Volume 672 Week 74 - Wednesday 18 May 2011 
Volume 672 Week 74 - Wednesday 18 May 2011 
[Volume:672;Page:18771] 
Wednesday 18 May 2011 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Questions to Ministers 
Tax System Changes—Fairness 
1. 
Hon PHIL GOFF (Leader of the Opposition) 
 to the  
Prime Minister 
: In stating that “this Government introduced a balanced package of tax cuts” was he saying that his tax changes and the tax system are fair to all New Zealanders? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 The tax changes we introduced in Budget 2010 were fair. They increased the fairness of the overall tax system compared with what we inherited from Labour. For example two-thirds of the total cost of the income tax cuts went to reducing the tax on the bottom two income brackets—that is on income under $48000 a year. Almost three-quarters of income earners now have a top statutory rate of 17.5 percent or less. A number of groups now pay a fairer share of tax including property speculators and leveraged foreign companies. We removed the incentive for people to shelter income in trusts and we invested $120 million over 4 years in the Inland Revenue Department in Budget 2010 to improve the policing of and compliance with tax rules. 
Hon Phil Goff 
: How is it fair that a person on the average wage of $48000 coping with a soaring cost of living got just a tax cut of $28 a week to cope with that but somebody on say $393000 a year got $350 a week in tax cuts? 
Rt Hon JOHN KEY 
: It is fair in the sense that one looks at the tax burden of what people pay; someone on $393000 a year pays a lot more tax. Secondly someone who earns a lot more pays a lot more in GST. The reality of the New Zealand tax system is that New Zealanders on higher incomes pay more in that area and a lot of the tax burden is met by those in the higher-income brackets. 
Hon Phil Goff 
: Does he think that the tax cut of $13.77 a week gained by a person on the minimum wage has fully compensated that person for the soaring cost of living? 
Rt Hon JOHN KEY 
: What it has compensated them for is the change in GST. What the member opposite is trying to do is confuse a position where there is a difference between GST rising from 12.5 percent to 15 percent and an overall increase in costs because of inflation or other issues that might be prevalent—seasonal adjustments for instance. I know that because for instance in the last 2 years of the Labour Government cheese went up 50 percent—and we had waited 9 years for a tax cut. I know that because the price of chickens went up 44 percent. I know that because the price of milk went up 23 percent the price of petrol went up 22 percent— 
Mr SPEAKER 
: I think the House has heard sufficient on that. 
Hon Phil Goff 
: Why is it fair that in the Budget tomorrow he is intending to take from people who are on low and middle incomes and are KiwiSavers over $500 a year that they were otherwise entitled to but he is not touching the tax cuts of thousands of dollars a week that he gave to the highest income earners? 
Rt Hon JOHN KEY 
: The first thing is that the member has only one more sleep before he has a chance to see the Budget so I would not necessarily make assumptions. The second thing is— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. We have worked very hard to get straight questions and starting an answer in that gratuitous way does not help. I also put in a second point of order which has to do with whether Ministers are still required to address you when they are answering rather than the backbenches or the gallery and nothing in between. 
Mr SPEAKER 
: I will deal with the latter part first. It will be no surprise to the member that it has often been a practice of Prime Ministers for years to address the back of the House. [ 
Interruption 
] I am on my feet. I am not too troubled by that as long as members are aware that when I get to my feet they should be silent. The Prime Minister did sit down pretty promptly when I got to my feet. To deal with the first point I believe the Prime Minister’s comment was not particularly unkind. It simply pointed out that there is one more day until the Budget. The question asked about a matter to do with the Budget and asserted that something would be happening in the Budget. It is kind of dangerous prior to the Budget to make assertions about what is in the Budget. For the Prime Minister to make some reference in a light-hearted way—and it was not made in a nasty sort of way—that the Budget is still to come is not I think desperately bad. That is why I did not pull up the Prime Minister but I will be listening carefully to make sure that when straight questions are asked the questioner is not attacked. I do not think it was particularly unfair at all to make a light-hearted reference to the fact that there is still a day to go until the Budget. 
Rt Hon JOHN KEY 
: As I was saying the member has only one more sleep until he will be able to see what is in the Budget. The second thing I would say is that it is worth noting that if we look at the top personal tax rate and the tax cut changes of 2010 we see that they amounted to about $400 million to $500 million per year which is something that Labour goes on and on about out of a $2.5 billion personal tax package. In other words 20 percent of the tax package went to the highest income earners. 
Hon Phil Goff 
: Are the Inland Revenue—[ 
Interruption 
] 
Mr SPEAKER 
: I want to hear the question. 
Hon Phil Goff 
: Are the Inland Revenue Department figures quoted this morning correct in stating that the tax paid by 17244 dairy farms in 2009 totalled $26 million representing the average annual tax paid by those farms of $1506 each; if not in what respect are those figures incorrect? 
Rt Hon JOHN KEY 
: There is a huge difference between turnover and profit just as there is a big difference between lamb chops and sausages. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. [ 
Interruption 
] 
Mr SPEAKER 
: The senior Government whip should know that when a point of order is called there should be no further interjections. 
Hon Phil Goff 
: The question was very specific. I did not talk about income or turnover. I asked whether three specific sets of figures were correct and if not in what respect they were incorrect. I could not have asked a straighter question than that. 
Mr SPEAKER 
: Forgive—[ 
Interruption 
] I have just called the senior Government whip to account so the deputy leader of the Labour Party will also not interject. If the member cannot see what he is walking into in asking a question like that with those figures I cannot assist him. 
Hon Phil Goff 
: Oh no Mr Speaker. 
Mr SPEAKER 
: The member will not interrupt me. I listened very carefully to the question and I just grimaced because I could pick what kind of answer the answer would be. I cannot help members if they do not think about the questions they are asking. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. I ask you to examine the question that I asked. It was a straight factual question about whether three sets— 
Mr SPEAKER 
: The Leader of the Opposition will resume his seat. I will examine it I promise him but I am absolutely certain that what I heard was very clear and I am not remotely surprised at the response to it. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I know that some members opposite have a special interest in this area. Mr Speaker— 
Mr SPEAKER 
: The member will resume his seat immediately. Some members will be leaving the House very soon. The point I have been emphasising day after day is that members need to think about their questions when they ask them. They should not ask the Speaker to help members who walk into traps when they are asking questions. Forgive me but that is the reality of life. I am warning members that I am not of a mood to be trifled with on this. For example I saw this just yesterday—I cringed when I heard a supplementary question asked because I could just see what the answer would be and I thought “Surely not!”. I ask members to think about it. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. I seek your leave to ask the supplementary question again word for word identical to how I asked it last time and to let you make a judgment as to whether any of the comments that you have just made relate to the question I asked. 
Mr SPEAKER 
: The question was absolutely in order. I have no problem with that whatsoever but the nature of what the member actually asked including his question made me cringe as I heard it. Forgive me but I listen to questions very carefully because I have to protect—I say to members of the Opposition that I have sat down Ministers. I sat down the Prime Minister in the previous question. I have not seen a previous Speaker do that. I have helped the Opposition more than I have seen previous Speakers do but I cannot assist—[ 
Interruption 
] There will be silence; some members of the front bench of the Labour Party will be leaving this House very shortly if they are not careful. I cannot assist if members do not think through the questions they ask. I listen very carefully. Yesterday I stopped the Deputy Prime Minister on a straight question from the shadow Leader of the House because the question was a straight question and the Deputy Prime Minister started to launch into an unfair comment. I cannot assist where questions are asked that lead to answers on which I simply cannot provide any help. 
Hon Phil Goff 
: Are Inland Revenue Department figures reported this morning correct in stating that the tax paid by 17244 dairy farms in 2009 totalled $26 million representing the average annual tax paid by those farms of $1506 each; if not in what respect are those figures incorrect? 
Rt Hon JOHN KEY 
: I cannot confirm whether they are correct but I can say that they are a small slice of what is paid by dairy farmers if one was to accept it at face value. The press release put out by DairyNZ said: “We need to set this straight. Our figures show that on average approximately $300 million tax is paid per year by dairy farms”. I say to the member that if he does not know the difference between turnover and profit then goodness knows what his Budget will look like one day. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think it should be obvious to you from the tail end of that question that there was no discussion of turnover in the Leader of the Opposition’s question. There was no suggestion of turnover. It was all about profit and tax paid. I ask you to tell us that you think the Prime Minister’s reply was appropriate and to also indicate now whether you think that that question was wrong— 
Mr SPEAKER 
: Regarding my comments I made about the question previously having heard all the material that the question related to forgive me but I do not change my position on it whatsoever. 
Hon Phil Goff 
: Is the Prime Minister saying that the material provided by the Minister of Revenue in written answers to a member of this House were therefore wrong? 
Rt Hon JOHN KEY 
: No. I am saying that that reflects one portion of what may be paid by those farmers at one snapshot in time. 
Hon David Parker 
: Tell us what the other portion is. 
Rt Hon JOHN KEY 
: Well here is the other portion. There are lots of people that work on farms and they actually pay PAYE. There are many other years that go into farms. There are many other parts of the industry. [ 
Interruption 
] Let me say to Trevor Mallard that if he is telling us he is changing the company tax rules and the way they work for every company in New Zealand then I say he should go for it. He should go out there and tell New Zealanders that they now pay tax on turnover and that they do not pay it on profit. I tell members that that will be a staggering speech considering that David Cunliffe was in the paper today saying there will be some remarkable new things that we will be surprised about. Wait until New Zealand companies find out that they are paying tax on turnover—what a cracker that is going to be. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. The Prime Minister’s answer related to turnover. I never mentioned turnover anywhere in the question. 
Mr SPEAKER 
: Enough steam has been let off on this one and I accept both sides of the House feel quite strongly about it. I did not stop the Prime Minister on that occasion because he was responding to a very loud interjection. The Prime Minister was answering in a pretty straightforward way until there was a series of interjections and I did not want to kill that exchange. But I think we now have let off a lot of steam on this question and we will come to some form of order now. 
Hon Phil Goff 
: If the figures given by the Minister of Revenue are not incorrect as the Prime Minister conceded does the Prime Minister think it is appropriate that the average dairy farmer paid half the level of tax that is paid by a married couple earning only superannuation? 
Rt Hon JOHN KEY 
: Well I just do not accept the proposition put up by the Leader of the Opposition. As I said to quote DairyNZ which probably has a pretty good idea of these things: “on average approximately $300 million tax is paid per year by dairy farms”. The average dairy farmer is paying about $28000 in tax I think I saw in the release. 
Dr Russel Norman 
: Does the Prime Minister agree that what stands behind the figures on the front page of the  
Dominion Post 
 today is that a lot of farming in New Zealand is done for capital gains and that is where a lot of the income comes from and that under our current tax arrangement there is no taxation of those capital gains? 
Rt Hon JOHN KEY 
: It is not true actually that there is no taxation of capital gains in New Zealand. If someone buys a farm with the intention of selling it then that will be subject to capital gains tax. It is not subject to capital gains tax if they are undertaking the farming business and that is typical of many industries in New Zealand. 
Stuart Nash 
: Was the Minister of Revenue correct—[ 
Interruption 
] 
Mr SPEAKER 
: I say to the National Government backbench that I want to hear the question from Stuart Nash. 
Stuart Nash 
: Was the Minister of Revenue correct in his answer to written question No. 2383 when he stated that the total tax paid by the dairying other livestock farming viticulture horticulture and service to agriculture industries totalled $247 million for the 2009 tax year compared with $486 million worth of tax for the mining industry? 
Rt Hon JOHN KEY 
: I am sure that the Minister of Revenue is right. He provides the right answer to all these questions. But I say once more to the member that ever since Walter Nash was Prime Minister we have been taxing people on profits not revenue and turnover. 
Dr Russel Norman 
: Does the Prime Minister stand by his answer to me given in this House yesterday with regard to the fiscal impact of the last two Budgets that “over the 4-year forecast period there will be an increase in net revenue of $1 billion.” when the Budget papers released by the Minister of Finance in last year’s Budget show that the net fiscal impact over 4 years will be a loss of $1 billion in revenue? 
Rt Hon JOHN KEY 
: I think actually the correct answer is that it is a positive $4.8 billion over that period. I should have correctly said that it was an average gain of $1 billion a year. 
Budget 2011—Main Objectives 
2. 
LOUISE UPSTON (National—Taupo) 
 to the  
Minister of Finance 
: What will be the main objectives of Budget 2011 tomorrow? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The Budget will set out the next steps in the Government’s plan to build faster growth and more jobs for New Zealanders and to turn round forecasts of significant debt on the Government’s books. In particular the Budget will focus on building faster growth and national savings setting a credible path back to surplus and rebuilding Christchurch at the same time as protecting the most vulnerable New Zealanders and improving front-line services. 
Louise Upston 
: How will the Budget build faster growth around higher national savings? 
Hon BILL ENGLISH 
: The Budget will take a number of steps to ensure that more of the growth in future savings is not based on the Government borrowing money for incentives and subsidies. The Budget forecast will also show stronger economic growth forecasts with increases in the number of new jobs and in real wages. It is essential that this growth is driven by the private sector. Since the mid-2000s too much of that growth has been driven by excessive Government spending and housing speculation. 
Louise Upston 
: How will the Budget set a credible path back to surplus and repaying debt? 
Hon BILL ENGLISH 
: The Budget will take a number of responsible and balanced measures to better target large Government programmes to those most in need and also to ensure that public services deliver better value for taxpayers. In fact we will take a lot of the steps that New Zealand households and businesses have already taken over the last 2 or 3 years. 
Hon David Cunliffe 
: Will he keep his promise to New Zealanders in tomorrow’s Budget not to cut KiwiSaver; if so how does he square that with the effective $10-a-week KiwiSaver tax increase he has already announced? 
Hon BILL ENGLISH 
: The Government has kept its promise to New Zealanders and in July I think we will pay out hundreds of millions of dollars of tax credits into KiwiSaver accounts. Any changes we make will not affect people until after the election. They will have the opportunity to express their views on that in an election. I am sure they will take into account the overall picture: that where the Government needs to get on top of a very large overdraft a very large deficit it is making balanced and responsible decisions to get it under control. 
Hon David Cunliffe 
: If it was the Minister’s intention to seek an electoral mandate for those KiwiSaver cuts why did he not campaign on them in 2008 or perhaps defer them to Budget 2012 if he thinks he will still be the Minister rather than legislate now and pretend he has not broken yet another promise? 
Hon BILL ENGLISH 
: I do not quite understand the logic of that. The National Government made one very significant change after the 2008 election: it cancelled two tranches of its tax cuts because of the depth of the global recession. We think it is a pretty straight-up deal. We will put the propositions up in detail before an election before it affects people and they will have the chance to have an opinion on it. 
Louise Upston 
: What reports has he seen on public support for the Budget’s direction? 
Hon BILL ENGLISH 
: This morning I saw an online poll asking New Zealanders how the Budget had affected their families. I was a bit surprised to see this question because the Budget has not been delivered yet and it might be difficult for those families to be able to tell. However the results were impressive: 88 percent of families who responded to this poll were feeling better off as a result of the Budget decisions. I thank the Opposition’s finance spokesperson for running this poll on his own website which has now been mysteriously removed because of the outstanding results. 
Louise Upston 
: I seek leave to table poll results from David Cunliffe’s website which are no longer on line and have been mysteriously taken down. 
Mr SPEAKER 
: I do not think website material is— 
Hon Simon Power 
: I raise a point of order Mr Speaker. The point that the member makes is a fair one. If it was still available online your point would make sense but as the Minister of Finance said it is no longer available online. 
Hon Trevor Mallard 
: It is very rare that I agree with the Leader of the House and Louise Upston at the same time. I think having the precedent of having websites that have been taken down tabled in the House is a very good one. 
Mr SPEAKER 
: I will leave it to the wisdom of the House. Leave is sought for that document to be tabled. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
GST Increase—Compensation 
3. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Prime Minister 
: When he said “In most cases the tax switch more than compensated people for the increase in GST” in which cases had people not been fully compensated? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 Budget 2010’s tax switch meant that at all levels of income the reduction in people’s income tax was greater than the effect of increasing GST so ordinary people earning a wage or salary and paying income tax were better off as a result of the tax switch. Superannuitants were also better off. Benefit payments were increased to compensate for the increase in GST. The only people who would not have been fully compensated for the increase in GST were people who were sheltering income in trusts or otherwise earning income that was not fully taxed at the personal tax rates. 
Hon Annette King 
: If a family such as the Alexander family featured on  
Campbell Live 
 received an $11-a-week tax cut but their food costs alone increased by $25 a week—not just over 1 month but over 6 months—does he believe that they have been “more than compensated”; if so how? 
Rt Hon JOHN KEY 
: The family has been compensated for the change in the increase in GST by the reduction of their personal tax rates. That is absolutely factually correct. What is also correct is that there may be increases—or decreases actually—in food prices. As I say to the member in the last 2 years in which Labour was in office—I could have picked any two frankly but I could not get enough data going back—basically cheese went up 50 percent chicken went up 44 percent milk went up 23 percent petrol went up 22 percent lamb chops went up by a certain amount sausages and mince went down by a little bit more but I am not sure of the exact numbers vegetables went up 21 percent bread went up 20 percent electricity went up 13 percent and from memory people did not get much of a tax cut. 
Mr SPEAKER 
: The Hon Annette King. 
Hon Member 
: Try again Anne. 
Hon Annette King 
: I certainly will thank you very much. What then is his response to people like Sharon who does not think she has been “more than compensated”? She is a single parent who is a qualified financial worker who knows how to budget who has had to toss up between filling her car up with petrol or buying groceries who is finding it very stressful to feed her kids and who said “John Key will lose another skilled person. As soon as I finish my degree I will leave New Zealand.” 
Rt Hon JOHN KEY 
: I will be very disappointed if Sharon leaves New Zealand because by the sound of things she could make a great contribution to New Zealand. What I would say to her is that in the 3 years that National has been in Government we have done the following things. We have reformed the tax system and made it more effective for people to work save and get ahead in their life. We have halved the levels of interest rates that are in place in the New Zealand economy today. We have reduced the size of Government as it operates today. We have saved billions of dollars of wasteful expenditure by the previous Government. We have made sure that her children— 
Hon Trevor Mallard 
: BMWs? 
Rt Hon JOHN KEY 
: Yes it is a shame Helen bought those BMWs but that is the way it goes I suppose. I mean it was a bit late once we arrived—but that is the way it goes. 
Mr SPEAKER 
: I think the House has heard sufficient. 
Hon Trevor Mallard 
: In light of his comment that Helen bought the BMWs why did the Prime Minister not read the papers in his office that confirmed the purchase this year? 
Rt Hon JOHN KEY 
: I am the first to admit that the process was a bit sloppy and we should have had better paperwork but I tell you what talking of papers I was interested to read in John Armstrong’s column today that Labour is getting out of the gutter. We will see whether that lasts to 2:45 this afternoon. 
Mr SPEAKER 
: The Hon Annette King. [ 
Interruption 
] 
Hon Annette King 
: That is right. Go for it. 
Mr SPEAKER 
: We are not going to have any of this. I ask the member to resume her seat for a moment. Both front benches will come to order and especially on this occasion the National front bench. 
Hon Annette King 
: What does he say to another person who responded to his comments about the tax cuts—on  
Campbell Live 
 for those who do not believe it—and who is prepared to speak up? She said that she cannot afford the diet necessary for her diabetes and her husband’s heart condition due to the rising cost of living and the GST rise and that her family is not living now; they are existing. Is that what he meant when he said people would be better off under National? 
Rt Hon JOHN KEY 
: There are a couple of things. Let us examine the facts. In the 9 years that Labour was in office real wages went ahead 3 percent in the entire 9 years. Under a National Government real wages have grown considerably faster than that in the 2½ years we have been in office. Let us look at health seeing that the member raised it. We are spending more money on health than New Zealand has ever had before. New Zealanders are waiting 4 weeks or less for cancer treatment. We had 20000 more elective surgery operations committed this year than last year. More New Zealand children are being immunised than before. And tomorrow even more money will be going into health. 
Hon Annette King 
: Does he think his lack of empathy towards people who are struggling and his own nonchalant attitude towards his own finances as shown in the  
Dominion Post  
today—that he has not had to check his superannuation balance for the last 8 or 9 years—makes him more or less likely to understand the pressures that a family has every day in counting their pennies? 
Rt Hon JOHN KEY 
: There is a very good reason why I have not checked my superannuation balance and that is because when one is Prime Minister one is extremely busy on the thing that really matters which is the future of New Zealand. 
Hon Trevor Mallard 
: I seek leave to table a Facebook page of the Hon Bill English where he says— 
Mr SPEAKER 
: Order! 
Hon Trevor Mallard 
: —that the Government— 
Mr SPEAKER 
: If it were not for the fact that the member is seriously injured and therefore takes longer to sit down I would be dealing with him pretty severely. He knows he failed to establish the status of this document. If this document is from a website that has been taken down then I am very happy to put the leave but the member should have established what the document is before describing what was in it. 
Hon Trevor Mallard 
: I can confirm that this document is a Facebook page from a website of the Hon Bill English saying stop asset sales that has subsequently been taken down. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Dr Don Brash—Prime Minister’s Statements 
4. 
JOHN BOSCAWEN (Leader—ACT) 
 to the  
Prime Minister 
: Does he stand by the statement he made in his post-Cabinet press conference on Monday that “Everyone needs to understand that what Don Brash is talking about is hardcore”; if so why? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 Yes; I was thinking of some of the policies from the 2025 Taskforce when I made that comment about the task force that Dr Brash chaired. These included for example abolishing all KiwiSaver subsidies introducing interest rates back on to student loans lowering the top personal tax rate to 20 percent selling all State-owned enterprises in New Zealand encouraging local government to sell all its trading companies winding up the Superannuation Fund and reducing the minimum wage. I think most New Zealanders would consider those policies to be hard core. This Government has chosen to take a more balanced approach to management. 
John Boscawen 
: Does he think it is hard core to have one law for all New Zealanders a policy that National campaigned on at the last three successive elections; if not why is he not implementing that policy? 
Rt Hon JOHN KEY 
: No; and we do. 
John Boscawen 
: What is hard core about a plan to return Government spending as a percentage of GDP to what it was under Helen Clark? 
Rt Hon JOHN KEY 
: The ambition of reducing Government spending as a percentage of GDP is one that this Government holds dearly and that will be reflected actually when one looks at the Budget tomorrow. But it is about the pathway to get there and I go back to the member and I say to him that this is what Don Brash wants to do: abolish KiwiSaver subsidies put interest back on to student loans drop the top personal tax rate sell all State-owned enterprises raise the age of eligibility for the pension encourage local government to sell all its trading companies wind up the Superannuation Fund and reduce the minimum wage. I think that is hard core. 
John Boscawen 
: What is hard core about the statement that youth rates give “employers a reason to hire younger people and give them a chance to get experience” as stated by the then Leader of the Opposition John Key in December 2007 and supported by the ACT leader Don Brash? 
Rt Hon JOHN KEY 
: Given that I said it nothing. The basic point here is that although that may be one particular small part of the tranche I think we all understand that the range of policies being advocated by ACT is extreme and hard core. That has not changed; that has always been the position. It does not mean we cannot have a constructive Government with ACT as we have enjoyed for the last 3 years. 
Tax System Changes—Impact on Operating Balance  
5. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: What is the total impact on the operating balance over the forecast period of the fiscal impact of the tax changes in Budget 2010 according to page 70 of the 2010 Budget and Economic Fiscal Update and how does he reconcile that with the Prime Minister’s statement in the House yesterday that “National’s tax plan 2010 … was fiscally neutral”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 According to the table the member refers to the total impact over the forecast period—5 years—is $240 million. Over those 5 years the average impact is around $48 million a year. In a tax package that involves many billions of dollars of reductions in income tax and increases in GST this is a very small net impact. As the member will see the final year of that tax package shows a positive fiscal impact which means that as time goes on that tax package will result in the Crown collecting more tax not less. 
Hon David Cunliffe 
: In view of the fact that the primary question was very specific in relating to page 70 of a Budget document which shows a fiscal hole of $1.085 billion over 4 years I seek leave to table— 
Mr SPEAKER 
: If the member is seeking leave to table a document he should have made that clear. 
Hon David Cunliffe 
: —that document from page 70 showing— 
Mr SPEAKER 
: No we do not table pages from Budget documents. We all have those. 
Hon David Cunliffe 
: Will he concede that the difference between his claim of fiscal neutrality and the actual $1.085 billion tax hole over 4 years according to page 70 of last year’s Budget has been created because of the rose-tinted growth forecasts in that Budget which have not eventuated? 
Hon BILL ENGLISH 
: No and as I have explained to the member and in fact I have tabled a summary of figures from two Budgets and the late 2008 tax package the Government’s tax changes of which there are three significant ones—the tax package in December 2010 the tax package in December 2008 and the announcements in the 2009 Budget where we cancelled two tranches of tax cuts—have had the overall effect that the Government’s tax take has increased. If the member looks at the Budget he will see that tax as a percentage of GDP is rising. 
Hon David Cunliffe 
: Which if any of the following four tests of a successful Budget—building a stronger economy promoting savings and New Zealand ownership of New Zealand assets tackling the rising cost of living and promoting debt reduction and fiscal responsibility—is met by borrowing for tax cuts? 
Hon BILL ENGLISH 
: The Budget tomorrow will pass all those tests. The member persists in an error. He is wrong to say that the tax changes implemented by the National Government have meant borrowing for tax cuts. They have not. He has spent a lot of time complaining about the tax changes we implemented to fund income tax cuts such as the increase in GST the abolition of the research and development tax credit and changes in KiwiSaver subsidies. The published Budget documents show over three significant sets of tax changes that the Government’s tax packages raise more revenue. In fact they reduce borrowing. We have not borrowed to fund tax cuts. It does not matter how often the member says it he is wrong. 
Hon David Cunliffe 
: When the Minister has by his own Budget documents spent $23 billion on forgone tax revenue in the 2009 and 2010 Budgets and he is currently running a $16 billion deficit how could some component of that tax remission possibly not be borrowing for tax cuts? 
Hon BILL ENGLISH 
: The member needs to go back and do his homework because the one significant piece of information he leaves out is that the Government in 2009 cancelled two tranches of tax cuts which maintained several billion dollars of revenue. When he adds it all up—he can get the Auditor-General to look at it and he can get Treasury to look at it—the Government’s tax packages over three significant tax changes collect more tax revenue not less and he is simply wrong. Being persistently wrong does not make you right it just makes you wrong. 
Mr SPEAKER 
: I hope it is not the Speaker the member is referring to. 
Chris Tremain 
: What has been the total impact on the operating balance over the forecast period of all the Government’s tax changes? 
Hon BILL ENGLISH 
: According to the official Budget documents the total impact over the current forecast period of all the Government’s tax changes is expected to be positive $4.8 billion. In other words all our tax changes together will generate $4.8 billion of extra revenue which will no longer need to be borrowed. So the truth is actually the opposite of what the Labour members are saying. The biggest contribution to this total is the $4.5 billion we saved when we cancelled tax cuts that both Labour and National had scheduled for 2010-11. We cancelled $4.5 billion of tax cuts. The other $300 million is the wash-up from our tax packages which are broadly fiscally neutral. The member is still wrong. 
Prisons—Container Units 
6. 
ALLAN PEACHEY (National—Tamaki) 
 to the  
Minister of Corrections 
: What reports has she received about the first year of container units being used in New Zealand prisons? 
Hon JUDITH COLLINS (Minister of Corrections) 
: 
 I am pleased to report that New Zealand’s first prison unit constructed out of second-hand shipping containers is outperforming all expectations. The unit which was 30 percent cheaper to build than comparable traditionally built units houses 60 prisoners at Rimutaka Prison. In its first year of operation the number of incidents within the container unit has been significantly lower than in standard units. There have been no incidents involving drugs alcohol cellphones or weapons and there have been no assaults on staff. Maintenance costs for the unit are 34 percent lower than expected and vandalism is extremely low. 
Allan Peachey 
: How could containers be used in future to meet prison capacity needs? 
Hon JUDITH COLLINS 
: The department will now conduct a full evaluation of the unit and consider how containers can be used further in the New Zealand prison environment. However given their speed of construction and flexibility in terms of design the department has developed up to nine different layout configurations including multi-storey options that could be used in future. Container cells could also be used for other purposes—for example to provide a low-cost option for adding audiovisual links between prisons and the courts. The container unit is attracting a lot of interest including from corrections operators in other countries that are keen to learn from our success in this area. 
Broadband Ultra-fast—Regulatory Forbearance 
7. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
 to the  
Minister for Communications and Information Technology 
: What was the motivation behind the decision to remove regulatory forbearance from the Telecommunications (TSO Broadband and Other Matters) Amendment Bill? 
Hon STEVEN JOYCE (Minister for Communications and Information Technology) 
: 
 Although the telecommunications industry is overwhelmingly supportive of the ultra-fast broadband policy some stakeholders were concerned about the regulatory forbearance over the 8½-year build period of the contract. I think these concerns were more theoretical than real given that everybody has been happy with the very competitive prices announced by Crown Fibre Holdings to date. But we have been able to find an alternative solution that continues to provide confidence to the network builders to be committed to their low capped prices and confidence for customers that they will continue to get the best prices over that 8½-year period. I thank the Maori Party for its assistance in developing this change. 
Rahui Katene 
: What confidence can Maori have that there will be specific opportunities within the Ultra-fast Broadband Initiative and the Rural Broadband Initiative that will assist in lifting economic development for Maori? 
Hon STEVEN JOYCE 
: A lot of confidence. The prime motivation for Crown involvement in the ultra-fast broadband development is to foster economic growth. Fibre will transform this country with enhanced productivity improved global connectivity and enhanced capacity for innovation becoming available for everybody. In particular for Maori the Minister of Maori Affairs and I have developed Nga Pu Waea to assist the Government on Maori interests and development opportunities in broadband and to work to ensure that Maori communities as well as Maori health and social service providers benefit from the roll-out of broadband wherever they live. 
Rahui Katene 
: How can Maori constituents consumers and industry participants all of whom are affected heavily by telecommunications costs be assured that pricing is appropriate and competition is encouraged? 
Hon STEVEN JOYCE 
: There are two safeguards in place to ensure competitive pricing. Firstly by prescribing for a wholesale-only open access network we will ensure the maximum competition at the retail level. As mentioned in answer to the primary question everybody has been happy with the very competitive wholesale price caps announced by Crown Fibre Holdings today. Secondly the Commerce Commission retains its ability to investigate and recommend regulations should anti-competitive behaviour emerge. 
Hon Parekura Horomia 
: Has the Government agreed to any further spectrum for Maori as part of this arrangement? 
Hon Member 
: What do you know about broadband? 
Hon Parekura Horomia 
: A lot more than that member. 
Hon STEVEN JOYCE 
: No nothing about spectrum has been considered in the Ultra-fast Broadband Initiative. 
Earthquake Christchurch—Full-time Workers Required for Rebuild 
JACINDA ARDERN (Labour) 
:  
My question is 
to the Minister for Canterbury Earthquake Recovery and asks: does he stand by the Prime Minister’s statement in relation to Christchurch— 
Mr SPEAKER 
: Forgive me for interrupting the honourable member. When members interject it is surprising how difficult it is to hear sometimes with sound echoing around the Chamber. Once a question has been dealt with there is no need for ongoing interjection. I do apologise to Jacinda Ardern. 
8. 
JACINDA ARDERN (Labour) 
 to the  
Minister for Canterbury Earthquake Recovery 
: Does he stand by the Prime Minister’s statement in relation to Christchurch that “it looks like the residential rebuild alone will require up to 12500 full-time workers” if not how many full-time workers does he believe will now be needed? 
Hon MAURICE WILLIAMSON (Associate Minister for Canterbury Earthquake Recovery) 
 on behalf of the  
Minister for Canterbury Earthquake Recovery 
: Yes. 
Jacinda Ardern 
: Does he believe that his Government’s trades training package announced last week with new funding for 1500 training places in Christchurch will be enough to meet reconstruction demands? 
Hon MAURICE WILLIAMSON 
: What I would say is that it is too early in the cycle to know the numbers precisely. The 12500 figure is the best estimate at this point but I can tell the member that the Department of Building and Housing says it will have a better idea of what the real number will be as the Earthquake Commission finishes the insurance assessments process. Secondly the 12500 workers required will not come just from new trainees. They will come from people who have been in the construction workforce have exited but will come back in they will come from outside of the Canterbury region and they may also come from an opening up of the immigration system to allow in workers from elsewhere. No one knows what those numbers are and until the process goes a little further down the stream no one will know the exact requirement. 
Jacinda Ardern 
: Will the Minister guarantee that overseas labour will not be imported to fill any projected shortfall in workers for the Christchurch rebuild? 
Hon MAURICE WILLIAMSON 
: It would be foolish to make any guarantees about this. There are too many unknowns. Too much of this is imprecise. It will probably be 2 to 4 years before the peak of the rebuilding occurs and therefore it is impossible to know whether we will be able to fill the shortfall. But the package announced this week as part of the Budget—the $42 million for trades training and the 3000 more construction-related training places at polytechnics in Canterbury—is a very good start to gear up for the process. I can assure the member that the Government will keep a watching brief and as the demand grows so will the supply of workers. 
Jacinda Ardern 
: Has he seen Tertiary Education Commission reports that show that under his Government the number of building and construction trainees has dropped by over 2000 and as such does not this package at best correct the shortfall that already existed before the earthquake? 
Hon MAURICE WILLIAMSON 
: I think a question like that would be way better put to the Minister for Tertiary Education because I would be floundering if I tried to answer it. [ 
Interruption 
] 
Mr SPEAKER 
: I want to hear Lianne Dalziel’s question. 
Hon Lianne Dalziel 
: Will he ensure that all Government-led Christchurch reconstruction contracts require contractors to take on local apprentices so that they can be fully trained in time to benefit from the expected peak in activity in 2 to 4 years’ time? 
Hon MAURICE WILLIAMSON 
: I think that taking on local apprentices and doing training would certainly be a key factor that would be taken into consideration as part of letting a contract—yes I do. 
Hon Phil Goff 
: In the 8 months since the 4 September earthquake how many new trainees or apprentices have been taken on so far specifically to meet the huge demand that will exist because of the need for reconstruction of 10000 houses? 
Hon MAURICE WILLIAMSON 
: I give the same answer as before. I am answering this question on behalf of the Minister for Canterbury Earthquake Recovery; I am actually the Minister for Building and Construction. I think it is the Minister for Tertiary Education that that question should be put to. 
Community Social Services—Community Response Fund 
9. 
Hon TAU HENARE (National) 
 to the  
Minister for Social Development and Employment 
: What recent announcements has she made to support community social services? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 We have announced the successful applicants to the sixth round of the Community Response Fund and I am pleased that nearly $14 million has been granted to 345 organisations. We created this fund to help organisations to keep delivering services to families through tough times and it has done just that. Since the fund began more than $55 million has been paid out to 694 community organisations and on top of that there was a special round just for Canterbury of $7.5 million. 
Hon Tau Henare 
: Has the Community Response Fund provided any support for budgeting and financial services that are facing an increasing workload? 
Hon PAULA BENNETT 
: Yes $2.3 million has been given to 57 organisations in round six. To date under the Community Response Fund budgeting and financial assistance organisations have received about $5.3 million in total. 
Broadband Ultra-fast—Regulatory Forbearance Cost 
10. 
CLARE CURRAN (Labour—Dunedin South) 
 to the  
Minister for Communications and Information Technology 
: What is the best estimate of the additional cost to the Crown of the change he announced to the ultra-fast broadband network this morning? 
Hon STEVEN JOYCE (Minister for Communications and Information Technology) 
: 
 The current best estimate of the additional cost to the Crown is zero. 
Clare Curran 
: What precedents are there for the Crown indemnifying a private company for its technological and financial risk? 
Hon STEVEN JOYCE 
: It is quite common in public-private partnerships for the Crown to be involved. 
Hon Members 
: Oh! 
Hon STEVEN JOYCE 
: No it is. In countries around the world it is common for Governments to be involved to provide support for regulatory risk. That is how they get prices down and that is what we have done in this case. [ 
Interruption 
] 
Mr SPEAKER 
: I want to hear Clare Curran. 
Clare Curran 
: How does he propose that the winning private contractor will be compensated in the event that the Commerce Commission decides that the contractor’s market dominance is unfair and forces a price cut? 
Hon STEVEN JOYCE 
: Firstly I should say that I think that that is a highly unlikely scenario because the prices that Crown Fibre Holdings have announced at this point for the contracts they have done have been seen to be highly competitive and supported by most of the industry contractors which have said that they are surprised they are on the cheaper side than what they expected and they are very competitive with current copper prices. So to say that that will be a problem one would have to assume that the Commerce Commission would come in and regulate over the top of what is already a very competitive price which I think is a very high assumption. But if it were to occur—and as I say it is not very likely—then I would expect that that would involve a change to the financial terms which would perhaps delay repayment of the Crown’s investment. It would not involve extra money and it would not involve a reduction in the footprint of the ultra-fast broadband. 
Hon Trevor Mallard 
: If as the Minister says that is highly unlikely why is he legislating to protect Telecom from that event? 
Hon STEVEN JOYCE 
: Firstly the member assumes the outcome of the bid negotiations. He must know more than me. The second point is that I think the entire point of the change to the regulatory forbearance is to not legislate so I think he needs to keep up with what has been happening today. 
Clare Curran 
: Why is he using the $15 million that was allocated to connect the most remote schools in New Zealand to broadband to now connect up to 108000 New Zealand school students from up to 470 schools who were mistakenly left out of both his urban and rural broadband schemes as identified in a report written by independent consultant Jonathan Brewer and is this not just another almighty screw-up in his broadband scheme? 
Hon STEVEN JOYCE 
: No although I am not quite sure how close that question is to the primary question. But let us humour the member. The reality of the situation is that there was always a boundary between the ultra-fast broadband network and the rural broadband network and it has always been the intention that schools within that geographical area would be tendered separately. That is what has happened. There is no conspiracy here I say to Ms Curran. 
Clare Curran 
: I seek leave to table three documents. The first two are reports from the independent consultant Jonathan Brewer. The first is titled “Ultra Fast Broadband for Schools—By the Numbers” and the second is titled “Broadband for Schools—Rural Communities Miss Out”. 
Mr SPEAKER 
: Leave is sought to table those two documents. Is there any objection? There is no objection. 
Documents by leave laid on the Table of the House. 
Clare Curran 
: I seek leave to table a third document. It is a letter to the Minister of Education Anne Tolley and the Minister for Communications and Information Technology Steven Joyce signed by InternetNZ Telecommunications Users Association of New Zealand and Federated Farmers. It is titled “Zone 3 Schools Missing Out on Fibre Broadband” and attached is a list of 470 schools. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Housing Innovation Fund—New Projects 
11. 
TIM MACINDOE (National—Hamilton West) 
 to the  
Minister of Housing 
: What recent announcements has he made regarding the Government’s Housing Innovation Fund? 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 On Monday I announced a further three projects in Hamilton Flaxmere and Napier that will receive $2.7 million from the fund. They include an 11-bedroom home in Flaxmere to be used as an affordable rental property for kaumatua four properties in Hawke’s Bay for people experiencing mental illness and seven accessible homes for affordable rental in Hamilton. 
Tim Macindoe 
: What is the aim of the Housing Innovation Fund? 
Hon PHIL HEATLEY 
: The fund encourages partnerships with community housing organisations. It is about making the taxpayer’s dollar go further. So far this year the $6 million contributed by the Government to help to fund new houses has been met by $7.1 million from community organisations. As part of this Government’s commitment to increase the quantum of social housing I am currently looking at ways to move from the Housing Innovation Fund to an even more attractive deal for third sector organisations. We want to work with them. 
Moana Mackey 
: Does he agree with the Prime Minister that New Zealand is not facing a housing shortage; if not will he guarantee that Labour’s Housing Innovation Fund will continue in one form or another in the next financial year with the increase in funding that he has been promising the sector? 
Hon PHIL HEATLEY 
: In the time that National has been in Government we have funded with community organisations 212 houses. Under the Labour Government’s Housing Innovation Fund which Ms Mackey mentioned the previous Government funded barely any houses. Interestingly enough we are into housebuilding. That Government was into capacity building which did not keep the rain out. 
Greenhouse Gas Emissions—Coalmining 
12. 
GARETH HUGHES (Green) 
 to the  
Acting Minister of Energy and Resources 
: What is her response to the statement of leading scientist and NASA director Dr James Hansen currently touring New Zealand that “coal is the single greatest threat to civilisation and all life on our planet.” and we should leave it in the ground? 
Hon HEKIA PARATA (Acting Minister of Energy and Resources) 
: 
 Fossil fuels will continue to play an important role in the global economy and in New Zealand as we transition to a low-carbon economy—for example the judicious use of coal in New Zealand at the Huntly power station ensures the lights stay on each winter. 
Gareth Hughes 
: Does she agree that our children and our grandchildren have a right to live on a planet not threatened by catastrophic climate change; if so will her Government stop the development of dirty lignite coal in Southland? 
Hon HEKIA PARATA 
: I do not believe that the first part leads to the second part of the question. Of course all Governments are interested in creating a safe and good environment for children and their families. 
Gareth Hughes 
: What is the Minister’s response to the finding in the report of the Parliamentary Commissioner for the Environment that companies developing lignite in Southland on a large scale are likely to receive millions of dollars of subsidies from the taxpayer? 
Hon HEKIA PARATA 
: The fact is that under our emissions trading scheme as soon as coal is mined the miner has the liability for the emissions and must either pass on the costs to the end user or carry the cost themselves. There is no cost to the Government for emissions from coal as coal mining is not eligible for an allocation under the emissions trading scheme. 
Gareth Hughes 
: Does the Minister agree with the Parliamentary Commissioner for the Environment’s recommendation that until carbon capture and storage technologies are proven New Zealand’s lignite coal should remain in the ground? 
Hon HEKIA PARATA 
: This Government has implemented a number of policies including the emissions trading scheme which is focused on pricing carbon and we are invested in a number of technologies that strengthen our portfolio of energy resources across the board. 
Gareth Hughes 
: I raise a point of order Mr Speaker. It was a very clear question: “Does the Minister agree”— 
Mr SPEAKER 
: To save the member time he can repeat his question. 
Gareth Hughes 
: Thank you. Does the Minister agree with the Parliamentary Commissioner for the Environment whose recommendation was that until carbon capture and storage technologies are proven New Zealand’s lignite coal should remain in the ground? 
Hon HEKIA PARATA 
: No. 
Gareth Hughes 
: Does the Minister agree that think-big projects that exploit dirty lignite coal are like pulling up the floorboards of our homes to throw on the fire to keep warm and that a smart green energy strategy would keep our children and our grandchildren warmer and more secure? 
Hon HEKIA PARATA 
: I am not aware that the Government is involved in any think-big projects. 
General Debate 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 I move  
That the House take note of miscellaneous business 
. Twenty years ago a song was released by David Grace that has become known as the anthem of Tuhoe. It gives focus to the refrain “Rua Kenana Tuhoe prophet of the Urewera”. In doing so it encapsulates the pride of the people in the leadership of someone who believed that Tuhoe could and should be self-determining. 
At the turn of the century Rua established a thriving community in Maungapohatu where land was owned and farmed collectively and all proceeds shared according to need. A community bank was established and the people gathered around. In 1916 Maungapohatu was invaded by a troop of some 70 police in what the Supreme Court later ruled as an illegal assault. Rua was charged with sedition. His trial in the Auckland High Court lasted 47 days and was the longest trial in New Zealand’s history until 1977. Of the eight charges laid against him the jury found him guilty of only one morally resisting arrest yet he was sentenced to a year’s hard labour and another 19 months’ imprisonment. At his sentencing Chief Justice Frederick Chapman told Rua: “The arm of the law was long … That is the lesson your people should learn from this trial.” 
A century later one wonders whether history is repeating itself. On Monday 15 October 2007 more than 300 police carried out dawn raids on homes and premises throughout Aotearoa. The focus of the raids was in response to what was allegedly “concrete terrorist threats”. People had supposedly attended training camps in the Urewera ranges. 
The latest twist in the trial of these defendants is that it now appears unlikely to go ahead as scheduled on 30 May. Some are speculating that with the Rugby World Cup and an election in sight the timeliness of such a controversial trial has come under scrutiny. But the question we in the Maori Party ask is if there is such a focus on one law for all as some parties in this House would have it how is it that the Tuhoe people continue to suffer the long arm of the law without so much as a murmur in this House? Why has it taken between 4 and 5 years to gather evidence on what is now nothing more than an arms charge? 
Three weeks ago 150 prominent Maori social justice activists and academics came together in support of a submission to the Solicitor-General sponsored by lawyers Moana Jackson and Professor Jane Kelsey. In that letter Moana Jackson spelt out the impacts of this sorry episode stating: “The accused their whanau and the whole of Tuhoe have had this hanging over them for almost four years unable to live a normal life. They already carry the label of ‘terrorists’ forever”. Waiariki electorate MP Te Ururoa Flavell has spoken frequently about the lifelong consequences of the original raids on Ruatoki and the never-ending saga of a prosecution that has been delayed for nearly 4 years. 
Of course although there are dire and traumatic impacts on human lives there are also some very real financial costs of a 12-week trial in Auckland. I cannot ignore the echoes back to 1916 when Tuhoe had to bear the substantial legal costs of the trial against Rua Kenana as well as the indignity of being billed for the costs of the police expedition—which remember was illegal—amounting to over £900. To address these huge financial burdens Tuhoe was forced to sell land. 
We are at a time in our nation’s constitutional history when we are attempting to build bridges and learn from our past. Iwi across Aotearoa in a substantial gift of generosity to this nation have settled claims amounting to an equivalent of 1 or 2 percent of the true worth of what they are entitled to. Our concern with the tragic case against the defendants in the Urewera is that any progress we make in nation-building is hindered by justice delayed. The lives of the people charged as a result of the police’s Operation Eight have been on hold for too long. Due process of law surely requires the right to a jury trial in an expeditious time frame. The human impact has been enormous. Further delay is unjustifiable. It is unfair. It is unacceptable. 
Hon Dr JONATHAN COLEMAN (Minister of Immigration) 
: 
 The facts just like his electorate are seldom visited by David Cunliffe. He was caught out today badly spanked by Bill English as he tried to make out that there was a great hole in the tax story that National has been laying out over the past 3 years. Mr Cunliffe neglected to say that National’s tax changes have been fiscally neutral funded by a tax switch that is quite transparently laid out in the Budget documents over the past 3 years. Mr Cunliffe has been badly undermined today by his spokesman on revenue who has scooped the front page of the  
Dominion Post  
off him. He will be livid about that. 
He is being badly badly exposed for a lack of a plan. If one reads his column in the  
New Zealand Herald  
today one will see there is a lot of guff a lot of unfunded stuff and no specifics. Three months ago David Cunliffe was telling the electorate that he had fully costed spending promises. Where are those promises now? Nowhere to be seen. It is a moving feast. Do members know why? The fact is that David Cunliffe does not want Labour to win the next election. That would be the worst possible thing that could happen to that member’s career. He knows that if Labour wins he is finished and his goal to be the Prime Minister of New Zealand will never materialise. 
Meanwhile poor old Phil Goff is stumbling out of the Takanini Countdown at the weekend absolutely shocked at the price of lamb chops. He seemed like a man who was trying to pretend that he goes to the supermarket every week when in actual fact it is completely transparent that he went in there only for political purposes so that he could make out that he is a man of the people and that he is really in touch with how tough it is for the average New Zealander. Once again Labour failed to visit the facts—that is that food prices went up under that Labour Government far more than they have in the last 6 months under this National Government. Those members can run cost of living arguments and they can have the chief well poisoner Trevor Mallard go on about BMWs painting houses and all that sort of stuff but until they come up with a plan for the electorate they will have no credibility. 
I can tell members that it has got to be better than slogans. You know it is all very well having slogans like “Higher incomes; better jobs.” Who could be against that? But there is absolutely no substance to the whole thing. What there is though is $5 billion of unfunded promises that Phil Goff has been rolling out. He has promised to find $5 billion. The other main plank of those members’ economic policy is removing GST from fruit and vegetables. That will not get the economy going ahead. 
In the Budget tomorrow we will find a firm plan for getting New Zealand back into surplus—a firm plan for reversing the damage that Labour did to New Zealand over 9 long years. It is a plan that actually targets Government payments to people in need and in terms of KiwiSaver and Working for Families will make a difference for those who really need it. I can tell members that these tax changes and this Government’s economic plan have been very very popular with the electorate. This Labour mob is getting absolutely no traction out there. 
Of course Phil Goff is out there at the front by himself. This other lot do not mind; they are sharpening the knives for Phil. In actual fact those members do not really want to win. Phil Goff will be stuck out there. David Cunliffe does not want him to win. David Parker has his head down. He knows that if Phil Goff wins that is the end of his career as well. I do not think Trevor Mallard wants Goff to win either. Otherwise those members would be pressing Phil Goff to come up with a credible plan for getting the New Zealand economy ahead. 
We know that this economy really needs the re-gearing that the National Government is bringing it. It is absolutely essential because those members blew years and years of record surpluses and wasted $1 billion on buying a trainset. At the end of it they handed a hospital pass to the incoming Government and we have been left to clear up the mess. 
I think that when the New Zealand people see this Budget tomorrow they will know that it is a prudent path back to surplus. They will appreciate the pressure that this Government has been under. They know the damage that the last Labour Government left as its legacy. Quite frankly I think they are very very thankful to have John Key as Prime Minister and I have no doubt that they will return him come November. 
Hon ANNETTE KING (Deputy Leader—Labour) 
: 
 The final veil of John Key and Bill English’s Budget dance will be lifted tomorrow and according to Bill English all will be revealed. Everything will be laid bare; it will be there for the whole country to see. For weeks now we have had the teasing we have had the blame-shifting and we have had the National Government softening us up to expect a zero Budget—a zero Budget that has been forced upon it by the global financial crisis by two earthquakes by floods and droughts and biosecurity and by borrowing and borrowing. 
John Key has told some New Zealanders that they will have to tighten their belts a few more notches. They have been told that they will have to pay off the $16 billion deficit mountain that we now have. It is a mountain that has all been clocked up in 2½ years of a National Government. It has been clocked up after this Government was left with a historically low level of debt by the last Labour Government and—unlike what was indicated in the comments of the previous speaker Jonathan Coleman—with books in a good shape. They were in such a good shape that Bill English said that the previous Government had put away for a rainy day. 
The deficit was clocked up by John Key and Bill English. They decided to borrow $2.3 billion a year for tax cuts that we could not afford tax cuts for those who already had the most. A $350-a-week tax cut has gone to somebody on $393000 a year and a $28-a-week tax cut has gone to somebody on $48000 a year. When were those tax cuts given? They were given after the global financial crisis hit this country. They were recklessly given by the Government. Having told us that everyone had to tighten their belts because of the global financial crisis it ignored that advice and gave out tax cuts that we could not afford. It gave out tax cuts we could not afford when unemployment was growing at an alarming rate. Month after month unemployment figures were going up. 
We are now told by many commentators that the so-called tax switch is a failure and has failed thousands of New Zealanders. The Government clocked up a deficit because it did not have any sort of plan to address our current or future economic and social problems. The deficit was clocked up by a Government that thinks short. Everything it does is thinking short. I have to say that it is selling this country short. 
Tomorrow is Judgment Day for this Government’s Budget. A few questions will be asked by hard-working New Zealanders. They will ask whether this Budget will set out a coherent long-term strategy to fundamentally change the economy of this country and give hope back to Kiwis that they will have a future and one that they own themselves. Will this Budget be bold? Will it really make the tough but fair decisions that will see all people pay their fair share but also get their fair share? Many New Zealanders must have woken up today looked at the front page of the  
Dominion Post 
 
and asked how it could be fair that they pay so much tax but there are people out there who pay so little. 
They will ask whether this Budget will promote innovation and use research and development to diversify our businesses and lift our exports to ensure that we create more wealth. Will it reduce unemployment and will it give the over 60000 unemployed young Kiwis a chance to get a job in this country or will there be more platitudes about how young Kiwis are our future? What future will young Kiwis get out of this Budget? Will there be an opportunity for them to get skills training and apprenticeships? Will there be an opportunity for them to get a decent income and stay here in New Zealand? Will it encourage savings? No I think we will see a Budget of lost opportunities. There will be backwards-forwards backwards-forwards decision-making. 
CRAIG FOSS (National—Tukituki) 
: 
 I must pull up the previous speaker Annette King. The tax changes that this Government brought in have been fiscally neutral. In fact there is one point I will agree on: that is not quite right because they are fiscally positive over the forecast period. They are not fiscally neutral but fiscally positive over the forecast period. On the tax switch which was one of the biggest changes in New Zealand’s taxation system over the last 25 years I have a question to pose to Labour members: which bits will you un-switch? Will you cut GST? Will you hike income tax? Will you hike— 
Mr SPEAKER 
: Order! 
CRAIG FOSS 
: Excuse me Mr Speaker. Will Labour hike business taxes? 
I would talk about the Budget a bit longer but today we have had a very very important announcement from Labour. Today a quite strategic move by the Leader of the Opposition Mr Phil Goff seems to have been missed. Today on the front page of the  
Dominion Post  
he totally shattered and shafted any chance whatsoever that the Labour Party president Andrew Little had of winning the New Plymouth electorate seat. The announcement of the “Taranaki turnover tax” the tax on dairy farmers and farming turnover will absolutely obliterate any chance whatsoever that Mr Little had of even making any gains in New Plymouth or in Taranaki. For that matter any chance whatsoever that Labour had of making gains in any provincial or rural seat has been blown away by what was on the front page of the paper today. 
I thought that the announcement might have been a mistake and that maybe Mr Nash had got a bit ahead of himself as he is wont to do. But at question time today in the House Mr Goff continued with it. I say to Mr Goff that the point is not that the data are wrong; it is the way you interpret the data. That is very revealing of how they— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. Although the member might have a point I think he cannot bring you into the debate. If we criticised you in that way we would be in trouble. 
Mr SPEAKER 
: If the member is alleging that the member on his feet was using the word “you” then he is correct; Mr Foss should not do that. But I did not hear Mr Foss use that word. I do apologise. I had already pulled him up. [ 
Interruption 
] The House will come to order. That petty to-ing and fro-ing across the House will stop. The member should be careful about using the word “you” because it refers to the Speaker. Debate across the House should not be in the second person. 
CRAIG FOSS 
: I raise a point of order Mr Speaker. As a clarification I understand that that member Trevor Mallard was not in his regular seat and he was leaving the Chamber when he called the point of order. 
Mr SPEAKER 
: The member can call a point of order from anywhere in the House. We are not too pedantic about that. But the member Trevor Mallard is now—oh no he is still there. Members should resist interrupting other members’ speeches unless there is good reason to interrupt them. I am not sure that the reason there was quite as strong as that. 
CRAIG FOSS 
: There was a brutal attack with the “Taranaki turnover tax” on Taranaki Hawke’s Bay New Zealand provincial and rural farming families and jobs associated with farming. At least Mr Nash has front-footed it. Perhaps that is how Labour intends to fund some of its $7 billion of unfunded promises so far. 
I guess the rest of Labour’s tax policies will continue. It has the turnover tax a capital gains tax and perhaps a payroll tax coming and perhaps an increase in income tax which it seems to be talking about more and more. OK fair enough Labour has said it will take GST off veges. OK the GST rate is 15 percent—funnily enough veges have gone down by 15 percent in recent months. Mr Nash’s speech was a brutal attack on business and on business confidence but I congratulate him on and thank him for providing certainty about Labour policy about Labour’s tax intentions and about Labour’s ambitions for New Zealand. 
It is interesting that not too long ago the Labour Party was calling the farming industry a sunset industry of New Zealand—in the early 1990s. Today we have the proof of the pudding. As Labour’s tax policy starts to roll out we see that it wants to kill off farming for good. Perhaps some of the Green members might be fans of that but I for one value farming. I value rural New Zealand and I value provincial New Zealand. It is the heartbeat and the engine room of the New Zealand economy. I cannot understand it: I was going to give Mr Goff the benefit of the doubt that this move was a mistake but his question today revealed Labour’s true intentions of a turnover tax a capital gains tax an increase in income tax and perhaps a payroll tax. I posed the question very early on as to which of the National-led Government’s tax switches that we announced earlier and put into place in the last few years would be un-switched if Labour was ever to form a Government. But to be fair to Mr Nash I congratulate him on at least giving us some clarity as to how Labour will fund its promises. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Tomorrow is Budget day. [ 
Interruption 
] 
Mr SPEAKER 
: We do not need that kind of mindless interjection when members get to their feet. 
Hon DAVID CUNLIFFE 
: Accurate as the description may have been— 
Mr SPEAKER 
: We do not need that kind of comment either. 
Hon DAVID CUNLIFFE 
: Tomorrow is Budget day and the most interesting thing about the Government members’ speeches today has been that they are saying hardly anything about what the Government might want to do. There is a picture of a desperate Government where the backbench lacks confidence in its own ministry. Those members would rather talk about us than their own plan to get New Zealanders out of the mess they have created. 
Let us deal with some real porkies up front. The first is that National has been tax-neutral. Well here is the table from the previous Budget that shows on page 70 a $1 billion hole over the first 4 years because of the tax cuts. That is the net figure. The gross figure for Budget 2009 and Budget 2010 was—wait for it—$23 billion of tax cuts. Much of that went on the top marginal rate going down from 39c to 33c. Some people benefited hugely from that and some did not. That was a rosy-glow picture that $1 billion hole and it was based on GDP being 3 percent higher this year than last year. That was the red line. What happened? The black line is way below the red line and that shows that the rosy glow did not come off. The economy is stuck in a hole and the Government does not know what to do about it. What it has not done is make everybody pay a fair share. When Mr Nash got the answer to the parliamentary questions about dairy farmers I thought there must have been a mistake. Surely the average dairy farmer pays more than $1500 a year in tax when beneficiaries pay more than that. Well no a multimillion-dollar business is a great way of sheltering income is it not? It is a great way of sheltering income. Look at the farmer on the front page of the  
Dominion Post 
. [ 
Interruption 
] Mr Bennett is an accountant from Hamilton. He is complicit in some of these rorts. Wait and see: the Labour Government will clean up this mess and we will be fair to all New Zealanders. 
The National Government has created a multibillion-dollar deficit the worst in New Zealand’s entire history—the debt mountain is worse than it has ever been in our lifetime—and it has the gall to tell New Zealanders who are already struggling to draw their belts in while the belts of certain constituencies that traditionally vote National have been let out another few notches. And that is not right. That is why we will fight these folks right to the line and it is why we will be the Government in November 2011 when we will set about getting New Zealand back on the road to recovery. How does one do that? There are four simple tests. First get New Zealanders back to work and build a strong economy by innovating and by exporting with the help of modern monetary policy that does not put the exchange rate through the roof. Secondly save more—do not cut KiwiSaver but save more so we own our own future. Do not throw it all away and sell off assets. Any granny knows that if we sell the family silver there is nothing to serve tea in tomorrow. National wants to sell the family silver; they have given it away to their rich mates. That is wrong and that is why National is like a McDonald’s special—for a “limited time”. The “limited time” ends in November 2011 because we are throwing them out. We are throwing them out because Kiwis have had enough of being told one thing that is not true. 
The great untruth of this Budget is that National is not breaking any promises. John Key said before the last election: “We will not cut KiwiSaver.” What has National said this week? It has said it will cut KiwiSaver. National said: “We won’t touch Working for Families.” What will it do tomorrow? It will change the abatement rate on Working for Families. It will put a new one on. It will cut Working for Families. “We won’t touch student loans.” National said. Wait for tomorrow. It will. All of those are broken promises just like “We won’t raise GST.” What is the excuse this time? “Oh the changes won’t take effect until after the election—you can throw us out.” Well then why not put it in next year’s Budget after National has campaigned on it? Why put it in this year’s Budget and legislate for it before the election? Because it does not have the moral courage of its convictions. 
Craig Foss 
: I raise a point of order Mr Speaker. I realise it is towards the end of the member’s speech but one cannot question the courage of members in any way shape or form or allege anything like that of other members of this House. 
Mr SPEAKER 
: Objection was taken. I ask the member to withdraw that last statement. 
Hon DAVID CUNLIFFE 
: I withdraw and apologise. I would not impugn the integrity of— 
Mr SPEAKER 
: That is all the member needs to do. 
AMY ADAMS (National—Selwyn) 
: 
 It is clearly Mr Cunliffe’s day today to give the vein-popping “flirting with delusions of grandeur” speech from the other side—full of hollow platitudes. It is always interesting watching Labour members speak to see whose day it is to make the leadership bid. Clearly today was Mr Cunliffe’s day and I have to say it is no surprise to hear that he addressed his entire speech to the gallery because none of his colleagues were paying any attention whatsoever to a word he had to say. So I hope he got a better response from the gallery because his colleagues all had their heads down and could not have shown any less interest in what he had to say—pretty much like the rest of New Zealand. 
Tomorrow is Budget day and I am pleased the members opposite have realised that. It is the closest they have come to saying anything useful all week. The Budget this year will be yet another brick in the rebuilding of this country’s economy. 
Hon Members 
: Come on! 
AMY ADAMS 
: That is what it will be. It will be yet another step in turning round the complete hash that the last Labour Government left the economy of this country in. It is election year but this Government will not use the Budget to recklessly throw around money in a desperate grab for votes in the way the Labour Government did. We will not do that; we are fiscally prudent. We know that a Government has to walk the talk. 
Hon David Cunliffe 
: Tell us about the farmers’ tax. 
AMY ADAMS 
: I tell Mr Cunliffe that anyone can say the words; this Government is delivering. We know that a Government has to earn the money and has to support the people who earn the money before a Government has anything to spend. Labour Governments are great at spending but this Government gets in behind people who are actually earning the money. This Budget is about a couple of things: it is about controlling Government spending and getting the books back in shape and it is about investing in infrastructure and skills. Those are the sorts of building blocks we need to get this economy going. Most important in my view it is about rebuilding my province of Canterbury and that will cost over $15 billion. We know we have to play our part in the rebuilding of Canterbury. New Zealand knows that the Government has to make changes in order to pay that bill. 
This Budget will do that; it will keep us on the path to rebalancing the economy. It will get the books back in order and get New Zealand back into surplus. Then we can have choices create productive sustainable jobs and provide better incomes for New Zealanders. Anybody can talk about that stuff. The National-led Government is the one delivering that stuff for everyday New Zealanders and that is why New Zealanders will continue to back us. That is why every single poll shows us that the only lot of people they want on the Treasury benches is the National-led Government. There is no interest in Labour no interest in the Greens no interest in the “Hone Heke” tax. The National-led Government has shown time and again that this is the party of fiscal responsibility. New Zealanders are supporting us. 
In between Labour’s squabbles and factions it tries every now and then to come up with a big bright idea. It tries to land a couple of blows on us. What have we had this week? There is so much to choose from but my favourite has to be David Cunliffe’s website poll. That was great. Two days before the Budget he was polling his faithful sheep on what they thought about the Budget. Best of all by the time he pulled down the website there was an 88 percent support rate for the National Budget which was so good that more than 24 hours before Bill English delivered it the country already loved it! It showed 88 percent support for the Budget which is pretty much the support I think most polls will show. But what about the front page of today’s  
Dominion Post 
 which shows Stuart Nash finally dropping the veil and admitting his complete financial incompetence by suggesting we should tax businesses on their turnover. That shows brilliance! That story had to be one of the most moronic pieces of thinking I have seen in a long time. Labour went out and suggested that $500000 turnover was the same as the same amount of salary. Does that not tell us how few Labour members have ever had a productive job in their lives? If any one of them had run a business and had even a basic grasp of how business works they would know the difference between turnover and profit. If I get this right Labour’s plan is to tax us on money we do not earn. Is that right? It would tax us on money we do not earn. I have an earth-shattering piece of news for members opposite. Maybe farmers are paying tax on what they actually get to keep. That would be radical. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Speaker. Under Standing Order 106 it is required to wait until the end of a member’s speech before seeking a point of misrepresentation. The member has grossly misrepresented the Opposition who has never suggested— 
Mr SPEAKER 
: The Standing Order provides for a member who has been grossly misrepresented not for a party to claim gross misrepresentation. If the member wishes to come back into the debate it has to be that he has been misrepresented. If that is the case I will hear from the Hon David Cunliffe. 
Hon DAVID CUNLIFFE 
: Speaking to your ruling Mr Speaker I appreciate that it must be a personal reference to a member. As the party’s finance spokesperson I do take a personal inference from the suggestion that we and therefore I—I am responsible for this area of policy—have advocated a turnover tax. That is certainly not Labour’s position. It was not contained in the Leader of the Opposition’s questions today. If a journalist writes that on the front page of the newspaper we cannot be responsible for journalism. 
Mr SPEAKER 
: I think we have had sufficient on that. I have allowed the Hon David Cunliffe to do this. There is some question though as to whether I perhaps should have but I have allowed it on this occasion. [ 
Interruption 
] That is not helpful from the honourable deputy leader of the Labour Party. I will not take it any further because I do not want it repeated. 
STUART NASH (Labour) 
: 
 I will pick up on David Cunliffe’s point of order and say that Phil Goff Leader of the Opposition never once said that New Zealanders are going to tax farmers on turnover. Never! What Mr Goff has said repeatedly is that the tax system has to be about fairness. Mr Goff has said that every New Zealander has to pay their fair share. So Labour took the figures that had been provided by the Inland Revenue Department and by the Minister of Revenue and the figures said that the average dairy farmer paid tax of $1500. That is what the figures said and that is what the statistics from the Inland Revenue Department said. So the question Mr Goff posed was whether that was fair. That is the question he posed. He asked whether it was fair when hard-working New Zealanders hard-working salary and wage earners are paying a significant amount of tax that dairy farmers are paying $1500 a year on average. That is all he was asking. If Mr Key had a different answer then he should have given it. The figure may be slightly higher—[ 
Interruption 
] 
Paul Quinn 
: I raise a point of order Mr Speaker. We have just had confirmed by the deputy leader of Labour that in fact they have been talking about the $500000. 
Hon Rick Barker 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I do not think I need any further assistance. I will hear from the member shortly. I ask the member to resume his seat because a point of order was being called and heard and I was about to deal with it. While that point of order is being dealt with we cannot have another point of order. Let me make it very clear to Mr Quinn that was not a point of order. If the member wishes to raise a further point of order I will hear it. 
Hon Rick Barker 
: I raise a point of order Mr Speaker. Members are not to use points of order to break up a member’s speech. I object to that member’s point of order on two grounds: firstly it was not a point of order and secondly it was a point of order taken deliberately to break up that member’s speech. I ask you Mr Speaker to defend our members’ rights to have an uninterrupted flow of speaking. 
Amy Adams 
: Mr Speaker— 
Mr SPEAKER 
: No I will not take any further on this matter. What is difficult for the Speaker of course is that when someone calls a point of order I cannot foretell what the issue might be but as soon as I could hear what the member was doing I went to sit him down just as the honourable member himself as soon as he heard what was going on sought to stop it as well. But I do say to members that points of order must not be used to disrupt another member’s speech for no good purpose unless it is an issue of order. I will not tolerate that and if members do that repeatedly there will be a consequence. I call Stuart Nash and I apologise for what happened. 
STUART NASH 
: Thank you Mr Speaker. I acknowledge the sum of $1506 may be a little low. I had a look at the figures I went through them and I could not determine a proper figure—there may be stuff held under other tax codes. But Mr Goff asked whether it was fair that according to Inland Revenue Department statistics the average dairy farmer pays about $1500 in tax when a person on the average income pays about $8000. 
I would also like to take umbrage at Mr Foss’ comments. Mr Foss is chair of the Finance and Expenditure Committee and he stood up here and said the Government’s tax cuts had been fiscally positive. There has been $23 billion worth of tax cuts. Mr Foss has himself heard the Governor of the Reserve Bank at the Finance and Expenditure Committee say there has been no economic stimulation whatsoever from $23 billion worth of tax cuts. The tax cuts have had no positive effect on the economy. 
I will tell the House about a woman in the electorate I live in who is called Raewyn. Food that a year ago cost her $85 now costs her $115. She has two children who play sport and belong to sports clubs. Her husband drives to work in a car. He earns above the average wage which 75 percent of New Zealanders do not. She has taken time off work to complete her PhD. Raewyn and her family are the sort of family we want: good and hard-working. She is bettering herself and she will become a very productive citizen. Raewyn admits she is not poor but her family is finding it very very tough. In Napier and around this country budget services are stretched food banks are flooded and social services are overrun. I ask whether this country is the sort of place we want to live in. Is this country the sort of place we want our children and grandchildren to inherit? It is a country with a working core who struggle hand to mouth and where the very wealthy just get richer. Those who earn $1 million a year last year received a tax cut of $1000 a week. Someone on a median wage in Napier received about $10 a week. Is that fair? 
Amy Adams 
: Crocodile tears. 
STUART NASH 
: Amy Adams does not care about the people of Napier. All Amy Adams cares about are the very wealthy who got $1000 a week in a tax cut when the vast majority of New Zealanders received less than $10. Is that fair? No it is not. 
DAVID BENNETT (National—Hamilton East) 
: 
 Mr Speaker—[ 
Interruption 
] 
Mr SPEAKER 
: Before I asked a member not to make inane interjections when a member first got to their feet and I say it again to members on the Opposition benches this time. There is nothing wrong with interjections but let the member speak first and have something to interject about. 
DAVID BENNETT 
: Today we have seen the true Labour. It has envy and hates people making money. It does not want to see this country progress; it wants just to take people down. A Labour member comes in here with an article in the paper and thinks it is God’s gift to the world to get on the front page of the paper for once. Labour members come in here and ask questions about it. Labour’s leader Phil Goff is so keen to get the tax on farmers argument going yet they pull away. They have pulled away within 2 hours of question time. We heard Stuart Nash talking about how the numbers might be a little bit low now. They are pulling away from the argument because they know they have lost. Stuart Nash is trying to win a provincial seat by going out there and saying that businesses should pay tax on their income or turnover. That is never going to get anywhere and Labour will never get anywhere doing that. 
Let us give Labour members a history lesson and a lesson in accounting. Revenue minus expenses equals profit. That is what people are taxed on. We are not taxed on revenue or expenses; we are taxed on profits. It does not matter what business people are in—whether it is farming forestry fishing retail industrial manufacturing or any business—if you want to do that to farming you do that to the whole industry in New Zealand. Tax everybody on revenue. 
Mr SPEAKER 
: Do not bring the Speaker into the debate. 
DAVID BENNETT 
: Labour wants to tax everybody on revenue. Let us see how long that lasts. Labour members should go to South Auckland and tell those businesses that you are going to tax them on revenue and you will see how many people are still in work at the end of that day. That will be the true test of Labour. Labour members do not know what they are talking about. If you want to— 
Mr SPEAKER 
: What is it that the member does not understand about the word “you”? 
DAVID BENNETT 
: I know. I understand. If Labour wants to tax revenue then it can do so. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: It had better be a good point of order. I have just dealt with the issue about the member using the word “you”. 
Hon David Cunliffe 
: It is a separate issue. I seek your advice. On a previous point of order in respect of the same matter you advised that if personal offence was taken and if an explanation was given that it was not our intent to have a turnover tax then that should be accepted. 
Mr SPEAKER 
: The member will resume his seat. The member was not given leave to make a personal explanation. I allowed the member under Standing Order 106 to clarify in a point of order a matter in respect of his own speech. That is a debating matter; it is not the same as a personal explanation. Other members are perfectly at liberty to refer to the matter again unlike with a personal explanation. Leave has not been granted for a personal explanation. A point of order was allowed for the member who claimed misrepresentation. I have allowed that. Members have heard the explanation and the matter is being debated further. 
DAVID BENNETT 
: That is another example of Labour retracting in their points of order to say now that they will not have a turnover tax. You talk to your leader who came into this House today and— 
Hon Annette King 
: I raise a point of order Mr Speaker. You have just ruled. He immediately went back to bringing you into the debate. He has been here many many years. Surely to goodness he can get through a 5-minute speech without— 
Mr SPEAKER 
: Let me just remind the honourable member that she interjected using the word “you” only a few short minutes ago. I did not pull her up on it. Interjections cannot use “you” either. I do not want members to interrupt other members’ speeches. The Speaker will deal with minor matters like that. 
DAVID BENNETT 
: Labour members want to break up this speech because they know they are getting a lesson in accounting and they do not like that. They do not like the real truth. 
Let us have a look at what happened in farming in the last couple of years. It is in the most difficult times. It happened when the payout came down. They were difficult times. There was high debt and a low payout. Many many farmers nearly went to the wall. Mr Cunliffe has been at a select committee where the Reserve Bank has come in and questioned the debt levels of farmers. He really knows what is going on if he would only admit it. That is the reality of the situation. Labour members are then comparing payouts in high years with payouts in low years. It is very very naughty of Labour members and the media to do so. 
Hon David Cunliffe 
: How come there’s no profit on a record payout? 
DAVID BENNETT 
: Well that is the thing; Mr Cunliffe does not understand that revenue minus expenses equals profit. He thinks that revenue is profit. That is the difference. That is what Labour wants to tax; it wants to tax New Zealanders on revenue. It wants to go to every business in New Zealand and tax on revenue. I want to see Labour go out and do that. Let us see you put that in your manifesto Mr Cunliffe. That is the great Minister of Finance you want to be. You will tax the country on revenue. The Green Party members are also talking about introducing a capital gains tax. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: Is the member seeking a point of order? It had better be a genuine point of order. 
Hon David Cunliffe 
: Under Standing Order 106 the member has transgressed again and gone to the extent of using this member’s name. 
Mr SPEAKER 
: The member has already had the chance under Standing Order 106 to argue that he has been misrepresented. Unlike a personal explanation it is not a matter that cannot be referred to again by the House. Members are at liberty to debate the matter further. The member had the chance to argue that he has been misrepresented. The House has heard that I allowed that but it is not like a personal explanation where members cannot refer to it again. I do not want to have speeches interrupted lightly. 
DAVID BENNETT 
: Mr Cunliffe will not seek a point of order and make a personal statement because he will not go out there and say he does not believe in taxing revenue. He does not have the guts to stand up in this House and say— 
Mr SPEAKER 
: Now I will interrupt the member. This is serious; the member will wipe the grin off his face. The member cannot allege that another member lacks courage. We had that earlier on today. In fact I asked the Hon David Cunliffe to withdraw and apologise. Now I ask this member to get to his feet to withdraw and apologise—and I want him to do so seriously—when I have sat down. He will sit down now and when I have sat down he will get to his feet and do it with some sincerity. 
DAVID BENNETT 
: I withdraw and apologise. The member over there had the chance then to make a personal statement and deny that Labour will have a revenue tax but he did not. He sat there and just let it go. The Green Party talks about a capital gains tax in regard to farming. Well there is a capital gains tax in regard to farming and it is that if you sell a property within a certain period of time the profit on the sale can be taxed. Also you have a yearly capital gains tax on farming unlike in any other business where you are taxed on livestock and that is a capital gains tax. 
Mr SPEAKER 
: Does the member not understand how to use the English language to avoid saying “you” all the time? The member has just said “you” three times in succession “If you do this you do that.” “If that is done” is the way to do it. The member should use the other part of speech. 
DAVID BENNETT 
: The Green Party needs to understand that when there is taxation in the farming sector there is a livestock tax and the livestock tax is a capital gains tax. That is something the Green Party tends to forget. 
JACINDA ARDERN (Labour) 
: 
 Frankly all I have seen today from the Government benches is an utterly embarrassing display. To be frank it began when the Prime Minister rose today. You would not have known that we— 
Mr SPEAKER 
: I have just corrected a National member. Let me now pull up a Labour member. Every time the member says “You would not have known” she implies that the Speaker would not have known. I can assure her that the Speaker does know. Members should debate correctly in this House. The reason why we do not use the word “you” is that not only does it refer to the Speaker and the Speaker must not be brought into the debate but also it personalises the debate. The reason for not using that part of speech is to avoid personal attacks in this House—“you did this” or “you did that”. I tell members that it is a longstanding tradition. I do not want to be unfair to Mr Bennett by allowing Miss Ardern to get away with it. Members should not do that. 
JACINDA ARDERN 
: Thank you Mr Speaker. Strike one versus strike 200 is the only point I would make. 
From the Prime Minister’s contribution today we would not know that we are on the verge of a zero Budget. The display we saw from the Government almost implied that what we will be presented with tomorrow will somehow be a joyous occasion. I saw an empathy-free comedian of ashamed proportions on that side of the House today. When did a $16 billion deficit become funny? That is the question I have for the Government. When did 6.6 percent unemployment become a joke? The point I wish to make today is that at no point should we assume that the Budget that will be presented to us tomorrow is by any means a default Budget. Choices have been made in the lead-up to the Budget that will be presented tomorrow that have led to the situation where we are now considering making significant cuts in areas like Working for Families student loans and KiwiSaver. All of that is as a result of choices. 
The Government is very likely to make the claim that the global financial crisis and the Christchurch earthquake are somehow the sole reason why we will be seeing these cuts tomorrow. Let us be honest; that is simply not the case. 
Paul Quinn 
: Because of the mess that the Labour Government left it in. 
JACINDA ARDERN 
: I can tell Mr Quinn that political commentary from Television New Zealand is one of the few areas where I have seen the acknowledgment that the economy was stalling well before the first Christchurch earthquake. That is for sure. We knew that. The reason is that the Government never had a plan not before and not after. There was never a plan for growth. Let us also be honest about the three areas the Government is now targeting. Before National came into Government it described Working for Families as communism and student loans as a bribe. It had never been a fan of KiwiSaver. So it is not enough for National members to stand here and tell us that by default the Government has no choice but to make the cuts it is making. It had a choice to present this country with $2.5 billion worth of tax cuts. That was its choice and it made it. Now we as a country are paying the consequences of that with the cuts we will see tomorrow. Let us also be clear about the cuts to the areas it has chosen. National members are not wringing their hands over them. These are ideological choices that they are making under the guise of being forced to make them by the global financial crisis and the Christchurch earthquake. 
Let us also look at the impact that this lack of growth has had. I do not want us just to assume that it means that they have had to make a few tough calls. It has had very real consequences for the state of our economy. The Prime Minister crows about projected growth in wages and employment levels. He has not told us what proportion of that growth is simply down to redeployment around the Christchurch earthquake. There is 6.6 percent unemployment and 27 percent of our young people are now looking for jobs which is the highest number we have on record. There are 77000 young people who are not in employment education or training. If members on that side of the House do not know I can tell them that that is an increase of 34000 since they took office. They can crow as much as they like about all the reasons why that has occurred but at some point the excuses need to end and there has to be a plan for growth. A tax cut first was not it and second made it worse. 
What have we seen the Government present around employment? There have been three attempts to tackle the issue. The Job Summit was the first. How many jobs did the Job Summit create? Mr Cunliffe indicates a handful. There were hundreds at best. Secondly we had Job Ops. Half of that package was canned after the Government recognised and acknowledged that all it created was short-term make-work schemes. All we got out of that were pumpkin patches—short-term employment. Thirdly we had the employment plan. The Government was going to invest $55 million in skills which it has already cut. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is a privilege to stand and speak in the general debate. I have heard a lot of the arguments from across the Chamber. From the speakers we have heard today the difference between the Opposition and this Government is clear. It is clear that the Opposition is all about negative tactics and pointing out the things that are going wrong. I have not heard one Opposition speaker point out a vision for this country. I have not heard one Opposition speaker talk about the issues that matter. 
In the 2½ years our Government has been in office we have been talking about the issues that matter. We have been talking about national standards for kids. We have been talking about raising the achievement level for our children particularly for the tail end of kids who leave school without being able to write and read which is very sad. 
Opposition members have not talked about the increase in the number of elective surgeries that has happened under this Government. They have not talked about the integrated health-care services that are now being rolled out across this country as part of a vision for bringing more convenient more timely and more effective health services to our communities. They have not talked about the infrastructure investment that this Government has put forward in terms of rolling out broadband and the type of road infrastructure that has certainly impacted on my community of Maungakiekie where the barriers to trade and commerce lie in infrastructure bottlenecks. 
What we have heard from the Opposition has been about BMWs that they purchased all of 4 years ago. What we have heard about from Opposition members has been about the painting of a house but the previous Government spent millions of dollars on infrastructure such as the Governor-General’s residence and the Prime Minister’s residence. We have heard vile personal attacks made against the Prime Minister from Opposition members—vile personal attacks made against the Prime Minister. I believe they are doing that because they are worried. They are worried because when the Prime Minister and I visited Onehunga last Friday he was given a standing ovation when he walked into the Onehunga Workingmen’s Club. You know that the Labour members are worried about that. When you go to afternoon teas where— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No no— 
PESETA SAM LOTU-IIGA 
: —I am sorry Mr Assistant Speaker—350 senior citizens of all shapes sizes and ethnicities turn up and they support the Prime Minister and welcome him for his positive attitude to bringing about change in this country you know— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member cannot bring the Speaker into this. 
PESETA SAM LOTU-IIGA 
:—no no—that Opposition members are worried. 
This Budget will bring about change. This Budget will be measured and it will be responsible. It will be about making changes to some of the $5 billion a year in spending on Working for Families and student loans as well as KiwiSaver. That much has been canvassed. But it is also about the $54.5 million that will go into improving the safety and quality of maternity services in this country. Women go through a major transition in their lives in giving birth to our children and this Government is committed to supporting them. It is about the $55 million that will go towards supporting young people into jobs; that is what it will go into. It is about supporting those young people because they are our future. 
The party opposite is obviously divorced from reality. You have the Leader of the Opposition shopping in Takanini. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No no. 
PESETA SAM LOTU-IIGA 
: Why is the Leader of the Opposition not shopping at Pak ’N Save in Mount Roskill? Mr Nash is committed to taxing incomes and taxing the turnover of businesses. Mr Nash is a bright man but he is sadly mistaken in his conviction to tax those revenues of businesses. It is sad that you have not heard about the good things in our community. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I call the next member I just wish to advise members for their benefit that every time a member uses the word “you” the member is referring to the Chair. The member must refer to a Minister or another member as “the Minister” or “that member”; that is in the third person. I refer members to Standing Order 103. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Assistant Speaker Robertson. Two nights ago along with maybe 500 other concerned Wellingtonians I attended atmospheric physicist and National Aeronautics and Space Administration director Dr James Hansen’s lecture on climate change. Dr Hansen is in New Zealand to highlight the risk of climate change to our planet and to future generations. He says our global climate is nearing the tipping point. Changes are beginning to appear and there is potential for explosive changes with effects that will be irreversible if we do not rapidly slow the growth of fossil fuel emissions over the next few years. In particular Dr Hansen is here to raise awareness on coal which he describes as the single greatest threat to civilisation and all life on our planet. Coal is the biggest threat because it is the largest source of carbon dioxide in the atmosphere and the one easiest left in the ground. 
Dr Hansen’s tour coincides with an important point for our New Zealand future. The Government is actively encouraging through its draft energy strategy the hugely expensive think big plan to destroy valuable Southland farmland to dig up dirty lignite coal which will destroy our climate credentials and our valuable “clean green” brand. Over the last 10000 years the Earth’s climate has been remarkably stable fluctuating by less than 1 degree centigrade over that period. This has enabled civilisation to develop in a safe constant environment. This has led to the society we see today. Preservation of life as we know it on this planet requires us to stabilise emissions at or below 350 parts per million. We are currently at 391 parts per million and rising by two parts per million a year. This Government has an inadequate emissions reduction target of 50 percent by 2050. However even this lowly emissions target will be impossible to meet if the Government allows the lignite plans to proceed. This is the height of irresponsibility and as Dr Hansen repeatedly points out climate change is a scientific issue but more important climate change is a moral issue requiring us in New Zealand to keep the coal in the hole. 
What does all this mean for New Zealand? We market ourselves as clean and green on the world stage. However Dr Hansen says of New Zealand that the fact the Government is even thinking of digging up the lignite shows there is a huge gap. Lignite is at the coalface of the New Zealand environmental crisis. It is estimated that New Zealand has around 6.2 billion tonnes of economically recoverably lignite. The trouble is lignite is the most inefficient and amongst the most polluting types of coal there are. Nevertheless Solid Energy and others are pushing their proposals to mine it ignoring the critical report from the Parliamentary Commissioner for the Environment that claims mining just is not worth it. We are dismally failing our current climate change target and allowing the lignite conversion to go ahead will signal to the world we have given up on our emissions reduction targets and our valuable “clean green” brand. If the proposed lignite mining goes ahead our emissions look set to rise drastically—as much as 20 percent of our country’s emissions from one lignite-to-diesel plant. Lignite trashes our “clean green” brand and our international climate treaty credibility. 
Under this National Government’s emissions trading scheme the plans could potentially cost the taxpayer $275 million a year from carbon credit subsidies the miners would receive. Over a lifetime the cost of just one lignite-to-diesel plant is likely to be in the order of billions of dollars. It is clearly bad for the Government’s books and bad because it locks in polluting industries. In oral questions today the Acting Minister of Energy and Resources attested there would not be subsidies. However either she has not read the report from the Parliamentary Commissioner for the Environment or she has changed the rules without telling anyone else. Lignite coal has environmental costs fiscal costs and also significant opportunity costs. The capital invested in these projects should be going to cleantech greentech projects that are greener cheaper and will last us for ever. 
Dr Hansen is in New Zealand and is talking about his grandchildren as his motivation for tackling the climate crisis. By the time my son Arlo who is now 3 years old starts school we could have an ice-free Arctic in summer. By his 10th birthday we will have likely increased the atmospheric carbon dioxide concentrations more than in the preceding 150000 years of natural emissions. By the time he starts high school we could have lost more than 3000 cubic kilometres of ice from Antarctica and Greenland. I want my son his children and the children and grandchildren of everyone else in this room to grow up in a world with a stable climate. In this Chamber we will not be the ones to bear the impact of our irresponsible actions; it will be our children and their children and every generation to come not to mention every other species with which we share this our only planet. Kia ora. 
AARON GILMORE (National) 
: 
 I start by referring to the lunacy we have just heard from the Green Party member Gareth Hughes. Last night I sat in the Banquet Hall along with the member from the West Coast Chris Auchinvole and heard a great presentation from a West Coast mining group. It pointed out that mining on the West Coast produces about $700 million to $800 million a year of export income and with a little bit of help and a little time it could produce another $1 billion of export income for New Zealand. That mining produces jobs and taxes which produces the real wealth for New Zealand. 
This is the problem that we have with the Opposition. Opposition members either cannot count or do not want to understand how real wealth is created in New Zealand. Last night in this Chamber we heard Clare Curran trying to subtract 800000 from 1.6 million. She got 83000. This morning we see in the  
Dominion Post  
that a journalist for whatever reason has pointed out that an income of $500000 which was the revenue turnover of a business should be the basis for taxation. At question time today we heard the Leader of the Opposition Mr Phil Goff point out and reaffirm that a turnover tax in some shape or form is the way to go. I am surprised. 
I look across at members on the other side and I give them credit. I look at Mr Cunliffe. He is a smart man. He has spent some time advising major corporations around the world—so I thought. I thought that no way would that man come up with an idea like this. Well it turns out that maybe we were wrong. Mr Nash came up with that brilliant idea. It would take $5 billion to fund the hole that exists in Labour’s expenditure programme—$5 billion. Fonterra has a $60 billion turnover. I know—let us tax them at 10 percent. That will be the solution! That will solve everything! 
When we go through the process it is like that old political saying about cows. We have two cows we look after the cows and they produce milk. The Labour Party has a view. If the farmer has two cows then take a cow produce the milk and throw it away. That is the Labour Party’s focus. We heard from Jacinda Ardern that jobs in places like Pumpkin Patch are not real jobs. I say to the member who pointed that out that people working in retail—the thousands of people up and down the country working in shops for 8 or 10 hours a day like my family does—are working in real jobs. They produce real value for New Zealanders. 
That is what Opposition members do not understand. People have to create real wealth. They have income they deduct their expenses and that is called profit. That is what we tax in New Zealand. There is nothing imaginary. There are no pixies at the bottom of the garden creating wealth that we can just throw at projects for the Opposition’s great grandiose plans. 
We have heard over time some of that craziness from Labour members. They told us that we would have an 11 percent unemployment rate; we have 6.5 percent. They told us we would have 20000 people unemployed in Christchurch alone but that was absolute rubbish. They tell us that the solution is to borrow more money so we can save it right now. Well right now New Zealand has a mortgage an overdraft and a credit card balance in deficit and its creditors are banging on its door. It would be absolutely ludicrous to go and borrow more money just to put it on a lottery that is the sharemarket we are seeing right now. 
Those Labour members seemingly believe that National members have no idea. Well I point to last year’s Budget. We released an investment plan to outline for the first time ever the way we would spend more than $100 billion over the next 10 years. We were the first Government in the history of New Zealand to do that. It is a plan to invest in our infrastructure in the smartest way possible and it has never been done before in the history of the New Zealand Parliament. But what credit do we get from members on that side? They ask where the plan is. I tell them that tomorrow they will see a plan. They will see a plan outlined to bring the Budget into balance. 
Hon David Cunliffe 
: I hope so—for New Zealand. 
AARON GILMORE 
: We cannot carry on spending more money than we earn I tell Mr Cunliffe. We cannot go on borrowing $300 million a week and spending the $5 billion that that member and his party wants to continue to spend to bankrupt not only me not only my family but this whole country. That is what Labour’s spending would achieve. Thank you. 
The debate having concluded the motion lapsed. 
Westpac New Zealand Bill 
In Committee 
Preamble 
CRAIG FOSS (National—Tukituki) 
: 
 I will take a brief call on the Westpac New Zealand Bill to thank and acknowledge members in the Chamber who will no doubt speak to the bill the Business Committee for helping with the process of this bill and of course the members of that Business Committee. It goes without saying that I am also thanking party leaders around the Chamber and acknowledging their cooperation—in and out of the Chamber I guess—various finance spokespersons people who were referenced to help with this legislation and of course members. I also acknowledge Finance and Expenditure Committee members. I was absent during the second reading but I looked at and reviewed some of the speeches there and those members captured what we did at the select committee pretty well I think. 
I will make just one quick point because I noticed that a point was raised and a question asked of me as the chair of the Finance and Expenditure Committee and the member whose name is on the bill about whether there were any issues with the bill. I can assure the Committee and the Chair that all processes and procedures were correct and that members were always aware of the bill and able to make fair representation on it. I can assure the Committee that no issues whatsoever were raised. Nor do I think there are any issues. 
The bill is relatively straightforward. Some members in the Chamber would have spoken on the previous bill upon which this bill rests which was the bill of 2006 in the name of the Hon Marian Hobbs. That bill turned into the Act of 2006. 
There has been quite a bit of consultation about the bill. There is general and very good understanding of what the bill is actually facilitating and members have been very reassured I believe by the assurances from the Reserve Bank from the Inland Revenue Department from Treasury and from the Ministry of Justice under the New Zealand Bill of Rights Act and the checks and balances that the ministry does. Those organisations have all given the bill a tick. 
I guess that members may speak to a couple of changes made to the bill at the select committee but the changes were very very minimal. The bill is now almost identical to the previous bill. I am sure that some members may want to speak to some of the minor changes and I look forward to contributions from the Committee. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The Labour Opposition supports the Westpac New Zealand Bill. I will begin by acknowledging the member who has just spoken the chairperson of the Finance and Expenditure Committee Craig Foss. As I have said before he does a very good job of managing that committee and he has certainly brought this bill through in good shape to the Committee. 
I think it is appropriate for us to run over quickly what the bill does and why; the rules it seeks to serve which the bill sets out in the preamble we are debating at the moment and why they are there; and the bill’s implications in the broader context which is the stability and security of the New Zealand financial system. Essentially this bill provides a mechanism through an Order in Council for the vesting of assets from Westpac’s New Zealand institutional business which technically are currently owned by Westpac Banking Corporation of Australia in Westpac New Zealand. In doing so the bill seeks to comply more fully with the local incorporation policy for systemically important banks which has been set by the Reserve Bank of New Zealand in consultation with its partners across the Ditch. 
This is special legislation that has been brought to the House because on the basis of testimony from the Reserve Bank and Westpac no other legislative vehicle is available that would allow that vesting to occur. The select committee accepted that expert testimony. But why is the vesting occurring? These systemically important banks in New Zealand are required by the Reserve Bank of New Zealand to maintain a minimum threshold of assets and liabilities within the New Zealand legal domicile. That is done by agreement with Australian banking authorities to ensure that there is sufficient system stability in the New Zealand banking environment. 
The counterfactual would be that if sufficient assets were not vested within the New Zealand domicile then more of that backing would simply be as it were on loan from the parent in Australia. That would bring with it certain system risk around the marginal status of a small market relative to its larger neighbour and in times of crisis as we saw in 2008-09 the potential for risks to be higher on the smaller marginal market than they are on the parent market. 
It is a totally legitimate goal. It is agreed upon on a bipartisan basis across this House and it is one that the Labour Opposition will continue to support. Behind that goal as reflected in the preamble we are debating is the underlying concept that the Reserve Bank of New Zealand should be and will continue to be a full-service regulator that has responsibility for both price stability in monetary policy under the Reserve Bank of New Zealand Act and system stability which if you like is the combined health and well-being of the financial ecosystem that is then able to provide credit on a sustainable and efficient basis to the businesses households and corporations that make up this wonderful country. Without the oversight of a full-service Reserve Bank we would not have the same degree of stability and security for the New Zealand banking system and as a completely legitimate part of that we have a minimum threshold of assets and liabilities for each of the main banks. 
Tomorrow is Budget day so it is appropriate that this bill has come to the Committee today by order of the Government. Clearly the Government wishes us to contemplate in the context of this bill the role and status of the financial system that this bank Westpac New Zealand is part of. It is certainly the view of the Labour Opposition that one of the crucial tests for tomorrow’s Budget is whether it will help New Zealanders to save. 
Westpac New Zealand whose representatives at a senior level I have recently had the pleasure of meeting and having discussions with strongly supports the KiwiSaver scheme. It does so because it is good business for the bank and the bank in turn provides an efficient structure through which KiwiSaver accounts can be managed. That is absolutely relevant to the preamble. The preamble sets out the bill’s purpose which is to provide for the vesting of assets and liabilities of Westpac Banking Corporation in Westpac New Zealand. Those assets include KiwiSaver accounts. Those assets have been growing rather rapidly not only for Westpac but also for other members of the banking industry. They have been doing so because there have been healthy we might say incentives to encourage New Zealanders to place their savings in the KiwiSaver scheme. Members get $1000 when they join and they get up to $1024 per annum as a dollar for dollar tax write-off. That is $20 a week for every $20 saved that people can set off against their tax. 
That was until last week when the Minister of Finance and the Prime Minister indicated that those benefits to saving New Zealanders would be reduced. That has created outrage around New Zealand. The internet is full of it our phone lines are full of it and our electorate offices are full of people wishing to register complaints that this Government has broken its promise sadly and is now moving to reduce the incentives in KiwiSaver again. It reduced them in Budget 2009. 
David Bennett 
: Come back to the bill. 
Hon DAVID CUNLIFFE 
: Westpac New Zealand is inhibited from fulfilling its commercial objectives I say to “Mr Benefit”—Mr Bennett sorry; it is “Ms Benefit”. I am not talking about dairying here so that sector is irrelevant to the purpose of this bill. I will contain myself to the bill and I will not talk about the member’s work in that industry. 
What is important with KiwiSaver is that it is predictable that the public has confidence in it and that Westpac New Zealand like other banks can continue to benefit from it. The Government said last year that it would reduce the default contribution rate and this year the big idea is that the Government will put it back to where it was last year before the Government changed it last time. Kiwis are asking why. They are asking why the Government is breaking its promise not to reduce the benefits in the KiwiSaver scheme. 
David Bennett 
: That’s got nothing to do with the bill. 
Hon DAVID CUNLIFFE 
: But that is enough on KiwiSaver because we would not want members opposite to get too agitated about it. Let us consider another important backdrop to this bill which is the health and well-being of the New Zealand banking industry. It remains a fact that has shocked many New Zealanders that the four Australian banks domiciled in New Zealand make more profit and send more profit offshore each year than all the companies on the New Zealand Exchange combined. 
Hon David Parker 
: The top 50. 
Hon DAVID CUNLIFFE 
: The top 50 that is which is the NZX 50 the New Zealand Exchange I was referring to. And that is not even close. The big banks are very profitable. They have almost recovered their full pre-crash profitability and those profits go offshore. The consequences of that is that when hard-working farmers and others are exporting their products it is virtually impossible for us to make a current account surplus even when we make a trade visible surplus because the invisibles from the financial sector are always so negative that they overwhelm the poor old trade surplus. Stripping back those invisibles we find the net investment balance and the cost of running the finance industry of which this healthy bank is a part. 
New Zealand deserves to spend some time considering how in our future we might own more of our own future by progressively boosting the New Zealand component of the finance industry so that we may progressively see a somewhat lower share of that profit and turnover being repatriated offshore. That will not happen overnight. It should not disturb the normal competitive processes of the market but the Government has an opportunity to stand behind that process by supporting for example the continued gearing up of Kiwibank’s balance sheet. A Labour Government certainly would do so. 
I will refer to one other aspect that is important to Westpac New Zealand which is that its institutional bank is able to play in the market for long-term securities. 
The third part of the financial and economic context is really the increasingly important part in our financial ecosystem that is being played by the New Zealand Superannuation Fund. In the context of this year’s Budget it was very interesting to note the recently released Crown accounts which project an operating balance before adjustments gains and losses of $16 billion. After those adjustments the operating balance is only about $10 billion. That difference is overwhelmingly driven by the improvement in the value of the New Zealand Superannuation Fund’s investment portfolio. That is a good thing. It is a good thing that it has increased by 32 percent or I think by 8.3 percent since its inception taking into account not only the last year but also all the effects of the global financial crisis. It is still almost double the rate of return of the Crown’s cost of capital. In anybody’s book it is a good investment except that the current Government has refused to continue paying into the fund and has thereby prejudiced the Government’s future ability to afford superannuation at the current rate. 
It is very difficult for me to square how the Government can talk the talk about increasing savings when it has undermined KiwiSaver 2 years in a row and refused to continue paying into the New Zealand Superannuation Fund. That is important to Westpac. 
Amy Adams 
: What’s this got to do with Westpac? It’s got nothing to do with Westpac. 
Hon DAVID CUNLIFFE 
: It does have a lot to do with Westpac because Westpac’s institutional bank is a partner with the New Zealand Superannuation Fund which brings me to the next point. I am glad Ms Adams raised it. The next point is that the Reserve Bank of New Zealand which sets the threshold for the vesting being embodied in this bill is also moving to adopt Labour’s monetary policy. Labour’s monetary policy includes macro-prudential policies such as the core assets ratio which just happens to be one of the key drivers that require banks to raise increasing amounts of their capital from domestic savings right here in New Zealand. That in our book is a really healthy development because it makes us somewhat—not totally but somewhat—less vulnerable to the swings and roundabouts of bouncing exchange rates and provides an encouragement to domestic savers. We acknowledge the wisdom of that move we compliment that act by the Reserve Bank we note that Labour has been advocating that policy publicly for at least the last 18 months and we believe that there is future potential to use it for counter-cyclical purposes. 
To sum up the Westpac New Zealand Bill has bipartisan—I imagine it is multipartisan—support because it is a sensible move to allow the vesting of assets and liabilities in the New Zealand offshoot of Westpac Banking Corporation Westpac New Zealand. It does so pursuant to the requirements of the Reserve Bank which are there for good reason to ensure that local banks have enough assets and liabilities to underpin system security. We support that goal. We support the bill. 
I note again the cooperative spirit of the Finance and Expenditure Committee. There are only a couple of minor amendments. I have not bothered to go through them. I could take another 5-minute call but I do not think I would be allowed to. In any case I think the bill is largely intact as it has been received back by the Committee. I commend the bill to the Committee for its support. 
STUART NASH (Labour) 
: 
 I suppose those watching will have seen two extremes this afternoon. The Westpac New Zealand Bill is a bill that I think every party in the Committee actually agrees on. We will all be speaking in favour of it. It was brought to the House by the chair of the Finance and Expenditure Committee Mr Craig Foss and he did a very good job in chairing it through the process. 
I suppose the nub of this bill is Part 1 clause 3(b) where it states that the purpose of the bill is to provide for “the efficient conduct of Westpac New Zealand’s business.” That is the nub of the bill. I have a slight problem though with the salary of Westpac New Zealand’s chief executive officer. I think he receives over $5 million a year which means he receives about $5000 a week in tax cuts. There are some people who would have a problem with that $5000 a week as some people do not get that in 6 months—but anyway. 
We know that one of the reasons why New Zealand came through the global financial crisis in the state it did was that Dr Cullen had left the books in very good shape. I shudder to think what might have happened if Don Brash had got in in 2005 and had given tax cuts. Dr Cullen left the books in very good shape. In fact the banking sector was one of the most robust in the world. Westpac is an important part of that banking sector but I believe that it breached its covenant albeit very briefly which was the impetus to bring in this bill. 
Mr Cunliffe talked about assets and liabilities. If we look at the interpretation we see there are some interesting words in relation to the interpretation of assets. No doubt they are the right ones but people may find them slightly interesting. Under clause 4(1) “assets means property of any kind whether tangible or intangible real or personal corporeal or incorporeal and whether or not subject to rights and includes—”. We would expect some of these things in terms of assets but there are some surprises here. Assets include “(a) estates or interests in any land including rights of occupation of land or buildings:”—which is the sort of thing that banks are involved in and we would expect that—“(b) buildings vehicles plant equipment machinery fixtures and fittings and rights in them:” and that is absolutely right. Assets also include “(c) choses in action and money: (d) rights of any kind and applications objections submissions and appeals in respect of those rights:”. 
Then it is interesting. We should remember that we are moving assets to Westpac New Zealand to allow Westpac to meet the requirements of the Reserve Bank. A further category of assets is “(f) goodwill and any business undertaking”. That is what it says in clause 4(1) of the bill and I ask the member in the chair Mr Foss to feel free to stand up and say if I am wrong. But it would be interesting to know how the bank values goodwill and whether in fact goodwill is valued by the Reserve Bank in the same measure that Westpac New Zealand values it. 
Clause 4(1) states that assets means “(e) intellectual property and applications pending for intellectual property:” and “intellectual property” is defined in the same subclause as “all patents designs copyright know-how trade secrets trade marks …” etc. Trade secrets are part of an asset because they are under the guise of intellectual property. Again it would be interesting to know how a bank values trade secrets. I suspect it would be quite hard to value a trade secret. It would be interesting to know at what point the Reserve Bank accepts a fair valuation on a trade secret. I am not too sure how the Reserve Bank could account for that but it is an asset. 
The actual purpose of this bill is that it enables Westpac New Zealand to comply with the Reserve Bank’s local incorporation policy for “systemically important banks” under recital (2) of the preamble. What does “systemically important” mean? According to the Reserve Bank it means those banks that have liabilities other than those to related parties—so we are not talking about liabilities to Westpac Australia—of $15 billion. Branches of Australian-registered banks such as obviously the Westpac Banking Corporation have a condition of registration that their external liabilities will not exceed that amount. Unfortunately—or fortunately—legislation is the only means by which the vesting of these assets and liabilities in Westpac New Zealand can be effected efficiently and economically and the only way that amendments to the Westpac New Zealand Act 2006 which was the Act that incorporated Westpac New Zealand can be made. There are no other ways to do that and the amendments cannot be obtained in any other way except through legislation which is why Mr Foss has brought the bill to the House. 
The Reserve Bank’s local incorporation policy assists the regulator by providing for greater control over the assets of a bank—in the event of bank failure I suppose. So a huge part of this is about providing certainty for those who have deposits mortgages assets and all sorts of other things with Westpac New Zealand. I have defined what assets are as determined by the bill. It is very important especially in this day and age— 
Hon DAVID PARKER (Labour) 
: 
 I am pleased to take a call on the Westpac New Zealand Bill. As earlier speakers have noted it is not a Government bill; it is a private bill brought on behalf of Westpac New Zealand in order to make changes to the assets that fall within that corporate entity rather than the prior corporate entity so that they are available effectively to creditors of the New Zealand Westpac bank in the event that something goes wrong. For example if there were losses on its loan book it would have a greater pool of assets to which depositors would be able to have recourse in order to be repaid the deposits they had lent to the bank. 
Of course this has arisen in part because the Reserve Bank back in 2003 noted that New Zealand was too exposed to risk as a consequence of our major banks being in part incorporated in Australia so their business and their deposit-taking might be via a New Zealand entity but the asset holding that lay behind the bank was not open to recourse from those depositors because those assets were held by a parent company in Australia rather than by the New Zealand subsidiary. The Reserve Bank went about changing that and since that time it has caused the New Zealand branches of Australian banks to be incorporated in their own right and to have substantial assets transferred into them. This is the latest example of that in that it transfers additional assets from the Westpac parent company into the New Zealand company. These are principally assets and liabilities that arise from the institutional banking business that will now be vested in Westpac New Zealand. 
There are a number of aspects to ensuring stability of financial markets and having properly capitalised banks is one important part of that. That is what this bill addresses. Of course of similar importance to the strength of financial markets in my view is the level of savings that one has in our country. Our country would then have sufficient levels of deposits available to banks or other financial intermediaries to lend to commercial enterprises coming from New Zealand sources. 
This bill does nothing to fix that and I think it is interesting that this bill is being considered against the background of the Budget that will be read tomorrow. That Budget has already been signalled by the Government as amongst other things restoring the default rate of contributions for KiwiSaver back up to 4 percent. It is interesting because we are now over 2½ years into the term of this Government—it is nearing the end of its term—and the centrepiece of its Budget this year is reversing its reversal of KiwiSaver. I think that is quite interesting is it not? In prior years National dropped the default contribution rate into KiwiSaver from 4 percent to 2 percent and it is now a year or two later reversing that—with some hooks obviously. It is reversing that by increasing the default rate from 2 percent to 4 percent. The centrepiece of National’s Budget is the reversal of its reversal. 
Amy Adams 
: Westpac bill. 
Hon DAVID PARKER 
: Amy Adams does not want to talk about this but it impacts on the security of financial markets. It is very relevant to the security of financial markets because if we do not have sufficient home-grown deposits to banks we are more reliant on overseas lines of credit and we are more likely to agree to extending the multiples that banks like Westpac can lend to make up for the deficit in New Zealand - based deposits born of New Zealand - based savings. Amy Adams might not want to talk about the fact that the centrepiece of this year’s Budget is likely to be the reversal of National’s prior reversal but I certainly think it is relevant. 
The Westpac New Zealand Bill is good in so far as it goes. It improves the security of New Zealand depositors in their deposits in Westpac by making sure that more of Westpac’s parents’ assets are in the New Zealand - based company— 
Craig Foss 
: Westpac New Zealand. 
Hon DAVID PARKER 
: —Westpac New Zealand. That is a good thing but it does nothing for other parts of the financial markets that are important. Notably one is the strength of our savings. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I think it is important to acknowledge at the outset the importance the Labour Party attaches to the trading banks most noticeably as evidenced by this bill the Westpac New Zealand Bill. Obviously banks are necessary to the functioning of a modern economy but I still remember my old dad’s dictum about banks which I think reflects the public view sometimes of banks. He used to say that banks are entities that give out two umbrellas when it is sunny and ask for them both back when it starts raining. That wisdom I suppose has imbued a certain caution in me about banks and it is not always I feel a caution that is reflected by banks themselves. 
I sometimes wonder whether Westpac as an example remembers our very recent history. Just last night on television I saw an advertisement for I believe Westpac. It showed a couple in a small modest flat and the woman was gazing across the road as someone was moving into a big old villa. The advertisement basically said: “Why wait?” and advertised that one can buy a house with a 5 percent deposit. Then the advert showed the couple having moved into what I guess would be in Auckland terms a villa worth at least three-quarters of a million dollars or thereabouts. I think that is illusory I think it is unreal I think it is enticing and I think it is provocative. I think it is also breathtakingly short term in view because it fails to take account of what we have been through in our very very recent history. One has just to ask sometimes what the fundamentals are that the trading banks including Westpac are operating under. We have to ask what happens in a situation where somebody buys a house with a 5 percent deposit and house prices collapse as some commentators still believe will happen at some point over the next year or two. 
I have to pick up on the speech of my colleague Stuart Nash and acknowledge the issue with dairy farmers. The average debt of dairy farmers at the moment be they a Westpac New Zealand customer or a customer of any other trading bank is $2.8 million—$2.8 million of borrowing. No wonder they are able to pay only $30 a week in tax because they are struggling to maintain any semblance of principal repayment when they have debts at that level. Of course it takes two parties to dance in respect of debt. One is the farmer wanting to expand wanting to grow wanting to acquire the neighbour’s property and wanting to increase the size of the herds and then there is the bank to fund the farmer into that proposition. But if the reality is that the farmer is paying only $30 a week in tax there is something wrong with that fundamental. When a farmer with a turnover of $1 million - plus pays only $30 a week in tax there is something very seriously wrong. There is a real shortcoming there in respect of that. 
We need only to contrast it with the financial borrowings of dairy farmers across the Tasman who are also likely in many instances to be Westpac customers. There seems to be a more prudential approach being taken there because according to Rod Oram’s column last Sunday the average debt of a Victorian dairy farmer for example is under $1 million. We are talking nearly three times the borrowing by New Zealand dairy farmers under banks such as Westpac yet the equivalent debt across the Tasman is about a third of the New Zealand figure. That says to me that there will be consequences. When farmers are paying only $30 a week in tax they are able to pay perhaps only $1 out of a $7.50 return from a kilogram of milk on principal if they are lucky. That is if the prices hold up and that of course is not guaranteed. I acknowledge that this bill does not deal with those issues. We leave the prudential management to the Reserve Bank but it is still worth noting those points. 
This bill is about having regard to the Reserve Bank’s policy of local incorporation. That is a very sound policy. We want to see banks with as much of a New Zealand component as possible and this bill is transferring some of the assets held by the broader Westpac Banking Corporation through to the New Zealand arm. This will underpin the financial viability of Westpac New Zealand. 
AMY ADAMS (National—Selwyn) 
: 
 I move  
That the question be now put 
. 
Hon SHANE JONES (Labour) 
: 
 Tena koe Mr Chair. I stand now at a quarter to 5 to make a contribution on this private bill the Westpac New Zealand Bill. I go back to the year 2000 when the Reserve Bank originally announced its intention in respect of a requirement of our banks especially those that—well we do not have any serious banks other than Kiwibank—could at this stage be what we might call Kiwi indigenous banks. Of course Kiwibank faces the threat of privatisation of sale as a consequence of the current Government but that is another matter. 
When the incorporation policy was originally introduced it was designed to deal with systemically important banks. There was a sense that if banks were large enough to materially affect the operation of the financial sector as a whole they needed to be incorporated here in our country so that the people who might suffer—perish the thought—in a run on a bank and a collapse of that bank had access to the assets and that the parent company would be unable to wriggle off the hook. Not that I am suggesting that the Aussies would do that to us but who knows. Secondly it was designed to deal with the issue of those banks that take a significant level of retail deposits that come from our own contributors and to ensure that at the point of a winding up the deposits remain available for those of us who have had the privilege the good luck or the fruits of good stewardship and who enjoy savings—savings that may be soon to disappear as a consequence of foolish decisions likely to be revealed tomorrow but that is another matter. 
It was pointed out that the Australians and the Americans had this standard in their banking sector so it was not unrealistic that New Zealanders should embrace it. It is rather strange that we should be focusing on the Westpac Bank because no one fought this more doggedly than Ann Sherry the chief executive officer in the early period of time who felt that it was an overreach that it was far too intrusive and that no Aussie bank would turn its back on Kiwi depositors etc. A great debate went on during that period of time. I cast no personal aspersion on that woman who is currently running a successful cruise line company but during her period of time there was spirited defence of the position and not surprisingly it is an expensive exercise when a bank has to go through this incorporation process. 
I am talking about points that were announced in 2000. We have lived through the last 3 to 4 years and we have seen how close we came as a country with our banking sector clogging up and other countries far richer than ours suffering runs on their banks. Full marks go to the advisers and the governorship of the Reserve Bank who contemplated at a time when none of us thought that we would go through the kind of economic downturn that we are now suffering. 
This is technical legislation and we have no compunction whatsoever in standing with our colleagues on the other side of the Chamber to support it. Indeed I think I was the chair of the Finance and Expenditure Committee in 2006 when we dealt with the first dare I say it variation of this legislation. 
It is important when dealing with the preamble that we isolate one of three things so that those MA students of the future look back to the contributions that are made today. Unfortunately these contributions will be overshadowed by the negativity of tomorrow. I repeat one of three things that were said by our colleagues: it is a vesting of liabilities and assets. It is about the stability—or should I say the solidity—of the system. A number of those assets and a number of those liabilities pertain to a sector that the front page of the  
Dominion Post  
has accurately captured this morning. It is extraordinary when we are talking about the banking sector—the assets and liabilities and the concerns about the importance of incorporation—that members opposite are not making any reference to the large burden that lies on the banks’ balance sheet from the farm sector. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I have been really looking forward to the opportunity to participate in this debate because it has been such a fascinating one to follow from the outside. I do not serve on the Finance and Expenditure Committee so I was quite puzzled to see legislation on the Order Paper that looked as if it was doing exactly what had been done in 2006. To travel on this journey from a distance and see how the bill has got to this point has been quite fascinating. 
I should declare a conflict of interest. I am a customer of Westpac. I have been for many years. I signed up to the Bank of New South Wales when I was a university student at law school at Canterbury University and that was when I first became somebody. I previously had a banking account with Trust Bank Canterbury. The two banks that I had accounts with merged to form Westpac so I have been with it really for all my adult life. 
I know that my colleague has traversed the approach of the Reserve Bank to the local incorporation policy but what I found particularly interesting was that when the Reserve Bank was undertaking its discussions about bringing in the local incorporation policy a study was undertaken on whether Westpac Banking Corporation would be able to find an alternative to local incorporation. I am not sure whether members in the Chamber are aware of that. Westpac proposed in the initial stages to bolster its branch operation in ways that it felt would mitigate the risks that the Reserve Bank was seeking to address with the local incorporation policy. Unfortunately for Westpac though in those circumstances the Reserve Bank determined in late 2004 that Westpac’s proposal would not constitute an acceptable alternative to compliance with the policy. Therefore it required that Westpac operate in line with the local incorporation policy. It was out of that decision that the 2006 legislation occurred and that confused me as to why we had the second bill. 
When I was looking at the preamble I also noticed that there had in fact been previous regulation which had seen the assets and liabilities transferred from Westpac Banking Corporation to Westpac New Zealand. Then I realised that this bill is about another step which is the institutional business. The institutional business has been run by Westpac Banking Corporation which is the parent company as a branch through its New Zealand operation. But now we are transferring the liabilities and assets of the institutional banking arm to Westpac New Zealand. Have I got it? I have got the thumbs up from the chair of the Finance and Expenditure Committee and I do not think I can expect better than that. As I said I have been studying this for quite some time—all of half an hour—and it has certainly been an important journey to traverse. 
A point that is well worth making is that one of the reasons why Australia and as a result New Zealand was spared some of the excesses that were poured across the world by the financial services sector—and the banking sector in particular—in terms of the global financial crisis was Australia’s four pillars policy. Australia owes great thanks to one Paul Keating who I think will go down in Australia’s history as having provided the stability that the country needed not only with the four pillars policy but also with its superannuation policy which we jealously observe from this side of the Tasman. We look at the amount of available capital that has been amassed and the depth of its capital markets which is in part attributable to that. When we look at the local incorporation policy coupled with the strength of the Australian banking system we see that it is not an absolute protection but that it is a much better protection. It perhaps would not have been the absolute protection against the fall-out from the global financial crisis if the Australians had not required that their four banks be Australian owned totally locked down. 
If we look at what happened internationally we would assume that the behaviour of banks would be without question. But in fact the way that banks behaved internationally which brought the world the global financial crisis is a disgrace. It is a disgrace that the people who worked in those professions allowed investors and savers as investors to be exposed to the true risk and the level of risk without any compunction and without any genuine attempt to address the pillars I believe of any banking system which has to be based on absolute trust and integrity. Those institutions of the world let down the people of many many countries. New Zealand and Australia were spared the excesses of that largely because of the ownership of the four banks within Australia and because our own local incorporation policy would have acted as a backstop protection had that been required. 
I am very much in support of seeing the shoring up of the activities of Westpac. The work of its institutional banking is now being brought squarely and fairly within the frame of Westpac New Zealand bringing on board those assets and liabilities within the New Zealand - incorporated structure. I believe that will strengthen the New Zealand structure and will act as a better protection. 
I think the chipping I received from the member opposite—I cannot remember his name—related to reference to the finance company failures we experienced. That was not part of the global financial crisis but some of the issues were exactly the same. For example people did not know the level of risk to which they were exposing their hard-earned money. Although we ended up with the Crown Retail Deposit Guarantee Scheme sitting in behind the banks the first time round in actual fact if one looks at where the stability was really required one sees it was with the non-bank deposit taking sector which was I am afraid without all of the protections. If there was a revisionist opportunity then maybe I would have looked very carefully as to whether the Crown Retail Deposit Guarantee Scheme should have been so widely available to the non-bank deposit taking sector. 
What has been fascinating to me is watching what has happened with the extension to the Crown Retail Deposit Guarantee Scheme that occurred late last year and seeing who took it up. The banks did not need it. They did not go near it. Who took up the retail deposit guarantee the next time round? South Canterbury Finance and a few others. One has to think very carefully about the message we send with some of the policies that are developed. To be quite honest whether or not one agrees with the original decision about making that scheme available to the non-bank deposit taking sector the reason it was vital for the banks was— 
Amy Adams 
: How does this relate to the Westpac bill? 
Hon LIANNE DALZIEL 
: Because it covered Westpac New Zealand and that is entirely the point. The whole policy—[ 
Interruption 
] Well I will take another call as a result of that. I had almost finished but I have now been interrupted so many times that I will have to take a further call to explain why what I am saying is entirely in order for the debate on this bill. The reason is that the Reserve Bank set up the local incorporation policy for strategic banks and the reason they were strategic was the amount of the retail deposit sector they had. Therefore talking about the Crown Retail Deposit Guarantee Scheme is entirely in order in relation to this bill. 
Given that Amy Adams wishes me to contribute much much more to this debate I shall go back to the point I was making. The point I was making was that whether or not one agreed with it the banks had to have the Crown Retail Deposit Guarantee Scheme put in place. 
AARON GILMORE (National) 
: 
 I move  
That the question be now put 
. 
Hon DAVID PARKER (Labour) 
: 
 The point I want to have some more information on from the member in the chair Craig Foss on this occasion is the preamble to the Westpac New Zealand Bill we are considering. Recital (5) states: “Legislation is the only means by which these assets and liabilities of Westpac Banking Corporation can be vested in Westpac New Zealand efficiently and economically.” When I read the phrase “efficiently and economically” I wondered what was meant by it. So I looked at the report on the bill that came from the Finance and Expenditure Committee and it says no more than that; it just states that legislation “is the only means by which the vesting of these assets … in Westpac New Zealand can be effected efficiently and economically”. The preamble states that and then the explanation from the Finance and Expenditure Committee in the commentary on the bill does not say what that means in practice. Does that mean it is the only way that it can be done tax-efficiently? If that is what it is talking about I want a bit more information about that because we have had on occasions the banks of New Zealand in New Zealand avoiding their fair tax liabilities and having to be taken through the courts before they will pay the proper amount of tax on their profits despite the fact that they have made many billions of dollars of profit in New Zealand. I have no problem with them making profits in New Zealand but when they do they should pay the proper amount of taxation. 
The reason that I inquire about this is that if we are going to be transferring assets across it is relevant as to the price at which they are going to be transferring those assets. I want to make sure that what is economically efficient from a tax point of view for the bank is actually fair to the New Zealand tax system. If banks are able to sell those assets in an excess of their value and revalue them in the future or realise the loss on those assets in the future then that therefore decreases their future profitability because they have effectively transferred those assets in at an inflated value and realised the loss that they have then used to offset against their New Zealand - based income and they would be able through that means perhaps—and I am not sure about this—to deflate their future income and therefore reduce their future tax liability under the New Zealand tax system. 
If that is what is meant by “efficiently and economically” then I am not sure that I agree with it. But I am not sure whether it is so I would like the member in the chair to clarify that for me because the report back from the Finance and Expenditure Committee sheds no light on it whatever and just parrots the phrase that is in the preamble itself—that is it asserts that it is the only way that it can be done efficiently and economically but does not tell us why that is the case. If the Minister—I mean the member—could please take a call— 
Craig Foss 
: I like “Minister” better. 
Hon DAVID PARKER 
: Well unfortunately that might be a bit premature at the moment. Could the member please take a call. I would hope that the member in the chair as the sponsor of this bill can inform the Committee as to why it is the only means by which this can be done efficiently and economically. He could tell the Committee what protections are in place to make sure that those assets are not transferred at an inflated value that puts at risk future tax revenue that would be properly payable on future profitability of the banking sector. 
I will turn to another sector while I have the floor. Yes it is true that the New Zealand banking sector performed better than some other sectors but it was not perfect. It did actually require a bank guarantee and it did require the Reserve Bank of New Zealand to step in and purchase bundles of securities from the banking system because the banking system could not roll over loans to support those securities that they had out in the New Zealand markets. Although it is true that the New Zealand banks did better than certain overseas banks it is not true that they were not in need of some Government support. They did require the guarantee of the New Zealand taxpayer in respect of deposits both at wholesale and retail levels and they did require the intervention of the Reserve Bank to maintain liquidity by buying bundles of securities from banks so they could use those moneys to repay loans to their overseas lenders. 
Yes it is true that the banking system was relatively sound in New Zealand compared with some of the problems experienced in other parts of the world but it is not true that they were not in need of Government support and I would just like to put that on record given some of the things that have been said in praise of those banks. It is not a criticism of those banks; I just want to put it on record that they were not perfect either. It would have been worse had they in terms of the risk that was faced by New Zealand depositors in the event of default by the bank had the— 
COLIN KING (National—Kaikoura) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
Preamble agreed to. 
The result corrected after originally being announced as Ayes 118 Noes 4. 
Part 1 Preliminary provisions 
Hon DAVID PARKER (Labour) 
: 
 The voting on the preamble bemuses me completely in respect of the Maori Party. Maori Party members have not taken one call in the debate and they did not participate in the select committee process to any meaningful degree. It seems that the members of the committee were unanimous in reporting back in favour of the Westpac New Zealand Bill. Rahui Katene the person who cast the vote on behalf of the Maori Party was according to the commentary I am reading on the Finance and Expenditure Committee and she did not express any concern about the bill according to the select committee report. But that is a case in point of how the Maori Party runs business in this House. On all of the big votes it props up the National Government despite the fact that National— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! 
Hon DAVID PARKER 
: —is undermining the interests— 
The CHAIRPERSON (Lindsay Tisch) 
: Clauses 3 to 5. 
Hon DAVID PARKER 
: Mr Chairperson I had not finished my sentence. On all the big votes it supports the Government—on motions of confidence—and then when we get down to a tintack bill like this one and like Part 2 of this bill the Maori Party stands up and thumps its chest as if it is independent and represents the interests of Maoridom. What a farce—what a farce. 
I am looking at Part 1 which deals with the purposes of this bill and I cannot see anything from the Maori Party criticising it. So I look forward to seeing whether we have a contribution from the Maori Party as to what its principled objection is to Part 1 which causes it to vote against parts of the bill. Was it just a mistake by the member? If it was the member is free to take a call and seek the leave of the Committee for the Maori Party to re-record its vote. But I suspect it will not because it is all about posturing; it is not about principle in respect of that party. The reality that those members cannot escape is that a vote for the Maori Party is a vote for National. We will be reminding electors of that. 
The purposes of this bill include the vesting of certain assets and liabilities. The assets and liabilities include a wide range of assets which Stuart Nash has previously referred to. The question I ask in respect of the preamble which the member in the chair has not answered is whether those assets will be transferred across at an inflated price and whether that leads to the future tax revenue from the banking sector through those assets being realised at a lower price and therefore causing a loss to the bank which the bank can claim as a loss for tax purposes against future income. Was that risk considered at the select committee? 
The committee’s report as I have said is very brief and runs to only two pages. It just parrots the provisions in the bill rather than critically providing advice on that particular point. I would have thought that the member in the chair who is in charge of the bill and is asking Parliament to pass legislation that may impact on future tax revenues for the Government had information on that point to share with the Committee. I ask the member where it is in Part 1. I might have the wrong part and he might say that the issue is dealt with in another part. In any event I want the member to respond as to how we guard against these assets being transferred across at an excessive price to cause a future write-down which creates a taxable loss for the bank and therefore reduces its tax liabilities in New Zealand. 
I am also interested in whether the select committee received any submission from the Australian revenue authorities about whether these assets were being transferred across from Australia to New Zealand at higher values than they are shown at on the Australian books. That might be tax effective for Westpac but it might not be fair on the Australian Government. I just want to see what is happening in respect of tax issues. I am somewhat suspicious here because we have had a pattern of conduct of the banks minimising their tax liabilities to the tune of many hundreds of billions of dollars. They were forced to pay them only following court action in New Zealand courts which found that the banks had been improperly paying lower amounts of tax. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to speak to clauses 3 to 5 which are the preliminary provisions of Part 1 of the Westpac New Zealand Bill. The purposes of the bill as set out in clause 3 provide for the vesting of certain assets and liabilities—as we talked about during the preambular discussion—in the locally incorporated Westpac New Zealand. The genesis of this policy goes back to a review announced on 27 September 2000. My colleague Mr Shane Jones has provided me with this little romp down memory lane and it confirms what we have said before. It confirms that the genesis of this policy was around improving the security of the New Zealand banking system. It does so by requiring under the revised policy banks in the following categories to establish a locally incorporated subsidiary for their New Zealand operations: banks that are either systemically important which Westpac New Zealand certainly is; and/or banks that take a significant level of retail deposits and come from countries that give home country depositors a preferential claim on winding up which includes both the United States and Australia; and/or banks that take a significant level of retail deposits and which in their home countries fail to publish the full information that depositors would need in order to assess financial soundness. In other words this policy is a back-up to ensure that New Zealand depositors have a reasonable expectation of stability and certainty in the market place. 
The policy is intended to help the New Zealand Reserve Bank manage a crisis affecting a systemically important bank. There are both good and not-so-good things to recount about recent financial history in New Zealand. The not-so-good thing is that New Zealand was not immune from the global financial crisis which occurred very visibly in September 2008—2 months before the last general election. Lehman Brothers collapsed the Bank of America was in trouble the world’s largest insurer started breaking up and the world credit system all but froze. What we are fortunate about the good news if you like is that of the about 13 triple A rated banks in the world five of them are Australian and four of them operate in the New Zealand market. So we did not have quite the same level of system risk but let us not be under any illusions. If the world credit system had frozen and if world central banks had not responded immediately with a credit infusion VISA cards and MasterCards would not have worked. Every New Zealander would have been affected and they would go to the ATM and it would not work either. There would have been panic here as there would have been around the world. We missed that bullet by a whisker; and it could happen any day. It could still happen any day. 
I want to compliment the New Zealand Reserve Bank. It responded in an absolutely exemplary manner. I think that all New Zealanders owe the bank a debt of gratitude. I think that the system in New Zealand worked as it should and it worked both pre-crisis and during the crisis. It worked because we had what in global financial circles is known as plain vanilla banking. It sounds not that exciting but actually it means that banks make their money the old-fashioned way by taking deposits and lending and earning interest on that lending rather than coming up with fancy derivatives like collateralised debt obligations or CDOs which mixed high-risk mortgage debt which was worthless with regular debt securities with the ostensible aim of spreading the risk but with the actual effect of magnifying the risk—in the United States by a factor of over 100 times so that the total bad debt was many times the size of the United States GDP. That was the effect and it was like a financial nuclear reaction. But New Zealand missed that part of it because we had a Reserve Bank that was exercising good prudential control and oversight and we had a system of major banks for which derivative trading was a very small part of their portfolio. So that was both the bad news that we were not exempt and the good news that we were in a sounder position than we might have been compared with some other countries. 
This bill is part of the foundation stone which will be there should another event like that God forbid ever occur again. I said a couple of minutes ago that it could occur at any time and I do not want to be pessimistic and I do not want to undermine confidence in our banks which are all in excellent shape. There is no reason to doubt Westpac there is no reason for New Zealanders to doubt any of the other major banks including Kiwibank but it is also true that there is an enormous set of imbalances in the global economy which we are part of. In the Western hemisphere there are trillions and trillions of US dollars of debt and in the Asian realm particularly with China and also increasingly with India and other countries like Korea there is a build-up of significant trade and financial surpluses. So America is not exporting enough and is importing too much; China is exporting a lot helped by an artificially low— 
The CHAIRPERSON (Lindsay Tisch) 
: I would like to hear “Westpac” mentioned occasionally. 
Hon DAVID CUNLIFFE 
: It is banking with Westpac on occasion. No doubt Chinese companies are banking with Westpac but anyway I will cut a long story short. Those risks have not gone away. Those imbalances are still getting worse and unless the world works together to overcome them sadly there is a real risk that the safety mechanism which is embedded in this bill might one day be called upon. I hope that is wrong I hope we never have to do that because in the end it is our whole country our whole economy and every New Zealander who is vulnerable. We do not want that but we are glad we have the banking police on the job—that is the full-service empowered New Zealand Reserve Bank. 
It is Labour’s policy that the Reserve Bank should remain a full-service bank that it should remain independent and that it should remain tasked with system stability as well as price stability. If anything our monetary reform package is designed to ensure that the system stability objectives of which this bill is a part are elevated so that everybody knows that the Reserve Bank is not just there to control inflation; it is there to protect the system. In protecting the system it has to have regard to more than just price stability. Financial stability underpins growth and employment objectives as well. Labour has given notice that we will update the Reserve Bank of New Zealand Act and the policy targets agreement to incorporate the best of the new global thinking that is coming out of the Basel Committee on Banking Supervision. People have heard about Basel II; there is now Basel III. Things like macro-prudential policy and so forth we have discussed at length at the Finance and Expenditure Committee which is the same committee that has passed this Westpac New Zealand Bill. The Chair is getting comfort from that. That is another long story cut short. 
The Labour Opposition supports the Westpac New Zealand Bill 2010. It is called that because there was a 2006 predecessor but one that was not fit for purpose for this bill which operates under the requirements set out by the Reserve Bank since September 2000 as I outlined earlier in my remarks. This is a small but positive contribution to enhancing the system stability of the New Zealand banking system. Westpac is a reputable and well-managed bank and continues and will continue to play a meaningful role as part of the broader New Zealand economy. The Labour Opposition commends the bill to the Committee. We will be supporting clauses 3 4 and 5. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I am keen to take a call on Part 1 of the Westpac New Zealand Bill because I want to get on record what may not be apparent to people who have been listening to the debate. I know that one person came down to the House for a debate on banks thinking that it was on Banks’ announcement of his bid for the ACT Party candidacy in Epsom. They were disappointed to find out that the debate was actually about Westpac Banking Corporation so there you go. 
My understanding is that Part 1 has the definitions which help us clarify exactly who we are talking about. Westpac Banking Corporation is the corporation that is “incorporated in New South Wales Australia under the Corporations Act 2001 of the Commonwealth of Australia”. What it operates in New Zealand is a branch which calls itself the Westpac Banking Corporation New Zealand Branch. That is the branch that at the moment operates the institutional banking arm of Westpac. That branch is being transferred to the organisation known as Westpac New Zealand which is Westpac New Zealand Ltd and which is incorporated in New Zealand under our Companies Act. I think people have missed out on that distinction. I was interrupted by a member opposite while I was trying to traverse that issue earlier on but I just want to see whether I have got it right. 
I do not understand why the 2006 legislation that provided for the retail arm to be transferred from the branch to Westpac New Zealand was so narrow in its ambit that it allowed for only a one-off regulatory intervention to transfer the assets. It seems to me that if the legislation had done that for a further set of assets and liabilities then we would not be here debating this bill; we would just simply have passed a regulation and that transfer would have occurred. I do not know whether the member in the chair Craig Foss has some knowledge of the history of this issue. I am very mindful of the fact that it was the Hon Marian Hobbs whose name the 2006 legislation was in. 
Hon Member 
: Absolutely correct. 
Hon LIANNE DALZIEL 
: I think that at that time we had a general discussion as to why the legislation was required but I do not know that we ever had a debate in the context of that legislation as to whether a further transfer of assets and liabilities would require other entirely new legislation to be referred to the Finance and Expenditure Committee and go through the legislation process. 
I have the benefit even though I did not serve on the select committee of having in front of me Westpac’s submission to the select committee. Of course it has been very instructive. A number of comments were made about tax liabilities. The issues I have looked at were that Westpac as I understand it approached the Inland Revenue Department. I do not know whether the select committee looked at that and got independent advice from the Inland Revenue Department. Westpac sought to ensure tax neutrality as part of the seamless transition from one to the other. Perhaps the member in the chair might like to put that on the record because the issue of tax liability has been raised in this respect. 
The second issue that has been raised in this Chamber is on the nature of the legislative intervention that is required. Again the member in the chair could provide us with a little bit of background. If further transfers are to happen in the future does that mean that there has to be more legislation? Will this have to be the practice for all the strategic banks any time they get into a situation where branch activities that are still owned and operated by their parent companies fall within the ambit of the new local incorporation rules which have been set by the Reserve Bank? I think they are fair questions to put to the member in the chair. I think it is time he contributed to the debate on Part 1. They are two very good questions that he could respond to and generate some enthusiasm into this debate. 
STUART NASH (Labour) 
: 
 I am sorry; was the member in the chair Craig Foss going to take a call? For a minute there I saw him writing away furiously and I thought he was going to stand up and address some questions that Lianne Dalziel had asked which were all very relevant. 
I will pick up on one of David Parker’s points if I may at the beginning of my speech. I sat on the Finance and Expenditure Committee as did the member in the chair. There was not much debate on the Westpac New Zealand Bill but there was very healthy discussion on the meaning of all parts of the bill Part 1 included. There was consensus and officials explained how it would work etc. The Maori Party often did not have someone at the committee but the Maori Party voted against the preamble. I would have thought that if at some point the Maori Party had concerns— 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot make comments about the absence of a member. I bring the member back to the bill. We are on Part 1. It is a very narrow part and has only three clauses—clauses 3 to 5. I ask the member to concentrate on them. 
STUART NASH 
: We are talking about Part 1 which really is quite an important part of the bill because it sets out the purposes of the bill and the interpretation. I was very surprised when the Maori Party voted against the preamble. I thought there was consensus. I assume the member in the chair— 
Hon David Cunliffe 
: They voted for it in the select committee. 
STUART NASH 
: Yes they did. The member in the chair would have assumed consensus and I am sure he reported back to Westpac— 
Rahui Katene 
: I seek leave to amend the record to show that the Maori Party supports this bill. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought for the Maori Party to amend its vote on the preamble. Leave is sought for that purpose. Is there any objection? Would you like to tell us what you want to achieve? 
Rahui Katene 
: Four votes in favour. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave has been sought; no one has objected. It is very clear: leave has been sought for the Maori Party to amend its vote on the preamble. Leave was sought; there was no objection. The Maori Party vote will be amended accordingly. That is the end of the matter. It means that the vote on the preamble was unanimous. We do not need to put the vote again. It was unanimous and a party vote will not appear on the record. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. This is now an interesting situation because before the leave was put I was about to clarify matters such as whether there would be an opportunity to debate the Maori Party’s seeking to amend its vote and— 
The CHAIRPERSON (Lindsay Tisch) 
: No there is not. The member will sit down please. There is no debate on the leave. The Committee can either accept it or reject it. I put the leave no one objected and that is the end of the matter and there is no further debate on it. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. That matter having been settled Mr Chairperson the next matter relates to how the record will read given that the leave motion has been part of the proceedings— 
The CHAIRPERSON (Lindsay Tisch) 
: I have just said how it will be. It will appear in  
Hansard 
 as a unanimous vote. We do not have to put the vote again because everybody has agreed. That is what the record will show. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. Can I therefore seek clarification as to whether these points of order or other comments in relation to the Maori Party’s position on the bill will be expunged from the record or whether they will they remain in  
Hansard 
 notwithstanding the fact that the leave has been accepted and the vote itself will be shown as unanimous. 
The CHAIRPERSON (Lindsay Tisch) 
: The record will show that no party vote took place. I refer members to Speaker’s ruling 68/4. In regard to the points of order that have been raised in relation to the seeking of leave I am seeking advice on that matter and I will come back to members. 
Hon Steve Chadwick 
: I raise a point of order Mr Chairperson. Without being difficult on this subsequent to the initial vote by the Maori Party members on our side raised concern about that vote and we do not want that in  
Hansard 
 if now the Maori Party is changing its vote. I think that is the point my colleague is making. 
The CHAIRPERSON (Lindsay Tisch) 
: I hear what the member is saying. The comments that have been made will stand. The member is bringing to my attention points that her party made during debate. Those comments will stand. They are in the record as are the other comments. 
STUART NASH 
: I thank the Chair and Ms Katene. It is good to hear that the Maori Party is supporting this bill but I think no one is more thankful than the member in the chair Mr Foss because otherwise at some point he would have to go to Westpac and to the Maori Party and try to figure out what part they did not like. But that is now sorted and that is very good. As has been mentioned I thought that this bill had gone through unanimously. It received robust debate but not a lot of debate. 
I come back to Part 1. As I mentioned previously the gist of this bill is in clause 3 and clause 3(b) talks about “the efficient conduct of Westpac’s New Zealand business.” But of course this is not about just Westpac’s business. Even though legislation is the only way that this matter can go through it is also about protecting the requirements of Westpac’s customers’ business. 
One of the most interesting things about this is the interpretation of assets. Clause 4(1) states: “assets means property of any kind whether tangible or intangible real or personal” etc. Clause 4(1)(a) refers to “estates or interests in any land including rights of occupation of land or buildings;”. The question I would like to ask—and it is a difficult one to answer—is how Westpac will account for the Crafar farms for example. My understanding is that Westpac was the major lender for the Crafar farms. I wonder how the issue will be dealt with. Will it be dealt with as an interest in the land? Is it a liability in the land? How will it be accounted for? Will the Reserve Bank look at the asset register and count the Crafar farms as an asset or will it look at its liabilities and count them as a liability? I must admit that this goes to the heart of the whole debate on farming. 
As we know the Reserve Bank has put in place new liquidity provisions in relation to increased money held by banks against loans to the agricultural sector. So the Reserve Bank has major concerns about the level of debt which I think is sitting at about $42 billion at the moment across all banks. The Reserve Bank has major concerns about the level of debt against the agricultural sector and that is why I bring up the point of what is an asset and what is termed a liability. 
The Crafar farm issue is a big deal. We are told that the value of some dairy farms has dropped by up to 30 percent and that other dairy farms have actually increased in value over this global financial crisis. At some point because it says this in the legislation when the Governor-General signs off on this—and we will talk about this in Part 2—a line will be drawn in the sand and Westpac’s assets and liabilities will have to be assessed. That will probably be a major task and I am unsure who will undertake it. Will it be Westpac will it be the parent company or will it be the Reserve Bank? If we come down to liabilities clause 4 states: “liabilities means liabilities debts charges duties and obligations of every description (whether present or future actual contingent or prospective)”. That is how we understand liabilities but again David Parker brought up a very good point. How will these liabilities be accounted for on the Westpac balance sheet? I have no doubt that in this economic climate there are a lot of liabilities out there that the bank must be very concerned about. If we look at the equity held in some dairy farms especially the dairy farms that have dropped in value by up to 30 percent which is the figure given to me by one of the banks then we have to wonder what impact it has had on Westpac’s asset register and liability register. 
I would like to question some of the other asset terms as well. Clause 4(1)(f) specifies “goodwill and any business undertaking”. I am not too sure what “any business undertaking” means but we can guess about that. But as to the valuation of goodwill there was a classic case where Rolls-Royce put a value of $1 or £1 on its brand. It did that because it knew that the brand had value. The company knew that the Rolls-Royce brand was worth something but it had absolutely no idea how much it was worth. By putting a dollar on that brand on its balance sheet it signalled to the market that it knew the brand was worth something but it could not quantify the value. That was a while ago and I know that advanced accounting practices include models to value goodwill but it is an interesting point. I wonder whether the Reserve Bank values goodwill using a different methodology or the same methodology as the Westpac Banking Corporation. It would be interesting to know what value goodwill has on the asset register of Westpac. 
Another matter relates to clause 4(1)(e) “intellectual property and applications pending for intellectual property:”. Intellectual property does have a definition in this bill and it is one of the few assets that are defined. I suspect that is because we are moving in a fast-changing world. The 21st century was completely different from the 20th century with patents and all sorts of carry-on. We have had patent legislation go through this House and it is fraught with difficulties. Clause 4 states: “intellectual property means all patents designs copyright know-how trade secrets trade marks service marks and other intellectual or industrial property rights of any kind and any rights in relation to them”. A very interesting question relates to how we value a trade secret. In fact how do we even acknowledge a trade secret? Would a bank have on its balance sheet or asset register $5 million worth of trade secrets? If the Reserve Bank came along and saw that figure I wonder how it would account for it. Would the Reserve Bank say: “We need to audit your accounts. You have $5 million worth of trade secrets on your asset register. Can you please show us.” Of course Westpac would be absolutely reluctant to lay out what its trade secrets are because no organisation or institution would ever let an independent institution understand its trade secrets. So it is a little unusual that it is in here. But the fact is that trade secrets could be on the asset register and we must remember that this is specific to Westpac New Zealand. This legislation is not about all trading banks or wider than that. It is about Westpac New Zealand. The fact that this legislation includes trade secrets in the definition of intellectual property means that there is a high probability that trade secrets are on the asset register. I could be wrong. Maybe the member in the chair can clarify this. Maybe a definition of intellectual property must be in the interpretation clause of every finance bill and this is just the standard definition that has been taken from other bills that include an intellectual property clause. But the valuing of trade secrets is very very interesting. 
There are other complications—not complications but I suppose questions—in respect of the definition of assets as “chooses in action and money:”. I am a businessman and— 
Amy Adams 
: Choses in action. For once get it right. 
STUART NASH 
: I am not too sure what that exactly means and I suspect that Amy Adams will stand to speak. 
Amy Adams 
: I did a law degree Stuart; you clearly didn’t. 
STUART NASH 
: Amy Adams shouts across the Chamber. She said that people in the Labour Party have not run a business or contributed to any productive enterprise. Well if I am right Amy Adams is a lawyer. In fact I have no doubt that Amy Adams was one of the people who set up a whole lot of structures that allowed farmers to pay about $1500 in tax. In fact if I understand correctly from the Register of Pecuniary Interests of Members of Parliament Amy Adams has about three houses and a number of farms. I am very keen for Amy Adams to stand up and take a 10-minute call before the dinner break to explain all those things. Because she is a lawyer I have no doubt that she can answer every question that has been put by the Hon Lianne Dalziel. She can answer every question that has been posed by David Parker. In fact Aaron Gilmore is now shouting across the Chamber. 
AMY ADAMS (National—Selwyn) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
Part 1 agreed to. 
Part 2 Vesting of designated assets and liabilities in Westpac New Zealand 
CRAIG FOSS (National—Tukituki) 
: 
 Some issues were raised in the debate on the previous part that are pursuant to Part 2. As I noted earlier the start of the Westpac New Zealand Bill rests very very heavily on the earlier 2006 Act in the name of the Hon Marian Hobbs which is where the definitions that the previous speaker Stuart Nash talked about were all prescribed. That member’s party and I think the whole Parliament at the time agreed with those definitions. One other point that has been raised is why we are having this bill now and whether there will be another one. There could be another one; I do not know. The Labour members in particular of the Finance and Expenditure Committee will know and they may want to share with their colleagues that the liabilities cap was originally NZ$10 billion when Westpac was originally incorporated here. It was extended to $15 billion in 2007. Westpac is well within those caps generally but through the global financial crisis in 2009 there was an issue and the asset/liability mismatch started to throw that out of whack. Therefore the whole point of this bill is to add assets and liabilities to the security of Westpac New Zealand Ltd taking those assets and liabilities from the Westpac Banking Corporation’s New Zealand institutional bank. 
Finally a very important point and one I am sure colleagues on the Finance and Expenditure Committee would like to share with their other colleagues is that questions have been raised about tax definitions and tax issues in Part 2. I refer members to clause 21. For the record I would like to read it: “The purpose of sections 22 and 23 is to ensure that the vesting of the designated assets and liabilities in Westpac New Zealand under this Act does not give rise to tax consequences under the Inland Revenue Acts for Westpac Banking Corporation or Westpac New Zealand that would not have arisen if they were the same person.” Members will also note that we took comfort at the Finance and Expenditure Committee from letters from the Inland Revenue Department as well as the Reserve Bank etc. 
Another point to note is that the Reserve Bank is very satisfied with where this bill is at regarding these various definitions and clauses. Of course Westpac Banking Corporation is Westpac New Zealand Ltd and essentially under tax they will be treated as the same entity for the purposes of this bill. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I will get in quickly ahead of my colleague the Hon Lianne Dalziel because I want to refer to her previous speech and also to the member who has just resumed his seat Craig Foss. 
Part 2 of the Westpac New Zealand Bill is in a sense the operative part of the bill. It provides for the vesting of designated assets and liabilities into Westpac New Zealand from and on behalf of Westpac Banking Corporation. Just to reiterate the very helpful clarification that the Hon Lianne Dalziel made earlier—which was faithfully represented by the chairman of the Finance and Expenditure Committee who has just spoken—it is important to make the public aware that Westpac Banking Corporation is the parent and the institutional bank assets are part of the parent. They are under this bill able to be vested in or transferred into the ownership of Westpac New Zealand which is the New Zealand - domiciled branch. 
It would be useful if the member in the chair could get a little more background on the record for the public about the circumstances during the global financial crisis in which a cap was breached which led to in part this bill being required. I may not have been present on all of the days on which this bill was considered by the Finance and Expenditure Committee and I cannot recall in great detail that background so I think it would be helpful to the Committee to get that elucidation from the chair of the select committee. 
I compliment the Hon Lianne Dalziel. I thought her previous contribution absolutely crisply and sharply showed exactly the transfer mechanism that is portrayed in this bill and summarised very succinctly the reasons for it which we as a Committee have gone into during this debate. It is at two levels. It is at the level of the bank itself and the transfer mechanism and it is at the level of the broader context both of the banking system the regulators around it and the broader economic context within which that operates. 
In my brief contribution to debate on the previous part I noted that although the risk factors that were very acute during 2008 and 2009 have subsided they have not gone away. The macroeconomic imbalances around us and we might add the commodities boom—which dairy farmers in particular are the current happy beneficiaries of and which has been driven by the rapid industrialisation of our East Asian neighbours in particular who are hungry for the resource inputs to their economies including protein products which this country excels at producing—carry risks. If the imbalances get too great and confidence is lost in the transaction system credit could again freeze. I understand from very reliable sources that over the last couple of months there have been signs of real stress in some of those clearance markets. I think all New Zealanders need to understand that it is very very important that we manage carefully for the future. 
For that reason the Labour Opposition supports the Government’s intention to carefully manage fiscal resources and to reduce debt. It is the Labour Party’s view that we need to reduce debt very considerably over the medium term. We think net debt is a better measure than gross debt. We think we should include Crown financial assets in that measure. But we are I think relatively close on that objective. 
The difference—and it is an important one—is that for the Labour Opposition debt reduction can never be an end in itself and it cannot be divorced from the other macroeconomic changes that are necessary to support both economic stability and system stability which is where we intersect again with this bill. Those changes include building a stronger more diversified more innovative and higher-value export economy. They include strengthening our savings system and our banking system so that we own our own future. They also include making sure that there is enough disposable income—in the jargon of the subject “readies in the pocket” of ordinary Kiwis who are always extraordinary hard-working families—to ensure that the purchasing power is there to keep the country moving forward as well as to feed their families. 
That adds up to I think four interlinked objectives: building the economy owning our future helping the Kiwis concerned to get ahead and of course having the fiscal prudence that must underlie the economy. That is how we reduce risk in our domestic economy; that economic stability needs to underlie the financial system stability that is part of this bill. 
Going back to this particular part I tell members that clause 6 provides for the Governor-General to approve the proposal to vest designated assets and that subclauses (2) and (3) allow those assets to be stated either in whole or in part. That may be important because the institutional banking arm of the parent may not wish to vest the whole of a very large set of assets for some practical business reason in the New Zealand branch. 
Under clause 7 the Governor-General may approve amendments to a proposal. That is important so that this becomes a dynamic process not a static one and so that the vesting of designated assets and liabilities occurs in the way described in the proposal which is transparent. Under clause 9 the process does not undermine customers and their rights and liabilities; under clause 10 it does not unduly affect security interests; and under clauses 12 and 13 it does not upset contracts. 
Of course as the member in the chair has noted the proposal will have no tax consequences that will differ from those that would occur essentially if the enacting of the bill did not take place. The bill must be tax neutral. I think the committee examined that question and received letters of comfort. We were reassured that there was no hidden agenda in terms of the tax position of the bank. That is to be commended. We note that this bank along with the other major banks has recently had some attention paid to its tax position particularly in the area of a structured finance transaction which resulted in the bank generously refunding to the taxpayer some $2.5 billion of underpaid tax. We hope that that situation will not recur because it is important for the reputation of the sector that it does not. I know there are always two sides to the story but the courts have held that in respect of those cases that went to court—and politicians never interfere in the judicial process once it is under way—a good case was made by the Inland Revenue Department and the remaining banks entered into a settlement. That was appropriate. 
It is absolutely appropriate in light of that situation and as a matter of principle that this Committee should be satisfied and should find comfort through the work of the Finance and Expenditure Committee that there are no improper tax consequences pertaining to this bill. We are assured. We accept the assurance that there are none. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I have just another question which is in relation to the nature of the business that is being transferred or the assets and liabilities that are being transferred. The way I read it is that recital (4) of the preamble talks about the transfer of “certain additional assets and liabilities of Westpac Banking Corporation being principally assets and liabilities of Westpac Banking Corporation’s New Zealand’s institutional banking business”. The preliminary provisions that we have dealt with too in clause 3 “Purposes” talk in paragraph (a) about “principally assets and liabilities of Westpac Banking Corporation’s New Zealand’s institutional banking business”. Then we come to Part 2 the part we are dealing with now which has all of the detail of the transfer and under clause 6 the Governor-General may approve the proposal to “vest designated assets and liabilities”. In clause 4 designated liabilities are defined as those that are “to vest in Westpac New Zealand;”. 
So we still have the word “principally” in relation to the assets and liabilities of Westpac’s institutional banking business but I am just trying to find where that is actually spelt out in detail. What makes up the word “principally” in that nature? Does that then mean “narrowly”—that it cannot apply to anything else—and that we could again end up in the situation where because of something that is slightly technically outside that definition of institutional banking we will be back in the House with another piece of legislation? Or is this provision now a slightly more expansive piece of legislation than we had previously? 
I guess the question I have is in relation to this initial stage where the asset and liability class is firmly established and the Order in Council is made is that it? Can no further transfer occur from one to the other under the provisions of this bill with an additional Order in Council? Perhaps the member in the chair Craig Foss could refer me to the clause that describes the specific elements of institutional banking. I am sure it is in here; I just cannot find it. I do not know—am I missing something or is it there? I do not know whether just a simple reference to a clause chipped across the Chamber might help me find what it is that I am looking for but it does not look hopeful at this stage. That is the question. 
I suspect that the Chairperson will take a closure motion at the end of all of this but I think I am asking the question for a serious reason—that is I cannot quite work out why in 2006 we did not have a sufficiently robust framework that allowed this additional Order in Council to be passed then. Why has it required additional legislation? But if this bill then subsequently shows itself to be insufficient to meet the ongoing obligations of the Reserve Bank will indeed further legislation be required? Or does this bill allow for an additional Order in Council to be made? It does not so that is very useful. I had a shake of the head which is not something that  
Hansard 
 can record. Perhaps if the member would like to say “No” then we could get it on the  
Hansard 
 record—that in fact the shaking of the head did take place. Now my colleague is nodding his head but that is different. I think he is agreeing with me that that is what should happen. But it would be useful if the member in the chair could indeed provide that comfort for me. 
The other point I wanted to raise concerns the transfer of staff because of course that does happen. The transfer of employees comes under clause 15(1): “A transferring employee ceases to be an employee of Westpac Banking Corporation and becomes an employee of Westpac New Zealand on the appointed day.” I understand why that is required. Obviously if employees are working in one branch of the corporation and are transferred over to the new bank then one would not want those terms and conditions of employment to be diminished by the transfer. But I am wondering—and I do not know whether the member in the chair is able to provide this advice—whether that then creates some inequity in terms of those who are already working for Westpac New Zealand. I guess the question I am asking is whether there is parity between the two organisations in terms of the salaries they pay their two sets of staff. It may well be that the transfer under these circumstances may create an internal inequity within Westpac New Zealand where those who belong to the branch of Westpac Banking Corporation may in fact be on more favourable terms and conditions of employment than their counterparts in Westpac New Zealand. There might have been a bit of a transfer there. 
The other thing I wondered was whether this in any way has impacted because it is one of the issues that is not raised anywhere in the legislation— 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Hon LIANNE DALZIEL 
: I am thrilled to know that I have so much time left in this call because the next point I will make is quite a substantial one. 
Hon Ruth Dyson 
: What was your first one? 
Hon LIANNE DALZIEL 
: I know that I cannot mention the fact that the honourable member was not here but I can mention that she did not listen to that part of the contribution I made. I was talking about the transfer of employees under clause 15 involving employees who were employees of Westpac Banking Corporation. The member probably does not realise that we have Westpac Banking Corporation New Zealand which is a branch of the Westpac Banking Corporation and incorporated in Australia and its affected employees will become employees of Westpac New Zealand which is of course a New Zealand - incorporated company. That is what the purpose of this legislation relates to as a result of the local incorporation provisions of the Reserve Bank which were introduced in the earlier part of this century. In about 2004 I think the decision was finally made that Westpac had to incorporate in order to meet the provisions of the new requirements and in 2006 we dealt with similar legislation. The honourable member would probably be really interested to know that that legislation was in the name of Marian Hobbs. 
Hon Ruth Dyson 
: Oh. 
Hon LIANNE DALZIEL 
: Yeah and that is an interesting history we have already traversed but now that I have brought the member completely up to speed I am sure the honourable member would like to participate in this debate. I know that she will have a lot of questions for the member in the chair. 
Before the dinner break I was seriously talking about the transfer of employees from one organisation to the other and whether that would create an inequity for those who were currently employees of Westpac New Zealand potentially because Westpac Banking Corporation New Zealand—the branch of the Westpac Banking Corporation—may in fact have better wages and conditions of employment than Westpac New Zealand. I was not sure and maybe the member in the chair could advise us on that. 
The next point I was going on to was a question that may not have been dealt with as an issue by the Finance and Expenditure Committee because it may not have been an issue when the legislation went through the select committee. It concerns the status of qualifying financial entity which is a new status that has been dealt with under the financial advisers regime. We have authorised financial advisers under that new regime being registered as we speak. But—and this has been quite a surprise to me—a lot more institutions have taken up the role of qualifying financial entity under that regime than I had anticipated. I thought that the banks maybe some of the insurance companies and maybe some of the larger financial institutions would take up that role but I really did not think we would have 200 or 300 qualifying financial entities which apparently we do have thereby limiting the pool of talent taking up the qualifying financial adviser status. 
The point I wanted to make was about the situation where Westpac Banking Corporation New Zealand had registered as a qualifying financial entity and Westpac New Zealand had also taken up the status of qualifying financial entity. That relates to the thing I find absent from the bill and the reason why I would like the member in the chair to take a call on this issue. I alerted him to the issue before the dinner break so that he could undertake some in-depth research over the dinner break in order to be able to answer the question for which I know he has now been waiting for 1½ hours. The question is: if both of them have independently obtained qualifying financial entity status does that now merge when it is not mentioned in the bill? Or will they have to then reapply or will it be automatic so that those employees who cross over into the new entity will be picked up by the qualifying financial entity status? There has been quite a fundamental shift and that shift involves the transfer of assets and liabilities which is the whole purpose of this legislation. 
I personally think this is quite a fascinating question. It is one I had not thought of until I felt compelled to do so and as a result I think it is a question that really ought to be answered by the member in the chair. I hope that the little heads-up I gave him before the dinner break commenced has served as a basis for checking out that matter and I am sure he will be able to share the answer with the Committee. 
When he did take a call earlier on Mr Foss made comment about the application of provisions relating to taxes and duties. I know that he was telling us that this measure was completely neutral as far as the tax liability was concerned one way over the other and that was made absolutely clear with reference to the detailed provisions of the legislation. I thank him for that because I think a genuine concern was raised by another colleague of mine about the capacity for this sector to not always do the right thing when it comes to ensuring that their full liabilities are met in that regard. I accept the comments that he made on that issue. 
There was another element to this issue which was from a banking customer’s point of view. I know that the legislation states that there will be this seamless transition from a customer’s perspective but I just wondered how that would be handled by the bank in terms of notifying that to its customers who previously were being looked after by Westpac Banking Corporation New Zealand before transferring to Westpac New Zealand which is the registered company in New Zealand. Does the member in the chair know how Westpac plans to communicate that to those customers? Obviously there is quite a significant change to how that might be addressed. I think it would be useful to have that on the record of the House as well because I am sure that the member concerned both in his role as promoter of this bill and as the chair of the Finance and Expenditure Committee would have dealt with that issue in respect of how the customers would see it. 
It was interesting to note that as I understand it Westpac has ensured some options will be available to their customers in respect of this transfer and that Westpac New Zealand will be in a position to make some advice directly available to customers on the basis of their asking for that advice in terms of the seventh anniversary. I really would like the member in the chair to talk about the seventh anniversary and how relevant it is to the particular issues that are raised in this bill. It is a little bit unclear from the submission that I have read why the seventh anniversary is a particularly relevant date in terms of the application of the measure. I understand that Westpac wants to make sure that the changes cause no disruption or as little disruption as possible to its customers and that is important but I also think it is important from a customer perspective—and as I have already disclosed I am a customer of Westpac—that customers know that they will be advised in specific detail about what the consequences of this legislation will be. 
STUART NASH (Labour) 
: 
 Sorry Mr Chair; I was a couple of seconds late in getting to my feet because I thought the member in the chair might have taken a call to answer some of the questions that my learned colleague had asked. She had asked a number and I think they were probably reasonably important. 
As mentioned this is a bill that everyone in the Committee supports although we got off to a little bit of a false start when the Maori Party thought it did not support the bill then determined it would support it. But that was good; the party saw the light in the end and decided it would support a bill that it had supported all the way through the select committee process. 
Hon Ruth Dyson 
: There’s time yet. 
STUART NASH 
: Exactly. I will talk a little bit about what my colleague Lianne Dalziel was talking about. It may even answer a couple of questions because as a member of the select committee—unlike Ms Dalziel who chairs the Commerce Committee and incredibly well I may add—I can tell members that we made it very very clear that a customer of Westpac will probably not notice any difference whatsoever. In fact when we look at clause 9 entitled “Relationship with customers and customers’ rights and liabilities” we see it talks about “(1) The relationship between Westpac Banking Corporation”—which is of course the parent company—“and a customer in relation to the designated assets and liabilities immediately before the appointed day …” and immediately afterwards. So I do not think that customers of Westpac will notice any sort of difference whatsoever. They will not get a differently coloured card and probably will not receive a letter in the mail because there is probably no reason for that. I must admit that like Lianne Dalziel I am a customer of Westpac myself and I would like to think that it will spend money cutting my headline rate as opposed to sending out a letter to me to tell me something that will probably have no consequence whatsoever for everyday banking. 
I will spend a little bit of time talking about the lack of the impact on customers of this merger. As we have outlined in the preamble and Part 1 this bill is a pretty simple piece of legislation in the sense that customers will notice absolutely no difference whatsoever. Having said that I also say there are 20-odd pages of legalese in there and I think that customers of Westpac bank will probably be asking themselves whether this legislation will impact on them at all. In fact suppliers will probably want to know whether there will be any impact on them—whether they should be sending invoices elsewhere or making calls to some other place etc. But the legislation has been pretty clear on that; as a select committee member I seem to remember that we made sure there would be no impact on the day-to-day business of Westpac New Zealand. Customers will not notice any difference. Clause 9(2) states: “An account between Westpac Banking Corporation and a customer that is comprised within the designated assets and liabilities”—it should say “or liabilities”—“on and from the appointed day”— 
Hon Ruth Dyson 
: Say that last bit again? 
STUART NASH 
: —“on and from the appointed day becomes an account between Westpac New Zealand and that customer and is deemed for all purposes to be a single continuing account.” I suppose it comes back to my point that I do not think any customer will notice any difference whatsoever. 
It is the same if we go to clause 14 “Contracts for supply of goods or services”. The clause states: “A contract that immediately before the appointed day provided for the supply of goods or services to Westpac Banking Corporation”—which is of course the name of the parent company—“(whether or not that contract is vested in Westpac New Zealand) is to be regarded as permitting the on-supply of those goods and services between Westpac Banking Corporation and Westpac New Zealand to the same extent that that on-supply would have been permitted if Westpac Banking Corporation and Westpac New Zealand were a single legal entity.” I think that what we will see throughout this legislation is the very common theme that customers suppliers and employees will notice very little difference whatsoever. 
That brings me to clause 15—and Lianne Dalziel has talked about this to a certain extent—which is about the transfer of employees. Ms Dalziel has asked some questions on rights and obligations— 
Hon Ruth Dyson 
: But they haven’t been answered. 
STUART NASH 
: They have not been answered and I am hoping that the member in the chair Craig Foss will stand up because it is quite an important point. Ms Dalziel made some very good points especially in this day and age when we have record high unemployment and when banks are making record profits. Let us be honest about that. The chief executive of Westpac pulls down a salary of about $5.25 million— 
Darien Fenton 
: How much? 
STUART NASH 
: It is about $5.25 million a year. In fact he collects a tax cut of around $5000 a week I understand but that of course is a debate for another day—probably tomorrow. 
In this bill we have made it very clear to all classes of people who deal with Westpac or who are employed by Westpac that this transfer will be seamless. The one thing that I suppose we have to look at in clause 15 is subclause (5) which states: “The employment of a transferring employee is not new employment for the purposes of the KiwiSaver Act 2006.” Unfortunately there is a little bit of a hook there because apparently tomorrow in the Budget those employees will be worse off but I do not think it would have made any difference whether they were employees of Westpac Banking Corporation or employees of Westpac New Zealand Ltd. They will be worse off no matter whom they are employed by. The cuts to KiwiSaver do not differentiate at all; they will affect just all Kiwis I am afraid. 
I come back to clause 15(1) which states: “A transferring employee ceases to be an employee of Westpac Banking Corporation and becomes an employee of Westpac New Zealand on the appointed day.” There are protections there under clause 15(2) in the sense that “(a) his or her employment contract is to be regarded as not having been broken by any provision of this Act; and (b) the period of his or her service with Westpac Banking Corporation is to be regarded as having been a period of service with Westpac New Zealand.” 
I move to clause 15(3): “A transferring employee’s terms and conditions of employment with Westpac New Zealand on and from the appointed day are identical to the terms and conditions of his or her employment with Westpac Banking Corporation immediately before the appointed day and are capable of variation in the same manner.” I suppose we are saying there that employees will notice no difference. If they do notice a difference and if in fact Westpac New Zealand uses this as a reason to make a change to an employee’s terms of contract then we will want to know about that because the law would have been broken. I am not saying that that will happen but that certainly was not the intention— 
Darien Fenton 
: But they’re not going to have a 90-day trial. 
STUART NASH 
: They will not have a 90-day trial period because they will have been deemed to be— 
Darien Fenton 
: New ones will—new ones will. 
STUART NASH 
: People who are employed by Westpac New Zealand and who are starting any day now will have that 90-day trial period—which is outrageous to tell the truth; it really is. But we are talking here about legislation put in place to protect everyone. We know that employees are most important and that we must protect their rights. 
As the member mentioned this legislation is tax-neutral. We talked about that in the select committee because we had to make sure there was no opportunity for arbitrage. We all know that the big banks are masters of that and I think there were out-of-court settlements between some of the big banks that totalled about $2 billion. We really wanted to make sure that there was no option for arbitrage and that this was not some ruse by Westpac to come up with some way to arbitrage its losses in Australia and profits in New Zealand or vice versa. This bill is simply to increase the liquidity for Westpac. 
The legislation states in clause 23(2): “For the purposes of the Income Tax Act 2007 if Westpac New Zealand incurs an amount of expenditure or loss on or after the appointed day in respect of a designated asset or designated liability Westpac New Zealand is entitled to a deduction for the amount of that expenditure or loss if Westpac Banking Corporation would have been allowed a deduction for that amount …”. Again the common theme is that there will be no difference. Not even the taxman—or taxwoman—will notice any difference whatsoever. We have been pretty clear on that and I think Mr Foss did a reasonably good job of ensuring it. 
One interesting point is found in clause 24 entitled “Use of information and intellectual property”. I will quote the provision if members will give me that indulgence. Subclause (1) states: “Westpac Banking Corporation and Westpac New Zealand may each collect use disclose or send any information if that collection use disclosure or sending would be permitted if Westpac Banking Corporation and Westpac New Zealand were a single legal entity.” I suppose it is saying that that is completely seamless. I was trying to think of some mischief that might occur there but I do not think any could. If a New Zealand company had a branch in New Zealand and a head office in Australia or a head office in New Zealand and a branch in Australia I suppose that if they were acquiring a loan from Westpac Banking Corporation as opposed to Westpac New Zealand they would have to disclose all the financial information anyway and there would be no mischief in terms of the use of information and intellectual property. That is something we needed to be clear about because the last thing we want or anyone wants—and we talked about trade secrets before—is any sort of disadvantage to New Zealand companies. Thank you. 
TODD McCLAY (National—Rotorua) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Eric Roy) 
: The question is that the question be now put. 
Hon RICK BARKER (Senior Whip—Labour) 
: 
 I raise a point of order Mr Chairperson. I know it is perfectly within your realm to make the decision about whether to put the closure motion and I will accept your decision without quibble or qualification but I make the point that this is members’ day. On members’ day it is very unusual for the Government to use its majority to foreclose on debates. I make the point that if the Government wishes to do that then that will change the nature of members’ day. I think the Government should reflect on that before it does it. We are perfectly happy for the whips to ring this side have a talk to us about matters and negotiate these things but that has not happened. I just want to make the point very clear to Government members that we need cooperation in this Committee. 
The CHAIRPERSON (Eric Roy) 
: The member has made the point very splendidly but I am going to give the Committee the opportunity to determine whether it is time to close the debate. 
Motion agreed to. 
Part 2 agreed to. 
Part 3 Inter-relationship with other Acts 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I am thankful for the opportunity to enter into the debate. I think one of the most important debates that we are having tonight on this bill is on Part 3 and the two clauses it represents. The reason I rise to speak on Part 3 is that it raises a question that has yet to be answered by the member in the chair Craig Foss.  
Clause 26 states: “Nothing in this Act exempts Westpac Banking Corporation or Westpac New Zealand from the provisions of any enactment relating to banks or banking.” That is an extremely wide clause one would assume but what about its application to the rules regarding financial advisers? Financial advisers are covered by a completely different regime that relates not only to banks.  
I wonder whether this clause is sufficient to encapsulate the requirements of an enactment that might pertain to banks in certain circumstances if they avail themselves of that particular legislation although they are not required to and the rather narrow—if one looks at it this way—terms of this clause which states: “Nothing in this Act exempts Westpac Banking Corporation or Westpac New Zealand from the provisions of any enactment relating to banks or banking.”  
Does the question that I raised in the previous part of the debate have relevance to this part? The member in the chair did not answer that question which was whether the New Zealand branch of Westpac Banking Corporation was registered in its own right as a qualifying financial entity under the financial advisers legislation or even whether under that provision it had certain members of staff who were already registered as authorised financial advisers. I think I can actually answer the second question myself. If those authorised financial advisers were independently registered then that registration will transfer over when the amalgamation is retained.  
I personally do not know whether either or both Westpac Banking Corporation and Westpac New Zealand were independently registered as qualifying financial entities. Maybe the member in the chair could assist in this debate by explaining to us whether Westpac Banking Corporation’s New Zealand branch was registered as a qualifying financial entity. In fact I do not even know whether it could register as a qualifying financial entity if it is just a branch of an overseas-owned banking corporation. That is quite an interesting point. I think it probably was able to.  
The second question is whether Westpac New Zealand was registered as a qualifying financial entity. I would assume that it was. If they were both registered does that makes a difference in terms of the transfer from one to the other and if only one was registered does that make a difference in the transfer from one to the other? It raises a really serious issue about whether this matter is catered for in a clause that specifically refers to the enactment having to relate to banks or banking. As we know financial advisers do not exist only within the banking industry. A number of financial advisers work for so-called independent financial adviser institutions others operate independently and some of them work in a tied arrangement with a broker in the insurance industry or may be tied to one particular financial institution.  
There are lots of different areas that are not specific to banks or banking where one can find qualifying financial entity status and where one can find people who would be described as authorised financial advisers. I am asking a genuine question and it would be really helpful if the member in the chair could advise whether Westpac Banking Corporation the New Zealand branch thereof was registered as a qualifying financial entity and whether Westpac New Zealand was. 
STUART NASH (Labour) 
: 
 My colleague Lianne Dalziel poses some very interesting questions. Lianne Dalziel has posed many interesting questions over the Committee stage debate on this Westpac New Zealand Bill. Unfortunately none of them have been answered. 
Hon Lianne Dalziel 
: Oh no the odd one has. 
STUART NASH 
: By us though. 
Hon Lianne Dalziel 
: No no. Occasionally the member to be fair has got up. 
STUART NASH 
: That is right he did get up; he did speak. I apologise to Mr Foss. But he has not answered this question and he has not answered questions for a while. What I might do is try to answer this question for my colleague but I could be wrong. I will give it my best shot because it is a very important question. Westpac New Zealand Ltd is an incorporated bank. It became a registered bank in 2006 and it did this in order to comply with the Reserve Bank of New Zealand’s local incorporation policy. It is a branch—there is no doubt about that—but it is also an incorporated bank in its own right. So it would surprise me if it did not come under the guise of the bill that as it says in here— 
Hon Lianne Dalziel 
: No no but we don’t know in the bill whether it’s a qualifying financial entity. 
STUART NASH 
: Yeah that is a good point. I would— 
Hon Lianne Dalziel 
: It’s a separate piece of legislation. 
STUART NASH 
: The member is right. But the incorporation policy says that systemically important banks should be incorporated in New Zealand. We talked about this before. What is a systemically important bank? It is a bank that has liabilities other than those to related parties of over $15 billion. I would assume that if an organisation of that size was not a—what do we call it again— 
Hon Lianne Dalziel 
: Qualifying financial entity. 
STUART NASH 
: —qualifying financial entity— 
Hon Lianne Dalziel 
: But that’s under the financial advisers legislation. 
STUART NASH 
: In fact the member is right. I do not know that so to say that I was going to answer that— 
Hon Lianne Dalziel 
: Do you think the member should answer that then? 
STUART NASH 
: I think that he probably should actually because it is not much to ask is it? It would not take long. We are not asking for a 10-minute call; we are asking for only a 5-minute call. 
If I could move to clause 27 we see that it talks about amendments to the Westpac New Zealand Act 2006. Clause 27(2) amends section 19(4) of the Act “by omitting ‘DB 23 of the Income Tax Act 2004’ and substituting ‘DB 31 of the Income Tax Act 2007’.” 
Hon Lianne Dalziel 
: Why? 
STUART NASH 
: Well that is the question I want to know the answer to. I would have thought that in a bill of this size—and it is not a large bill; we have to admit that compared with some of the bills that come before the Finance and Expenditure Committee this is about a third of the size of a Supplementary Order Paper that we are looking at the moment so it is not a big bill—perhaps just for clarity because people may look at this and wonder what it is about it could have been listed there. It actually means nothing. To tell the truth it means nothing. We were talking about this in the Finance and Expenditure Committee today and saying that tax legislation should be clear. It has to be easy to use. It has to be clear so that people are not running around looking for a whole lot of different Acts. 
Again if we look at clause 27(3) which amends section 19(12) of the Westpac New Zealand Act “by omitting ‘adjusted tax value’.” it would have been good if it could have just fleshed that out a little bit. I do not think there would have been any mischief there. It would have made it just a little bit easier. The legislation would have been a little clearer. Clause 27(4) states: “Subsection (2) applies with effect from 31 March 2008.” That is actually retrospective legislation in a banking bill. Again I think it would have been good to clarify that. As I said there is no mischief here at all. I am not trying to be smart and there is no attempt to deceive anyone or anything like that but I think it would be good in bills like this—which are quite important bills—if they were to set out what did come into effect from in this instance 31 March 2008. That was 2 years after the original Westpac New Zealand Act was passed and obviously it is 3 years before this bill will be passed. 
Again clause 27(5) states: “Subsection (3) applies with effect from 13 September 2006.” which was obviously just after the original Westpac New Zealand Act was passed. Again it would have been nice to put it down to clarify it and be a little bit clearer on what the legislation meant. As I said clause 27 apart from the title “Amendments to Westpac New Zealand Act 2006” means nothing. It means nothing. In fact if we really want to know what this means we have to go and grab the Income Tax Act and the original Westpac New Zealand Act 2006. That just takes time. It would not have been long at all. 
I come back to clause 26 “Banking legislation continues to apply”. That makes a lot of sense. We would hope—and it has been the case—that this Act did not change Westpac’s status with regard to any other Act governing the banking sector. That is clarified in this bill. 
Hon SHANE JONES (Labour) 
: 
 Tena tatou katoa at 8 o’clock on a Wednesday evening. I will augment in a very modest fashion that which has been offered. I might wait until the senior member Pete Hodgson moves away from the Table; the wisdom is blinding me at the moment. 
I direct our attention to clause 26 in Part 3. I want to be confident about the changes that are contemplated. I remind the current chair of the Finance and Expenditure Committee Craig Foss who is the member in the chair—I dare not say “the throne”—that when this legislation first went through he enjoyed sterling chairmanship under the leadership of a Mr Jones. Now that I have rejoined the Finance and Expenditure Committee we will look to see whether those qualities have continued. Time will tell. 
I cannot imagine that Mr Chairperson is likely to rule any of what I am about to say far of the mark but I will say that the banking sector is facing some substantial changes not the least of which is a change to the capital adequacy equation or dare I say it the framework. So when clause 26 states: “Nothing in this Act exempts Westpac Banking Corporation or Westpac New Zealand from the provisions …” I am presuming that those provisions are enabling the Governor of the Reserve Bank to introduce changes that ensure our major banks especially those of systemic importance are able and will be required to fulfil the Basel II capital requirements that have recently been in the newspaper. Basically they require that as we continue to fund the very substantial appetites of the farming sector that continue to grow the banks derive an adequate amount of capital from their own inherent sources and are not relying to such an extent on a thin level of capital so that when they continue to fund the more aggressive elements of the farming community which have been unwisely in my view stacking up too much debt and running a set of operations—unless it is arrested and they are brought to accept that there is a fair standard that all contributors to the economy ought to observe in relation to the tax system—their prodigious appetite for debt does not undermine the broader banking sector. 
Mr Foss is challenging me to demonstrate the relevance of that to the bill and I will be glad to do that over the next 20 minutes with the Chairperson’s forbearance. I am referring to clause 26 in the unlikely event that Mr Foss—unlike the Labour member who formerly brought in the 2006 bill—has not read it. I am talking about whether the banks will be captured by the provisions that enable the regulator the Reserve Bank to impose standards. I would not like to think that as a consequence of shoddy workmanship or shoddy drafting—perish the thought—they may not be required to observe the new strictures put in place by the Reserve Bank because those strictures are there for a purpose. 
Farm sales have slowed down. They have gone through a very low period. Not every single client of Westpac who is a farmer is in “Strugglers’ Gully” in terms of their debt-equity ratio but it is important that as the bank goes forward it does not worsen that situation. A sum of between $45 billion to 47 billion has been extended in the form of debt to our agricultural primary produce sector. Not all of it is with dairy farmers but the vast majority of it is. In addition to that as I have said not all dairy farmers are facing tragic economic circumstances but a significant minority are. I am sure the banks that put them in that situation will work very judiciously with them to ensure that they are not tipped over the edge. I am sure that no particular provision requires a bank to act in that fashion but banks have to accept that they are members of the community and that they have a critical role in relation to the provision of credit. That credit depends inordinately on overseas sources as a consequence of the blighted view that the current Government has about saving and unfortunately that will be worsened tomorrow. These things are in relation to clause 26. 
I will continue in this vein of farming. As the current Minister of Agriculture knows when the front page of the  
Dominion Post 
 is not about us and is about members opposite it is never wrong—never. There are odd occasions when the front page of the  
Dominion Post  
is unwisely directed on members on this side of the Chamber and that is a case of poor research of personal agendas and of its feeling beholden perhaps to some of the corporate backers of the current Government and we cannot do much about that. But we know that as a consequence of today this is connected to the status of the banking sector. I must not continue in this vein however. 
We have talked about this bank our Westpac bank which has now been fully incorporated as a consequence of changes that originated back in 2000. Ann Sherry a former chief executive officer fought that doggedly. She has since gone on to run not the 
 Love Boat 
 but some sort of ocean liner business. Under her stewardship Westpac was the last bank that was willing to embrace its obligations. 
Westpac accounts for somewhere between 18 to 20 percent of our commercial banking sector. It is not the largest—I think that belongs to ANZ in terms of its exposure to the rural sector—but it has a handsome book. Part of that book contains warts otherwise known as Crafar which will soon no doubt be sold overseas as a consequence of more dilatory approaches by members opposite but we will learn more about that closer to 26 November. Will the bank be obliged to continue along with the other banking sectors will it be obliged to observe such capital adequacy ratios as I earlier referred to and as a consequence of this legislation will it be able to do anything that might worsen the situation with our real estate - based debt? Our Aussie-backed banks are unlike the single sterling example of Labour policy Kiwibank which is regularly undermined by the current Minister of Finance in his very parsimonious approach to providing adequate amounts of capital for it to slowly grow into flourishing areas of the economy rare though they may be under the current administration. 
On the household sector debt what will happen as a consequence of this bill’s passing? Can it be affirmed that our Westpac bank will continue to play a key role not only in ongoing funding of house owners and young families wanting to purchase houses but also in the provision of credit for business lending? That is the provision of credit on the basis of the strength of the cash flow that an enterprise is showing as opposed to small to medium sized businesses having to rack up more debt against their houses and move that credit through to sustaining their businesses. We would like to see something of that nature flow from banks such as this monumental institution otherwise known as the Westpac bank so that they are providing capital to those who are willing to take a risk diversify the revenue the Government relies on and deepen our reach into overseas markets with the provision of innovative services and new goods. 
But none of that can happen without the banks being willing to move away from their very comfortable association with lending dough against houses one after the other. We want to be assured that as a consequence of this enactment—clause 26 in Part 3—they will be able to continue to adopt the attitude that grows the part of the economy that has actually withered over the last 2 or 3 years and in particular the last 2 years. That is not really a consequence of the so-called international recession but has actually come about because of the very drowsy approach taken by the current leadership towards reviving the economy training people and more important using a time of adversity and turning it into an opportunity to create new sources of wealth and innovation and to boost productivity. From a time of adversity can come inventiveness and resourcefulness—something that is spectacularly absent from the current approach shown to us by the Government. 
Part 3 agreed to. 
Clauses 1 and 2 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 In addressing clauses 1 and 2 of the Westpac New Zealand Bill which of course the Labour Opposition will support let me recount a small homily in the nature of the contribution of the previous member Mr Jones. 
Hon Lianne Dalziel 
: Oh nothing could be quite like— 
Hon DAVID CUNLIFFE 
: Well perhaps not with the same panache but the content bears upon something that Mr Jones just recounted. It was a cold wild and windy night in Wellington and I was a junior Minister in the Beehive. My phone rang and there on the other end I heard the dulcet tones of she who must be obeyed—not God but the next best thing: Prime Minister Helen Clark. “Can you come up to the ninth floor?” she said. 
Hon Lianne Dalziel 
: Oh I thought you were talking about Ann Sherry again! 
Hon DAVID CUNLIFFE 
: No no—it was worse than that. When I got in the door of the Prime Minister’s office I saw the Minister of Finance sitting ashen-faced at one end of the room and at the other a bloke whom I could not instantly recognise with a strong Australian drawl. I thought he was undertaking a very high-risk exercise as he was wagging his finger at Helen Clark and Michael Cullen and telling them what to do. I had not actually seen someone do that for a long time and live to tell the tale. I said more out of kindness than in anger “Who the hell are you and what do you think you’re doing?”. He said “I’m David Morgan and I’m the chairman of Westpac and I object to this new regulation you’re putting in around the Reserve Bank.” He was the chairman of Westpac Banking Corporation from Australia. He had come across the ditch to wag his finger at Auntie Helen and to tell her that she was not—not—to regulate the banking industry and not to tie these silly performance and asset regulations around the neck of Westpac. Well we did. All banks were treated equally and all banks complied. New Zealand today is a safer and better economy because we have more assets domiciled in this country. I am actually quite proud that the last Labour Government put those regulations through despite the wagging finger of that rather charming Aussie bloke from across the Ditch. 
Today we come full circle. Today we are discussing the Westpac New Zealand Bill which vests in Westpac New Zealand those parts of the of the Australian-owned institutional bank’s asset book that better fit within the cap instituted under that policy. So there we are and we are doing this for good reason. As we go to the title and the commencement of the bill we note that the words “Westpac” and “New Zealand” appear in the same sentence. That has to tell us something. It is a New Zealand bank it is subject to New Zealand law and it is subject to a full-service regulator the Reserve Bank of New Zealand. Lest we forget and lest we take it for granted there were those and I think more than a few on the other side—on the dark side—who suggested that we did not need our own Reserve Bank that we did not need our own prudential regulations and that we could just let Canberra do it. We could have our entire banking system regulated out of Canberra. How patriotic is that? It would not be called the Westpac New Zealand Bill then would it? It would be called the “Westpac Australia (New Zealand Bit) Bill 2010”. But it is not because the good old Labour Government stood up for New Zealand. It said “We want to own our own future—own our own future. We want a banking system we can rely on and we want decent asset-backing locked into this market because when the rainy day comes we don’t want all that capital taking flight back to Sydney and leaving us all on our own poverty-stricken lonesome.” 
Here we are today passing through the Committee stage what is universally regarded thanks to the Maori Party’s clarification—I tautoko that—as unanimous in this House. All parties including the Government have seen the merit in putting the words “New Zealand” in the title alongside the words “Westpac” and “Bill 2010”. It is a statement of our sovereignty as New Zealanders. We are proud Kiwis and we want to own our future. We want to own a bigger not a smaller slice of our own financial system. This may not be great news for Westpac but we plan to empower Kiwibank to be an even more vigorous competitor by infusing its balance sheet with a little extra capital so it can go charging into the marketplace and do battle with our friends across the Ditch like we do on the footy field. 
Shane Ardern 
: How come the member didn’t give it to Government banking last time? 
Hon DAVID CUNLIFFE 
: What was that? 
Shane Ardern 
: How come you didn’t give it to Government banking when you were in power? 
Hon DAVID CUNLIFFE 
: Well now the member has provoked me. In the nick of time the member has provoked me for one further short 5-minute drawl. What was the question again? 
Hon Lianne Dalziel 
: I think he was asking us why we set up Kiwibank. 
Hon DAVID CUNLIFFE 
: Oh that is a long story. That might require— 
The CHAIRPERSON (Eric Roy) 
: Clauses 1 and 2. 
Hon DAVID CUNLIFFE 
: But I will have to bring it back to the title and the commencement. The commencement date of this bill is a very good question because I assume it is not the same date as it is in the title—the title of course is 2010. The commencement date comes into force when the legislation receives the Royal assent and that could not possibly be 2010 because we are in 2011. 
This brings me to a very important point: when making law it should be made with a mandate. If one is making law in 2010 and 2011 the mandate should come from the 2008 election not the 2011 election. Does that sound familiar? Does it sound just a weenie bit familiar? There are other matters where the Government is saying it will seek a mandate from the public on 26 November for matters it intends to pass through the House in the next 3 days—just a mere “Rip Van Winkle” of 6 months in advance. Well that defies logic and it defies gravity and that is why it is important that this bill is called the Westpac New Zealand Bill 2010. The mandate was achieved in 2008—it happens to be bipartisan—and on this occasion the Government got it the right way round unlike KiwiSaver unlike Working for Families and unlike cutting back on student loans where National says it will go to the people in November to do something it will legislate for in May. That is not a mandate; that is a broken promise. I am glad the member opposite Shane Ardern provoked that slight peroration into the chronology of legislation—provoked as it is by the title and commencement clauses of the Westpac New Zealand Bill 2010. 
Let us sum up briefly. This bill is perhaps not the most complex bill we have seen in the House. It is certainly not the longest. This bill may not be the most important bill we have ever passed but it is very important to Westpac and it speaks to some principles that actually matter. It is called the Westpac New Zealand Bill for a reason: it is in New Zealand. It is in New Zealand because it is required to be in New Zealand by law. The assets and liabilities of the bank have to be to a substantial extent under New Zealand law subject to the regulation of the full-service Reserve Bank of New Zealand. In this House we are sovereign and that brings with it enormous responsibilities to our people and their kids because we want them to grow up with sovereignty. We want them to own their own future. That is not just a phrase; it is a matter that is dear to all our hearts. The day we lose control of our financial system is the day we will not own that future and we have come perilously close to that already. With those words of caution for the future I commend the bill to the Committee. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 Thank you Mr Chairman for the opportunity to speak on clauses 1 and 2 of this very important bill the Westpac New Zealand Bill. 
I begin by traversing the policy that lies behind the legislation we have before us tonight. The first thing I will do is remind the Committee why the Reserve Bank came to the view that it was important to have local incorporation. I think the reason for that can be brought back to the provisions of the Reserve Bank of New Zealand Act. In Part 5 of the Act the Reserve Bank is given powers to register banks and perform prudential supervision. Section 68 of the Act states that those powers must be used for the purposes of: “(a) promoting the maintenance of a sound and efficient financial system; or (b) avoiding significant damage to the financial system that could result from the failure of a registered bank.” 
We have been very lucky in this country to be honest with the system we have in place. We have not had the failure of a registered bank in the way that occurred in other jurisdictions. Of course the behaviour that was identified in the global financial crisis as undermining the integrity of our global financial system stemmed from those people who did not appreciate the sense of confidence that people had in banks in general. People were really let down by the behaviour of individuals who were running those banks. Those individuals came up with amazing derivatives collateralised debt obligations and various other ways of chopping dicing and slicing the different levels of risk within products. Those products did not make much sense to anyone who knew anything about what those individuals were supposedly able to advise people on. 
The Reserve Bank’s supervisory regime though comprises three important pillars. The first is market discipline which involves creditors and financial markets monitoring banks. The second is self-discipline which involves banks and their decision makers responding to incentives to operate prudently and efficiently. The third is regulatory discipline which is where the Reserve Bank sets the prudential rules by which banks are required to operate. When the local incorporation policy was brought into being the Reserve Bank was responsible only for the prudential supervision of banks. It was subsequent to that with the Review of Financial Products and Providers which I was the lead Minister on at the time that a decision was made to extend the jurisdiction of the Reserve Bank to cover the non-bank deposit taking sector. 
If we carve out the non-bank deposit taking sector and its behaviour within New Zealand from what happened with the banking industry within New Zealand and Australia—and in that respect we were fortunate to be tied to Australia—then we can identify that we suffered our own mini-version of the global financial crisis which was located in the non-bank deposit taking sector. So our decision to regulate in that area was entirely appropriate. Everyone says that it should have been done sooner. I ask them how much sooner that could have been done than doing it as soon as the return on the discussion documents was made available. I do not know whether that could have been done any sooner than it was. 
But leaving that aside the point that is often overlooked is what happens when we have such a large exposure to foreign-owned banks. Australian-owned banks in New Zealand still account for and did at that time about 90 percent of assets held in our banking system. That is an enormous benefit but it is an enormous exposure as well. I think that was what drove the Reserve Bank to consider the whole issue of local incorporation. Its view at the time was that foreign ownership acted as a channel through which distress from abroad could spread to New Zealand. That was the risk the Reserve Bank was trying to address. That meant that although the banks looked like New Zealand banks in name—Australia and New Zealand Banking Group Westpac Banking Corporation New Zealand branch—they had the ability and the incentive to act in ways inconsistent with promoting a robust and efficient New Zealand financial system. This was the problem: potentially an Australian bank could behave in the interests of an Australian bank and not act through its New Zealand branch in the best interests of the New Zealand banking system. That is why the Reserve Bank felt that it was really important to undertake the review of its policy in the early 2000s. 
My colleague made the point that Westpac tried to find alternative ways to address the policy intent without meeting the regulatory obligations that were being worked through by the Reserve Bank. To be fair Westpac put up a proposition that the Reserve Bank of the day did consider. The Reserve Bank declined to accept that proposition at the end of 2004 and as a result we dealt with legislation in 2006 that brought into play the Westpac New Zealand Act 2006. 
The one question that I still have not quite had answered is this: the Westpac New Zealand Act was obviously designed with a view that the transfer that had occurred at that time would be the one and only transfer required. I am not sure whether it was deliberate or just an assumption that that would be the case. I wonder whether we are debating this legislation tonight because we did not have sufficient foresight to understand that the rules would again come into play. I think I should put that on the record. The reason why we are having this debate tonight is because of a condition that was reached with the Reserve Bank in terms of its local incorporation policy. That condition requires that systemically important banks be incorporated locally in order to provide a degree of assurance that the Reserve Bank will be able to manage a failure affecting the bank. 
One of the conditions requires that branches do not have New Zealand liabilities excluding those to related parties in excess of $15 billion. That is the cut-off point where banks suddenly become systemically important. So that means that the Westpac branch that remained at the time in 2006 did not reach that threshold of “systemically important” but now it does. That says something pretty amazing about the extent of business that Westpac has managed to generate in the institutional banking sector over that period of time. I have already confessed my conflict of interest because I of course bank with Westpac so I am saying positive things about them but not for that reason. It appears that Westpac has reached that threshold in that period of time. 
The question is: does that mean that if that happens again with what remains in the branch of Westpac Banking Corporation we will need more legislation to address it or will this bill be sufficient to enable a further Order in Council to be made to transfer assets and liabilities in order to keep the liabilities’ cap in future below the level where the Reserve Bank would require this process to be undertaken? That is really the only outstanding question I have in that regard. I take it that the member in charge of the bill Craig Foss is not going to stand and advise the Committee whether Westpac is in the qualifying financial entity area. Maybe that means that it is not as relevant as it would otherwise be. 
I want to know whether this legislation has life beyond 2011 or a limited life as did the 2006 Act and whether other banking institutions that may have dual registration will be affected. I think others have that dual registration. I think Rabobank is one of them. Will we end up having a multiplicity of legislative interventions as opposed to regulatory interventions by way of Order in Council? That would make a lot more sense to me. 
STUART NASH (Labour) 
: 
 We are talking about clauses 1 and 2 the title and commencement clauses of the Westpac New Zealand Bill. Lianne Dalziel brought up a couple of good points. It is always good following Lianne—apart from the fact that she steals a lot of my arguments—because she poses questions. One of the words of the title clause “This Act is the Westpac New Zealand Act 2010.” is “Act”. Lianne Dalziel brought up an important point. I know as the member in the chair Craig Foss will also know that consideration was given to using the Westpac New Zealand Act 2006 but it was considered to be unfeasible because it was not drafted with the intention of being used for a second vesting. This is why the new bill was necessary. I wonder whether with the 2006 Act the then Parliament thought that Westpac would not get any bigger than it was and then here we are in 2011 and we are saying it will not get any bigger than it is now. Are we going to have the same sort of approach in 2016 and say it will not happen again? One just never knows. 
The bill is the Westpac New Zealand Bill 2010. It got me thinking and the other thing I would also like to ask is whether when the bill receives Royal assent it will be changed to the Westpac New Zealand Act 2011. 
Hon Lianne Dalziel 
: It will. I checked with Pete Hodgson. He knows everything. 
STUART NASH 
: He does. That is good to know. So the “2010” of the legislation at the moment will change. The Act will be the Westpac New Zealand Act 2011. 
Hon Lianne Dalziel 
: The Clerk will fix it before it goes for assent. 
STUART NASH 
: The Clerk is very good like that. 
There are a couple of things we talked about. In 2011 the bill will receive Royal assent. That has been talked about before. A couple of amendments to the Westpac New Zealand Act 2006 came into effect retrospectively on 31 March 2008. There is another amendment from September 2006 probably just after the original Westpac New Zealand Act came into force. This bill is largely based on the Westpac New Zealand Act 2006 and like that Act the bill facilities the vesting by providing an overall legal framework for the transfer of assets and liabilities from Westpac Banking Corporation to Westpac New Zealand. I suppose in a way it is good because it means that the New Zealand banking sector is growing. The facilities that are demanded by New Zealand companies need to be bigger. Perhaps the economy is expanding. 
One thing Mr Cunliffe talked about is that the bill is called the Westpac New Zealand Bill. He said that Westpac New Zealand is overseen by the Reserve Bank of New Zealand. But the sad thing is that Westpac is not a New Zealand - owned bank. All the profits that Westpac New Zealand will make will go back to its Australian shareholders. The profits will not come back to New Zealanders. 
An interesting fact is that Westpac has its 150th anniversary next year. It is a very old bank. I think it started out as a New Zealand bank but somewhere along the line it was sold. If we look at all the major banks here we see that ASB Bank which used to be called the Auckland Savings Bank was sold to Australians. All its profits go offshore. ANZ National Bank—the “National” stands for what was the National Bank of New Zealand—was sold. It is gone. “BNZ” used to stand for the Bank of New Zealand. It is gone. All the major banks of New Zealand even though they are controlled by the Reserve Bank are owned by Australian parents. All the dividends that are earned by the four major banks in New Zealand return across the Tasman to their parents not to the pockets of New Zealanders or back to the Government in terms of revenue. They go to Australia. That is a great shame. 
I suppose the one shining light is that Kiwibank is still New Zealand owned. I hope and pray that it will continue to be New Zealand owned. Mind you if I look at the agenda of the Government when it talks about selling assets I wonder whether— 
The CHAIRPERSON (Eric Roy) 
: This is the title clause and the commencement clause. Although both  
McGee 
 and Standing Orders state that members can summarise the debate the member is not summarising; he is introducing new material. He should please contain himself to what is required. 
STUART NASH 
: I will. I was talking about the title of the bill the Westpac New Zealand Bill. The reason it is called the Westpac New Zealand Bill as Mr Cunliffe put down is that it is about the Westpac New Zealand branch. The bill governs the rules around the prudential requirements of the New Zealand branch of Westpac Banking Corporation. As we know Westpac Banking Corporation is based in Australia. Westpac New Zealand is a branch of Westpac Banking Corporation but as I was saying the vast majority of the dividends—in fact all of the dividends—from Westpac go to its parent company which is a real shame. 
I was saying that the transfer will mean that Westpac New Zealand will increase in size. We know that. We talk about $42 billion worth of debt against the agricultural sector. I wonder how much of that debt is vested with Westpac Bank. 
David Shearer 
: A considerable amount I would say. 
STUART NASH 
: A considerable amount. I suppose even though Westpac is growing which is the reason for the bill we have to be a little bit careful when we look at a growing bank not to just simply assume that this is growth in the New Zealand economy. Part of it is growth in the debt profile of these banks and a large portion of that is to the agricultural sector. I am not too sure how much Westpac New Zealand has of that but maybe one of the reasons we are debating this bill is that the liabilities of Westpac New Zealand are such that it needs to increase that prudential rate above the $15 billion. Westpac is still a significant bank of that there is no doubt but I am unsure whether it is the biggest bank. This term being my first I am unsure whether we have passed similar legislation titled the “ANZ New Zealand Act” in 2000 and something or whether there has been the “BNZ New Zealand Act”. Would that not be ironic—the “Bank of New Zealand New Zealand Act” regulating a New Zealand branch of the BNZ? 
There are very good reasons for the bill. It is very sound legislation. It protects the interests of all customers all suppliers and all employees. We made that very clear as it went through the select committee process. It is good legislation which is why I commend it to the Committee. Thank you. 
Clause 1 agreed to. 
Clause 2 agreed to. 
Bill to be reported without amendment presently. 
Royal Society of New Zealand Amendment Bill 
In Committee 
Debate resumed from 4 May. 
Clause 4 Purpose ( 
continued 
)  
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I welcome back colleagues to the Royal Society of New Zealand Amendment Bill. 
Chris Tremain 
: We’ve been waiting all night for this. 
GRANT ROBERTSON 
: Absolutely. It is the highlight of Mr Tremain’s evening—and perhaps life—to be here for this. 
When I was last speaking I was working my way through the memorandum of understanding between the Royal Society of New Zealand and the Council for the Humanities because it lies at the heart of this purpose clause. Essentially the memorandum of understanding is bringing together the Council for the Humanities and the Royal Society in a way in which both organisations will be able to work closely together and to ensure that the kaupapa the philosophy and values of the organisations are kept. I think I had come to the point of saying that the term “humanities” will be included in all places within the Royal Society’s mandate and on its website. We will be doing that as we work through the bill that is before us. Also in making its representations to the Government and agencies the Royal Society will be including humanities wherever it is relevant and particular representations will be made about humanities. Obviously in collaboration with the Council for the Humanities which will become the Humanities Committee of the Royal Society there will be a particular focus on promotion and celebration of the humanities. 
I thought it was important to put on the record what the memorandum of understanding between the Royal Society and the Council for the Humanities means in terms of this purpose clause. I think it is a very good document that gives a solid foundation to the way in which the two organisations will now work together and it will allow the purpose clause to be enacted. I think this is a very important document. It shows that the level of collaboration between the Council for the Humanities and the Royal Society has been high for some time. They are committed to bringing this together. In fact they have largely incorporated most of the work required to bring it together and this legislation is merely the legal requirement on top of that. 
In one last point on this memorandum of understanding as I said in the last intervention one aspect of the memorandum of understanding is the statement that within 5 years the Royal Society will use its best endeavours to have its Act reflect the inclusion of the humanities. We are well ahead of time because this was negotiated in February 2010 so we have until February 2015 to pass this legislation. As I said the other day it might take that long. 
Hon Pete Hodgson 
: It won’t take that long. 
GRANT ROBERTSON 
: I say to Mr Hodgson that it probably will not but we certainly want to give it a thorough consideration this evening as we work our way through the clauses. At the end of this call I will seek the leave of the Committee to table this memorandum of understanding because I believe that it is an important part of the debate. I seek the leave of the Committee to table the memorandum of understanding between the Royal Society of New Zealand and the Council for the Humanities. 
The CHAIRPERSON (Eric Roy) 
: Leave is sought for that purpose. Is anyone opposed to that course of action? It appears not. Leave is granted. 
Document by leave laid on the Table of the House. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I think the memorandum of understanding will be pretty useful and I hope it will be made available to members soon. I was going to ask three questions about the memorandum of understanding but one of them has been answered and that is the date it is being written in. The second question relates to whether the memorandum of understanding was itself subject to any scrutiny by the academy council or the academy executive committee. The member in the chair Grant Robertson may want to reflect on that. I would assume that there has been consultation. I would further assume that in the course of the memorandum of understanding there would have been—I do not want to use the term “argy-bargy”; that is not appropriate for the Royal Society—carefully considered variances of view as people trolled through the vicissitudes of their various disciplines to see whether incorporating the humanities into the memorandum of understanding and therefore into the purpose of the Royal Society of New Zealand Amendment Bill was a legitimate thing to do. The member may choose at his leisure to give us some insight into the process by which the memorandum of understanding is drafted. 
I think the more important thing for members of the Committee in general is to reflect on the words in the memorandum of understanding that the member referred to when he said that where it was appropriate the Royal Society in making representations to Government would consider whether the humanities had something to offer. That is an area that I think we need to look at a little more deeply. 
Later on in the bill—and I appreciate that we are talking only on clause 4—when we get to section 6(e) in clause 7 it states that it is a function of the Royal Society “to provide expert advice on important public issues to the Government and the community:”. From now on that expert advice will include the advice that we can divine from the humanities. Let us reflect on what that might be. A good way to do that is to go to the British humanities scholarship group—the British humanities council the body of people in Britain who involve themselves with humanities. I suppose in an effort to sell humanities to the British public it produced a book about the sort of information that humanities might offer a Government of the day that might be helpful to the Government of the day. The book came out at about the time of the London bombings so it inevitably included a piece of research in which some sociologists and those who wanted to study the phenomenology of religion spoke at length with the imams of different parts of Britain—with the geographical distribution of imams but also with imams from different parts of the world; for example those who had come from Pakistan from Afghanistan northern Africa and so on. The researchers were able to give by way of this scholarship quite a lot of insight into a nation that desperately needed that insight. It is a good example I think of the humanities being of immediate value to the Government of the day. 
Another example just to get our appetites whetted—because I am sure other members will be able to offer the Committee further examples—is from New Zealand not England. It is not an immediate example it is historical and it is occasioned by the sad death of Judith Binney who of course through the latter part of her life wrote extensively on Tuhoe. I do not want to make any politics out of this but the Tuhoe claim is not advancing or it at least has got itself into trouble. Although I do not know where the Tuhoe claim will go in the future—others will know more than me—it is my assertion that when that claim is settled people will look back on Judith Binney’s work and say to themselves that had she not lived it would have been a different settlement. My assertion is that that is an example whereby one person’s scholarship quite narrowly defined but quite extensively done and most exhaustively written about will actively influence public policy that is in front of us in this country. 
So let us think now about other examples in the area called the humanities in which we the Government including local government those of us who are in the policy elite those of us who get to do the decision making will be informed by the humanities in the future and have been informed by humanities until now. I am asserting that we have been ignoring the humanities; that we have been absorbing their lessons almost in an indirect way in an unconscious manner and that the humanities influence public policy a great deal. 
This comes from a scientist. If members want to know where I have been greatly influenced by science they should refer to the Royal Commission on Genetic Modification. That is where I drew my public policy from. It was not from any opening or closing prejudice or predilection or from a general view of the world but from the science alone. Why? Because I had nothing else to go on. This was new. I needed to know what the science said. It was a very good example of where science effected a huge impact on public policy. But very often it does not and the Royal Society would much rather that it did more often than it does. I am making the case as a scientist not only for science but I am beginning to make the case for the role of humanities in public policy. This purpose clause is a good place to do it. 
The member in charge of the bill has reminded us of the memorandum of understanding that exists between the humanities of New Zealand and the Royal Society of New Zealand to bring them together and spoke of the role of humanities when the Royal Society was making representations to the Government or was involved in some educative process. Those of us who think that humanities are nice only that they are just poetry should think again. Poetry may not directly affect public policy a lot but history does and geography does. Just think of the Geographic Board—people who go around renaming things. Think of the role of the humanities in our trying to get the nomenclature of our own place in order. It takes a bit of time and we do not do it without expert advice. So there is another example. I am sure many members will be able to leap to their feet when I return to my seat to give examples of where the humanities have been instructive or have been in some cases perhaps even inspirational in determining Government policy. We do not have to always rely on what the health professionals say what the physicists say what the educationalists say or what the social scientists or political scientists say. We can reach to the humanities. We can ask historians what they have to say about life. 
Hon Member 
: We all have feelings. 
Hon PETE HODGSON 
: We all have feelings. We can ask people whose skill is with language who are skilled linguists what they have to say about that. We all know that this is the one country in the world where there is a particular language known as te reo which if it does not exist here it will not exist anywhere. We are absolutely beholden to the humanities for the maintenance of that the teaching of language to our mokopuna. There are a bunch of things to which the humanities make a contribution that I think have probably been underrated. 
I am coming to the view that I soon need to resume my seat. I have enjoyed this contribution and I do thank members for their close consideration and careful attention to my modest contribution. Thank you. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 What I would like to do is to follow on from Pete Hodgson’s contribution. I think he made a really important point that cuts to the very heart of the purpose of the Royal Society of New Zealand Amendment Bill which is the incorporation of the humanities into the Royal Society. I was reflecting on his contribution as he was speaking. 
The Prime Minister’s Chief Science Adviser Peter Gluckman is looking very much at the issue of evidence and scientific evidence in particular in terms of the contribution that that can make to policy. Although we support that—and of course we should be making decisions on the basis of evidence—Peter Gluckman makes it quite clear that we should at least have the evidence presented before us and as a result of that evidence we should make the decision. We may decide to take that evidence into consideration in the decision on policy or we may for political reasons decide to ignore it or take only some of it into consideration. But nevertheless that evidence is before us. Peter Gluckman makes a very good point in that regard. 
However I think what Pete Hodgson was also saying is that it is not just scientific evidence that is important in the consideration of policy but also history. He mentioned te reo the Maori language. That too is important when we are looking at policy in this particular place. 
I will go back to clause 4 the purpose clause to reflect on what the Royal Society itself says about the inclusion of the humanities in this bill. Clause 4(a) recognises that incorporating the humanities is a big step forward and an important step forward for the Royal Society to make. The explanatory note of the bill also notes that in November 2008—and Grant Robertson talked about this before in terms of the date of this particular legislation and how it came into being—the council of the Royal Society resolved that there was a need to expand the object and the functions of the society to include humanities. So we are looking at this legislation 2½ years on from when it was first considered. 
The Royal Society went on to say—and this is important—“The decision to extend and enhance the Royal Society’s Academy to include researchers from across all disciplines of science technology social sciences and the humanities is a landmark decision.” It recognises that this is not just a decision that was suddenly dreamed up by the Royal Society and the academy of the Royal Society. It was considered over a long period of time by the Royal Society and I think that was one thing that we recognised and valued when we were in the Education and Science Committee hearings—that this was not an ad hoc decision. Again I will quote from the Royal Society’s submission: “There is a growing appreciation at both national and international levels of the need for greater cross disciplinary dialogue to address the global problems that now occupy much of the research agenda.” 
That really comes back to what Pete Hodgson said in his contribution. In fact his contribution chimes very well with what the Royal Society was trying to get at and why it wanted to make this landmark change. The submission goes on to say: “The enhanced Fellowship at the centre of the Royal Society mirrors the situation in many of the world’s leading academies. This strengthening of capacity will enable the Royal Society to provide a significant contribution to present and emerging debates …”. I think that sums up the reason that we are here tonight debating this bill. I say “debating” but in many ways it is a traversing of the issues. [ 
Interruption 
] 
Hon David Carter 
: Let Parekura have a go. We need some entertainment. 
DAVID SHEARER 
: We will wait for the Hon Parekura Horomia. I did not want to be unkind; I probably should have sat down. I feel somewhat guilty now for seeking a second call to be honest. 
To come back on track with regard to the Royal Society of New Zealand Amendment Bill there were about 13 submissions on the bill which we heard very carefully. A number of those submissions were made in person and were made very passionately by people who were very concerned that the object of the Royal Society was to be eroded. I just want to reflect on the contribution of Bob Brockie— 
Hon Parekura Horomia 
: Bob who? 
DAVID SHEARER 
: —Bob Brockie—who is a weekly columnist for the  
Dominion Post  
and is also a scientist in his own right. What I would like to do is to note what he stated quite articulately about his opposition to the inclusion of the humanities into the Royal Society bill. He said: “The Royal Society might think that it is doing God’s work by bringing the Sciences and the Arts together. I don’t think this is the role of a Scientific Society which should stick to its knitting. From my observations there is very little traffic between the worlds of Science and the Arts and that is all in one direction. Science inspires a lot of artists but Artists rarely if ever inspire Science (science fiction writers are the exception). The Arts and Humanities can have their own Academy but finance it not from the Science Budget but from the Creative Arts and Heritage budget.” 
Although I think his point is probably slightly overstated compared with a lot of the other opposition that we have heard on this bill it does reflect the feeling quite strongly held that the Royal Society is going backwards in terms of bringing the humanities into the Royal Society. I think that that view is mistaken. What the Royal Society said in its submission was right. In fact the humanities are an extraordinarily important part of policy dialogue and other dialogues. As I quoted before bringing that in is enormously important. I will just wrap up on that particular point and hand over to the Hon Parekura Horomia and I will give him plenty of time to get to his feet. 
ALLAN PEACHEY (National—Tamaki) 
: 
 In speaking to clause 4 of the Royal Society of New Zealand Amendment Bill I will reflect for a moment on the comments of the previous speaker David Shearer. The only bit of merit in his speech was the way he opened his second call when he said in effect that he should not have taken it. It is time that this nonsense stopped. There is support across the Committee for this bill. As chairman of the Education and Science Committee that conducted the hearings into the bill I think it is time that I at least on behalf of members on this side of the Chamber apologised to the Royal Society for the way in which this legislation which is very very important to the society is being made into a farce by the tactics of the Opposition. The Opposition is trying to delay debate on— 
Dr Rajen Prasad 
: I raise a point of order Mr Chairperson. I fail to see how the member is addressing clause 4 of the bill in anything he has said so far. 
The CHAIRPERSON (H V Ross Robertson) 
: No the member has a few minutes in which to respond to any debate from the other side. But the member should come to the point. 
ALLAN PEACHEY 
: I am indeed trying to respond to the comments that have been made by the Opposition on clause 4. The difficulty is of course that there is actually very little to respond to. So on behalf of the Royal Society and members on this side of the Chamber I appeal to the Opposition to stop this nonsense. It is costing the taxpayer $31000 an hour— 
Colin King 
: How much? 
ALLAN PEACHEY 
: —$31000 an hour—while the Opposition unnecessarily delays the progress of this bill. It is a bill on which there is agreement across the Committee. It should be passed the Royal Society has asked for it to be passed and it is incumbent on this House to do that in a timely and diligent manner. But all the Opposition is doing in prolonging the debate on clause 4 and in prolonging the debate generally on this bill is avoiding confronting the issues of the Education (Freedom of Association) Amendment Bill. 
I think that approach brings no credit to that party at all. I say to the member in the chair Grant Robertson who has spoken on clause 4 endlessly that he should live up to his responsibilities as the sponsor of the bill. He has that responsibility and that honour as the member for Wellington Central and it will not be lost on his constituents that he is disabusing that responsibility with a smirk on his face because of a greater agenda on the part of the Labour Party. That brings no credit at all to that member. I appeal to that member to take a moment to reflect on the comments he made on clause 4 to reflect on the strategy that is being used and to question whether he is meeting his responsibilities to his constituents as the member sponsoring this bill. 
Hon Steve Chadwick 
: This isn’t the classroom or the schoolhouse; this is the House of Parliament. 
ALLAN PEACHEY 
: I heard the junior Opposition whip shouting at me a moment ago and I say to that whip that she should exercise some responsibility some leadership and some control over her team. The behaviour of the Opposition in the debate on clause 4 as in other aspects of this debate brings no credit to this Chamber and even less credit to the Labour Party. 
Hon PAREKURA HOROMIA (Labour—Ikaroa-Rawhiti) 
: 
 I have much pride in rising in this House of democracy and debate. I will certainly put to rest the notions of the previous speaker Allan Peachey. I have just watched someone who has taught the ABC to pupils over generations in the classroom. 
The Royal Society of New Zealand Amendment Bill is a serious bill as my learned friend from Wellington Central has pointed out. I wonder when I listen to the debate between those sciences that were supposed to be exact—only those sciences recognised through research and whatever else—and the other parts suggested as the humanities that have been put aside. I was the most uneducated Associate Minister of Education I think this Parliament has had because I was evicted from school at 16. But I learnt over 9 years as one of the longest-serving Associate Ministers of Education in this House that snobbery pervades in relation to unreal differentiations between the humanities and those supposed exact sciences. 
You see when Captain Cook came here he used cartography. He would put the line up take the angle and strike it. He used researched science and proof. Yet he did not know where he was going—he did not know where he was going. Generations before that my ancestors used their wills their hearts and the stars and they got there— 
Hon Pete Hodgson 
: And back again. 
Hon PAREKURA HOROMIA 
: They came back again. I think there has been a fair bit of snobbery by people like the last speaker who have tried to be harbingers of the isolation of those sciences. I think this is a wonderful and great opportunity for merging and recognising things. 
When I went to school we learnt about Shakespeare. There would be talk about a pound of flesh or there would be talk about Puck coming down at midnight or some damn thing. I was always astounded as a Maori living in a Maori environment and wondered why the hell we were thrust into that long-breadth learning about somebody who lived in Italy wrote stanzas and whatever else. We had great stories of our own. I believe marginalisation in the sense of educational progress came out of that isolation. What has survived? What has survived? Italian songs and stanzas that are 4000 years old—the arts! 
We can go into the Louvre and look around at things. Gee it is bigger than the Tolaga Bay community hall. We can look at things and stand in front of the Mona Lisa. The eyes follow us and we think it is great stuff. But it is not science; it is the humanities. Yet all those mugs go over there and pay money to go and look at it. 
In 1867 the Royal Society was started—a long time ago. That is why with respect we need to give this debate time. In 1856 the Maori chiefs went to Pukawa and they decided they would mirror those great scientists. They would get together collectively and form things not too dissimilar to the King and everything would be put right. But what they missed and what the old professors—Mr Hodgson’s ancestors—kept in their hip pockets was this great thing about science. 
At the end of the day I commend the member in the chair Grant Robertson for his effort in putting forward this bill and in getting general agreement for it across the Committee. It is like the great statement about the person who is about to inflict on us a lot of doom and gloom in about 2 hours and 54 minutes of sitting time—that is Budget day. I am not too sure what size they have used but there are “nice-to-haves” like psychology English literature arts and Maori. Who were the fools in the past who believed that those subjects do not have a place in any society especially the Royal Society which was mirrored by our people? 
It is like wine tasting: there is a science of fermentation and there is an exactness about prolonging tasting over a period of time so one quits the taste of the wine. But then people get pissed if they drink too much of it. Or they get a bit wayward. I am sorry Mr Chair—they get a bit wayward if they drink too much. Which is the right science? The one that is researched and states that we should ferment the grapes plant them try to avoid botrytis and keep the sugar levels up or the one that makes us happy? Which is right? 
I say to Mr Peachey that there is a very very serious case for merging these great studies and sciences. We have to capture our young people’s mindsets in relation to how they should be part of the Royal Society. They should be more than inspired; they should actually understand. 
Imagine a young Maori sitting in Mr Brown’s biology class in Tolaga Bay. There are two things they like: the Bunsen burner because they can burn something and the subject of unicellular animals such as paramecium and amoeba. They are fascinated because this is unlearned stuff. It is outside the sciences. They are attracted because they learn that those organisms breed and that their sexuality is carried out through the central cells splitting. The cell is surrounded by cilia which means fine hairs. Then that person understands that there are two little creatures unicellular things flying around in the air somewhere. That person starts to sit down with their mates and wonder about how they might trap some. 
Hon Paula Bennett 
: Wouldn’t this be more interesting if you said it in Maori? 
Hon Simon Power 
: In te reo. 
Hon PAREKURA HOROMIA 
: Well that is another point. The Maori language is not recognised. Shame on you— 
The CHAIRPERSON (H V Ross Robertson) 
: Not shame on me. 
Hon PAREKURA HOROMIA 
: Shame on the people who kicked it out. It is like being in Italy and their language being put under the mat. It is like being in Greece and their language being put under the mat. Why are these humanities not important? There is only one place where the Maori language is really important and it is here. Why? Because the Maoris are not going away. Captain Cook’s progeny and all those people who came from Australia such as my ancestors the Rutherfords have a lot to answer for at the end of the day. 
What we are doing here in fine community spirit is ensuring that these two great functions are merged and that neither is greater than the other. It is like the tax take at the moment. What is it about giving tax favours to the more well-off when the people at the bottom suffer? It is like not recognising the humanities. If we want to disconnect from the humanities let me tell the Scots to get rid of their bagpipes and take those skirts off or tell the Irish to stop drinking green beer. Yes that is right. It is like telling the English to stop going to big weddings—all of those things. Stop doing that sort of stuff. 
This has been a whole lot of nonsense. I am really really proud of my colleague for bringing this bill together for making history and for ensuring that simple people like me who were evicted from school at 16 will have a chance or my grandchildren will have a chance to learn and to become great scholars and will not have to worry whether they are in the humanities or the true sciences. 
If we are to say that everything has to be stood up and the impact and outcomes of years of research and information measured then I say stop feeling good stop believing we can do things and stop dreaming. What is that? Is it the humanities or the sciences? 
David Carter is the Minister of Agriculture. We have this great science that says that if we put so many tonnes of urea on the paddock the grass will grow. We have this science that says if we pour copper on cattle they will survive better and get heavier. But at the same time the cows piss in the paddock it leaches into the river and turns our rivers into dirty uninhabitable environments—and that is through science. Only people’s feeling that we must keep things green and clean will correct that issue because nobody puts effort into the science needed to correct it. So I am a strong supporter of the humanities. 
Jo Goodhew 
: Did the member get the wrong notes? 
Hon PAREKURA HOROMIA 
: I am not worried unlike those people who have no culture who bastardise everybody else’s dreams and joys and who sit on the other side of the Chamber. 
Hon Simon Power 
: Steady steady. 
Hon PAREKURA HOROMIA 
: That member is skiving off. He is not a bad bloke though. Simon Power has been a great man. He has run the justice portfolio with an iron hand. He has used science he has measured everything and he has ensured that the countables are counted but he has used his heart. He has a heart this Simon Power. I am trying to get him in trouble with his leader. He has a good heart and that is the truth. That is why Paula Bennett is sitting next to him. She is trying to get from him the ways to feel about the heart. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 It is not easy to follow a great orator like the Hon Parekura Horomia but I will give it my very best shot. I have to say that Mr Horomia showed exactly what this Royal Society of New Zealand Amendment Bill is all about which is the bringing together of science and the humanities through the poetry with which he described some of the environmental challenges that we face through the degradation of our rivers in this country. Of course there is a lot of science involved in monitoring our rivers for the nitrate levels and the other things that we might find in them but could we have heard them more poetically described than we did when the Hon Parekura Horomia spoke this evening? 
I fully support what other members have been saying tonight. I support this bill. As someone who has taken papers in such diverse subjects as biochemistry the history of New Zealand politics inorganic chemistry and the English language I have great interest in this coming together of the humanities and science. Although there seems to be—and Mr Peachey pointed this out—a pretty uniform agreement around the Chamber on this bill I am not sure that the same can be said of the members of the Royal Society itself and of some of the practitioners of science out there in New Zealand. That was borne out I think in some of the submissions at the Education and Science Committee. I wonder whether the member in charge of the bill might be able to address some of those issues. 
When I first looked at this bill I reflected on a number of the meetings I have had with Royal Society members in Palmerston North many of whom are involved with Massey University. On a number of occasions I have heard those members lament the fact that in their opinion not enough young people in New Zealand these days are engaging with the sciences or feel so connected to the sciences through their time at secondary school that they wish to continue with a career of studying science and technology at university and maybe go on to undertake some research in science and technology. In fact they lament the fact that too many young people are perhaps taking off to the humanities and studying subjects such as English French geography and subjects like that. I wonder just how much support there is amongst the rank and file members of the Royal Society for this bill. My concern about that I think is borne out in some of the submissions that the select committee heard. 
I have to admit that I come to this debate rather belatedly. This is the first opportunity I have had to participate in the debate but while looking at some of the submissions I noted that some submitters said the exact definition of “humanities” was difficult to provide and that “humanities” was a vague term. I know we will come to that matter later in the debate on clause 5 where there is a definition of the humanities but it seems rather limited and I wonder whether it is too limited. I think some of the submitters are right as the humanities are difficult to define and I wonder whether the member in the chair has some reflections on that. There was even a submission that said there was no need to change the current Act because the Royal Society of New Zealand Act could be interpreted to include humanities fellows. Obviously there is some concern out there amongst the science fraternity that this bill in some ways waters down what they do. 
Although the Royal Society proposed this bill and asked the member Grant Robertson to bring it to Parliament I wonder about the process that it used to engage with its members. I am sure other members who were on the select committee might be able to discuss that issue. This matter is central to the purpose of the bill. Clause 4(a) states that the purpose of the bill is to “incorporate humanities into the object and functions of the Royal Society of New Zealand:”. David Shearer reflected on the submission of Dr Bob Brockie who made comments that science and the humanities were incompatible. 
CAROL BEAUMONT (Labour) 
: 
 It is a great pleasure to rise and speak to the Royal Society of New Zealand Amendment Bill and to acknowledge my colleague Grant Robertson who I believe has taken this matter very seriously in bringing forward this bill. I acknowledge his work on it and his representation of this organisation which is based in the electorate that he so ably represents Wellington Central. 
As others have said the purpose of this bill—I thought I would remind people—is to amend the Royal Society of New Zealand Act 1997 to “(a) incorporate humanities into the object and functions of the Royal Society of New Zealand: (b) rename the Academy Council: (c) amend the standard for the election of Companions of the Society: (d) amend the election process for Councillors of the Society.” I will talk about one of those purposes in this call although later on I will come back to others. 
Incorporating the humanities into the object and functions of the society is the core part of this bill and I think it is very very important that it is done. It makes a great deal of sense. Others have talked about their areas of studies. I did a degree in social sciences. Arguably it would already fall under the authority of the Royal Society of New Zealand. Social sciences would be seen as science for the purpose of currently belonging to the Royal Society. 
However when we look at a subject or a series of subjects we can see that a number of them are made up of different components. Take the subject of geography which is the subject I majored in. Human geography is certainly a social science. Physical geography is clearly a science. And there is something in between all of that when we look at people’s relationship with the land and how they organise and place themselves on the land which is what the study of geography is really about. That can be conveyed through poems music art and a whole range of mechanisms that one might call the humanities. So in fact many subjects are effectively interdisciplinary in nature. It seems to me that one of the advantages of this change is to recognise that many many subjects touch across a whole range of areas and that makes that traditional division no longer useful. Take environmental studies; again we can see it has physical social and humanities elements in it. 
I want to give a particular example because it is one that I have recently been looking at. It is the issue of violence against women. That issue can be studied at a university for example as part of women’s studies sociology or history which is one of the humanities. The reality is that it is interdisciplinary. The fact of the matter is that creating this new object and function of the Royal Society is entirely appropriate. 
I want to illustrate that a little bit more. At a conference I was at over the weekend we were talking about the issue of violence against women. As many in this Chamber know it is a very serious troubling and pervasive problem. We can look at the problem from the point of view of the history of it. What is it that society has experienced over generations in relation to violence against women and where has it come from? What has been the underlying reason for the sexual and other forms of physical violence that women face? What has created that? Is it an issue of power perhaps? Is it because of the view that men own women and can treat them in any way that they want? Certainly if we look at the relationship between men and women in a historical context we might come to that conclusion. 
At the conference I was at in Australia over the weekend we were shown a T-shirt. It was illustrative of what one might loosely call art—one of the humanities that under this provision is now being incorporated into the objects of the Royal Society. This T-shirt had a very ugly drawing of a woman who was bound and bleeding and the words that went with that were “Relax it’s just sex”. That is a deeply troubling image. I think that image is quite powerful; the words are powerful and the image is powerful. My point is that up to that point in the conversation at the conference we had been talking about numbers about the number of women who have violence inflicted upon them. We had been talking about politics and what the political response was. 
While I am talking about that I note that $86 million of new money has gone into the issue of violence against women and girls in Australia—A$86 million of new money—and there is a 12-year plan to tackle the issue. Sitting there I could only compare that with what is going on in New Zealand where we are cutting funding in the area of violence against women where refuges have had their funding cut by $700000 and where Te Rito and child advocates have had their funding cut. 
I come back to my point which is that we were having a political discussion on the issue of violence against women and children. At that point the T-shirt was shown. 
Jo Goodhew 
: I raise a point of order Mr Chairperson. I am really struggling to work out how this fits with the purpose of this bill and I ask for your assistance in that matter. 
The CHAIRPERSON (H V Ross Robertson) 
: I am listening to it. It is a wide-ranging debate and it has been for the whole of the debate. I am quite happy to let the member go on but I caution her to try to keep it pretty close to the bill. 
CAROL BEAUMONT 
: The point I am trying to make and I will spell it out for the member opposite so that it is clear is that clause 4 states that the purpose of the bill is to include and incorporate the humanities in the objects and functions of the society. The point I was really making was that social sciences are already included in the definition of the society and in its coverage. The physical sciences are already included. What is being added in is what one might call the humanities. I was trying to point out—just so the member opposite understands—that many areas of study are now interdisciplinary or multidisciplinary and elements of all three of those things may come into play. 
The example I was giving and it was foremost in my mind because it was so powerful was the issue of domestic violence and the study of domestic violence. A number of different subject areas including those in the humanities try to explain what the problem is about and the consequences of it. The T-shirt I referred to was a graphic representation that somebody had made. They had not done it for shock value. It was on sale as a serious but very troubling statement of attitudes about violence towards women. My point was that the politics is probably covered as a social science but the imagery and the words of that T-shirt which say a great deal about the issue of violence against women and girls perhaps are not. The value of this change to the Royal Society of New Zealand Act is that it will incorporate the humanities and those distinctions will not be relevant any more. Subject areas like women’s studies environmental studies and many others that are interdisciplinary will certainly not have any strange or arbitrary distinctions made in particular elements. I think that is very important because how we understand things as people how we learn and how we convey knowledge is not in just one manner. We can learn a great deal about particular topics by for example looking at a cartoon. A visual representation of an issue can often convey a great deal more than a chapter in a book. 
So I support this bill and I acknowledge again the work of my colleague Grant Robertson in bringing this bill to the House. I think it is important that we debate these types of distinctions and I am really looking forward to outlining a little further the definition of “humanities” which is referred to in clause 4 which outlines the purpose of the bill. It states it is to “(a) incorporate humanities into the object and functions of the Royal Society of New Zealand:”. I think there will indeed be a lively debate on the definition of “humanities” which is included in clause 5. There has been some interesting discussion as I understand it in the Education and Science Committee about that definition and whether it is sufficient to outline what we are talking about in the purpose of this bill. With that I look forward to resuming this debate later. 
JO GOODHEW (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I thought this might be a timely opportunity to respond to one or two of the comments made by colleagues from both sides of the Chamber. 
To begin I respond to Pete Hodgson who in his initial contribution on the Royal Society of New Zealand Amendment Bill raised two very important issues. The first issue was the process that was gone through to reach the point at which the humanities could be drawn into the Royal Society to create—as my colleague who has just resumed her seat Carol Beaumont highlighted—the situation where so many issues that we face today are in fact a combination of the sciences and the humanities in terms of the way we deal with them the way we talk about them and the way we describe them. 
This is not a decision to be taken lightly. The Royal Society is an organisation with a huge history. I am not allowed to refer to Mr Hodgson’s absence but the last time we discussed this bill we had a debate about when the Royal Society commenced. I discovered that on 10 October 1867 it began its life. It is an organisation with a great deal of history. It is an organisation with a serious contribution to make and it has up to this point been composed of what we would call scientists. It includes the social sciences already and that has caused some confusion but it has been up to this point an organisation associated with science in its most serious forms. The inclusion of the humanities therefore is not something to be taken lightly. 
Mr Lees-Galloway also raised the fact that people were concerned about that inclusion and we discussed earlier in the debate the submission of the Wellington branch of the Royal Society to the Education and Science Committee. It raised the concerns that Mr Shearer and others have raised regarding the question of whether there is a dilution of the sciences and of the ability of the society to advance sciences by the inclusion of the humanities. It raised those concerns as an organisation that as it pointed out had been going longer as a Wellington branch than the Royal Society had overall. 
The Royal Society responded to the select committee with a very thorough explanation of the process. It goes right back to the fact that the decision to incorporate the humanities was presented to the council of the Royal Society it was presented to the Academy Council and it was presented to the fellows over a period of time through 2009. At all of those occasions the fellows the Academy Council members and the council members were given the opportunity to give feedback and at each stage of that process there was a universal endorsement of this idea. The reason there was a universal— 
Hon Pete Hodgson 
: Fancy scientists agreeing on anything. Fancy that. 
GRANT ROBERTSON 
: Exactly. As Mr Hodgson said it would be a rare time to find such universal agreement among scientists and social scientists. 
The letter from the Royal Society to the fellows is very interesting because it makes the point that for the promotion of scholarship and excellence in research in New Zealand there needs to be a coming together of the arts and the sciences. Although there was dispute in the submission made to the select committee the decision to incorporate the humanities was thoroughly discussed. It was not totally accepted by all members of the Royal Society but at the council level at the academy level and at the fellows level it was accepted. 
To answer Mr Hodgson’s question: yes there was a degree of argy-bargy but it was not at the level that would stop this bill going through or that would make me as the member for Wellington Central on being presented with a bill—which I am taking on behalf of the Royal Society—have any concern about it. I have been at great pains in this debate to acknowledge the fact that there was some debate from the Wellington branch in particular about this but overall the benefits to the Royal Society of incorporating the humanities are great. 
The other point Mr Hodgson raised in his speech regarded the question of the importance of bringing these disciplines together. Mr Hodgson mentioned the Royal Commission on Genetic Modification which I was also involved in as a non-scientist looking to interpret relatively complex scientific concepts in a political way as the adviser to the Minister who was responsible for that royal commission. That was the classic bringing together of the sciences and the arts. In fact some of the contributions on the ethical dimensions are to me the cutting edge of why humanities and sciences need to come together. 
But with respect to Mr Hodgson I say that to me the most interesting aspect of this legislation is the future not the past. It is the opportunities that the bringing together of the arts and the sciences provides for us in the future. We had a lot of talk about knowledge societies about knowledge waves and about how we will add value to our products. I know if Mr Hodgson ever goes to Westpac Stadium he will look out and see all that wood all those logs sitting piled up on the waterfront. It grieves him to see that because sitting there is the product of nature and the product of science yet we have not applied the innovation to it to turn it into something of greater value to New Zealanders. That is the coming together of the arts and the sciences that I want to see. That is the bit where the Royal Society can contribute to how we bring together innovation. 
All over the world innovation in science has been driven by multidisciplinary teams. We can go to any country. We can go to Taiwan and see innovation parks that include not only scientists and engineers but also designers historians linguists and marketers—people who will actually bring the concepts together. We do not have to go to Taiwan; we can just go to see a factory in New Zealand. I went to a Fonterra factory recently. The designers and the artists who do the packaging are as important as the people who are working out whether they can put probiotics into milk. What can they do? How can they actually make those things work together? That is the bit that I am focused on I say to Mr Hodgson: the future of the linkages between the arts and the sciences. 
I turn briefly to Allan Peachey’s contribution. I will say two things. The first is that I am not sure whether Mr Peachey was listening to me when I worked my way through the memorandum of understanding between the Council for the Humanities and the Royal Society. I will repeat for his benefit the clause in point two of the memorandum of understanding which states: “Within 5 years the Royal Society will use its best endeavours to have its Act reflect the inclusion of the humanities alongside science and technology.” That was written in February 2010. Here we are in May 2011 making excellent progress towards that goal. In the meantime the Royal Society and the Council for the Humanities have begun working together bringing fellows together from the Council for the Humanities and the Royal Society and working on exactly the things we have just been discussing. We are providing the legislative tick-off to that and we will do that in time. 
I think it is sad for Mr Peachey to say it is somehow wrong for members of this Committee to want to make a contribution about one of the most important changes to the way we think about knowledge and future innovation in New Zealand. There is an opportunity on members’ day for individual members to decide they want to stand up and talk about the importance of science and the arts and humanities together. I think that is a good thing. 
Mr Peachey is concerned about a bill further down the Order Paper about freedom of association. Mr Peachey knows very well that there were opportunities to change that bill in the Education and Science Committee which might have seen it progress a little quicker but those opportunities were not taken. From my point of view as the sponsor of this bill I will not take the blame for members of National not taking the opportunity to progress that bill in a much quicker way. 
I will support this bill because I think it is a good bill. I will not stand here and say that people cannot be allowed to have their say on this bill. This bill deserves debate. It will pass; it will pass well before the time limit the Royal Society has set for itself. In the meantime the Royal Society will have the opportunity to develop the linkages that it is already developing knowing that the bill will get the legislative passage it needs. 
I think we have heard an interesting debate on clause 4. I know there are colleagues who have yet to make a contribution on clause 4 “Purpose” who want to. It is an important clause in this bill because it defines exactly what we are doing and why we are doing it. I think there needs to be an opportunity for people to be heard on this bill. Members make a choice on members’ day to come to the Chamber and have their say. There are very few opportunities for members to talk on their own terms in this Chamber in the system we have. This is a very important opportunity. I urge members who want to to take a call. The Royal Society knows I am taking a responsible attitude to the passing of this bill. I strongly support it. It will pass in good time when all members have had the chance to have their say. 
COLIN KING (National—Kaikoura) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
Clause 4 agreed to. 
Clause 5 Interpretation 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 Clause 5 is the interpretation clause. It is where a number of quite significant changes are being made. As members know Te Ururoa Flavell has an amendment to clause 5(2) which we will come to in time. I note before we do that his amendment has been consulted on across the House and there is agreement to it. The Royal Society itself is comfortable with the change and supports it going through. So I hope that all parties in the Chamber will be able to find their way to support it. It will be helpful to have an explanation of the process and how we arrived at it. 
Before we come to that though there is clause 5(1) which amends the Act by “repealing the definitions of ‘Academy bylaws’ and ‘Academy Council’ ” and substituting the definitions included there. The important point as was raised earlier was the confusion that could occur by having an Academy Council and a separate council of the Royal Society. The Academy Council is essentially the science scholarship committee of the Royal Society and the council is the governance body. But by having one called the Academy Council and the other called the council there was scope for some confusion. Therefore the decision was taken to rename the Academy Council as the Academy Executive Committee. 
Some might say that is a minor point but it is important. Those two bodies represent the different strands of work of the Royal Society. The council has the overall governance role to ensure that the Royal Society is performing the functions outlined in clause 6 which we will come to forthwith. It is about fostering the culture of science and presenting arguments to the Government. There needs to be a body that can govern that work and provide the overall stewardship and leadership. That body does not necessarily have to include just scientists and it does not. Currently it includes someone like Phil O’Reilly from Business New Zealand. He brings an outside perspective. He would not consider himself to be a scientist I think by any means but he has a valid perspective that is worthy of being included on that council. The Academy Executive Committee on the other hand is the harder science end of the operation. It is the part of the organisation that decides who wins fellowships and scholarships. It is at the hard edge of deciding what work the Royal Society will undertake within its scientific fields. That is what clause 5(1) focuses on. 
Clause 5(2) as I mentioned defines “humanities”. This has gone backwards and forwards a little bit. The original definition that came before the House included English and other languages and American studies at the end of it. That is a slight hotchpotch of subject areas. It was largely defined by subject matter that the Council for the Humanities tended to note when it described itself. I think the Royal Society made clear from the very beginning of this process that it was relaxed about that definition. It wanted a definition that was inclusive but that highlighted areas that people thought were important. The Education and Science Committee withdrew “English and other languages”—perhaps a member of the select committee might want to discuss that; I was not on the committee myself—“and American studies.” Te Ururoa Flavell has introduced an amendment that will include te reo specifically and also Maori studies. 
As I noted when I read out the memorandum of understanding I think that that falls in line with what the two organisations the Council for the Humanities and the Royal Society were trying to achieve in bringing themselves together. Right at the start of the memorandum of understanding the third point refers to the importance and value of Te Whanga Maori. It was recognised right off the bat that that was part of the bringing together of those two organisations. I actually think Mr Flavell’s amendment picks up that spirit; it includes te reo and Maori studies. There could have been an argument to re-include other things but the Royal Society is happy with where it has ended up. As I have stated before I am here on behalf of the Royal Society sponsoring this bill and it is comfortable with the amendment that is on the Table in respect of clause 5(2) but it would be useful to hear from someone on the select committee at some point about why the change was made to withdraw English and American studies originally. But I do not think that we should concern ourselves that the amendment is in any way hostile; it is in fact very supportive of the original agreement of the Council for the Humanities and the Royal Society to bring this bill to the House. 
I think clause 5 is an important one because what it does is define two specific changes that have been made: the change to the structural part of the organisation and also the change to the definition around the bringing in of humanities. Just to clarify once and for all I say that the social sciences are already there so my own subject of political studies is covered already and humanities is defined as it is here in the bill and in the amendment from Mr Flavell. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Chairperson. Kia ora tatou e hoa ma e hui nei i tenei po. I thank the member in the chair Grant Robertson for giving a lead-in to our korero tonight. I very much thank him for his cooperation—and indeed that of the Minister—in getting us to the point where we are at tonight. 
I will set the scene as to how this amendment came about—this very good amendment in my name that I am sure will be supported by all members of the House. At the opening address of the United Nations Permanent Forum on Indigenous Issues earlier this week the United Nations Secretary-General Ban Ki-moon welcomed the fact that the United Nations Declaration on the Rights of Indigenous Peoples finally had the consensus it deserved. He challenged nations to make the declaration’s principles a reality and to protect and promote the rights of indigenous peoples simply because it benefits all of us. This Royal Society of New Zealand Amendment Bill seems an absolutely appropriate place to apply some of this wisdom. 
The bill amends the Royal Society of New Zealand Act 1997 through a number of measures including incorporating the humanities into the objects and functions of the society as other members have spoken about tonight. When the bill came to the Education and Science Committee members examined the provisions and recommended that it be passed with the main substantive amendment to the definition of “humanities”—basically clause 5. While doing so the committee also put forward some very strong guidance; specifically to omit mentions of English and American studies. Curiously however—and I take the member’s point about it being a little bit hard on them in terms of that action—in cutting out and deleting reference to America and England from this bill one thing that the Maori Party picked up is that the committee neglected to preserve and protect that which is purely of this land namely Aotearoa. That is basically where the Maori Party has come in. The committee crossed out American studies as a part of the humanities perhaps because we are not in America and it crossed out English studies as part of the humanities because we are not in England. But the Maori Party has suggested that in remembering who we are it is logical that we learn about te reo Maori Maori studies and Te Tiriti o Waitangi. 
Over a month ago I released an amendment to the bill to include Maori studies te reo and the recognition application and advancement of Te Tiriti o Waitangi in the definition of “humanities”. I will come to the definition shortly. These amendments would balance out the bill to identify and distinguish it as home-grown—a truly New Zealand bill. I proposed therefore a definition of the humanities which includes languages—and in particular te reo—history religion philosophy law classics linguistics cultural studies Maori studies media studies art history film drama and the study of Te Tiriti o Waitangi. That we thought was a pretty logical move. Part of that was not to insist on or mandate the compulsory study of te reo or even of Te Tiriti o Waitangi or Maori studies in fact much as some may well have favoured that approach. The amendment that we put up does not mean that people must study these disciplines; we simply propose that they qualify under the definition of “humanities”. 
We have developed this amendment not just because one of the submissions received on the bill—from one George Jones I am told—suggested that Maori studies must be included but because it is pretty unthinkable to consider the application of “humanities” in our land without consideration of the people of the land tangata whenua or the official language of the land te reo Maori or one would have hoped the foundation of our nationhood: Te Tiriti o Waitangi. This is Aotearoa - New Zealand. The fundamental source of authority for our country comes from Te Tiriti o Waitangi the Treaty of Waitangi. In that Treaty the Crown agreed to arrange governorship over Pakeha living here without British law. It has also guaranteed the continuance of Maori authority and sovereignty over our lands our villages and everything else that we treasure including our language culture and customs. In article 3 the Treaty affords Maori similar rights to those of British people. I quote the Hon Justice Durie: “we must not forget that the Treaty is not just a bill of rights for Maori. We must remember that if we are the tangata whenua the original people then Pakeha are the tangata tiriti those who belong to the land by right of that Treaty …” 
The Treaty is a bill of rights for Maori and non-Maori alike. Having at least put the case I would like to acknowledge the Minister Dr Wayne Mapp for his willingness to consider these amendments. We did not quite achieve the goal as members will see in terms of the amendment on the Table because one or two major bits have been crossed out but it was not through a lack of trying and it was not through at least some consideration by the Minister. We really appreciated his response to the notion that at least the Treaty section be taken out as it was indeed captured in I suppose the definitions of law and maybe even of philosophy and that that is why we had to remove that section. There may well have been other motives but we will leave those aside because we would have liked it to be a part of the bill. But in the end a gain is a gain and te reo Maori and Maori studies are significant in terms of their promotion and acknowledgment in this bill. 
As I said I appreciate the support from the Minister. I appreciate the work done by the honourable member Grant Robertson and of course the other parties. I assume that Labour is coming to the party. I am sure the Greens will be with us as well. In fact I am sure all members will support this amendment. It is very much appreciated and we look forward to adding its provisions to the definitions in this bill. 
Ko taku noa ake ko te mihi ki tena ki tena o tatou o te Whare. He mea nui tenei ki te whakanui i tenei ahuatanga o te reo Maori ka mutu nga tikanga Maori i tuhia mai ai ki roto i te pire nei. Ehara i te mea he kupu noa iho kao he wairua ano ra kai reira he tikanga ano ra kai reira ki te ki atu te reo Maori ehara i te mea he kupu pakupaku nei kare ona kiko. Ara no te whanui te wharoa o tena whakamarama tae atu ki nga tikanga Maori he pera ano te ahua. No reira ka mihi ra ki a tatou katoa i tenei po. Tena koutou kia ora tatou. 
[ 
I simply want to acknowledge each of us of the House. Magnifying this aspect of the Maori language and furthermore Maori customs by writing them into this bill is a significant thing. They are not just mere words. Far from it a sense of spirituality and culture is present as well saying the words are not just mere words of little significance or usefulness. The explanation of that is extensive and broad. It applies to Maori customs as well. So I acknowledge us all this evening. Greetings to you collectively and to us. 
] 
Dr RAJEN PRASAD (Labour) 
: 
 Thank you Mr Chairman and a big namaste to you. I thought you might have as is your practice used our indigenous or cultural greeting but I will greet you in mine Mr Chairman. 
The CHAIRPERSON (H V Ross Robertson) 
: Namaste. 
Dr RAJEN PRASAD 
: Thank you and namaste again. I am pleased to take a call on clause 5(2) of the Royal Society of New Zealand Amendment Bill and I am really pleased that here are the beginnings of additional free thinking regarding the sciences and regarding the work of the Royal Society which now includes a missing link a huge knowledge base and the many subjects that are part of the humanities discipline. I note that the interpretation clause does not give an exhaustive list of the subjects that are in the humanities. It simply states that the humanities include certain subjects and therefore it does not exclude many other subjects that are part of the discipline of the humanities. I urge the Royal Society to look at this more broadly when graduates of other subject areas want to apply for membership of the Royal Society through this provision. I hope it will be so. 
As a social scientist— 
The CHAIRPERSON (H V Ross Robertson) 
: I am sorry to interrupt the honourable member but the time has come for me to report progress. 
House resumed. 
The Chairperson reported the Westpac New Zealand Bill without amendment and progress on the Royal Society of New Zealand Amendment Bill. 
Report adopted. 
The House adjourned at 9.56 p.m.