In fact we still have not seen the artist who is to represent New Zealand at the international exhibition that the art will go to. We still do not know what we are sending there. The Minister herself does not know that. 
Jim Peters 
: Et al. 
DEBORAH CODDINGTON 
: Et al. Under the broadcasting vote money is spent on  
NZ Idol 
 which is a copy of an overseas programme—one of the most commercially successful television programmes in terms of generating revenue both from audience participation and advertising. We spent taxpayers’ money on that under the heading of broadcasting. It is about picking winners. It does not work and it rewards rent-seeking behaviour. That is why I believe we should debate and pass legislation that places much greater scrutiny on the spending of taxpayers’ money. We should be looking at the value for money—what we get out of what we are spending. Why do we not look at that before we decide where we spend it instead of just passing it under generalised unprincipled headings and sending it off to the huge State service sector to spend? 
We should have an independent commission that would undertake systematic reviews of taxpayers’ money to see whether we had value for money. We can imagine how it would be if we had a taxpayers’ bill of rights that restricted Government spending even further so that it did not exceed the rate of inflation or population growth. I liked the United Future member’s suggestion about the state of Colorado where when it has a fiscal surplus—if it takes too much tax from the taxpayers—it has to give that back. It cannot just save that money and store it up for an election year and then spend it on constituencies where it wants to get the vote. This is not our money. People seem to forget that. There are too many members in this House especially on the Government side who have never run their own businesses or worked in the private sector and who do not know what it is like to generate wealth—to make and spend one’s own money. If they did they would think very carefully about where they spent taxpayers’ money. 
I will finish by briefly touching on what this legislation does to the academic freedom and autonomy of tertiary institutions. I commend the Vice-Chancellors Committee for the fight it has put up against the Government which has been totally dismissed. The Government will argue until it is blue in the face that the status quo has been preserved. It has not been preserved. The legislation increases the State’s control of Crown entities and does not exclude universities from those entities. The spirit of the Education Act of 1989 has been breached. The academic freedom protected in that Act has now gone. The State Services Commissioner can have a say in collective agreements negotiated by any Crown entity including the universities. In conclusion I believe that the repeal of the Fiscal Responsibility Act is a serious error. 
ROD DONALD (Co-Leader—Green) 
: 
 This legislation is better than when it started but it is not as good as it should be. I thank in particular the Clerk of the House David McGee and the staff from the office of the Auditor-General for their strenuous efforts at the Finance and Expenditure Committee to improve the legislation. It was really because of their hard work that we have the legislation before us in its current form. I will not repeat what I said during the Committee stage debate about how particularly David McGee made a big difference to the original bill but I think it is worth reflecting on a couple of the very strong statements that he made in his early submission. It is unusual language for the Clerk of the House to describe clauses of a bill as “virus-like” and as a “Trojan horse” yet he did and I think he needed to use that sort of language in order to shake the select committee out of its lethargy. Up until then the officials had done a very good job of convincing us that everything was largely technical in nature and did not involve substantive changes to existing legislation. 
It is appalling parliamentary process for legislation of such size and that has an all-pervasive impact on the public sector to be forced through under urgency in this way. I think the Government will look back on that and regret the way it has treated the public sector in Parliament in relation to this legislation. It will be interesting to see how long it takes the Government to look back because one needs only to remember that within 19 days of the foreshore and seabed legislation being passed under urgency—thanks to New Zealand First supporting the Government—the first amendment to it was before the House. I remind United Future of its complicity in this urgency motion. It is because of the United Future members that we are doing the same to this legislation as we did to the foreshore and seabed legislation. 
Notwithstanding those criticisms the Greens will support the passage of this legislation although lingering doubts remain about its intent and application. We endeavoured to improve it by a series of amendments and I acknowledge the Labour Party and the Progressive party for their support for our amendments to allow Crown entities and tertiary education institutions to bank with their local building societies. That is a first but significant step towards countering the bank-preference clauses that discriminate against building societies in New Zealand. Our building society amendments will enable the community partnership that already exists between for example the Southern Institute of Technology and the Southland Building Society to extend to banking—something that I know Mr Peck the local MP is very pleased to see. I found it extraordinary that the National ACT New Zealand First and United Future parties opposed building societies. I could not believe it when they voted against that amendment. I do not know what they have against mutual organisations that have 150000 members and that simply want to be able to provide tertiary institutions and Crown entities with a safe secure place to deposit their money in the full knowledge that the profits will remain in New Zealand instead of being siphoned off by foreign-owned banks. 
Unfortunately the Labour Party and the Progressive party joined the other parties in opposing our other amendments. I am very sad about that because I think we put up some very constructive amendments. One of the most significant amendments that we put up was a change to the good-employer clause which would have required Crown entities to have a pay and employment equity programme. It is very disappointing that for all the fine rhetoric from the Government and despite the fact that it set up a task force in 2003 and now has a unit beavering away in the Department of Labour it wants to continue the talkfest rather than to implement actual legislative change in order to address pay equity. That is a shame because the Government should be taking a lead on pay equity. Instead there is a greater gender pay gap in the public sector than in the private sector. Members need only to look at the classic example of nurses whereby a nurse gets approximately $10000 less than a police officer when starting out but at the top of the scale gets $20000 less than a bobby on the beat. Pay equity is not just a gender issue of course; there are inequities along ethnic lines as well. For example the average hourly rate for a Pakeha man is $19.88. That compares with $13.79 for a Pacific woman and everyone else sits in between those two figures. That is an amendment that I would have thought a Labour-Progressive Government would support especially given the number of former trade union officials in those parties. 
Other amendments we put up would have created a belt and braces approach in relation to contingent liabilities derivative transactions securities investments and guarantees—something I would have thought that John Key would support given his background in the area. We also sought an addition to various reporting functions particularly the economic forecast. We wanted that to include the balance of overseas trade in goods and services reserves of natural resources our social well-being and our environmental quality. Again that amendment and others relating to triple bottom lines were rejected by the Government. That is not just unfortunate but is also hypocritical because the Government has had a lot to say in recent years—at the Rio conference in Johannesburg at the Redesigning Resources conferences in New Zealand and at its own press conferences where from the Prime Minister through to the Minister for the Environment it has waxed lyrical—about the benefits of triple bottom lines. But when it came to the opportunity to incorporate triple bottom lines in the Crown financial statements the Government refused to do so. I think that is an indictment of the Government and it is something we will continue to raise with the Government because it is long overdue that those changes take place. 
Although the Green Party supports this legislation we have lingering concerns about it. Some of those concerns were expressed by a group of submitters. I have already traversed the views of the universities. I am not sure that their concerns are entirely justified. Given that the universities are protected under the Education Act and given the amendments made to schedule 6B of the original bill I think that the universities have had some significant concessions. 
I finish my speech with a small tribute to June Pellow who was one of the critics of this legislation. She died in November as a result of cancer but right to the end she continued to contribute to the debate on this legislation. She said in her closing article on it: “Contrary to the statement made by the Minister of Finance in tabling the bill we conclude that overlooking the political implications is a risk especially if New Zealand is to ‘set the world benchmark for public management’ and that politicians need to be educated in accounting matters and their significance for the democratic process. A wolf (risks to taxpayer funds) appears to be entering the New Zealand Government using innocuous sheep’s clothing (technical accounting matters).” 
I hope that June Pellow’s conclusions are wrong but I acknowledge and honour the contributions she has made to the public policy debate in New Zealand. I hope that we will be vigilant in terms of the concerns she has raised. 
GORDON COPELAND (United Future) 
: 
 I rise to speak to the third reading of the public finance legislation which we have now been debating in the House for more than 24 hours. I begin with a comment about the universities. As the previous speaker Rod Donald mentioned we had some submissions from the universities. Their argument—which I think was in the end fallacious—was that they did not want their assets and liabilities consolidated into the Crown accounts on the basis that that would somehow threaten their academic freedom. As I said in a previous speech I think we need to decouple those two things because realities are realities. 
I suggest to the universities that if they want the totality of academic freedom in the way that for example Harvard University exercises it in the United States then their only option really would be to become private. That is not completely out of the question. I understand that Oxford University either has or is in the process of or is certainly looking at the possibility of becoming a private university. Private status confers upon a university the opportunity to have complete academic freedom and also complete freedom to challenge the Government or any other part of society from time to time. I think the only answer I can give to the vice-chancellors who came to see us is to tell them to look at the Oxford example and consider whether it is possible for some universities in this country to become private. Maybe that is a way out. 
This bill accomplishes some important things in the interests of the clearer presentation of the public accounts and the absorption of the Fiscal Responsibility Act into the overall public finance framework. It is important to appreciate that this bill does not bring the Fiscal Responsibility Act to an end. On the contrary it affirms and embeds that world-leading legislation into New Zealand law for the long term. The bad old days when a Government could keep the public in the dark about the state of the nation’s books particularly in an election year are now a thing of the past—and a somewhat shameful past it was at that. We can thank Ruth Richardson for that Act although some of her other innovations are not fondly remembered. However credit where credit is due. The targeting and control of Government expenditure is also at the heart of this bill and it is in that regard that I think the nation still has some way to go. In my view the focus of the estimates on outcomes is conceptually correct but they do not yet in general really measure the worth or otherwise of expenditure with sufficient precision. 
The big question is whether taxpayers get bangs for their buck in the delivery of services by Government agencies and their departments. Let me mention a couple of examples. What really is it that the Department of Child Youth and Family Services is trying to do? I must say that when I put that question into my speech I did not realise that the Hon Ruth Dyson would be in the Chamber to hear me. I assure the Minister that I am not picking on the Department of Child Youth and Family Services; I simply want to use it as an example. I put that question at the Finance and Expenditure Committee to Dr Graham Scott former secretary of the Treasury and therefore someone with a fair bit of experience in the whole concept of outcome-oriented expenditure controls. His reply was that the core function of the Department of Child Youth and Family Services should be preventive. I do not know for sure that that answer is correct but if it is then obviously the Department of Child Youth and Family Services is a failure because sadly as is well known the department’s list of clients—children at risk—grows ever longer. In other words if the goal is preventive it is not working. 
Parliament and the Government need to know that because if it is not working then we need to do something about it. It needs to be reformed and we then need to reallocate the necessary resources into something that does work. What difference for example might result from a much smaller sum of money being put into the financing of vouchers to subsidise all New Zealand parents into parental training courses run not by the nanny State but by charities and other non-governmental organisations? There are many fine organisations already in New Zealand that offer parenting programmes but they are often scratching pub charities to try to find the money to keep those programmes going as well as charging fees to parents to participate in them. I believe that the Government could remove some of those barriers and have as a policy goal to ensure that all parents in New Zealand become educated on how to become great parents. If that were done I think it would result in less children being at risk. Then truly the outcome-goal of preventing children from becoming at risk in the first place would certainly be better delivered than it is under the present system. 
It is fundamentally important that our departments and agencies do the right thing in terms of outcomes for our society. I remember a speech that Bill Clinton gave at the APEC conference in Auckland a few years back. He made that very point. He said that if we are not doing the right thing—if the idea we have in the first instance is not the right idea—then we can work away and pour a lot of money into the wrong thing for a very long time. If we are doing that then our system which is outcome-based should pick that up. We then need to stop that start again and do things differently. 
The mechanisms provided in this bill are merely tools. We still have to do the job. At least when it comes to children at risk we clearly are not doing the right thing. We will not be doing the right thing until we see the statistics about the abuse and neglect of children and about other situations that put children at risk coming down. Indeed we should see a decrease in the involvement of young people in the criminal justice system—that situation should begin turning round. In other words the ideas around outcomes-focused reporting are: why are we spending the money what are we getting for it and how do we measure that? Otherwise Government initiatives merely become like a giant super-tanker that moves forward under its own momentum absorbing megabucks compulsorily extracted from taxpayers but doing little that truly makes a positive difference to our society and its families. The bill provides a methodology and a system but it will deliver real benefit for New Zealanders only if we skilfully use it to deliver measurable outcomes that are designed to enrich the life and welfare of the people of this country. 
I could perhaps give a further example to emphasise the point and the importance of outcomes-related expenditure controls—something I know that the Secretary to the Treasury is continuing to work on. As I have said of this legislation we have provided a good framework a mechanism whereby the estimates in particular that come to this House are outcome-driven. But again we have only to look for example at an area like the money dispensed through Sport and Recreation New Zealand and say: “OK we are putting all this money out but are we actually getting something back for our buck?”. Is it actually making a difference? What is the goal? Is it through physical exercise to improve the health of New Zealanders? If so has it done that and are we measuring it? If on the other hand we use anecdotal evidence—for example evidence of a rugby league club that decides to have a Saturday night booze-up for the members of the club and their spouses—then quite obviously the money is being misspent against an outcome that is negative not positive in terms of improving the health of people through sport. 
I believe there are some very real questions that need to be continually worked on by Treasury and by the Government in that area. However having expressed those sentiments let me say that overall United Future is content that this legislation is a good step in the right direction. It will put in place some very robust rules around public sector finance and the State Services Commission in terms of management. Accordingly we are happy to signal that we will vote for the legislation on its third and final reading. 
DAVID PARKER (Labour—Otago) 
: 
 I rise to speak in favour of the third reading of the public finance and State sector legislation. First I will refer briefly to the National Party’s concern that the fiscal responsibility provisions that used to be in a separate Act now appear in this legislation. I read from the Finance and Expenditure Committee’s report back: “it is true the Fiscal Responsibility Act will be incorporated in the body of the new Public Finance Act ”. The matter is that simple; the report I read from is in fact the National Party’s minority report in the commentary on the bill and whether the fiscal responsibility provision appears in Part 1 or Part 2 it does not change its effectiveness at all. National’s protestations to the contrary are just plain incorrect. 
The next point I will deal with is the suggestion that the Government is trying to take away academic freedom from universities. The Government is required—and all parties agree that the requirement is appropriate—to comply with international accounting standards. Those accounting standards require that the Government include in its books all the assets that fall within the ambit of financial reporting rules. University assets and liabilities fall within the ambit of those rules therefore the Government has an obligation to include them in the Crown’s finances. If the Government does not it is criticised and gets tagged accounts as happened during the last year when universities’ accounts were not consolidated into the Crown’s financial statements. That is the reason—the only reason—why it is that universities are now required to have their financial situations consolidated in the Crown accounts. That does not at all undermine the academic freedom of universities which this Government supports and will protect in the future. I commend this legislation to the House. 
JOHN KEY (National—Helensville) 
: 
 We are here today to debate the third readings of the public finance and State sector legislation legislation that National will be opposing. Before I begin I acknowledge the work of the officials who worked on this legislation for a very long time. It is very significant legislation. It replaces the Public Finance Act an Act of Parliament that has served New Zealand extremely well indeed. I know that the officials worked extremely hard and the criticism I am about to make of the legislation is no reflection on their work but rather on the misguided musings of two Ministers who have a political agenda—namely Dr Cullen and the Minister of State Services Trevor Mallard. That agenda is intertwined in this legislation which will be remembered if for nothing else for the fact that the original bill was 500 pages long and contained an incredible amount of drivel. It also contradicted itself on numerous occasions. Other than that the fact that the legislation is so prescriptive means it is likely to lead to lawsuits all over the show involving Crown entities and we are left wondering why we are rushing it through under urgency today. 
I want to make note of the select committee process. In the 2½ years I have been in Parliament I have seen a great many submissions before various select committees. I think it is fair to say that in my limited time in Parliament I have never seen a submission accepted almost in totality in the way that the submission from the Clerk of the House David McGee was accepted. That in part reflects the very widely held cross-party view of the work that David McGee does and the contribution he makes to Parliament. I think the New Zealand public many of whom will not know David McGee have a lot to thank him for for the work he undertook on this legislation because he certainly transformed it. 
I want to draw attention to two of the major issues that he highlighted in his submission and that have been corrected in the soon-to-be-passed legislation. The first of those was around the elimination of the estimates. It is easy to sit back and say there is so much information that removing the estimates would really not have too much impact but we forget that one of Parliament’s most significant jobs is to allocate the spending undertaken by the State sector and to scrutinise and review that spending as it takes place. The estimates process is a very important and detailed process a process under which parliamentarians on both sides of the House—but very often it is left to Opposition members—can drill down into the spending and make sure that taxpayer dollars are being appropriately assigned to where it was indicated they would be so that true reflection can take place. To remove the estimates would have had quite a significant impact on transparency and on the ability of members particularly those in the Opposition to scrutinise spending. 
I also want to highlight a second and very important part of the submission that Mr McGee made. It was around the ability under the Official Information Act potentially to block requests—often from Opposition parliamentarians but also from the media—on the basis of political grounds. At the moment most of those who work with the Official Information Act will know that information can be requested across all matters and can be and often is withheld by the Government on commercial grounds but cannot be withheld on political grounds. Mr McGee pointed out quite effectively I think that there was a great chance that that could take place under this legislation. One has to ask why it was left to David McGee to work that out. I think the answer and the conclusion one draws is that it was not left to Mr McGee; he was smart enough to see it but in fact it was part of the process that the Government was wanting to entwine in the original bill and to bury so deep in that 500-page document that it never saw the light of day. 
I will now reflect on some comments in relation to the Fiscal Responsibility Act and the entwinement of that Act in the new Public Finance Act. I say that that action is an absolute disgrace. Maybe this House needs a small history lesson on where and how the Fiscal Responsibility Act came about. It came about because a National Government came to office and had to look at and work with a set of accounts that were fundamentally wrong. They fundamentally did not tell the truth about the New Zealand economy. To say that the 1984-90 Labour Government cooked the books is not incorrect but to say that New Zealand should never be faced with that situation again is absolutely the right picture. When Ruth Richardson became Minister of Finance in 1990 she worked tirelessly to get the Fiscal Responsibility Act an iconic piece of legislation into our Parliament. She did a magnificent job of it. 
New Zealand has a lot to thank her for because under that Act we get not only some clarity but also some transparency. Most of us will know that just this week we have gained some more transparency under the Budget Policy Statement as a result of the Fiscal Responsibility Act in relation to just how the Government will spend money. And my word it is going to spend money—$23 billion in the next 4 years. 
Clayton Cosgrove 
: How much does your tax policy cost? 
JOHN KEY 
: Well our tax policies are costed thank you I tell the member. The Fiscal Responsibility Act plays an incredibly important part and it is a disgrace that it is being buried in the Public Finance Act. I think that will not be lost on the people of New Zealand when they reflect on that matter. 
I want to talk about another important move within this legislation. One of the reasons I have concerns is the way that the State sector will endeavour to define the way that it should be judged effectively—to put it in layman’s terms. The Public Finance Act in 1989 essentially defined the way that the State sector should be measured—on the basis of outputs. It was relatively easy to go and look at those outputs and to determine and decipher whether the Government department in question had actually reached its goal in terms of outputs. The Public Finance Act makes some movement towards a goal of measuring by outcomes. I think that in one sense that is quite a noble cause and not without merit. I say that because if we take a very simple example like say the Immigration Service and ask ourselves what the outcome is I think most New Zealanders would agree that the Immigration Service’s No. 1 outcome is to allow people to come to New Zealand make New Zealand their home integrate into our society and make the best contribution they possibly can. Therefore the outcome we want from the Immigration Service is that it does that job and allows people to come here and make a significant contribution to our country. That can be different from the output which can be processing the number of people going through the Immigration Service with no regard at all to the kinds of people who come out the other end. 
So in one sense I understand the dilemma but I think it leaves open a very woolly interpretation by Ministers who will all of a sudden find it quite difficult I think to judge whether their departments have actually achieved their outcomes. One can imagine that with biosecurity the argument will be put forward that the outcome—something very dear to our rural background and something that could have a significant impact on our economy—is no incursions but in reality it is likely that any incursion could well be blamed on many others areas over time. I have concerns about that. I have concerns about multiple aggregation of outputs where definition will become less clear and it will become harder for the Opposition to interrogate and decipher the information. 
A lot has been said about the Crown entities. There is not enough time in my address to discuss that unless Mr Speaker you are prepared to give another 10 minutes—and even though this is the Christmas season I doubt that that is the case. So on that note I will leave that and say that National will be opposing this legislation. 
Mr Speaker in case I do not have another opportunity to do so I wish you the very best for Christmas. 
Mr SPEAKER 
: Thank you very much. 
Hon DAVID BENSON-POPE (Minister of Fisheries) 
: 
 I am pleased to support the legislation. 
PANSY WONG (National) 
: 
 That was a stunning speech from the Minister of Fisheries—a few little words! As I have said before during the first reading debate on the Public Finance (State Sector Management) Bill National has tried very hard on it. We understand that the officials spent a lot of time drafting the legislation and we learnt during the Committee stage that the concept for the bill came from the Hon Simon Upton. But unfortunately as was pointed out by my colleague John Key the incoming Minister of Finance it has been politicised interfered with and tinkered with by the Minister of Finance—the current one—and the Minister of State Services. 
When the original bill was introduced to the House at some stage in February it was said that it was meant to fix problems with Crown entities’ behaviour and governance to provide leadership and development among the State sector to improve flexibility and to retain accountability for public money. But how much real impact that 500-page bill will have in terms of changing behaviour and culture remains to be seen. It is important to bear in mind that behavioural and cultural change come about by having leaders with clear vision who can articulate expectations and put in place transparent and appropriate measurement systems. The mere fact that everything is written into a 500-page bill will do little to motivate individuals to behave in a way that is conducive to producing the desirable outcome. Rules regulations and legislation alone will not achieve that. The fact is that the minority Labour Government for far too long—5 years—has shown a lack of independence and objectivity in enforcing a policy that will enable New Zealand to move forward in a way that benefits all New Zealanders. I would certainly not expect the public sector to behave any differently because of this legislation. 
I also want to make a sad observation on the behaviour of two political parties United Future and the Greens during the debate on this legislation. Both those parties campaigned on the promise that they would come to Parliament to hold the Government to account. They told their supporters that they stood for integrity and excellence. We have heard Rod Donald time and time again say that this legislation is not as good as it could be but it will have to do. We have heard from United Future that this legislation is a step in the right direction but that United Future members are looking forward to it returning to the House for further amendment. The New Zealand Parliament is not a place where mediocrity should be respected or accepted. Members of Parliament come to this House to do their best. It is a place where political parties are supposed to be accountable to their supporters and to all New Zealanders. 
Let us examine why the National Party eventually decided after much deliberation that we cannot support this legislation. In the debate on Part 1 I continued to point out that the Finance and Expenditure Committee acknowledges and is grateful to the Clerk of the House for standing up to defend the supremacy of Parliament over the executive’s attempts in the way that Part 1 was drafted to undermine that supremacy. It would have made MPs’ lives difficult in seeking answers and also digesting aggregated financial information from Government departments. The acknowledgment of that fact still has not removed the lingering doubt in our minds as to why it happened in the first place. If that drafting was the result of deliberate political instruction that is very worrying. If it was due to a lack of understanding on the part of the officials that it would undermine parliamentary supremacy that certainly makes me very worried as to the capability of the officials involved. I would like to think it was unintentional but certainly the doubt is there. 
It was very much of concern to us on this side of the House whenever we saw a statement about the whole-of-Government approach in terms of Part 2 and Part 3 which concern the management of the State sector and Crown entities and State-owned enterprises. The very famous line about the Immigration Service of “lying in unison” gives me more reason to doubt whether the executive would allow Government departments to remain independent. If the Minister of Finance and the Minister of State Services can jointly instruct that there be a so-called whole-of-Government approach I doubt whether Parliament would ever get to the bottom of answers to any questions we want to pose about Government departments in terms of outcomes outputs and accountability for their performance. 
I think the universities have raised a valid point not so much about the drafting of this legislation but in pointing out that in the last 4 years the Labour Government has chipped away the autonomy of the tertiary education sector. That is why they are concerned about this legislation. As I say sometimes it is not so much what one puts in the legislation; rather in this case it was the consistent chipping away of academic autonomy that had the university sector making very strong representations to the select committee. 
Mr Speaker I would like to utilise my last few seconds to wish you a very merry Christmas and a very well-earned break. After all we are going to miss you because this will be your last Christmas in your long and shall I say— 
Darren Hughes 
: Distinguished. 
PANSY WONG 
: —distinguished—that is a good word—career as Speaker of the New Zealand Parliament which is one of the oldest democracies. I say bon voyage to wherever you may be going and have a very good break. 
Mr SPEAKER 
: Thank you very much and I am sure all the other members of your party join you in expressing those wishes. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I rise to support the third readings of the legislation. I would like to echo the last member’s words and wish you a very happy Christmas after a very productive and interesting year in the House where as Speaker you have at all times behaved in the most professional and fair manner. 
Mr SPEAKER 
: Thank you but that still does not mean the member can break any Standing Orders. 
A party vote was called for on the question  
That the Public Finance Amendment Bill the State Sector Amendment Bill (No 4) the Crown Entities Bill and the State-Owned Enterprises Amendment Bill be now read a third time. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Bills read a third time. 
Resource Management and Electricity Legislation Amendment Bill 
First Reading 
Hon DAVID BENSON-POPE (Associate Minister for the Environment) 
: 
 I move  
That the Resource Management and Electricity Legislation Amendment Bill be now read a first time. 
 In due course I will move that this bill be referred to the Local Government and Environment Committee. 
The bill amends the Resource Management Act of 1991 in improving quality of decisions and processes while not compromising environmental outcomes or sacrificing public participation. The key objectives are to increase certainty reduce delays and costs and ensure consistency of process. The bill also proposes two amendments to the Electricity Act of 1992. 
This bill is the result of a process characterised by a close working relationship between central and local government. The development of the bill is also the culmination of extensive consultation undertaken throughout the last 18 months. We have rejected the calls of a few extreme voices that wanted to see the Resource Management Act ripped apart for the sake of unfettered development. Quite frankly that is not sensible it is not necessary; and it is not even what various elements of the community asked us for. 
As the chief executive officer of the Auckland Regional Chamber of Commerce and Industry Michael Barnett noted after surveying 350 of its members: “The issue with the RMA is not so much the contents of the Act preventing development proceeding but how it is administered by local authorities.” That is because the Act is firstly about protecting the environment for future generations—something that should remain as its overriding consideration. Development at any cost is no answer at all. 
We have identified a series of issues and have come up with timely sensible and well-thought-out solutions. Legislative changes are just one part of a package of measures reflecting a stronger leadership role for central government and implementing and supporting the Resource Management Act. 
The bill addresses problems at all levels of decision making. The focus is on local democracy at the plan level where the community sets the rules while decisions at the consent level are made more robust and quasi-judicial. Local authorities and the Environment Court are to be given extra powers to run efficient inquiry-style hearings. 
I am in no doubt that the bill will achieve its aim. Indeed I was heartened by the words of the manager of regulatory services for Buller District Council Terry Archer when we announced the reform package. He simply exclaimed: “Where the hell were these things in 1991 when they introduced the Resource Management Act? It would have made it so much easier.” 
Local authorities are increasingly being asked to consider projects that raise issues of national significance in a policy environment that provides little guidance on how competing national benefits and local costs should be weighed. For the first time we will have a range of mechanisms for managing national and local interests. The bill strengthens the expression of national interest by reinforcing the role of national policy statements and national environmental standards. There will be a menu of flexible options for central government involvement including funding of an independent coordinator direction for joint council hearings and changes to the call-in process. 
District and regional plans are varied at present and in some cases are inexplicably inconsistent. This bill provides for national standards to be set absolutely when necessary throughout the country. That will reduce duplication and costs associated with producing similar standards it will increase certainty for landowners and developers when dealing with local authorities and it will reduce unnecessary compliance and regulatory costs. Jan Crawford a planner of some 30 years’ experience and an academic with Waikato University’s International Global Change Institute that studies the Resource Management Act noted that these changes were in her view long overdue. She described the greater use of national policy statements and environmental standards as “filling the hole in the doughnut—the vacuum at the centre of the RMA.” 
This bill will improve local authority decision-making on resource consents. Consultation requirements will be clarified. The role of local authorities will be simply to notify affected persons and to encourage applicants to consult rather than to consult themselves. Those improvements include training to support mandatory accreditation of members of hearing bodies targeted one-on-one assistance to local authorities in need of support and national guidance through the delivery and sharing of good practice between resource management practitioners. Pre-hearings will be encouraged and the role of consent authorities as inquisitorial bodies will be clarified. Consent authorities will have enhanced powers to direct the hearing process. 
The president of Local Government New Zealand Basil Morrison described these proposals as “a major step in the right direction”. I quote further: “As a country we need sustainable management of our physical and natural resources but we also need to protect our economic growth and prosperity by investing in new development. This is the challenge constantly faced by local government one which the Government has acknowledged with these changes.” 
Of course action has already been taken to reduce delays at the Environment Court. The number of delays in appeals to the court has been more than halved since 2001. An extra $1.2 million per year has seen an increase in the number of judges commissioners and administrative support people; yet the length and the cost of the appeal process continue to be a concern for some resource consent applicants. Current appeals to the Environment Court often duplicate processes at the consent authority hearing and allow for new issues and evidence to be raised on appeal. The court will move away from a full hearing to a focused rehearing approach that concentrates on only the matters in contention. 
The process for making plans has also been criticised as cumbersome. After 12 years some district plans have not yet been approved and others remain overly complex. This bill improves local policy and plan making. Streamlined plan-making processes will enable plans to become operative quicker and reduce compliance costs and lengthy protracted debates. District and regional plans will now have to give effect to regional policy statements and regional councils will have a more strategic role. 
The bill improves the quality of engagement with iwi authorities and is focused on plan and policy preparation processes. The Government will provide information to councils about the iwi authorities in each area or rohe. In terms of resource consents iwi will have the same opportunities to participate as any other persons affected by an activity. 
The bill also amends the Electricity Act of 1992. The amendments to sections 24 and 31 of that Act will clarify that the environmental effects of high-voltage works in the road corridor are best managed using processes under the Resource Management Act. 
We in the Government are committed to protecting and preserving the unique aspects of New Zealand’s natural environment. That means striking the right balance between our desire for a clean and healthy environment and our expectations for growth and opportunity. This bill provides for changes to the Resource Management Act and two changes to the Electricity Act. The package of improvements is about providing practical solutions and improved processes to make the law work better. By our provision of leadership and partnership with the community with business and with local government we will all get better environmental results. I commend the bill to the House. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 This bill is another sorry chapter in the Government’s book of failures in respect of resource management law. Anybody who believes that this bill will solve the serious and significant problems with the Resource Management Act either lives in fairyland or in David Benson-Pope’s office—or perhaps those are one and the same place. When we look at the history of shonky process we see that it is no wonder this Government keeps messing up this important area of law. 
National in 1999 with Simon Upton as Minister for the Environment introduced a comprehensive and well-thought-through reform bill. Labour rejected that bill yet 5 years later it is regurgitating those same ideas and effectively pleading guilty and saying that it got it wrong. The select committee toiled away diligently for months on the bill but it sat on the Order Paper for 22 months without the Government doing anything. Then in a mad rush the Government introduced another bill and passed it under urgency. 
Again today we are sitting under urgency and we have had to suspend the Standing Orders to allow this bill even to be introduced. It is a shonky bill that has been advanced under a shonky process. 
Let us not underestimate how serious the problems are of the Resource Management Act. Back in 2001 the Government set up the business compliance cost panel which came out and said that the No. 1 concern for business was the Resource Management Act. What did the Government do about that? Sweet nothing. It ignored the panel’s report until this year when Marian Hobbs was sacked and the polls changed. Earlier this year in April the results of an international competitiveness study on New Zealand came out. It was disgraceful that in terms of environmental law New Zealand ranked No. 60 out of 60 places. We were dunce of the class for the quality of our environmental regulation. 
Everybody in this country knows that we need to engineer more roads—not engineer people as this Government wants to do—yet Transit New Zealand says it will take up to 7 years to get consent for a new road. 
Larry Baldock 
: Oh! 
Hon Dr NICK SMITH 
: That is what it said. I say that Mr Baldock should take responsibility and listen to what Transit is saying. Then in only December of last year Transpower stated in its annual report that there was no way New Zealand could address its substantial electricity supply issues unless there were changes to the Resource Management Act. 
Darren Hughes 
: Is that accurate? 
Hon Dr NICK SMITH 
: Members opposite are chipping in because they know they are guilty. They know they have failed desperately in respect of issues to do with the Resource Management Act. 
Let me give some other examples just in case members opposite are unaware of them. The Auckland City Council has to deal with 3000 consent applications a year—applications to just one council—for people to be able to trim a tree. That is right—3000 consent applications a year from poor old homeowners in Auckland who simply want to trim a tree. 
Then we have the disgraceful position that has occurred in the Queenstown lakes district whereby if people want to rent out their homes for any period less than 3 months they have to get a resource consent from their council. Will this bill fix those problems? Not on one’s nelly. It does absolutely nothing to address those substantive issues. 
We need look no further than the reactions to this bill. Let me read what the New Zealand Law Society said about the bill: “Far from being a set of proposals that will reduce costs and delays being incurred under the Resource Management Act the net result from our collective experience we have no doubt will be worse for everyone—for councils for industry for community groups and ordinary members of the public.” How can the Government stand up today and say that this is the solution when the Law Society says those things about the bill? 
Let us look at what the Government’s friends say about the bill. The newly elected Mayor of Auckland and bosom buddy of Helen Clark Dick Hubbard said that this bill goes nowhere near far enough in changing the Act in order for Auckland to be able to deal with its infrastructure issues. So I say to the Government that even its friends say this bill is a lemon. 
Then we come to some of the detailed issues. Why is it that members opposite are going to amend the Resource Management Act to make Maori iwi authorities into public bodies? That is a revolutionary constitutional change. I am sure that Clayton Cosgrove has not been telling his constituents in Waimakariri that he is off in Parliament saying that Ngai Tahu is no longer a private body but a public body that will have regulatory powers normally restricted to publicly elected bodies—and that is a step backwards that takes us further down the road to having two standards of citizenship in this country. 
Then there is the dopey idea that we will make all notification decisions by councils appealable to the Environment Court. If ever there were a stupid idea that would clog up the Environment Court and make it a nightmare for ordinary New Zealanders to try to get consents for doing very minor things then that is it. 
In no area has National been so detailed in its proposals for reform of the Act and in the sorts of ideas we think would make a material difference. In respect of direct Environment Court referrals we have said let us send major projects straight to the Environment Court rather than go through all the process of a resource consent hearing. Is that in this bill? No it is not and the bill will not fix the substantial problem of major projects being subject to years of delay. 
Nor do we see anything in this bill that will enable us to address the huge and growing problem of iwi holding communities to ransom and effectively asking for “brownmail” in order for projects to proceed. It is a tragedy that in a country that prides itself on a lack of corruption the Resource Management Act unreformed will result in substantial problems with people asking for payment or alternatively holding consents up for years. 
There are a few ideas in this bill that National supports. In fact three of them come straight out of our bill that Labour rejected back in 1999. But the idea that if we have accredited training for a few councillors then the huge problems with the Resource Management Act will somehow be solved is simply foolish. 
This bill is a big disappointment. It says that Labour does not understand the importance of wealth creation or the importance of the clear systems that will both ensure high environmental standards and reduce the costs delays and uncertainties so prevalent within the resource management industry of this Government. 
The last point I want to make is that it is a failure that this bill makes no changes to Part 2 of the Resource Management Act. The Government believes those provisions are somehow sacrosanct yet the Government itself has amended them twice. It did so in making national heritage a matter of national importance and in protecting customary values. Until we amend Part 2 of the Act New Zealand will continue to have problems our economy will be held back and our environment will not live up to the standards New Zealanders expect. 
DAVID PARKER (Labour—Otago) 
: 
 The inconsistency of the last speech with reality can be gauged from the fact that the member claims that the Resource Management Act is a substantial impediment to New Zealand’s growth at a time when New Zealand has the second-highest growth rate in the OECD under the very Act he criticises. That view is just not credible. There were major problems with the Resource Management Act when Labour came into office. People were gaming the rules and the system and some close-to-blackmail tactics were going down as a consequence of the delays in hearing appeals. When we came into office the average time it took to get a hearing in the Environment Court to appeal a council decision was about 18 months. We have reduced that to 6 months for ordinary cases and 3 months for urgent cases. A lot of the problems unnecessary delays and close-to-blackmail tactics that were becoming a bit prevalent at that time have been remedied through the better provisioning of the Environment Court and then by getting over the backlog of plan references and decreasing delays as a consequence by two-thirds so that they are now only a third as bad as they were and are getting very close to the expected ideal of less than 6 months for an ordinary appeal. 
On the suggestion that we are conferring special rights on iwi it is right that Maori groups have a right to participate in the writing of plans. This legislation makes it clear that that is where their right of access to process exists. It also clarifies that they have no special right of participation in Resource Management Act matters when it comes to consents. Maori will have the same rights any other person has to participate in consent hearings but no greater right. This legislation clarifies the law in that regard. At the moment the law is uncertain. There are cases where applicants think they have to liaise with Maori in respect of a particular consent application when that might not be necessary on the facts. This bill will resolve that ambiguity. 
On the issue of council support for this legislation the Queenstown Lakes District Council—which is in my electorate—has the highest rate of consent applications per head of population in the country because the area is experiencing the highest rate of population growth in Australasia. Some will say that the fact that so many applications have to be made points to failings in the Resource Management Act. I do not think it does; I think it just reflects the fact that this is a time of intense pressure and change that requires consent applications to be made and considered. I note that the council thinks these amendments are practical and it does have day-to-day dealings with the Resource Management Act. I am not saying that the Queenstown Lakes District Council gets it perfectly right. I will say that the council is quite right in respect of the issue Dr Nick Smith raised of owners who rent out a house as commercial visitor accommodation. It would be quite unfair if one could rent out commercial quasi-hotel accommodation in residential housing in Queenstown. 
Peter Brown 
: Come on—it happens all over the country. 
DAVID PARKER 
: Mr Brown says: “Come on.” But the reality at present is that we have at one end of the market in Queenstown deliberate and prolonged use of quasi-residential accommodation as commercial visitor accommodation. I do not think the council is trying to get people who rent out their holiday homes for a short period once a year; it is trying to get and to treat in the same way as all other hotel providers people who are providing hotel accommodation through private residences. So popular is Queenstown as a tourist destination that that is a very profitable thing to do at the moment. 
This legislation will make some sensible improvements to procedures under the Resource Management Act. I am one of those who think that it is the procedures that need to be looked at rather than the principles of the Act. I think the principles of the Act were sound when it was passed and they remain sound now. I agree with Michael Barnett of the chambers of commerce who said that many of the problems relating to the Resource Management Act lie not in the law but in its implementation at council level. Again prior to this Government being elected the Ministry for the Environment had no systems in place to ensure that best practice was copied in the different councils around New Zealand. As a consequence we had inadequate liaison with councils and we had bad practice not being fixed. In defence of councils I note that the Resource Management Act was then relatively new. We were going through the first round of plans under that Act in the transition from the old Town and Country Planning Act so they had a lot to learn. 
I think this legislation is worthy. I am sure the tension between speed of process and not making the first hearing too difficult will be teased out in the Local Government and Environment Committee. It is an area that I am interested to look at as I am sure other select committee members will be. We will look at whether the proposals—which I have to say seem sound on the face of it making the Environment Court a court of appeal that focuses on whether the decision of the council was correct rather than on re-litigating the whole contest—represent the best approach. I am happy to see this bill reported to the select committee. I am a member of that committee and I am sure that we will give the bill the attention it deserves. 
JIM PETERS (NZ First) 
: 
 When I picked up my copy of the bill and took it home and looked at it and thought back over the past 5 years I like Dr Nick Smith found a significant similarity to the work done in 1999 by the Upton committee. In fact if I had time I could go through five examples where suspiciously in a not-too-subtle way the same concepts are embodied in the bill before us. That is very surprising. When I came to the House I like Dr Nick Smith picked up in the select committee the almost abandoned work that the earlier committee had done and that the incoming Labour Government had slashed with a very large red pen. New Zealand First claimed that the time was appropriate in the almost redundant 2002 bill to thoroughly review the Resource Management Act. 
In the view of New Zealand First it was after a decade the right time to see whether the Act and Part II in particular was still valid—in other words whether the pre-1990s thinking embodied in the Palmer concepts which were part of the gestation of the Act and were finally brought to the House by the National Government and virtually embodied first in its bill and then in the Act still fitted New Zealand a decade later. For our part we do not believe it does. We believe that Part II of the Act should have been looked at and it was not. The part we particularly believe should be looked at—and we will be encouraging submissions on this—is the part that defines Maori and the Treaty of Waitangi. We believe that the Treaty of Waitangi clause has no place in Part II of the Act. In fact we believe that section 6 of Part II needs to be further defined. 
There is no place for the Treaty of Waitangi clause in legislation in 2004. There is a place to emphasise in detail in Part II of the Resource Management Act exactly what is meant by the aspects of Maori culture that are mentioned particularly in section 6. We also believe absolutely that there is no place in this day and age for an ill-defined concept of spirituality. New Zealand First’s concern is that Part II of the Act should have been addressed in the bill. The concept of spirituality that has become an indefinite part of Resource Management Act decisions as recently as the Genesis decision with regard to the Whanganui River is not a matter for legislation; it is a matter for personal conscience. It ought not to have had a place and has no further place in resource consents. In saying that we believe that sacred sites and other tangible evidence of Maori culture should have impact but not to the degree that Part II of the Act allows and that jurisdictions have said should be there. We strongly support submitters coming to the select committee with their mind on the relevance of Part II of the Act and on the broad concepts that guided that part. Is the term “sustainability” one that we still need to embody; if so what does it mean in 2004 and so on? 
We in New Zealand First were very conscious when we came to look at the bill that there is a backdrop. That backdrop is the immense amount of work done by councils in formulating the present state of planning—the millions and millions of dollars of ratepayer expenditure and to some degree taxpayer expenditure in formulating plans. More important than the cost is the large number of local people who have had an input into plans over the last 11 years. Therefore some of the suggestions in this bill particularly the national statements and the potential impact caused directly by cutting across local and regional thinking are cause for alarm. I hope that submitters will come back to us and tell us exactly what that means. The other issue with regard to planning is the issue of the lengthy and abundant jurisdictional judgments and decisions about various aspects of planning and consents. There is a vast body out there that any change must have regard to. Therefore this bill ought to have addressed that in a pragmatic way. 
The most significant factor in the bill is that against a decade or more of local regional and national planning with only one policy statement with regard to coastal policy before the country we are about to have should this bill finally be transposed into law a whole body of national statements at this late stage. That is in opposition of course to the work that has been done over the past decade. In other words if this bill is admitted in its final form we are about to move into a “command and control” approach to environmental decision-making whereby decision makers merely apply regulatory statements that are prepared by central government. That is not in keeping with the whole history of participation a democratic approach and a pluralistic approach in public law which have been the hallmarks of the Resource Management Act. Therefore that is a matter we would look at very closely and we hope submitters will too. 
In other words a light-handed approach in the past has been the mode. We are about to have or could have a heavy-handed approach to strongly influence and to have a marked impact on local authorities. With that comes the very clear intention in some of the subtle or not so subtle language that is tantamount to telling local authorities how to go about their day-to-day tasks how to perform and that central government bureaucracy can dictate to local authorities on matters that local authorities would have to fund. That in my short time here has been one of the hallmarks of this Government. Through its legislation it has imposed vast costs upon local bodies. Unless this is watched very closely and I have suspicions indicating otherwise this could be one of the very first results here. 
So we have a heightened central government interest. We have a modified call-in process that is very little used but is about to be used if this bill should become an Act in the future. No one quite knows what this call-in process is how diverse it will be or more important where the local council comes into it at the end of the process. There was an abridged call-in process in regard to the Resource Management (Waitaki Catchment) Amendment Bill. In the end the Government turned aside and came to the House with more proper and we hope effective legislation. We have a call-in process that goes down to private plan changes and we saw that with regard to the Aquaculture Reform Bill that has just gone through the House. 
New Zealand First hopes that submitters will go through this bill with great care. We believe that the pre-hearing meetings should be speeded up. We believe that they have a real part to play and have not been used in the past. A clear definition of “pre-hearing”—more than is in this bill—will certainly mean an efficient ongoing process. We also believe that the Environment Court could have a lesser role to perform than it has had so far. If there were consistency between the pre-hearing process as a major definitive process and a shorter judicial hearing as a result with only some cases going to the Environment Court on points of law rather than having as now total rehearings then that would be in the best interests of the country. If this bill removes blockages that are there now with regard to the speed of being able to get a consent it is sound. But I do not see that. 
Last of all with regard to the bill was there a necessity for change and has it been expressed? The answer is yes. It is clear. Has it been answered in this bill? That is very doubtful. Is there a constituency out there supporting the change such as farmers community groups local authorities industry lawyers and the community? Yes there is but this bill does not very clearly define what that could be. Is the magnitude of what this bill envisages such that we will have real change and reform? The answer is that it is doubtful. 
So New Zealand First believes that this bill should be concerned in 2004 primarily with promoting the sustainable management of resources which is about understanding people’s needs and understanding the capacity of our national and physical resources to meet the present and future needs of the country. New Zealand First will support the passage of this bill to the select committee despite our many reservations—some of which I have just expressed—thereby affording submitters the opportunity to define further what New Zealanders believe should be the future scope of this bill for the common good. 
GERRARD ECKHOFF (ACT) 
: 
 I realise that with a few short days to go until Christmas one should be filled with joie de vivre and the joy of Christmas and be charitable to all men— 
Ian Ewen-Street 
: And women. 
GERRARD ECKHOFF 
: —and women as the member points out. But to be charitable to David Benson-Pope over this bill is probably to go to the well too many times. I was stunned to hear the Minister in charge of the Resource Management Act tell members that the Act was designed to protect the environment for future generations. I ask the Minister to read the Resource Management Act. It is about the sustainable development and management of our natural and physical resources. We have a Labour Minister in charge of the bill who really knows nothing about the whole process. 
The Resource Management Act has become known by virtually all resource users in this country as probably the most obnoxious Act that New Zealand has. Some of us held our breath in the vain hope that a review of the Resource Management Act would remove the nonsense from it. That has not happened. The vexatious objections will still occur on a constant basis. Nothing has been done about that at all. 
The Resource Management Act has ensured that no significant project has taken place in this country since it was passed back in 1991. I asked the Parliamentary Library to list for me the major projects of over half a billion dollars that have occurred since the Resource Management Act was passed. The answer was none. There has been not one project costing over half a billion dollars. I have to drag it out of my memory but there were only about five projects costing between about $100 million and $450 million. That is outrageous. I draw attention to the member for Otago’s speech in which he said it was remarkable that we have significant growth in this country. I think it is a huge credit to the productive sector that it has still managed to do a fantastic job of producing wealth for this country despite the Resource Management Act. 
This bill is really about recognising the need for the Government to fast track projects that it approves of. I am sure that members recall the Meridian Energy project down in the Waitaki Valley that fell over recently due to the Resource Management Act. There was little doubt that there would be claim counterclaim Environment Court hearings and appeals and that the project would be stopped. I do not know whether Project Aqua was needed but we most certainly do need power generation in this country. That proposal by Meridian Energy was stopped by the Resource Management Act and I am told that during this coming winter we can look forward to power cuts regardless of the state of the lakes in this country. So when people all get up to vote in the spring after having a cold shower they should remember who caused the problem—Helen Clark her Government and the Resource Management Act. 
Why is this bill before the House? I said a moment ago that it is for Government projects that need special treatment. It is not projects designed by businessmen from Southland to Northland that will be assisted by this bill; it will be the projects the Minister considers necessary to provide infrastructural benefits to this country. I am not opposed to that. I think the Resource Management Act should be fast tracked. I think projects of significance should be fast tracked. But then I also think a dairy farmer in Southland or a sawmiller in Northland should have his or her project fast tracked or given the same treatment that we will be giving—whether or not we like it—to all Government-approved projects. 
A pylon project in the North Island just came up recently. It is the big project that Transpower is undertaking through some of the best farmland in this country—and I say that as a South Islander which is saying something. I went through that area just recently and there is some magnificent country there. Frankly the thought of those—how do we describe them—awful Eiffel Towers going up through that pristine magnificent farmland fills me with abject horror. 
Having said that I recognise and my party certainly recognises that electricity is the lifeblood of this country. We have to do that project but my concern is really whether this bill will protect the rights of those landowners. With the infrastructural changes to their land will the aesthetic qualities and the natural environment of their land be enhanced and will they receive adequate compensation? The answer to that I am perfectly certain will absolutely be no. There will be no enhancement of the environment and the compensation will be a few paltry dollars that will pass but the towers will be there forever. The people will look out of their kitchen windows in the morning and see those towers that the Resource Management Act and the Labour Government have given them because the Government is putting through special legislation to drive those sorts of projects. That is called “special consultation”. I think we will see and have seen from the Resource Management Act selective consultation. We have seen self-interest driving the Resource Management Act. We have seen and will see more centralised control more ministerial discretion and more ministerial direction as a result of the bill being debated at this time. 
As a member of the farming community I am well aware of the need to ensure that our natural environment is cared for and protected and there needs to be some process to ensure that that does occur. But I want the same standard applied to the Government that the Government is demanding should be applied to Farmer Brown the sawmiller or any other person who is engaged in industry in this country. 
I have very very significant concerns and I warn the Government over a particular aspect of this bill that the select committee will no doubt consider—the allocation of natural resources especially around the allocation of water especially in the South Island. Let me tell this Government that if it wants demonstrations of a size that make the recent Maori land march the protest against the “fart tax” and even the Destiny Church’s protest outside Parliament appear to be all rolled into one and doubled it should start tinkering with water rights in the South Island and taking away the water rights of every farmer or landowner who has invested heavily in those rights. I warn this Government that it must be exceedingly careful of that aspect. I regret deeply that this bill is likely to go to a select committee. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 This bill claims to be about improving the Resource Management Act but it is actually a fundamental change to the original purpose of the Act. The Minister says that the bill will improve the Act without compromising environmental outcomes or public participation but what we have is vastly increased ministerial powers to override the decisions of communities and local councils. The bill has six main objectives but not one of them even pretends to be about improving environmental quality or slowing environmental destruction. 
This is a bill that the National Party would be proud of. It has campaigned for years to make the Resource Management Act more developer-friendly and if National had introduced this bill a few years ago Labour would be expressing outrage alongside Green members. But there is now little difference between Labour and National on the question of public participation in planning or the protection of the natural environment. There have been numerous Resource Management Act amendments from both the larger parties in the House since the Act was passed in 1991 and none of them has been aimed at improving environmental outcomes. There have been numerous reviews of how the Act is working of compliance costs of timeliness and of how well it works for developers but never has there been a review of whether it works for the environment. The fact is that aided by numerous amendments and case law it often does not work for the environment. 
New Zealand’s primary piece of environmental legislation has increasingly become an Act for developers and this bill takes it further in that direction. It is legislation that is driven by Government panic that democracy may actually work and that communities may make decisions about how they want to live that do not accord with the Government’s plans. We know from the Growth and Innovation Advisory Board survey that most New Zealanders value their quality of life and the quality of their environment more highly than faster economic growth. But that is not the Government’s objective so it has given itself draconian ministerial powers to override local decision-making and ram through unpopular projects. 
All of this is supposed to be in the national interest but there is no definition of “national interest” in the bill. It seems that the national interest is whatever the Minister says it is. We do however have a definition of “infrastructure” which is appropriate because this is actually an infrastructure bill. The ministerial overrides are primarily to enable a smooth passage for infrastructure projects like motorways large dams hydro projects transmission lines and landfills. In each case where an unpopular giant project is proposed to be foisted on a local community there will be alternatives. Instead of motorways we could have better public transport and urban planning; instead of hydro projects we could have wind or energy efficiency; instead of landfills we could have better resource recovery; and instead of transmission lines we could have more local generation and fuel switching. But only the large expensive unsustainable option is to receive a free ride under this legislation—further entrenching the dominance that it already has. Further evidence for that is the addition of “promoting timely and effective provision of infrastructure” to the functions of regional councils. 
To disguise just how draconian this bill is the Government has had to resort to doublespeak. The first objective of the bill is supposed to give clear guidance to decision makers “on how to take national interest matters into account”. This so-called guidance takes a number of forms. When we turn to clauses 20 and 21 we find that guidance may involve forcing all councils to abandon environmental standards that they have set with their communities for air and water and replace them with lower standards set by Government. Environmental standards provided for since the Act was passed have been unused until recently when standards for dioxins and for air quality were developed. The Greens have always supported having standards and have frequently called for this part of the Act to be used. But the Act provides for standards to be a minimum below which councils may not go. Now they are to become a maximum level of environmental quality which may not be exceeded. 
We also find that environmental standards may be used to require a council to make a certain activity a permitted use with no conditions and no requirements for a resource consent. Standards can now relate to infrastructure rather than environmental quality. One can only wonder what unpopular activities this is designed for: food irradiation plants coal mines or transmission lines. Environmental standards are by this bill to become anti-environmental standards which is another example of doublespeak. Further guidance is to be available in the form of national policy statements. As first conceived in the Act these were robust statements of policy that would survive several changes of Government and guide local decision-making. To achieve this broad level of support they were developed by an independent board of inquiry with a consultative public process. But this was too democratic for successive Governments to use and they never did. So in 2003 it was streamlined to make it easier for Ministers. 
But we still have no national policy statements so now it is to become a creature of the Minister who can use any process he likes as long as there is an opportunity for public comment—not hearings—and as long as someone reports to him on the submissions. So the whole process could be undertaken by a junior staff member and the Minister. This will of course not have the robustness intended by the Act and local authorities will be bound by national policy statements that change with every Government. Consent hearings and applications for plan changes can now be snaffled up by the Minister and given to an appointed board at the request of applicants who think they might not get what they want from the local community. There will be no appeal except on points of law from the decisions of these ministerially appointed boards. 
There are also serious concerns about the changes to the way local decision-making will work. If an applicant fails to give relevant information about a project a council can no longer require that that information be provided. A developer can refuse to provide it and effectively dare the council to turn down the application for that reason. Theoretically the applicant will have to weigh up that risk—that his or her project might fail to get consent because not enough information was provided. In practice we know that will not happen. 
Councils will instead make decisions in ignorance not knowing what they do not know. The less information that is disclosed the less opportunity there is for objectors to contest it. It is a recipe for non-disclosure and for decisions based on poor quality information. The ministry tried it on in 1999 and it was thrown out by the select committee with the Minister’s agreement. Now it is trying it on again. 
The first consent hearing by the council or its appointees is to be made much more formal. We strongly support the training to be provided and required for councillors on hearing committees. We also support encouragement for those on the hearing committees to test evidence but that cannot replace cross-examination. The proposal is that with a stronger first hearing the Environment Court should not rehear any evidence that has been heard and no new evidence should be able to be presented except with the leave of the court. The only outcome I can foresee is that every Environment Court appeal will begin with several days of legal wrangling about whether certain pieces of evidence have been properly tested. It will not be an easy decision for the court as there are no transcripts of council hearings. With sufficiently sharp and well-paid lawyers it will be possible to establish that all evidence that is disputed must be heard again and cross-examined. The hearing will be made longer and more complex and tilted against community groups. 
Council hearings are stacked against community groups in several ways. They must have all their evidence and witness briefs in at the start—easy for a corporate with paid staff but an onerous task for unpaid community groups. They may not bring new evidence later. The council has new powers to strike out a submission if it finds it to be vexatious or frivolous and refuse to hear evidence if it finds it not to be relevant. Lawyers will spend a lot of time arguing at the new compulsory pre-hearing meetings that their opponents should not be heard at all. 
Finally to complement the foreshore and seabed legislation a local authority may after satisfying many subsections set up a joint management agreement with another body such as an iwi organisation for joint decision-making. But it may then act alone without the agreement of its partner and it may terminate the joint-management agreement unilaterally with 20 days’ notice. I personally cannot see iwi organisations flocking to take advantage of this generous provision to participate in managing natural resources in which they have a particular interest. 
The Greens will not vote for this legislation. There are some clauses we support but they are vastly outweighed by the matters I have mentioned. We will however listen hard to submissions. We will get involved strongly in the select committee process and work to improve the bill at that stage. 
LARRY BALDOCK (United Future) 
: 
 I am very very happy to rise on behalf of United Future and happy to see this day when we introduce this Resource Management and Electricity Legislation Amendment Bill because it is another step forward in the process of reforming the Resource Management Act and of making it more business-friendly and also more environmentally sound in the management of our resources. 
When the 47th Parliament convened more than 2 years ago United Future made it clear to the Government that we considered reform of the Resource Management Act to be a priority. When the Government asked us for our support to pass the legislation known as the Resource Management Bill (No 2) which had been sitting on the Order Paper for more than 3 years we gave it our support. 
That legislation sat on the Order Paper throughout the entire parliamentary term before this one and although it could have been passed if National had worked constructively with the Government it sat here stalled completely. The Green Party of course saw to the fact that it was stalled. It was stuck until United Future arrived into this Parliament and began to work constructively to improve the Resource Management Act. We had to accept some omissions from that bill to get it passed. We are not going to hold out for everything we want. We are prepared to work for some common-sense improvements as long as they are heading in the right direction. 
The Hon Nick Smith mentioned in his speech that some of the amendments dropped from the original bill introduced by National in 1999 are now appearing in this one. The member should be very happy because that is the long-term approach that United Future takes. We do not get everything all the time but if we keep working constructively with the Government ultimately we achieve improvements that are of benefit to the country and to the business community. The Greens National and New Zealand First had 3 years to work on that bill but they did not. 
When we gave our support to the legislation we received a great deal of criticism in the House. At the time there was much criticism until the references to spiritual beliefs cultural landscapes and ancestral landscapes had been dropped. Even then the National Party spokesperson on the environment was willing to admit that it was a pretty good bill. We passed it and we were ready to move on to more amendments. That was not the end of the matter and we have continuously hounded reminded urged and pushed the Government to further reform the Resource Management Act process. However reforming the Resource Management Act is a process that requires balance. 
The speaker before me from the ACT party gave a very curious speech really. 
Gerrard Eckhoff 
: No it was the Greens. 
LARRY BALDOCK 
: Before the Green member spoke the ACT member said that this bill would be all about fast tracking projects. Then he said that everything—every small project—should be fast tracked and he spoke about the need to protect the environment. He then spoke about the need for people to have their rights recognised and to be compensated and that is a very curious balance. That is what the Resource Management Act is trying to do. It is trying to find a balance between environmental protection people’s rights and the need to move our economy forward and do sustainable development—as the member has said. 
Additional funding which the Government has recently provided to improve the tracking systems and additional judges have led to a marked improvement in the operation of the Environment Court reducing the waiting list down to as little as 3 to 6 months for decisions in most cases. We commend the Government for that. That move alone has been hugely significant in reducing the number of vexatious and frivolous objections yet there is still more that could be done. 
Members will remember the passage of the Resource Management (Waitaki Catchment) Amendment Bill which was a very interesting and informative process. It gave many insights into possible amendments that could be useful in the main Resource Management Act and some of those experiences have been brought into this legislation. It certainly highlighted the need to address consent and resource allocation processes in the light of national-interest tests which will occur reasonably frequently as we upgrade and add much-needed infrastructure across the country. The Transpower upgrade of the national grid is one example and there is the construction of roads rail networks and power generation projects to cite others. We had a lot of discussions with the Government and in particular with the Associate Minister for the Environment and officials from the Ministry for the Environment and we concluded that the next reform needed to focus on the process rather than amendments to Part 2 of the bill—the major foundations of the Resource Management Act. 
That brings me to this bill the Resource Management and Electricity Legislation Amendment Bill. The purpose of the bill is to further improve the working of the Resource Management Act and also to amend the Electricity Act. It is the culmination of a 4-month review of the Resource Management Act which focused on improving the quality of decisions and processes—that is reducing uncertainty unnecessary delays costs and abuse of processes without sacrificing robust environmental outcomes or public participation. 
Research on eight major projects has shown that it took approximately 6 to 8 months for the council process—and an average cost of $0.6 million to the applicant—for the hearing process. That period was in addition to an average period of 2 years at an average cost of $1.3 million for the applicant to develop a proposal and prepare applications. All projects were appealed to the Environment Court adding an average period of 16 months at an average cost of $1.4 million. That is not acceptable for our economy and for our business community and it is why this legislation is designed to help improve and speed up that process. 
As I said earlier recent improvements in the Environment Court have substantially reduced the time of delays on appeals and are likely to have flow-on effects for costs. Applicants have expressed concern about third parties who delay consultation processes make ill-informed submissions make vexatious or frivolous appeals and are not accountable for the cost or delay they cause to the approval processes. Anecdotal evidence indicated inconsistencies between councils in their processes and decisions. There are perceptions that decision making can be biased and in some cases that decision makers themselves lack the relevant skills and knowledge. 
The key measure in the bill that will focus on those outcomes is the establishment of a requirement that the majority membership of hearing panels is accredited for hearing resource consents private plan changes designations and heritage orders. We welcome this move because there is an expectation that elected officials or others who sit on consents and hearing panels have the skills necessary to make decisions that are consistent across the country. As an elected council member myself in 2001 I know I had a huge amount to learn about the Resource Management Act and I would have benefited tremendously from going through such an accreditation programme. I believe this move will be welcomed by local government bodies around the country. 
The bill also focuses on empowering all hearing panels with more inquisitorial powers thereby increasing the robustness of the first local authority hearing. Limiting appeals to the Environment Court to testing the merits of the first hearing is a very good move indeed instead of simply repeating the hearing through the de novo process. The bill will also provide new mechanisms for non-local decision making which will build on existing ministerial call-in processes. 
The bill addresses many other things and I look forward to those things being submitted on in the select committee stage where I am sure that we will make many many amendments and improvements to this legislation in its draft form. 
This bill which is eagerly awaited by the business community Resource Management Act practitioners planners and local government politicians and staff will be welcome today as we pass it through its first reading. United Future is pleased to have played an important role in bringing this bill to the House and we will wholeheartedly support its expeditious passage through Parliament. We look forward to receiving many submissions in the select committee and despite the early report-back date we do not believe that submitters need to be concerned this will limit their opportunity for input. It simply means that because of the importance of this reform to the New Zealand economy committee members will devote extra time to ensure that it can be reported back and passed by this House as soon as possible. 
United Future made a commitment at the beginning of this term of Parliament and we intend to ensure that no action on our part will prevent the completion of that commitment before the expiry of this parliamentary term. I commend this bill to the House for referral to select committee. 
JILL PETTIS (Labour—Whanganui) 
: 
 I have enjoyed listening to the debate this afternoon because it has largely been a considered debate. However I was rather surprised with some of the comments made by Mr Eckhoff about the Resource Management Act. I just remind Mr Eckhoff that the Act was largely supported by both sides of the House and it was passed by National with the support of ACT. Mr Eckhoff should just keep eating bananas because I understand that they are good for memory. I also remember that Mr Eckhoff has a penchant for farming kiwis to protect their future. 
Nick Smith made an interesting contribution but I do have to say that National talks an awful lot in a very populist vein and a very superficial manner about what it will do about the Resource Management Act. I suggest that National will do nothing of any substance about the Resource Management Act other than a little bit of window dressing and a little bit of tinkering here and there that will do nothing to change the Act’s substance at all because it knows only too well that most responsible New Zealanders would oppose its so far dramatic and draconian suggestions. 
This bill is a good bill. A lot of consideration has gone into it. It is essential to provide leadership on issues of such importance to New Zealand. The changes to the Resource Management Act will focus on improving the quality of decisions and processes by increasing certainty reducing costs and delays and ensuring consistency. Of course consistency is what the vast majority of New Zealanders who have to work within the Resource Management Act are seeking. 
This Government is absolutely committed to protecting and preserving the unique aspects of New Zealand’s very very special natural environment. That of course means that we have to strike the right balance between everyone’s desire for a clean healthy environment and our country’s expectations for growth and opportunity. This is a good bill and I am very pleased to support its passage through the House. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 There is one comment made by the previous speaker that I agree with and it is that this legislation needs leadership. So far from this Government through two Parliaments we have seen absolutely none. The main part of the bill before us today was introduced as a discussion document in the mid-1990s. It evolved from that through a variety of committees including a 1998-99 select committee which brought to Parliament 12 recommendations of substantial change. I think this legislation touches on about four of them. The recommendations that came out of that select committee were then taken up by the incoming Minister Marian Hobbs and a red pen was put through every single one of them. In other words they were dumped. What do we have here today? We have a road to Damascus experience from this Government which is saying: “Well actually some of those things may have been so. They may have been. We’re not going to stand in the House and say they are or were; we are just saying they may have been so.” But we oppose this bill on the basis that it does not represent that kind of view for all. 
What we have here today is proposed legislation that includes only those who have the ear of the Government. I say to the Government members who may take another call at some stage as this bill progresses through the House to explain to me why major State-owned enterprises will be given special treatment as proposed here but the average joe—the hard-worker the average farmer the average businessman the average commercial entity that wants to go about its business and enter into some kind of development—is excluded. Why do they not get the same treatment? Somebody should explain that to me. In the Taranaki - King Country electorate the seven territorial authorities and the three regional councils will still be able to inflict their view of what the Resource Management Act stands for on the average farmer or business but if Meridian Energy or similar wants to come through that electorate with a development it will be given a different set of rules to work with. Why is that? 
Members opposite should listen to their new-found bosom buddy the muesli man from Auckland the Mayor of Auckland when he says that the proposed Resource Management Act legislation will not go anywhere near far enough towards fixing the problems in major infrastructure in New Zealand particularly roading in Auckland. I repeat the comments that have been made previously. What Auckland needs—as do other cities such as Wellington and Tauranga and other major areas where roading problems are clearly obvious—is engineering in the roads not engineering in the people. The Government is totally ignoring those requests. As I said earlier this legislation started in the 45th Parliament went through the 46th Parliament and now in the 47th Parliament it is still being tinkered with around the edges. I ask Government members why they cannot accept all the sensible work done earlier by a number of people who understand this issue inside out. Why can they not accept that and why has that recommendation not been taken up in full? I say to United Future members if they are to assist this Government in getting this legislation through—and it appears as though that is the case—why did they not given that they hold all the bargaining chips as it were dig in and get the reform to the Resource Management Act that they know and that everybody else in New Zealand knows should take place? Why did they not do that? Why did they roll over? Why did they accept a piecemeal incremental bit-by-bit change to this legislation? Why could United Future not have stood its ground and come up with something that most New Zealanders would have accepted and on which it would have had substantial majority support in this House? 
I think that this legislation has come about as a result of the fiasco we saw with Project Aqua. I cannot be sure that that is so but I suspect that the Minister came under much pressure at that time. One hundred million dollars was spent investigating that project—a project he ultimately dropped. On top of that of course the small-business committee came back to the Government and recommended that the single biggest barrier to growth and business in this country was the Resource Management Act. So that combined with the Project Aqua fiasco brought the Minister a relatively new Minister to the conclusion that perhaps he would go back and look at the earlier work and see whether he could pick out some bits that would help us to move this thing forward. I ask that Minister why he did not do the job right the first time. Why could he not bring himself to accept that his predecessor Marian Hobbs had made a huge mistake when she allowed herself to be hijacked by the very left of the political spectrum by those who are here supposedly to protect the environment the Green Party? Why could he not bring himself to the conclusion particularly with the support of United Future that he could have taken a substantial step forward with the Resource Management Act? Why did the Minister ignore the hundreds of thousands of submissions—and it is that many now—over a long period of time since the mid-1990s? Why did he ignore those submissions? 
I know that the other Minister here in the House Minister Swain who sat through the submissions to the business development committee could have told him in minute detail some of the concerns Business New Zealand has with the Resource Management Act and the impact it has on business development. Why did he not implement the leadership that the member for Whanganui spoke of earlier when he had the numbers? Of course the Minister sits there completely oblivious to what those people have been talking about. He has no idea of business like the rest of his Cabinet colleagues. He has no idea of what is needed to fix the Resource Management Act. So at this eleventh hour the Government has introduced this piecemeal unacceptable amendment to the Resource Management Act which will not go anywhere near far enough towards doing what is needed to fix it. 
The bill also amends the Electricity Act and we have to ask why we are putting in place a special one-off piece of legislation just because we have a major problem now with electricity generation and the transmission thereof. I again say to United Future that here was an opportunity to enhance all sorts of energy development. Thousands of projects are on hold because the people involved have looked at the problem of getting them through the consent process under the Resource Management Act and said that it is all too tough—in fact State-owned enterprises have. They have said they will go over to Australia and build generation capacity in Australia because it is much easier to build it there. I do not know whether the Minister is going to pass another amendment to the Resource Management Act so we can build transmission lines across the ocean to bring some of that power back home. Maybe he is; I would not know. What I do know is that New Zealand investment in energy generation is going on in Australia when we desperately need it here in New Zealand. The reason for that overwhelmingly would be that it is too difficult to get through the consent process in New Zealand in order for it to happen here. 
So I ask the Minister and the Government why they do not go back to the earlier work that was done. Why not have a look at where the real problems are? Why not adopt the whole revamp of the Resource Management Act as proposed by Owen McShane? Why not go back to the original principles—prescribed by Geoffrey Palmer one of Labour’s former Prime Ministers—and find out how those principles are being implemented by some of the district and regional councils that have completely distorted the original intent as drafted by Geoffrey Palmer and those who were involved in the first instance? I say to the Minister that he should take the opportunity now to fix it once and for all while he has the support of United Future and does not need the loony-left vote to get it through. He has United Future’s support. He has the numbers. He will have support from business and he will probably pick up other political party support in this House. He should fix the Resource Management Act and save New Zealanders from the endless grind that is holding this country back. 
Hon MARIAN HOBBS (Minister for the Environment) 
: 
 I found that last statement which asked what role central government could play regarding local government a bit rich considering that the National Government for 9 years of this legislation did not fund the support of local government in that area. It did absolutely nothing. I rise to support the Resource Management and Electricity Legislation Amendment Bill. The speech by Dr Nick Smith was sadly predictable. I had it reported to me. As usual he focused on process not substance. As usual he advocated gutting the Resource Management Act to allow unfettered development. As usual he talked about shutting people out of the process and taking decision making away from local government. Those are the solutions his Government put forward in 1999. We did not proceed with that bill which would have been disastrous for our environment. Instead we focused on solutions that would deliver for the environment for the community for business and for Maori. 
Since that time the National Party has always got terribly embarrassed by that. We did something it never did. We properly resourced the Environment Court. At the first meeting of the Resource Management Law Association I attended in Dunedin people asked me whether I as Minister would listen because National never listened. They needed that number of judges and those sorts of resources. And did we deliver them? We halved the backlog of cases. We ensured that new cases got to hearing within 6 months not the 36 months it took when Nick Smith’s Government left office in 1999. Unlike National we actually work with local councils to help them improve their practice. We have put an extraordinary amount of money in there. Obviously that speaker does not know what he is talking about and never goes online to look at the best-practice website. 
We have also produced the first national environment standards—those on air quality. Did the previous National Government do anything about that? That was in the bill and absolutely nothing was done. The solutions were all ones that were raised by the business compliance cost study. We have had results in that area. In 2004 there was a 39.2 percent decrease in environmental compliance costs compared with 2003. Our solutions are improving the implementation of the Resource Management Act without compromising the environment. The bill carries on that process. 
Environmental law always aims to strike a balance between protecting the environment and allowing development. We are not business unfriendly I say to the previous speaker. We assess that balance and ensure that it is correct in an ongoing process. The bill makes some sensible changes that improve on process under the Resource Management Act. I am sure the previous speaker is very well aware of the issues around transmission and what that costs. 
I have attended meetings up in his area with all those people and with transmission representatives trying to work out a way in which we can allow people to have their say and to work forward to some solutions but not to stop what is absolutely necessary for our power which is power we have put into this bill in order to facilitate the process. As it was under the previous legislation it left it and abandoned it. 
The most telling thing about Nick Smith’s earlier speech was his fascination with amending Part 2. He talks about providing work for lawyers but for God’s sake what would amending Part 2 do to case law? That part sets the environmental bar protecting our environment. The bill does not lower the bar. As I have already said it focuses on practical changes to get improvement and implementation without compromising the environment. 
Make no mistake if this bill had been put forward by National that environmental bar would be lowered. It is money and degradation at all costs. Development can take place anywhere particularly on the Nelson coastline at any time and without public involvement and that is what separates Labour from National. 
The bill ensures the public will have a say in decision making although it provides a range of processes through which that can occur. It has a variety. It is on solution mediation and problem solving and it is sensible as different projects have different requirements and local authorities should have different tools to lead them. 
I also heard members on the other side of the Chamber quote the Law Society. Of course they neglected to quote the Law Society’s latest statements in which they recognised that many of their earlier concerns were overstated or could be dealt with. The Law Society has now joined the mainstream of resource management practitioners in seeing these changes as practical and workable. It is only Opposition members who remain isolated in their outdated views about outlawing public participation and fast tracking development at the cost of the environment. This is a good bill. It is a well argued and well-thought-out bill and I commend it to the House. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 Let me make New Zealand First’s position clear from the outset. We will support the Resource Management and Electricity Legislation Amendment Bill going to a select committee but that does not mean to say we agree with everything in it. In fact we have some major reservations. The United Future member who is sitting there admitted that his fingerprints are all over the bill. He claimed credit for it and then at the end of his speech he said there will have to be some significant amendments to it. I ask that member why we are debating a bill under urgency before Christmas when he could have had 6 weeks to sort it out and we could have put it through the House—hopefully 100 percent correct—very firmly and quickly in February. It is an absolute disgrace for a member to stand up and claim credit for legislation then say that it needs some adjustment and will have to have major amendments at the same time as we are debating it under urgency so that we can push it through before Christmas. 
I believe that every party in the House wants to address some of the concerns of the Resource Management Act. That is why we are a little bit mystified by the National Party and certainly by ACT. I listened very carefully to Mr Eckhoff. In 10 minutes he told us everything that was wrong with the Resource Management Act as it is and he made a very good job of it. I say to Mr Eckhoff that here is an opportunity to sort it out. But before he sat down he said he would oppose the bill. 
Hon Dr Nick Smith 
: The bill is a lemon! 
PETER BROWN 
: I know that the former Minister keeps close scrutiny on resource management problems. I say to him that this is an opportunity to address those concerns. He raised an interesting issue—an issue that I could not believe occurred. People in Queenstown have to get a resource consent for hiring out their houses. Did I hear the member correctly? 
Hon Dr Nick Smith 
: And for less than 3 months. 
PETER BROWN 
: That is even worse. 
Hon Dr Nick Smith 
: And David Parker supports it! 
PETER BROWN 
: That is outrageous. It is so outrageous that I found a clause in the bill that may or may not deal with it and hopefully will. Clause 33 inserts new section 75 “Contents of district plans” which states: “(1) A district plan must state—(a) the policies for the district;”. So the council will have to outline the fact that it charges people a fee to get a consent if they hire their houses out for less than 3 months. Then as set out in subsection (2) it will have to supply “(b) the objectives that the plan seeks to achieve;”. That is quite simple. Queenstown obviously wants to get more money! That is the only reason. The council will have to state that. 
Then the council will have to supply “(d) the principal reasons for adopting the policies and methods;”. That is quite clear. They want to rip off their local constituents. Then the council will have to supply “(e) the environmental results expected from the policies and the methods;”. They will have a hard time justifying that. Then it will have to supply “(f) the procedures for monitoring the efficiency and effectiveness of the policies and methods;”. The council will have to send the smoke-free inspectors down in their spare time to check whether the people who have hired the house are still there. 
Subsection (3) states: “a district plan must give effect to—(a) any national policy statement;”. I say seriously to the House that if we cannot get a national policy statement that does not require people who hire their houses out for less than 3 months having to get a resource management understanding then it is a disgrace. We are turning this country into a police State. 
We must get the Resource Management Act correct. The delays and hold-ups due to resource management problems cause all sorts of concerns not only to investors developers landowners and property owners but to the average Joe Blow. People want certainty. They also want fairness and simplicity so that they can understand what it is all about and the procedures they have to go through. Further to that they want transparency and speed. They want the issues handled fairly speedily transparently and in a manner that is easily understood. I ask Mr Baldock whether this bill will do that. I doubt it. He is nodding his head; he thinks it will. I will give the member a little bit of credit—the bill will go some way. But if he had taken a little longer and consulted a bit more widely in Parliament he might have got it right. My colleague Jim Peters probably knows more about the Resource Management Act than anybody in Parliament. He will be on the select committee and will sort it out. 
I ask the honourable member why he did not spend a bit more time on the bill. There is an old saying: “More haste less speed.” If this bill had been presented to the House in a form that would deliver the whole thing National members would have supported it would they not? 
Hon Dr Nick Smith 
: It was promised in September. 
PETER BROWN 
: It was promised in September. [ 
Interruption 
] We have it in December and members are all admitting that it is not correct. United Future members are admitting that it has to be significantly amended. 
Part 2 which has only three clauses amends the Electricity Act. Basically that will allow access for higher-powered structures on the roading corridor. I do not know whether that is desirable. I know the arguments for—some say it will deliver power more cheaply and effectively. But there are many arguments against it. New Zealand First welcomes this bill going to the select committee so that we can hear the arguments for and against. I remind this Government that the electricity industry in this country needs some attention. The Government has made two attempts to address the issues and it does not yet have it right. We should be aiming to guarantee security of supply. 
Will the Government say whether its recent legislation will do that? I do not hear any wild shouts of confidence. We also need greater investment in electricity in this country. Will that little part in the bill achieve that? Will the current legislation achieve that? I doubt it. People want electricity prices that are fair reasonable and sustainable. We have volatile prices. Is that likely to change? No it is not. 
As I said New Zealand First supports this bill in its entirety going to the select committee. By reading through the bill quickly I can see that my colleague will be working day and night to give the select committee the sound advice it needs to amend it. I concede that there are some points of merit in it but many clauses need to be addressed positively in the interests of all New Zealanders. [ 
Interruption 
] The honourable member said something that I did not quite catch but I tell him that he has had his day in the sun with this bill. If this is the best he can come up with he has a C. 
Shane Ardern 
: A C-. 
PETER BROWN 
: A C-. It will rest heavily on the shoulders of New Zealand First—principally my colleague Jim Peters—to sort this out. If he does not sort this out or is prohibited from doing so at the select committee then New Zealand First will not support the progress of this bill. But we will support it going to the select committee so that people can come and have their say. Let us sincerely hope that between us we can make a better job than we have had thus far. 
RUSSELL FAIRBROTHER (Labour—Napier) 
: 
 Some recesses of people’s minds should never be revealed publicly. We just heard the meanderings of the last speaker Peter Brown—which came from the recesses of his mind—whereby he hoped for things and uttered things that he does not understand. The key is that in this bill he wants efficiency effectiveness and certainty. I remind him of the main objectives of the bill which provide just those three things—efficiency effectiveness and certainty. 
Peter Brown 
: How is that achieved? 
RUSSELL FAIRBROTHER 
: That is achieved by enabling central government to better express the national interest so that decision makers have clear guidance on how to take national interest matters into account. That is fundamental to the efficient operation of the Resource Management Act. How is it effective? It enables consent processes to be undertaken in a manner that is effective and efficient and that provides certainty of process for applications. It is effective because it improves the effectiveness of planning documents to enable their timely development. It is certain because it provides certainty of consultation requirements for resource management matters. So when Peter Brown gets the Christmas fairy to read his last speech back to him he will realise that deep down in his heart he supports this bill. New Zealand First members will flock after him and vote for it at its later readings. 
A party vote was called for on the question  
That the Resource Management and Electricity Legislation Amendment Bill be now read a first time. 
Ayes 74 
New Zealand Labour 51; New Zealand First 13; United Future 8; Progressive 2. 
Noes 45 
New Zealand National 26; ACT New Zealand 9; Green Party 9; Maori Party 1. 
Bill read a first time. 
Hon DAVID BENSON-POPE (Associate Minister for the Environment) 
: 
 I move  
That the Resource Management and Electricity Legislation Amendment Bill be referred to the Local Government and Environment Committee 
referred to Local Government and Environment Committee 
 that the committee present its final report on or before 2 May 2005 that the committee have the authority to meet at any time during a sitting of the House except during questions for oral answer during an evening on a day on which there has been a sitting of the House and on a Friday in a week on which there has been a sitting of the House and that the committee have the authority to meet outside Wellington during a sitting of the House despite Standing Orders 191 193(a) and 194(1)(b) and (c). 
SIMON POWER (National—Rangitikei) 
: 
 I raise a point of order Mr Speaker. The House now finds itself in some difficulty. I refer you to Standing Order 284(3) which makes very clear that the member in charge of the bill may include in a motion nominating the committee to consider the bill any special instruction in respect of that committee’s consideration. Specifically this Minister just referred to a report-back date of 2 May 2005 the presumption being that the select committee would otherwise have 6 months to report the bill back. However Standing Order 284(3) further states that in respect of the committee’s consideration of the bill the mover has to have indicated in his first reading speech that that matter is to be proposed. Although I was not in the House at the time of the Minister’s first reading speech I am advised by my colleagues who were in the House that no such reference to a shortened report-back date was made by the member in charge of the bill at the point of the first reading. Therefore the motion put by the Minister in my submission is out of order which means that the report-back date will then revert to the 6-month period otherwise presumed under the Standing Orders and I seek your ruling accordingly. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: I thank the member for that yes. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I wish to confirm that I listened very carefully to the contribution by Mr David Benson-Pope the new Minister because I would have made a contribution in the debate had I known of the motion the Minister is now attempting to put to the House contrary to the Standing Orders with the Minister not notifying the House. As my colleague Simon Power has correctly put to members the motion from the Minister is out of order and the select committee cannot include any instruction because the Minister did not include in his first reading speech any indication that he would do so. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: I thank the member for raising that. The issue is quite clear. Under Standing Order 282(1) the Minister must indicate in the first reading speech whether it is intended to impose a different reporting date or whether there are any other instructions. I am told that such instructions were not included in that speech so to achieve that course it can only be done by the seeking of leave. 
Hon DAVID BENSON-POPE (Associate Minister for the Environment) 
: 
 I am pleased to seek leave for that instruction to be given effect. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: Leave has been sought for that course to be followed. Is there any objection? There is objection. Leave is denied. The only parts of the motion that can be accepted are those that relate to the referral to the Local Government and Environment Committee and the motion will carry the normal report-back time of 6 months. 
LARRY BALDOCK (United Future) 
: 
 I raise a point of order Mr Speaker. I ask your assistance in this matter with your knowledge of the Standing Orders but I referred to the report-back time in my speech and I wonder whether I might be able to move the motion. Can you give me some clarification on that Mr Speaker because I clearly referred in my speech to the fact that there would be a shortened process. If it must be a Minister who moves the motion I understand that but I am seeking a clarification please. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 Standing Order 284 is very explicit. It states that it is “… the member in charge …” of the bill. The member in charge of this bill whose name is on the front of the bill is Mr David Benson-Pope. I was concerned when I heard the contribution from Mr Larry Baldock indicating that there would be an earlier report-back time. I had listened very carefully to the Minister’s speech and he had not given any indication so that is what alerted me to the fact that the Government was attempting to break the Standing Orders. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: It is clear by the Standing Orders that those instructions and all things relevant to that can be moved only by the Minister so I thank Mr Baldock. The motion now is that the bill go to the Local Government and Environment Committee and have the normal report-back date.  
Bill referred to the Local Government and Environment Committee. 
Prisoners' and Victims' Claims Bill 
First Reading 
Hon PHIL GOFF (Minister of Justice) 
: 
 I move  
That the Prisoners' and Victims' Claims Bill be now read a first time. 
 It is my intention to move that the bill be referred to the Justice and Electoral Committee for consideration that the committee present its report on or before 4 April 2004 and that the committee have the authority to meet at any time while the House is sitting except during oral questions and during any evening on a day on which there has been a sitting of the House and on a Friday of a week in which there has been a sitting of the House despite Standing Orders 191 and 194(1)(b) and (c). 
Most people including myself have a deep sense that it is wrong that serious offenders can be awarded compensation for wrongful treatment without those offenders themselves being required to pay compensation to their victims for the serious wrongs inflicted upon them. The best way of preventing compensation payments to inmates of course is to ensure that breaches of State obligations that give rise to them do not occur. To help achieve that outcome Ministry of Justice officials are currently leading a review of current prisoners’ complaints mechanisms including the Department of Corrections’ internal complaints process prison inspectors and external complaints mechanisms such as the Ombudsmen so that any breaches can be dealt with at the earliest opportunity. 
This bill sets out two major changes with regard to State compensation to inmates. Firstly it provides that prisoners can be compensated only in exceptional cases and after exhausting all avenues of complaint. Secondly if compensation is payable the bill provides victims with the means to seek redress from the offender for the harm and suffering the offender caused them. 
The bill requires that if a person in the corrections system brings a claim for a breach of the New Zealand Bill of Rights Act the Human Rights Act or the Privacy Act compensation will not be available as a remedy unless the person can show to the satisfaction of the court that he or she has made reasonable use of the available complaints mechanisms and has failed to achieve effective redress and that no other remedy or combination of remedies would be effective. These new rules will apply to all court decisions made after the bill takes effect. That includes any cases that are pending at the time of enactment. Requiring prisoners to use available complaints mechanisms is intended to ensure that complaints are brought to official notice and dealt with as quickly as possible. That will reduce any opportunity for prisoners to tolerate a breach longer than is necessary in order to claim compensation through the courts. 
In the extraordinary situation where compensation is paid to a prisoner this bill establishes a new mechanism whereby the prisoner’s victims have the opportunity and get assistance to claim redress from any payment that the offender has received. The bill does that by establishing a trust account and a special victims’ claims procedure. Any compensation paid by the Crown to an inmate either in the form of a public law damages claim or as the result of a claim in tort will be paid instead to the Secretary for Justice. After deducting any legal aid charges and unpaid reparation the secretary will place the money in a bank account to be held in trust so that victims can claim against it. The Secretary for Justice will take reasonable steps to identify and notify victims of the offender of the fact that a sum of money is available to them. Victims will be sent an application form and will have 6 months in which to file a claim in writing. To assist them financially victims will be exempt from the usual financial eligibility rules for legal aid up to a capped amount. They will also not have to pay normal filing and hearing fees. Victims therefore will not be disadvantaged in relation to offenders. 
The procedures have been made as simple as possible while still being consistent with natural justice requirements. Claims will be determined by a District Court judge sitting as a victims’ special claims tribunal. They will usually be determined on the papers unless there are exceptional reasons justifying a hearing. Victims will not have to re-prove the details of offenders’ crimes. The tribunal will be able to rely on the findings of fact in the criminal cases that led to the offenders’ convictions. Victims will have to provide information only about the harm or loss they have suffered—something they have already done normally through a victim’s impact statement. When all the claims against the offender are determined the tribunal may make orders for damages. The Secretary for Justice will then pay money out of the trust to the victims according to the tribunal’s order. Where there are multiple victims and there are insufficient funds to meet all victims’ awards the available money will be paid out on a proportional basis. This new process and trust arrangement will apply to any money awarded as part of a final judgment or settlement given after the bill takes effect even if a case is already before the courts pending final determination. 
The third main feature of the bill is that it makes changes to the limitation rules that apply to victims’ claims. Although victims have always had the right to take civil claims against offenders for the loss or harm they have suffered they generally do not do so. One of the main reasons for this is that such claims are usually futile if the offender has no assets and is in prison. By the time the offender is released the normal limitation period of 6 years may have expired and the victim may be disadvantaged. Clearly this puts victims at a particular disadvantage in enforcing their rights. The bill will address this by providing that for victims’ claims against offenders the 6-year limitation period will be suspended during all periods that the offender is in prison. Changes to the limitation rules will extend the period in which victims can pursue claims against prisoners either before a victims’ special claims tribunal if relevant or in the ordinary courts. The new limitation provisions in the bill will benefit all victims of offences whether the offence occurred before or after the bill takes effect and irrespective of whether the offender has sought compensation and even if the victim’s action would previously have been statute barred under the Limitation Act. 
There will be those who say that this bill does not go far enough and that compensation should never be paid to prisoners. That is a position that is not sustainable under international law and may remove from the State the incentive not to breach standards. No comparable country—the United Kingdom Canada Australia the United States or any European country—denies the right of compensation in those circumstances. This is a right acknowledged by the National Party through its entire period in Government. This flip-flop National Opposition might promise all sorts of things now but it will never deliver on them because when National was in power it never provided anything of this nature. Others will say that this bill goes too far. That also is incorrect. The bill takes a principled approach to compensation consistent with New Zealand’s domestic and international human rights obligations. 
I believe that the review of the complaints procedures that is taking place now and this bill will quite properly restrict the circumstances that may give rise to compensation payments to inmates. Where payments have to be made the bill maximises the prospect that victims will be the ultimate beneficiaries. That is as it should be and I make no apology for that. I commend this bill to the House. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: The question is— 
Hon Phil Goff 
: I raise a point of order Mr Speaker. When I started my speech I inadvertently said “before 4 April 2004”. Of course that should be “before 4 April 2005”. I ask whether that can be corrected. 
Hon Tony Ryall 
: Was that by leave? 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: No it was not by leave. 
Hon Tony Ryall 
: Well you had actually started to put the question. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: In any case I would have accepted that correction because it was a simple mistake. 
Simon Power 
: I raise a point of order Mr Speaker. Unless I am mistaken—and I stand to be corrected—the Minister had resumed his seat at the point that the chief Government whip arrived at his desk to advise him that a second mistake in a row had been made in respect of referral dates. My understanding of the Standing Orders is that at that point—the point that the Minister resumed his seat—his speech had terminated. The fact that the Minister had resumed his seat and his speech had terminated meant that the date he mentioned in his opening remarks on the first reading stood. Now by leave he can seek to amend that but the Minister had resumed his seat and his speech had terminated. I seek your ruling on that point. 
Rodney Hide 
: The point is that it was a simple mistake and I am sure everyone would appreciate that. The date could not possibly be 2004. But there is a bigger issue and it is this. Once a Minister on his feet mentions a date and sits down his speech is over. In fact Tony Ryall had been called. 
Hon Phil Goff 
: No he had not been called. 
Rodney Hide 
: Well Mr Assistant Speaker had begun to put the question. At what point is it allowable for a Minister to come back later and say: “Point of order I got the date wrong.”? You could imagine Mr Assistant Speaker that we could have had half a debate—in fact we could have had an entire debate. The idea that a Minister can mention a date in his speech then correct it some time after his speech seems to me to be getting into very treacherous waters. I would like you to consider just where the cut-off point is for correcting a mistake like that. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: I thank the member for raising that. I do not have any difficulty with it. I heard the Minister say “2004” in the early part of his speech. I took it as a mistake. The intention was clear and in any case his speech was not finished. He still had time to go—albeit he had sat down. 
Hon Tony Ryall 
: But you had started to put the question. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: Yes I had. But I accept the correction. If it is not accepted now it would be accepted as a matter of course when the Minister next speaks after the debate has finished. It would be accepted as a matter of course. The intention is clear. We are not playing games here. 
Simon Power 
: I raise a point of order Mr Speaker. I will not test your ruling as that would be very unwise but could I just ask you to rule on this matter. If a member resumes his seat regardless of whether time is left to run has that speech terminated or has it not? 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: I am told that is a hypothetical situation. I think we have taken it as far as we can. It is a hypothetical situation and— 
Simon Power 
: Can we get a ruling? 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: I rule on actual cases only. 
Simon Power 
: I raise a point of order Mr Speaker. As I said I accept your ruling in respect of the circumstances surrounding Mr Goff’s error and the House is in your hands to allow that correction. But actually we are not dealing with a hypothetical situation. We are dealing with a very real situation where the Minister resumed his seat after his speech—and again I am not contesting the date issue; you have ruled on that. This is not a hypothetical situation. When the Hon Phil Goff resumed his seat was his speech terminated or was it not? That is the ruling I am asking for. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: I will need to come back to the House on that point. I am quite prepared to do that because there is a grey area there. But at that moment Mr Goff still had the floor. That is my view at the moment because no other member had been called. But we will clear that up in due course. 
Hon TONY RYALL (National—Bay Of Plenty) 
: 
 That was a speech made by the Minister of Justice—maybe for just a few days more—who was done like a dinner on  
Morning Report 
 this morning by the Leader of the Opposition. Dr Brash exposed Phil Goff for what he actually is—a Minister who is prepared to mislead the public about the effect of this bill so much that a reporter exposed him. It is a shame that the Minister refuses to listen to what I am saying. That Minister was done like a dinner on  
Morning Report 
 by Don Brash. He was exposed as the worst sort of politician we have in this Parliament. He is one who is prepared to go on radio and mislead the public. Sean Plunket who is no friend of the National Party exposed Mr Goff for misleading every New Zealander who was listening to that programme. Mr Goff was exposed as trying to sound credible in promoting the indefensible. 
Morning Report 
 showed one of two things this morning: either Minister Goff does not know what is in his bill or he is prepared to mislead the public because he is ashamed of what is in his bill. I will say why the Minister made the mistake of saying April 2004 when talking about the referral motion: because in fact it was in April 2004 that he found out compensation would be paid to prisoners. In April this year Mr Goff found out that compensation would be paid to prisoners. Do members know what Mr “Get Tough” Goff did? He did nothing. What he did was to continue with his bill that would have legalised some sexual activity between 12-year-olds. Mr Goff carried on with his bill to decriminalise some sexual activity between 12-year-olds when he could have been blocking stopping and wiping payments to criminals. He thought that was more important than stopping payments to criminals. 
This Government has got itself completely tied up in knots over prisoners’ rights. The answer to this is very simple and very clear and it has been enunciated by Dr Don Brash the Leader of the Opposition. He said “No money.” Dr Brash said this morning as he was wiping the floor with Phil Goff: “This is a Government that says there is no money for tax cuts but there is money for prisoner compensation.” That is what this Government says. There is no money for hard-working New Zealanders as a reward for effort but there is money for prisoner compensation. This legislation has a gaping hole— 
Jill Pettis 
: What’s all the fuss about a date when you can get up and tell porkies like that? 
Hon TONY RYALL 
: I want to tell Jill Pettis because I am sure Chester Burrows will tell the people in Wanganui that under this legislation offenders will still get the money. Every single one of those offenders who got a payment under the last set of payments by the Government will still get the cash. Let me give an example of where that happens. 
If no victims are identified the money goes to the offender. I want to talk about two men from Remuera in Auckland. They lived in an exclusive part of Auckland and their children went to private schools but when they lost money they resorted to trafficking pure methamphetamine or P—amongst the most destructive and addictive drugs in this country. Using their status as businessmen as a disguise they smuggled up to $14 million worth of methamphetamine in and out of the country for an international drug syndicate. Who were their victims? No victim was promoted during the court case. These vile characters were sentenced to jail for what the judge said was some of the most serious offending known to New Zealand and there were no identifiable victims. Well of course there were victims. The people who used the evil that these guys peddled on the streets of New Zealand were the victims but not one victim was identified in the court case. If those two men the Remuera drug dealers do get a compensation payment they can keep every dollar. Any drug dealer who gets a compensation payment will keep every dollar because there is no identifiable victim. What does Mr Goff say to that? Nothing because if there are no identifiable victims the crim gets to keep the money. If the judge does not approve the victim’s claim the money goes to the offender. 
Under this plan judges will be put in the unenviable position of having to decide how the compensation should be split amongst the number of victims. They will be forced to put a value on pain and suffering and make a decision between victims. This bill pits victims against each other. 
Here is the third outrage of why the offender still gets the cash. If there is anything left over it is handed to the offender. This bill does not block stop wipe payments to prisoners. It allows them to keep the cash. Dr Brash on  
Morning Report 
 this morning when he humiliated the Minister of Justice— 
Rodney Hide 
: It wasn’t hard. 
Hon TONY RYALL 
: As Rodney Hide says it was not very hard. I presume that Mr Goff was busy worrying about the demise of some of his proposals to decriminalise the sexual activity of 12-year-olds but what Mr Goff one of the worst sorts of liberals we can see in this Government would not admit is that this measure will re-traumatise victims. The victims will have to prove that they deserve compensation. The victim’s application is to be shown to the offender. The rape victim will talk about the pain and suffering she has suffered over the years and write it down and Phil Goff will show it to the rapist. 
Hon Dover Samuels 
: What did you do about it when you were in Government? 
Hon TONY RYALL 
: I will say to Mr Samuels what I will do about it. I will stop payments to rapists and to murderers. I will stop these compensation payments under a Government led by Dr Don Brash. Let us face it: the rapists are to read the comments of the victims. The victims will get legal aid but so will the offenders. 
I want to debunk one of the big myths from Phil Goff. He says that international obligations mean we have to pay this compensation. We have looked at the international obligations. There is not one international obligation that says we have to pay criminals compensation and in fact there is a reservation to the international covenant that says that payments can be made only at the discretion of the Attorney-General. It is clear: payments can be made only at the discretion of the Attorney-General. That is why Margaret Wilson paid hundreds of thousands of dollars to the Mangaroa prisoners. Mr Goff should confront the fact that the only reason these payments are subject to the human rights legislation is the Baigent case. When the police shockingly raided the home of the late Mrs Baigent whom I knew and in that raid on her property took away her dignity the court decided that she should get compensation. That is where this started. It was a court decision relating to the late Mrs Baigent. There is no international obligation whatsoever and the Government has been told that. The Minister will not admit it but the Government has been told that. I am sure that when the Official Information Act requests for all of the advice to the Government come out people will see clearly that there is no international obligation that we pay criminals compensation. In fact the international obligations say it is totally at the discretion of the Attorney-General—in this case the high priestess of PC Margaret Wilson. 
This bill is an appalling fraud being committed on ordinary New Zealanders by Phil Goff. The crims can still get the cash. 
RUSSELL FAIRBROTHER (Labour—Napier) 
: 
 That was a surprising address from someone who clearly did not listen to  
Morning Report 
 very accurately this morning. He has not read the law on international obligations very carefully nor does he understand the law on compensation. This bill of course is a patch-up effort for the failures of the previous National Government during the 1990s which developed a culture of abuse within prisons resulting in the mess that this Government now has to handle. 
So this bill is the first step towards bringing something correct to the crazy world that existed under the previous administration as represented by the previous pathetic speaker who seems to be careless with facts as well as with logic. 
The main way to stop money from being paid out to prisoners is to stop prison officers from ill treating them—it is as simple as that. And of course that is what the Government is doing under its enlightened Minister of Corrections the Hon Paul Swain. We will not see the need for this legislation when it becomes law to become active as a result of the actions of this Government in relation to prisoners. But we are still cleaning up the mess left by the previous administration. During the early and mid-1990s—in 1992 at Mangaroa and then down in Christchurch—when the previous speaker the Hon Tony Ryall was a member of Cabinet prison officers felt welcome to inflict cruelty and unfair treatment on prisoners. That will no longer happen so this bill is really a patch-up for the problems caused by the last administration. The previous speaker ridiculed the bill but he will not sleep well at night knowing that he is the author of the conflict in prisons and the author who created compensation for prisoners who do not deserve such compensation. We know that this bill will have very little practical effect because of the sterling work done to sort out our prison service so that we stop mistreating prisoners. 
RON MARK (NZ First) 
: 
 What an extraordinary speech that was. The member said that this Government was sorting out the mess inside our prison service! We do not even have a prison service; it is a Department of Corrections. Some of us would be very appreciative if we could get back to having a prison service not a business unit. Some of us would like to see the return of a culture of service to the public not the promotion of Labour’s much-vaunted reforms from the 1980s that were parroted out of the good member’s mouth there when he referred to the prison service. I make it very clear right from the outset that New Zealand First will support the bill’s referral to a select committee but we recognise that some work has to be done on it. 
We need to peel back the pages and see what is not covered in the legislation. New Zealand First has long expressed its disgust at the fact that inmates have been paid compensation under this Government. This Government said that it would end the culture of excess that it would stop the golden handshakes and that it would stop unseemly disgusting payouts to people. We all remember the payouts to people and the campaigns that the Government ran against Christine Rankin and a number of other public servants. However what was the first thing that Margaret Wilson as Attorney-General did in respect of big payouts? She approved them. She paid out $230000 to two inmates within a year or so of having her job. 
What was another payout that this Government approved? There was the young man in the South Island who was not released after he had completed his full sentence—he was released belatedly after having qualified for parole. He was held in jail for 1 week extra. The Government allowed that little piece of scum to get $42000. And here is the real rip: that boy had been put in jail as a result of beating up a barber breaking his teeth and being told to pay $500 in reparation. Did the Government move then when he put his digit in the air and said there was no way that he would pay the reparation? Did the Government move when the barber was on television explaining how he had been viciously assaulted had had his teeth broken and had still not been paid reparation? No it sat on its chuff and did nothing. So the Government did not pay out once or twice; it paid out four times. Then we had a ruling about five inmates who had been illegally detained. Once again the lights were flashing to signal that another payout was coming but the Government did not do a thing. 
Now we are sitting here going gasp gasp horror horror because there are more inmates who are likely to get $130000. Why? It is because Labour is lazy. It is so focused on genetically re-engineering the New Zealand populace on its social law reforms and on representing the rights of inmates that it forgot all about the rights of victims. Now the Government expects the country to applaud it for championing the issue in the House today. Well this measure is too little too late. The Government has been in office far too long and New Zealand First aims to correct that at the next election. 
But the party that sits to my right is not immune from criticism either. The National Party needs to accept that it has also played a part in this situation. The legislation that has allowed those things to happen has been around for about 9 years and nothing was ever done. But more important the formation of an emergency response unit in the Christchurch prisons happened under National. That unit set about acting illegally and improperly and breaching inmates’ rights which put the country in jeopardy of such lawsuits and was anything done about that? No. Now we go flip-flop back to the Government side of the House because who is to blame for letting that debacle go on for so long? Inmates have been mistreated and abused which has raised the potential for lawsuits to be lodged. That happened as a result of a National Party initiative with regard to an emergency response unit but what did Labour do about it when it came into power and was told there was a mess down in Christchurch? 
The first Minister to say he would not do anything about that situation was Mark Gosche. He was paid over $100000 a year to do nothing. Did he redress the situation? No. Did he react to my call for an investigation? No he did nothing. I am sorry but I failed to mention that before Mark Gosche we had Mr Matt Robson the great champion of civil liberties and human rights as Minister. He is the man who is out there campaigning for Zaoui. He will do anything for some terrorist foreigner who has sucked up $2 million of taxpayers’ money but he would not do a jolly thing about his own people being abused in his own prisons. Matt Robson is the great champion of no one for nothing unless it suits him personally. He did nothing about the emergency response unit the excesses the allegations and the abuses. He did nothing about the prison officers who raised their concerns. One of them even went to the Employment Court and had everything he had said vindicated. 
Mark Gosche who did nothing came after Matt Robson and then came the matriarch herself Margaret Wilson when she became the Minister of Corrections. What did she do? Nothing! Then came Paul Swain. Hallelujah! I begged him asked him and pleaded with him to deal with the issue. The select committee discussed having a select committee inquiry into the abuses and excesses in the Christchurch prisons. It took Paul Swain years but finally he relented and right now the Ailsa Duffy inquiry is being held into the excesses and the abuse of inmates by the emergency response unit in Christchurch. We get claims and lawsuits such as those and disgusting payouts such as those only when we break our own rules. When four Ministers in this Government ignored such breaches of the law and did nothing we should not ask ourselves how those things could have happened. Rather we should ask ourselves how we can have people who are so incompetent sitting on the Government bench and drawing ministerial salaries using ministerial credit cards living the life of Riley and supposedly representing New Zealand. How can we allow that? 
The problem is that we have had a succession of absolutely incompetent Ministers of Correction. We now have the Minister of Justice coming in over the top with a bill to try to clean up the mess. There are three areas of blame. The National Party is one. The Labour Party is hugely to blame—all the more so because it said that it would fix all the problems. It had 9 years to plan for that and it has been in Government for 5 years. The warning lights were flashing and people were telling Government members that there was a mess inside the Department of Corrections but four successive Ministers chose to ignore that. Then we had an Attorney-General who handed out money like an eight-armed octopus gone mad to inmates here there and everywhere. And now we have the cleaner coming in and trying to clean the mess up. 
Well New Zealand First is here to help. We want to make this law workable. We do not like the situation whereby inmates are being paid out money. We do not like inmates getting money that Agent Orange veterans cannot get. The Government announced yesterday that it will not pay compensation to the Vietnam veterans yet it hands out money willy-nilly to inmates who get a bit of a hard time. New Zealand First is here to help to clean the whole mess up. We aim to do more than just work on this bill. Come 2005 we aim to clean up the Government benches well and truly. 
NANDOR TANCZOS (Green) 
: 
 The Greens do not support this bill going to the select committee. We suggest that the Government go back identify the problem clearly and rethink how best to remedy it. We suggest that the Government go back to the conceptual stage and take the time to work through the issues a bit more carefully because this is hasty legislation. It has been drafted in response to a specific situation and to claims that are before the courts and in the wings. We do not believe that that is a good basis for hastily enacting legislation that has such significant and enduring effects. Of course there is an issue. Inmates are being granted significant damages by the courts for suffering abuse—tantamount to torture at times—at the hands of the Department of Corrections. While I agreed with some of the things that Mr Mark said I do not think we can compare that compensation with a golden handshake. I do not think it is in quite the same league as that. 
The problem is that the victims of the inmates who receive such compensation—sometimes victims of terrible terrible crimes—may be unable to sue those prisoners for damages because the statute of limitations does not allow them to. That is clearly unfair. It is abhorrent to most New Zealanders and I do not believe that we can allow it to stand. Having said that there is a very simple way to fix the problem. It is to extend the statute of limitations. This bill does that in clause 60 and that is a good thing. Clause 60(1) states: “The limitation periods to which this subpart applies cease to run while the offender is serving a sentence of imprisonment in a penal institution or a prison.” That is a very sensible amendment and the Greens support it. 
Out of a concern for victims we would also look at supporting ways to make it easier for victims to sue offenders for damages. For example we support automatic eligibility for legal aid for such victims which is what Part 3 of this bill provides for. We support removing court filing fees as this bill does in clause 27. So this bill does do some of those things and we support those parts of it. However the bill goes significantly further than that. It goes much further than simply fixing some bizarre anomalies in the law. In fact far from focusing on the rights of victims we believe it puts up a smokescreen. It makes a number of changes that are more in the nature of protecting the Crown from liability for its own actions with regard to prisoners than they are about protecting victims’ rights. 
Let us look at what the bill does. The Minister has run through this stuff. First it restricts the granting of an award of public law damages to prisoners and people “under control or supervision”. Let us note the phrase “under control or supervision”. Despite the Minister’s assertions that is not just about serious violent offenders who are in prison for the most heinous offences. That may well be so in some of the cases that are before the courts now but this wording means that people who are doing community service for very minor offences will have their right to sue the department for significant breaches of basic human rights restricted. In any case the law is supposed to be blind to the status of individuals. It is supposed to treat all people equally regardless of our views of them. This bill is a significant infringement of that principle. It forces people to rely on the official complaints procedure. That weakens the most effective protection against abuse in the prison and correctional system which is the ability to seek damages. Russell Fairbrother mentioned that. He said that the best way to stop compensation from being paid out was to stop the abuse. I absolutely agree with that but what we are doing is removing that sanction from the department. That is a very dangerous thing particularly when we bear in mind that the Government has strenuously resisted the establishment of a complaints body that is independent of the Department of Corrections. 
The second thing that the bill does is to provide that any money awarded even under that highly restrictive scheme will be frozen for 6 months while victims of the inmate are informed of their chance to sue. Interestingly given that the bill claims to be about victims’ rights any moneys that are paid out from those frozen funds will under clause 17 be used firstly to pay off any legal aid bills—that is an interesting thing—and secondly to pay for reparations. Only thirdly will compensation claimants be able to get hold of any of that money. Again that brings into question the actual intent of the bill. Just as an aside the Greens would have supported legislation that stated that any compensation money must first go towards paying off any fines outstanding reparation orders or things like that. But it is also interesting that fines are absent from the list. 
The third thing that the bill does is to set in place a special procedure under which victims will be able to sue offenders: the victims’ special claims tribunals. We are seeing here the establishment of a new kind of tribunal. Again it is being done in haste. The implications of that have not been well-thought-through. Normally we would expect to see significant policy work done before such a thing was introduced. We would expect to see a discussion document from the Law Commission papers go out for public submissions submissions come back and then the development of a bill. But because this is a hasty bill that is designed to protect the Crown from liability we are seeing a significant new procedure being set up the implications of which simply have not been thought through. Hearings will be on the papers except under exceptional circumstances when the plaintiff can give oral evidence. Interestingly the defendant apparently will not be able to give oral evidence; only the plaintiff will which seems unfair. 
The other interesting aspect is that action can be taken “by or on behalf of” a victim. The Minister has suggested that many victims may not want to sue offenders for damages and so are unlikely to take action. So we may see a number of cases coming through on behalf of victims. It may well be that the victim does not want payment from the offender; he or she may see that as distasteful. The Minister has suggested that many payments may well go to organisations apart from the plaintiff. That opens up I think the very worrying possibility of some unscrupulous organisations—and there are many good organisations working in this area—that claim to represent victims manipulating victims of crime who have no wish to initiate proceedings into allowing those organisations to take proceedings on their behalf in return for keeping the proceeds. Given that the bill puts in place a special procedure to sue that is all about expediting the award of damages to the victim I think that procedure is seriously open to misuse by people whom the bill is not at all intended to benefit. I think the Minister needs to take a very careful look at that. 
This bill has already caused significant disquiet in the legal fraternity and among organisations with an interest in or a commitment to civil rights. Once again the Green Party is the only voice in Parliament that is prepared to defend some basic civil rights. While some people and some members of this House view civil and human rights as a kind of fluffy PC thing or as an expendable luxury basic human and civil rights are in fact what distinguishes and separates a just nation from a tyranny. 
STEPHEN FRANKS (ACT) 
: 
 I rise for the ACT party to address the Minister of Justice’s hasty Prisoners’ and Victims’ Claims Bill. 
Dr Wayne Mapp 
: Hasty? 
STEPHEN FRANKS 
: This bill looks as if he still has not had a chance to read it. I would not be surprised if he has not read it properly. Of course the Government has only one halfway-competent Minister in the field. The Government is riddled with Ministers Associate Ministers and others that it needs to take out of its caucus and stick into Cabinet so that it can halfway trust them. 
Here is a bill that falls squarely within the scope of the authority of the Minister of Corrections. It could have been dealt with by the Minister who has negotiated some of these dreadful payouts the Hon Margaret Wilson but she is of course getting the kick upstairs and obviously could not have been trusted to sort out this little mess. The Hon Paul Swain is in the House and is I hope preparing to take a call and speak on this bill because this is again something that was absolutely predictable when his Corrections Bill went through earlier this year. That was a bill that simply opens the Government up to more claims like this. Chapman Tripp my old law firm took the precaution of putting in writing its warnings to the select committee on the likelihood of increased liability of the Crown under the new Corrections Act. These are liabilities that are utterly immoral. These are liabilities that the courts impose because they want to get into the business of straightening out the Department of Corrections. 
As Ron Mark said earlier there are reasons why prisoners have grievances against the prison authorities. In a civilised country it is important that those grievances be addressed. Being healthy and safe are minimum requirements for prisoners—safe from each other safe from abusive behaviour by officers and safe from themselves if the misery that they are dealing with is too great. But that does not mean that they should be getting paid great sums of money because their rights have been abused. It means that the visiting justices should be doing their jobs. Instead Mr Swain passed a bill earlier this year that turned the visiting justices—who should be blowing the whistle on this kind of thing who should have independent clout who should have the mana of their judicial office to draw attention to abuses in prisons—into prison toadies. A visiting justice is any lawyer of 7 years’ standing whom the department wants to retain and make into a formal part of its internal system. A visiting justice these days is hitchhiking on the honourable term “justice” with no claim to it. They are not justices; they are simply another part of the machine that is operated by the Department of Corrections. The Minister knows that that system will not provide the independent overview that will mean we do not get the kind of outrage that has led some of the prisoners to file their claims. 
I will get back to what Mr Goff’s bill does. I measure that against the bill I drafted for him in a week in the middle of September when it became quite plain that despite his bluster and his statements that he would fix this problem he was really just hoping it would die down and the media would forget it. It does not do the most important thing which is eliminate the ability of judges to invent grievances and then invent remedies to deal with them. The 1994 Baigent decision involved a piece of judicial lawmaking that this Parliament had expressly considered and decided not to adopt. The courts gave themselves the right to give monetary awards for breaches of what they determined to be human rights law. 
In the circumstances that we face vicious criminals are making these claims and getting awards that work out at hundreds of dollars a day—amounts they could probably never earn anywhere—when they have suffered nothing except irritation and perhaps humiliation and a sense of grievance. The fact that their compensation sticks in the craw of victims is absolutely obvious. This bill does nothing to fix that because it does not give the victims an equivalent right. There is nothing in this bill that conveys the outrage and sense of loss that a victim feels when justice is not done or the sense that most people in this country have that the price is not paid for a crime or that it could lead to an outrage every bit as intense as the kind of offence that in the Taunoa case a judge decided should be rewarded with compensation for a prisoner. These prisoners—who may be feeling a sense of grievance because they have not had fresh towels or because they have been forced to clean out their own cells—are claiming for breaches of standards that are not extended to law-abiding innocent citizens. 
What Mr Goff’s bill should have done but of course does not do is state quite simply that monetary compensation should be paid only when there is something to compensate. When someone has lost something or when there is damage then that damage should be remedied. But in most cases what these prisoners have lost is respect for their minimum rights to be safe from abuse and kept healthy. That does not involve a loss of money and there is no reason why this bill should not have included a provision that requires a judge not to invent a redress that is really an ability to attack the Crown. Instead it should have said that compensation or damages should be payable where damage has been suffered. 
The second thing that this bill should have done and does not do is stiffen the prison discipline provisions. I have already mentioned the failure to maintain the status of visiting justices. We do not want our prisons to get the sort of reputation that Turkish prisons had— 
Midnight Express 
 sort of prisons. We do not want to be embarrassed in this country about the state of our prisons even though we do want prisons to punish offenders. What should be happening here is that when there is a genuine claim upheld by the court the court would really be doing justice if it had the authority to ensure that those who are responsible for it were brought to justice. There is nothing in this bill that ensures that. This bill should make it quite plain that when victims claim they will be able to claim for the same kind of hurt and grievance that has given the offender the entitlement. We can know now that most of these sums will stay intact for the prisoners because the accident compensation scheme blocks the claims of people who have been physically injured by criminals. The accident compensation scheme does not block claims for mental injury. So we will put victims who are really claiming because they are outraged through the hoops of having to try to establish that they have a continuing injury. That is humiliating for them it is not healthy and it does not do what this bill should be setting out to do which is to even the scales of justice. It should be a very simple matter to describe a grievance here that is compensation for the offence of seeing a prisoner getting a sum that the victim could not get in the same circumstances unless they were in prison. 
This bill does not do what my bill did which was to authorise and instruct someone to take the proceedings for the victims. The so-called tribunals are simply District Court judges who have been given another label. They are already overworked and do not have the time. There is nothing in this bill that says they will get the priority they deserve. Lastly it does not do anything about the money that has already been paid out. Although we do not approve retrospective law there should have been an ability to simply save that money intact at least until it was determined under existing law whether the victims of the offenders who have already been compensated should be able to access some of that money in civil actions. This bill as I read it does nothing to deal with the offence that must be felt by victims. 
Sitting suspended from 6 p.m. to 7 p.m. 
MARC ALEXANDER (United Future) 
: 
 This bill has given us a great deal of difficulty for a number of reasons because from a purely gut instinctual point of view my attitude is that international obligations be damned. This is about justice in our own country. No criminal for whatever reason deserves one cent of compensation for being in prison for choosing to commit a crime. Sadly whichever way we look at it we see that the Prisoners’ and Victims’ Claims Bill is a compromise—nevertheless it is one that we have no choice but to accept at this time. Hopefully members will be able to improve upon it during the select committee process. I say it is a compromise that we have no choice but to accept for a number of reasons but chiefly because the idea of expecting victims to have to fight to take the compensation given to inmates is an absolute affront to any form of justice at all. If anything it is another kick in the teeth for victims by our criminal justice system which certainly needs a monumental overhaul. Criminals have won awards for things like hurt feelings. It is pathetic! In August 2004 the High Court saw fit to award $130000 to five inmates for alleged mistreatment under the provisions of the New Zealand Bill of Rights Act but that was only the beginning. 
Let us consider one of those five Christopher Taunoa. That man was in prison because he slit the throat of someone so badly that it exposed the spine. He put at risk not only the guards in the prison but also the other inmates. He was put into segregation for 700 days and for that he was awarded a sum of money because it breached his so-called rights. 
Stephen Franks 
: $55000. 
MARC ALEXANDER 
: He was awarded $55000. Sadly there is no win here because had he been put back into the general prison population I have no doubt that he would have infringed the human rights of the other inmates and the guards. What is the Department of Corrections supposed to do with people like him? He must be in segregation for everybody else’s good and damn his rights because he has chosen to abrogate the rights of others. 
I find it absolutely horrifying that—as stated in answers to my written questions—in the last year there have been 41 claims made for breaches of the New Zealand Bill of Rights Act the Crimes of Torture Act and the United Nations Convention Against Torture and Other Cruel Inhuman or Degrading Treatment or Punishment amounting to $963000. There have been 26 claims for breaches of the New Zealand Bill of Rights Act and negligence amounting to $1569000. There were three claims for assault and breach of duty of care four for unlawful detention one for loss of opportunity and one for breach of privacy—that one amounted to $10000. 
There is clearly a problem within the corrections system that needs to be addressed but compensating inmates is not the way to do it. The total external legal costs incurred by the Department of Corrections for the five inmates was $616938.20 as at June 2004. The total amount of legal aid paid in relation to those proceedings was $357961.96 as at September 2004. The Government is appealing the claims which will escalate the cost to taxpayers further but regardless of that course of action for the $130000 that was given in compensation $1104900 has already been spent. That works out at an average of $220980 per criminal. The inmates’ lawyer Tony Ellis has filed a claim on behalf of 18 other criminals and has sought permission to represent 175 more. Assuming similar costs and outcomes that means it will cost at least another $3977640 for the first 18 criminals and a whopping $38 million – plus for the other 175. The taxpayer has to pay for compensation legal proceedings and legal aid for criminals who chose to commit crimes and that is an affront to anybody in our country who loves justice. 
If we add it all up we find that the taxpayer could be stung for up to $44 million and that is without looking at possible appeals. The fact is that law-abiding taxpayers are facing a potential bill that is outrageous in the extreme in settling compensation claims from criminals alleging mistreatment in jail. Complaints from inmates have been escalating at an alarming rate—from 96 in the year 1998-99 to 147 in 2001-02 204 in 2002-03 and 226 in 2003-04. Successful claims for compensation will only incentivise those criminals and worse their lawyers—who sometimes are indistinguishable from the criminals themselves in my opinion—at the expense of our notions of justice. The very idea that criminals are getting their taxpayer-funded day in court to claim taxpayer-funded compensation because they pose a genuine threat to the safety of guards and other inmates can be seen only as a slap in the face for all victims and it is happening because the Government is putting international treaties ahead of the interests of justice in our own country. 
The Greens are resolutely opposed to this bill. I cannot help but reach the conclusion that those members do not find it repugnant that criminals could be rewarded but their position gives the rest of us who do care about the interests of victims an opportunity. I urge all other parties—National ACT and New Zealand First—to work together with United Future to make this bill achieve what it needs to achieve because Labour will not get it through without one of our parties. We can make it better. 
I turn to the content of the bill. Some of these provisions are quite positive things that we ought to retain. Any compensation that might be awarded will be placed in a trust until a victim decides whether to make a claim. Legal aid charges and unpaid reparation will be deducted. A sensible protection has been included so that prisoners on remand who prove a breach of their rights and who are not convicted will not have their funds subject to the trust. The accessibility of prisoner funds will be extended to include offender income other than compensation such as accumulated savings bequests and so on. Those provisions will also apply to so-called victimless crimes whereby victims from previous offending are identifiable and may also have the capacity to take compensation from offenders. 
I am also particularly pleased that the Minister of Justice has picked up three points that I have been strongly pushing and advocating for. They include a rigorous complaints process that decreases the possibility of compensation. As I said earlier I would rather not have that possibility come up at all. A victim will have access to legal aid to claim the prisoners’ compensation without regard to the victim’s financial circumstances and I think that is important. As most victims do not actually want the money—because they think quite rightly that it is blood money—are scared to sue sometimes because of an offender’s gang connections or do not want an ongoing legal connection to the offender which is also understandable an organisation such as for example the Sensible Sentencing Trust would be able to sue for the money on their behalf. I think it is absolutely right and proper that it be able to do that. 
Above all else we must understand that compensation—a reward—should never be given to anyone who chooses to commit a crime and finds himself or herself behind bars. Where is the compensation for victims for their loss of human rights at the very crux of the crime that was inflicted upon them? Yet offenders demand those rights for themselves. It is an ironic and absurd situation when those who most despise the law then use it to assert their so-called rights. Rather than criminals pursuing rewards that eluded them in the pursuit of their unsuccessful crimes they are appealing to the New Zealand Bill of Rights Act. It is a pity that we do not have a “Bill of Responsibilities” under which we could make the criminals pay instead of their victims and other taxpayers. United Future will be supporting the first reading of this bill and with other parties we hope to improve it immensely for the benefit of victims. 
Hon MARIAN HOBBS (Minister for the Environment) 
: 
 I support the first reading of the Prisoners’ and Victims’ Claims Bill because in the first place it ensures that prisoners can be compensated in only exceptional cases and after exhausting all avenues of complaint; and the second part of the double it provides new opportunities and assistance for victims to pursue compensation from those who have offended against them. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I certainly would not regard that last speech as exhaustive or thorough. But I must say that I did appreciate Mr Alexander’s speech. He has put a lot of thought into the material and weighed the balance and United Future will vote for the bill. He feels—and I suppose in some respect so does National—that we do not have a great deal of choice because there is the opportunity for the select committee to repair the damage of this bill. National’s position is clear: there should be no monetary compensation for prisoners under any circumstances. That is not to say there should be no remedies but we are clear on this: there should be no money for prisoners under any circumstances. 
That is not the appropriate remedy because that is not the loss they have suffered. In fact it leads to bizarre and perverse results. It can result in the absurd proposition that victims might want the prisoner to get money because that then gives them an avenue to get it themselves. Why on earth would we put victims through such a ludicrous lottery? The Victims’ Rights Act was dealt with by Parliament some 3 years ago and National saw major deficiencies in it and so did Mr Marc Alexander who contributed to that as well. 
One of those deficiencies is the very very limited statutory regime for monetary compensation for victims. New Zealand lags behind in that area particularly compared with Australia and I know that for a fact because members of my immediate family have had the direct experience of compensation for the effects of a crime—in fact a serious assault—in Australia. We do not have that here so we have the bizarre position of the victims’ rights legislation not having an adequate mechanism with which to compensate victims. However in this situation in the event that an offender’s rights might be transgressed there is the opportunity for the victim to get compensation on a truly random basis. How would any victim know in advance whether his or her particular offender is likely to have some form of grievance? 
When we look at the cases that were involved this happened with the very worst offenders because they are the ones who come to the attention of the prison authorities. They are the ones against whom the prison authorities have to take special measures. We heard from the previous speaker of the incredibly egregious behaviour of offenders that led them into the punishment regime. Ordinary offenders do not get there. They have to be particularly bad violent unruly or difficult before that happens. All of that brings the offender to the attention of the prison authorities and then they go through the behavioural change regime I guess they would call it. 
It is in the application of that regime that the alleged defaults occurred which then caused the judge to award compensation of up to $130000. In this scenario the worst offenders in jail—who had committed the crimes the ones who caused the most difficulty to the prison authorities and indeed to other prisoners—were the ones who went through the regime that then led to the claim for which the judges awarded compensation. On that lottery the victim then has a right to those funds. It is an absurd proposition— 
Hon Georgina te Heuheu 
: A lottery! 
Dr WAYNE MAPP 
: But it is a bizarre lottery. It is a lottery based on bad behaviour—bad behaviour by the offender actually because that is what initiates the whole process. So as a matter of principle it seems fundamentally wrong that prisoners would get compensation that then leads to victims getting compensation. It is wrong in principle on that basis. I do look forward to the select committee trying to deal with what is frankly an absurd conundrum that they face. 
Now maybe what they should be doing is going back to first principles and asking: “How do we compensate victims more effectively?”. Because that is after all much of the motivation of this legislation. How do we ensure that victims get properly compensated? Well the answer to that is to actually look at the victims’ rights legislation not this particular legislation. 
Mr Marc Alexander said that he felt forced to accept the reality that prisoners would get monetary compensation. I would not like to misrepresent Mr Alexander but that is what I understood him to say. I say that that is incorrect. The international conventions do not require that. The Attorney-General has to consent to that sort of thing. We could on a statutory basis essentially say: “No consent end of story.” 
I want to make it perfectly clear: National clearly wants proper regimes to ensure that prisoners are not mistreated. There is a range of options to do that as the Deputy Prime Minister would well acknowledge. That range of options does not need to include monetary compensation. For instance and this would be in the nature of a hierarchy one can have administrative disciplinary procedures in relation to staff. That does happen from time to time—people get demoted in a position and things of that nature. For more serious matters—and there have been a number of them—the staff would get prosecuted. They themselves would be punished for egregious breaches of the law. There might be more general retraining of staff—a clearer understanding of how to manage prisons. 
Finally of course and this has arguably been one of the more serious breaches in this area there has been a lack of accountability by senior officials. When one gets a culture occurring as seems to have occurred in a number of prisons where quite a large number of staff have been prosecuted dismissed or engaged in completely inappropriate behaviour with prisoners—it would be fair to say in some cases with the prisoners consent but I will not go down that line too far—then one knows that something is fundamentally flawed in relation to the management. So the management needs to be held accountable. 
Ministers need to hold their senior executives accountable. This is after all and the Government consistently says it a core State function. Therefore Ministers have direct responsibility and accountability. And when one gets a pattern of behaviour the buck actually stops with the Minister. Members might say: “That’s all very well you deal with the problem of the staff but how does that help the prisoner?”. Well the way it helps the prisoner when his or her rights have been offended is that the breaches stop. That is the remedy for the prisoner. The breach of the law stops and they are correctly treated. I think it was Mr Franks earlier in the debate who said that they have not suffered a monetary loss so therefore why should they receive monetary compensation? 
I shall expand on that point slightly. The Government sort of argues that there has to be monetary compensation to sheet home the level of responsibility and to truly sheet home to the Department of Corrections the level of responsibility. That is simply false. There are other ways to sheet home responsibility. I would guess that the prospects of job security would have to be the most important thing and more important than that are the risks and prospects of prosecutions. What do the guards in Abu Ghraib fear at the moment? They do not fear that the prisoners might get monetary compensation in Iraq. They fear that they will be court-martialled. I return to the fundamental proposition. There should be no monetary compensation for prisoners. It is not necessary. Furthermore it is wrong to put victims through that lottery. The problem is the legislation itself. That needs to be fixed so that victims are properly compensated. 
Hon GEORGE HAWKINS (Minister of Police) 
: 
 I support the Prisoners and Victims Claims Bill and I want to see it off to the select committee. 
Hon GEORGINA TE HEUHEU (National) 
: 
 I am pleased to take a call on the Prisoners and Victims Claims Bill. I want to say to the House and to those New Zealanders who might be listening that a fraud has been perpetrated on this House tonight and on the public of New Zealand. We have in the introduction of this bill— 
Dr Wayne Mapp 
: Which Minister? 
Hon GEORGINA TE HEUHEU 
: In the first place the Hon Phil Goff but in the end the Government overall. This bill builds huge expectations for victims of crime without actually delivering and pretends to take away from offenders—prisoners—the ability to receive money for any supposed wrongs that have been done to them while they were under the care of the Department of Corrections. Of course the Government was under pressure to do something about this issue but torn as it is between wondering whether to continue the right of prisoners to make claims but at the same time to satisfy the public demand for the rights of victims to take precedence over the rights of criminals it has come up with this hybrid legislation that in the end probably will satisfy only the offenders and will do very little to fulfil any expectations that victims might have that the hurts and suffering they have had at the hands of criminal offenders will be catered for in the long run. That is why I have said that a fraud is being perpetrated on the New Zealand public and on this House with the introduction of this bill. 
That is not surprising. This Government through its various Ministers is great for doing the great huff-puff job pretending to be disgusted at certain things. We have seen that this week with the issue of Judy Bailey’s salary increase where the Prime Minister and the Minister Steve Maharey did a huge mock-disgust act. The Prime Minister said that the pay rise resembled something of a culture of extravagance in TVNZ it was not acceptable and she would not stand for it. What did they do today? When three of the directors on the board of TVNZ offered their resignations they were given a little slap with a wet rag and told no they should stay in their jobs—but not before the Prime Minister and Steve Maharey had huffed and puffed in the last few days about the disgusting nature of Judy Bailey’s salary rise. When they had a chance to do something to satisfy the public disgust at that pay rise they did not do that. 
A similar pattern of behaviour is contained in the issue we are addressing now. When the issue arose of prisoners getting huge payouts for supposed hurt and damage they had received while in the corrections system and the public of New Zealand got all worked up that of course was a signal for the Minister Phil Goff to give some of his vein-popping speeches and feign disgust as well. He is very good at feigning disgust I might say but in the end the words are not as important as the delivery. 
As I say we are seeing in this bill expectations raised for victims of crime. If it is a proper thing to do if there are some principles on which this House believes that victims should be compensated for the hurt they have received then that should be addressed through the victims’ rights legislation and not through some half-pie mumbo-jumbo that is contained in the bill before us tonight. 
The other thing is if we are truly trying to satisfy a public disgust at huge payouts to criminals then this bill does not achieve that. The reality is that if one looks at the detail and considers the hoops and barriers that victims have to go through to try to claim some compensation out of a fund into which money won by a prisoner has been placed even if victims of any particular crime could be identified it is highly unlikely that they will win anything back. 
One then gets that invidious kind of situation where on the one hand the Government is saying: “Here we are we’re setting up this framework whereby if this prisoner gets a huge payout the fund will go in trust and as a person who suffered at the hands of that prisoner you can make a claim and you can win some of that fund.” Clearly that is not true. If one looks at the detail offenders will still get the money. If no victims are identified and in many many cases it will not be possible to identify the victims then the money will go to the offender anyway. So nobody not one person who has been disgusted with the huge payouts this year and in the past will be satisfied with that. 
Secondly if the judge does not approve a claim and there are a whole lot of reasons why a judge may not approve such a claim again the money will go to the offender. If anything is left over even if a victim was able to win a part of it the remainder is handed over to the offender anyway. I guess on balance it is more likely that offenders who have managed to get a compensation payout will end up having that money paid to them. 
Of course there is the other side to this and that is why my colleague Dr Wayne Mapp and I say that there is a better way to address the suffering and hurt of victims. Under this framework victims will be absolutely traumatised if they bother to apply for part of the payout of any of the funds anyway. As I say it is highly unlikely when they consider the hoops and barriers that they will even bother. 
But as I say if there is a good principle on which this House should be seeking to develop a framework to compensate victims properly then this is not the way to do it. We do not need to put victims through a trauma again. They are already victims. Under this bill a victim’s application for a payout from the fund is shown to the offender who can then comment on it. What victim would want comment from some person—for instance why would a woman who is a victim of a rape go through such a stupid procedure and become traumatised all over again? Why would she? The victim’s comments go back to the offender. The victims may have to reappear in court in support of their application. Again why should that be the case? [ 
Interruption 
] If it is wrong the Minister can explain why that statement is wrong. What he cannot deny though is that his bill raises expectations for victims many of which expectations will not be fulfilled. They just will not be. 
That is why I say that a fraud has been perpetrated on this House on the New Zealand public and on the victims of crime. This is a hybrid bill no doubt hastily put together even though these payouts have occurred over a long period of time. In looking at the way it has been set out one can only ask who put it together. Of course the Minister will claim credit for it. However it does not do him any credit. There is a better way of compensating victims than the way presented in this bill. The Minister should withdraw this legislation. 
DAIL JONES (NZ First) 
: 
 As there was no twelfth Speaker from the other side—and I take the point made by David Carter to me the other day that if we wanted a second call we are free to take one in a situation where National has had three calls—I thought I would spend just a few moments on the issue. 
I am quite concerned about some of the statements made especially by Dr Mapp. When he mentioned the Iraq situation it made me think of the Middle East and Afghanistan. It made me think also of the situation in Guantanamo Bay. What level could we possibly get to in New Zealand if we did not have this type of legislation? Almost what Dr Mapp says is that the prison officer involved should be slapped over the wrist perhaps demoted or fired and off he or she goes home. We could have a Guantanamo Bay situation in New Zealand and there would be no penalty on any Government. I am astonished that the Greens are opposing this legislation. I would have thought that this legislation was strong and did the sort of thing the Greens want to see done because the suggestion by the National Party—one that I do not think is fully appreciated by the Greens—is that we could have a Guantanamo Bay situation in New Zealand not in Cuba or somewhere else and all that would happen is the prison officer would get a slap over the wrist. 
New Zealand First is strong on law and order. We are interested in this bill going to the select committee. We have been calling for it for a long time and we have wanted to see it go there. 
Dr Wayne Mapp 
: Gross misrepresentation. 
DAIL JONES 
: Dr Mapp says I am grossly misinterpreting what he was saying but it is a logical conclusion of what he said. It suggests that the National Party with its continuing coalition with the Greens on the last couple of bills has not fully understood the nature of the legislation. That was very very clear in the speech made by Ms te Heuheu. 
Nandor Tanczos 
: It does not protect them from physical abuse. 
DAIL JONES 
: Mr Tanczos keeps interjecting on me. I do not mind explaining to him that we could get a situation where if we opposed this legislation and supported Dr Mapp’s view some Government could have a regime—and I know it would never happen in New Zealand; I am speaking theoretically and as lawmakers we make sure that even the worst situation cannot develop—[ 
Interruption 
] Dr Mapp and Mr Tanczos are voting the same way on this legislation so they are supporting each other even though they say they are not. I suppose that is the best place for me to finish on this particular issue. It shows the ridiculousness of the whole situation. The Greens and the National Party oppose this legislation but say they do not support each other. 
Bill read a first time. 
Hon PHIL GOFF (Minister of Justice) 
: 
 I move  
That the Prisoners' and Victims' Claims Bill be referred to the Justice and Electoral Committee for consideration that the committee present its final report on or before 4 April 2005 and that the committee have the authority to meet at any time during a sitting of the House except during questions for oral answer during an evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 191 and 194(1)(b) and (c). 
referred to Justice and Electoral Committee 
STEPHEN FRANKS (ACT) 
: 
 I raise a point of order Mr Speaker. Is there a means of moving an amendment to that motion to omit the permission to sit outside normal hours? I would like to move that we omit the words that represent the departure from the normal Standing Orders relating to the sitting times of that committee. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I understand that the member might be able to seek leave to do that but it is my understanding that it should also be in writing if there is to be an amendment. 
STEPHEN FRANKS 
: I did not know that that was to be the condition of sending the bill to the select committee until the motion was moved. 
Hon Phil Goff 
: The member should have read my first reading speech. 
STEPHEN FRANKS 
: The Minister mentioned the committee. He did not mention those conditions. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I advise the member that Standing Order 284(4) states: “An amendment to substitute another committee or to alter any proposed special powers or instruction may be moved if notice of such an amendment is delivered to the Clerk at the Table before the bill is read a first time.” 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 61 
New Zealand Labour 51; United Future 8; Progressive 2. 
Noes 56 
New Zealand National 24; New Zealand First 13; ACT New Zealand 9; Green Party 9; Maori Party 1. 
Motion agreed to. 
Business of Select Committees 
Appointments 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That a committee be established to undertake a review of New Zealand’s existing constitutional arrangements by identifying and describing: 
New Zealand’s constitutional development since 1840 
the key elements in New Zealand’s constitutional structure and the relationships between those elements 
the sources of New Zealand’s constitution 
the processes other countries have followed in undertaking a range of constitutional reforms and 
the processes which it would be appropriate for New Zealand to follow if significant constitutional reforms were considered in the future; 
the committee to consist of seven members to be nominated by parties to the Speaker as follows: New Zealand Labour 4 Green Party 1 ACT New Zealand 1 and United Future 1. 
In speaking to the motion I say first of all that I regret the fact that by leave even though obviously the Government parties are not going to oppose it New Zealand First and National removed themselves from the select committee and indeed therefore from the ability to participate in the committee should they change their mind at any point in the future. It seems to me in looking at the terms of reference that they are both very broad and encompassing and do not bias in the least the nature of the conclusions to be arrived at by the select committee. It is a very open process that is being proposed within this motion. 
It would not come as a surprise to most members in this House even to those who know me at all reasonably well that I am a constitutional conservative—that is I am a constitutional monarchist. I believe very firmly in the supremacy of Parliament I reject the notion that the will of Parliament can be overruled by outside bodies I believe in accountability to the democratic electorate at large and I believe in the rule of law. But it is clear that over a long period of time we have come to the stage where a large number of questions have been raised about the nature of New Zealand’s constitution: how it works what it means how we have got to where we are what the various documents mean within that constitution and should we wish to change those—and this committee does not deal with the issue of whether we wish to change them—what the processes will be for considering any changes that might be suggested. In some countries such as Australia that issue of the process of change has been quite a difficult one. 
New Zealand is traditionally regarded as having an unwritten constitution. It is therefore similar to the United Kingdom and one of I think only three countries it is now claimed that have unwritten constitutions. I am one of those who do not feel that that is some great disadvantage. There are any number of distinctly non-democratic States around the world that have extremely democratically written constitutions that are significantly disobeyed with great frequency. In fact I have pointed out on many occasions that those countries that have a long and largely continuous history of democracy in the world are almost universally constitutional monarchies. The United States is actually the one great exception to that rule but of course it chose to elect a monarch in its constitution. The United States president is an elected monarch and mirrors in his powers the powers assumed to be the powers of the King as they ought to have been in the 18th century as opposed to the powers that the Americans thought George III was improperly exercising. In a sense what one has in the United States is a kind of elected constitutional monarchy and as we now largely seem to have Bushes one after the other it may potentially become an actual kind of constitutional monarchy as well with the election being a kind of confirmation process around the succession. [ 
Interruption 
] That is right. If George is going can Jeb be far behind? That is the question now being asked about the States in the short to medium term future. 
The notion that our constitution is unwritten is actually a bit of a nonsense. There is not a thing called the “constitution” but we have a Constitution Act an Electoral Act and a whole range of other Acts. What is significant about those Acts is that they are not subject to interpretation that overrides the will of Parliament. In other words there is not a supreme law called the New Zealand constitution against which other New Zealand statutes have to be measured in terms of their constitutionality. For those brought up in the 1960s who think that is a wonderful liberal idea that will lead to the progress of human kind as a benign Supreme Court overrides nasty right-wing laws I simply invite them to consider first of all the fact that progressive income tax was ruled out by the Supreme Court in the early 1930s and in more recent times the US Supreme Court has not shown itself as the vanguard of the democratic left—indeed it is rather distinctly not moving in that direction in more recent times. As we are perhaps beginning to learn in New Zealand the inclinations of supreme courts depend very much on the views of those who are appointed to them rather than necessarily some broad all-encompassing view of life. 
So we have many constitutional documents that are written which have arisen in a large number of different ways. I think it is very important that we investigate them. It is often said that the Treaty of Waitangi is the founding document of the New Zealand constitution but that is a theory that does not have much historical weight. It is something that has been asserted as a doctrine in the latter part of the 20th century; the notion that it was the founding document of the New Zealand constitution would have seemed a totally bizarre notion to most people in the 19th century. However that it is now a constitutional document of some sort is an unchallengeable assertion within the New Zealand context. But what the meaning of that is and how that relates to other things is of course open to a huge variety of debate and part of the select committee process will enable that debate to occur within an open and democratic framework—which again is why I regret the fact that the main Opposition party the National Party is not participating. The ACT party is quite right to have seen the fact that the committee can be the potential for exploring a whole range of issues which can be properly explored in that way. 
By no means is the committee there to assume a certain outcome. It is not there to assume that we will turn ourselves into a republic although one occasionally hears the faint tinkling of those outside who are lining themselves up for the prospect of becoming New Zealand’s first elected president. There may even be one or two people inside the House who are suffering from the delusion that they might fill that role at some point within the not too foreseeable future. Certainly even though I am a monarchist I sometimes think that perhaps we might want to consider that issue when the reign of the current monarch comes to an end—not that there is anything personal about that because the whole thing about being a constitutional monarchist is that one puts aside one’s views about the particular nature of the person who might be the monarch at the time. 
The issue of process has been a very important one. The Australian development was around a very formal and quite difficult process but it broke down on the very simple matter of how the president was to be chosen. Had there been consensus around that the Australians would probably now have a republic at this point in time. There was clearly a majority for being a republic but not for any of the particular versions of how to choose a president. 
This is a process that we should undertake quite slowly and carefully not rushing it. As I said I do not object to the leave sought by National and New Zealand First. If at any point either party wishes to become part of the process as they see it working and not being what they fear I am very happy to make parliamentary time available for a motion to enable membership to be added. The Government has indicated that Government members will support the election of the Hon Peter Dunne as the chairperson of the committee. Ironically by withdrawing from membership National and New Zealand First have now ensured that Labour will have a majority on the select committee. Mr Dunne is known for his careful thinking for not rushing to conclusions and for listening fairly to all points of view and I think he is an excellent person to be considered for the chair of the committee. I might say that amongst my own colleagues there has been almost a huge rush of volunteers to be members of the committee. I have to say to those who have volunteered so far that I have the faint suspicion that those who volunteered the fastest may be the least qualified to serve and perhaps the more reluctant might be the more appropriate to serve on a very careful process around a constitutional committee of this sort. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 That was a very considered speech from the Leader of the House. Many of the points he put forward in support of the motion seem on the face of it to be quite reasonable. The National Party however has decided not to participate in this process because we are most uncomfortable with the terms of reference. We believe they are the only terms of reference that currently exist as stated in the motion itself. I will go into those reasons in a few moments. 
I make it clear to the House that if the Government were to be more upfront about the intention behind the select committee we would be part of it. It seemed to me that in the Leader of the House’s speech where he hit upon the issue of the Treaty of Waitangi and the issue of where that sits inside our constitutional arrangements there was the seed of a new motion that may well see the National Party participate in this exercise. To that effect I will move an amendment to the motion later in my speech. 
I remind the House that in the year 2000 a constitutional conference was held in the Legislative Council Chamber. There was a compilation made of all the contributions at that conference which Colin James put together. I have recently taken the time to read through those contributions in order to get a bit of a feel for where New Zealanders’ thinking was about those issues 4 years ago. I think it is a shame that the Government if it were serious about looking at New Zealand’s constitution did not start with those fairly learned contributions that as my colleague Dr Mapp said—he was a major player at that conference—were most divided on the issue. 
Although this motion speaks of the constitutional development of New Zealand since 1840 that topic can be quite authoritatively found in that book put together by Colin James. The key elements of New Zealand’s constitutional structure and the relationship between those elements are thoroughly explored in those papers and the sources of New Zealand’s constitution are similarly dealt with. Perhaps the processes other countries followed in undertaking a range of constitutional reforms are not so well followed. So my question has to be: why put that in this motion if there were not ultimately some intention to move New Zealand down that particular track? 
There I think we start to lose the plot a little bit. Although I accept that the Hon Peter Dunne would be a fair chairman he has publicly stated his desire to see New Zealand a republic. So I have this view that if Parliament is to progress down this line perhaps there should be a discussion publicly and then the option should be put to New Zealanders in the general election to come. I think it is that general election and the comments made by Dr Michael Cullen about the Treaty of Waitangi that have caused the Government the most problems on this issue. 
I accept that the Government says it wants to do this in good faith but I look at a couple of other things it has done this year—supposedly in good faith. One was the review into race-based funding in Government departments agencies and entities. When that issue was first raised by Dr Brash earlier this year the Government’s first reaction was to deny it ever happened. It said there were no race-based funding arrangements in the New Zealand Government’s dealings with people. Then today a report was released that totally acknowledges the very vast extent of that type of policy making in the Government’s activities but there is no commitment of any real substance to do anything about those issues. 
We can also point to the issue of the seabed and foreshore proposals. The Government went around the countryside and spent millions of dollars in holding hui up and down the country. It then went through a very exhaustive select committee process only to turn up in the House once the Fisheries and Other Sea-related Legislation Committee reported back with what was effectively a new bill a 150-odd page Supplementary Order Paper that the House was supposed just to adopt and pass—which it ultimately did. Some of us voted against it but most of the people who wanted and who were on that select committee were party to that complete denial of the pleas of submitters to it and simply pushed through the legislation they wanted. 
I have also heard the Leader of the House Michael Cullen say that he would never tolerate a situation in which the will of Parliament was interfered with or overruled by people from outside. Members should correct me if I am wrong but did the Prime Minister not stand up in this House yesterday and tell us that over the recent debacle of the high salaries at Television New Zealand heads would roll? Did we not hear today that at least three directors have offered to resign—to roll their own heads—and that the Minister of Broadcasting has said that that would not be necessary? The Government has blown in the wind and done a bit of trumpeting but it will do exactly what it wants to do. 
We can ask the same thing of the Leader of the House with regard to the Supreme Court’s decision over the Zaoui issue. Parliament makes it very clear in legislation that bail is not available to someone who is incarcerated as a result of his or her being named in a security risk certificate. But the Supreme Court has decided that whatever Parliament wants is not good enough and it has granted the man bail. Well good luck to him it would seem. Those are two cases where Parliament’s will has been overruled in very recent times. 
Perhaps that is a reason for having a discussion about our constitutional arrangements. I get back to the real reason behind the Government’s wanting to set up this committee. I believe it wants to take the issue of race relations and the issue of the place of the Treaty of Waitangi in 2004 and beyond off the political agenda. 
So I want to move an amendment. It is that all the words from “constitutional arrangements” to “the committee to consist of” shall be removed and replaced with a motion that will read: “… to undertake a review of New Zealand’s existing constitutional arrangements and the place of the Treaty of Waitangi in contemporary New Zealand. The committee is to consist of 11 members to be nominated by parties to the Speaker as follows: New Zealand Labour 4 New Zealand National 3 New Zealand First 1 Green Party 1 ACT New Zealand 1 United Future 1.” I will supply that motion to the House before we move on. If the Leader of the House is so upset that National is not being part of this new select committee surely National’s representation on it should be much more akin to its representation as the main Opposition party than the motion he is proposing allows. 
I wonder also just how serious the Government is about the results that come from this committee when an equal weighting in the committee’s work is supposed to go on the consideration of the steps that New Zealand might take were it to embark on constitutional reform. I fear that many of the steps have already been taken and the Supreme Court decision is no doubt a very significant step in that direction. I question whether the proposed nomination of Margaret Wilson to the Speaker’s seat in this House is part of that agenda because there is no doubt that Margaret Wilson has a republican view of New Zealand’s future. Although the National Party does not want New Zealanders not to discuss these issues I think it is very appropriate that we get right to the heart of them and that this House accept the amendment proposed by the National Party to the motion. 
DAIL JONES (NZ First) 
: 
 It is an interesting suggestion that has been put forward by the minority Labour Government and it has been put forward in a very interesting way by the Leader of the House Dr Cullen. I think I can agree with many of the things Dr Cullen said during the course of his speech. In agreeing with them I feel that those were reasons why this motion should not proceed. It was one of those situations where the more he spoke the more I thought he was speaking against the motion rather than for it. But I appreciate the open and frank way in which he approached this issue. It should be discussed in an open and frank manner because it is of vital importance to the future of New Zealand. 
New Zealand First takes the view that if we are to proceed in the way suggested by Dr Cullen—as I said I can go along with a lot of what he had to say—then time on this type of issue would be best spent by a royal commission. It should not be dealt with by members of Parliament who have many other things to do next year let alone sort out any future problems with the foreshore and seabed legislation and suchlike that might arise and that took a bit of time this year. There is a general election coming up next year and if the ACT party feels that it will not have any contribution to make afterwards then it can surely spend time on the select committee because it may not be around after the election. Maybe that is why Mr Hide wants an ACT member on the committee. I can see his point of view. 
New Zealand First expects to be busy electioneering next year with a view to being back in a more dominant position after the next election. So partly there is a practical reason for New Zealand First’s viewpoint. We have other things to do to help run the country rather than tie down a member on a select committee. 
If the job were done properly this committee would probably meet for 6 months. How long would the committee go for? It would go for quite a long time. I think Mr Dunne as chairperson elect agrees with me that this committee would have to sit for a considerable length of time. 
We have seen how the minority Labour Government operates on constitutional issues through for example the Privy Council matter and the Supreme Court legislation. The Supreme Court Act was rammed through this House. It had the support of only 38 percent of those able to vote at the last election yet it was rammed through the House. In fact the majority on both sides was the same: 38.1 percent of those eligible to vote at the last election voted for that Supreme Court legislation and 38.1 percent voted against. Yet the Labour Government rammed it through. 
There would be people who would come along to the parliamentary select committee and ask whether they were really wasting their time because as the Labour Government had proved that they had wasted their time in the past they would presume they would be wasting their time in the future. Once again if Prime Minister Helen Clark decides that a thing will go a certain way it will be done that way. Everybody in the Labour caucus will jump to heel supported by United Future— 
Nandor Tanczos 
: And the Greens. 
DAIL JONES 
:—and the Greens of course as Mr Tanczos interjected. We have only to note what has happened about the appointment of Margaret Wilson as Speaker. There was no consultation with New Zealand First but through an agreement with United Future and the Greens—bang!—it was done. So much for discussing that issue with other members of the House! Of course I take many of the points made by Dr Cullen about the United States and our constitution and I am reminded of a speech made by Winston Churchill in about 1946 quoted recently in  
The Economist. 
 He told an enraptured audience in Fulton Missouri that the Americans and the British must never cease to proclaim in fearless tones the great principles of freedom and the rights of man that are the joint inheritance of the English-speaking world—which through Magna Carta the Bill of Rights habeas corpus trial by jury and English common law I go on to say are the basis of New Zealand’s unwritten constitution. 
Those are the foundation stones of the way in which New Zealand operates. They have served and will continue to serve New Zealand well. One would feel that this committee that was suggested by the minority Labour Government would be a partisan committee—based on the experience I have had at any rate in the last 2½ years in this House. 
Of course one of the things I would have liked to see in the terms of reference is a question as to whether New Zealand is independent and further if we are independent from Britain what our independence day is. That is a question that might create some interest. Some people might say a date in 1835 some people might say 6 February 1840 and other people might have other dates. That particular issue will have importance I think when we look at Peter Dunne’s bill later on about what date New Zealand Day should be. Should New Zealand Day be the same as the day on which New Zealand obtained its independence? I suggest that that date was 21 November 1947 at the time of the passing of the Statute of Westminster legislation because until that legislation was passed this House for example was unable to get rid of the Legislative Council. That council was established by legislation in 1852 and until the Statute of Westminster legislation was passed this House was still bound by an Act of Parliament passed by the Parliament of the United Kingdom. So the “consent and reply” legislation had to be passed in 1947 and it was only then that this legislature was able to move on in the early 1950s to get rid of the Legislative Council. I would think then that at some stage or another and in the course of a royal commission on the issue New Zealand would consider just what day New Zealand’s independence day is and whether we should be celebrating an independence day or something along those lines. 
One question about the Treaty of Waitangi has been issued. There are various views on the treaty and one view questions whether a minor naval official could enter into a documented agreement—which he thought he would call a treaty but he could have called it anything he liked—with a group of people who were virtually stone-age barbarians and who were unable to read and write in a country they did not have possession of and authority over— 
John Tamihere 
: We’re talking about New Zealand not Pakistan. 
DAIL JONES 
: The racist member Mr Tamihere can keep on with his remarks. But if we look at say the Montevideo Convention we can say for sure that the Treaty of Waitangi was not a treaty. The reason is that it did not comply with the requirements of two parties who were sovereign in their countries because both parties had to have clearly sovereignty-defined territory. So in that sense the so-called Treaty of Waitangi can never be a treaty. Mr Brownlee has raised an interesting point but just as New Zealand First is not interested in supporting the Government’s motion so of course it is not interested in supporting the National Party’s motion which is based on a feeling of over-importance on the part of the National Party in this House. From what I can recall Mr Brownlee said that the membership should comprise four Labour members three National members and one member from New Zealand First. We know that the sense of proportionality has been knocked out of the window altogether there. If the committee is ever to be effective it should have a membership of four two and one. So what that amendment betrays is as I said the feeling of over-importance the National Party has in this House. One will have to wait and see after the next election whether even a four-two-one situation will be appropriate. 
This is a very interesting situation and any future development of New Zealand’s history I say is a matter of the constitution written or unwritten. People might say that on a particular day in Parliament this matter was debated and a select committee was established but New Zealand First does not want to be part of that select committee because on the evidence we have had in just this past 2½ years we cannot believe that the Labour Party will act fairly. We have seen evidence of that with the Supreme Court Bill. We know for example that the Greens said they would listen to the voice of the Maori people but when the legislation came through and Maori were opposed to that bill the Greens still went ahead and supported it. It was just the Greens and Labour who pushed that bill through this House by the slimmest of majorities. So the Labour Party if it wants to do anything it will do it. 
I think that in all fairness the best way to consider this issue is to give a royal commission a broad-brush set of instructions and that will encourage all New Zealanders to go to that royal commission knowing they will be given a fair hearing and a fair conclusion. At the end of the day whatever happens New Zealand First will expect to see a referendum to give effect to whatever the decision will be. That is totally in keeping with New Zealand First’s view. I notice nodding heads but I will not name the members. Time will tell whether that will be the case. 
RODNEY HIDE (Leader—ACT) 
: 
 That was Mr Dail Jones of New Zealand First. I fear that those “nodding heads” might have been people nodding off to sleep. I am a little surprised by Dail Jones’ contribution where he said I think that it would be a waste of his time to turn up to the select committee. If that is to be the measure that that member applies to what he does or does not do around Parliament he will have a lot of spare time indeed. I have to say that I am also a bit surprised by the National Party’s reasoning for not turning up to this committee. Its reason is that its members do not agree with this committee and they do not agree with where it is going. Well that is part of the feature of being in Opposition actually. Large numbers of bills go through this House that we as Opposition MPs are vehemently opposed to. There are select committees sitting on legislation that we do not agree with but we turn up in order to improve the legislation and to take part in the debate and because we live in hope of convincing our Labour colleagues they are wrong. But the idea that when we see something we disagree with we somehow pick up our toys hop out of the sandpit I have to say is unparliamentary indeed. So the ACT party will certainly be taking part in this select committee and we will have Mr Stephen Franks as our member. 
There is nothing more important than the constitutional arrangements of a country—nothing. Like it or not the Government has set up a select committee to have a look at those arrangements. I think that it behoves us all to take an interest in what that select committee is up to. Let us just think of the things we will be considering. We will be considering the rules within which the Government operates and in particular the protections that citizens have from the Government. If we look at our constitutional arrangements we see that they have sort of grown up in a haphazard way and that is so particularly in the last 20 years. We have as some sort of constitutional principle now some partnership between Maori and the Crown but what that partnership is has never been explored in a consistent and considered way. 
I think of New Zealand First which has wasted many many hours of this Parliament’s time in trying to explore in question time what are the actual principles of the Treaty of Waitangi—principles that infest large sections of the legislative make-up of New Zealand. Dail Jones has asked questions Winston Peters has asked questions and they have got nowhere. But they are very important questions. This select committee is the precise place at which New Zealand First should turn up and start exploring what the principles of the Treaty of Waitangi are what they mean to the Government and what they mean to New Zealanders. But no New Zealand First has said it will not turn up. Why? Because Dail Jones thinks it would be a waste of his time. Well he could be right. 
Hon Trevor Mallard 
: When is this member going to resign? When is ACT going to get a decent leader? 
RODNEY HIDE 
: It is always lovely to get Trevor Mallard’s positive contribution! It is always wonderful when Trevor Mallard shakes himself awake and puts forward an intellectual contribution to a debate about the constitution of New Zealand. I just say to him that the TVNZ board is not sitting over here. We are actually doing OK.  
Hon Trevor Mallard 
: At 2 percent? 
RODNEY HIDE 
: Trevor Mallard says 3 percent. Well I remember when Helen Clark was on 2 percent and Trevor Mallard was running around trying to do the numbers to keep her in place in her party and things turned out right. 
Hon Trevor Mallard 
: And it worked. 
RODNEY HIDE 
: It did work. So I tell Mr Mallard to hold his breath just wait and he will be surprised at what can happen. The ACT party had the opportunity to participate in this select committee. Trevor Mallard probably does not like that but the Hon Dr Michael Cullen was very pleased. I wrote him a letter with the help of my colleague Mr Stephen Franks and I have to say we had a very good meeting with Michael Cullen about our concerns and what we would like to do in the committee. Our particular concern was whether the committee would be adequately resourced to do the job because this is a big job and if we are going to be involved we want it to be done well. 
We raised other concerns. We asked what limits were there on Parliament’s ability to take away a person’s property. To be honest I suspect there are none. So this Parliament could decide with 61 votes to deprive any New Zealander of his or her private property. I suspect there are no constitutional limits on Parliament’s ability to come along and deprive someone of property. That is a serious deficiency in our constitutional arrangements. So we said to Michael Cullen that we would like to explore that issue in the committee. I would have thought the National Party would be keen to stand up for private property rights and try to get some protections in our constitutional arrangements so that a Government with a bare majority could not turn up in Parliament and deprive people of their property rights. 
Another of our concerns is the ability of Parliament to overturn contracts. We know that a Parliament with 61 votes can overturn any contract that it likes—no compensation required. Mr Franks and I suggested to the Hon Dr Michael Cullen that we would like to explore that issue as part of these constitutional considerations because we believe there should be limits on what Governments can and cannot do; and the constitution is the place to sort that out. We see the ACT party as having a positive impact on this select committee. 
Another of our concerns is the current excess taxation of New Zealanders. ACT has stood up and complained about excess taxation. The National Party has stood up and complained following our lead about excess taxation. New Zealand First has stood up and complained. Likewise United Future has stood up and complained. So we were interested in what sort of constitutional arrangements could be established that might constrain a Government’s spending and constrain a Government’s ability to raise taxes—again with a simple majority of 61 votes. 
I have to say and I think my colleague Stephen Franks will agree that Michael Cullen was very open to our asking these questions as part of this committee. Why? Because it will be a committee of Parliament. Now I do not think that Michael Cullen shares our view of what the constitution should be and I do not think we share many of his views but we are in our Parliament and we will be turning up and putting forward our views and asking our questions. The Hon Dr Michael Cullen accepted that. So it behoves us all to take part in the parliamentary process and to represent the views of all New Zealanders. I am disappointed that the National Party and New Zealand First in some hissy fit over what a committee might do what it might come up with what particular process it might follow have decided they will not partake but would have allowed this select committee to be entirely run by the Government if it were not for the ACT party and the Greens. They are the only two parties that will be standing there aside from the Government asking the tough questions. 
Gerry Brownlee might scoff but who is doing it if it is not us? Because the National Party is not turning up New Zealand First is not turning up. I see Dr Cullen in the Chamber and I ask him how many times have we heard New Zealand First members in this House get up and ask questions about the principles of the Treaty of Waitangi and what they mean—principles that infest all our legislation going back years? 
Hon Dr Michael Cullen 
: I don’t know. 
Jim Peters 
: They don’t know. 
RODNEY HIDE 
: That is quite right but the New Zealand First Party has a golden opportunity to get on the select committee and actually do some work to discover what it might mean to discover the implications yet Dail Jones says: “Oh no it would be a waste of my time; to hell with that.” I say: “Shame on New Zealand First and shame on National for not accepting your parliamentary obligations!” 
NANDOR TANCZOS (Green) 
: 
 This country is in a process of constitutional change and it is part of a slow process of decolonisation. That makes some people in this country uncomfortable. It is right that it should do so because if that means anything at all it must mean a shift in the bases of power. It is not clear to everyone that we are undergoing such a process because this country is unusually fortunate. Our constitutional debate is not forged in civil war or in violent revolution but in peaceful evolution. That allows us a unique opportunity. It allows us to take a measured approach. It allows us to take a considered process of full public participation and an incremental approach towards an agreed destination. 
Recent events in this country have added impetus to this process of constitutional change. We have seen the establishment of our Supreme Court and the assertion as a result of judicial independence. That has been important because the doctrine of judicial independence has been academic in this country while our final appeal court has resided in London. We have seen the enactment of the foreshore and seabed legislation and it has raised quite properly questions of what are the constitutional protections for tangata whenua and what are the protections to stop Parliament from usurping property rights. Even the current debate over what is the best flag for this country is symbolic of an interest in constitutional matters. But that debate has been constrained in this country by a general lack of knowledge of what our constitution actually is. 
During the hearings on the Supreme Court Bill Sir Tipene O’Regan said that New Zealanders are constitutionally illiterate. I agree with that comment but it is not surprising that that is the case since there is no civics education in our schools. Most people in this country do not even know how legislation is enacted never mind the roots of parliamentary judicial and executive “legitimacy”. But people are capable of understanding those debates and forming opinions. The language of the debate may be unfamiliar to many people but it is not incomprehensible. So we need a proper process in this country to provide information to the public and to facilitate public discussion about this matter. The course of action that we are discussing in this motion is part of that process. 
I remind the House that this specific proposal began as an agreement between the Green Party and the Government made during our support for the Supreme Court Bill and the terms of reference have largely been nutted out in the Justice and Electoral Committee. I am pleased to see the Hon Peter Dunne is so enthusiastic about a Green Party idea he wants to chair the committee. The Government needs to remember that it is the committee itself that will elect its chair. It is not for the Prime Minister to decide who the chair will be despite attempts to put a conciliatory gloss on it. So what should this committee do? It is not for the committee to determine what our constitution should be. That is for the people of this country. But it is helpful to have a select committee lay out the sources of our constitution now. The point has been made that we can find it in Professor Philip Joseph’s textbook and we can find it in the  
Cabinet Manual 
. That may be true but what do those things mean? There are widely divergent views on this and the recent debates between Dr Cullen and the Chief Justice indicate how divergent some of those views can be. 
I think it is right for this Parliament at the start of the 21st century to lay out its view of what it means—its view of what those sources are and how they work out in practice. There is no single view in this House just as there is not in the wider community but what we can do is lay out the parameters of that debate and the arguments for and against different positions. The other thing a select committee can usefully do is provide an accessible text readable by lay people and accessible to the average New Zealander that can lay out that information and thereby provide a basis for a much more informed discussion in the community. As the Green Party has often said in the past that needs to be backed up at a more basic level with a commitment to civics education in our schools. 
I was looking at the December issue of  
Law News 
 and in it there is an article by Catriona McLennan about a paper by Professor Bruce Harris on the constitutional future of New Zealand which was published in the  
New Zealand Law Journal 
. Professor Harris said that there is a lack of public knowledge about constitutional issues that constitutional education in schools is inadequate and that a prerequisite to any constitutional reform process must be an effective programme not only to meet the understanding deficit in the community but to increase enthusiasm about constitutional debate. This committee is an opportunity for Parliament to take a step in that direction. Professor Harris also makes a number of useful suggestions about how we might proceed to have a public discussion and we should take note of those suggestions. Other people have made suggestions too but they are just suggestions. We need to start to work towards a collective agreement about ways to proceed and a commitment to make that happen. 
The last role of the select committee is to look at the processes used to debate constitutional change in other countries and what processes we might use in this country bearing in mind that we can learn from overseas countries but that we are unique in Aotearoa and have to develop processes specific to ourselves. That process is about public discussion. As I have already said it is not for the select committee to determine whether and how we might change the constitution but it is a proper role for a committee to determine how Parliament can facilitate a debate about whether we should change and how any such change should take place. 
As I stated at the beginning of my speech we are in an unusually fortunate position in this country in that this debate is happening not in revolution not in war not in violent confrontation but in a peaceful slow evolution. That is extremely important. This is part of our process of coming of age as a nation. I know I am privileged as a member of this Parliament to participate in this process and I look forward to doing that on behalf of the Green Party. 
Hon PETER DUNNE (Leader—United Future) 
: 
 One of the good things about this debate is the consistency of the ignorance from the member who preceded me. I should tell him that this is not a Green Party idea. The Deputy Prime Minister and others will know that I have been advocating for a constitutional inquiry at reasonably frequent intervals since 1994. 
Rodney Hide 
: Very effectively too. 
Hon PETER DUNNE 
: Absolutely; we now have it. I think it will be a very positive step forward. I want to take some time to deal with some of the issues that have been raised about what is actually intended. That Dr Cullen is a very conservative constitutional monarchist and I am a cautious conservative republican— 
Stephen Franks 
: Irish. 
Hon PETER DUNNE 
: —and proud of that too—are quite irrelevant to the debate. What is relevant is the process that is being followed and the objectives of the exercise. If we look at the terms of reference we see very clearly that contrary to Mr Brownlee’s fears this is a very cautious and very deliberate first step and it may be an only step. Let me go through the process as I see it over a period of time and I will pick up some of the points that Mr Jones made in this regard. 
This select committee inquiry is essentially to bring together all of the elements of the New Zealand constitution as we know them to be or discover them to be; to tease out their relevance their relationships and by implication their effectiveness; then if a process of change is deemed desirable at some future point to determine how that might occur. The committee then will make a report to the Parliament. The Government of the day will consider that report. I would imagine that if it accepts the recommendations we put forward it would then move to establish at a future point something akin to the commission of inquiry that Mr Jones referred to. That might well have very specific terms of reference. I envisage that that process would take some years as it should and that at the point the commission of inquiry reports—and I am relying here on the experience of the royal commission into the electoral system—its recommendations would essentially be just that. 
The Government at that point and who knows what its form might be would have to determine whether it wished to accept those recommendations and how it might proceed to deal with them. It would seem to me that if we were at that stage looking at major constitutional change—and that is a huge if—then the only way realistically to proceed would be by way of endorsement at a binding public referendum. But that is a process—if one even assumes its inevitability—that is likely to take the best part of a decade from here. The steps we are taking by establishing this committee and this review process are very much preliminary groundwork. It does not prejudge an outcome; it does not even presume a specific outcome. It is a stocktake of what we have what we assess its effectiveness by implication to be and if we were to consider change how we might go about it. 
But I think it has one other important element. It seems to me that it will be an inevitable concomitant of this process that we engage in some form of public interaction. Firstly I think it is important that New Zealanders as a whole get a chance to express a view on how they perceive the New Zealand constitution and secondly it is important that the debate that has been lurking around for some time about nationhood about constitutional arrangements and about where we might go with diverse elements like flags national days and all those things that are not covered here or relevant here gets a chance to be aired. I get a sense that New Zealand is at the point where it wants to discuss these issues. 
One of the things that arose from Dr Brash’s Orewa speech earlier this year—if I can be permitted to use some imagery—was a situation akin to the lifting of the lid off Pandora’s box. Everything came out flew around and made a great deal of noise and unsightly presence but there were no solutions as to how either the problems might be resolved or the things put back in the box. It seems to me that what people were actually saying was that yes it is fine to get everything out there and it is fine to know what we perceive our problems to be whether or not we agree with them but we are really much more interested in a way forward. We are really much more interested in what it all means and how we take this country forward and if that means we need to start to talk about our constitutional arrangements their adequacy and whether change is required so be it. 
This is a very deliberate cautious first step. Some have said that it is not the right time. Frankly there is never a right time. But I think that in this country probably since the days of Norman Kirk’s walk across the Waitangi marae in 1973 with the young Maori warrior there has been a bubbling sense of that amorphous thing called New Zealand nationhood and a willingness—increasingly fostered by journalists and others—to start to discuss it. This process is part of capturing that. 
It is also part of doing the necessary review of the adequacy of what we have at the moment in a deliberate and considered way. I get no sense from the considerable amount of correspondence I have had since this matter has been in the public arena that New Zealanders are keen to make rapid unproven change. New Zealanders are certainly keen for a debate and to express a view. It may well be as perhaps the Deputy Prime Minister implied that their views will harden up once there is a change in the monarch in Britain. I do not get any sense that New Zealanders want to take any precipitate steps while Queen Elizabeth is on the throne. The future may be a different story and if one looks at the genes in that family one sees that that future may be a very long way off from being confronted. Most of us will be long into our dotage by the time the Queen shuffles off this mortal coil. So I do not think there is any great need for concern or a hurried response but I think it is an appropriate time to start considering these issues. 
I want to pick up some comments made by Mr Hide—he may have made them tonight but he has certainly made them in correspondence with the Government—about the range of issues that ought to be considered. I know that Mr Franks has expressed similar views as well. I think that some of the matters relating to the New Zealand Bill of Rights Act property rights and associated matters are properly issues that ought to come on to the agenda here. I do not see this as being necessarily exclusive in that regard. 
Mr Brownlee spoke about the Treaty of Waitangi and he seemed to be postulating that it was an either/or situation—we either have a constitutional environment where we take the treaty to be the absolute founding document from which everything flowed or we ignore it altogether. If I heard him correctly I thought that was the message he was proposing. The relevance of the treaty to this exercise is of some importance but I personally do not believe that it is sufficiently relevant that it requires a specific term of reference. It is a feature and a part of the New Zealand constitution but in some sense it is no greater than any other feature. I think that by making it a specific reference we accord it a status that will simply ensure two things: first that it will be given a status that is not warranted; and secondly that the division and the anger about it that Dr Brash referred to earlier and that Mr Brownlee picked up tonight will simply be fuelled. 
I want to make this final point. The committee when it is established will meet to elect its own chair. I am grateful for the indications of support from the Government for my nomination. In the event that it is successful I give this pledge to the House: while my own personal views are well known and I do not shrink from them I will not chair this committee in a way that demonstrates any bias at all. It is important that this be done properly be done impartially and be done fairly because the outcome is one that all of us will have to live with whatever our particular view and that is completely as it should be in a process of this type. 
Dr WAYNE MAPP (National—North Shore) 
: 
 The last speech illustrates the whole difficulty of the process here. Essentially what Mr Dunne was saying is that this matter has to be driven from the top down that parliamentarians have to guide it and set the terms of reference. Apparently they should ignore the big topic that has motivated this whole inquiry. Let us be honest about this: the Government would not be moving to set up the select committee but for the Orewa speech earlier this year. I have to say to Mr Dunne that that in many respects is the central question about our identity. 
The reason I say that is I was involved in setting up the constitutional conference in the year 2000. I had extensive discussions with the then Prime Minister Jim Bolger the subsequent Prime Minister Jenny Shipley and with various other people including Colin James who became the organiser. The conference was held in the Legislative Council Chamber. 
Hon Tony Ryall 
: Was it a waste of time? 
Dr WAYNE MAPP 
: No it was not a waste of time actually. There was a large number of contributions but the abiding theme that came out of it was the sense of division. Whilst Colin James certainly pulled together all those contributions and the conference concluded with a tentative way forward in fact the whole issue stalled. That was the reality. Mr Franks will well remember this. The whole issue stalled because of the central issue of what was the role of the treaty and whether this nation could ever find any sense of consensus on it. I guess the fact that nothing happened thereafter meant that people thought it was too dangerous that it was too difficult to go close to and that we should do nothing. 
That was the Government’s response. In the year 2000 the current Government had a choice. It could have funded the university centre to continue the dialogue and to have further conferences and discussions. I am sure that Dr Cullen will recall that the Government made a conscious decision not to do so. It must have made that conscious decision because some eminent New Zealanders made these representations and the Government simply ignored them. After all these kinds of discussions require a degree of central government funding. That is why the conference occurred in the first place. In fact the Hon Tony Ryall provided $50000 from his Ministry of Justice budget to help it take place. 
The current Government has not done any of that. For the last 5 years it has done nothing. However when Dr Brash at Orewa made a speech that changed the political landscape of the country the Government suddenly felt the impulse and the necessity to have a constitutional select committee. It is all about defusing things. That is the Government’s intention. I do not believe that the public will be fooled by that process. I do not believe that a select committee of this Parliament as opposed to a process that is driven by a wider group of New Zealanders will be successful. Mr Dunne has said that it will all take a lot time the committee will just listen to things and make a report and so forth and ultimately there would be a referendum if there was to be any change. And Mr Dunne has been quite honest about what his particular motivations are. 
The interesting speech made by Dr Cullen raised a particular point. As I understood it he said he was a supporter of the current constitutional arrangements. He nailed his colours to the mast on that point. It seems to me that his views are different from those held by the Prime Minister. It is clear that the Government has an agenda. The high point of it in the sense that it has been the most prominent move was clearly the passage of the Supreme Court Act—and I wonder to what extent the Government rues the day it introduced that particular issue. Clearly it was a major step. The Government did not go and get public consent. It never put it to the people directly. I know that it was part of Labour’s overall manifesto but people vote on many things; I doubt whether the Supreme Court was uppermost in anyone’s mind. That particular issue was never put to the people. It was a major constitutional change. 
We could easily end up in a situation where the only thing left is in a sense the shadow of a monarchy. We could end up having a referendum that is intended to endorse effectively what has happened instead of there being a proactive decision by the public to make an affirmative choice. New Zealanders could end up endorsing the reality of what has already happened. Why do I say that? I say it because when I look at what the Government has done over the last several years I see a series of measures that are small in themselves but are cumulatively quite significant—incremental creeping republicanism in fact. I refer to measures like changes in the oath of allegiance for new citizens; the renaming of Queen’s Counsel to Senior Counsel; and the change to the oath of allegiance for senior military officers—it is no longer to the Crown but to the Government and that is quite a significant change. We also have the removal of the portrait of the Queen to be replaced by that of the Prime Minister in our embassies—though not perhaps our high commissions—and the refusal to issue a Queen’s golden jubilee medal in 2003 when Canada actually did so. 
So collectively the Government—the Prime Minister at least if not Dr Cullen—clearly has an agenda. To be fair the Prime Minister has been reasonably open about it. She does want New Zealand to be a republic; she actually says that. But more significant she has been taking a series of steps intended to get New Zealanders to the point where when we have the referendum the result will be a foregone conclusion. That seems to be the overall plan. We have to see in a sense the establishment of this select committee as part and parcel of the process. 
There are other ways to deal with the matter. I do recognise that there is a degree of interest in constitutional issues. Obviously I understand that; otherwise I would hardly have been involved in setting up the conference in 2000. I suggest that the more appropriate path—the path the Government should have taken—was to develop the outcomes from the constitutional conference in 2000. That would have been much more obviously and transparently a process controlled essentially by the public as opposed to the agenda-driven approach of a committee. 
I acknowledge that Mr Dunne will try to chair the committee fairly; I accept that. Nevertheless that is not the issue. The issue is twofold. Firstly is this review a diversion? The answer is yes. Secondly is it intended to be part of an overall agenda to advance the cause of republicanism so that a referendum will simply be a confirmatory vote as opposed to a genuine choice? I believe that the answer to that is yes also. The Deputy Prime Minister said today that he believes in supporting the constitutional monarchy. I think that is in reality a minority view—to be charitable—in his own Government because it is clearly not the Government’s agenda. 
For those two fundamental reasons—firstly it is a diversion; secondly it is part of an overall agenda—National finds that it cannot support this proposition. Moreover the terms of reference simply do not address the central issue so eloquently addressed by Dr Brash earlier this year. 
Hon TONY RYALL (National—Bay Of Plenty) 
: 
 I would like to pick up on a point that my colleague Dr Wayne Mapp made in respect of the constitutional conference. I think the one thing that came out of the constitutional conference in the Legislative Council Chamber was the fact that there is no desire amongst the people of New Zealand for the sort of constitutional change that this cabal known as a select committee will be discussing. As I travel around the country no one asks me about the constitution. No one asks me about the role of the monarchy. No one asks me about the matters that this select committee will look at. People do ask me about more incentives to work hard. They do ask me about more police. They do ask me about less red tape in the community— 
Hon Trevor Mallard 
: You love being wrapped up in it with red bows! 
Hon TONY RYALL 
: And they do ask me when we will have a Minister of Education who does not have a speech impediment; maybe we will have that next Monday. 
The key issue to be discussed in this review is race relations. That issue will not be solved by members of the select committee trying to say it is not important. Middle New Zealand will not be denied in respect of changing the role of the Treaty of Waitangi in the way that the Government thinks. 
Just in the last few days we have seen how the separatist views of the Government and the senior public service have impacted on Maori. Mr Hemopo from the Hawke’s Bay has been here in Wellington arguing the case that the Government’s view of the role of Maori and of the treaty is such that Maori are given extra points that keep them in jail longer. One standard of citizenship cuts both ways. Why would a Government have a policy that says: “Because you’re Maori and you answer a certain way you will get extra points to stay longer in jail.”? That is the sort of political nonsense the people of New Zealand want expunged from the public service. We want the removal of—[ 
Interruption 
] Dr Cullen says he wants that; he does not. Mr Hemopo is saying that he wants that separatism removed from the law so that Maori are not automatically assumed to be violent. 
Hon Trevor Mallard 
: Oh come on! 
Hon TONY RYALL 
: Well that is what the Department of Corrections says. “Might be minth pie time.”—is that what the Minister is saying? I say to the Minister of Education: “The fact ith thith.” We are saying that middle New Zealand will not be denied in respect of its desire to remove the treaty from the fundamental tenets of Government in New Zealand. Government in New Zealand should be built on fairness equity and treating New Zealanders the same regardless of their race. The Government is forcing on the public an agenda that is heading towards an inevitability that this country will have radical constitutional change that the people do not want. New Zealanders do not want this. New Zealanders do not want to sack the Queen. New Zealanders do not want to have the Treaty of Waitangi enshrined in our constitution any further than it is at the moment. What the Orewa speech showed is that middle New Zealand has had enough. The Government will not be able to fix that with some silly committee. 
STEPHEN FRANKS (ACT) 
: 
 I raise a point of order Madam Speaker. I know that the National and Labour whips have been talking about the issue—and I have also been involved in the discussion—of anticipating a closure motion on a debate that technically is not limited. When the debate is not limited it is deliberately like that in our Standing Orders. We recognise that the Government can move and carry a closure motion but on an issue like this I think it is improper not to allow a different sort of debate from the normal introduction debate which runs ritually backwards and forwards. I know that Mr Smith wants to have another call. I certainly would like to have 10 minutes. I do not think this is a debate where the Speaker should be bound by arrangements that are reached between whips. 
Hon Dr Michael Cullen 
: There was an arrangement and Mr Franks was part of that arrangement. Now he wants to change that arrangement yet the Government on the standard tariff could have moved the closure before Mr Ryall’s speech. But if the member insists on speaking for 10 minutes we cannot stop him since this is not a speech that is being split between members of one party. I simply note that in this House when arrangements are arrived at they are stuck to for a pretty good reason which is that eventually life goes around in this place over time. 
Lindsay Tisch 
: National did seek to have a third call. That was not going to happen. I looked to negotiate with ACT to be able to split the call. I negotiated with the Government to be able to take one 10-minute call split between the two of us—National and ACT—and that was certainly my understanding. That is National’s position. 
Murray Smith 
: I understand that there may have been discussion between the whips in Labour and National. To my knowledge there has been no communication with United Future’s whip. I certainly want to take a call tonight on this matter because of its importance. I do not think it is right that the minor parties should be bound in this instance by discussions between only two parties. 
Madam DEPUTY SPEAKER 
: I assure the member that the Speaker cannot be bound by any arrangement like that. A call can only be split between members of the same party. In fact this is a 10-minute call because no closure motion has been moved to date. 
STEPHEN FRANKS 
: Speaking to the point of order Madam Speaker. I want to reassure Mr Tisch that I was not taking issue with the arrangement that Labour and National had reached nor would I have done so except that I knew the United Future member was seeking a call as well. I thought that perhaps the Labour Party whip was not aware of that when considering the closure motion. It would have been awkward to have had a 5-minute speech when there might have been a 10-minute speech if the Government is in fact not able to get the closure motion through. I wanted to draw attention to that point. 
Madam DEPUTY SPEAKER 
: The Speaker is not involved in this matter. It is Mr Stephen Frank’s call. I have called him properly and it is his call. 
Rodney Hide 
: I raise a point of order Madam Speaker. 
Madam DEPUTY SPEAKER 
: I have ruled on that point of order. Is this a new point of order? 
Rodney Hide 
: Yes. What I do not understand is why you thought that there could be a 5-minute call because my understanding is that members can only share a call with someone of the same party. So I do not understand how the Speaker could have decided that there would be a 5-minute call. 
Madam DEPUTY SPEAKER 
: If the member had listened he would have heard me say that I was not party to that at all. Tony Ryall took his call and that was his call. 
STEPHEN FRANKS (ACT) 
: 
 The terms of reference that have been put in the motion describe a job that would ordinarily be done by officials or academics or be published in a Government background paper. I believe that this committee was originally conceived as an exercise to take awkward issues safely past the next election. The only forward-looking instruction in the terms of reference is directed safely away from home—to review other countries’ processes for constitutional change. Nevertheless we join in this knowing that we could be part of a tactic to give credibility to a diversionary manoeuvre. But I believe that the committee can make it much more and if it becomes clear that we are wasting our time ACT will not continue. 
There are plenty of issues to raise. Over the past 20 years there have been distortions in a number of our institutions by what essentially has been an elite consensus. Some of it has been calculated hypocrisy—just political opportunism and deception—but not necessarily ill meant. It has been well-meaning arrogance in a view that the end justifies the means by historians by people outside the political process by the judiciary and by many who mistrust and patronise ordinary people. But on a constitutional matter there are really only three hard issues: firstly how to minimise conflict over succession and leadership without insulating leaders from the boot when they deserve it; secondly who has the power to ensure that the rules about succession are followed; and thirdly who watches those watchers. Our judiciary has been watching the rules from the sidelines because our conventions have been so strong but those conventions have been modified and I believe that this committee can describe not just what they ought to look like but the way that they are actually operating. 
In essence deciding who watches the watchers has been the hardest issue for most countries and the easiest for us when the watcher was the Privy Council. When judges could only interpret or apply existing law which was laid down by elected representatives the risk of the judges getting out of their station was low. But now we have considerable tension in this area. I believe that the Hon Michael Cullen made a thoughtful and useful contribution when he moved the motion. He has been watching closely. He has moved considerably since his speech to the Labour Party in Gisborne when he essentially told us there is a separate status for Maori—“Eat that!”. I think he wants to see this committee deal with some of these issues in a way that is very difficult for a governing party to do on its own. We have a Chief Justice who only last month told the International Bar Association conference that in constitutional law even Parliament was not sovereign. It appears that these judicial supremacists as Lord Cooke identified them are confident that they are on a roll. 
Well these are the matters that this committee can look at. But they are too large and I do not think we will see solutions. What we must report on are the many minor changes; the things that have happened that have evolved our constitution without any significant public debate such as the absence from the New Zealand Bill of Rights Act of protection for property rights and an interpretation of the “living document” treaty that has actually buried the only really substantial property protection for New Zealanders in it. The Chief Justice at that same conference gently mocked property rights as a focus of a Victorian bill of rights. We have provisions reserving appointments for Maori and giving trump status under the Resource Management Act for example to Maori spirituality. Where is our separation of Church and State in that position? There is a transfer of political decision-making to judges through the calculated use in law of undefined terms that Parliament has deliberately left in the law. We did it last week when kaitiakitanga was given no definition and was left for the judges to flesh out. Then there will be criticism of the judges for being inventive. 
I refer also to the powers of general competence of local authorities. I hope the committee will revisit the changes made only 2 years ago when we turned on their heads rules that had underpinned liberty for hundreds of years. The liberties of individuals are protected only when local rulers cannot use coercive powers for anything they have a bright idea about. Then there are the spurious partnership obligations that Mr Hide talked about and the loss of open courts—we have courts that are closed and where justice can never be seen to be done because of blanket secrecy. In the court area again de facto sentencing power has gone to the Parole Board instead of to judges. The judges are involved in just a charade. 
But I do not think this committee should think that its task is to prepare the ground for a written constitution. In the absence of some strong external threat or exhaustion after civil strife a constitution drafting exercise will just be a scramble for political advantage. Ordinary New Zealanders will not have the endurance to outlast the political junkies and the ordinary people have better things to do with their time. So I believe that this committee would be best served if it looked at a few incremental things that it can fix and some protections it can put into our arrangements to prevent the sort of mudslide of new law that we have had over the last 20 years and the surrender of political control of speech to the media establishment. 
I also hope it will come back and put a nail through the heart of the “living document” treaty. Dr Cullen Ms Wilson and Ms Clark still seem to think that there is a “living document” somewhere. It seems to be some sort of deity. Maybe Dr Cullen is no longer a believer. We think this committee can help put a stake through its heart so that it becomes a genuine document once more. 
Hon TREVOR MALLARD (Minister of Education) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 61 
New Zealand Labour 51; United Future 8; Progressive 2. 
Noes 54 
New Zealand National 24; New Zealand First 13; ACT New Zealand 8; Green Party 9. 
Motion agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 32 
New Zealand National 24; ACT New Zealand 8. 
Noes 83 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 78 
New Zealand Labour 51; ACT New Zealand 8; Green Party 9; United Future 8; Progressive 2. 
Noes 37 
New Zealand National 24; New Zealand First 13. 
Motion agreed to. 
Overseas Investment Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Overseas Investment Bill be now read a first time. 
 I intend that the bill should be referred to the Finance and Expenditure Committee for consideration. The bill proposes the most significant changes to the way New Zealand regulates overseas investment in more than 30 years. On 10 November last year I announced a review of the existing Overseas Investment Act. That Act of course is now some 30-odd years old. The review had two purposes. First to ensure that New Zealand’s approach to the regulation of foreign investment focuses on those assets that really matter to New Zealanders. They include sensitive land fisheries and assets with historical or cultural significance. Second we wanted to ensure that potential overseas investors did not face unnecessary compliance costs and that foreign investment that can make a positive contribution to the economy and to New Zealand is encouraged. 
I guess those criteria with the current way New Zealand regulates overseas investment have some shortcomings. Some overseas business investors are subject to unnecessary compliance costs. On the other hand some investors who want to buy land are required to pass a test that is based only on economic development and ignores other important factors such as heritage value and access to sensitive land by New Zealand people. Further the plans submitted by investors to support purchase consents cannot be adequately enforced. In practice it is often impossible to ensure that they are completed to a reasonable standard or for the courts to impose adequate penalties in the event of a breach. 
The bill addresses those problems through a number of provisions. In relation to land investments a proposed purchase to the unimproved value of more than $10 million will no longer be screened where it is not screened for any other reason. This change is expected to affect only land sales in the main centres’ central business districts and is designed to stop purchasers of small parcels of central city land that is not sensitive from incurring unnecessary compliance costs. The criteria for land purchases will be extended to include any of economic development natural heritage historic heritage or walking access and the appropriate weighting of those criteria for any given purchase will be determined by Ministers. 
Purchasers will be required to submit management plans to take account of the criteria that have been specified and compliance with those plans will be made conditions of consent. So for example where a purchaser is required to develop walking access for the public as part of a consent to purchase and fails to meet that condition the purchaser will face penalties that could ultimately include being required to dispose of the land. 
Land adjoining some non-sensitive reserves will be dropped from screening. The most important of those will be drainage reserves within urban areas. This change is designed to ensure that the regulator focuses on those land purchases that are genuinely sensitive as opposed to most of the ones that I looked at which were around urban subdivisions adjoining drainage reserves and similar areas. 
The threshold for screening non-land business assets will be increased from $50 million to $100 million. That threshold was last adjusted in 1999 when it was increased from $10 million to $50 million. 
Ownership of and access to the foreshore and seabed is an important issue for most New Zealanders—as we have recently been seeing. The bill provides that the Crown will have a new right of first refusal where land includes foreshore and seabed and where such land would otherwise be sold into foreign ownership. The requirements on landholders who would need to comply with that new provision will be set out in regulations. 
The bill sets out what is regarded as sensitive land caught under the new regulatory regime. This includes land adjoining the foreshore or land that adjoins any lakes. It also includes lands over 0.2 hectares on specified islands and any land on other islands. It includes land over 0.4 of a hectare that includes or adjoins conservation land; land that is provided as reserves or public parks; land that adjoins land that makes up the Queen’s Chain; land that adjoins scientific scenic historic or nature reserves over 0.4 hectares administered by the Department of Conservation; land that is subject to heritage orders or land that adjoins such land; land that is a historic place wahi tapu or wahi tapu area or land that adjoins such land; or land that adjoins sensitive reserves. Any land over 5 hectares that is not urban land is also covered by the proposed regime. 
Finally if a proposed overseas investor is seeking to purchase farmland that land must first have been offered for sale on the local open market as provided for under the current Act. The rule makes no changes to the existing policy that investments in fisheries by overseas persons require consent. However the onus for obtaining consent when an overseas person wants to buy a stake of more than 25 percent in fishing quota will now rest with the overseas investor rather than the fishing company as the rules apply now. That brings it into line with the general rules around sensitive purchases. 
I now turn to the new enforcement provisions in the bill. The bill responds to previous concerns that the ex post monitoring enforcement of consents was not robust enough and lacked the necessary disincentives. The onus for monitoring conditions of consent will be on the overseas person who will be required to file statutory declarations to attest to ongoing compliance. 
The bill provides greater flexibility for enforcing non-compliance through a series of progressively stronger penalties. Administrative penalties for late filing of statutory declarations have been introduced as has a new category of civil penalties which can be used to penalise people who profit from breaching conditions or cause loss to others by breaching conditions. Continued failure to comply with consent criteria could result in court orders to comply with consents fines or civil penalties or ultimately to the court ordering disposal of the land. 
For serious offences against the regime individuals could be able to be imprisoned for 12 months and maximum fines have been significantly increased to $300000. The courts will be able to order that a mortgage be registered against any land of a consent holder to secure payment of fines and penalties. 
I believe that this bill will better serve the interests of New Zealanders than the current rules. It will ensure that overseas investors who seek to acquire sensitive New Zealand assets comply with purchase conditions that advance New Zealand’s interests. Failure to comply with those conditions will result in real sanctions. At the same time the bill seeks to remove unnecessary impediments to overseas investment where the assets being acquired are not particularly sensitive. I am confident the bill balances the need to protect sensitive New Zealand assets while recognising that overseas investment makes a positive contribution to the economy. It is with much pleasure therefore that I commend the bill to the House. 
Hon DAVID CARTER (National) 
: 
 National will support this bill to the select committee but will be watching the submissions carefully and reserving its position for the future. Sadly overseas investment invokes some of the worst sentiments in some of our people and some of our political parties. Xenophobia which is the intense dislike of foreigners and foreign investment has no place at all in this modern world. I think that people like Winston Peters who trot out this xenophobic attitude time and time again for the polls does himself a huge disservice and he does huge disservice to the recognition of foreign investment and its importance to our economy. I do not believe he genuinely believes in it but he uses the election cycle and every 3 years out comes the same message that is simply promoting fear and hatred but only for the purpose of collecting votes. New Zealand needs foreign investment. 
Rod Donald 
: Why? 
Hon DAVID CARTER 
: If Rod Donald had bothered to study the history of this country even he would realise that it was founded totally on foreign investment. As long as New Zealanders remain relatively poor at saving for themselves then we will continue to rely on foreign capital being invested in this country. Therefore any rules must not be so tough as to turn overseas investors away from this country. Other countries also seek foreign capital and if their rules are grossly easier than ours then the investor has the chance to go somewhere else and that would not be good for our economy. 
This legislation appears to be a reasonable attempt to allow small inconsequential investment to occur without hassle and if that is what is achieved by this legislation then I congratulate the Government on that. At the same time this legislation appears to recognise that some sensitive land—and by that I mean sensitive to New Zealand because of its iconic nature—will need to meet a higher threshold. Again I agree with that. 
We need also to acknowledge the abuse that has occurred in the past in the Overseas Investment Commission process. I am certainly unaware of any case at all where action has subsequently been taken against a foreign investor. I recall land being purchased by Bill Lloyd of Sovereign Yachts— 
Hon Member 
: That went well. 
Hon DAVID CARTER 
: Well it did not go too well in fact. This man promised what I believe Lianne Dalziel is on the record as saying in this House that he would create a business to give 600 jobs somewhere in Auckland. 
Brian Connell 
: I think Jim Anderton had something to do with that. 
Hon DAVID CARTER 
: Exactly. Brian Connell reminds me that the man then befriended Jim Anderton. Not only did Jim Anderton see that this man got tens of thousands of dollars of corporate welfare from the taxpayer but also Jim Anderton ensured that he had the ability to buy some surplus Crown land in Auckland at a price grossly below market value. 
So this man had to seek overseas investment approval. When I look at the rules that applied at the time the first test Mr Bill Lloyd had to pass was that he had to demonstrate as they called it “business acumen”. Well as many of the political parties on this side of the House subsequently revealed this man had had a very chequered career in North America. He certainly had not demonstrated any business acumen in those countries at all. His track record in New Zealand is equally disastrous. I am not sure but at the last count he may have employed five or 10 people. He may have built one boat not the hundreds that he promised. So I say that if the overseas investment legislation sets rules and thresholds it is vital that they be met in the approval of foreign investors to New Zealand. 
The next clause I want to bring to the attention of the House in this debate today is clause 18(2)(d): “there are or will be adequate mechanisms in place for walking access over the relevant land …”. The reason I raise this is that this is the first indication of any of Mr Jim Sutton’s public access legislation being advanced. It is the first indication of a move towards a freedom to wander at will over private land. We know that the legislation has been sitting on the Minister of Agriculture’s desk since March. We know that he is too nervous and scared to move that legislation. We know that this man at least until next Monday has been the farmers’ representative around the Cabinet table and he has been a disaster in that role. 
Only this week we revealed that Accident Compensation Corporation premiums had leapt another 30 percent for farmers. As Dover Samuels knows that decision was passed by the Cabinet table and Jim Sutton sat at that Cabinet table as the Minister of Agriculture and failed to represent the farmers. If this is the first step of developing public access legislation then Mr Sutton should front up as he promised with the balance of the legislation before Christmas. 
The last point I want to make is around the weakness of some of the rules already in existence with overseas investment legislation. One of the rules I know of which was introduced at the insistence of Winston Peters himself was the necessity for any farmland that was to be offered for sale to be publicly advertised so everybody knew that it was on the market. I happen to know of a farm in Conway Hills in North Canterbury that has been sold by a New Zealander to an overseas company. The deal is stitched up and done and it was only subsequent to the deal being stitched that the owners realised that they had to advertise it publicly. We then had a tiny little advertisement appearing in the public notices. So technically the law has been satisfied but farmers who are looking to buy land in New Zealand do not look at a small advertisement in the public notices column of the Christchurch  
Press 
. They look in the farms for sale column. 
I raise that because the more rules that are set for overseas investment in this country then the more inventive and imaginative the solicitors will be in trying to circumvent those rules. 
I finish where I started. Capital is a scarce resource in this country. Capital is a scarce resource in this world. If New Zealand wants to progress and prosper we must attract foreign investment to this country. If we establish rules that make it simply too hard for investment in New Zealand then we will be setting rules that will be the poorer for this country. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I rise to support this legislation. 
CRAIG McNAIR (NZ First) 
: 
 The purpose of this bill is supposedly to introduce changes to the way in which overseas investment is regulated in New Zealand. New Zealand First will not be supporting this bill being referred to a select committee. 
If the bill passes its first reading which it probably will it will be interesting to listen to submitters and hear evidence from officials on this very important legislation. The reason I say this bill is such important legislation is that this Government should have no choice but to get it right. However the sad fact is that the Government has got this one wrong on a huge scale. The bill’s implications will hurt this nation in a devastating way in the same way as we saw in the mid-1980s and the 1990s with the sell-off of New Zealand assets by the Labour and National Governments of the time. 
Members just need to look at the bill. They do not have to look very far to find what I am saying to be true. For example the threshold for overseas ownership will be increased from $50 million to $100 million. Mr David Carter from the National Party said that that amount was small. He said that $100 million was a small amount. I say it is a very large amount New Zealand First says it is a very large amount and the average New Zealander would say it was a very large amount. 
Also for example the explanatory note states: “Purchase of land by overseas person with an unimproved value of more than $10 million will no longer require consent where the land is not screened for other reasons.” From just reading those two examples and there are a few more examples as well we find that this bill takes us back to the Labour Government of 1984 to 1990 which sold New Zealand Steel Petrocorp Health Computing Services the Development Finance Corporation Postbank—remember that—the Shipping Corporation Air New Zealand Landcorp Financial Instruments the Rural Bank— 
Mr SPEAKER 
: Could the member come to the bill please. 
CRAIG McNAIR 
: I raise a point of order Mr Speaker. You asked me to come back to the bill. I am speaking directly to the bill because this bill obviously concerns overseas ownership. That is what I am talking about as far as the sell-up of assets— 
Mr SPEAKER 
: Come back to this bill and do not dwell on the 1980s. 
Dail Jones 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: This is all coming off the member’s time. 
Dail Jones 
: New Zealand First is saying that this bill is all about the sale of New Zealand assets and we are giving examples of how the Labour Government has done that in the past and the National Government has done that in the past. These are just examples and we will come back to the bill in the ordinary way. I am disappointed that you should have interrupted that member. 
Mr SPEAKER 
: I am sorry. Perhaps I was a little hasty. 
CRAIG McNAIR 
: Thank you Mr Speaker for being open to our comments in that regard. Before I was interrupted I was telling the House about a long list of companies and State-owned enterprises that the Labour Government sold off back in the 1980s. I referred directly back to this bill because that is what this bill does; it opens the country up to being flogged off once again into foreign ownership. That is what the bill is doing. 
We saw that the Labour Government is still holding on to its past when for example it passed the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill this week—we just finished speaking on it today. That legislation gives certain non-residents a tax advantage on profits from the sale of shares in unlisted New Zealand companies and that will disadvantage New Zealand - resident venture capital investors. 
If we look at the National Government’s list of sell-offs we see it is almost as bad as Labour’s. Between 1990 and 1996 the total—[ 
Interruption 
] He left the National Party during that time because it broke every promise in the book. I remember 1990. I was a young fellow 14 years of age. I remember flicking on the television and seeing Mr Bolger the leader of the National Party at the time say basically: “Read my lips.” He said that there were hardly any more State-owned assets to sell. The Labour Government had pretty much sold all of them. This bill brings in some more; it brings us back to those old days. That is why I have mentioned the Labour Government’s track record and the National Government’s track record. They refer directly to this bill. Jim Bolger said that and that is what this bill will do. This Government is going back to its past. It has not changed its heart and it shows us that by this very bill which increases the threshold for overseas ownership from $50 million to $100 million. 
Hon Dover Samuels 
: How much? 
CRAIG McNAIR 
: Fifty million to $100 million and that Maori member is voting for it. He is allowing foreign investors to come into this country and they will take their profits back to the country they came from. That money will not go to New Zealanders. A Labour Government is supposed to stand for that; that is what I thought it was supposed to stand for and it is not standing for it. As Rob Muldoon used to say: “I know what I stand for but I’m not going to stand for it.” That is what the Labour Government is doing. It is not standing for it. It is not standing for what the people who voted for it thought it would stand for and that is an absolute disgrace. 
The amazing thing about this bill is hearing the National Opposition speaker talk on it. He was almost reminiscing about the old days and how great the economic experiment was—selling off $6.36 billion of State-owned assets. That is what the National Government did. It sold off $6.36 billion of State-owned assets after the Labour Government had sold off $10.1 billion of State-owned assets. That is when the National Party said that there were no more State-owned assets to sell. 
That is what this bill does. It takes us back to the past back to what the National Party members—in particular Mr Carter who spoke just before me—and the Labour Party members including Helen Clark the current Prime Minister and Dr Cullen were a part of in what they call the good old days. That is what they call it and that is what they want to go back to. Basically they will sell these assets to foreign-owned companies for a song and let them take the profits back to the overseas countries they came from. New Zealand First opposes that in its entirety. We say it is disgraceful repugnant and wrong because New Zealanders own those assets and the money should come back to New Zealanders. 
ROD DONALD (Co-Leader—Green) 
: 
 I thank my colleague from ACT Richard Prebble for letting me have a call before him. I am looking forward to his endorsing what I have to say in the same way that I am pleased to endorse much of what Craig McNair just had to say. 
It was fantastic to hear an angry young man state the obvious which is that his predecessors in this Parliament sold off the family silver. It was not just one Government but two Governments that sold it; it was not just the Labour Government in all its new-right zeal that did that but also the National Government that followed it. I guess the only silver lining in that extraordinary sell-off of New Zealand’s State assets is that we now have MMP as a result. Due to those two old parties going against everything that the New Zealand electorate had expected of them the public knew that it would not be good enough just to throw one lot out because when the other lot came in it would be just as bad if not worse. That is why the public changed the electoral system instead of the Government and that is why we have some independent voices in this Parliament. We do not always agree with each other but on this occasion I am pleased to say that the Green Party does empathise quite extensively with what the New Zealand First speaker just said. 
And that to respond to David Carter’s earlier speech is not a position of xenophobia. It is not that the Greens have anything against foreign individuals moving to New Zealand and making our country their home. We are not even against foreign corporations making greenfield investments in New Zealand. It is about placing some appropriate restrictions on foreign investors and even the Minister of Finance admits in his general policy statement that “… it is a privilege for overseas persons to own sensitive New Zealand assets”. The problem with this bill is that Dr Cullen has narrowed what he considers to be sensitive assets and that is our fundamental criticism with this bill. 
In effect what Dr Cullen has done is pull a massive swifty on the people of New Zealand. This bill is a complete and utter sham and he is not going to get away with it. The public is wise to what is going on and I can give members evidence of their wisdom in the fact that in the last few weeks I have received over 1500 signatures to the petition I launched only this time last month opposing the expansion of foreign investment in and foreign control of the New Zealand economy. The reason why signatures to that petition are flooding in is that people recognise what this Labour Government is trying to do. In its very stealthy way it is claiming to be saving the facade—in other words so-called sensitive iconic sites—at the same time as it is making it easier to sell off the building and the businesses behind the facade. That is what this bill does. It offers some protection to so-called iconic sites of historical cultural or environmental interest and we applaud that because we want greater protection from overseas ownership of those sites but it also so-called liberalises the foreign investment regime to make it even easier for foreign investors to gobble up the rest of the private assets that are on the block. 
The New Zealand First speaker suggested there would be more State assets available for sale. I have to give Labour credit that it has no intention of selling any more and the profitable ones I tell Mr McNair have already gone to overseas owners. This bill is all about making it easier to asset-strip the private sector in this country and that is why we oppose this bill and why we will be putting up significant amendments to it. We see foreign investors as guests and we believe that guests need to follow the rules of their hosts. In our case those rules should mean no more land sales to foreign corporations and non-resident foreigners—absolutely no ifs no buts no maybes. Land has got to be off the table. Already too much of New Zealand’s land has fallen into foreign control. 
It is difficult to know how much because the Government simply does not collect statistics on it. We can hazard a guess that approximately 7 percent of our commercially productive land or more than 1 million hectares is now in foreign ownership. We know from the Government figures that are available that in just the last few years 2720 hectares of offshore islands 57 kilometres of coastline and 150000 hectares of high-country leasehold land have been sold to overseas buyers. But that is just the tip of the foreign ownership iceberg because most residential and commercial land sales under $10 million are not scrutinised or recorded now. With that threshold increasing to $100 million not only will the sell-off intensify but it will be more difficult to identify which parcels of land have fallen into foreign control. 
This bill is a complete contradiction of the recommendations made by the Finance and Expenditure Committee only a couple of years ago. That committee in a review of the Reserve Bank for the 1999-2000 year made a number of significant recommendations. Those recommendations were joint recommendations as in being Labour Government and Greens recommendations. They included appointing an additional commissioner to represent the wider community on the Overseas Investment Commission extending the application of the national interest criteria to all proposals not just to land sales and re-examining the investment thresholds. Our preference was to reduce them from the $50 million that Mr Bolger had brought in back down to the pre-election level of $10 million and therefore we are certainly opposed to increasing them to $100 million. We also wanted the commission to consider the impact on social well-being environmental sustainability and economic sovereignty when assessing whether an investment will benefit New Zealand and we wanted a code of corporate responsibility for investors because they need to measure up to that—otherwise there is no point in having a compliance regime. 
Quite frankly there is no point in having the compliance regime in this bill because it is a self-regulating one and who will say no when asked whether he or she has complied? There needs to be some independent compliance monitoring and yes it should not be at the cost of the taxpayer but no it should not be undertaken by the applicant. It should be paid for by the applicant but it needs to be done independently. That is one of the many flaws in this legislation. 
Another flaw is getting rid of the Overseas Investment Commission. Stephen Dawe who heads that commission will tell members that the Greens have many criticisms of how it operates and one particular example recently was the Shania Twain sale but that is not a reason for getting rid of it. The problem is that that was a pre-determined outcome. There was no first-principles review of the Overseas Investment Commission. The Government knew all along what its intention was and that was to make it even easier for foreign investors to gobble up more of our assets. It was not interested in addressing issues around the lack of compliance. It was not interested in addressing issues around the fact that there have been a lot of retrospective approvals. It is not interested in facing up to the big issues which are that at the end of June foreign investment in New Zealand totalled $190 billion—up more than $8 billion on the previous year—and that that investment is costing us enormously. For the year ended June there was $9.488 billion in interest payments and profits on those loans and shareholdings. That is what foreign investment is costing New Zealand. It is costing us an increasing balance of payments deficit. It is causing the price of land to increase so that it is becoming nearly impossible for young Kiwi families to buy a farm or ever have the opportunity of buying a bach at the beach. It is making it more difficult for first-home buyers to buy their first home because residential property is being bought up by overseas investors who can get it at a very cheap price and make a very good return on their capital. 
So we ask the public to please make a submission on this bill and tell this Government that it has got it wrong. The fact that National supports the bill is a very good reason why everyone in this country should be concerned. 
Hon RICHARD PREBBLE (ACT) 
: 
 I rise on behalf of the ACT party to say that we will also oppose the Overseas Investment Bill but for completely opposite reasons to the Green Party. 
Rod Donald 
: I thought so. Predictable. 
Hon RICHARD PREBBLE 
: It is a shame that it is predictable because Mr Donald though he tries to hide it has a better intellect than was showed by the speech he gave to the House. He was talking emotional claptrap. The idea that foreigners are buying up homes in Otara pushing up the price of homes— 
Stephen Franks 
: Wainuiomata. 
Hon RICHARD PREBBLE 
:—or in Wainuiomata—and making it impossible for young New Zealanders to go there is absurd. If he listened to his own rhetoric about the amount of overseas investment in New Zealand he would know that it is still tiny. 
If he had bothered to study history when he was at school he would realise that this nation was built on overseas investment. If one goes back far enough one can see that nearly every economic activity in New Zealand was done by foreigners. If we look at New Zealand’s economic growth at the time when there were no rules at all against overseas investment we see that we have never matched that growth since—never never matched it. Indeed according to research done by Geoffrey Blainey who is as I am sure the New Zealand First member knows probably Australia’s most prominent historian it is his belief that in 1900 New Zealand had the highest standard of living in the world—and that was at a point when we had no overseas investment rules. 
These rules are nonsense. Let me give one other small example. The explanatory note includes “investments” that are “sensitive” and “sensitive assets”. When one reads through it one finds out that those refer to land but the proposal actually increases the “threshold for screening non-land business assets” whereby overseas people can buy from a company to $100 million. I hate to be the first to break it to the Government but that means people can go and buy a company on the New Zealand Stock Exchange for $99 million— 
Stephen Franks 
: Lots of them! 
Hon RICHARD PREBBLE 
:—one could buy quite a lot on the New Zealand Stock Exchange for $99 million—and the next day deregister it and put it on to the Singapore Stock Exchange—which has happened to a few public companies. That is possible. But the “sensitive” investment is land and no one has worked out how that can be picked up and put into Singapore. No foreigner has ever managed to acquire a piece of New Zealand land or foreshore—perhaps a little bit of sand but not a proper section—and take it overseas. It cannot be done. That is a load of rubbish and when we hear the stuff about some singer who has bought some land— 
Craig McNair 
: Shania Twain. 
Hon RICHARD PREBBLE 
: Apparently she is a pop singer or something so I am told—[ 
Interruption 
] Well jolly good. 
Hon Member 
: She’s very good-looking. 
Hon RICHARD PREBBLE 
: I have various strengths but that is not one of them—but I can guarantee that that land is still there and I suspect she is probably a better landowner than many Kiwis. 
I listened to Mr Rod Donald and to the New Zealand First member talking about overseas investors and heard that they have a dreadful impression of some sort of robber barons. It is interesting that they did not name one of those corporations. If they have to look at robber barons in New Zealand I would have thought the New Zealand First member would know about the Wine-box. Not one overseas company was involved in that—not one. 
I can tell the member why that is so. It is because overseas companies tend to be very careful about obeying the law. I have been a director of New Zealand companies overseas and we are extremely careful to be very good citizens. There are quite good reasons for that. We certainly would not be interested in playing the sorts of games that New Zealand companies have played—regrettably—on occasions. 
This also raises questions for New Zealand First and the Green Party. I will give one example. If we are to follow the advice given by New Zealand First and the Green Party do we say to New Zealand’s biggest multinational Fonterra that it should not own overseas companies and that it should withdraw its bid for—what is it?— 
Gerrard Eckhoff 
: National Foods. 
Hon RICHARD PREBBLE 
:—National Foods in Australia? In fact the Green member said that no foreigner ought to be able to own any land in New Zealand. That is interesting. I hate to break it to him but I am a New Zealand citizen and I own land overseas. So if that theory is applied that land should be taken away from me. I assure the member that I am a very good owner and my wife would be even more upset than I would be if that were to happen. It is nonsense. 
I say to the House that it is a shame when members get up and scream because that is really what the New Zealand First member did. I guess he can plead his youth as he did. I do not know what Rod Donald’s excuse is for getting up and talking emotional claptrap but it does not help the House. I do not doubt for a minute that there are many New Zealanders who instinctively fall for that sort of appeal but it is still claptrap. 
Let me give the member another example which is probably one of the more famous. We all know that the United States became the wealthiest nation on earth. One of the actions that achieved that was the building of the railroads right across the United States which in that century was the big economic development. The people who paid for that were the British; the British put in the investment. Under the theory advanced by the Greens and New Zealand First the United States should have come out of that experience as a very poor nation. Did they? No not at all—of course they did not. 
If we had had the sense to get the British to build the New Zealand rail I would not have had to go and save it; it would have been a problem for the British. But of course we put our money in unlike— 
Craig McNair 
: The difference is that the British actually lived in the US. 
Hon RICHARD PREBBLE 
: Oh they lived in the US? That will come as a great shock to them. I guess they did in the sense that some of them thought the “united states” were still the colonies but most of the investors did know about the Declaration of Independence. Most of them knew that the United States was a separate country but there could have been a few New Zealand First supporters who got confused about that sort of development. I assure the member that no railway was built when the United States was still a colony of Britain and the point I make to the member is that that is just one example—a very easy one for anyone except New Zealand First members to see—where the people of the United States were the real beneficiaries of that investment. No doubt British investors got some money as well. 
But coming from the ACT party which believes in sound economics I say to the House that this whole bill is emotional claptrap. Of course overseas investors should have to obey the law but they ought to obey the general law of New Zealand that applies to all investors. They should not have to fill out those sorts of forms and as Green Party and New Zealand First members have accurately pointed out many of the forms they will be asked to fill out have been put up just for political smokescreen reasons by the Government. 
Hon David Carter 
: That’s right. 
Hon RICHARD PREBBLE 
: The National Party member says that is right. That is because neither of the two original parties in this Parliament are prepared to get up and say that what we ought to do is have no such bill of this sort. We should be saying that anyone who wants to come and invest in New Zealand can do so but they must obey the general laws of New Zealand and that if there is anything wrong with those general laws then we should fix them. I think there is—there are too many of them. 
This addition to investment law is of no assistance so the ACT party will vote against it. Yes there will be people who claim that assets are being sold. I tell the House that I have never sold a State asset. I have sold many State liabilities but I have never sold a State asset. Some overseas people bought those liabilities and nearly all of them did a better job than previous Ministers. I say to the House that this bill is emotional nonsense and that it is a great shame for the country that we are even attempting to pass laws of this nature. The ACT party will vote against it. 
GORDON COPELAND (United Future) 
: 
 It is a bit of a mixed blessing to follow a speech like the one we have just heard from Richard Prebble of the ACT party. On the one hand I agreed with a fair bit of what he said earlier on in the speech but on the other hand right towards the end when he made the claim that he had never sold a Crown asset to overseas investors but that he had sold only Crown liabilities to them I thought to myself that we should congratulate him on his genius. Not many Kiwis can talk overseas investors into buying New Zealand - based liabilities and I think that that really is an incredible feat. I extend my congratulations to him for doing that. However I think that maybe he is a bit of a stranger to the truth on some aspects of it. 
The other irony relates to the position of New Zealand First. We had—let us put it mildly—a very impassioned speech from Craig McNair who raved on about the sale of Crown assets. The irony of that to me is that just earlier this year the Government went to New Zealand First to get its support on the foreshore and seabed legislation because it could not get the bill through without New Zealand First. The Government wanted to put the foreshore and seabed into Crown ownership which Craig McNair spent his whole speech saying was a very dangerous thing to do because the foreshore and seabed would be flogged off to overseas people. 
The very point of distinction that United Future had on that bill was to say that we should put the foreshore and seabed into the public domain to make it clear that it is not for sale to overseas people. I do not think we will ever get around to selling it but I note that little irony in the diatribe we heard from the New Zealand First member about how terrible it was to sell anything from this country to anyone from overseas. 
Richard Prebble really hit the nail on the head in many ways. The fact is that the history of this country has from its very beginning been very very influenced by overseas investment in our nation. When for example the ANZ bank tells us that it has been here since 1840 we remember that it was Australians who invested in this country and who continue to do so to this day. Overseas investment really has been a part and parcel of our history. 
The other thing that I think a lot of Kiwis overlook when they talk about the sale of land to foreigners is that it kind of depends on where people stand in the spectrum does it not? They may just have the point of view that they do not want overseas people to own New Zealand land. If asked why they will answer that it is because the buyers are foreigners. When asked why that is relevant they will answer that it is because the buyers are foreigners. In other words we get back to a sort of xenophobia on that point. 
On the other hand if one talks to New Zealand landowners—such as owners of big pieces of land of whom I know several—who actually want to sell their property and get the very best price from the market they can for the labour they have expended on that property sometimes over many generations and if the best price they can get happens to be from someone based overseas the world looks very different indeed. I do not think we should be in the business of stopping New Zealanders from freely exercising their right to sell their own property. 
With respect the New Zealand First member’s speech was limiting in that it referred to only the Crown selling things. But there is a whole other class of business activity in this country if members have not noticed—that is private business and private property ownership. One thing that goes with that reality is that those owners should have the right to transact business in the marketplace with more or less as little restraint as we can reasonably impose on them. Having said that I tell members that United Future will support this Overseas Investment Bill because I think that in a funny kind of way it probably comes down on about the right side of the ledger. 
The political reality is that there are New Zealanders who are opposed to the sale of our land to overseas owners. Therefore I think it is sensible to put some conditions in place particularly when sites are sensitive. Young Nicks Head is a case in point Cape Kidnappers is another and there are several other very sensitive pieces of land for which we should put in place some requirements because they are places that all of us value. I think it is fair and reasonable to have the requirements in this bill—which is a plan for economic development—to maintain the natural heritage and historic features of a site and to have walking access. 
Walking access is a very important issue. We in this country have a culture—and I remember the Prime Minister talking about this to Paul Holmes this morning I think on the radio—whereby we have broken away completely from British and to some extent American models. Citizens of those countries cannot walk on the beach in many places and cannot access lakes and rivers because they are privately owned. I know of places in the United States where beaches are fenced off. As one is coming along the beach one cannot get over the fence to the next bit of the beach because there is a physical barrier restraining one from doing that. 
New Zealand was founded on the basis that there should be free access that is reasonable to those parts of the country that in a very real sense are our endowment and are what we see as being universal destinations—in other words destinations that belong to all people which also includes people coming here from overseas as tourists. So I think that the walking access requirement that has been made a part of the sale of large tracts of land to overseas investors is a very good way of signalling that that is Kiwi culture. Otherwise the danger is that those people with the best will in the world will put a great big fence around a whole property and say that people cannot go there because it is theirs. 
Gerrard Eckhoff 
: Name me one property where that’s happened. 
GORDON COPELAND 
: One situation that has caused this bill to come into being is the D’Urville Island situation. Some very real problems have arisen there not only because of the access rights but also because of the fact that there are— 
Stephen Franks 
: That land was off-limits before the foreigners bought it. I know; I tried to go there. 
GORDON COPELAND 
: OK. Well two wrongs do not make a right. The point I am making is that I sincerely believe that it was part of my heritage to be able to walk up and down quite freely on the piece of beachfront I grew up on and that is what I want my kids and my grandchildren to be able to do. I unashamedly think that that is part of Kiwi culture. This bill recognises that which is very good indeed. 
I also think with regard to the D’Urville Island situation that the new rights brought into the bill about not fulfilling the conditions of the consent are extremely important. There must logically be a way to ensure that if one puts in place conditions attaching to a sale the conditions are enforced. Otherwise they are not conditions; they are just suggestions. So I think it is exactly right to state in the bill that if one strays outside or fails to comply with the conditions on which one purchases a property then one will be subject to penalties. In extreme cases the court can order the disposal of a property to new owners who will then be subject to and have to fulfil those conditions. That would probably result in a very real loss to the foreign purchaser. 
As far as business is concerned I think I have already made United Future’s position quite clear. We welcome and should welcome business investment in New Zealand. One can think of so many examples recently of New Zealand companies successfully investing offshore. I was just reading in today’s or yesterday’s paper—I am not sure which; we are still in Tuesday after all and it has been a pretty long Tuesday—that Glassons for example is now succeeding quite well in the Australian market. That is the latest example of successful investment by a New Zealand company overseas. 
There has to be a reciprocity of course. As Richard Prebble said if we want to invest in other people’s countries then we have to reciprocate by allowing them to come and invest here. I think that everyone benefits from that. 
The last point I make is one that Richard Prebble also made. I agree with him that I have not yet seen anybody remove any land from this country. If an overseas-based person buys land here and puts money in here it creates jobs and wealth. That is the way in which our economy will grow expand and succeed in the future. 
Hon DOVER SAMUELS (Associate Minister for Economic Development) 
: 
 I rise to support the Overseas Investment Bill. I bring a practical example of why I support this bill. I have listened to a number of claptrap contributions that referred to this idea that if we sell land then all of a sudden somebody will pick it up and take it away. Right next to my bay in the far north there was a marginal farm called Tepene Tablelands. 
The area was about 4000 acres. The majority of the land was covered in gorse and tea tree and 50 percent of it was non-productive. It was owned by two Kiwi farmers and they employed 2½ people. Some years ago an American investor came along and made an offer for the property and despite the ramping and raging of some of the local politicians and of some other politicians the investor actually secured and bought the property. Now 7 years later that property is one of the top international golf courses in the world. It employs some 60 people on a permanent basis and two-thirds of those people are actually related to me and to the leader of New Zealand First. Two-thirds of the people employed are local tangata whenua and they are people who have been trained to do the job. I say that that investment has uplifted the economic destiny of our community. Two-thirds of the employed are local people and a number of them are in managerial positions. Now we have a piece of land that is productive and making a contribution not only to the local economy but to the New Zealand economy. 
That is the reason why I want to stand up and give an example of a practical application of what this bill allows and I want to stick that up the noses of those people who are saying: “blah blah blah blah. We are not going to sell any more land in case somebody comes along and offers X’s of millions of dollars invests in our country and creates jobs for our people. 
BRIAN CONNELL (National—Rakaia) 
: 
 That was an outstanding contribution from the last speaker. I was hoping he would take more time and give another example but we are very grateful for having had the benefit of his contribution. 
The National Party is prepared to support this legislation through to its next stage and as my colleague the Hon David Carter has already foreshadowed we will watch carefully what happens at the select committee stage and reserve our position. I have to say that at a first read it appears to me that this bill is a pragmatic and common-sense solution to what is an emotional and often very ill-informed debate flamed by some politicians in pursuit of what I roughly phrase as cheap votes. National has no problem with the concept of foreigners pouring their hard-earned cash into this country subject to some clear rules of engagement. For goodness’ sake—everybody wins! Overseas investors get to live work and own property in Godzone and we get money for education employment infrastructure—members can name it. That is the type of contribution that foreign capital makes to our economy. 
But I have to say also that this bill appears to me to be an absolute no-brainer. Arguing against it is a bit like arguing against motherhood. But then on reflection I realise that some members of the House did argue against that last week so I probably should not use that example. No one is knocking tourism in New Zealand no one minds planeloads of foreigners coming here and spending their cash— 
Hon David Carter 
: The Green member does. 
BRIAN CONNELL 
: Will the Green member knock tourism? Well that is probably enough said. No one should mind foreigners coming here and deciding they want to buy a company or a farm— 
Hon Dr Michael Cullen 
: I bet he doesn’t ride a NZ-made bicycle. 
BRIAN CONNELL 
: I bet he does not. Foreigners are really saying to people in New Zealand that they think this is a great country and they want a stake in it. I say to members in this House and particularly to Green Party and New Zealand First members that this is just another form of immigration. Unless we forget I remind everyone that we are a nation formed from immigration beginning with Kupe. Overseas investment is a vote of confidence in the New Zealand economy. Years of market reform in the 1980s and the 1990s have made this a very good-performing economy but some Luddites in the House want to wind back that clock. 
I have heard all sorts of talk about our heritage being sold off etc. but I want to quote some examples that put those myths to bed I hope forever. In the last 3 years 11 Canterbury high-country stations were sold. Six of those went to New Zealand interests three were sold to New Zealand and foreign interests in joint ventures and only two were sold to foreigners—so much for the argument that Kiwis are being priced out of the marketplace! Over the last 11 years 40 percent of foreign-owned properties were sold back to New Zealand interests. I have also to say that with the benefit of that overseas capital those farms are now performing at a much higher level than they ever were before. They are making significant contributions to the local economy in terms of both their produce and their employment opportunities. Let us remember that nothing is sold in this country—or not yet unless Mr Sutton has his way—unless there is a willing seller and a willing buyer. 
I challenge a member of the Green Party or the New Zealand First Party to stand up—whoever will—and say that he or she is prepared to take $50000 or $100000 less for his or her property simply because it is an overseas buyer who is making that offer. The Government has no right to involve itself in the New Zealand property market and has no role in that market. I therefore congratulate the Minister on resisting the pressure that must have been brought to bear from some quarters for him to do just that. 
I want to take time to quote another example. Five Star Beef Ltd’s feedlot in Ashburton houses nearly 18000 cattle all destined for the top tables in Japanese restaurants. It is a joint-venture operation between Japanese and New Zealand interests and Japanese capital contributes something like $30 million to that venture. Not only does that feedlot employ significant numbers of people in the area but it underpins the local barley price two meatworks three or four transport companies and dozens of grazing and silage contracts and the flow-on effects into the Ashburton retail trade are extremely significant. That is what foreign capital does for this country. 
I offer yet another example from mid-Canterbury. The Mt Hutt ski-field is now regarded as one of New Zealand’s premier tourist attractions. The prosperity of the township of Methven is underpinned by the performance and success of that ski-field—and guess what? The capital that underpins that ski-field is Japanese capital as well. [ 
Interruption 
] Is the member contradicting me? 
Hon David Carter 
: I’ll tell you when I’ve made it. 
BRIAN CONNELL 
: Ha ha! Well a lot of it is foreign capital; does the member agree with that? In fact there is actually some misunderstanding around the Mt Hutt ski-field. About 4 or 5 years ago there was an exchange of ownership. The original owners of Mt Hutt ski-field were having difficulty trading so they sought significant capital. My understanding is that that capital came from Japan. 
I have another example: the Terrace Downs golf resort in mid-Canterbury is now regarded as one of the premier golf courses in this country. About 10 years ago a Japanese investor—risk taker is a better way of describing him—came to the area and bought a farm that nobody else wanted. The local community said: “You are absolutely mad.” Today the capital employed in that resort is in excess of $80 million. The resort employs 180 people at the height of the season and has been doing so for many years. An astounding number of people in the local community—in particular Christchurch—have built properties on this resort. One needs only to go there to see how outstanding that development is. That was all due to foreign capital. 
If we adopted some of the arguments put forward in this House we would build a wall around this country to keep out the rest of the world but that would be shooting ourselves in the foot. We need foreign capital we need foreign investment and we need the type of person I have just spoken about to come here and invest. We need to embrace those people. But the anti-foreign sentiment I have heard tonight makes my skin crawl. It is sad but a lot of the protest is racially based. I have to say that some members are objecting because a lot of people who are coming here and investing in New Zealand are Asian. I say to them: “Wake up and smell the roses.” We are a multicultural country now and we are part of Asia. 
I say to those members: “Don’t be surprised because you will be slashing your wrists if we see people from Pakistan South Korea and Mainland China coming here to invest more and more into the future.” Capital is a scarce resource and we should embrace it. 
MAHARA OKEROA (Labour—Te Tai Tonga) 
: 
 I compliment the previous speaker on his well-presented well-researched and knowledgable contribution which started from Kupe. 
It singularly impressed me. I support this bill on the basis of the arguments that have been presented. 
PHIL HEATLEY (National—Whangarei) 
: 
 The National Party gives cautious support to the Overseas Investment Bill. We support its referral to the select committee and will watch very closely as submitters come forward and put pressure on the Government. We will be interested to see where and when the Government folds on some aspects of this bill. 
We know that there are far too many roadblocks to investment in this country not only to overseas investment but also to internal investment. Members have heard many many claims made in debates in the House that the Resource Management Act has caused a slowing down in investment in this country both from overseas and from internal investors large and small. The taxation regime and all the associated levies and taxes slow down investment in this country. The immigration regime holds back expansion in business because people cannot employ the right skills from overseas. This is either because of xenophobia as demonstrated by the New Zealand First member who spoke earlier or because we are allowing into this country those who do not contribute and never will and those who have no skills and never will. 
I turn to clause 18(2)(d) which deals with land access. It states with regard to land owned by an overseas investor that there will be adequate mechanisms in place for walking access over the relevant land or a relevant part of that land by the public or any section of the public. It is interesting to see that provision introduced in this bill. I hope it is not the thin end of the wedge for later Government legislation to see a “right to roam” for the general public across agricultural rural and other remote land. 
I know that David Carter has travelled the length and breadth of this country both in the media and physically preaching the National Party’s stance on that issue. We say the general public should have the courtesy to talk to farmers before crossing their land just as they always have because they will see farmers allowing them free and safe access across the land just as farmers always have. That is what David Carter has been saying the length and breadth of this country. Some hundreds of metres behind him of course has come Gerrard Eckhoff echoing those sentiments and redistributing David Carter’s speech. We thank him for pushing National Party policy. These land access issues as demonstrated in clause 18(2)(d) relating to land owned by overseas investors had better not be a stalking horse for free-range access over our rural properties because that involves safety issues private property rights and not least of all matters of courtesy that have served this country well for many years. 
I also take great interest in clause 73 which deals with the amendments to the Fisheries Act 1996 because that deals with the overseas ownership of fishing quota. It might be of interest to the House that overseas interests are prohibited from owning New Zealand fishing quota. In fact they are prohibited from owning not just quota but provisional catch history and annual catch entitlement without obtaining exemptions under that Fisheries Act. “Overseas ownership” is defined as any company or building society in which 25 percent or more of any of its shares are held by that overseas person or entity. But it is not just the ownership of share rights; it is also the control or the voting rights held at any meeting that that person or entity may hold. That influence cannot exceed 25 percent either. If that figure is exceeded either by the ownership share numbers or by the voting power on any meeting relating to that entity then that is deemed an overseas owned company or person. They are prohibited from owning fisheries quota. 
Interestingly the rules that will be brought in by this Government are about amending the Fisheries Act 1996 so that it falls in line with this other legislation. I am intrigued to see section 57G “Criteria for overseas investments in fishing quota” inserted by clause 73. That section states that all relevant individual overseas persons must be of good character. I will be intrigued to see how this Government with its policy judges that. I trust that it will not have anything to do with being part of the Labour Party. There is also criteria for overseas investments in fishing quota relating to the Immigration Act of 1987. That Act lists certain people who fall into a category that we do not want to see owning New Zealand fishing quota. I think Ahmed Zaoui would qualify under this section as the Government has clearly welcomed him with open arms by not deporting him the moment he arrived in this country but giving him 2 years’ stay. 
Stephen Franks 
: Free board. 
PHIL HEATLEY 
: And free board as the ACT member chips in. It is not just free board but a weekly $180 cheque for the next little while which will contribute to the friars’ fund I should think. 
Section 57H inserted by clause 73 also deals with determining whether overseas investment in fishing quota is in the national interest. The criteria there deal with the creation of job opportunities in New Zealand; the introduction into New Zealand of new technology that may be useful to us; the development of new export markets which may not have happened if this overseas investment in quota did not take place; added competition to make the fishery more efficient in the use of our fishing product; the introduction into New Zealand of additional investment for purposes of development which of course is quite important; and improvement in the efficiency of processing of New Zealand fish or aquatic life. 
What concerns me is section 57H(2)(b)—and I will be interested in the select committee examining this—which states: “any other criteria prescribed under the Overseas Investment Act 2004”. That of course is subject to Government policy of the day and may be far too wide ranging. It is not just giving the Government free and unchecked scope to allow investment into the fishing industry but scope to close off investment in the New Zealand fishing industry. So those are the issues that I would particularly like to highlight this evening. We will be supporting the bill to the select committee and watching with interest. 
LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I want to take just a brief call. This particular bill has certainly provoked some interest in my own electorate of Christchurch East and I know that there are constituents who want to have meetings about it in order to discuss the ramifications of it. I think my constituents will find that the aim of creating a balance between the need to protect New Zealand’s assets while also promoting overseas investments in order to achieve growth and innovation will have been met. I look forward to the debate and the report back from the select committee in due course. 
A party vote was called for on the question  
That the Overseas Investment Bill be now read a first time. 
Ayes 85 
New Zealand Labour 51; New Zealand National 24; United Future 8; Progressive 2. 
Noes 32 
New Zealand First 13; ACT New Zealand 9; Green Party 9; Maori Party 1. 
Bill read a first time and referred to the Finance and Expenditure Committee. 
Securities Legislation Bill 
First Reading 
Hon JUDITH TIZARD (Associate Minister of Commerce) 
: 
 I move  
That the Securities Legislation Bill be now read a first time. 
 At the appropriate time I shall move that the bill be referred to the Commerce Committee. 
This bill is designed to build confidence in New Zealand financial markets and to encourage investment in New Zealand’s financial markets by strengthening the regulatory framework embodied in securities securities trading and takeovers law. Accordingly the bill amends the Securities Act the Securities Markets Act the Takeovers Act and the Takeovers Code. 
Current law relating to the trading in securities and futures on registered exchanges is not working as effectively as it should be. For example our insider-trading law is far too complex. Despite the regime being in force for over 10 years no one has been found liable for insider trading under the Act and this is not because we do not think that insider trading happens. The Securities Legislation Bill proposes a new rationale to govern this conduct so that insider trading would be regarded as a harm to the entire market not just to the particular company and its shareholders. It acknowledges that insider trading has the potential to damage New Zealand’s reputation as a place to invest. 
Other aspects of the current law do not conform to international standards or best practice. For example New Zealand does not have rules targeted specifically at addressing market manipulative practices that create a false impression of trading. This lack of regulatory oversight can affect both international and domestic confidence in our market. The bill introduces comprehensive prohibitions against market manipulation. When seeking help people need to be able to make a decent assessment of their financial advisers. Are they qualified? Do they belong to a professional organisation? What commissions will they earn if people take their advice? Who can people turn to if it all goes wrong? Current disclosure requirements for investment advisers are inadequate in achieving this. This bill therefore aims to improve the quality of adviser disclosure and establishes the Securities Commission as the public enforcement body policing the disclosure laws. 
For a market to have integrity the regulatory institutions that monitor and enforce the law need to have sufficient powers to carry out their functions effectively. The bill increases the size and range of penalties and remedies under the relevant Acts in order to deter contraventions of the law and to encourage compliance with regulatory obligations. 
In light of all this some of the main provisions and benefits of this bill include strengthening the law relating to insider trading by adopting a new regime similar to the Australian regime based on the market efficiency and market fairness rationales for the regulation of such conduct. The new provisions are designed to improve monitoring of insider-trading behaviour and enforcement action against misconduct. Studies show that countries achieve additional liquidity in their markets if they have an effective enforced insider-trading regime. 
The bill introduces comprehensive prohibitions against market manipulation. These provisions covering misleading or deceptive conduct in relation to dealings in securities or takeover activities empower the regulatory bodies with the relevant expertise the Securities Commission and the Takeovers Panel to enforce the prohibitions. Deterring manipulative practices will eliminate artificial price distortions and therefore assist market efficiency. The prohibitions will also bring New Zealand into line with international practice. 
I turn to improvements to the law relating to substantial security holder disclosure. The bill simplifies the regime so that mandatory disclosure requirements apply only to listed voting securities by class. This will make for disclosures that are easier to understand. It will also promote an informed market by ensuring that the identity and trading activities of persons who may control or influence significant voting rights in a public issue are known which will enhance investment adviser disclosure and improve enforcement of that law. 
 The bill ensures that advisers bring matters relevant to an investor’s trust and confidence in both the adviser and his or her advice to the investor’s attention. The creation of new offences where advisers recommend illegal offers of securities or advertise in a misleading way will deter conduct particularly harmful to the public. 
The Securities Commission will have an enforcement role over investment advisers and brokers ensuring that disclosures are made to the public remedying breaches of the disclosure laws and where appropriate taking proceedings in the public interest. This will achieve consistency and cohesion in the penalties and remedies available for breaches of securities and takeovers law. The introduction of criminal penalties for insider trading and market manipulation as well as of a range of civil pecuniary penalties across the legislation aims to deter conduct harmful to the integrity and efficiency of securities markets empowering the Securities Commission to be a fully effective enforcement agency for securities law. 
The bill extends the commission’s brief so that it has a consistent enforcement role for all securities laws including the ability to apply for civil remedies and compensation on behalf of public issuers and those who have suffered loss as a result of contraventions of the law. Under this bill the Securities Commission will be able to apply for court orders in respect of breaches of securities law. For example it could apply for a court order to prohibit or disqualify a person from being a director or from taking part in a company’s management. 
Public confidence in sound and effectively enforced securities laws makes New Zealand a more attractive investment destination. The measures in this bill will encourage public confidence in our capital markets and the institutions that support those markets. 
Debate interrupted. 
Speaker’s Rulings 
Members’ Speeches—Termination 
SIMON POWER (Senior Whip—National) 
: 
 I raise a point of order Mr Speaker. Before my colleague Brian Connell leads off the debate for the National Party I seek a point of clarification. Earlier during this session I sought a ruling from you as to whether a member’s speech was terminated at the point that the member resumed his or her seat. You said that you would come back to me on that. I am not asking you for that ruling now. I just wondered in what time frame we can expect the ruling to be made. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: I am ready to give an answer on the issue of when a member’s speech terminates. It is correct that when a member resumes his or her seat the speech is terminated. Although that should be obvious it cannot cover all cases because members may indeed resume their seat while speaking for a whole lot of other reasons. They may get cramp or something like that. For our purposes at the moment the member is quite correct that when members resume their seat their speech is ended but it is very much up to the Speaker to make a decision. 
Securities Legislation Bill 
First Reading 
Debate resumed. 
BRIAN CONNELL (National—Rakaia) 
: 
 National intends to support this bill through to the next stage and we will reserve our position thereafter. This bill addresses second-tier application issues such as defining the territorial scope of investment adviser law received or given in New Zealand. In what I consider to be a good move it removes the $20 million threshold requirement from the definition of “specified company” in the Takeovers Act in order to give greater certainty about whether a takeover is governed by the Takeovers Code. The Institute of Chartered Accountants raised a series of questions on that issue in a submission to the Ministry of Economic Development in September 2002 which somewhat persuaded me to come to the conclusion that the threshold should be removed. It argued that due to the shortcomings of the code there is little guidance as to how the $20 million asset threshold is to be measured—is it gross value of assets or market value that triggers the threshold? 
The bill deals with three other major issues that I want to address: insider trading market manipulation and substantial security holders’ disclosure. The bill sets out to strengthen the law relating to insider trading. Conceptually I think most of us would agree with that. I do not want players in the market to get richer on the basis that they have access to information that other players or investors do not have. Most of my business experience was gained in Australia and over the last 10 years or so there have been some high-profile prosecutions of senior executives who engaged in insider trading in Australia. That those prosecutions were successful speaks volumes about Australia’s determination to deal with those who would engage in some type of corporate fraud or deception. Australia’s insider-trading legislation has been framed to give teeth to that determination. I spoke about successful prosecutions in Australia yet in the corresponding time in New Zealand to my knowledge no successful prosecutions have been made. That cannot and should not continue. In that regard New Zealand is looked upon as something of a soft touch. 
The bill sets out quite unashamedly to adapt and introduce a regime similar to Australia’s. It will apply to any person who has material information that is not generally available to the public. I do have a caution that I would like the select committee to be cognisant of. Before extending the scope of our insider-trading regime the select committee must ensure that any benefits to be derived from that will outweigh the costs involved. A broad-reach system will invariably increase compliance costs for business. When members of the select committee are grappling with that issue I will be looking for them to determine the application of the law—that is whether it will apply to on-market transactions only to all transactions in quoted securities only or to all transactions in securities? Those are difficult decisions and they are quite complex in nature so the select committee will need to take expert advice in coming to a decision. 
Market manipulation is quite a different matter from insider trading. Market manipulation through the distorting of prices clearly impacts negatively on the efficient functioning of capital markets. The resulting uncertainty discourages trading reduces liquidity increases the cost of capital and compromises the ability of the markets to allocate capital to those firms that are best able to use it. Clearly market manipulation is a problem but again I caution the select committee to make a judgment call on whether the medicine will be worse than the illness. The unwanted costs of regulation need to be weighed up against the benefits of a well-designed regulatory regime. Essentially the challenge is to catch abusive practices without catching harmless practices to boot. The next decision the select committee will have to grapple with is this: should market manipulation be viewed as a private wrong or as a wrong against the market? The answer to that question will be critical to the framing of the law. Even in Australia very little action has been brought against those engaged in market manipulation simply because it is hard to determine where the responsibility lies. So while the theory is good the select committee may find that issue is a particularly hard nut to crack. 
Finally I want to address the issue of substantial security holders’ disclosure. The bill aims to simplify the current regime by requiring the disclosure of relevant interests by class and in respect of listed voting securities only. The updated regime ensures that investors and public issuers can identify substantial security holders and therefore make informed investment decisions. Of course the National Party supports that because the ability of investors to make informed decisions goes to the heart of credibility and of investor confidence. As we heard in a previous debate investor confidence in our markets is absolutely critical if New Zealand is to grow as a nation. 
Again though I have to issue a caution to the select committee. Costs to the investing community—to the firms involved in the capital markets—will increase. The select committee must ensure that a mechanism is in place to ensure that a spike in costs does not become institutionalised. That is one of my major concerns about the legislation that this House has passed during my time in Parliament. What is not often understood is that organisations maintain their profitability by being able to manipulate their margins. In times when there is revenue aplenty that does not represent such an obstacle. But if we institutionalise costs into the cost line of businesses when things turn bad—when the revenue line turns down—the ability of organisations to maintain their margins and therefore their profitability is impinged upon because they have no control over the costs that have been built into their businesses through what I roughly call the institutionalisation of costs. So when I sit on the select committee that I understand will be dealing with this legislation I will caution my colleagues that we need to be very cognisant of that concern. In the case of this issue it will not be easy to find solutions. 
This is very complex legislation and we are grappling with very complex issues. I will repeat my cautions. We must not create medicine that is actually worse than the illness. We need to make sure we have a solution that gives the business community and the investor community which we seek to support confidence in the legislation we are framing. With those cautions I conclude. 
DAVID PARKER (Labour—Otago) 
: 
 I am pleased to rise in support of the Securities Legislation Bill which makes amendments to the Securities Act the Securities Markets Act the Takeovers Act and the Takeovers Code which is enforced under the Takeovers Act. It does so with the intention of improving the regulation of the financial markets and the intention behind that is to give people confidence in investing in New Zealand’s markets and so to improve our economy. Amongst other things the bill aligns our insider-trading laws more closely with those of Australia and it makes some simplifying changes with regard to substantial security holders’ disclosures. I commend the bill to the House. 
BRENT CATCHPOLE (NZ First) 
: 
 New Zealand First supports the progress of this legislation to the select committee. It is clear that the current laws surrounding insider trading are inadequate. To date there has been not one prosecution in New Zealand for insider trading. This legislation will amend the Securities Act the Securities Markets Act the Takeovers Act and the Takeovers Code. This legislation is desperately needed in the marketplace. The stock exchange operates a market within a regulatory framework designed to maximise transparency fairness effectiveness and competitiveness and to promote confidence among all market participants. It is also there for shareholders. All shareholders should be treated fairly and equitably. Any unfair share-trading practices should be detected and met with effective remedies. It is these remedies that have failed in the past. The market rules should be backed by effective mechanisms for investigation surveillance and enforcement with strong sanctions against deliberate breaches of the rules. 
We have seen huge corporate frauds and means of swapping moneys from one company or one corporation to another and methods of changing the marketplace by insider trading. New Zealand First as most members will know has always stood strongly against corporate crime of any description. We support any moves to clean up our securities market improve people’s confidence in the market and bring to justice those who have not been playing by the rules. 
The Rt Hon Winston Peters refused to quit in his pursuit of the wine-box matter. That clear example shows that New Zealand First is not prepared to allow the kind of corporate fraud that has gone on in the past. 
Pita Paraone 
: What support did this House give him? 
BRENT CATCHPOLE 
: Absolute zero! Members fought long and hard to block every move by which he tried to bring that fraud to the House. It was only on a slip that he was able to table the wine box and expose the fraud that had gone on. 
New Zealand First stands firm on its commitment to fight corporate crime. I would like to quote the Rt Hon Winston Peters who said: “New Zealanders are simply not interested in returning to the failed far-right policies that Don Brash proposes. They know that National has no concern for ordinary New Zealanders but is in the pocket of big business. What has National said about the insider-trading case involving New Zealand Rail?”. 
Simon Power 
: I raise a point of order Mr Speaker. The member knows that it is unacceptable to accuse any member of Parliament or any political party of being under the influence of any party or organisation outside the Chamber. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: Quite right. Mr Catchpole could you withdraw and apologise. 
BRENT CATCHPOLE 
: I withdraw and apologise. Without sound insider-trading laws and antitrust laws New Zealand is completely out of step with international markets. That is not moot and we have a situation where certain parties in this House have not supported addressing such issues. I dare not say any more on that issue because I will be pulled up again by the member. 
Dail Jones 
: They are very sensitive. 
BRENT CATCHPOLE 
: They are obviously very sensitive about this and with good reason. Aspects of this bill require fine-tuning but it is a step in the right direction. It aims to bring New Zealand’s securities laws into line with those of the rest of the world. We expect many of the flaws in this legislation to be ironed out by the select committee process with the help of submissions from the public and from other parties of interest. But our main issue with this legislation is that New Zealand First wants to see the marketplace cleaned up to provide security and put confidence back in the market. 
A more transparent market is a more attractive market to New Zealand investors and to investors from overseas. The provision in the legislation to prohibit people from creating false trading activities such as buying and selling stock to themselves is to be applauded. Any efforts to stop this are greatly appreciated and welcomed by New Zealand First. Some critics say that the regulations will be expensive to uphold. We are not entirely convinced that the extra $1 million that the Government is prepared to put into this legislation is enough. Let us face it Australia has a budget in excess of $200 million for the Australian Securities and Investments Commission. That is a lot more than New Zealand is prepared to put in. That extra $1 million will bring the total up to only $7 million. So New Zealand First is concerned by the fact that this will not really be sufficient. 
Enforcing insider-trading rules is very difficult and will remain difficult even with this legislation but at least we are getting some mechanisms in place that will make it far more difficult for insider traders and make it easier for them to be caught and exposed. Some in the industry have also said that the legislation amounts to smoke and mirrors and they would prefer that the Government had adopted laws that are better suited to New Zealand rather than mimicking the Australian laws. Unfortunately in Australia as Brian Connell pointed out there have been six prosecutions over the last 10 years. But Brian Connell did not point out that only one person has been convicted and gone to jail. So even with all that extra money it is very difficult and obviously the Australian example is not necessarily the best for New Zealand. We want to see some changes made to this bill and we will be working in the select committee to make sure those changes are brought about. 
The select committee process is likely to iron out these issues and we will certainly be working with the committee to make sure that those problems within the bill are ironed out. We will make sure at all stages that the bill will be what the marketplace requires. Certainly the stock exchange with its high standards would expect the support from the legislation to ensure that people do not take advantage of situations and do not rack up share and securities prices by insider trading by using insider funds to swap from one company to another or by buying their own shares to ensure that their share prices increase. 
New Zealand First wants to make sure that the rest of the community and certainly the business community understands that we will be fighting hard to ensure that there is fair play for everybody that everybody has fair access to all the information and that others do not take advantage of that situation. We have seen that in the past and have fought against it. New Zealand First wants to ensure that this bill makes the marketplace a safer and better place to trade and that trading is on an even playing field so that it is fair for everybody. New Zealand First supports this legislation to the select committee and we look forward to working through it. 
STEPHEN FRANKS (ACT) 
: 
 It is quite sad for me to be looking at this legislation which covers areas that I have spent so much of my working life working in. I think I was probably the most determined as a practising commercial lawyer to uphold and improve enforcement of securities law in this country. I spent 9 years putting hundreds of unpaid hours into the surveillance functions of the market surveillance panel and I spent many many hours making submissions and encouraging people to bring proceedings against insider traders. I spent a long time on policy issues to understand the securities laws of Australia the United States and the United Kingdom. 
When I look at this bill and see the primitive aping of Australian law I am really sorry for New Zealand. One of the advantages that this country should be exploiting is the ability to avoid some of the stupid political solutions that the Australians inflict on themselves as a result of having too many layers of politicians with too much influence after the occasional moral panic and the political hysteria that follows from their crashes and panics. 
I look at what we have done with for example insider-trading law and I see it going wrong in two ways. Firstly it is not very complex. Insider trading needs a clear conceptual foundation. We deliberately did not adopt one in 1988 and we deliberately are now moving even further away from a clear principle. Insider trading has resulted in a number of proceedings. I know of proceedings that have resulted in the payment of millions of dollars by the offenders. I know of the proceeding that I prosecuted in the name of my wife Roger Kerr’s wife and Roger Kerr against Kerry Hoggard. Hoggard paid many times the value of what he made. The only reason that it did not proceed to a conclusion was because of a law that meant that if we had gone further and taken the case right through the court would have held that his offer precluded us from recovering our costs. I believe that that is probably the case with a number of these proceedings. If we had refused his offer to settle the court would have said not unfairly when it reached an eventual outcome that because he had offered to settle for an amount that was in the order of the penalty that the court might order it would not award costs. The costs were so big that we settled. What I can say is that we were not alone. There are cases still trundling through the courts where insider traders will pay very heavy penalties. 
I then look at the dishonesty in this law—and it is dishonest. It refers to civil pecuniary penalties as if there is some magic in those words. I think what it really means is penalties that can be levied on the balance of probabilities. The standards that are set out are standards that no politician would tolerate such as absolute liability or liability for being inadvertently misleading. The legislation includes liability of up to a $5 million fine for something that is not even defined. There is liability for breaches of regulations that have not been written. I think it is very sad to see this House adopting the sanctimonious hysteria mode of saying that there must be badness out there because we have not seen prosecutions and we should therefore throw away longstanding principles. The State must not use its coercive powers to punish people until there is proof beyond reasonable doubt. 
I think it is sad also because we will inevitably achieve the Australian culture. I have worked on both sides of the Tasman on fundraisings takeovers and securities and I believe that the New Zealand market was far more intrinsically honest than the Australian market. I believe that this is partly a result of this kind of law. The Australians have an insider-trading law that everyone knows cannot be used because honest people will be put behind bars. So they have a set of understandings that mean people know the law is never actually applied the way it reads and now we are adopting it. 
We are saying that if someone has information that the market would like to have even if that person acquired it perfectly honestly had spent a lifetime in that business and understood the significance of a Government announcement of a change of policy before anyone else did and was making sure that the business trades on the investment subsequently made—and he or she knows that—and the information has not been derived from anywhere except by a public announcement that person is still an insider trader. That is absolutely what happens. 
New section 8A(1) which is proposed to be inserted into the Securities Markets Act by clause 21 states that a person is an insider trader if that person: “(a) has material information relating to the public issuer that is not generally available to the market; and (b) knows or ought reasonably to know that the information is material information; and (c) knows or ought reasonably to know that the information is not generally available to the market.” That person is an insider trader and cannot trade. 
What is “material information”? The information that is material will be a person’s knowledge of the significance. That is that person’s own proprietary information. For example a person may have spent a lifetime as a scientist understanding the next cure for  
Dothistroma pini 
 for trees and will know the moment it becomes evident that there is a genetic test for that disease. He or she will have the ability to increase the value of the entire forest estate of New Zealand. But this bill would say that until that person has explained it so that everyone in our market understands it that person cannot use his or her own knowledge—even though that person did not get it from anyone within the company. It was not obtained illegally—the information was drawn from the person’s own research. 
We know that that will happen. This market is given a feeble exception whereby the bill provides that it is not inside information if it is obtained by independent research and analysis. Well what is “independent research and analysis”? It means “planned investigation to gain new knowledge and understanding”. I would think that would be a phone call. Clearly someone has to plan to make a phone call which seems to me to be a planned investigation undertaken to gain new knowledge. In other words there is a set of slogans as the standard for an insider and then because that is completely unrealistic there is a set of exemptions that mean the law is actually mocked. Anyone faced with a potential $5 million fine in any court will lean over backwards to find that a person can fall within a planned investigation undertaken to gain new knowledge and understanding. In other words this law is simply a charade. 
We had a rational—or semi-rational—test before which said that if someone had information that is not that person’s property and that person has misused it that person would be liable. That was rational because it was upholding the ethical standards of those who acquire information in circumstances where they should not use it. 
That is only a part of this law. I have looked through it and I know that people will not invest the time in protesting because they know that the market in Australia gets around it and works. I am not surprised by the statistic of one secure prosecution given by Mr Jones from New Zealand First. It is really hard because often markets can work only when informed traders participate. As an uninformed trader I want the market price to be set by a whole lot of people who know more than me. I want the market price to be set by those who know that the new disease can be cured. I do not want a market that will adjust its price only when everyone understands it. That ruins markets. 
It has been known for years that the Australian test is illogical and is a joke but the Australians have enough clout to be able to persuade a weak Government and feeble Ministers. They are like kids sitting on a bulldozer. They do not know how to drive it but they can do damage and make it make a good noise. So every other kid on the block is admiring them. Others who would love to have the controls of the bulldozer are saying: “Yes we’ll pretend that you can drive if you pretend that we can.” That is what this Government is in a securities market. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 The Green Party supports this bill going to the select committee. We look forward to the debate that will occur there and the submissions it will receive. 
Members spend a lot of time in this House working ourselves into a lather to see who can be toughest on the sorts of crimes that are committed by the marginalised and deprived in this society but I think it is just as important that we have equally stringent rules for those who have every advantage but who nevertheless take advantage of other people and commit crimes involving very large amounts of money. No doubt there will be a lot of debate at the select committee as to what is the best way to do it. I found the points that Stephen Franks made very interesting and we look forward to further debate. 
GORDON COPELAND (United Future) 
: 
 I find it quite interesting and perhaps quite fortuitous that the Securities Legislation Bill follows hard on the heels of the Overseas Investment Bill because there are quite significant interrelationships between the two things. 
If we look at the big picture—and many of us made this point when talking about the Overseas Investment Bill—we see that New Zealand is dependent on overseas people investing in this country. If the market is to work properly one of the things that overseas people investing in this country need to know and have assurance about is that the local guys and girls do not have information about what is happening on the ground here that is not available to them. Basically I think that is what we are trying to describe however roughly when we talk about insider information. 
I have always thought of it as information gained by a person who has an association with a company—for example as a member of the management or the board—that is then used for personal gain. Using that information personally even under our rather loose arrangements here would probably get that person into trouble but he or she can dodge that by telling someone else the information and having that person undertake the transactions in his or her name on the basis that when a tidy profit is made both share the proceeds. That is all part and parcel of the kind of mischief this bill sets out to overcome. 
Stephen Franks 
: That’s illegal now. 
GORDON COPELAND 
: I appreciate that it is illegal at the moment. I think the case being taken at the moment against David Richwhite and the former chief executive of New Zealand Rail and some other former board members is about the sort of behaviour that everybody says is conceptually quite unacceptable. When people see individuals who quite clearly are on the inside of a company and who have information that the rest of the market does not have using that information to make unconscionably large sums of money in short periods of time to line their own pockets and when people look at the other side of the ledger and realise that others who put their money into the same company at the same time are now significantly disadvantaged sometimes to the point of having very significant losses they can plainly see that that is quite wrong and needs to be stopped. I hope that prosecution will go ahead and deliver some messages to others who might be tempted to go down that route. 
I want to agree though with what Stephen Franks said which was that generally the level of honesty and ethics in New Zealand markets is very good. However there have been a number of rogue people. Some of them have gone right over the boundary into fraud and have ended up in prison. But in some ways it is just as bad to defraud people of funds in other ways simply through using information that one has gained as an insider. 
I think that is the big picture. What we are trying to do with this bill is put together a regime that basically gives people living in New York and investing in a New Zealand company on the New Zealand stock exchange reasonable assurance that they are playing on a level playing field. We have Internet access these days which means that people in New York are able to have as much information about a New Zealand company as the locals do and that is fine. We simply need to give that kind of assurance so that we can encourage free and open markets. 
The other thing this bill does is change the conceptual framework around insider trading from the former understanding that it was a breach of duty to the company to say now that it is actually a breach of duty to the market itself. I think that is a step in the right direction. When I did my commerce degree and studied commercial law—a long time ago now—companies in New Zealand were not able to buy their own shares. Therefore if one was using insider information gained as an insider of the company one was also breaching a duty to that company. That has all changed; companies can now buy their own shares so it is now possible for a company itself to breach insider-trading concepts by utilising information that disadvantages the other participants in the market. The proposed change I think needs to happen. 
I am not quite as negative I think as the member Stephen Franks—and I certainly bow to his expertise in this area. I do not interpret the exceptions quite as he understands them. My understanding is that there will be exceptions for legitimate market-efficient activity such as research and analysis. By that my understanding is that people are still free to use their wits and their brains to figure out information about trends in a company market research and all those kinds of things in order to make an informed decision about whether an investment is a good investment or a lousy one. They have no obligation to tell anybody else about that and I do not think that flows from this bill at all. What the bill is trying to say is that that kind of activity is fine and clearly is not in any sense insider trading or insider information because it is information obtained by if one likes outsiders. 
So I think the exceptions are right and proper but they are imperfect. We have this curious thing which everybody talks about called Chinese walls. I know that Stephen Franks will be very familiar with that concept. Somehow we kid ourselves that people working in the research division of a stockbroking firm for example who find out information will not tell it to another member of the firm who might have an interest in that information. I know that some of the big professional firms do try to maintain these Chinese walls and they have quite strict rules about them but I think it is sometimes a bit of a stretch of the imagination to think they work quite as well as that. Stephen Franks is probably right that what actually happens is that the market sorts these things out itself and adopts some standard practice. I think that as long as that is fair and reasonable there is no problem but there is a point beyond which it should not go. When it goes over that point—and here I very much agree with Stephen Franks—it is important to prosecute and make examples of those people. That in itself basically sends a message to others that it could happen to them and that in itself restrains people and encourages them to act honestly sensibly and ethically which is what we are trying to do here. 
It is therefore very important that a new range of penalties is brought in and new powers are given to the Securities Commission and the Takeovers Panel so that they are armed with a comprehensive and flexible range of penalties and remedies which they can apply on a case by case basis. That seems to me to be a very sensible approach. The other things in the bill that I also think are good include the tightening-up of the investment adviser and investment broker law. It is important that people holding themselves out as experts are actually experts and that they make appropriate disclosures to people before they induce them to part with what might sometimes be almost their lifetime’s savings into the hands of a stranger who claims to have great knowledge and expertise in investing. I think that is a welcome step in the right direction too. 
Overall and as others have said I hope the Commerce Committee will go into the nitty-gritty detail of this bill and ensure that it remains on track in terms of common sense that it does not stray into overkill but that we get it right. With that trust in the select committee that will be looking at the bill I signal United Future’s support for it. 
MOANA MACKEY (Labour) 
: 
 I am happy to rise to support the first reading of the Securities Legislation Bill. It is important that we do all we can to build confidence in New Zealand financial markets in order to ensure that we are encouraging investment. Looking through this Securities Legislation Bill I think that strengthening our regulatory framework as is proposed in this bill is an important step towards achieving that confidence because the current laws are complex and difficult to enforce as we have heard from the Minister in charge of the bill. Although not a reason in itself the lack of prosecutions in New Zealand to date under the current law should be taken into consideration as an indication that maybe the current law in this area is inadequate. I look forward to seeing the work that the Commerce Committee does on this bill. It is good to see that it has wide-ranging support. It is important legislation and I commend it to the House. 
Hon TONY RYALL (National—Bay Of Plenty) 
: 
 I was pleased to receive a call this evening to come down and participate in the debate on the Securities Legislation Bill. I would like to talk about the import of securities legislation to the performance of Ministers in the House. We have seen the performance of Ministers in the country today. The Prime Minister gives huff and puff about what she will do to the directors of Television New Zealand in terms of the impact they have had on various securities associated with Television New Zealand—in particular the payment of those securities to one Mrs Judy Bailey. We have all the huff and puff and what happens? We have Steve Maharey on television parroting exactly what the chairman said to him. 
It is important that Ministers in this Government are particularly aware of what is being proposed in the securities legislation because on numerous occasions Ministers in this Government have broken the basic rules of securities legislation. I will give a couple of examples. 
Darren Hughes 
: Always ready to give a cheap shot. 
Hon TONY RYALL 
: Well actually it is not a cheap shot; they were both very expensive shots that resulted from breaches of the Securities Act. 
Let me just go through the first example. Jim Anderton the then Deputy Prime Minister of New Zealand appeared on the  
Holmes  
show to talk about the fact that he could fund Kiwibank through a redeemable preference share issue. A redeemable preference share issue was a proposal that had been floated by New Zealand Post and a considerable amount of work was being done on it by Treasury under both Governments. Mr Anderton was quite convinced that he could fund the growth of Kiwibank through the issue of some redeemable preference shares which would be a security that would be listed on the New Zealand Stock Exchange. What he was not told was that it would have provided market disciplines that would have affected the operation of the whole company. But Mr Anderton was convinced about its worth and because he likes to pretend to be informed he said on television that there could be redeemable preference shares and that they would be a really good deal. He scuttled the whole thing over night. Those few words on the  
Holmes  
show stopped the deal with New Zealand Post to issue redeemable preference shares because Mr Anderton broke a basic premise of the securities legislation. 
When National was last in Government and was working with Mr Peters as Treasurer to privatise Auckland International Airport—and he as Treasurer signed the prospectus for privatising Auckland International Airport—we were under very clear legal advice that we could say nothing about that security. Mr Peters who as Treasurer was privatising Auckland International Airport could say nothing about the sale of Auckland International Airport shares in terms of what benefit there might be to shareholders. Similar restrictions applied to the other wildly successful privatisations of Contact Energy and Capital Properties. 
Here is the second breach of the Securities Act. It involves the Prime Minister and Air New Zealand. She gave a television interview and made a statement about the likely future of Air New Zealand and the value of its shares. She said that people should hang on to them. That had an immediate impact on the share price. If that was not a breach of the securities legislation then nothing is. So if Labour members want to bemoan the fact that there have been no prosecutions as a result of breaches of the Securities Act they should wonder why the Prime Minister was not prosecuted. Mind you we have seen “paintergate” and now “motorcade” and in both cases the Prime Minister has not faced any prosecution whatsoever. My point is this. It is vital that Ministers know what is in this securities legislation because they have a history of breaching those regulations. They need to be aware of the legislation so that they do not do that again. 
Quite a lot of good information was given by Brian Connell earlier in the debate about the importance of making sure that the remedy is not worse than the illness. The criticism I made of the last piece of securities legislation that came into the House which I see the Government has tried to remedy was about the quite superficial analysis of the regulatory impact statement. It is quite superficial. There are very few numbers. There is a sort of calculation about how much it will cost to get an exemption from the Securities Commission. But the analysis is very poor and it does not include the impact on the costs of the general purchaser of securities. I would have thought that would be quite an important feature of any analysis that would be done. 
The third issue I would like to talk about is the fact that there is nothing in this legislation to deal with one of the major crises with securities in this country that the Government is doing nothing about and that is the number of people who sold their houses to trusts and companies which would then provide them with the security of an income stream as a result of the transfer of the title of their houses. I have people in my electorate as will most members who were approached by promoters by investment advisers who said that if they gave them their title to their homes they would in turn give them a guaranteed income stream for the next 3 years—that they would use that title to issue securities and create money in order to pay them. Hundreds and hundreds of people have fallen for that scam. 
Dail Jones 
: And lawyers have let them do it. 
Hon TONY RYALL 
: Lawyers and investment advisers have let them do it. In fact I tell Mr Jones that most of those people did not see their lawyers and that was the problem. Most of them did not see their lawyers and they were sucked in by those investment advisers those promoters of these securities. 
It does not seem that the Government is doing much on that. I have made some inquiries of the Ministers involved and there is no sense of urgency to assist those people to recover their homes. There is no action being taken by the Securities Commission that I am aware of to help those people get back their homes. They have been ripped off by people holding out false securities and the Securities Commission should be in there boots and all—not just saying that they are trusts and it is all too difficult. It has been going on for 3 years now and nothing has been happening. If the Securities Commission and this Government are determined to have some prosecutions they should prosecute those people who have ripped off the homes of people—tradespeople blue-collar people ordinary New Zealanders—who have scrimped and saved for 40 years to get a house then are sucked in by some conman. But the Government does nothing to assist them. We need in terms of this legislation to find out from the next Government speaker what will be done about the securities issued to those people in various parts of the country. 
Also there are a number of questions to be answered by Ministers about the role of investment advisers. The Government has a couple of options in the bill about how to deal with investment advisers. One is the quite stringent disclosure regime set out in the legislation and the alternative is the use of occupational licensing. What is an investment adviser? Is it the individual who provides the investment advice or is it the company or the sharebroker for which that individual works? The Government needs to realise that increasing numbers of people are handing over their financial security to investment advisers. There are considerable questions to be asked about the backgrounds of many of these people. Most who are high profile for example are perfectly legitimate investment advisers who deal with people’s retirement savings and their life-savings but others need further investigation. The issue of whether the adviser is the individual or the company has significant impact as well. A burden and an onus needs to be put on the employers of investment advisers to make sure that their investment advisers are performing within an appropriate standard. 
In summary my contribution today is to highlight to Ministers that they themselves need to know what is in this bill rather than their just reading the departmental speech. Ministers deal with securities every day depending on their responsibilities. We have seen the Prime Minister breach the Securities Act. We have seen Jim Anderton prevent the issuance of securities because of something he said. It is important that once this bill is passed Ministers are given a lesson on what not to say and what they can say. 
DARREN HUGHES (Labour—Otaki) 
: 
 I rise to take a brief call in the first reading which will refer the Securities Legislation Bill to the Commerce Committee. It is an omnibus bill that amends the Securities Act the Securities Markets Act and the Takeovers Act as well as the Takeovers Code so I am quite comfortable with that. 
DAIL JONES (NZ First) 
: 
 As comfortable as the junior Government whip may be with this bill there is a little bit more to it than he has told the House. 
Darren Hughes 
: Leave it to the select committee. 
DAIL JONES 
: Yes it could be left to the select committee. However this bill apart from the explanatory note has 134 pages. To expect the Opposition parties in this House just to concede this debate on Wednesday at 11.28 p.m. is far too much for this Labour Government to expect. As my colleague Brent Catchpole said in his very fine speech in this particular legislation one finds that investors breaching insider-trading laws face up to 5 years in jail under sweeping new proposals to beef up the law. However up until now no one has been found liable for insider trading since the Act came into effect. So it is bit of a pyrrhic piece of legislation if the penalties are all increased but no one at this stage has ever been found guilty of anything in terms of it. 
Research has shown that enforceable insider-trading laws could increase trading volumes so the need to beef up our insider-trading legislation becomes apparent. They say that insider-trading laws are complicated difficult to enforce and easy to avoid. The Government hopes that this bill will deter misconduct in the markets and make New Zealand a more attractive investment destination. What is this Government’s solution? Just bring in an Australian-type model. And really why must we copy Australia? There have been any number of commentators on the New Zealand situation who have said that there is no need for us to mimic Australia—why can we not do something that is more appropriate to New Zealand? I would expect that that is one of the things that the select committee would have a good look at. 
For example I note that the Securities Commission general counsel Liam Mason has said that the bill would give the commission more power to take action in situations where previously only investors had been able to and the commission would have simpler and firmer laws and more powers to enforce them. But once again so far no one has been convicted in New Zealand. Of course when we look at the Australian situation and what has happened over there only the flamboyant stockbroker—as the person was described—Rene Rivkin has been jailed for insider trading in Australia during the past 10 years. The threat of jail in addition to a fine can only give those contemplating the use of inside knowledge an extra incentive to pause for thought. 
But of course the real problem I guess is the test that is imposed in order to find someone liable under this legislation. While the test remains that of “beyond reasonable doubt” clearly it will be very difficult to find someone guilty. Of course as Stephen Franks has indicated in his speech if people have come to an arrangement then there is no encouragement for them to take the matter to the Securities Commission. 
The other test that is usually available in civil law is a test of the balance of probabilities. As a member of New Zealand First—a party that really likes to get tough on people who try to rip off the community—I have to wonder whether consideration could be given to putting in an easier test to find someone liable such as the test of balance of probabilities. I hope the select committee will give some thought to this. I can see Mr Brent Catchpole nodding. I am sure he will give some thought as to whether a balance of probabilities test is possible. That will give the committee something to think about rather than it being fairly comfortable with the present situation which is very very hard to prove. 
How is it proved? We have the Securities Commission and the evidence that is necessary there. What about the funds available to the Securities Commission? I understand that currently the commission has a total budget of $7 million. I am told that the Australian Securities and Investments Commission has a budget of A$191 million. Depending on when one considers the translation of money values that is close to NZ$200 million today. One cannot get much for $7 million. It has been a struggle in Australia to get even one conviction on a $200 million budget. I have to ask whether this is really a waste of time in so far as insider trading is concerned. Are we just throwing money away? Do we perhaps have to change the test to try to achieve a result with the present lack of resources and the very high test that is required? 
Is the Government really serious? Are the stock exchange and the people who want to curb these problems really serious? I see for example that someone at Chapman Tripp has said: “These new powers do have the potential to curb the enthusiasm of offerers targets major shareholders and certainly their PR advisers.” I am quoting Roger Wallace a securities lawyer at Chapman Tripp. 
Even that is set out in modest legal terms. That is just the potential. He is not saying that we are going to catch them now; he just says that the powers have the potential to curb enthusiasm. Clearly we are not approaching this particular problem—if there is one—with enough resources for the Securities Commission. 
Some of the issues mentioned by Tony Ryall were those I was interested in considering. I was looking at page 58 of the explanatory note and wanting to discuss the question regarding investment advisers and brokers. It seems so easy today to throw up one’s shingle or sign and call oneself an investment adviser or investment broker. All those companies seem to have people working for them going out and giving advice. What really needs to be done is to make sure that the people who part with their money get a real indication of whether they will actually make any sort of profit on the transaction. 
Time and time again as we all know it is only the company that makes any money. It is only the investment adviser who makes any money. It is only the investment broker who makes any money. Often people who put their money into these transactions do not even get their capital back and the whole situation is not good enough in so far as the simple blue-collar tradesman is concerned as mentioned earlier by Tony Ryall. 
I will skip over that because I want to discuss a couple of other issues before time runs out. The bill is such a big one that one would think we would have more time on it rather than it being rushed through in this way. 
I was interested in the takeovers asset threshold on page 52 of the explanatory note and the question of compliance costs arises. It is good how in legislation today efforts are made to try to set out what those costs may be. On page 48 of the explanatory note we read: “For a person taking over a company newly caught by the provisions the total additional costs are estimated to be between $40000 and $75000 depending on the size of the company and the complexity of legal and independent merits advice required.” Those of us who have relatives or friends working in the banking and corporate law business will feel that this is another Christmas present to lawyers and advisers. Here quite baldly is an additional $40000 to $75000 available depending on the size of the transaction. Under the heading “Takeovers Act asset threshold” on page 52 it states: “the compliance costs associated with making a takeover bid under the Takeovers Code are estimated to be approximately $15000 to $35000 for legal advice (depending on the complexity of the takeover) and approximately $8000 to $13000 for mailing and printing costs:”. With $8000 to $13000 for printing costs obviously there is a lot of money to be made in these areas. 
This bill is a very complicated piece of legislation comprising 130-odd pages. I am confident that the select committee will give full consideration to it. We look forward to the submissions that will be made available to the select committee and the very many amendments that will inevitably be made. I am concerned of course that once again the Government has put up some legislation that in order to make it easy in the Committee stage is drafted in only a couple of parts. For lawyers who have to try to understand the legislation when it comes out it will be pretty difficult for them to follow. 
Hon RICK BARKER (Minister for Courts) 
: 
 That member spoke so brilliantly that he has worn me down. I accept that the bill should be supported by this House and I commend it to every member. 
Bill read a first time. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Securities Legislation Bill be referred to the Commerce Committee. 
referred to Commerce Committee 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 106 
New Zealand Labour 51; New Zealand National 24; New Zealand First 13; Green Party 8; United Future 8; Progressive 2. 
Noes 9 
ACT New Zealand 9. 
Motion agreed to. 
Taxation (Base Maintenance and Miscellaneous  Provisions) Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I move  
That the Taxation (Base Maintenance and Miscellaneous Provisions) Bill be now read a first time. 
 I shall be recommending to the House later that the bill be referred to the Finance and Expenditure Committee for consideration. 
This omnibus taxation bill is the second to be introduced this year. Like its March predecessor the bill reflects the priorities of the Government’s tax policy work programme. That includes promoting growth and innovation making the tax system easier for businesses to work with reducing compliance costs and protecting the revenue base. Protecting the revenue base is the single most important theme of the present bill. 
The centrepiece of the bill is the introduction of new rules to ensure that foreign-owned banks which constitute most of the banking business in New Zealand pay sufficient tax on their New Zealand income. A notable trend has emerged recently that the growth in the profits of foreign-owned banks operating here is not reflected in their payments of New Zealand tax. The reported profits of the financial sector have been going up but the proportion of the tax paid by the sector has been going down. At the Government’s request tax policy officials reviewed the tax laws relating to banks to see whether they needed to be more robust. It has emerged that the banks can use certain features of our international tax laws such as the conduit rules to reduce the amount of tax they pay in New Zealand. 
Under present law banks can use interest deductions arising from an excessive level of debt to reduce the portion of their income that is subject to tax in New Zealand. That works in two ways. First the cross-border financing arrangements for outbound investments which have generally been funded by debt have generated income that effectively is not subject to New Zealand tax under current law. Second under the current law there is potential for banks to substitute debt for equity in financing their New Zealand businesses for the use of holding companies and bank branches. That results in their New Zealand business being thinly capitalised for tax purposes. 
The changes introduced in this bill will provide robust thin-capitalisation rules that ensure that the income of banks cannot be sheltered by interest deductions arising from excessive debt. Under the proposed rules foreign-owned banks will be denied interest deductions if they do not hold a level of capital or equity equivalent to 4 percent of their New Zealand banking assets weighted for risk. They will also be required to have enough capital in New Zealand on which no interest is deductible to fully fund their offshore investments. That means that banks will be prevented from using the expenses associated with this income as a deduction against their New Zealand income. As I announced in September the proposed changes could result in foreign-owned banks paying as much as $360 million a year more in New Zealand tax assuming current levels of bank profitability—which is probably I think it is fair to say about the biggest free hit any Government has ever got out of taxation with no impact upon the New Zealand economy. 
Members will have seen media reference to the Inland Revenue Department’s audit activity that has resulted in some banks being reported as disputing their contingent tax liability. Obviously that is an issue between banks and the Inland Revenue Department and is separate from the legislation proposed in this bill. Under the law I as Minister of Revenue have no part in such investigations of specific taxpayers. 
As another measure to protect the tax base the bill amends the dividend imputation rules to ensure that in certain circumstances when a company is sold the benefits of any prepaid tax will stay with the original group that paid the tax and cannot be transferred to the shareholders of another group. The amendments are aimed at companies that have no immediate expectation of being liable for income tax but that prepay tax to impute dividends to shareholders and then engage in transactions to have the prepaid tax refunded to them. Once enacted that revenue protection measure will apply from today. 
The bill also introduces a number of changes that improve the operation and effectiveness of tax law in other areas. It introduces several changes to the tax depreciation rules to improve their operation and reduce associated compliance costs to business taxpayers. Included are changes to the tax depreciation treatment of patents and the special tax depreciation rate rules additions to the list of the depreciable intangible property and extended deductibility for losses on buildings. 
The bill also clarifies and explains the rules on tax deductibility for business environmental expenditure such as the cost of preventing remedying or mitigating the discharge of contaminants. The current rules are rife with uncertainty about the existing scope of tax deductions that are available for environmental expenditure and I am told that some environmental costs may not indeed be deductible for tax purposes. Allowing environmental costs to be taken into account for tax purposes as other business costs are will ensure the correct calculation of taxation on income from business activities. The changes will also remove disincentives for undertaking environmental expenditure and encourage businesses to be more environmentally responsible. 
Another part of the bill simply clarifies the income tax rules on transfer of assets and liabilities to beneficiaries when someone dies. I emphasise that those changes affect only assets and liabilities that are already in the tax base such as buildings on which depreciation is being claimed and land on which the gain is taxable. It is not some attempt to back-door smuggle in some new death duties. The current law in that area is unclear and over the years there have been repeated calls from the taxation industry for reform of the rules. Uncertainty also surrounds the tax treatment of in-kind distributions of assets from trusts estates and companies as well as gifts of all kinds. To add greater certainty and consistency the bill introduces comprehensive rules that provide a uniform income tax treatment of these asset transfers both for those who transfer assets and for recipients. Those policy announcements have already been warmly welcomed by taxation professionals. 
The bill also introduces statutory privilege or a right not to disclose certain documents relating to tax advice provided by tax advisers such as chartered accountants. Although it will be subject to a number of exclusions it will place the status of communications from non-legal tax advisers such as accountants closer to that of the tax advice provided by lawyers who do not have to disclose their advice to the Inland Revenue Department. Advisers such as accountants should also be able to give candid and independent advice to their clients without having to disclose it to the Inland Revenue Department. The benefit of enabling this to occur is that legal and accounting advice will be treated in a similar way. In both cases such advice can promote voluntary compliance with the tax system and thus help to reduce compliance and administrative costs. 
The bill introduces a temporary 6-year tax exemption on income earned from non-resident drilling rigs and seismic ships involved in exploration for petroleum in New Zealand. The measure removes a tax obstacle to gas exploration in New Zealand and is part of a package of measures announced in June to boost gas exploration here. 
Those are the main features of this wide-ranging taxation bill. They and other changes proposed in the bill are described in detail in the separate 74-page commentary that has been distributed to all members of the House and which I recommend they read. I commend the bill to the House. 
BRIAN CONNELL (National—Rakaia) 
: 
 I agree with the Minister that this legislation is extremely significant to New Zealand and some of the implications the Minister has talked about and are referred to in the commentary will be far-reaching. 
The bill is divided into three significant areas which I want to address. The first deals with the thin-capitalisation rules for foreign-owned banks. As the Minister pointed out—maybe not in as much detail as I would have liked—this is the method or deception of loading excessive debt to hide the amount of equity to support assets and that has significant tax implications. As much as it pains me to say it having worked for Westpac Banking Corporation for some time and seeing that it is now in the sights of the Minister of Revenue in relation to this I do believe that the bank may have a case to answer. The practice of debt loading to disguise the true equity position goes back 15-odd years. As I was reminded yesterday when I met some Westpac executive and board members some very fine people are engaged in that institution right now who had no part in what has transpired. 
I want to be on the record as making it very clear that that bank and some of the other foreign-owned banks have not been involved as has been alleged by the Minister in anything illegal. Essentially they used the law as it was drafted and thus were able to enhance profitability to their shareholders on the other side of the Tasman. I agree with the Minister that the loophole needs to be closed. Hundreds of millions of dollars have run out of New Zealand into the Australian economy and to Australian banks and shareholders and New Zealand shareholders to some degree have been left exposed. 
The issue at hand is one that will reap the Government an extra $300-odd million and some of it will be retrospective—some of the legislation will apply retrospectively. I have two issues of concern on this. The first is that the Minister and his Government will now have an extra $300 million to put into their coffers—money they never expected to have—and I expect the Minister to rebate that by way of tax deduction to the hard-working Kiwis who have contributed to the $6.5 billion surplus the Minister is so pleased to talk about ad infinitum. 
The second issue that concerns me is the retrospective nature of some of the legislation. Legislation that applies retrospectively—[ 
Interruption 
] The member should sober up and listen. The National Party is strongly opposed in principle to legislation that applies retrospectively. It should not be happening. When the bill goes to the select committee we will run a very clear rule of thumb over that. I look to some of the other members of the House for support on this because it is a very very dangerous principle. This Minister has an insatiable appetite for taxation and that is something that bothers me. He is very good at spending other people’s money and now that he will get a windfall of an extra $300 million he will be put on notice by the National Party that it is time to cut taxation for the productive sector that has contributed to the surplus I talked about. 
Another issue I want to talk about is the amendments to introduce temporary exemptions. I see from the commentary that that relates to 6 years of income earned by foreign companies for offshore surveys for possible petroleum fields. That type of tax incentive to support our natural resources and infrastructure development—a foreign concept for this Minister—is a very good initiative. That New Zealand is exposed in terms of its petroleum resources and its inability as it were to attract foreign capital into a very capital intensive and capital hungry area around petroleum development is not in doubt. We need to think a little bit more laterally than is suggested here. I would like the select committee to look at the wider application of this suggested amendment because I believe that any infrastructure development for which we need to attract large amounts of capital is something that could have application to what is being suggested. 
New Zealand is in a dire position in terms of infrastructure and development. In particular I am thinking about our ability to generate energy or electricity. Our energy resources are running out and our ability to generate electricity is hurting our ability to attract foreign investment to our country. As National’s spokesperson on forestry amongst other things I am confronted with this issue nearly every day from organisations that are looking at opportunities to invest here. They have the same mantra when they talk to me—that New Zealand is a good place to grow trees that we need to get involved in the processing market and that the two things that concern them deeply are the Resource Management Act and the uncertainty of electricity supply. Anything this bill can do and any wider application of what it suggests will get the National Party’s support. 
The third area I want to speak about relates to the amendments that will allow deductions for expenditure incurred by business in avoiding remedying or mitigating detrimental effects on the environment from the discharge of contaminants. I find I also agree with that. We have a pristine environment in this country that we as New Zealanders are all very proud of. But it is not something we should take for granted. Anything we can do to maintain that environment will get National Party support provided the cost does not outweigh the benefits. That is an issue the select committee will look at and I will ask it to reflect on whether the medicine is worse than the illness itself. Conceptually what is being suggested in this legislation is very sound constructive and sensible. I think that all large organisations—and most of the organisations in this country are responsible corporate citizens—will look at their ability to mitigate any environmental effects and if they can work in partnership with the Government to achieve that then I think we will find they are very responsive to that. 
In conclusion the three major initiatives suggested in this bill go to the select committee with the National Party’s endorsement but on the very clear proviso that we will look to see what devil is in the detail. A practice of this Government has been to put in place solutions that are not cost effective and we need to be very mindful of that. 
JILL PETTIS (Labour—Whanganui) 
: 
 There are many important parts to this omnibus bill but some in particular will appeal to my constituents. One of those— 
Brian Connell 
: Name one—the only one! 
JILL PETTIS 
: I tell the member to settle down it is late. One issue in the bill that will appeal to my constituents is the introduction of new regulations to ensure that foreign-owned banks pay their proper share of tax on their New Zealand income. I think that everybody in this House would see that as a good thing. Even Mr Connell’s constituents would see that as a good thing. This is part of the Government’s commitment to a fair and just taxation system and I look forward to seeing this bill when it is reported back from the select committee. 
CRAIG McNAIR (NZ First) 
: 
 In speaking to this first reading of the Taxation (Base Maintenance and Miscellaneous Provisions) Bill I start off by referring to the amendments to the Income Tax Act 1994 regarding foreign-owned banks. We have been told tonight that foreign-owned banks have not paid around $360 million in tax that should have been paid to this Government or to the Government of the day. I find that sad for a couple of reasons. It is incredibly sad not only that have we sold off these banks to foreign-owned enterprises but that for quite some time not even the Government of the day—whatever Government it is—has been able to collect the appropriate amount of tax the banks are supposed to be paying. I think everyone in this House agrees—I do not think anybody would disagree—that everybody whether a company an individual or a small business should no matter what the tax rate is pay the appropriate amount of tax stipulated by law. It is very sad that for some time now banks have not been paying the appropriate amount of tax because of some loopholes they have been able to find in the law. 
I listened to the tax officials some time ago now. From memory they said that this situation has been going on for about 3 to 5 years but the Minister can correct me if I am wrong on that. When we calculate it up that is a lot of money—money that could be going back into the pockets of our small-business owners exporters and small export businesses through tax concessions tax abatement schemes and things like that. Whatever we call it and in whatever way we could have done it that money could have been channelled back into taxpayers’ pockets. I find it incredibly sad that the banks not only were not paying the appropriate amount of tax but were— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the honourable member but the time has come for me to leave the Chair. 
Debate interrupted. 
Sitting suspended from 12 midnight to 9 a.m. (Friday)