Volume 695 Week 60 - Tuesday 19 November 2013(continued on Thursday 21 November 2013)Text is incorporated into the Bound VolumeVolume 695 Week 60 - Tuesday 19 November 2013(continued on Thursday 21 November 2013)[Sitting date: 19 November 2013. Volume:695;Page:15009. Text is incorporated into the Bound Volume.]Tuesday 19 November 2013(continued on Thursday 21 November 2013)Reserve Bank of New Zealand (Covered Bonds) Amendment BillIn CommitteeDebate resumed.TIM MACINDOE (Junior Whip—National): I seek leave for the Committee to take all parts schedules and clauses of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill as one question.The CHAIRPERSON (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.Parts 1 and 2 schedule and clauses 1 to 3JACINDA ARDERN (Labour): It is my pleasure to give a contribution in the Committee stage of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. Labour will be giving its support to this bill. We do have some reservations though in giving that support but we will traverse that over the course of this debate.The purpose of this bill—obviously covered bonds are debt securities issued by a financial entity. But at the moment the legislative framework for covered bonds in New Zealand is somewhat lacking. So opposing this legislation—and this is something that Labour has considered in giving its support—would not prevent the issuance of covered bonds but it would leave New Zealand without regulation and we would be concerned by that situation. That is one of the reasons why we are giving the bill support with reservations.To cover the purpose of this bill—briefly given that we are at the beginning of the Committee stage—the key feature of a covered bond is that bondholders both have an unsecured claim over the issuing entity and hold a secured interest over a specific pool of assets called the cover pool. New Zealand banks have been active in issuing covered bonds over the last 2 years and this has been carried out under contractual arrangements. However most jurisdictions—and we often look to jurisdictions like Australia when assessing whether or not we are keeping up with the play in terms of those jurisdictions that are similar to us—with banks active in the covered bonds market which includes Australia now have a legislative framework for issuance in place. The lack of a similar legislative framework in New Zealand does put New Zealand issuers at a disadvantage and that is one of the reasons why obviously this bill has been brought in.The bill establishes a legislative framework for covered bonds the purpose of which is to improve financial stability by ensuring that New Zealand banks have effective access to the covered bond market as a source of long-term relatively stable finance as an alternative source of bank funding. But the main problem that has been identified—which we are obviously trying to remedy with this bill—is a lack of certainty over the effectiveness of legal arrangements to segregate the cover pool assets from the assets of an issuing bank. So that is something that this bill is trying to address. The second problem that this bill seeks to address is ensuring that there is an adequate level of independent monitoring of information provided by issuers on cover pool assets. So the three things that we are likely to debate in this Committee stage are: first the requirement that covered bonds issued by New Zealand banks be registered subject to meeting registration requirements; second the independent monitoring of cover poolsby an asset monitor; and third provisions to amend the legislation including the Companies Act 1993 to clarify the treatment of registered cover bonds in the event of issuer insolvency.I think that anyone would agree that in this current environment and with the state of our financial markets in the past few years regulation is better than the absence of regulation. Hence Labour is lending its support to the bill because to not do that would mean a continuation of the status quo where we have an ad hoc arrangement which is contractually based as I understand it. That leaves us at a disadvantage when we are looking at comparable jurisdictions like Australia but that does not mean that simply having a regulation in its current form is going to necessarily tick off all the boxes that we would be looking for—all of the acid tests that we would have—for legislation such as this. My colleagues who have been involved in this area a little more closely than I have will I am sure traverse some of that in their contributions.One of the things though that we are also likely to cover is that the effect of covered bonds currently is to create a class of lenders to banks who have a higher level of security over banks compared with other lenders. That is unfairness in that it creates a two-tiered system. Most covered bond holders are foreign institutions. So the question is where does this leave mum and dad investors whom we have so frequently heard about—Dr DAVID CLARK (Labour—Dunedin North): This issue is one that we debated at length in the Finance and Expenditure Committee although that was some time ago. I look across and recall Mr Bennett from the other side of the Chamber there participating in this lively discussion in the select committee. Other members here will think back and remember the interesting discussions we had.If a bank collapses covered bonds have a higher priority to banks over other lenders including ordinary mums and dads. There is no doubt that it is desirable to have some legislation in this area. It seems a good idea to have an instrument that is protected from runs on banks and from other unforeseen financial situations in order to attract a certain kind of lending at a premium. Having a covered bond is a mechanism that is used around the world to provide some financial security to banks and to other lenders. We know that $6 billion worth of bonds has been issued over 2 years without any regulatory oversight so it is clearly an area that needs to be addressed. It is good and it is timely to do so.Our question on this side of the Chamber is whether the percentage of a bank’s assets that can be placed in this position is too high. It is possible that the 10 percent limit is too high. We looked at other examples overseas and we found that in Australia it was lower—I think around the 8 percent mark from memory—and in Canada it was as low as 4 percent. So we ask whether the big end of town needed this much protection and whether in fact that level could be set lower. Those who were pushing the case seemed determined that it should be higher. On this side of the Chamber that left us a little bit uncomfortable. So we are really arguing about where the line should be drawn.We on this side of the Committee are very concerned about small-business owners about mum and dad New Zealanders who take out a mortgage to start a business and about those who are putting their shoulder to the wheel taking the risks and borrowing money. Having them further down the list of people who are able to access capital in the case of a collapse seems an injustice. So we do not believe that too much of this covered bond lending should be happening and we would have less of it.We think of the recent example—not so recent now but not so long ago—of Mainzeal Property and Construction and the way in which individual contractors and small-business folk missed out on getting their money and worse than that getting their tools back. So Labour is of course proposing solutions in that area to make sure thatsubcontractors—the lifeblood of our economy those who go to work every day—and their interests are looked after. That unfortunately does not seem to be a priority for the National Government. It is more interested in making sure that the interests of big business are protected. I could digress into Chorus the Skycity Casino deal and Rio Tinto as other examples of that but I think it would be better to focus on the particular issue of covered bonds and quite where that line should be drawn.Labour will be supporting this bill I have to say despite our reservations. That is primarily because we think there needs to be a regulatory framework. We are actually arguing as I said at the beginning about exactly and precisely where that line should be drawn. The lack of a legislative framework has we think put New Zealand issuers at a disadvantage. At least with the regulatory certainty in Australia for those who are seeking to lend there is some certainty to the people they are lending to. As we know in the world of business often regulatory certainty is more important than other factors. Businesses like to know the risks that they are dealing with take their chances and develop a strategy around those risks.I think back for a parallel example to the emissions trading scheme. I had the privilege of working on that legislation as an official many years ago. When I contacted for example the oil companies I had oil companies saying to me: “We will scream if you put this legislation through. But we will scream quietly if we know what it is and we know the detail of it. However if the rules are not clear if the legislation is too harsh if it comes too soon and if it comes too fast we will scream loudly.” They were representing their interests their clients and their profits. But they are also like any business looking to the future and saying: “We can plan if we know what the rules are. We can plan our arrangements. We can work out how we are going to structure our debt. We can plan as to which areas of industry we go into and whether we move toward renewables.” I know that BP had a brand that was about a sustainable future. That has been called into question by more recent events but BP made choices about where it was going to put its business interests and that is around regulatory certainty.Certainly in New Zealand one of the discussions that we have in this Parliament often is around regulatory certainty and the ability to attract capital to our businesses here—not just overseas capital but New Zealand capital. There are some significant New Zealand companies that want regulatory certainty here or otherwise they will invest their money offshore.That is why we will be supporting this bill. We do think that that limit is a little too high and panders to the big end of town and that it makes sure that the big institutional lenders creditors and so on are protected rather than looking out for the interests of those who are starting up and those who are literally risking the shirt off their backs. We see the pattern there in the Government’s other behaviour but we appreciate the need for a regulatory framework.There are of course other areas where we would like to see the Government provide greater regulatory certainty in the interests of the financial well-being of New Zealand long term. Here we are talking about savings and putting savings at risk. In the KiwiSaver arena we would like to see universal KiwiSaver so that there is actually a greater depth of savings in New Zealand a deeper pool from which businesses can lend. We think of the Australian scheme which came in shortly before the National Government in the early 1980s canned the scheme we had here. They now have about $1.6 trillion in their retirement savings scheme and that is available capital. So that is good for small business. In New Zealand if you want to start a small business you are handing round the hat to your family members. In Australia there is a lot of capital and a lot of it is sticky capital that stays close by that is available for good ideas that pursues good ideas and that ensures growth in that economy.These are issues of savings. They are issues of how we protect lenders—whether we can attract good credit from overseas—and they are important issues for our country. There are of course plenty of others. There is the capital gains tax that we would like to introduce which we think would send money towards the productive sector again in New Zealand. All of these things actually reduce the risks that we are trying to cut off here. When you have an economy that is prospering and when it has got a balance of trade that is under control—a rebalanced economy—there are fewer risks in it. It is more attractive for investors over time because they see its health.It was very disappointing to see our economy downgraded under this Government’s last term because essentially it did not have the vision. It was not projecting the right kinds of figures in the period to come that would give the international ratings agencies confidence. I guess that is because this Government has run deficits consistently where the last Labour Government ran 9 years of surpluses. Michael Cullen was certainly a strong hand on the tiller. Our economy was running strongly but under this Government it has lacked a certain amount of vision. It has lacked the ability to convince those ratings agencies that we have a long-term plan for our economy that it is secure and that it is a good place to invest in the same way that the previous Labour Government has. This Government has a poor record on the economy—the worst economic record of any Government in the last 50 years in New Zealand—whereas the Labour Government certainly by introducing Kiwibank KiwiSaver and other measures pushed us towards more secure savings that will benefit small businesses in our economy which is the type of issue that we are dealing with here.The legislation itself has three main elements: a requirement that the covered bonds issued in New Zealand by banks be registered subject to meeting registration requirements which is a technical expectation that enables monitoring and makes sure that this does not get out of hand; independent monitoring of covered pools by an asset monitor; and provision to amend the Companies Act.Hon CLAYTON COSGROVE (Labour): Like my colleague we note that we will support the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill because in essence opposing it of course will not prevent the issuance of covered bonds. It will merely leave New Zealand without regulation and at a competitive disadvantage particularly with Australia as covered bonds already exist there. I have to say like my colleague Dr Clark and others on this side who have spoken in respect of this bill that we do have a reservation in respect of the unfairness that is created with a two-tier system whereby in the event of a collapse of course the banks get far better coverage and get to essentially secure their shirt and others do not.You could make an argument—and there is a bit of precedent for this—in respect of the big end of town being looked after. There are precedents with this Government in terms of looking after the big end of town whether it be those in the film industry or whether it be a negotiated disaster with Skycity where Skycity effectively took the negotiators and the Government to the cleaners but the big end of town tends to get looked after by this Government. The small folk those at the other end of the scale tend to have a different set of rules a different set of parameters and a different set of safeguards. As my colleague said we are mindful for instance in respect of Mainzeal Property and Construction Ltd where the big end of town was first in and those subcontractors and others even struggled to get their tools out of the construction site let alone the age-old problem of getting paid.So although we support the bill we have reservations in respect of it. I wonder like Dr Clark whether the limit of 10 percent of a bank’s asset base is indeed too high and whether that should not be brought into line with the 8 percent that exists in Australia. Why we would have a different system—why we would have a different tier? I do notthink has been adequately explained by the Minister in the chair the Minister of Internal Affairs. We would look forward to some explanation in respect of that. Why is there a difference? Why did the Government put in a different level and a 10 percent limit as opposed to other jurisdictions like—Dr David Clark: Very keen to hear what the Minister has to say about that.Hon CLAYTON COSGROVE: Indeed. Dr Clark says that he is very keen. I know the learned Minister in the chair will be all over this legislation. He would have examined it in great detail last night knowing that he was coming into the chair today but—Hon Shane Jones: Stu Nash knows the answer. Stu Nash.Hon CLAYTON COSGROVE: Stu Nash does know the answer. I look forward to Stu Nash providing us with that answer when he re-enters the fray in here in a matter of months as the incumbent has raised the white flag of surrender—“Custer’s last stand”. It is all over and various vermin are deserting various ocean-going vessels as it were. So I look forward to Mr Nash giving us a very good dissertation in respect of this. But it is a serious point.This legislation at its essence gives preference and a preferred status to banks. There are some reasonable rationales behind that. There are also some large risks and unfairnesses behind that especially when everybody else sits in the second row as it were in terms of the hierarchy if there is a collapse. So that being the case we will support this bill because covered bonds already exist. As I have said opposing it would not stop that but not having an appropriate regulatory framework and safeguards around it would put us at a disadvantage.I come back to this point. Why is it—and I would like an explanation for this so the Minister may want to consult the learned officials—a two-tiered threshold? I think people are getting quite weary of the fact that if you are a big multinational corporate—say Rio Tinto—anything is possible for you. Money rains from the sky and other places in order to help the big boys out. I think Rio Tinto made $4.3 billion last year—those poor souls who are scratching for every dollar they make. I think it was about $4.3 billion or thereabouts. Yet the Government went and gave it a big chunk of dough—$30 million of course. The Government threw money at it as if it was growing on the proverbial trees.Hon Shane Jones: Tossed it away.Hon CLAYTON COSGROVE: Tossed it away. [Interruption] Yes I am coming back to it. And the point I am illustrating is in respect of covered bonds where there is a two-tiered preference system where the big end of town stands ahead of others. Returning to my Rio Tinto point as an illustration of that what did we get for the $30 million? Maybe Mr Bennett could tell us. We were told that there would be job security for those folks.The CHAIRPERSON (Lindsay Tisch): Order!Hon CLAYTON COSGROVE: Indeed—job security for those folks never materialised because the Minister never asked. As the Chair quite rightly suggests there may well be a linkage to that in this bill. But the point is this: in the case of Rio Tinto and in the case of this bill preference is given to the big end of town. I would suggest there are probably some more palatable reasons as to why that is the case to some degree in this bill but certainly not in the case of Rio Tinto certainly not in the case of the film industry certainly not in the case of Skycity—Hon Shane Jones: Chorus.Hon CLAYTON COSGROVE: —and certainly not as my colleague points out in the case of Chorus where there is a simple solution and that solution is not a preference. That solution is an enforcement of a contract in the same way as a contract would beenforced in the private sector. It is real easy. If you negotiate a deal and the other party is not smart enough to outsmart you in negotiating the deal and you get the better deal that they cannot deliver on you enforce the contract. You do not run around with a begging bowl as happened with Rio Tinto and start throwing dough at it because the other party messed up. That is the point.So there is a body of evidence now over the last 12 months that National looks after those big corporates those mates up and down Queen Street yet when it comes to mums and dads they will be in the second row in respect of preference with this bill. We know over recent days that mums and dads have taken a bit of hammering out of this crowd because mums and dads were promised all sorts of things in respect of Mighty River Power and Meridian Energy. They were promised all sorts of things and they never eventuated. So the mums and dads will be sitting in the second row in the cheap seats—as the big boys the banks get the covered bonds and the preference—hoping that their investment positions and their financial positions are maintained.If you were an observer outside this place you could get the impression pretty quickly that National is concerned about only those in the skyscrapers and those behind the mirrored glass up Queen Street and a few other places. It is a bit like the bill we discussed last night the Financial Reporting Bill which I will not go into apart from the theme which was to practise what you preach and walk the talk. High standards outside are required of other parties but there are low standards in this place.So I say to the Government that we will support this but I think it is worth it for the record that the Minister gets on record an explanation a detailed one for the difference in the limit of the bank’s asset base which is 10 percent as opposed to the 6.75 percent limit in Australia. Why the difference? I think it is a simple question. The officials will be able to tell him if he does not know. I think for the record as we go through this legislation that that is very important. This legislation will have a benefit for some. Hopefully it will provide another mechanism for financial stability. But there will be those left wondering why that preference exists and why that difference in the limits exists in respect of Australia.I say in conclusion that we look forward to the Minister providing some detailed explanations specifically on that matter. If he chooses not to provide those explanations can I say to him that that would be quite telling in terms of his stewardship of this legislation.ANDREW WILLIAMS (NZ First): I take a call on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill on behalf of New Zealand First. New Zealand First will be supporting this legislation. Covered bonds go back to the 1700s. Denmark was the first country back in the 1700s to issue covered bonds so they are a very old form of financial security and an old financial tool. More recently of course they have been a major tool used by European banking but in more recent times the likes of the United States Department of the Treasury introduced them in 2008 and the Australian Treasury introduced them in 2010-11.New Zealand banks were the first in this part of the world to actually start using covered bonds which was back in 2010 but they did not have the legislative framework to work within which is the purpose of this bill—to actually give them that legislative framework to cover those bonds. Covered bonds are debt securities that are backed by cash flows from mortgages or public sector loans. A covered bond is a corporate bond with one important enhancement: it has recourse to a pool of assets that secures or covers the bond if the originating financial institution becomes insolvent. In this day and age in the world that we live in it is increasingly important that we do have these guarantees put in place to ensure a stable and reliable banking system. In this respect the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill does help to bringNew Zealand into line with many of our major trading partners—in particular Australia the United States and many of our trading partners in Europe and Asia.We did have some reservations as to why New Zealand was adopting the 10 percent maximum number of covered bonds as compared with Australia on 8 percent. In this House in Parliament and throughout legislation we are regularly referring to the fact that we need to harmonise as much as possible with our major trading partner Australia. When so much of our banking financial interests are trans-Tasman it is somewhat puzzling as to why we would not simply adopt the same 8 percent level as Australia and that we would have a higher level. That still has not been adequately explained. Countries such as Canada as we have heard are as low as 4 percent. It does beg the question as to why New Zealand would go to a much higher level. At the end of the day should a bank fail it means that these covered bond holders have preferential call over other investors in the bank other depositors in the bank and therefore we would not necessarily want to see the first 10 percent of any failure in New Zealand go offshore to international investors first perhaps before mum and dad investors in New Zealand. So I think this still does need to be addressed and I think it would be wise if the Minister could fully explain the reasons why that decision was made to go with the extra 2 percent.But basically this is another means of tightening up the New Zealand financial system. We saw 61 financial institutions go by the wayside in recent years through an appalling period of New Zealand’s financial history—the likes of South Canterbury Finance with $1.6 billion going down the tubes. That was picked up by the New Zealand taxpayer. That sort of thing cannot be allowed to repeat in the history of New Zealand. This bill is a mechanism to provide greater controls in this area more certainty about investment and more certainty about a major investment in this country. We are seeking greater investment in New Zealand. This is one means of encouraging more investment in New Zealand by international institutions. Therefore New Zealand First believes as it always does that if there are improvements to our financial system and improvements to our economy then it can only be a good thing. New Zealand First supports the bill.Hon SHANE JONES (Labour): Kia ora tātou. Mōrena. I stand to support my colleague here Dr David Clark. He and I were both at various points in our parliamentary history members of the Finance and Expenditure Committee and members of the Commerce Committee.I just want to focus a little on why the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill is necessary. In particular I want to remind us that it gives more confidence to the international providers of capital to New Zealand. The international capital providers want to ensure that when an adverse event takes place they have some recourse regarding their percentage of exposure and they are not completely unsecured but also having said that that their level of priority is not such that they monster everyone else or that they are left out to dry. This is important because it speaks to the notion of certainty. It speaks to the notion that when a financial entity seeks to raise capital it is then capable of taking a punt on how the regulatory framework will remain to the extent that its interests are if not protected then certainly able to enjoy a high level of priority.We are going into treacherous territory and I hope that this bill does compensate for the gross level of uncertainty that has recently crept in in respect of the speculative statements that are being made that the Commerce Act is likely to be changed. Once you start to change the regulatory framework at the whim or at the instigation of corporate welfare lobbyists such as those associated with Chorus it impacts rightthroughout the system—right throughout the system. Indeed it can have a systemic effect.That is why although we are going to support this bill it is absolutely essential that people bear in mind that when international financiers look at our economy they look at the Government. Then they look at the sense of whether or not a contract can be not only enforced but collected upon. Then they look at the institutions that a modern economy puts in place to ensure that all parties or stakeholders in a commercial equation have some level of protection. Let us just think about it. With international providers there are obvious disciplines around the financial entities—the banks. The fact that they do not pay enough tax is something that will be addressed at the end of next year when the National members sit over here and we on this side of the House sit over there. But at the moment that is another matter. The difficulty is how we continue to promote the positive story—although there is some upside with us agreeing to this bill—that regulatory frameworks will not be changed in some sort of capricious manner.What we must not do is allow the chair of a publicly listed company—now a shining example of the Government’s small business policy given that Chorus has lost 40 percent of its shareholder wealth so it probably now qualifies for a small business grant which is presumably what the Government has in mind in terms of corporate welfare. The deeper problem is that in order to rescue that particular entity we would then take the profound step of worsening uncertainty in terms of the commercial framework—the Commerce Act and the Commerce Commission. You may be thinking: “Well Mr Jones that pertains to what was formerly known as a large company. I think it is insolvent anyway according to the Prime Minister but the chair is a friend of mine.” But now that is starting to spread because when directors international lenders and international investors see that you can capriciously change the legal framework in terms of the commercial regulatory framework the cost of capital goes up.This bill is not going to overcome that problem. The cost of capital will go up. We have seen in here that the banks—and having known one or three clever roosters in the banks myself—can go and use these devices to raise capital at a lower level in the European bond markets. Let us hope they get their dollar assumptions right having had a bit of experience myself of that in the fishing industry. When the dollar does move against you it is not for the faint-hearted. The point I am making here is that these are sensible changes but unfortunately there is a larger threat. That threat pertains to the framework that is related to how commercial transactions and investors are dealt with. We will support the bill.The question was put that the amendments set out on Supplementary Order Paper 186 in the name of the Hon Bill English be agreed to.Amendments agreed to.Parts 1 and 2 schedule and clauses 1 to 3 as amended agreed to.Bill reported with amendment.Report adopted.Third ReadingHon CHRIS TREMAIN (Minister of Internal Affairs)on behalf of theMinister of Finance: I moveThat the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill be now read a third time. The bill sets out a legislative framework for the issuance of covered bonds by New Zealand - registered banks. It will provide greater clarity for both investors in covered bonds and depositors as to the treatment of the asset securing the covered bond in the unlikely event that the issuing bank defaults.The bill establishes a registration regime for covered bond programmes. An issuer commits an offence if it issues covered bonds other than under a covered bond programme registered by the Reserve Bank. In order to be registered the programme must meet certain registration requirements. These requirements aim to ensure that the cover pool assets are effectively segregated from the bank’s other assets and a cover pool monitor is appointed to the covered bond programme to provide enhanced monitoring. Following registration there are ongoing requirements on issuers of covered bonds—in particular reporting requirements. The issuer is required to keep the register of cover pool assets up to date and the cover pool monitor must be required by their contract to assess the issuer’s compliance with that requirement.The bill then clarifies the application of the law in relation to cover pool assets of a registered covered bond programme in the event that the bank that issued the covered bonds is placed into statutory management or into liquidation. The bill includes a transition period that delays the application of the bill to existing covered bond programmes to allow time for amendments to be made to the programmes to meet the registration requirements.This bill is important as it will improve the access of New Zealand banks to offshore covered bond markets. Covered bonds enable banks to obtain finance at a reasonable cost at times when it is difficult to issue other forms of debt. Further covered bonds provide New Zealand banks with a source of long-term funding which is important to reduce the vulnerability of the New Zealand economy to sudden changes in investment sentiment. This helps to promote overall financial stability and as such it does benefit all New Zealanders.Finally I would like to thank the members of the Finance and Expenditure Committee for their prompt consideration of this bill and also officials who have engaged with the industry and with other political parties. I commend this bill to the House.Hon CLAYTON COSGROVE (Labour): As we have already said—and we will not labour the point—the Labour Party will be supporting the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill with some reservations. We note that covered bonds already exist and can be legally issued in New Zealand but they lack a regulatory framework which in itself could indeed generate instability. So opposing the legislation will not prevent the issuance of covered bonds. It will merely as I have said leave New Zealand without regulation.We note that the effect of covered bonds is to create a class of lenders to banks who have a higher level of security over banks compared with others. We have said in the previous speeches that have been made that we have some reservation about this given that there is an inherent unfairness that a two-tiered system has created.Most covered bond holders are foreign institutions. The question is where that leaves mum and dad investors. We know that in recent days as we noted in the Committee stage the preference given to foreign entities institutions brokerage houses and others over and above the mum and dad shareholders has been evidenced—contrary to stated Government policy and commitment. It has been evidenced through the recent sale of Air New Zealand where the Government went out to the big end of town and the best that mum and dad could do was wait until the shares hit the market and then make a purchase. That was not the agreement. We know that the big end of town and the foreign institutions were in like big hungry dogs hoovering up those shares—as was the case with Meridian Energy and Mighty River Power.As we said in the Committee stage there is a series of precedents where this Government has preferred the large corporates in the formation of Government policy in respect of the film industry Skycity Rio Tinto latterly Chorus Meridian Energy andothers. One would be forgiven I think for sitting outside this place and looking at this piece of legislation with some scepticism bearing in mind that we all agree that it is imperative to ensure that there is financial stability within the commercial sector. But mum and dad Kiwis might be forgiven for looking at this piece of legislation with a tad of cynicism given the Government’s penchant for looking after its mates up Queen Street. That is a fact and the difficulty with that is that even if this legislation which does make good sense in large part in terms of increasing the stability of the financial sector gets degraded—if the integrity of that legislation gets degraded by the past and present actions of this Government—the question is where that leaves mum and dad. Where are those second-tier investors left as they sit in the cheap seats while the big boys secure their base?The other point that we raised in the Committee stage was the differing limits between us and say Australia—the proposed limit being 10 percent of an asset base. We did ask the Minister in the chair for an explanation. We thought there might have been one or two who sat on the Finance and Expenditure Committee and dealt with this legislation—Mr Goldsmith Mr Bennett I think and one or two others who were hovering around the Chamber mid-morning—who might have assisted the Minister in providing an answer which he chose not to give. I think that is unfortunate because a question does hang over the legislation as to why there is a difference. The Minister could have sought advice from his officials and put on the record why that difference exists to give some commentary as we move through the final passage of this bill. Or those learned colleagues opposite who were on the select committee and part of the processing of this bill—and there was not a heck of a lot of politics in this I have to say—could have taken a call and could have provided perhaps an explanation because that is left hanging in the ether.On this side of the House no one wants to see a financial collapse. I do not think there is anybody in this Parliament who would want to see instability rendered upon our economy putting commercial entities at risk and ultimately putting investors’ money at risk particularly those folks who have squirreled a bit away in trying to make some sort of capital increase or increase in value on their investments. It is in everybody’s interest to create and reinforce an environment of financial stability avoid collapses and avoid difficulties within the commercial sector. However that has to be done in an appropriate way and although we support this bill as I say we want to make it very very clear that this bill follows a history of preference given to some over others. We think that is a concern. Even if that might be appropriate in this legislation it is undermined by the actions of this Government in other portfolio areas.Probably the biggest example is as I said in the Committee stage Rio Tinto where it appears on the face of it that money was simply just thrown at an entity. I do not know whether Bill English got down on both bended knees or just one. The last time I checked when you actually try to strike a deal you try to get a bit back for yourself. When you do a deal with someone there has got to be something in it for them. What is that wonderful phrase that Peter Dunne used? “Willing buyer willing seller.” But generally both parties come away with something. This was—Andrew Little: At least his dignity.Hon CLAYTON COSGROVE: Indeed. Well if you do not get anything at least your dignity is intact—Mr Little is right. But in this case it was a bizarre example of Rio Tinto bending the Government literally over the barrel waiting to spring the trap because it had nailed itself to a deadline. And it sprung it all right. Rio Tinto tied the noose around Mr English on his ankles and dangled him up the flagpole until he squealed enough and gave enough and it ended up with a decrease in power price half the notice period and just for good measure because I suppose we are getting nearChristmas 30 million pieces of silver—30 million bucks. Then you look at the other side and you ask what the taxpayer got—zip zero nada.Dr David Clark: The comfort of increased profit for Rio Tinto.Hon CLAYTON COSGROVE: My colleague says: “The comfort of knowing that—”Dr David Clark: They only made a few billion last year.Hon CLAYTON COSGROVE: —“that multibillion-dollar company Rio Tinto would be kept warm in its old age and maybe a more—”The ASSISTANT SPEAKER (Lindsay Tisch): Back to the bill.Hon CLAYTON COSGROVE: Indeed. Well indeed. This is also about transparency. Maybe Rio Tinto will be able to afford a nicer bottle of Scotch to whip around the board table for the brothers and sisters a few extra Chrissie presents and another room on the house thanks to Bill English. The truth is this: what did we get? Nothing. What were we told? Job security. What did we find out? He did not even ask for the jobs to be secured. What do we now know? That many of those jobs are slowly in the restructuring going—The ASSISTANT SPEAKER (Lindsay Tisch): Order!Hon CLAYTON COSGROVE: Sorry. Thank you. I was getting a tad emotional there Mr Assistant Speaker. I am glad you brought me back to the bill because when it comes to potential job losses we on this side get a tad emotional about that because we care about those folks and we do not like people being given falsehoods and false hopes especially by the Government.With that small contribution we will support the bill. We will be monitoring it closely and I think it deserves as it is implemented close monitoring not only by this Parliament but by others outside this Parliament. As I say we all in this place I think are for financial stability—Dr David Clark: What about Mainzeal?Hon CLAYTON COSGROVE: —for ensuring that people’s investments are secured given that there is no such thing as a zero-risk investment. You know every time you spend a dollar every time you invest a dollar you take risk and there is no way any Parliament can perfect a zero-risk investment. But you do see collapses as my colleague said like Mainzeal Property and Construction where again the big boys got secured. They got the security blanket and those at the bottom of the heap and those subcontractors and others just had to sort of wait in the queue with the tin cup out hoping somebody might put a dollop of soup in it in the form of some monetary compensation or actually get their money back so that they could move on to other things.We will be monitoring this. We look forward to some interesting contributions in the third reading. I hope that Mr Goldsmith might take up the challenge and actually talk about why that 10 percent limit is different from say Australia’s limit and maybe give us his thesis as to why he thinks that is appropriate given that the Minister was sadly lacking. He either was not interested in the bill or did not understand the bill. It is probably the latter. But it would be helpful perhaps if some members of the Finance and Expenditure Committee who put this bill through actually stood up and gave some sort of narrative around it.PAUL GOLDSMITH (National): It is my pleasure to speak on the third reading of this bill the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. Ultimately this bill is an important part of the Government’s programme to improve the resilience of the New Zealand financial system to volatility in international markets. The Reserve Bank of New Zealand (Covered Bonds) Amendment Bill establishes a legislative framework for the issuance of covered bonds by New Zealand - registeredbanks. It will provide greater clarity for investors and depositors improving on the current legal ambiguity.So under this bill the New Zealand banks issuing covered bonds will have to register their covered bond programmes with the Reserve Bank and notify the Reserve Bank of issuance of covered bonds under the programme. Legal certainty will increase economic efficiency and financial stability because the banks will not have to pay an uncertainty premium to obtain covered bond funding and because certainty will improve banks’ access to the covered bond market.Ultimately that helps promote the sound and efficient operation of our financial system and ultimately that helps by lifting our economic performance. Through that we can create jobs boost incomes improve living standards and provide the world-class public services that Kiwi families need. This bill is only a small part of the jigsaw but it all goes to create that brighter future that New Zealanders look forward to under this National Government. On that basis I commend this bill to the House. Thank you.Dr DAVID CLARK (Labour—Dunedin North): Well after that brief contribution from the member—Moana Mackey: Less than 2 minutes.Dr DAVID CLARK: Less than 2 minutes Paul Goldsmith. We call him “less than 2 minutes Paul Goldsmith”; I hear others do too. He failed I am afraid to address the issue of why 10 percent should be the right number and why the international interest should be protected at that level when overseas jurisdictions protect at a lower level. I mean it is a little surprising. Mr Goldsmith is normally—at least technically—well versed in these things although his slightly jaundiced view of the world sees the kinds of Thatcherite policies he prefers often put forward—Hon Clayton Cosgrove: Be fair he wrote John Banks’ biography.Dr DAVID CLARK: Yes my colleague reminds me that he wrote John Banks’ biography. He is wondering whether there will be a sequel. But normally Mr Goldsmith is well versed in the actual technicalities of the issue and will put forward an argument at least in defence of a position. I guess it is a bit disappointing to the House that he is not prepared even to defend the legislation here. He is simply willing to see the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill go through.Paul Goldsmith: Well you’re supporting it aren’t you?Dr DAVID CLARK: He says that the Labour Party is supporting it which we are because we need some regulatory framework but we have already drawn attention to the inadequacy in that respect and it is a shame that the Government will not even articulate—and maybe it has lost faith in—its own view about where that line should be drawn. That is symptomatic perhaps of a Government that is out of touch—just get it done get it in place—but it is a long way down the track.We are passing the bill under urgency. We have had 2 years of unregulated bond issue. There has been no regulation covering financial bonds. In fact it may be longer now. There has been no oversight or regulation. There has been a very tardy response as you have heard and not well articulated as to why the line has been drawn where it has been drawn and why it should be higher here in protecting international interests and big-business interests over small-business interests—those who risk their shirt every day in terms of putting their own shoulder to the wheel mortgaging their own houses and so on. No argument has been put forward by Mr Goldsmith on that front.This is typical of this Government. It is 5 years since the global financial crisis and we have had 5 long years of this Government which has been very tardy to address issues in the financial sector and certainly where it protects small investors and small lenders. It seems not to be a priority for it at all. In fact on that side of the House it seems to have rather a negative view towards small-business people. National memberswould much rather protect the interests of capital the vested interests those who already have the money—the 1 percent—and the people who are their financial backers. It is a real shame that National members are not interested in the broader prosperity of New Zealanders and the opportunities that are presented for New Zealand’s future in having every New Zealander succeed having a country where all can live in dignity and make their best contribution. But that is National and New Zealanders are getting a little tired of it and I expect that will be reflected in the next election. When a Government gets out of touch when it has been here too long the voters start to turn off and they start to ask what the alternative is and we are certainly hearing that around the country.This lack of oversight of the covered bond market is indicative as I have said of a Government that has got its eye off the ball and is in no particular hurry to protect the small-business people of New Zealand. This approach is already in place in the UK Australia Canada and other jurisdictions and has been in place for a long time. Opposing this legislation if we were to do that on that detail would see only further delays and that is the point I would make to Mr Goldsmith who seems strangely silent now. He is not responding in any way. In fact he is almost invisible in this debate right now I would suggest.This lack of regulation is paralleled in other areas and it is unfortunate for New Zealand. The Crown Retail Deposit Guarantee Scheme was another scheme designed to protect a run on banks designed to make sure that those creditors did not pull out and designed so that we had secured lending for the country and it is estimated that $500 million of taxpayers’ money was lost as a result of the Crown Retail Deposit Guarantee Scheme. This Government has failed—absolutely failed—to investigate it. It failed to have an oversight of that lending scheme and the likes of South Canterbury Finance and others have collapsed because of dodgy lending. Likewise other finance companies increased their loan books with dodgy loans of up to 10 percent because it was Crown guaranteed. That is taxpayers’ money that has been handed over to those lending companies. It has been handed over willy-nilly by a Government that failed to observe what was going on when it signed a blank cheque gave it out to those companies and said: “We will guarantee all of your lending.” Of course many people invested but particularly those with interests that were not necessarily straightforward. Many ordinary New Zealanders invested their savings got caught up and got hurt and taxpayers as I say have footed the bill for all of it.This Government has steadfastly refused to investigate and that is typical of the lack of oversight that we see here in this legislation—the lack of willingness to regulate in favour of the mum and dad depositors and to look out for the interests of those who mortgaged their own houses to contribute to our economy. We saw that with the collapse of Mainzeal Property and Construction. The large firms got out OK but the subcontractors could not even get their tools off the building site. That is why I think that the proposals put forward by my colleague Clayton Cosgrove the excellent proposals he has consulted on around making sure that subcontractors get their dues when they are contributing to projects in New Zealand are well worth thinking about and well worth debating. I do not expect we will see much progress from this Government which seems very disinterested in small business and the little guy who works to get ahead or the woman or man who risks their own house in order to get ahead. There have been $6 billion worth of bonds issued over 2 years without any regulatory oversight.So it is good that this is finally being addressed by this Government albeit it is being done in a fairly tardy fashion. The point that Mr Goldsmith did not address was why these big lenders should be protected at a rate of 10 percent: why are 10 percent of a bank’s assets being run in this way as opposed to 4 percent in Canada or 8 percent inAustralia. The arguments were not strong at the Finance and Expenditure Committee in favour of having a bigger protection for the big end of town in New Zealand than in those other countries. The Finance and Expenditure Committee chair Paul Goldsmith was content to let that slide through. Mr Goldsmith—Moana Mackey: The chair?Dr DAVID CLARK: Well subsequently the chair. There was another chair at the time. Mr Goldsmith is now the chair of the committee and again is very silent on the issue. As I look across the House I see no response—not even a glimmer in his eye can I see across the House.Hon Clayton Cosgrove: No it was a glazed look.Dr DAVID CLARK: A glazed look? I cannot see it now. I cannot even make eye contact with the man. He is absorbed in other things—probably a little bit ashamed of the legislation in its current form. But there we are.The three elements of the legislation are a requirement that covered bonds issued by New Zealand banks be registered subject to meeting registration requirements. It is a sensible step. We can see what is going on. We can make sure they are not exceeding the limit even though it is rather high. The fact that there will be independent monitoring of covered pools by an asset monitor makes sense and the provisions to amend the Act to clarify the treatment of registered covered bonds in the event of issuer insolvency all make sense as measures in terms of the framework that has been set up. So we will be supporting the legislation. We have noted our concerns our reservations about the level of covered bonds in New Zealand as opposed to those overseas jurisdictions which seem more interested in growing new businesses and supporting entrepreneurs than in supporting vested capital interests but that is the National Government. It is there for the 1 percent to protect the capital interests of some of its mates. Even the big corporate interests are not safe; it is only the ones that have got the Prime Minister’s ear it seems. We saw that with the casino deal we have seen that with Bill English and Rio Tinto and no doubt we will see that with Chorus.It is only the ones that have the immediate ear of the leaders of the National Party that seem to be able to get the handouts as and when they wish for them. Not all big businesses seem to get the fair treatment; it is only some that are close to the National Party. That is something New Zealanders are growing increasingly tired of and something I hear over and over again in my electorate. New Zealanders are getting sick of a Government that does everything by deals and that is not prepared to regulate markets in good time to make sure that they are acting in the wider New Zealand interest. This is one of those examples here. We are glad that the Government has finally come round to regulating this sector albeit in a kind of slightly haphazard way that it is not prepared to defend. But it is good. This is a Government that has got a terrible record on unemployment which is much higher than when it took office. Real wages are worth less—The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member.Dr RUSSEL NORMAN (Co-Leader—Green): I rise on behalf of the Green Party to speak to the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. The Green Party will be supporting this legislation even though we have some significant concerns about it.One way to think about this legislation is that it is kind of like the equivalent of raising the private debt ceiling for New Zealand. There has been a lot of debate in the United States about raising the debt ceiling for borrowing by the US Government. I think it is something in the order of US$16 trillion at the moment. Likewise in Australia at the moment there is a very lively debate because the conservativeGovernment over there wants to increase the debt ceiling of the Australian Government to A$500 billion and the Greens have been resisting that suggesting that it should be a lower debt ceiling of A$400 billion. But in some senses what the covered bonds bill does is that it regulates a sector that enables the New Zealand private sector economy to borrow even more. It regulates that kind of borrowing and essentially facilitates more borrowing.So although this bill is a necessary step and we will be supporting it for that reason we should admit and recognise the underlying addiction to debt of the New Zealand economy that this bill is really a reflection of. Essentially it is like raising the private debt ceiling for the New Zealand economy as a whole because what it says is that New Zealand runs these huge current account deficits it has this massive external debt—somewhere in the order of $260 billion now in gross terms—and the plan looking forward is to increase the debt and to not pay our way in the world. That is this Government’s plan. The Government’s plan is to run very large current account deficits currently in the order of 4.3 percent of GDP which is the second-largest in the OECD after Turkey. So New Zealand runs these very large current account deficits.In order to finance these current account deficits we either borrow from offshore or we sell assets. New Zealand currently does a mixture of both so we are slowly selling off our productive land into overseas ownership. Most of the large corporations have already been sold into overseas ownership. We can look at the banking sector for the obvious example of that and in telecommunications it is a similar story. Then the other part of it is that we just borrow from offshore and the banks are the mechanism essentially to do that. So the banks do most of the borrowing and then channel it into the New Zealand economy. What this bill does is regulate a part of the banks’ borrowing the covered bonds section. So the banks borrow offshore using these covered bonds mechanisms in order to lend into the New Zealand economy and increase the debt of the New Zealand economy as a whole.Yes it is good that we are regulating this sector but surely alongside the regulating of this borrowing problem that the New Zealand economy has we should also have a plan to get ourselves out of constantly having to borrow from offshore in order to pay our bills. Unfortunately although this Government came into office—and Bill English said some really important things about trying to rebalance the economy where he recognised this problem. He said that international debt is the central biggest threat facing the New Zealand economy—of course it is the current account deficit that sits behind the growth of that international debt—and Bill English talked a lot about trying to get a balance put between the tradable sector and the non-tradable sector so that New Zealand could trade its way out of its debt position. But as he has failed to achieve that goal which was a very sensible goal he no longer talks about it.So when we look at the difference between the tradable sector and the non-tradable sector what we are finding is that the tradable sector is continuing to flat-line in New Zealand and that means that we cannot solve the debt problem. Because we cannot trade our way out of it we are continuing to borrow offshore in order to finance this debt problem we have. Once we say: “OK there’s no plan from the Government to get ourselves out of increasing our borrowing and increasing our foreign debt”—in fact the Government has a plan to increase the debt—“and if the Government’s plan is to increase the debt then what we need is a mechanism to regulate and facilitate this dramatic increase in debt that the New Zealand economy is loading up.” and that is what this bill does. This bill provides a way in which the banks can go to the offshore lenders and say: “We want to borrow more money to loan into New Zealand but in order to do that we will give you first bid on home mortgages in New Zealand.”So if one of these Australian-owned banks that are operating in New Zealand goes belly up it will be the foreign lenders that get the first bite of the cherry at the carcass of the Australian bank when it rolls over. It is on that basis that the foreign lenders will keep lending into the New Zealand economy. I mean that is the fundamental principle that sits behind the covered bonds bill. It means that if one of the Australian banks goes belly up and you are a depositor in that bank you will not get your money until the foreign lender gets its money because it is essentially first in the queue as a result of this bill.That has a certain logic to it because we are trying to facilitate the constant flow of foreign lending into the New Zealand economy and this bill provides a way to facilitate that and tries to decrease the cost of that lending by providing security to those overseas lenders but what it means is that depositors in New Zealand banks are now not at the front of the queue. It is the foreign lenders who are at the front of the queue when it comes to getting access to the assets if one of those banks goes belly up. You might say: “Well if we are a country that is constantly borrowing this is just what we have to do.” and there is a logic to that. I appreciate that and that is why we are voting for the bill. But surely this should make us look at our economic strategy as a country and say: “Well isn’t it funny that we are sitting here today in Parliament in order to pass a piece of legislation to make it easier for us to increase our borrowing from offshore?”. Should that not make us think: “Is this really a sustainable strategy for New Zealand as a whole to constantly run very large current account deficits”—the second-worst in the OECD—“and use all that offshore money to finance the New Zealand economy?” Is that a sustainable economic strategy for our country? We finance a current account deficit by borrowing which this bill will facilitate by enabling more borrowing and we do it by selling assets. Is that really a sustainable strategy?Of course you could keep doing it for quite a long time. We know that. New Zealand has run chronic current account deficits. So you know the Government says this when we press it about it. It says that New Zealand has run a current account deficit for a long time and that is true. You can keep doing it because we do have significant assets. We have still got a lot of land we have not sold off—probably about 90 percent of the land is still in New Zealand ownership. We still have some large corporates that have not been sold off but most of them have been. We still have some facility to borrow further. As we are seeing with this bill we can borrow more money from our offshore lenders and they will keep doing that for a while because we still have some space to borrow more. But is this really where we want to go?Do we want to say that what we are going to do is max out our ability to borrow cash from offshore using things like this bill—we are going to max the credit card out we are going to sell the house and we are going sell off as many assets as we can in order to fund our current consumption? Because that is what we are doing as our economic strategy as a country and we have now done that for a couple of decades. In order to fund current consumption we are selling off our assets and borrowing from offshore and this bill is the next logical step in that economic strategy by facilitating this offshore borrowing.I would argue that this is not a wise strategy for our country. What we need from our Government is a clear clear strategy for how it is going to get us out of this position. The Greens have put up various proposals on exactly this issue and it is the focus of our economic policy to rebalance the New Zealand economy. The Government made certain noises in that direction but so far it has failed to deal with the underlying problems. But this bill surely should be a moment when we look at ourselves and say: “Why are we standing in this House passing a bill in order to make it easier for us to borrow billions and billions more from offshore?”. Surely that should be a moment to stop and say thatour economic strategy is not working. When our economic strategy relies on offshore borrowing and selling our assets every year for year after year after year after year after year this is not going to have a happy ending. At some point our offshore creditors are going to either dramatically increase the cost of borrowing for the New Zealand economy or start actually restricting our access to credit. At that point there will be a significant adjustment.I would argue it is a much more sane strategy to start to make that adjustment ourselves now so that we can get out of the hole we are in rather than leave it up to our creditors 10 years down the track who are going to make that adjustment for us because they will do that. That is the real choice we have.What this bill does is it puts off the day when we have to make that choice because it says: “Well we’ll facilitate these creditors lending us more money by giving them first dibs on the assets of the banks”—which are the home mortgages—“and then the foreign lenders will lend us more money.” OK that is true. It does put off the day of reckoning. That is true. But to think that this solves the underlying problem is I think extremely foolish. If the Government does not realise that and it does not seem to then we have got a problem and the Government needs to change. Actually we need to deal with that underlying problem as reflected in the current account numbers and as reflected in the gross external debt numbers. This bill does not do anything to do that. It simply enables us to keep borrowing. Thank you.MAGGIE BARRY (National—North Shore): I rise to speak to the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill in its third reading. It is a bill that enjoys universal support but you would be forgiven for not thinking that if you listened to the Opposition grumbling on.We have indeed heard a lot of stuff and nonsense from the Opposition parties. In a manner of speaking they want to reinvent the wheel. When it comes to—let us just take one aspect—the Reserve Bank they want to broaden it out and remove the independence of the Reserve Bank. It has served us well for three decades. Leave it as it is.Labour members particularly seem to be under the illusion that is going to be a body that will generate a lot of income that those members would be able to change interest rates and that the Reserve Bank in a changed role would mean a changed economy. That is of course wrong and delusional like much of Labour’s policies.I guess you know that when you look at what this bill does—and it enjoys the widespread support of the House—there is not a lot more to be said. Peddling the old arguments would just be a waste of the House’s time. So without further ado I commend this bill to the House.ANDREW WILLIAMS (NZ First): It is a great pleasure to take a call following the member for the North Shore Maggie Barry and the amazing amount of information she provided to the House in that once again very short speech from the member for the North Shore.We still have not heard the answer—despite it being asked in the Committee stage and by speakers in this third reading we do not have the answer—as to why the 10 percent figure was chosen while Australia has 8 percent for the covered bonds market. In the likes of Canada it is 4 percent and other jurisdictions around the world range between that figure of 4 and 8 percent. We still have not had the answer. We have had members of the Finance and Expenditure Committee including Paul Goldsmith the current chair and other members of the committee including Maggie Barry and yet not one of them has answered the question. It is somewhat surprising that in the House of Representatives where quite clearly it is a pretty black and white situation—why has New Zealand adopted a 10 percent ceiling? The officials are sitting over there. I am surethey know the answer. I am sure they would love to give us the answer. It is probably a very sound and solid answer. It is probably a justifiable answer but we still have not been given the answer.Now we have got the Hon Gerry Brownlee in the House. Perhaps the Hon Gerry Brownlee has come along with the answer. Maybe he has been researching it all morning working out why it is 10 percent. He has probably been sitting up there on about the sixth floor of the Beehive—Hon Gerry Brownlee: Oh seventh.ANDREW WILLIAMS: Oh you are on the seventh floor Gerry? And he has been ringing through to Bill English’s office saying: “Bill why is it 10 percent?”. And Bill says: “I don’t know Gerry. I wouldn’t have a clue why is 10 percent. It is 10 percent.” And Gerry says: “Well I am going down to the House shortly and I should know why it is 10 percent because I hate going the House and not being able to answer the question.”With Gerry Brownlee being the Leader of the House I would have thought that he would have done his homework. He would have been up there on the seventh floor and he would have heard this debate. He would have been riveted to the television all morning and he would have said: “I am going to go down there and I am going to go explain all. I am going to explain all. I am going to tell New Zealand and I am going to tell the large viewing public out there in New Zealand why the Government has selected 10 percent while Australia is 8 percent. I am going to explain why when in so many other legal areas and financial areas where we try to harmonise with our big cousin over the Tasman we have selected 10 percent rather than 8 percent.” Why are we giving preference to international investors to get 10 percent—get their claws on 10 percent—of the funds of any financial institutions in New Zealand should they heaven forbid go belly up unlike in Australia where they would get their claws on only 8 percent or in Canada where it is only 4 percent?I think it would be a great shame if this bill does pass—and it is going to pass because it has unanimous support from parties in this House—and if the very learned Gerry Brownlee was not able to answer that simple question and this goes into the annals of history as being a mysterious figure that was plucked from the air and put into an Act of Parliament but it was never answered and it was never actually determined as to how the figure came to be. But like so much legislation put through by this Government it was probably done with a dartboard or you know with a flick of a coin. The Government probably tossed a coin and said: “Oh shall we make it 6 percent? Shall we make it 8 percent? Shall we make it 10 percent? Oh let’s toss a coin.” So much of the legislation that is brought before this House by this Government often does not have the facts behind it.You know the Government told us that the sale of the shares in the mixed-ownership model would mean we would end up with all these New Zealanders owning the power companies and Air New Zealand. And how many—was it 2.5 percent of New Zealanders who now own those shares whereas before it was 100 percent of all New Zealanders? Everyone in this room and every New Zealander out there had 100 percent ownership of those power companies. Now half of those power companies or 49 percent of them are owned by a miserable 2.5 percent of the elite people who can afford to go out and buy the shares in those power companies. The same has happened with Air New Zealand—David Bennett: Winston bought some.ANDREW WILLIAMS: The same has happened with Air New Zealand this week Mr Bennett. Again we all have pride in our national airline. We get on the national airline and we say: “It’s ours. It’s great.” You know we owned over three-quarters of it.It is our airline. Now you get on it and say: “Oh well we own 53 percent.” The other 47 percent could be owned by anyone—could be owned by anyone. It is a bit like the power companies now. BNY Mellon bought 8 percent of Meridian Energy. Is that not shocking? Suddenly they are in New York—probably an old mate of John Key’s who was a banker in New York I would say. He probably got a phone call and said: “Hey there’s a good deal coming up here in New Zealand.” and the banker said: “Oh thanks very much John. Here—we’ll be into 8 percent of that. That’ll be great. Thanks for the tip. Thanks mate. Next time you’re in New York I’ll buy you a bottle of ‘Bolly’.” I am sure that is probably how the conversation went.This is what happens with all these deals with the National Government. It is happening all the time because people—the favoured few the ones who get tapped on the shoulder by the National Government—benefit while the rest of good old average Kiwi New Zealand suffers. Good old Kiwi New Zealand suffers. As a fifth-generation New Zealander on both sides—on my father’s side and my mother’s side—can I just say that I am getting heartily sick and tired of seeing our country being sold down the river. Quite frankly you know my parents my grandparents and their parents going right back to the 1840s in New Zealand did not spend all their time helping to develop this country over many generations for this one generation—this one generation with Gerry Brownlee Steven Joyce John Key Bill English and their ilk—to sell off all the hard work of my parents my grandparents and their parents and parents before them. It is disgraceful and this generation will always go down as the one that sold the wealth of New Zealand down the river for the benefit of the 2 or 3 percent who could afford to be participants in it.In closing this speech New Zealand First will support the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill because New Zealand First supports any legislation that has merit to it in terms of improving our financial systems. We have been strong opponents of the loose financial arrangements that saw 61 institutions in this country go belly up in recent years which saw the likes of South Canterbury Finance taking more deposits in 6 to 12 months without the Minister of Finance or Treasury or anyone keeping an eye that it was taking more and more deposits and it could not cover them. That situation cannot be allowed to continue.So this piece of legislation is a small part of the overall framework to try to improve the financial securities in this country to ensure that we do not operate a cowboy Wild West financial system and to ensure that as a result there is more security for those investors including international investors coming to New Zealand and that we are not seen as a Third World financial place. So New Zealand First will be supporting the bill.DAVID BENNETT (National—Hamilton East): I just want to take a short call. The Reserve Bank of New Zealand (Covered Bonds) Amendment Bill has got very strong support amongst members of the House. It is a good bill which is in the best interests of New Zealand and the economy. Unfortunately the last speaker Andrew Williams from New Zealand First and the Greens speaker Russel Norman tried to put their slant on it with their economic histories but those were inaccurate speeches. This is very good bill and we look forward to it progressing.Hon SHANE JONES (Labour): Tēnā koe. I saw the member David Bennett recently at a sporting event in the great Waikato. It was probably a place that I would not be encouraged by my colleagues to go to—it was the boxing. But we are not boxing today with the Leader of the House Mr Brownlee. I am sure that at the moment he is studying the boundaries that have come out from the Representation Commission.Anyway let me come back to the bill the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. We stand and support this bill. I want to actually follow up on what the co-leader of the Green Party Russel Norman had to say. The co-leader of theGreen Party was pointing out that this bill ranks international lenders’ interests above those of depositors. He also pointed out that it kind of makes it easier for us to stay on the trajectory that our small island nation State of 4.2 million people and $180 billion GDP is on—i.e. we are too reliant on international capital for our banks. It is mediated through the banks which are after all intermediaries into a housing market that is killing our dollar. That has become so expensive that we cannot get the next generation into a level of housing either that they can afford or that suits their aspirations.It is actually a compelling argument that Dr Norman puts forward but the challenge that I am always left with is OK what actual remedies is he offering? I know the remedies on this side of the House and to a certain extent they are shared by that side of the House. We are probably a lot more aggressive in saying that it is important that we engender a greater level of enthusiasm amongst households and more important provide support to those households to amass an indigenous body of capital for want of a better expression that over time lessens our reliance on international capital. But as long as the banks and dare I say it perhaps other financial entities are relied on to meet the shortfall of what we as depositors are able to contribute those international lenders are looking for not only regulatory certainty as I spoke about before but a greater degree of protection. I cannot see how we can wriggle out of that at the moment.We do have a set of policies that are designed to change the structure of the economy unlike our colleagues on the other side of the House. I suppose I have learnt over the last 5 to 6 years that there is a greater belief on that side of the House that the market will solve all of these pitfalls whereas on our side the reason that we are prepared to back the bill is not only a recognition of macroeconomic reality but an awareness that if you are getting people to take the risk and put their dough into various enterprises they should have some greater sense of recourse.We need to ensure though that we never lose sight of what Dr Norman was also saying: what are we doing as parliamentarians? What are we doing as businesses or indeed as a Government or in this case a shadow Government to engender a greater level of commitment to save and to reward that? One thing we must not allow is the ongoing slipping away the ongoing leaching the ongoing loss the ongoing spiriting away of far too much wealth out of the country without internationally owned entities—obviously the banks are at the front of the row in that regard—meeting their fair share of the tax obligation in New Zealand. If it is good enough for them to go internationally raise capital and bring it to New Zealand for people like me our families etc. who are reliant on it it is also good enough for them as they derive the profit from what passes as the New Zealand business and residential community to accept the obligation which comes with operating in a modern economy of actually paying their fair share.I certainly look forward to joining forces with Dr Norman next year and making a major issue out of that particular challenge. Whether or not we are capable in terms of how our tax collectors are currently reconfigured is another matter. But we all believe that it is necessary—and banks should be particularly knowledgable about this—that we pay our fair share.Let us just go back and touch on one or three things in respect of just reminding ourselves why we are doing this. In the end it is cheaper for an entity such as the BNZ bank to raise its capital internationally via these instruments. As I said earlier I have no doubt in my mind that BNZ has got very sophisticated computer modellers ensuring that it does not get the dollar wrong. It is one thing to bring capital back in but if you have not covered the cost it is going to impose upon you to get it out as you repay it—therein lies many a tale that currently afflicts dairy farmers and has blighted the fishing industry in the past.Are we confident that the independent monitoring is adequate? Well we have an independent monitor at the moment in the broad commercial sector called the Commerce Commission. The current Government is not confident about or respectful of that particular independent monitor. Any doubts about that would be allayed by the capricious way in which the Government announced that it was going to slash the commission’s current powers in order to reward the narrow cast of shareholders in what is now a small business formerly a big business otherwise known as Chorus. It was going to give Chorus a greater degree of protection and gouge out of you and me the consumers of the broadband services. So that is an example of how if you put into legislation or if you posit upon a particular agency the responsibility of independent monitoring by an asset monitor you must be consistent.There are a few entities that escape the grip of the institutional monitoring function that touches the broad swath of our economy not the least of which are the shipping lines. In addition there are a special set of concessions that were dreamt up in the time that the Labour Government enabled the dairy industry to create Fonterra something that it consistently disregards—at its peril I might say. That is something else that will be dealt with at the end of next year.It is important that we challenge ourselves as parliamentarians and in this case the other side of the House. When you have these entities these agencies undertaking these independent functions do not play fast and loose with them. Do not change the law and do not monster them in order to reward a narrow range of vested interests which we have seen most unfortunately over the last few weeks although I get the sense that saner minds are prevailing and that there is an awareness that you cannot run a modern economy unless you protect the role of such institutions. Those institutions also have to be accountable. They have to measure up to the fact that—as indeed the Governor of the Reserve Bank is learning to accept—you may at one level be independent but at another level you have obligations and you have a responsibility to educate inform and communicate. So I look forward to hearing that the entity that is going to be charged with the responsibility does not fall into the bog that seems to ensnarl the current Commerce Commission. That is nothing to do with us; it is more to do with the attitude of the other side of the House.To return back to the base proposition of why we are going to support this thing we realise that we are reliant on overseas lenders. We realise that it would a fantastic transformation to effect under our approach with the leadership of our current shadow Minister of Finance and our shadow Prime Minister Mr Cunliffe. If we want to reduce over time the reliance we need to husband our own domestic resources. We need to reward people for doing that. We need to ensure that the tax system does not penalise people in terms of going without now in order to enjoy something in the future so it does not represent an impossible burden in terms of future generations.I am talking here not only of the fiscal discipline needed; I am talking not only of a reliance on international capital but of our ability to care for ourselves. This is why it is very very important that we manage the transition so that we have got access to overseas funding at competitive rates but at the same time never lose sight of the fact that this generation of New Zealanders—i.e. those of us born in the 1950s and 1960s—have an obligation to ensure that when we agree to pieces of legislation like this we never lose sight of the fact that we have to pay our own way. Kia ora tātou.TIM MACINDOE (National—Hamilton West): I am in favour.Hon DAVID PARKER (Deputy Leader—Labour): The Labour Party aware of the caution that is needed around this issue does support the bill the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. As earlier speakers have said one of the problems in New Zealand is that covered bonds which create a class of deposits thatare lent to New Zealand banks give the people who have the benefit of that covered bond a preferential interest in the assets of the bank in the event that it goes broke. The amount that is left for people who are outside that covered bond arrangement is less and they wear a more than proportionate share of the loss in the event that there are not enough assets when the bank is wound up to cover the amount that has been deposited in the bank. The problem we have got in New Zealand at the moment is that that is allowed to happen but it is an unregulated activity and the Reserve Bank has not had a direct tool to control the level of those covered bonds. So on balance we in the Labour Party accept that it is necessary to regulate covered bonds so that there is a clear limit on the amount that can be covered ahead of other unsecured depositors in the bank.I agree with Russel Norman that it is unfortunate we have got to the point in New Zealand that we are so reliant on foreign capital that we have had to legitimise covered bonds and create this differential between the rights on wind-up of those who have the benefit of covered bonds compared with those who do not. I also agree with the Hon Shane Jones that the long-term key to overcoming this and perhaps backing out of covered bonds is having a more effective New Zealand economy. The capital part of that is reliant on increases in productivity—sorry I should not have said it in quite that way. All of the factors of achieving that better economic outcome are interlinked but an important part of achieving the increase in productivity and increasing the wealth that we need is to improve the pool of New Zealand investment capital that is going into the productive economy.The two most important ingredients of that have been completely ignored by this Government. The Government refuses to make KiwiSaver universal—a compulsory scheme like they have in Australia which has stood them in good stead. Indeed no one should forget that National railed against KiwiSaver voted against it and has tinkered with the details of it since it came into Parliament as the Government in 2008.Hon Shane Jones: And the Cullen fund.Hon DAVID PARKER: KiwiSaver needs to be made universal. National does get all these big calls wrong when it comes to the long-term wealth of our country. As Shane Jones has said National also ceased contributions to the Cullen fund at a time when borrowing rates for Governments were at historic lows and it was obvious following the clean out in the global financial crisis that returns on equities in the future from that low base would be higher than the Crown cost of funds. Despite that Bill English ceased contributions to the Cullen fund and as a consequence that fund or the New Zealand Superannuation Fund as it is more properly called is some billions of dollars smaller both in terms of contributions that were not made to it and also earnings that would have been made in addition on those contributions. So that is the second bad call.The third one that impacts upon this is not getting the tax signal right so that we encourage too many people in New Zealand to put their investment money not into a bank deposit or into a share both of which can improve the productive economy but into residential rental investment which drags money out of the productive economy—Dr David Clark: Too many vested interests.Hon DAVID PARKER: —and also at the same time increases the demand for money to come from offshore into New Zealand banks to feed that appetite for more borrowing for mortgages. As Dr Clark just intervened there one of the reasons they do that is that they are determined to protect the vested interests of those who do not want the relative value of property assets in the rental market to change relative to the value of investments in the productive economy. They are happy to continue preferring the interests of speculators over the productive economy and as a consequence we have just had another report to show that New Zealand does not get as much in terms of returnsfrom tertiary education because we do not invest enough capital in our productive enterprises.All of these problems are interlinked. This bill in so far as it goes is a bill that we are supporting but it does not cure the underlying problems that have led to its need.KANWALJIT SINGH BAKSHI (National): I support this Reserve Bank of New Zealand (Covered Bonds) Amendment Bill.Bill read a third time.Non-bank Deposit Takers BillIn CommitteeTIM MACINDOE (Junior Whip—National): I seek leave for the Committee to take the parts schedules and clauses of the Non-bank Deposit Takers Bill as one question.The CHAIRPERSON (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.Parts 1 to 4 schedules 1 to 3 and clauses 1 and 2Hon DAVID PARKER (Deputy Leader—Labour): The question I would like to ask the Minister in the chair the Minister for Canterbury Earthquake Recovery is about the impact of this Non-bank Deposit Takers Bill on credit unions. This bill makes changes to the prudential requirements that are imposed by the Reserve Bank and extends these measures to non-bank deposit takers. These are people who take money on deposit from New Zealanders who are investing to get an interest return but who are not a bank because the banks are already covered by the prudential requirements that are managed by the Reserve Bank on behalf of the Government.My question to the Minister in the chair is whether the extension of the new measures to non-bank deposit takers applies to credit unions and whether that is wise. We heard from credit unions at the Finance and Expenditure Committee that they are concerned at their overall level of regulation. Credit unions generally take small amounts of deposit from New Zealanders and they lend it on small amounts of loans generally in the consumer finance area. They are concerned that the measures of this bill do not overly tie them up in red tape given that they are not really posing a great risk to the New Zealand financial institutions overall because they are such a small part of the overall financial services sector. They do not want to be tied up in unnecessary regulation that causes them more trouble.There are a number of things that need to be fixed for credit unions that are not addressed by this bill. If I might I will just mention them very briefly. One is that rather than have two trustees they effectively have to have a statutory trustee and then another trustee who holds investments in their name or on their behalf. They cannot hold the investments in the name of the credit union because the credit union is not a legal purpose for banking purposes. That is not fixed by this bill.They are currently restricted from lending to non-real people so despite the fact that a lot of people who used to be employed for example by the post office are now a tied contractor through a small corporate entity which might provide services to say Chorus any loan that was made for example to such a small company for a vehicle could not be made by a credit union if it was being made to a corporate entity. Those sorts of things also need to be tidied up. I would like to hear from the Minister as to whether he has a view on that.Dr DAVID CLARK (Labour—Dunedin North): I think we should acknowledge right from the start that the Non-bank Deposit Takers Bill is a complete waste of time.Effectively it moves legislation from one area to another and Parliament’s time could be better spent especially in urgency when we are supposed to be prioritising legislation that really makes a difference at short notice to our economy and to its settings. We have just debated a bill that has been sitting around for a long time in respect of the level of—what was it? It is slipping from my mind.Hon David Parker: Covered bonds.Dr DAVID CLARK: It was the level of covered bonds sorry. Thank you to my colleague. It was legislation that was important to have in place eventually. It has taken the Government a long time to get there. We are debating things under urgency that ought to really I guess have been tidied up earlier on.This is a Government though that seems to have its eyes off the ball. David Parker has already alluded to many other things that could make our economy more productive and that could change the relative balance between the productive and speculative sectors in order to make a more productive economy. That would help this Government’s fortunes. It does not seem to be interested in the wider interests of the New Zealand economy preferring instead the deals with the likes of Chorus that we see being cooked up at the moment; Skycity the casino deal that will build a convention centre off the back of problem gambling; and Rio Tinto. Actually the taxpayer is getting a pretty poor deal on the deals that are being done. They do not seem to have any advantages for the taxpayer other than getting the Government out of a hole when it has made commitments.This legislation as I said largely replicates legislation already in place. We heard from a submitter from Chapman Tripp who thought that one point worth noting was that the capital adequacy criteria tend to be much more stringent in practice than the advertised minimum capital of 8 percent due to the high risk weighting given to some asset classes—as much as 350 percent—and the market risk - operational risk multiplier. This is something of a variance to the original conception around second-tier financial institutions and may result in a shrinkage to the sector greater than is allocatively efficient. In layman’s terms that is really about perverse incentives to loan heavily into the mortgage market and away from productive areas. This bill may actually have a perverse outcome; when we want those firms to actually be investing in productive assets they may be forced to take on capital adequacy measures that hamstring them and make them less competitive in the market place.I will be interested in the view of the Minister in the chair Associate Minister of Finance Coleman and whether he is willing to defend it. He will have known that this bill was coming up having looked at the Order Paper overnight and no doubt will have studied the finer points of the legislation and have a view as to why the Government is choosing to disadvantage credit unions why it is making life very difficult for them and why it is trying to push more money towards the speculative housing sector when that is such a problem for New Zealanders. Ordinary average Kiwis cannot get into their first home. This Government seems determined to make that worse. We have the loan-to-value ratio restrictions that have been put through by the Reserve Bank which are playing out in a strange kind of way because although first-home buyers cannot get into the market it is making it a little bit cheaper for property speculators to get in. We see the inequalities widening and here we have another measure that distorts the economy further. This is sadly indicative of a Government that has its eye off the ball. It is not about rebalancing the economy. The Minister in the chair should stand up and provide some technical advice as to why that incentive will not come to pass. I think it will be embarrassing if he is not willing or able to defend that.The Government ought to be focused on rebalancing the economy not on passing bills that simply shift legislation from one part of the book to another. It should be moreconcerned about creating jobs and supporting exporters. These are the things Labour wants to do. We know that our export economy needs to be supported. The high exchange rate is crippling our exporters. We hear that time and time again but the Government is reluctant to put monetary policy in place that would support that. It is reluctant to undertake pro-growth tax reform—the likes of a capital gains tax which would see money go towards the productive sector and out of the speculative sector. It is reluctant to support research and development in this country—and on it goes. It will not put in universal KiwiSaver which would also create capital depth and address the problems that this bill is in a way setting out to fix. Those bigger solutions have been looked over in favour of tinkering and that is a great disappointment.This legislation needs to strike a balance. It is not quite doing that in the right way and it is similar to those things we have seen in the past with the Crown Retail Deposit Guarantee Scheme where the Government took its eye off the ball. We saw in that case a 25 percent increase in South Canterbury Finance’s books the risk borne by the taxpayer and then we saw a ten-fold increase in another finance company. This is a Government that really does not have itself across the detail but it is interested in making sure that taxpayer money is handed over to get the deal and to get things out of the public limelight. We are seeing that with Chorus now. We have seen it with Rio Tinto where the Government handed over $30 million—30 million pieces of silver my colleague Clayton Cosgrove says—without a jobs guarantee. The very next day it is talking about laying staff off. This is a Government that is doing deals to get things off the front pages like the Skycity Casino deal. It is really not focusing on growing the economy which is what we really need. We need more jobs—jobs for Kiwis high-value jobs—and that will be created by having the right economic settings not by protecting the vested interests that this Government seems so determined to protect.We hope that the Government sees the light. We hope that in the future it applies the principles that I have outlined because on this side of the Chamber we are interested in ordinary Kiwis—those extra people who are unemployed. There is a much higher unemployment rate than when National took office. Unemployment has gone up and up and median wages are down under this Government in real terms. That is why New Zealanders are feeling the pinch. The cost of living has gone up but their wages have not. With the tax cuts that the Government put through in 2010 I note that 40 percent of the value went to the top 10 percent of earners and the bottom 20 percent got just 10 percent of the value. That is disappointing. That is growing the gap between rich and poor. The gap between rich and poor has never been so high in New Zealand as it is under this Government. Inequalities have grown and this Government seems happy to oversee the demise of this country.Hon CLAYTON COSGROVE (Labour): I want to pick up where David Parker left off in respect of the smaller end of town in terms of credit unions. I note that the New Zealand Association of Credit Unions and its members made a number of submissions on the Non-bank Deposit Takers Bill. Basically their thesis said that credit unions should not be lumped in with finance companies under the same non-bank deposit takers definition given that “A cooperative business model”—I am quoting from them—“is so inherently different from other financial institutions”.That does raise a valid point because if you look at the model of credit unions and friendly societies they have vastly different objectives based on the various Acts—the Friendly Societies and Credit Unions Act and others—that govern them and that they originate from. They are coupled with their own prudential supervisory requirements via trustees. In the case of credit unions they are all equal partners equal shareholders within that entity which is vastly different from the case of the financial sector. They have a cooperative model that is based on equal ownership and that is based on the veryneeds of the individuals in that entity and the communities interests and industries in which they operate. They are inherently conservative if you look at the history of credit unions in respect of their investments. They are involved in health schemes skilling schemes and all sorts of interesting and innovative processes and they are very entrepreneurial but they are inherently conservative and they are based on a cooperative model. Their approach to business is not driven by shareholders if you will who take risks; their basis for business is based on cooperation and collectivism. And it would be hard to see and it is still hard to see why those additional prudential requirements should be visited on them because of course they inherently have a whole series of additional compliance costs.So I would be interested to know from the Minister in the chair the Associate Minister of Finance Jonathan Coleman—and if he could answer some questions that would be helpful to us—why it is that the Government believes that credit unions for instance and friendly societies and others that do indeed take deposits but operate completely differently on a far more conservative basis with a cooperative model and equity in terms of individual members should be lumped in with this. I do not know whether the Minister in the chair is going to take a call. I note that the chair of the Finance and Expenditure Committee Paul Goldsmith is here today. It would be very helpful if the Minister is not in a position to take a call if Mr Goldsmith took a call and gave the Government’s rationale for this. The cost of regulation of course is going to be borne by firms that did not collapse that actually did do the right thing—credit unions and others—that were fiscally conservative and that did manage their funds and their members’ funds and investments appropriately. Of course they are going to be the ones that along with others in the financial sector will bear the brunt of these compliance costs.We are all as I said in the last debate for financial stability. We are all for ensuring that the best prudential requirements are put in place to protect mum and dad investors or any investors. You would have to look—and I challenge the Government to provide some evidence if I am wrong—at the history and performance of credit unions. In many many respects in the management of funds that they have they outstrip many in terms of the conservative nature of their investment portfolios and how they manage funds. That is borne out by many of those they outstrip not being here any more because they collapsed.Those credit unions provide a pretty unique form of model and form of investment for their members. They are involved in a vast array of pretty unique activities for people who are in this sector in terms of providing opportunities for their members and they have a completely different model. It is a cooperative model. It is a very old model. They operate completely differently. So it would be helpful if somebody on that side could for the record put on the record the rationale for lumping in credit unions with every other non-bank deposit taker because I think they do make a valid argument that they can differentiate themselves off from most. If the Government still believes that it is appropriate that they be part of this regime then the Government needs to stand up in all fairness and articulate in a detailed way why it believes that. It may be helpful to do so I think in terms of the level of understanding. And it may—I doubt it but it may—allay some of the fears that credit unions and others in that area have in respect of this bill.I would be grateful if somebody from the other side would take a call. Again there is not a lot of politics if any really in this bill. I was on the Finance and Expenditure Committee for most if not all I think of this piece of legislation going through and I would acknowledge that there was a genuine effort on both sides to make it work. It is appropriate but these credit unions and friendly societies do have some genuineconcerns. They have put some appropriate propositions on the table in their submissions arguing that they should be differentiated off and dealt with differently or dealt with under the Acts that prescribe their activity anyway. I would be grateful if a member from the other side or Mr Goldsmith could provide the Government’s rationale for that. I am sure that that would be helpful for those submitters.The question was put that the amendments set out on Supplementary Order Paper 394 in the name of the Hon Bill English be agreed to.Amendments agreed to.Parts 1 to 4 schedules 1 to 3 and clauses 1 and 2 as amended agreed to.Bill as amended agreed to.Bill reported with amendment.Report adopted.Third ReadingHon Dr JONATHAN COLEMAN (Associate Minister of Finance) on behalf of theMinister of Finance: I moveThat the Non-bank Deposit Takers Bill be now read a third time. I want to begin by thanking the members of the Finance and Expenditure Committee and officials who have engaged with the industry the wider financial sector and other interested parties. The purposes of the bill are to promote the maintenance of a sound and efficient financial system and to avoid significant damage to the financial system that could result from the failure of a non-bank deposit taker. The bill will not create a zero failure regime but by completing the implementation of the regulatory regime for non-bank deposit takers which mainly comprise finance companies building societies and credit unions this bill will achieve those purposes.The bill creates a stand-alone framework for the prudential regulation of non-bank deposit takers. It incorporates the prudential requirements already imposed under Part 5D of the Reserve Bank of New Zealand Act 1989 and introduces new measures including the licensing of non-bank deposit takers suitability assessments for directors and senior managers restrictions on changes of ownership and new powers for the Reserve Bank to detect and manage instances of distress or failure of non-bank deposit takers.Licensing is at the heart of the bill with the establishment of a licensing regime and a requirement for all non-bank deposit takers to be licensed by the Reserve Bank. An important part of this is the suitability requirements for directors and senior officers of non-bank deposit takers and the opportunity this gives for the Reserve Bank to identify those who are clearly not suitable to hold positions of responsibility within the industry. Licences may also be issued subject to conditions. The bill sets out the types of matters that may be covered by conditions and the consultation procedure to be followed if the Reserve Bank wishes to add new conditions or amend or revoke existing conditions of licence. There is also an express obligation for non-bank deposit takers to comply with the conditions of their licence so that a failure to comply with a licence condition becomes a failure to comply with the Act. Breaching such a condition will be grounds for cancelling a licence.Following licensing the non-bank deposit taker must then comply with the prudential requirements that are already in place under Part 5D. Any substantial changes in ownership over a prescribed threshold must have the consent of the Reserve Bank. The powers of the Reserve Bank to address breaches of prudential requirements have also been strengthened to be more in line with the Reserve Bank’s powers under thebanking and insurance regimes. In particular the bill provides the bank with the power to direct non-bank deposit takers and their associated persons in particular circumstances. Amongst other things the Reserve Bank can direct that a non-bank deposit taker takes specified action to address any financial or other difficulties it may be subject to.Under the bill the Reserve Bank is also able to remove and appoint directors where the non-bank deposit taker is in financial difficulty or failing to comply with statutory requirements. Under the bill trustees remain the front-line supervisors of non-bank deposit takers’ compliance with prudential requirements such as those relating to capital and related party exposures. To help ensure that the Reserve Bank can intervene where necessary when a non-bank deposit taker is involved in an actual or potential breach of its obligations under the prudential regime the bill provides the Reserve Bank with the power to direct trustees to take certain specified actions in these situations.During the Committee of the whole House stage additional amendments were included in the bill by Supplementary Order Papers 99 and 394. These amendments were largely technical in nature and in many cases were necessitated by the recent enactment or coming into force of other legislation most notably the Financial Markets Conduct Act. Along with the changes recommended by the Finance and Expenditure Committee these changes have helped to ensure that the bill is well designed and will operate efficiently.To sum up the bill will increase confidence in the New Zealand deposit-taking sector and enhance the Reserve Bank’s ability to promote the maintenance of a sound and efficient financial system. It represents an important milestone by putting in place the final components of the prudential measures applicable to the non-bank deposit taker sector. From its first reading in Parliament in August 2011 this bill has received broad cross-party support and the general support of industry. Again I want to thank the Finance and Expenditure Committee those who made submissions and officials for their work on this bill. I commend the bill to the House.Hon DAVID PARKER (Deputy Leader—Labour): I rise to take a call on behalf of the Labour Party to support the Non-bank Deposit Takers Bill. Can I thank the Associate Minister of Finance Jonathan Coleman for his contribution and acknowledge the work done at the Finance and Expenditure Committee and by officials. I add my thanks and respect for the work done by the officials. I believe that this is a good bill. It is important that the non-bank deposit takers be appropriately regulated. It is one of the lessons that we have had following the global financial crisis—that there is a need to properly regulate the financial sector so as to protect members of the public from inappropriate risk. You cannot eliminate all risk but you can properly regulate to stop some risks from being hidden.The bill defines “non-bank deposit taker” as being an entity that “offers debt securities to the public of New Zealand;” and then on-lends them. That second part of the test is necessary because if for example you are another company that offers just debt securities to the public—if you are a company that is not in the business of on-lending and the retail provision of money—then you ought not to be subject to the same regulatory regime.One of the improvements that has been made is providing a good definition of what “related party” means. That is important when trustees have day-to-day oversight of debt securities—that is when someone invests in a debt security in a deposit there is generally a trust deed that governs the terms upon which their deposit is to be held. The terms are generally overseen by a trustee which is often something like Trustees Executors or AMP—one of those trustee security companies oversees it. Their duties include making sure that the trust deed provisions that are intended to govern how themoney is held and what sorts of assets it can be invested in are conformed with by the entity that is taking the money from the public. Too often of course in recent years they were actually taking the money from the public and not giving it back. One of the reasons why that came to pass was that there was inadequate regulation of related party transactions where those that were in control of some of these non-bank deposit takers were effectively using the money to lend to risky ventures that they or a related party had an interest in and that went belly-up. The directors of the issuer of the debt securities did not have their own names on the guarantees and they managed to lose the money of the depositors and not face personal liability in respect of some of the losses that occurred to depositors. So tightening up regulation around related parties is a desirable thing to do so that there is less ability to do that in the future and so that it is less easy for people to pursue their private interests to defeat the interests of the people who have lent money through debt securities to non-bank deposit takers. I will not take any further time of the House other than to endorse the Associate Minister’s comments. Thank you.PAUL GOLDSMITH (National): I am very pleased to speak in favour of the Non-bank Deposit Takers Bill. It is a very important piece of legislation in terms of restoring mum and dad investor confidence in our capital markets after the global financial crisis. I am glad to see that there is widespread support for this bill across the House.I do want to draw attention to just one or two changes made by the Finance and Expenditure Committee—in particular around the Reserve Bank’s powers to remove and appoint the directors of these non-bank deposit holders. I think this is an important additional power to the Reserve Bank and it should be used carefully. When the Reserve Bank has made a decision about the suitability of the directors or senior officers those persons now do have a right to appeal that decision. This was also amended to allow appeals by those who had proposed to be directors or senior officers but who were prevented from doing so by a Reserve Bank decision on their suitability. I think that is an important rule-of-law aspect to this whole equation—making sure that we have the right people in the right places but also giving them the opportunity to defend themselves. So just drawing on that I would like to support this bill in its third reading. I commend it to the House. Thank you.Hon CLAYTON COSGROVE (Labour): I have got to say that whilst I share the sentiments of Mr Goldsmith’s speech it was disappointing in one particular way. Members on this side have raised a number of key questions. I do not think the Minister of Finance took a call at all throughout the debate on the Non-bank Deposit Takers Bill. One of the concerns that both Mr Parker and I raised were issues around credit unions and compliance costs around credit unions. No Minister decided to take a call at all on the differentiating factors and different strictures around credit unions the legislative framework and how they operate in a completely different way—a different model; a cooperative model. These are pretty venerable institutions. I am sure we all have people in our respective patches and constituencies who are members of these institutions who have invested wisely. Also I should say that these credit unions do a lot for their communities.What we simply asked for on this side was some rationale and some assurance around why these credit unions and friendly societies would be placed within this legislation. I do not think that is too much to ask of highly paid Ministers with highly professional and knowledgable officials behind them. But it got to the point where the Minister could not even sort of turn round and ask his officials for the answer and give us some assurance and nor could the now chair of the Finance and Expenditure Committee Paul Goldsmith—rather than stand up run through a few cursory items sit down and raise the white flag. So it is disappointing because I know that some of thesubmissions from the New Zealand Association of Credit Unions on behalf of its members and others raised some very valid points and would have appreciated I think as we go forward and process this legislation some sort of assurance or rationale for the record. But no one including Mr Hayes who I think is a member of the Finance and Expenditure Committee still Ms Barry Mr Goldsmith or others—but more especially the ultimate responsibility is with the Minister in the chair—was prepared to even give lip service to that request and just provide some background for the record in the Committee stage or the third reading. I have got to say that that is disappointing.Mr Goldsmith is right. There is widespread support across the House for this bill. But if we are at a stage where when we raise valid questions without politics to simply try to secure some level of confidence for various entities in the community and the Ministers simply sit there at 10 past 11 and just read their papers and do not even bother to seek the information even if they are not the Minister with portfolio responsibility then you have got to say that that is a bit rough. It is not too rough on us because we are not the ones with our backsides on the line; the credit unions and friendly societies are. Their members will be looking at changes that are made. Their members will actually be saying: “What does this mean for us? Are we going to have to change? What will these prudential requirements mean for us in terms of our investment structure in terms of our appointments in terms of how we manage funds and take deposits?”. As my colleague Clare Curran says obviously the Government over there does not really care about that end of town even though that end of town—credit unions and friendly societies—are a bit bigger and they have more substantial funds under management than many other entities in our community.So I would have thought that in the spirit of bipartisanship or non-partisanship that this bill has engendered Ministers or members of the select committee would get up and simply put on the record the rationale for this. It would have been helpful. Maybe it is going to happen when I sit down and a Government speaker takes the next call. That would be helpful. I make this genuine plea to the next Government speaker: could they provide that advice on the record? Mr Hayes Ms Barry or—well Mr Goldsmith has already spoken. Could somebody who is on the select committee take some advice from the Minister’s officials? I am sure Mr Hayes will because he is a reasonably responsible joker. Could he actually in his speech if he is allowed to get up and give that rationale as to why these credit unions are going to be lumped into this? It is a pretty simple request. There is no politics in it. We will accept the nature of it and take the information. We are all supporting it—I do not think there is anybody in this House who is not supporting this bill—but it would be a courtesy to those credit unions which will be the ones—Dr David Clark: To the listeners at home.Hon CLAYTON COSGROVE: —and to the listeners—that have to implement this legislation.I think it was the credit unions that rightly said in one of their submissions or perhaps to the media that it will be the entities that did not collapse as I said in the Committee stage that pay for this not the bad guys who did collapse. It will be survivors—including the credit unions which acted appropriately and were fiscally conservative and guard with a great deal of pride their members’ investments and money—who are going to have to bite the bullet on this. Even if it is appropriate and it may well be I think they are owed a duty of care from this Parliament and this Government to ascertain why they are lumped in. They raised some very very solid points—different model different membership structure different investment structure cooperative model different priorities and fiscally conservative with the investments. They are all the things that you would have to say that some in the big end of town areactually lacking especially those who came a gutser through their own lack of financial foresight.So I will conclude by simply making the request again for about the third time that some narrative be put down in a third reading speech from the Government to answer the points raised legitimately and professionally by credit unions. We will support this bill but I think that as we are doing this—I know some want to get home over the side—it is appropriate that proper information is put on the record of this House so that entities know what is going to happen and what they are up against and why they are caught by the sort of catch-all bill that this is. So I look forward to the next Finance and Expenditure Committee member taking a call.Dr RUSSEL NORMAN (Co-Leader—Green): I rise on behalf of the Green Party to speak to the Non-bank Deposit Takers Bill and to echo many of the sentiments expressed by Clayton Cosgrove who I thought made some really good points. The thing that people probably do not realise about this pretty obscurely named bill the Non-bank Deposit Takers Bill is that essentially it covers three entities: finance companies credit unions and building societies. People will be very familiar with the finance companies. The finance companies are of course the companies that collapsed and cost taxpayers many hundreds of millions of dollars as they had to be bailed out. I will get back to that particularly South Canterbury Finance where the bailout was mismanaged by the current Government.Finance companies are a very different kettle of fish to the credit unions and building societies but they are all being regulated together under this one piece of law the Non-bank Deposit Takers Bill or Act as it will become. That is a problem. It is a problem because credit unions and building societies have a very different risk profile to finance companies. In the Reserve Bank’s report that was delivered very recently about the review of the non-bank deposit taking sector there was some discussion of those differences. I think that this is a real missed opportunity to make sure that the regulation of the credit unions and the building societies accurately reflects the risk and performance of those two kinds of institutions which is fundamentally different to the finance companies.If one casts one’s mind back through the earlier part of this century and the emergence of the finance companies and the huge risks that the finance companies presented one sees that during all of that period all of our regulatory agencies completely failed. So you would have to say that the Reserve Bank Treasury and the trustee structure that was set up to provide oversight fundamentally and completely failed the people of New Zealand in providing adequate prudential supervision of the finance companies. The proof of that is the fact that the finance companies overwhelmingly—almost all of them—went belly up. They went bankrupt. At the end of the day it was the depositors in those companies and the taxpayer who ended up having to pay the cost of the fact that the finance companies went bankrupt.So it seems to me that we need to differentiate between those institutions the finance companies and their regulation and the credit unions and building societies which did not go belly up. But it became one of the mantras of the neo-liberal model of the 1980s and 1990s that one has light-handed regulation of things like finance companies. Unfortunately the Clark-Cullen Government was completely captive to the neo-liberal ideology as it applied to the regulation of the finance sector. It applied the same kind of laissez-faire regulation of the finance sector that has been the ideology from New Zealand since the early 1980s and that is why we ended up as taxpayers and depositors losing so much money because of the laissez-faire regulation that the Clark-Cullen Government continued through the early part of this century which meant that the taxpayer ended up having to pay the bill.This Government paradoxically a conservative Government came in at a time after the global financial crisis and has had to institute the regulation of these sectors but it is very much closing the gate after the horse has bolted. Most of the finance companies have already gone and so most of the institutions that are now being regulated by this bill which is a response to the failure of the finance companies are not finance companies. This is the paradox of the bill that we have before us. This bill is a response to the failure of the finance companies but this bill actually overwhelmingly regulates credit unions and building societies. So that is the paradoxical situation we find. So the incoming conservative Government had a complete overreaction and a poor response to the situation that we are in. We should actually have the regulation of credit unions and building societies done differently to finance companies because credit unions and building societies do not have the same level of risk associated with them. The proof of that is the fact that during the global financial crisis the finance companies went belly up but the credit unions and building societies did not. So instead of saying that we will have a differentiated regime we have just lumped them all in together into non-bank deposit takers.There is no question that we need to improve the regulation of the finance companies in particular so that is why we are voting for this piece of legislation. It is the right thing to do even if it is after the horse has bolted. Hopefully it will prevent a similar thing happening again. What it means is that there is a sea change in a kind of philosophy of regulation in New Zealand and a recognition that the failure—the complete and absolute failure—of the neo-liberal model of laissez-faire regulation has been recognised. I doubt very much that that is completely recognised by Treasury and the Reserve Bank particularly Treasury but certainly to some degree it has been and that is a good thing. But lumping the credit unions and building societies in under exactly the same kind of regulatory regime I think is a bit of a mistake and we need to differentiate. So in the implementation of this law given that it is going to go ahead it is very important that the Reserve Bank differentiates between the credit unions and the building societies on one side and the finance companies such as they remain on the other.Unfortunately there is not a great recognition that that will happen. We had the Reserve Bank in front of the Finance and Expenditure Committee a few days ago when I raised these issues and there was some acknowledgment of the issues but I do not think a great acknowledgment. There was also the issue of trustees which I think we really have to address. For people who do not know these non-bank deposit takers—finance companies credit unions and building societies—have trustees who are meant to provide supervision. What we know about the trustee model is that it is a complete failure—a total and absolute failure. The proof of the failure of the trustee model is that depositors lost millions and millions and millions of dollars and taxpayers lost millions of dollars because they had to bail the thing out. So given that the trustee model has proven to be a complete failure why are we continuing with it as if it works when we know that it does not? It has been proven that it does not work. The trustee model does not work in terms of providing prudential supervision of these companies. The proof of that is what actually happened. But we carry on and pretend the trustee model works. It does not work.Why do we not actually introduce regulatory regimes that have a better chance of working? For example in the review of non-bank deposit takers there was talk about treating credit unions and building societies more like banks and regulating them directly more like banks because a lot of their behaviour is bank-like. Why would we not regulate them more directly more like banks and in the process get rid of the trustees who are useless because they do not protect these companies from actingpoorly as we saw with the finance companies? By getting rid of the trustees at the same time we also reduce the red tape and the regulatory burden on the credit unions—a regulatory burden that the banks their competitors do not face. So if you are a credit union you have got to have this elaborate structure above you of trustees and so forth. It all has to be supported. If you are a bank you do not. Yet we lumber the credit unions with this elaborate regulatory burden that they totally do not need. Why do we not regulate them much like we regulate banks? Let the credit unions compete with the banks on a fair even playing field. Reduce the regulatory burden on the credit unions so that they can compete for deposits with the banks.I think that in the implementation of this regime it would be great to see the Reserve Bank recognise the reality of the difference between the finance companies and the credit unions and building societies. That is one of the fundamental problems of this legislation. We are supporting it because I think we need it but I think it is important as we go forward that in the implementation of the law we recognise the difference. I think that in the future we are going to have to change the legislative framework around credit unions in particular to recognise the actual risks associated with credit unions. I also think we need to acknowledge that the trustee model completely failed. It did not work as a way of actually preventing widespread failure of the finance companies. It was a failed model. None the less we will be supporting the legislation but we look forward to future improvements of the regulatory framework in this sector. Thank you.ANDREW WILLIAMS (NZ First): I take a brief call on behalf of New Zealand First on the Non-bank Deposit Takers Bill. For those out there listening to this or watching this I will give just a reminder as to what the bill actually does. The bill seeks to implement the final components of a new regulatory regime for non-bank deposit takers. These are deposit takers in the finance industry that are not banks. This incorporates the prudential requirements already imposed under Part 5D of the Reserve Bank of New Zealand Act 1989 and introduces new measures covering the licensing of non-bank deposit takers suitability assessments for directors and senior officers restrictions on changes of ownership and new powers for the Reserve Bank to detect and manage instances of distress or failure of those non-bank deposit takers.Essentially what this bill does is tighten up the areas outside of the main banking stream and brings in a lot more controls via the Reserve Bank so that we will not have a repeat of some of the perhaps cowboy activities that have occurred in the past in some of our financial institutions—or what you could call fringe financial institutions.In looking at Part 2 of the bill clause 13 “Determining applications for licence” states: “The Bank must not grant a licence to an applicant unless—(a) the Bank is satisfied that the applicant if licensed would be able to comply on an ongoing basis with this Act the regulations and the proposed conditions … (b) the Bank has received a suitability notice for each director and senior officer or proposed director and senior officer of the … Bank …”. That is most important because what it basically says is that at last full applications to the Reserve Bank will be required for these various entities. They will also have to justify who the directors are and who is controlling these entities.In terms of the appointment of the directors if a licensed non-bank deposit taker is a company building society or overseas company “(a) the governing body of the [non-bank deposit taker] must include at least 2 independent directors; and (b) the chairperson of the governing body of the [non-bank deposit taker] must not be an employee of either the licensed [non-bank deposit taker] or a related party.” An independent director cannot be an employee of either the non-bank deposit taker or a related party. An independent director cannot have more than 10 percent of the voting securities of the non-bank deposit taker or related parties and are therefore in a sensetruly independent and able to provide independent advice to that entity. In the past these lines have been a bit blurred perhaps where employees have acted in this role. Senior management has acted in this role in some cases. Often as we have seen in the case of South Canterbury Finance and other such institutions there have been instances where governance and management and other things have overlapped.It is also interesting in terms of credit ratings that a licensed non-bank deposit taker must have a current rating of its creditworthiness or as required by the regulations in clause 23 the creditworthiness of its borrowing group. Again that will be of great comfort to investors—the mums and dads of New Zealand who are perhaps putting money into such financial institutions. The non-bank deposit takers must have a current financial rating and creditworthiness to substantiate what they are doing in terms of taking the deposits.This is a further bill today following on from the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill which we had just before and following on from other financial ones last evening. It is a tranche of various bills aimed at tightening up the financial markets in New Zealand. This is another one that New Zealand First supports because we believe that there were some glaring anomalies in our financial legislation that were allowing less than satisfactory business transactions to take place and indeed putting New Zealanders at risk in the case of their investments. This is another way of tightening that up and giving more surety to the financial markets making New Zealand a much safer place in which to invest money and making it a far tidier situation for the New Zealand economy. New Zealand First will support the bill.Dr DAVID CLARK (Labour—Dunedin North): The point I have made consistently through this debate on the Non-bank Deposit Takers Bill is that it is a wasteful use of Parliament’s time to be shifting legislation from one place to the other. It does not make the changes perfectly that it ought to make. We have heard about the difficulties for the credit unions that are put into this bill. We know that today we have debated covered bonds in the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill 2 years after they were implemented overseas. We know that the Crown Retail Deposit Guarantee Scheme may have cost the taxpayer up to $500 million because of the Government’s mismanagement. The Government is not focused on the big issues and it seems to be slow in getting this kind of legislation in place.We will support the bill because broadly it is OK. It could be better. We wish the Government would get on with supporting our export sector with worrying about the exchange rate with introducing pro-growth tax reform with bringing through increased savings with universal KiwiSaver and with looking out for ordinary Kiwis’ interests with the type of policy that we are putting forward with NZ Power and the kinds of policies like KiwiBuild which we are putting in to make sure that ordinary Kiwis can hope to own their own homes. We want a Government that is taking the interests of New Zealanders forward.This Government is sitting on its laurels. I am increasingly told by people whose doors I knock on in the weekends that this is a Government out of touch. New Zealand is going backwards under National. It does not seem to have a plan for the economy. It is disappointing that we are here debating fixes to problems that would be solved through a stronger economy. We would have more jobs if this Government was focused on the real issues if it was focused on the big changes that are needed in our economy and not just tinkering.CLARE CURRAN (Labour—Dunedin South): I will take a short call on the Non-bank Deposit Takers Bill. I spoke on the first reading of this bill back in 2011. I did not sit on the select committee that heard the submissions the Finance and Expenditure Committee but I did speak in the first reading and it has taken a long time for it to getto this point. When you look back to the genesis of this bill it actually comes out of work done by the previous Labour Government in 2005 and 2006. How many years ago was that? It was 7 years ago. It took 7 years to get this bill to this stage in the House. It came out of the Review of Financial Products and Providers. This was the second bill as part of that work which was required to implement the registered non-bank deposit taker regime and included licensing and fit and proper requirements.We support this bill obviously. I think you have heard from this side of the House that there has been quite a bit of concern around some of the measures particularly around credit unions which have not been addressed and answered by the Minister of Finance or by any of the National Party members who sat on that committee which makes you wonder whether they were actually paying attention whether this piece of legislation was just slipping through and whether the Minister in charge of this bill who I think was actually Bill English was asleep at the wheel and not really paying attention to the concerns.On the issue around credit unions which has been raised by my colleagues Clayton Cosgrove and David Clark I just want to go back to officials’ advice around their concerns. The credit unions believe that this regime should apply only to finance companies and that cooperatives should be carved out because they are different. The advice that was given—and it was very brief advice which really did not go into any detail and should have provided a lot more of an explanation—was that it would provide a legal loophole in the regime whereby simply adopting a particular form would mean falling outside the regulatory regime. I contend that that was not sufficient and that has not been properly explained by the Minister during the passage of this bill.I would also like to draw the attention of the House to a bill we discussed last night the Financial Reporting Bill where there had been a lot more intelligent discussion around some of the measures in that. That bill singled out members of friendly societies it singled out not-for-profit entities and it looked at how the regime around financial reporting would or would not apply to each of those entities. In the bill that we are discussing today that has not happened. I think that is a big mistake. However we do support this bill. It comes out of work that was done by the previous Labour Government and I commend it to the House.Bill read a third time.Statutes Amendment BillIn CommitteeLOUISE UPSTON (Senior Whip—National): I seek leave to take the Statutes Amendment Bill as one debate.The CHAIRPERSON (Lindsay Tisch): That is Parts 1 to 30 schedules 1 to 4 and clauses 1 and 2. Leave is sought for that purpose. Is there any objection? There is no objection.Parts 1 to 30 schedules 1 to 4 and clauses 1 and 2Hon TREVOR MALLARD (Labour—Hutt South): This is just another example of the Opposition helping the Government to do its work. The idea that the Statutes Amendment Bill which is a bill that by definition passes unanimously is all of a sudden urgent after hanging around the system for well over 12 months is just a farce. It is a sign of the very very poor organisation on the part of the Government that we are dealing with it. You are looking a bit anxious Mr Chair?The CHAIRPERSON (Lindsay Tisch): No no not all—not at all. I was interested in your comment.Hon TREVOR MALLARD: Well that makes a pleasant change for any member for you to be interested in the comments that I am making. I want to thank you. I have got a dram upstairs if you are available later.This bill is traditionally one that picks up a wide range of very minor amendments. They are circulated around all members of Parliament to make sure that there is unanimity on their passing. Hearings are held and have been held. The Government Administration Committee did some very good work under the very able chairpersonship of Ruth Dyson. We made some minor—The CHAIRPERSON (Lindsay Tisch): This is a point of order I take it?Hon TREVOR MALLARD: No not at all.The CHAIRPERSON (Lindsay Tisch): Oh it is a call. OK.Hon TREVOR MALLARD: It is a call. It is still going.The CHAIRPERSON (Lindsay Tisch): My apologies.Hon TREVOR MALLARD: I noticed you were listening intently and trying to work it out.The CHAIRPERSON (Lindsay Tisch): My apologies because the member stood on a point of order and that is why I acknowledged him on a point of order. I am happy that you are taking a call. You have got 3 minutes 29 seconds remaining.Hon TREVOR MALLARD: Thank you thank you thank you Mr Chairman.Hon Member: When are you going to get to the point?The CHAIRPERSON (Lindsay Tisch): It was a long point of order.Hon TREVOR MALLARD: With not much point to it and not a hell of a lot of order from the Chair. I am slightly lost for words and wonder whether I should start again.The point that I am making is that the bill is one that is supported unanimously. The idea of doing it under urgency is very dangerous from a Government point of view. If the Opposition was not cooperative then we would not have had it as one question. We could have debated up to four calls each on every one of these parts. It could have taken the House the entire period of urgency to deal with this. But as we have gone relatively soft under the new shadow Leader of the House and the new whips we will be cooperative and we will focus our debate on the Unit Titles Act amendments which of course should not have been part of this bill.The CHAIRPERSON (H V Ross Robertson): I call the honourable member the Hon Ruth Dyson.Hon RUTH DYSON (Labour—Port Hills): Thank you Mr Chair. That is really helpful because that is my name so it is a very useful thing for you to do. Can I first of all express a little bit of surprise that the Minister who is in charge of this Statutes Amendment Bill the Hon Chester Borrows is not taking a call. When bills go through under urgency unless they are urgent it is my view that the Minister should address not only the substance of the legislation but also the reason that the bill is being put through the House under urgency.The Government Administration Committee which I have the privilege to chair spent a lot of time and effort rigorously considering the Statutes Amendment Bill which had already gone through a very good process of deliberation amongst parties. That is usual and appropriate for a Statutes Amendment Bill. It should be non-contentious. I think that this bill with the work that we put into it has been returned to the House in a better condition than that in which it was given to us. However we are now required to pass it under urgency and I think the public of New Zealand just needs an explanation for that.Labour totally supports the substance of the bill itself. Our select committee made some alterations to it and they are outlined in our select committee report so I have gotno need to go over them. I just think that it really is the mandate and the responsibility of the Minister to explain why after such good process up to this point we are considering it under urgency. I assume that it is incompetent management of the House by the Hon Gerry Brownlee but if there is some different explanation then I look forward to the Minister confirming that either by him not contradicting me or by giving a different explanation for the mismanagement and this bill therefore coming through under urgency.Hon TREVOR MALLARD (Labour—Hutt South): I do want to thank the Hon Chester Borrows for confirming to the Committee by way of his silence the fact that there is no good reason for this Statutes Amendment Bill to be passed under urgency; or that the only reason that it is being done under urgency is the mismanagement by the National Party whips and by Gerry Brownlee.There are a number of members around in the Chamber. I am slightly surprised that Jonathan Young has not taken a call. He is the chair of the Commerce Committee and there are massive repeated amendments based on changes in the Companies Act that run their way through this bill. I am sure he is across the top of it and that he could have made some contributions there. There are areas of change to the Defamation Act which I know is of particular interest both to myself and Judith Collins. I know that I read this very carefully in order to make sure of the effect of it; I am not absolutely certain that she did.The question that I am asking the Minister in the chair the Minister for Courts is whether there is anything in this bill that requires passing before Parliament finishes at the end of this year; if so why? Because at the Government Administration Committee other than some relatively—I am not going to say important; no relatively important compared with the other things in the bill—important changes to the Unit Titles Act we did not get the impression that there was anything that was urgent here.The question that flows from that is that given the House has over recent years developed a very good practice of having extended sittings on a Wednesday and a Thursday morning can the Minister tell us why this bill did not go through in 5 or 10 minutes during one of those extended sittings rather than coming along in a period of urgency? It is almost like the way our Parliament works. It is an invitation to have a bill that is non-contentious debated more than is appropriate and I would be very happy if the Minister could make a contribution and indicate the reasons if any. We will assume that there is no good reason and that it is his incompetence and that of Gerry Brownlee if in fact he chooses not to talk a call.LOUISE UPSTON (Senior Whip—National): I seek leave for the Statutes Amendment Bill to be taken as one question for the vote with the exception of Part 25 which will be taken separately.The CHAIRPERSON (H V Ross Robertson): Is there any objection to that course of action being taken? There is none. This is how we will have to do it honourable members. There will be three motions put.The question was put that the amendments set out on Supplementary Order Paper 354 in the name of the Hon Chris Tremain the amendments set out on Supplementary Order Paper 362 in the name of the Hon Chester Borrows the amendments set out on Supplementary Order Paper 353 in the name of the Hon Dr Jonathan Coleman and the amendments set out on Supplementary Order Paper 329 in the name of the Hon Chester Borrows be agreed to.Amendments agreed to.Part 25 not agreed to.Parts 1 to 30 excluding 25 schedules 1 to 4 and clauses 1 and 2 as amended agreed to.The Committee divided the bill into the Accident Compensation Amendment Bill (No 2) the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill (No 2) the Aquaculture Reform (Repeals and Transitional Provisions) Amendment Bill the Armed Forces Discipline Amendment Bill the Births Deaths Marriages and Relationships Registration Amendment Bill (No 2) the Children Young Persons and Their Families Amendment Bill (No 3) the Companies Amendment Bill (No 3) the Criminal Investigations (Bodily Samples) Amendment Bill the Disputes Tribunals Amendment Bill the District Courts Amendment Bill the Electoral Amendment Bill (No 2) the Extradition Amendment Bill the Flags Emblems and Names Protection Amendment Bill the Gambling Amendment Bill the Health Amendment Bill the Health and Disability Commissioner Amendment Bill the Insolvency Amendment Bill the Legislation Amendment Bill the Local Electoral Amendment Bill (No 3) the Local Government Act 2002 Amendment Bill (No 4) the Maori Commercial Aquaculture Claims Settlement Amendment Bill the Parental Leave and Employment Protection Amendment Bill the Passports Amendment Bill the Private Security Personnel and Private Investigators Amendment Bill the Real Estate Agents Amendment Bill (No 2) the Road User Charges Amendment Bill (No 2) the Sale and Supply of Alcohol Amendment Bill the Social Welfare (Transitional Provisions) Amendment Bill the State Sector Amendment Bill (No 2) the Statistics Amendment Bill (No 2) the Tariff Amendment Bill the Telecommunications Amendment Bill the Unsolicited Electronic Messages Amendment Bill the Wills Amendment Bill (No 2) and the Wine Amendment Bill (No 2)pursuant to Supplementary Order Paper 352.The Chairperson reported the Statutes Amendment Bill with amendment and that the Committee had divided it into 35 bills.Report adopted.Third ReadingsHon CHESTER BORROWS (Associate Minister of Justice): I moveThat the Accident Compensation Amendment Bill (No 2) the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill (No 2) the Aquaculture Reform (Repeals and Transitional Provisions) Amendment Bill the Armed Forces Discipline Amendment Bill the Births Deaths Marriages and Relationships Registration Amendment Bill (No 2) the Children Young Persons and Their Families Amendment Bill (No 3) the Companies Amendment Bill (No 3) the Criminal Investigations (Bodily Samples) Amendment Bill the Disputes Tribunals Amendment Bill the Electoral Amendment Bill (No 2) the District Courts Amendment Bill the Extradition Amendment Bill the Flags Emblems and Names Protection Amendment Bill the Gambling Amendment Bill the Health Amendment Bill the Health and Disability Commissioner Amendment Bill the Insolvency Amendment Bill the Legislation Amendment Bill the Local Electoral Amendment Bill (No 3) the Local Government Act 2002 Amendment Bill (No 4) the Maori Commercial Aquaculture Claims Settlement Amendment Bill the Parental Leave and Employment Protection Amendment Bill the Passports Amendment Bill the Private Security Personnel and Private Investigators Amendment Bill the Real Estate Agents Amendment Bill (No 2) the Road User Charges Amendment Bill (No 2) the Sale and Supply of Alcohol Amendment Bill the Social Welfare (Transitional Provisions) Amendment Bill the State Sector Amendment Bill (No 2) the StatisticsAmendment Bill (No 2) the Tariff Amendment Bill the Telecommunications Amendment Bill the Unsolicited Electronic Messages Amendment Bill the Wills Amendment Bill (No 2) and the Wine Amendment Bill (No 2) be now read a third time.As the House is well aware Statutes Amendment bills have been a feature of the New Zealand Parliament system for a very long time. The oldest Statutes Amendment Act dates back to ’36—1936 that is. The bills divided from the Statutes Amendment Bill today propose a number of valuable changes to the statute book that would not ordinarily receive the House’s time. Although minor technical and non-controversial by nature Statutes Amendment bills are an important component of the Government’s annual legislation programme and have been in successive Governments and allow us to keep the law up to date accurate and user-friendly.The legislation contains 169 clauses and amends 33 different Acts. There has been the introduction of a couple of Supplementary Order Papers during the Committee stage and it is important to note what they are. A question was asked in the previous Committee stage about the reason for urgency. The obvious reason which has been made known to the Opposition for some time is changes to the sale and supply of alcohol particularly in respect of minibars in hotels being not bound by on-licence trading. For caterers there is a similar thing so that caterers at certain weddings which some of us may attend over the Christmas break will not be forced to stop serving alcohol at certain times constrained by the legislation. There are also wine cellars—that is “cellars” with a “c”. And knowing how important our wine industry is to our country I am sure Opposition members are only too pleased to support it or so they indicated earlier on.Hon Ruth Dyson: So urgency for wine?Hon CHESTER BORROWS: Knowing the discussions I have had with the Hon Ruth Dyson around other matters contained in the alcohol legislation I know that she is very supportive of this. Politics is not without its theatre and its game-staging. It is good to see Mr Mallard back after his little sojourn and it is interesting to see that he is ably ruffling the feathers and dividing the fissures within the Labour Party opposite.This bill proposes a number of valuable changes to the statute book that are minor technical and non-controversial as much as I have tried to make this speech a little bit controversial. I commend the legislation to the House.The ASSISTANT SPEAKER (H V Ross Robertson): I recognise the Hon Trevor Mallard.Hon TREVOR MALLARD (Labour—Hutt South): Well Mr Assistant Speaker I have been away for some time but I am not sure that that should stop you recognising me. I do want to react to the member opposite the Hon Chester Borrows. I think that an attack on Gerry Brownlee is hardly showing divisions opposite. We know that they do not like Gerry Brownlee but when we agree with them they should not say that that indicates a lack of unity on the part of the Labour Party. That is pretty obvious.But there has been one thing that has been made absolutely obvious by the contribution of the Minister in charge of this legislation the Associate Minister of Justice and that is that Tim Groser is staying in the country for the Christmas holidays. Tim Groser is staying in the country for the Christmas holidays because we have the minibar amendment which makes it legal to take alcohol out of the minibars between 4 and 8 in the morning. If anyone has a particular interest in that area—Hon Dr Jonathan Coleman: I raise a point of order Mr Speaker. It is going very well but I think that sort of comment is likely to lead to disruption. That is a slur on a member’s character and I take offence.Hon TREVOR MALLARD: Can I speak to the point of order?The ASSISTANT SPEAKER (H V Ross Robertson): You most certainly may.Hon TREVOR MALLARD: It is a matter of fact—Mr Groser’s minibar habit. It is a matter that is recorded and reported to the New Zealand public every 3 months. It is outrageous and referring to it should not be stopped.The ASSISTANT SPEAKER (H V Ross Robertson): Can I just say that it is usually up to an individual member to take objection. In this case it would be Mr Groser. I call the Hon Trevor Mallard but ask him—Hon Dr Jonathan Coleman: I raise a point of order Mr Speaker. As I say it is going well. That sort of personal attack on a member who cannot be here to defend himself is I think unwarranted and will lead to disruption. If Mr Mallard wishes to go and impugn Mr Groser’s character outside the House I would wish him to do that. But the last time he did that he came off pretty poorly.The ASSISTANT SPEAKER (H V Ross Robertson): Thank you Mr Coleman. It is not actually leading to disorder at the present stage.Hon TREVOR MALLARD: I raise a point of order Mr Speaker. In some ways I want to agree with the point that my colleague opposite just made. I think for you to rule that an absent member should take a point of order is something that is slightly bizarre. I disagree on the facts as to whether what I said was out of order or not and I think you ruled appropriately there. But your subsequent ruling that it was up to someone who was not here to take a point of order is I think somewhat unusual.The ASSISTANT SPEAKER (H V Ross Robertson): Can I just say to members that all members are honourable and that is it. We refer to each other as honourable despite what we may think is otherwise and we call a member what we would want them and all of us to become. I caution the House. We tend to see the world as we are not as it is. I just ask members to be conscious of that because courtesy is contagious.Hon TREVOR MALLARD: I am going to go right back to where I started in reaction to members opposite and the indication from the Minister in charge of the bill that the urgent part of this was a Supplementary Order Paper to do with the Sale of Liquor Act the main import of which is that people do not have to go to people’s hotel rooms at 4 in the morning to lock the minibars in order to stop people serving them. The point that I did make is that there is on the record published by John Key as Minister responsible for Ministerial Services one person who uses minibars I think about as much as every other Minister combined. That is Tim Groser.Hon Chester Borrows: And a member of the Opposition.Hon TREVOR MALLARD: Well that is exactly right. He has more than all Ministers and members of the Opposition combined. I agree with Chester Borrows on that. That is almost certainly the case. We are passing a clause that tends to indicate by its urgency that it is a matter of the Christmas holidays for the Minister concerned.Other than that there does not appear to be any urgency around the legislation. In actual fact that matter I am pretty sure could have been dealt with in a stand-alone bill that could go through all of its stages relatively quickly anyway. It did not really need to be part of a Statutes Amendment Bill. I think that when there is unanimity around a matter like that it might have in fact been more transparent to do it by that method.There have been a few areas that have come into this bill. There have been a couple of areas that have been knocked out of the bill. There has been an area that has been transferred to the Unit Titles Amendment Bill. But overall this is a relatively simple bill and one that deserves support.Hon RUTH DYSON (Labour—Port Hills): I just want to make three points in my contribution to the third reading of the 35 bills arising from the Statutes Amendment Bill. The first is that Labour supports this legislation and I want to just acknowledge the process that the Associate Minister of Justice Chester Borrows undertook when getting agreement and understanding from all parties which is proper and appropriate.I also want to say that the Government Administration Committee took these issues—it is a large number of Acts that are amended 33 Acts—very seriously including requiring one clause of the original Statutes Amendment Bill to be removed. We did not consider it was appropriate as part of a Statutes Amendment Bill. So we did not just rubber-stamp it; we looked at it really carefully and I think that is a good thing to do.The first point is that Labour supports the legislation and we are pleased in the main with the process that it went through. I do not agree with the Associate Minister of Justice’s contribution and what I thought was a half-hearted attempt to defend the incompetence of Minister Gerry Brownlee the Leader of the House. I suppose he had to really. He would not have had much choice given the future career prospects if you just blatantly stay silent while the incompetence of the Leader of the House is exposed to everyone. But saying that this legislation needs to be put through under urgency because of the sale of liquor amendments is just nonsense. We have had them for weeks and weeks and weeks. They are not last-minute amendments. They have been well canvassed. We have had many many sitting days under ordinary time of Parliament when this could have been progressed. As my colleague the Hon Trevor Mallard pointed out on Thursday mornings we have set times where we have extended sitting hours for bills that are agreed by Parliament and that time would have been an opportunity to progress this legislation. So it was a feeble effort from Associate Minister Chester Borrows. I understand why he tried to do it but it did not cut the mustard in terms of justifying the incompetence of Minister Gerry Brownlee and his House management.The final point I want to make is that there is a real risk when putting through bills under urgency that something will be wrong and it will be required to be corrected in the future. With the Statutes Amendment Bill that is pretty ironic given that this is fixing errors of the past. It does not matter who made them—they were made for a variety of reasons—but we should not risk making another mistake. In regard to Part 25 of the Statutes Amendment Bill to see it approved by the select committee but then to have the Minister’s Supplementary Order Paper 329 delete that part and then for the Government to vote against its own Supplementary Order Paper is very confusing. So I think that once again we see the risks of putting stuff through under urgency without proper consideration. It is a risk that I do not think we should take and it is certainly with something that is totally agreed by Parliament a risk we do not need to take. Thank you.Bills read a third time.Unit Titles Amendment BillIn CommitteeLOUISE UPSTON (Senior Whip—National): I seek leave for the Unit Titles Amendment Bill to be taken as one debate.The CHAIRPERSON (Eric Roy): Leave is sought that there be one debate. Is anyone opposed to that course of action? There appears to be none. Leave is granted.Clauses 1 and 2 and 142 to 163Hon TREVOR MALLARD (Labour—Hutt South): This is a bill that was split off from the Statutes Amendment Bill. It was taken out by the Government Administration Committee on the basis that there was more in it than was appropriate for a Statutes Amendment Bill. Traditionally statutes amendment legislation amends one two or three clauses of the substantive Acts. In this particular case there are 21 clauses of thesubstantive Act amended. None of them are that controversial other than the fact that they drew attention to the very slow progress on a substantive reform of the unit titles legislation which the Government has been promising for the last 5 years.There are very minor changes around utility interests around alterations of plans and around the timing of the annual general meetings. There are some very minor changes to the duties of the body corporate especially around maintenance. There are some requirements about what has to be disclosed to buyers. Any of these individually or as a group of two or three would have been fine for a Statutes Amendment Bill but they were in the view of the committee too substantive. Because we are not opposed to them we are quite happy for them to go through on this relatively fast-track arrangement based on the assurance that we received in the committee. It is going to be interesting because we were going to get a substantive amendment bill in the House on the unit titles question later this year.Hon RUTH DYSON (Labour—Port Hills): I hope I did not push in front of the Minister in the chair the Associate Minister of Justice. He is welcome to take the call. It is usual for the Minister in the chair to take a call first up in debates in this situation but he does not seem to want to. So I am happy to wait and it will be worth waiting for I am sure. As my colleague the Hon Trevor Mallard has just explained the Unit Titles Amendment Bill is the part that was taken out of the Statutes Amendment Bill when it was first referred to the Government Administration Committee some time ago not because there was anything in it that did not have unanimous support in terms of policy across all members of Parliament but because the number of amendments that it sought to make to the Unit Titles Act was not appropriate for a Statutes Amendment bill. So on that basis we not only took it out of the Statutes Amendment Bill but gave our commitment to ensuring that it was progressed in a speedy fashion.That was in May of this year—quite early in May at the start of the second week in May—and it is now nearly the end of November. I want to know what the Government has been doing between May and November that caused it to not progress a bill that has the support of every single member of Parliament and that was taken out of the Statutes Amendment Bill and why it now rams this through all its stages under urgency. There is clearly no consideration of what urgency does and of what should be in an urgency motion let alone an explanation of how the incompetence of the Leader of the House in terms of House management could possibly justify our putting a bill like this through under urgency. So I want the Minister to explain why this bill is being put through under urgency when our committee representing three parties—and I am sure that we had the understanding from other parties as well—had agreed that it was fit in content for a Statutes Amendment bill? Why would the Government not see fit to progress this bill in our normal extended sitting time on a Thursday morning rather than under urgency?The other point that I want to make is that our understanding was that for the last 5 years the Government has been working on a substantial housing package including a reform of the Unit Titles Act. I would like to know how much longer New Zealanders have to wait to get something of substance out of this Government in a pretty critical area the housing area. I know that we in Canterbury are used to waiting. The very Minister who is responsible for the incompetent management of the House Gerry Brownlee promised my constituents that the zoning decisions would be announced before Christmas 2012 and guess what? Eleven months later we are still waiting for those decisions. People’s lives have been put on hold. They have no ability to do repairs or a rebuild of their house while the zoning decisions are still not determined. So in terms of this Unit Titles Amendment Bill being put aside since May and now being put through under urgency I am not at all surprised. So with frustration over theincompetent management of the timetable of the House we support the substance of this bill.Hon CHESTER BORROWS (Associate Minister of Justice): I seek leave to have all questions heard as one.The CHAIRPERSON (Eric Roy): Leave is sought for all questions to be put. Is anyone opposed to that course of action? Leave is granted. That does simplify matters. [Interruption] Oh we have just done that.The question was put that the amendment to clause 150 set out on Supplementary Order Paper 358 in the name of the Hon Chester Borrows be agreed to.Amendment agreed to.Clauses 1 and 2 and 142 to 163 as amended agreed to.Bill reported without amendment.Report adopted.Third ReadingHon CHESTER BORROWS (Associate Minister of Justice): I moveThat the Unit Titles Amendment Bill be now read a third time. This bill formerly constituted Part 27 of the Statutes Amendment Bill which the House has just considered. Although the Government Administration Committee considered that the amendments to the Unit Titles Act 2010 were minor and technical there were so many of them that it was appropriate for them to be contained in a separate bill. Therefore the committee resolved to divide the Statutes Amendment Bill so that Part 27 became a separate bill known as the Unit Titles Amendment Bill which the House is now considering.The Unit Titles Act 2010 has been in force since June 2011. Its purpose is to allow bodies corporate which comprise all unit owners in a development to operate and manage unit title developments. The Act provides guidance to bodies corporate and unit owners to assist them in managing their property. In 2011 Ministry of Business Innovation and Employment officials and industry stakeholders identified several minor and technical issues with the Act such as incorrect cross-references for terminology and the Unit Titles Amendment Bill corrects these minor drafting errors. Although the proposed amendments are minor they are important because they affect the day-to-day administration of property affairs by bodies corporate and unit owners.The following amendments are examples of how the bill will clarify the original intent of Parliament when the Act was drafted. The bill simplifies disclosure when buying a unit by allowing buyers to choose from a list of relevant information from the seller rather than receiving all material as is currently the case. This will help both parties to the transaction. It clarifies that a body corporate can seek to recover unpaid levies through the Tenancy Tribunal enabling bodies corporate to recover unpaid levies quicker and it clarifies the types of general orders that the Tenancy Tribunal may make to resolve unit title disputes. This will assist with the resolution of more disputes.I wish to thank all stakeholders for their input into the amendments in this bill and I also acknowledge the support of my colleague the Hon Dr Nick Smith the Minister of Housing on the bill. I commend the bill to the House.Hon RUTH DYSON (Labour—Port Hills): I think that some people will probably be puzzled when listening to Parliament debating this morning. It is probably not an unusual situation actually that people would be puzzled listening to our debate but it is not common that we have a bill going through all stages under urgency when there is the complete agreement of every single member of Parliament on it. So just to explain that a little more to people this bill that we are debating the Unit Titles AmendmentBill originally came into Parliament as part of the Statutes Amendment Bill which is a vehicle for making technical changes to bills that do not change the policy but where there has clearly been an error in the original drafting or a lack of clarity about the intent and every member of Parliament has to agree to the provisions of a Statutes Amendment Bill.When our select committee the Government Administration Committee was given this bill to consider we looked at the provisions in Part 27 which covered the Unit Titles Act amendments and said that there were too many. None of them on their own constituted a breach of the statutes amendment regime in that none of them changed policy—they were just clarifications of the original intent—but there were so many of them that we considered that they should come out of the Statutes Amendment Bill and be considered as a stand-alone bill. We agreed that we would support its speedy progress because we understood the desire for better clarity in the unit titles legislation so we said that we would support it going through the House in you know a reasonable fashion. We did that in May of this year. Nothing was further from our imaginations than thinking that our commitment to having this bill progressed would then mean that it would be put through all its stages under urgency It is just incompetent House time management that this is where this bill has ended up. I just want to put on the record the fact that it is very expensive for taxpayers to have Parliament sitting under urgency. In my view the term “urgency” should have some relationship with the urgent need of the matter that is before Parliament and this clearly has no such need.The other point I want to make is that we have now been waiting—New Zealanders have now been waiting—for 5 years for the Government to take some substantive action in terms of the housing issues that we face. In Canterbury as a result of the considerable population movement because of the earthquakes and the damage and the influx of a large number of people from outside Canterbury—indeed from outside New Zealand—to help with the rebuild we have a housing crisis. People are literally not able to afford rental property in their own communities and that has caused a lot of anxiety. But the Government has not done a single thing towards addressing what I am sure the whole of Parliament would love to hear about: what the Government will do to address the serious and genuine housing needs that we have in our country. So we have silence from the Government on the substantive needs of New Zealanders and here a bill that is totally agreed on by every single member is being put through under urgency. It smacks of incompetence it smacks of arrogance and it smacks of a total dislocation of this Government from the real needs of New Zealanders.Hon TREVOR MALLARD (Labour—Hutt South): I rise to also support the Unit Titles Amendment Bill and associate myself with the comments made by my colleague the Hon Ruth Dyson. This was part of the Statutes Amendment Bill. Unlike most other parts of the Statutes Amendment Bill it did attract a number of submissions and well-reasoned submissions. Unfortunately the vast majority of those submissions were outside the scope of the relatively minor changes that were being made as part of the Statutes Amendment Bill.I do want to reiterate that there has been a commitment to a substantive change in unit titles legislation. We had a minor change in 2010. It became apparent in 2011 that there were at least 21 minor errors to the minor legislation and some major errors to that and some areas that needed to be looked at. Unfortunately despite the commitments that were made to the Government Administration Committee by officials and by the then Associate Minister of Justice there has not been any progress—although I can be proven wrong. There might be a Unit Titles Act amendment bill introduced in the next couple of weeks. We did have an undertaking that we would have something back before the end of the year that dealt with the substantive matters thatwere raised with the select committee but we had to tell the people making the submissions: “Sorry this is a Unit Titles Amendment Bill but it is not wide enough.” It was not wide enough to encompass and to deal with the very real issues that are causing harm to people who own or want to develop unit title properties or who want to convert properties into unit titles.I do say to members opposite to you know think about Auckland a little bit and think about some of the intensification that needs to occur. To do it properly one of the answers—it is only one of the answers—is to have decent working unit titles legislation. It is important if people are going to feel safe putting what is often their biggest investment—for most New Zealanders their biggest investment is their property the home that they live in. If people are going to feel safe about having unit titles there has got to be good legislation and there has got to be appropriate legislation and we have not got that yet despite the promises of various Ministers including Maurice Williamson and Nick Smith over a period of time.As has been indicated this makes 21 amendments all of them minor to a minor bill that was enacted by Parliament under the National Government in 2010. The idea that the Government can make 21 mistakes in a relatively small bit of legislation does go to the lack of focus on detail and the lack of care of its Ministers and the fact that they do not work their Cabinet committee and the select committee process well. In most countries making 21 errors in a relatively minor bill and having to come back to Parliament to get it fixed up a year or so later would be a source of outrage but unfortunately that is the level of competence we have come to expect from the National Government. The bill comes to the Opposition and the only reason we are supporting it is that it does a little bit of good for some people who have got unit titles.Bill read a third time.Medicines Amendment BillIn CommitteeLOUISE UPSTON (Senior Whip—National): I seek leave for the Medicines Amendment Bill to be taken as one debate.The CHAIRPERSON (Eric Roy): Is there anyone opposed to that course of action? There is not. Leave is granted.Parts 1 and 2 schedule and clauses 1 to 3Hon ANNETTE KING (Labour—Rongotai): You can see that I am very eager to speak on the Medicines Amendment Bill because I have looked forward to this day for 6 years. For 6 years I have looked forward to it. In fact for 14 years this bill has been in the making. In fact this bill makes a few changes to the Medicines Act 1981. It is an interim measure after 14 years. It is a bit of a sticking plaster a bit of a patch up until the Government progresses the Australia New Zealand Therapeutic Products Agency under a treaty that was signed between Australia and New Zealand in 2003. So this is not a comprehensive overhaul of the Act; it is an interim measure.The irony of this is that National after years of political posturing and shilly-shallying in Opposition led by Tony Ryall opposing a joint agency finally decided in 2011 that it now supports it. That must be the biggest backflip that we have seen on a piece of policy in this House. The Prime Minister agreed in 2011 that National which was once opposed to a joint agency would now proceed with the establishment of the Australia New Zealand Therapeutic Products Agency.The legislation that will bring this agency to life sits on the Order Paper of this House—No. 47 if you want to have a wee look. It is the very legislation that Iintroduced in 2007 and is unchanged after all the political posturing. Now it is in the name of the Minister of Health Tony Ryall. I have to say that after 9 years of National being in Opposition with the most objectionable obnoxious and malicious fabrications—full of cant—about a joint agency we now have a National Government in support of it. In fact Mr Hayes probably knows quite a lot about it because it was very much part of a trade deal we did with Australia under the CER and the Trans-Pacific Partnership and he is probably well aware of the negotiations that took place. But for purely political reasons the National Party opposed the joint agency.This bill takes out some of the changes that were going to be made a very narrow range of changes for an interim measure until the joint agency is set up. I look forward to that day because as the former Minister of Health who took the heat on that bill and listened to so much rubbish over months and months—in fact years—I am delighted that National finally saw the light. I have to give credit to the Prime Minister because there is no way that Tony Ryall would have seen the light.You see a regulatory impact statement undertaken by the New Zealand Institute of Economic Research right back in October 2000—13 years ago—confirmed that the Medicines Act 1981 the Medicines Regulations 1984 and the Dietary Supplements Regulations 1985 were outdated and gave rise to significant “safety risks trade barriers and costs to Crown and industry.” It proposed in 2000 that the changes to be put in place should be around putting in place regulations to make change and putting in place international best practice.Well this bill which we are now finally debating modernises the definition of medicine medical devices and therapeutic products. We welcome that because it made up part of the negotiations for the joint agency all those years ago. The second thing it does is it changes the approval process for medicines and medical devices by the use of regulations to specify detail. We support that because it made up part of the changes that would have come in with the joint agency all those years ago.The third part of this bill amends the prescribing framework. We will have three types of prescribers. Authorised prescribers are the ones whom most people are familiar with. They are doctors dentists and midwives and they prescribe within a scope of practice that has been defined for them. Then we have designated prescribers and they are a restricted subgroup of authorised prescribers. Currently they are optometrists and nurse practitioners. They have already got prescribing rights and there are some specialised nurses who are also designated prescribers. They are allowed to prescribe only medicines that are on a list and these are listed in regulations. This bill revokes designated prescriber regulations for nurse practitioners and for optometrists and now names them as authorised prescribers. So they now join the doctors the dentists and the midwives. It aligns them and now they too will prescribe in line with their scope of practice. They have shown for 7 years that they are totally capable of doing that so it has taken rather a long time.The new category of prescriber is the delegated prescriber. This new category is going to enable people to prescribe under a delegation an order by an authorised prescriber. That is a doctor or a dentist or a midwife and in this case it would be a nurse practitioner or an optometrist. In fact the requirements will be at a lower level so they will have limited prescribing. But we believe that the changes will enhance the health workforce and also the ability to provide appropriate care within the community. We support all those changes in this bill. The reason why is that they were a Labour Government proposal. It is only 5 years later that in fact we are now looking to pass them into law. So we certainly support those changes in this bill.But because this is being taken as one debate I have to emphasise again that we should have learnt a lesson about playing political games with major policy that affectsthe health of New Zealand our trade obligations and the economic viability of many businesses in this country. For purely political reasons the joint agency with Australia was held up predominantly by the then Opposition spokesperson on health Tony Ryall for no other reason than political purposes. Now all these years later having opposed it National is going to pass the very bill that I introduced. The Prime Minister said that National now supports the joint agency. Can we not learn that there are some things that are for the good of this country and are supported across Parliament instead of the sorts of stupid political games that were played with this particular policy?So now in an interim way we will make a few changes a little bit of a sticking plaster until the agency is in place. I will celebrate that day as I am sure will the Hon Christopher Pyne who is now the Leader of the House of Representatives in the Australian Parliament and Tony Abbott who was the Minister for Health and Ageing who helped negotiate it—now the Prime Minister of Australia—and who gave so many concessions to New Zealand to ensure that we have an agency that is fair that is equal and that enables us to act in a joint way and finally complete the negotiations with the one part that was missing under CER.Yes we will support this bill but the bigger picture needs to be the passage of the Therapeutic Products and Medicines Bill sitting on the Order Paper with the date on it saying it was introduced in 2007.IAIN LEES-GALLOWAY (Labour—Palmerston North): As my colleague Annette King outlined the Medicines Amendment Bill is an excellent bill. It is a very good bill that not only streamlines our prescribing processes and streamlines the way in which we approve medicines and medical devices but also improves access to health care particularly primary health care. It will improve people’s access to medicines. It will make it an awful lot easier for many people particularly people with chronic conditions to be able to access the medicines they require which is clearly the reason why the National Party has held it up for so long. That must be it. It is such a good piece of legislation which improves access to health care. That must be why the National Party has held it up for so very very long.Here is a little bit of history for those who are watching at home. The National Party has actually known all along that this is a good piece of legislation. It knows that this is the right thing to do but back in 2007 the National Party—and in particular Tony Ryall—saw a political opportunity. People may or may not remember a gentleman by the name of Gordon Copeland. Gordon Copeland was elected to this Parliament as a member of the United Future party. He decided to leave the United Future party despite being a list MP whose only mandate to be here was the fact that United Future had gained a certain number of party votes and that its leader had managed to win an electorate seat. So Gordon Copeland was here as a United Future member he decided to leave and he made it his life’s work to oppose the Labour Government on absolutely anything he could—Hon Ruth Dyson: When he remembered to vote.IAIN LEES-GALLOWAY: —when he remembered to vote. He did remember to vote against this legislation which improves access to medicines in primary health care. The National Party members thought to themselves: “Aha! With his vote opposing the Government if we decide to oppose this we can actually stop the Labour Government achieving something that is enormously positive for the people of New Zealand.” So rather than doing the right thing rather than having the interests of New Zealanders at heart and rather than doing something that would improve the health of every New Zealander the National Party chose to play politics and it blocked the Labour Government from passing this legislation.That was bad enough frankly but when National got into Government the election was done and the little political power play had had the effect it was looking for—it was just one of the things that led up to the 2008 election. National was now the Government it had the opportunity to act and it had the mandate to act. This bill the Medicines Amendment Bill—which of course is exactly the same legislation that Annette King introduced but it got rearranged slightly and reintroduced in the name of the Hon Peter Dunne—was introduced on 13 October 2011. So it took this Government almost an entire term of Parliament to introduce the legislation. It then got its first reading after the 2011 election in February 2012 it came back from the Health Committee in August 2012 and it finally got its second reading in March this year.So here we are in November—Hon Annette King: Under urgency.IAIN LEES-GALLOWAY: —under urgency and suddenly this piece of legislation has become tremendously important to the Government. It is so urgent that it has taken the Government only 5 long years to get to this point. And now it is suddenly so urgent to—John Hayes: Remember the 9 long years.IAIN LEES-GALLOWAY: —pass it through its Committee stage to get to here. John Hayes just tried the “9 long years” line—John Hayes just tried the “9 long years” line. We could have had this done when Labour was in Government but your party Mr Hayes blocked it. Your party stopped it happening. It played politics over it. That is what it did Mr Hayes. It put the health and well-being of New Zealanders to one side to play politics. You should be careful with your interjections Mr Hayes.On this side of the Chamber we wholeheartedly support this legislation. We think it is a great pity that it has taken so long to pass this legislation. It has actually outlasted the Hon Peter Dunne. That is saying something quite significant—that it has managed to outlast the Hon Peter Dunne. But this is good legislation. Annette King has covered the fact that it is the interim phase before we get to the joint regulator. But frankly I am more interested in the prescribing rights—the fact that this bill widens and deepens prescribing rights for many health practitioners. I am particularly interested in that because of the fact that so many people do not have adequate access to primary health care. General practitioners are tremendously important. They will always be an incredibly important component of primary health care but we simply cannot provide the primary health services that we are going to need in the future if we totally rely on general practitioners to be the sole bastion of all prescribing rights.We do need to move towards more nurse-led clinics. We need to give nurse practitioners—Sue Moroney: Paul’s fainting.IAIN LEES-GALLOWAY: —more opportunities. I am looking forward to Dr Paul Hutchison’s contribution on this legislation. We do need to make greater use of our highly qualified highly educated nursing workforce and in particular the nurse practitioner workforce. That is the only way we are going to provide the primary health care services that New Zealand is going to need and in particular that is how we are going to reach into those most deprived communities that simply do not have the primary health facilities that they need.Dr Hutchison will have heard me talk about this at the Health Committee recently. If you map the location of primary health care services against the deprivation index you get an almost perfect correlation. The most affluent parts of any community have an over-abundance of general practitioners and the least affluent—Hon Ruth Dyson: Do people get more sick in those communities?IAIN LEES-GALLOWAY: I am not sure that people get more sick. Maybe money makes you sick—I do not know. But people in the most affluent areas have an over-abundance of general practitioners and the people in the least affluent areas have minimal or sometimes non-existent services. It is those people who need primary health care services the most and who often have the most challenges in terms of access. I am thinking about things like transport and the affordability of going to your doctor. So that is why we need to pass legislation like this and do many other things to free up our health workforce to be able to provide the level of care that New Zealanders demand.It is an absolute tragedy that this bill is the thing National chose to play politics over. This is the kind of legislation that sits on the back-burner for 5 long years and then finally gets passed as part of an urgency motion early on a Thursday morning. I think that speaks volumes about where this Government’s priorities lie. I think it speaks volumes about this Government’s priorities. I know that had Dr Paul Hutchison been the Minister of Health under this National Government this bill would have been a priority. He would have progressed it much sooner than now. There is a gentleman who will be missed from this Parliament because he brought some sanity to the health policy of National.Hon MARYAN STREET (Labour): It gives me great pleasure in fact a deal of satisfaction to rise to speak to the Medicines Amendment Bill. I had the privilege of being on the Health Committee under the chairmanship of Dr Paul Hutchison when it was debated and reported back in August of 2012 prior to that I was also on the Health Committee in 2005 when this bill was first debated and when it first came into the House. So I have lived with this piece of legislation albeit on the back-burner as my colleague has said for a very long time. Tony Ryall was the Opposition spokesperson on health. We worked on the Health Committee together—or not as the case may be but we happened to be on the Health Committee together—and I remember the parade of red umbrellas. It was the red umbrella protest. I am sorry if there are members opposite who have come into this House subsequent to the 2005 election and do not know of that performance and now have to sit here listening while the Labour Opposition rightly sheets home to the National Party the blame for the delay in this legislation. If it is embarrassing for them so it should be—so it should be—because this bill was in front of the Health Committee in my first term in Parliament from 2005 onwards.The Hon Tony Ryall saw fit to side with a set of protesters whose arguments ranged from the patently ludicrous to the quite sensible and worthy of debate but who gathered together because of a range of measures. They saw this opportunity for a political score against the Labour Government at the time. So instead of looking to see whether the bill was going to benefit the health and welfare of New Zealanders Tony Ryall saw fit to do what only Tony Ryall does best—that is calculate the political benefits and ups and downs. I have to say that I consider that to be the way the Minister continues to operate the health portfolio now—that is with half a dozen measurable outputs into which everything has to be squeezed so that he can sing his sunny song constantly about how well health is progressing. Any other stories—the true ones—about people who cannot get on to waiting lists to get operations or whose blood glucose meters are seriously jeopardising their health do not make it into Tony Ryall’s narrative. They do not make it because he is only here for politics; he is not here for people.This is a historic reminder that that is this Minister’s modus operandi. He will look to the politics before he looks to the content. We had this ludicrous situation with two new members on the Health Committee—one a former general practitioner Dr Jonathan Coleman and one a former breast physician Dr Jackie Blue—who were compelled byTony Ryall to oppose this even though they knew it offended every professional ethic that they had. Jonathan Coleman had no trouble sacrificing his professional ethics but Jackie Blue did have trouble sacrificing her personal ethics. However that is history now. But let us not forget it. For those members opposite who do not know that history it is important that they do understand it because it is part of the progress or lack thereof of this bill.This Medicines Amendment Bill modernises the Medicines Act. It is only a temporary measure until the Australia New Zealand Therapeutic Products Agency is set in place. When that is set in place it will overtake the provisions of this bill. However the purpose of the provisions of this bill was to actually expand the ability of health practitioners to be able to prescribe so that one did not have to go to a doctor all the time; one could go to a designated prescriber who came under the jurisdiction the oversight and the supervision of an authorised prescriber.I am not going to take up any more time over this. We support this bill because we invented it and because it is good for New Zealanders.The question was put that the following amendment in the name of the Hon Todd McClay to the proposed amendment set out on Supplementary Order Paper 270 in his name to insert new clause 37A be agreed to:delete subclause (1).Amendment to the amendment agreed to.The question was put that the amendment set out on Supplementary Order Paper 270 in the name of the Hon Todd McClay to insert new clause 37A be agreed to.Amendment as amended agreed to.Part 1 as amended Part 2 schedule and clauses 1 to 3 agreed to.Bill reported with amendment.Report adopted.Third ReadingHon TODD McCLAY (Associate Minister of Health): I moveThat the Medicines Amendment Bill be now read a third time. This bill streamlines the current Medicines Act 1981 and is an interim measure until such time as the Therapeutic Products and Medicines Bill is passed. This legislation and the Natural Health and Supplementary Products Bill will comprehensively overhaul New Zealand’s therapeutic products regulatory system. Indeed this bill modernises the definitions of medicine medical devices and therapeutic purpose. It also amends the medicines approval process to make legislation less prescriptive and instead specifies the detail in regulations. It will amend the prescribing framework to name nurse practitioners and optometrists as authorised prescribers and makes some minor changes to licensing requirements. The bill also adds a new prescribing category: delegated prescriber. The definitions in the bill have been developed to reflect New Zealand’s current regulatory framework and will be reviewed and updated again as part of the establishment of the Australia New Zealand Therapeutic Products Agency.The changes that this bill proposes are consistent with this Government’s dedication to improving and enhancing access to health services and removing in a timely fashion unnecessary red tape while ensuring an emphasis on patient safety. The bill revokes the designated prescriber regulations for nurse practitioners and optometrists and names them as authorised prescribers. This will align their prescribing rights with those of medical practitioners dentists and midwives by enabling them to prescribe all medicinesappropriate to their scope of practice. This move acknowledges the safe and appropriate prescribing practice of these groups over the past 7 years and will support timely access to care for New Zealanders. The bill also creates a new category of prescriber the delegated prescriber who will be allowed to prescribe under a delegated prescribing order issued by an authorised prescriber. This bill also enables a licensing authority to take into account previous convictions when considering an applicant’s fitness to hold a licence and to impose conditions either when issuing a licence or at any other time while the licence is in effect.The default commencement date for the definition prescribing and other minor technical provisions will be 1 July 2014. The bill removes provisions in the Medicines Act that deal with medicines approvals and will replace these with a regulation-making power. The default commencement date for the medicines approvals provisions is set at 1 July 2017. This anticipates that the medicines approvals process provisions in the bill are likely to be superseded by the establishment of the Australia New Zealand Therapeutic Products Agency but provides a backstop should the implementation of the agency be delayed. This bill provides an opportunity to amend some specific provisions of the Medicines Act in advance of the comprehensive overhaul of the therapeutics legislation that will occur via the Therapeutic Products and Medicines Bill. This is timely legislation and a big priority for this Government. I commend it to the House.Hon ANNETTE KING (Labour—Rongotai): Labour will support this bill the Medicines Amendment Bill. It is an interim measure it is a sticking plaster it is a patchover until the Government progresses the Australia New Zealand Therapeutic Products Agency which was to be set up under a treaty that was signed between Australia and New Zealand in 2003. So it is not a comprehensive overhaul of the Medicines Act but a couple of little measures to progress it along the way after being delayed by political posturing for almost 7 years. Why was there a need in fact to even look at a joint agency? I did mention some of this in the Committee stage. We needed to resolve a special exemption for therapeutic goods under the Trans-Tasman Mutual Recognition Arrangement in a manner that facilitated trans-Tasman trade and to enhance Closer Economic Relations (CER) between Australia and New Zealand. You see it was one part of CER that had not been resolved in the late 1990s and the New Zealand system and the Australian system for regulating therapeutic goods were so different that it necessitated a special exemption. That special exemption was given in 1997-98.We were then required to work on getting rid of this exemption and we could have done it in three ways. It could have been a mutual recognition a permanent exemption or a harmonisation of regulation. It was decided by the then National Government in 1999 when the New Zealand and Australian health Ministers agreed that they would go down the harmonisation track for regulatory requirements for therapeutic goods as the best option under the Trans-Tasman Mutual Recognition Arrangement. So the then Minister of Health Wyatt Creech started the process towards having a joint agency between Australia and New Zealand. That was when the National Party had members of Parliament who were sensible and who were prepared to look at the trade issues and the health issues and to progress them in a sensible manner. But unfortunately when there was a change of Government and a change of spokespeople the bill became nothing more than a political plaything for the then National spokesperson on health who is now the Minister of Health. And play with it he did to the extent that he was able to delay the passage of any part of this bill until today under urgency.Maryan Street set out a very good record of what happened when she was a new member of Parliament coming into the Health Committee with Tony Ryall there as the Opposition spokesperson and watching how National had gone from supporting an agency in Government to opposing it when in Opposition. The irony of this—and I amsure members who were on that committee will understand the irony—is that the bill on the Order Paper that will set up this agency the very bill was in my name in 2007. Not one word of it has been changed. The very thing National members railed against which they went out on the street and argued against—and said that it was evil it was bad and it could not be done—is the bill that is No. 47 on the Order Paper. My name was taken off and Mr Ryall’s was put on. Well what an irony that is. It must be one of the biggest U-turns and pieces of political cant that I have ever—Hon Trevor Mallard: An S-turn.Hon ANNETTE KING: It is an S-turn—an S-turn. Well it is; I think that is right.Hon Trevor Mallard: Two U-turns.Hon ANNETTE KING: Yes it was an S-turn and it very much suits this particular Minister.You see the shame of this is that many of the good things that are in this bill could have been done all of those years ago. I agree with my colleague Iain Lees-Galloway that we have got some wonderful health professionals in New Zealand. With the changes made to prescribing in this bill these health professionals could be out there providing enhanced services—particularly in rural and provincial New Zealand and in specialised areas of health—but they have been held up because it was not important enough to pass. But under urgency today we now need to pass it in a hurry. It makes a nonsense of this Government’s legislative timetable but it makes an even bigger nonsense of its hapless Minister of Health who for purely political reasons held up this joint agency.I will be interested to see whether the Hon Christopher Pyne who is now the Leader of the House in Australia and the Australian Prime Minister Tony Abbott who gave so many concessions to New Zealand to ensure that we had a fair deal will be prepared to sit round the table and give those concessions back to us again. They are going to say: “Hey can we be sure that you will do it this time?”. I think that they will be very reluctant to go down this track unless there is some assurance. The assurance that we can give the Government is that we will not be playing politics with the joint agency. We will be looking at the greater good for New Zealand. That is what this Government ought to do. All I can say is shame on Tony Ryall. This delay is his delay.KEVIN HAGUE (Green): This Medicines Amendment Bill is a good bill. It is largely technical in nature and it is one that we are happy to support at its third reading. But like the Hon Annette King I want to provide a little bit of context as is appropriate at the third reading. As Iain Lees-Galloway described in the Committee stage the progress of this bill has been extraordinary and also chaotic. Certainly this morning I had to refresh my memory on much of the content of the bill because it has been so long since we last debated it in the House and to now be progressing it through all of its remaining stages under urgency is a little extraordinary. One of the things that I noticed was the commencement date and the change to the commencement date made by the Health Committee which has turned out to be fortuitous. If we had not done that the bill was due to have commenced in July of this year. At the time the select committee was considering it we had no idea that it would take the Government this long in fact to come to finalise the bill.It is hard to know whether that chaotic nature is a reflection of Minister Ryall’s political lens as Maryan Street has described it in the House. He is a Minister whose first instinct is to ask: “Does this win my party votes or does it lose my party votes?”. He is not a Minister who asks: “Is this measure good for New Zealanders’ health or bad for New Zealanders’ health?”. I think that is a sad thing but we do not know whether the chaotic nature of this bill is a reflection of that or of a more general incompetence either in the health portfolio specifically or around the Government’s management of its House programme more generally.Part of the context for this bill that I want to talk about is the workforce. Minister Ryall has for example trumpeted an increased number of doctors an increased number of nurses both of which have been shown to be outlandish claims that are not supported by the evidence. For example when asked about increased specialist numbers he included in his new doctor numbers a very large number of junior doctors who are not in fact specialists. His increased nurse numbers include a very large number of nurses who previously worked in our hospitals under contracts and are now employees so do not reflect any increased nursing capacity. It is a certain disingenuous use of data. Neither of those numbers reflects the maldistribution of those health professionals.Why this is important is that New Zealand is going to be facing—and indeed already is facing—a massively increased burden of disease particularly associated with chronic conditions. I have used diabetes in this House on a number of occasions as an example of an area where New Zealand is already facing this massively increased burden. If New Zealanders today require renal services they will be lucky to receive them. They will be lucky to receive them because those services are already being overwhelmed by the burden of disease associated with diabetes. That burden of disease is due to increase even more rapidly both because of the ageing New Zealand population but also because of the burgeoning incidence of type 2 diabetes. It is burgeoning to the extent that it seems likely based on the PricewaterhouseCoopers projections and based on the work done by the University of Otago researchers on the current prevalence of type 2 diabetes and pre-diabetes that in just 8 short years—by 2021—New Zealand will have moved from spending around half a billion dollars currently to spending around $2 billion each year on type 2 diabetes treatment alone. That is a massive increase in the burden of disease that our health services will face. It is an increase that we are ill-equipped currently to bear and this Government is doing precious little about preparing us for that impact. In fact in the face of that impact this Government and this Minister of Health Tony Ryall have actually slashed spending on preventing type 2 diabetes which is a massive massive problem.Against that extremely worrying picture the one bright light that I can pick from the Government’s performance is in fact this bill because clearly one of the things that New Zealand will need to do in the face of this impact from chronic conditions is to use our health workforce more intelligently and more flexibly. That will mean health professionals doing things that they are competent to do and that lie within their expertise but which they are not currently doing. Part of the recipe for reaching that point is to change the regulatory framework that may be preventing them from working to the full scope of their expertise. That is one of the things that this bill does accomplish. It will see a wider range of health professionals being able to prescribe and actually use a greater part of their expertise to the advantage of New Zealanders’ health. I already see it in the rural area that I come from the desperate need—and I spoke earlier in this contribution about the maldistribution of health professionals around the country—to be doing that in order to provide for the needs of rural New Zealanders. But that need in rural New Zealand is effectively the thin end of the wedge. What we are experiencing in rural areas will be experienced right through the country as a result of this burgeoning chronic disease burden. A bill like this which enables that stretched New Zealand workforce to work to the extent of its capacity is a welcome contribution and the Green Party will vote for it.BARBARA STEWART (NZ First): It is my pleasure to take a call on behalf of New Zealand First on the Medicines Amendment Bill. New Zealand First supports this bill. This is a bill as others have said that has languished—The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for the luncheon break.Debate interrupted.Sitting suspended from 1 p.m. to 2 p.m.Questions to MinistersEconomy—Manufacturing Sector Regional Economies and Employment1.Hon PHIL HEATLEY (National—Whangarei) to theMinister of Finance: What reports has he received on the economy—and especially on further signs of economic momentum in the regions and among manufacturers?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: The Minister of Finance has received a number of positive reports providing strong evidence of good momentum in the economy and of improving confidence. This is happening right across New Zealand but particularly in the regions and as it turns out especially in manufacturing. New Zealand’s healthy economic momentum is being recognised by respected international organisations such as the OECD which forecast that New Zealand will be among the strongest developed economies in the world next year with 3.6 percent growth. The Government is supporting these positive developments through its economic programme and especially through the Business Growth Agenda which is focusing on creating the conditions for businesses to invest grow and create new jobs.Hon Phil Heatley: What recent reports has he received confirming that the manufacturing sector is in good heart following a crisis that the sector was in in the mid-2000s?Hon STEVEN JOYCE: The Minister has received the BNZ-Business New Zealand Performance of Manufacturing Index for October. The index increased 1.5 points further in October to 55.7. The manufacturing sector has now been expanding for 11 consecutive months and this particular reading was the highest October reading since 2007. The index has actually averaged 56 since the start of 2013 which is very high by world standards. Interestingly it is not just manufacturing; the BNZ-Business New Zealand Performance of Services Index is also at its highest level of activity since November 2007. The contrast between the Performance of Manufacturing Index now and the index in 2008 when it had readings down to 35 shows that the manufacturing sector then was truly in a crisis.Hon Phil Heatley: Has he received any recent reports confirming that regional New Zealand is leading the economic recovery?Hon STEVEN JOYCE: This week the Minister received the ANZ Regional Trends survey. It reported that 12 of the 14 regions reported a lift in economic activity in the September quarter led by Taranaki which has the benefit of course of a vibrant oil and gas industry and also a dairy industry. Year-on-year economic growth accelerated in all but one region and overall growth was the strongest reported since December 2004. It is great to see that Canterbury grew at 6.2 percent in the past year which of course was the strongest in New Zealand. The Opposition failed at talking down the overall economy and it has failed at taking down the regions as well. In fact the regions are lifting New Zealand out of the global financial crisis.Hon Phil Heatley: How is New Zealand’s good economic momentum particularly in the regions and especially in manufacturing translating into more jobs?Hon STEVEN JOYCE: There are good signs that the economic momentum is translating into more jobs. For example the latest household labour force survey showed that employment was up 1.2 percent or 27000 people in the Septemberquarter. There were 53000 more people in work compared with a year earlier. This is despite previous false declarations by some people that there have been crises in manufacturing and crises in the regions and so on. I encourage those two groups to declare a crisis in some other part of the economy as there seems to be a direct inverse correlation between those that declare a crisis and a subsequent resurgence in the sector that they have declared to be in crisis.State-owned Assets Sales—Revenue Costs and Commentary2.Dr RUSSEL NORMAN (Co-Leader—Green) to theMinister of Finance: How much did the Government’s share sales in Mighty River Power Meridian and Air New Zealand raise given that theSupplement to the 2010 Investment Statement of the Government of New Zealand projected that those sales would raise $5.18 billion?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: The potential proceeds the member quotes were based on estimated commercial values of the companies at that time. They were one of a number of estimates by the board and Treasury but they were not market valuations because of course there was no market on which to value the companies. There was only a market valuation for Air New Zealand because it was already listed on the sharemarket. The share programme has confirmed what the actual market values of these companies are. They take into account all sorts of factors including a proposal to nationalise the electricity sector using a model found in only one other country. So in answer to the member’s question the partial share sales have so far raised almost $4 billion for taxpayers.Dr Russel Norman: Given that the sales have so far raised almost $4 billion whereas they were valued at $5.2 billion is he satisfied with his performance as finance Minister given that he has lost $1.2 billion of public wealth with his failed asset sales programme?Hon STEVEN JOYCE: I find it very hard to take from that member his criticism of the Government’s proceeds from the asset sales when he was doing his absolute level best through most of the year to scare investors away from the power companies of which there have been two that have been floated. You cannot sit there in the Greens and say you are working to sabotage the float and then turn round and say the value is not high enough.Dr Russel Norman: I raise a point of order Mr Speaker. I asked whether he was satisfied with his performance—Mr SPEAKER: Order! The member not only asked that; he then effectively said that the Minister was responsible for the loss of the $1.2 billion. If the member wants a simple question answered I would advise him to ask that clear and simple question and then I can assist him. But in this case the Minister has addressed the question.Dr Russel Norman: Well does the Minister think he is in any position to lecture the Greens in this House on prudent economic management when not only—[Interruption]Mr SPEAKER: Order! Allow the member to finish his question.Dr Russel Norman: Does he think he is in any position to lecture the House on prudent economic management when not only did he lose $1.2 billion of taxpayer money on the asset sales so far but the assets sales process has cost more than a quarter of a billion dollars—money that went to brokers lawyers and admen when it should have gone to schools hospitals and good housing for New Zealand families?Mr SPEAKER: The Hon Steven Joyce—as far as there is ministerial responsibility.Hon STEVEN JOYCE: I disagree completely with the two suppositions tacked on to the member’s question. I agree yes definitely with the member’s question and the Green Party proves the quality of the Government’s economic management every day.Dr Russel Norman: What does he say to the New Zealanders who believed his spin and believed the $8 million taxpayer-funded ad campaign and bought into these companies given that the value of the shares bought by retail investors has fallen by $150 million so far?Hon STEVEN JOYCE: The member needs to decide which line he is running here: either the shares have been sold to National’s greedy mates and they deserve everything that is coming to them or they have been sold to mum and dad investors who are losing out. The whole concept is ludicrous. He has actually been complaining that investors would sell them on for a quick buck. The reality is that most investors are still holding the shares and they have not lost any value because they have not sold them.Dr Russel Norman: What is his answer to the question raised today in theDominion Postby Vernon Small regarding the failed asset sales programme who said “Why did the Government ever waste so much effort on something so unpopular that would make so little difference to the economy?”Hon STEVEN JOYCE: I am happy to give a very clear answer to that question. The Government bothered for three reasons: first to get those companies on the sharemarket so they could be properly analysed and properly supervised by a market economy; two to give the opportunity for the market to grow and more opportunities for investors in shares in the New Zealand economy and the New Zealand sharemarket has been boosted through this process; and third to so far save the Government from borrowing $4 billion—$4 billion—that it would otherwise have had to borrow on the world stage. If the member thinks it is so wrong I invite him to go out and declare transparently as this Government did that the Greens would borrow $4 billion and buy the shares back.Dr Russel Norman: Is Brian Gaynor correct in theNew Zealand Heraldwhen arguing about the failed asset sale programme and the Government’s economic management he said: “Investors are now realising that there are huge risks associated with the current Administration because it doesn’t appear to have anyone at the helm steering a straight and consistent course as far as major business decisions are concerned.”?Hon STEVEN JOYCE: No and if Mr Gaynor wanted to see a contrast between a Government that knows how to run an economy and one that does not then he should vote for the Greens at the next election and see what he could really wish for.Dr Russel Norman: Are the market rumours that are circulating at the moment true that the Government is going to back away from the Genesis sale given the complete failure of the asset sales programme so far or is National determined to sell the assets regardless?Hon STEVEN JOYCE: Nobody takes the Greens seriously with their views on the share sales because they have a doctrinaire opposition to them. The reality is that the share sales have been a success. They have saved New Zealand taxpayers $3.9 billion that otherwise would have had to be borrowed on world markets and the Opposition members if they really have a conviction on this should get out there today and promise to buy the shares back.Dr Russel Norman: I raise a point of order Mr Speaker. It was a pretty direct question about—Mr SPEAKER: I invite the member to ask his question again.Dr Russel Norman: Are the market rumours true that the Government is going to back away from the Genesis sale given the failure of the asset sales programme so far or is National determined to proceed regardless?Hon STEVEN JOYCE: I was disagreeing with the proposition contained in that speech from the member. The reality is that the Government does intend to proceed with the Genesis sale and does intend to raise more money so we do not have to borrowmore money on the world markets. The public will judge the quality of New Zealand’s management of debt and one of the things they will judge is the amount of income raised from these mixed-ownership model companies.Pike River Mine Disaster—Compensation and ACC Investment in Energy Companies3.Hon DAVID PARKER (Deputy Leader—Labour) to theMinister for ACC: How much did ACC invest in Pike River Coal Limited and in New Zealand Oil and Gas Limited over the last eight years and how much has it made or lost in total on its investment in each company taking into account share purchases subscriptions and sales dividends and current share prices?Hon JUDITH COLLINS (Minister for ACC): I am advised that the shares currently held by ACC in New Zealand Oil and Gas cost $22.4 million and have an unrealised loss of $3.9 million. Over the last 8 years it has made a realised gain including dividend and trading income of $8.9 million. The shares currently held by ACC in Pike River Coal Ltd cost $20.5 million and have an unrealised loss of $20.5 million. During the last year it has made a realised loss including dividend income of approximately $1 million. In total the net loss of the investment to date has been $16 million.Hon David Parker: Of ACC’s $2 billion profit on investments last year how much did ACC pay towards the court-ordered compensation that Pike River Coal a company that ACC partly owned has not honoured?Hon JUDITH COLLINS: Of course ACC had no obligation or requirement to pay that and it was not ordered by the court to do so.Hon David Parker: I raise a point of order Mr Speaker. My question was not that; my question was how much has ACC from its—Mr SPEAKER: Order! I invite the member to ask that question again.Hon David Parker: Of ACC’s $2 billion profit on investments last year how much did ACC pay towards the court-ordered compensation that Pike River Coal a company that ACC partly owned has not honoured?Hon JUDITH COLLINS: Exactly the same amount that the court ordered ACC to pay which was none.Hon David Parker: Why did ACC vote against the New Zealand Oil and Gas resolution of shareholders at the company’s recent AGM instead of voting otherwise or online or via its proxy to contribute money to Pike River families which would have assisted in paying the compensation awarded by the courts?Hon JUDITH COLLINS: I think I should correct the member in relation to the actual motion which was “That the Company investigates and reports to shareholders on paying the reparation order of $3410000 handed down …”. ACC voted against it I am advised because it did not believe as a shareholder that it was sufficiently informed on all of the considerations to make a judgment as to what was the right stance for New Zealand Oil and Gas to take on that issue.Hon David Parker: Why has ACC made no claim against the directors of Pike River Coal Ltd for ACC’s losses following the misleading statements in the Pike River prospectuses which could have also been used by ACC to pay for compensation?Hon JUDITH COLLINS: Could you ask the member to repeat his question please?Mr SPEAKER: I will certainly ask the member to repeat his question.Hon David Parker: Why has ACC made no claim against the directors of Pike River Coal Ltd for ACC’s losses which the Minister said is $20 million following the clearly misleading statements in the Pike River prospectuses which again could be used by ACC to pay the compensation that the miners’ families have not received?Hon JUDITH COLLINS: That question is extremely speculative and it would be a matter for the board of ACC not for the Minister.Hon David Parker: Does the Minister agree that it is repugnant that ACC has done nothing to enforce its right to hold the errant directors of Pike River Coal to account has not contributed to the court-awarded compensation and as one of the largest shareholders in New Zealand Oil and Gas it voted to block that company from doing so too?Hon JUDITH COLLINS: No I would not call it repugnant; what I would call it is in accordance with the law and I would also point out to that member that ACC will have in fact by the end of next year paid almost $5 million to the families of those who were tragically killed at Pike River. There will be in fact around $16 million to $20 million extra paid and that is in addition to the massive $16 million loss in the investment which by the way was commenced under a Labour Government. Ruth Dyson was the Minister.Constitutional Review—Acknowledgment of Tikanga Māori4.Rt Hon WINSTON PETERS (Leader—NZ First) to theMinister of Māori Affairs: Does he stand by his statement “I know Māori want to talk about the place of the Treaty of Waitangi in our constitution and how our legal and political systems can reflect tikanga Māori.”; if so why?Hon CHRISTOPHER FINLAYSON (Associate Minister of Māori Affairs)on behalf of theMinister of Māori Affairs: Yes; because that is what some folk have been saying to me over the years.Rt Hon Winston Peters: Does he not understand that under our existing constitution and law every New Zealander has the right to practise his or her religious or cultural identity?Hon CHRISTOPHER FINLAYSON: Yes the Minister understands that perfectly well.Rt Hon Winston Peters: Well if he understands that perfectly well is it his view that our current constitutional arrangements give every New Zealander the same status of citizenship; if so why has he argued for a different constitutional status based on tribalism and race?Hon CHRISTOPHER FINLAYSON: Yes the Minister understands that equality is a fundamental bedrock principle of our constitution. Constitutional structures evolve over time; there is no big deal in any of that.Rt Hon Winston Peters: If there is no big deal in that why is he arguing for our new constitution to include provisions that would be destructive of democracy—that is to say a provision where one group of New Zealanders gain their status from being New Zealanders and another group gain their status by being members of a tribe or iwi?Hon CHRISTOPHER FINLAYSON: The Minister’s entire life has been dedicated to equality. That is why he took such a firm stand on the hateful foreshore and seabed legislation which denied people the right of access to the court on the basis of race and which that member supported.Rt Hon Winston Peters: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! This is a point of order. It will be heard in silence.Rt Hon Winston Peters: That was a very clear question I asked the Minister and he has not given me any answer at all to the question I have put to him. The question is simply this: why—Mr SPEAKER: Order! No I heard the question and in my opinion the member addressed that question. The way forward is not to raise a point of order with theSpeaker. The way forward is to use a further incisive supplementary question to try to get the answer that the member wants.Rt Hon Winston Peters: I raise a point of order Mr Speaker. The way forward is not as you suggest because we have only a limited number of supplementary questions. We well know that.Mr SPEAKER: Order! How many supplementary questions has the member got left now?Rt Hon Winston Peters: We have only—Mr SPEAKER: He has two left so I suggest he uses them quickly otherwise we will move to the next question.Rt Hon Winston Peters: Well I will ask the same question again one more time and hope for an answer. Why is he arguing for our new constitution to include provisions that would be destructive of democracy—that is to say a provision where one group of New Zealanders gains their status from being New Zealanders and the other group gains their status by being members of a tribe or iwi?Hon CHRISTOPHER FINLAYSON: I am not arguing for anything that would be destructive of that constitutional bedrock principle of equality before the law. Indeed my entire life has been dedicated to making sure all New Zealanders are equal before the law including Māori who were denied the right to go to court in an endeavour to prove that they had a customary title because they were Māori something I found utterly repugnant. I pay tribute to that outstanding member Tariana Turia who worked with me to ensure that that disgusting legislation was repealed. [Interruption]Mr SPEAKER: Order! There is a supplementary question. [Interruption] Order! I am just trying to get the House a bit quieter for the member.Rt Hon Winston Peters: If that customary title legislation was so disgusting to Māori why did every coastal Māori tribe back it unlike what the Minister has just said? More important are we to have now a Parliament that is sovereign or are we to have both a Parliament and a Treaty partner which means we have two sovereigns?Mr SPEAKER: The Hon Chris Finlayson in answer to either of those two questions.Hon CHRISTOPHER FINLAYSON: I will endeavour to answer those manifold questions. The first is that not every coastal iwi supported that disgusting legislation at all. The second point is that there is no issue about parliamentary sovereignty and the member as usual is chasing moonbeams.Rt Hon Winston Peters: I raise a point of order Mr Speaker. Whether you are aware of it or not there is a constitutional review going on now where precisely that is being argued—Mr SPEAKER: Order! [Interruption] No what we are getting here is a relitigation of the answer that has been given by way of point of order. That leads to disorder. If the member wants to raise a point of order he should raise it quickly and refer to the particular Standing Order and I will attempt to help the member.Rt Hon Winston Peters: I raise a point of order Mr Speaker. The Standing Order is known to all of us. It is that the answer to the question be direct to the question that you were given.Mr SPEAKER: Order! Now the member can resume his seat. That is exactly the point that I made. The member is now relitigating the answer because it is not to the standard the member wants. The member in my opinion addressed very adequately the question that was asked by the member.Finance Associate Minister—Management of Contract with Chorus5.Hon SHANE JONES (Labour) to theAssociate Minister of Finance: Is he satisfied with his performance in regard to his delegations as Associate Minister of Finance?Hon STEVEN JOYCE (Associate Minister of Finance): Firstly can I say that I am surprised to see the member here today. I thought he would be down with—Mr SPEAKER: Order! The start to that answer is just not going to help the order of this House at all. Would the Minister stand and answer the question that has been asked.Hon STEVEN JOYCE: Well Mr Speaker. [Interruption]Mr SPEAKER: Order!Hon STEVEN JOYCE: That question is for the Prime Minister to judge not me. It is perhaps worth noting though that in 5 years in the role this is the first time this portfolio has attracted a question in the House from the Opposition which perhaps suggests it has not seen too much to concern it over that period.Hon Shane Jones: Given that answer and the fact that he is directly responsible for the events that have led to the precarious financial position of Chorus as outlined in delegations transferred to this Associate Minister will he take responsibility for the catastrophic failure of Chorus for its $500 million write-down? He is not so smug now.Hon STEVEN JOYCE: Again I think the Opposition needs to line up its attack on this particular question because Opposition members are sitting there saying that the Prime Minister was wrong to say that the Commerce Commission would place the company at risk and now they seem to be suggesting that it does place the company at risk. This is a serious issue. The reality is that Chorus was relying on a certain amount of income from copper broadband to help pay for its share of ultra-fast broadband. The Commerce Commission has made a determination that will at least partially remove that income and some of the money that Chorus was relying on and that may lead to price reductions or it may not. The Government has sought an independent assessment of the financial position of Chorus. Once that assessment has been received we will work through the options to ensure that ultra-fast broadband is completed and done so at a very fair cost to taxpayers.Hon Shane Jones: Explaining is losing.Mr SPEAKER: Order!Hon Shane Jones: Sorry?Mr SPEAKER: If the member wants to continue with a line of supplementary questions I invite him to do so but if he is going to make an interjection like that again we will just move to the next question.Hon Shane Jones: Does he agree that he should no longer have delegated responsibility for Chorus Ltd as Associate Minister of Finance but should have in fact have responsibility for Chorus as Minister for Small Business given that that is what it has become under his watch?Hon STEVEN JOYCE: Again I can only marvel at the gymnastics of the Opposition which is one minute telling the Government that there is no problem that needs to be solved and the next minute is saying that there is a problem that needs to be solved. It is just playing politics. This Government’s ultra-fast broadband project is seen worldwide as a success. There is an issue to be dealt with. The Government will deal with this issue responsibly and the Opposition will carp no matter what the solution is.Hon Shane Jones: Given his close history with this issue and obvious responsibility for the fundamental failure of Chorus did it occur to him that he was fouling the reputation of Sue Sheldon the current chair of Chorus—apparently a paragon of audit and risk—and given the fact that she in her dealings with him has presided over a $500million loss does he not agree that she has no option but to resign today as the deputy chair of the Reserve Bank?Hon STEVEN JOYCE: I am sorry but it is very hard to take that question remotely seriously because the reality of the situation is that the Commerce Commission has come up with a determination that is going to create some issues for that company. Those issues are being worked through in a responsible way. The Government is seeking advice in terms of its contract with that company. That is being dealt with absolutely correctly. Again I have to say that the Opposition needs to decide what its view is on this matter because that member is disagreeing with his leader who is criticising the Prime Minister for saying there was a problem.Hon Shane Jones: Given that answer and the advice he is taking on the contract of Chorus and the prospect of that contract being rewritten does he not agree that he provides a precedent for the Green Party to rewrite the contract of Skycity?Hon STEVEN JOYCE: Oh dear.Hon Gerry Brownlee: Two and two equals seven.Hon STEVEN JOYCE: Yes I think that is it. Two plus two equals 45 in Shane Jones’ world.Mr SPEAKER: Order! Just address the question.Hon STEVEN JOYCE: I thought he was once a Labour leadership contender. I reject completely the member’s question. It is on another planet.Hon Shane Jones: I raise a point of order Mr Speaker. When you measure the level of admonition from one side of the House to the other it is necessary for you as we take leave next week to take account of the fact that that side gets a lot of leeway from you and you are constantly threatening to throw—Mr SPEAKER: Order!Hon Shane Jones: —this side of the House out.Mr SPEAKER: Order! Would the member please resume his seat. I have some sympathy for the point the member is raising. The question asked was a very loaded question. The Minister does not help the order of the House and on two occasions I have had to ask him to desist. He does not help the order of the House by answering a question with those sorts of initial comments. I do ask the Minister to do so. My alternative is simply to ask the Minister to leave the Chamber. I do not think that is warranted at this stage but I will warn Ministers that if they continue to do that they leave me no option but to then ask Ministers to leave the House.Grant Robertson: I raise a point of order Mr Speaker. I am not in any way challenging the ruling that you have made but I want to make clear that on this side of the House you have rightly in the terms of the strict Standing Orders admonished people on this side of the House and clearly said to them that the next time they do it they will leave the Chamber. Our concern is that Mr Joyce particularly in virtually every answer breaches the Standing Orders and we would ask that he is held to the same standard.Mr SPEAKER: I will hear from the Hon Steven Joyce.Hon STEVEN JOYCE: I understood that the convention was that if it was a politically loaded question the Minister in response had the possibility of providing a political response. I have been very careful whenever I receive a question that is one that is not politically loaded to respond to the question. I think my history in this House demonstrates that. But when it is political—Mr SPEAKER: Order! I have heard enough and I can help the Minister with his question. If a politically loaded question is asked then members who ask such a question can expect an answer back. But it is totally unhelpful for the Minister toinitiate his answer with some almost throwaway comment to members on the other side and that is what they are objecting to. To the point raised—Hon Gerry Brownlee: Well—Mr SPEAKER: Order! To the point raised by Grant Robertson I say that I do not want to make a habit of asking members to leave the House. I attempt to give very clear warning to members before I ask them to leave this House. On this occasion I have given a very clear warning—Hon Shane Jones: About time.Mr SPEAKER: Order! I have given a very clear warning that if Ministers continue to ignore an instruction that has been given from the Chair then they can expect the same sort of treatment in being asked to leave the House.Hon Trevor Mallard: I raise a point of order Mr Speaker. I would invite you to go back into your ruling and to look very carefully at the question that Shane Jones asked. Although it was asked with some flourish it was essentially a straight question as to whether someone who had made a loss of $500 million was—Mr SPEAKER: I do not need any more—Hon Trevor Mallard: —a suitable person to be—Mr SPEAKER: Order! The member I think has answered his own point of order. When a question is asked with some flourish—I think that was the word he used—then it does not become a clear precise perceptive question. If it is asked in that way loaded with some political connotations then that is the answer that members can expect back.Business Growth Agenda—Construction Sector Report and Initiatives6.JONATHAN YOUNG (National—New Plymouth) to theMinister for Building and Construction: What reports has he received regarding the state of the building and construction sector?Hon MAURICE WILLIAMSON (Minister for Building and Construction): The Government yesterday released the construction sector report which provides what I think is a very comprehensive report card on the state of the sector and I would ask all members of this House to have a good read of it. The report will support the Government’s Business Growth Agenda by improving understanding of the economy. Currently the sector employs 170000 people and generates revenues of around $30 billion per annum. The report highlights the huge wave of work that is coming in this country with the peak expected to occur in 2016. The sector needs to be ready to ride this wave and make sure it has a skilled workforce to cope with such a tidal wave.Jonathan Young: What is the Government doing to support the sector to prepare for this boom in construction activity?Hon MAURICE WILLIAMSON: We recognise that with all the work that is coming in Christchurch Auckland and the regions it is vital to have as many skilled workers as possible. That is where the apprenticeship reboot scheme comes in. Already more than 8000 people this year have signed up for a trade. It has indeed been a huge success. Yesterday the Minister for Tertiary Education Skills and Employment Steven Joyce announced that the Wellington Institute of Technology and Whitireia Community Polytechnic will invest $13 million in a new Regional School of Construction for Wellington. The Government is also improving the professionalism in the sector through the licensed building practitioner scheme for which we now have 23500 licensed practitioners. Other moves to cut red tape involve introducing risk-based consenting the uptake of building information modelling and the development of a national online consenting system which will all add to the productivity of the sector.Oil and Gas Exploration—Assessment of Anadarko’s Risk Management Plans7.GARETH HUGHES (Green) to theMinister for the Environment: Did the Environmental Protection Authority assess the full version of Anadarko’s Discharge Management Plan and Emergency Response Plan as part of its evaluation of the company’s Environmental Impact Assessment for the Deepwater Taranaki Well; if not why not?Hon AMY ADAMS (Minister for the Environment): Under the transitional provisions within the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act which are in effect until July 2014 and which apply to the application in question the Environmental Protection Authority is required to assess only the completeness of the impact assessment as set out in section 39 not make a finding on its effectiveness. I note that the Environmental Protection Authority is an independent agency that operates at arm’s length from Ministers and therefore this matter is entirely operational for the authority. However I am advised by the authority that although it did not see the version of the discharge management plan that was finally approved by Maritime New Zealand it does consider that it received sufficient information to satisfy its obligations under section 39 as they apply during the transitional period.Gareth Hughes: Is the Minister for the Environment satisfied that the Environmental Protection Authority has done its job when it has signed off on Anadarko’s well without having the full facts in front of it about potential environmental effects from a spill?Hon AMY ADAMS: As the Minister for the Environment it is not my job to second-guess the independent decisions of the Environmental Protection Authority. But as I pointed out in my answer to the primary question it is not the job of the authority while in the transitional period to approve the impact assessment; it is its job to receive and ensure that it is completed. That is very clearly what the legislation says.Gareth Hughes: Given that legal doubts have been raised is she confident that the Environmental Protection Authority has fulfilled its statutory obligation to determine that Anadarko’s environmental impact assessment was complete given that it saw only summaries of Anadarko’s oil spill modelling and emergency response plan?Hon AMY ADAMS: I can advise the member that the Environmental Protection Authority has confirmed to me that it considers it has met its statutory obligations.Gareth Hughes: Has not only the Government kept the public in the dark by suppressing these documents but also the Environmental Protection Authority has kept itself in the dark by not seeking and seeing full versions of Anadarko’s oil spill response plans before giving approval to drill the deepest-ever well in New Zealand’s waters?Hon AMY ADAMS: I can only repeat what I said to the member in response to the earlier questions. The Environmental Protection Authority’s obligation during the transitional period is to be satisfied that it has received a complete impact assessment under section 39 of the Act. The advice it has given me is that it is confident that it has received that.Moana Mackey: Is it still her assertion that deep-sea drilling can be done safely by Anadarko off the coasts of Taranaki and Kaikōura because we have been drilling offshore in Taranaki for decades with no problems when advice she received a year ago shows that the risk of a reportable incident each year increases from 10 percent at depths that we have drilled in so far to 70 percent at the new deep-water depths proposed for off the coast of Kaikōura?Hon AMY ADAMS: Yes. It is my view that it can be undertaken safely. That is not to say that there are not risks; of course there are risks and yes risks do increase as you get deeper. We have always been clear about that. But let me be really clear about this:the 70 percent figure which Mr Cunliffe is toting around the country and whipping up unjustified concern about is the risk of a reported incident—a reported incident. That includes property damage it includes accident or injury to workers and it includes days of being shut down. It is not the indication of a likely oil spill. In fact the best international information that I have seen tells us that the average rate of spill for deep-water offshore wells is 2.54 per 1000 wells and most of those spills are minor and contained.State-owned Assets Sales—Air New Zealand8.Hon CLAYTON COSGROVE (Labour) to theMinister of Finance: When if at all did Cabinet approve the timing of the Air New Zealand sell-down and what directions did Cabinet give the shareholding Ministers?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: In December 2011 Cabinet confirmed that the Crown would sell down its shareholding as part of the mixed-ownership programme announced nearly a year earlier. On 2 September 2013 Cabinet authorised joint Ministers comprising the Prime Minister the Minister of Finance Associate Minister of Finance Steven Joyce and the Minister for State Owned Enterprises to determine the final timing of the transaction. Under this authorisation the joint Ministers made the final decision on the timing of the transaction on Friday 15 November subject to the appointment of joint lead managers and determining the transaction’s structure. The Air New Zealand sell-down occurred on 19 November and was highly successful.Hon Clayton Cosgrove: Why was formal approval not sought for the timing of the transaction worth hundreds of millions of dollars or was it a case of Mr English having a drink on the Friday night and deciding to flog them off? [Interruption]Mr SPEAKER: Order! I am going to ask the member to ask that member again but the last bit just does not help the order of the House. If we could just have the factual question I think the member stands a far better chance of getting an answer.Hon Clayton Cosgrove: To the Minister—[Interruption]Mr SPEAKER: Order! [Interruption] Order!Hon Clayton Cosgrove: Sensitive. Why was formal Cabinet approval not sought for the timing of a transaction worth hundreds of millions of dollars or is it the case that Minister English on Friday night decided to flog the shares off?Mr SPEAKER: It is not greatly improved by that but anyway the Hon Steven Joyce.Hon STEVEN JOYCE: The member was simply not listening to the first answer to the question. I invite him to do so because the idea of having supplementary questions is that you expand on the answer to the first question. The key point is that Cabinet approved the transaction taking place but the timing of the transaction was actually delegated to joint Ministers: the Prime Minister the Minister of Finance the Associate Minister of Finance Steven Joyce and the Minister for State Owned Enterprises. Ministers took the decision after 5 p.m. on the Friday to make the decision to proceed.Hon Clayton Cosgrove: Given his answer yesterday in this House that he would not have to go “crawling to foreign bankers” to fund debt could he please explain whom he is borrowing the current $424 million per month from?Mr SPEAKER: Hon Steven Joyce in so far as it is related to the Minister of Finance.Hon STEVEN JOYCE: I look at the primary question—and I appreciate that the member has run out of supplementary questions because I have answered the question—and actually the debt question has got nothing to do with the primary question.Mr SPEAKER: And I am certainly going to accept that as an answer.Hon Clayton Cosgrove: With regard to the Air New Zealand sell-down has he seen the statement of a sharebroker published in the ChristchurchPress today who describes the sell-down of Air New Zealand as “What another bloody debacle”—and forgive the invective Mr Speaker but it is a direct quote—if so does he now acknowledge that along with Kiwi mums and dads the big end of town also believes that he has stuffed this transaction up?Hon STEVEN JOYCE: The Labour Party—the party of stockbrokers! That is what we have now. Again the member needs to make up his mind. Either we are making too much money or not enough money but he needs to stop actually arguing it around. The reason I am answering in this way Mr Speaker is that you heard the question.Hon Clayton Cosgrove: How will he make up the shortfall of his asset sales target? Will he forgo building the mythical schools and hospitals he promised or will he go “crawling to foreign bankers” to borrow the money to make up the shortfall?Hon STEVEN JOYCE: The reality is the Government has a net Crown debt of $60 billion. If we did not do these sales that number would be $4 billion higher now and then $5 billion higher. The question actually for the Opposition is: are those members promising to borrow the money to buy the shares back? If not the rest of it is all wind.Christchurch Recovery—State and Social Housing9.NICKY WAGNER (National—Christchurch Central) to theMinister of Housing: What steps is the Government taking to rebuild Christchurch’s housing stock damaged or destroyed by the earthquakes?Hon Dr NICK SMITH (Minister of Housing): The Government is committed to a programme of having all 5000 damaged Housing New Zealand homes repaired and 700 new homes built or the equivalent of one a day by the end of 2015 and we are making good progress. Today I turned the first sod on a new $9 million 26-unit development on Manchester Street where six old damp State houses previously stood. Eleven of the new 26 homes will be retained by Housing New Zealand and the remainder will be sold on the private market. This approach of increasing the density of housing in the central city and moving to mixed housing developments of social and private housing is part of our vision for Christchurch’s future.Nicky Wagner: How is the Government addressing the housing problems of the people of Christchurch with mental health needs given the stresses this community has been through and the escalating costs of housing from the thousands of homes damaged by the earthquakes?Hon Dr NICK SMITH: The Government has partnered with Comcare Trust a specialist community housing provider for people with high needs and has provided funding of $4.1 million to expanding its housing portfolio by 45 homes. We opened the first six of these in St Albans today. These tenants have complex needs that are better met by a specialist community housing provider like Comcare Trust. This initiative is a flagship of our social housing reforms underpinned by new legislation that was passed unanimously by Parliament yesterday.Phil Twyford: Does he agree with the Christchurch City Council that there is severe stress on the housing stock or does he agree with Gerry Brownlee who says it is just a housing pinch; and after 5 years in Government and 3 years since the quakes is it not about time he sorted out his failed housing policy?Hon Dr NICK SMITH: I would much rather be focused on building a house a day and rebuilding those 5000 houses that were damaged by the earthquakes than have an argument that the Opposition seems to be focused on as to whether it is a housingchallenge a housing crisis or a pinch which are the sorts of word games that get families nowhere.Meat Industry—Government Investment and Development10.Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) to theMinister for Primary Industries: Does he stand by his statement “The opportunity and challenge for our meat producers now is to add value to different cuts of meat and continue to sell the New Zealand story”; if so why?Hon NATHAN GUY (Minister for Primary Industries): Yes. This Government has a goal of doubling our primary sector exports by 2025. I have just returned from a very successful trade mission with the Prime Minister to Thailand to support this goal. To reach this goal we will also need to continue adding value to what we sell overseas. That is why the Government and the industry have jointly committed $684 million in funding for the Primary Growth Partnership. If successful these programmes could add around $7 billion per year to our economy by 2025. Almost half of these projects are in the red meat sector including innovative programmes such as FarmIQ; the new Silere merino meat brand which was a hit at the America’s Cup; and the marbled grass-fed beef project. Change of course does not happen overnight but Labour did nothing in—Mr SPEAKER: Order! That answer is now long enough.Hon Damien O’Connor: Does the Minister consider his investment of half a million dollars in the Red Meat Sector Strategy and the $350 million of taxpayer and farmer money in Primary Growth Partnership meat projects to be a good investment given that the Auditor-General is currently investigating each and every one of these projects?Hon NATHAN GUY: The member’s figures are inaccurate. They are not correct. The Government is investing just over $161 million in the red meat sector in very important innovative projects. I am relaxed about the Auditor-General having a look at these projects because there is very robust auditing already put in place by the Ministry for Primary Industries and external audits.Hon Damien O’Connor: How can the Minister justify his commitment to an $87 million Primary Growth Partnership project with ANZCO Foods a Japanese company that is so far not accountable for the money spent when the project to add value to meat carcasses is simply in the company’s own words “business as usual”?Hon NATHAN GUY: No I disagree with that. There are robust auditing processes under way. There are quarterly reports. The information is available on the Ministry for Primary Industries’ website. The member needs to understand that these are long-run projects. These are long-run projects and we are working very closely with the industry to return more money to the industry and to support our farmers. Labour does not care about our farmers and our rural communities.Hon Damien O’Connor: I seek leave to table an email from the Ministry for Primary Industries apologising once again—Mr SPEAKER: Order! Just describe the email precisely.Hon Damien O’Connor: The email is from the Ministry for Primary Industries apologising for not being able to deliver on time its obligation to an Official Information Act request for details on these—Mr SPEAKER: Order! And the email is presumably to the member?Hon Damien O’Connor: Yes it is.Mr SPEAKER: And the date?Hon Damien O’Connor: It is to our—Mr SPEAKER: And the date?Hon Damien O’Connor: It is to our research unit and it is detailed 18—Mr SPEAKER: The easiest way is for me to put the leave. It is over to the House to decide. Leave is sought to table this particular email to the Labour research unit. Is there any objection to it being tabled? There appears to be none.Document by leave laid on the Table of the House.Hon Damien O’Connor: Does the Minister consider the $350 million - plus committed in Primary Growth Partnership meat projects to be making progress when farmers are converting land to dairying with an increasing impact on the environment and meat carcasses are being exported to China for value-added processing while New Zealand meat workers remain unemployed?Hon NATHAN GUY: I refute some of those comments from the member. I think he needs to check his facts before he comes into the House because the China meat market is important to the red meat sector and to our farmers—so is the European Union and so is the UK. Yes there are some carcasses going there that are unprocessed but importantly there is a lot of processing and a lot of value-adding that is going on to support Kiwi jobs here. Importantly what we want to do is see greater returns flow through to farmers and that is why the member’s party should be supporting the Primary Growth Partnership water storage projects and the Trans-Pacific Partnership but it does not agree with anything.Hon Damien O’Connor: Supplementary question. [Interruption]Mr SPEAKER: Order! I will call the member once I can get some decorum from his own side.Hon Damien O’Connor: Given the admission by his colleague the Hon Tim Groser that the Ministry for Primary Industries had inadequately resourced trade into the China market does he consider the increase in staff from one to three to be sufficient to develop and protect the growing meat trade into China?Hon NATHAN GUY: The important thing here is that the Ministry for Primary Industries is addressing the issues that came to bear with the certification and importantly resources are increasing in China from one to three. The resources are also increasing here in Wellington in the market access team and we are working across the whole of Government to ensure that we are supporting our exporters getting their products into the Chinese market.Hon Damien O’Connor: I seek leave to table theRed Meat Sector Strategy Report—Mr SPEAKER: Order! Order! The member can resume his seat. That is something that was sent to all members at the time.Hon Damien O’Connor: I seek leave to table the Controller and Auditor-General’s annual plan—Mr SPEAKER: Order! If it is an older document it will have been tabled in the House already.Hon Damien O’Connor: It is this year’s document.Mr SPEAKER: It will have been tabled in the House already.Local Government Reforms—Financial Reporting11.IAN McKELVIE (National—Rangitīkei) to theMinister of Local Government: How is the Government improving councils’ financial reporting?Hon CHRIS TREMAIN (Minister of Local Government): Recently I announced the introduction of new financial prudence regulations that will tighten financial reporting lift transparency and encourage excellence in local government. The regulations will provide a standardised way of financial reporting which will encourage council efficiency and improve accountability to ratepayers. In next year’s annualaccounts councils will have to report against a set of benchmarks around three key elements of financial prudence. These are affordability sustainability and predictability.Ian McKelvie: How will the new financial reporting requirements ensure more transparency and encourage excellence in local government?Hon CHRIS TREMAIN: Affordability will be measured through rates and debt information; sustainability will be measured through a balanced budget expenditure on essential services and debt servicing; and predictability will be measured through cash flow from operations and debt control information. Performance results will be collated in a way that recognises each individual local authority’s situation. I want to see councils measured and benchmarked against each other to help lift performance and to focus on excellence. These regulations are part of the Better Local Government reform programme and are part of the Government’s commitment to delivering better services within tight financial constraints.Employment Relations—Legislative Reform12.DARIEN FENTON (Labour) to theMinister of Labour: Does he stand by his statement that “I am especially keen to hear what affected parties have to say on the Part 6A proposals in the Bill and will carefully consider their submissions and the recommendations of the select committee”?Hon SIMON BRIDGES (Minister of Labour): Yes I do.Darien Fenton: Can the workers at Hillmorton Hospital in Christchurch be confident that he has listened to their concerns given that their lives have already been turned upside down by the earthquakes and they are now sick with worry that his changes to Part 6A of the Employment Relations Act will mean they have no job security?Hon SIMON BRIDGES: In all seriousness they can be confident that I am listening and taking this very seriously.Darien Fenton: Will he carefully consider the submissions of school cleaners who told the select committee that enabling smaller cheaper companies to clean in schools will drive down the quality of cleaning thus putting our kids at risk of unnecessary infections?Hon SIMON BRIDGES: It will not be possible as the member knows for me to read every single submission. There have been a lot. But as she knows I have met with a number of people including the Service and Food Workers Union despite harsh criticism from Whale Oil for doing that. I am taking this issue very seriously.Darien Fenton: Given his commitment to carefully consider their recommendations where the submissions on the bill from both employers and workers overwhelmingly oppose elements of his Part 6A changes will he change them?Hon SIMON BRIDGES: Also as the member knows this is a very complex issue. Really there have been submissions going every way on every part of Part 6A. I have confidence that David Bennett and the team on that select committee will do a very good job.Medicines Amendment BillThird ReadingDebate resumed.BARBARA STEWART (NZ First): It is my pleasure to continue the debate on the Medicines Amendment Bill. This bill is long overdue. On—Mr SPEAKER: Order! Can I just ask members who are leaving the Chamber to try to do it as quietly as possible to allow the member speaking to have a reasonably fair go.BARBARA STEWART: Thank you. On this side of the House we lament the time that it has actually taken to get the bill to this stage. We are pleased to see that it has come to the House under urgency but we wonder why it never ever appeared prior to that. We are all aware that the bill is an interim measure until the Australia New Zealand Therapeutic Products Agency is established when we will act in a joint way with Australia on these matters. It was interesting at the Health Committee that the submitters all generally supported the new regime proposed and the new definitions even though it did take some time for us all to get our heads around the definitions and to feel quite comfortable with them.We were pleased to see that this bill uses the skills of the nurse practitioners and they can be more widely used. We know that nurse practitioners provide a valuable service that an increasing number of people depend on and this is particularly evident in rural areas. Again we know that pharmacists are now included in this regime and we are pleased to see the skills of pharmacists used. They are a highly skilled group of people and in every town people are very comfortable going into their local pharmacy to actually ask for advice. That is the first port of call before we go to the doctor these days.So just to quickly sum up New Zealand First supports the passing of this bill. It allows for greater flexibility where medicine and health changes are happening at an incredible rate. We believe it is in the interests of the health outcomes of all New Zealanders to keep up with the changes that are happening overseas and we believe that this should be a priority for the Government. Given that we are seeking to increase the flexibility of our health system and to make it more accessible to every New Zealander we support this bill. Thank you.Bill read a third time.Immigration Amendment Bill (No 2)First ReadingHon MICHAEL WOODHOUSE (Minister of Immigration): I moveThat the Immigration Amendment Bill (No 2) be now read a first time. I nominate the Transport and Industrial Relations Committee to consider the bill. The integrity of our immigration system is vital for the well-being of New Zealand and this bill further ensures that our immigration system protects our borders is responsive to the use of electronic systems protects migrant workers from exploitation and gives immigration officers the power they need to enforce the Act.The bill extends the powers of immigration officers to enable them to undertake a personal search at the border search a property or place for identity documents in order to facilitate a deportation or turn-round and enter and search an employer’s premises in order to search for unlawful workers check documents and interview employees to ascertain whether the employees and the employer are complying with the Act. It will also enable immigration officers to apply for and execute a search warrant. Currently immigration officers apply to the court for a warrant and a police officer executes the warrant on their behalf. This amendment will result in more timely compliance operations and contribute to the effective functioning of the immigration system.The bill includes two amendments that will protect migrant workers from exploitation. They are part of a package of actions that this Government is taking to address the exploitation of migrants. They demonstrate that this Government is takingthe issue seriously and will come down hard on employers who take advantage of vulnerable workers. We see this as very important particularly in the context of the rebuild of Canterbury.The first measure is to make exploitation of migrants on temporary entry class visas with work conditions an offence. There is presently an inconsistency in the legislation in that employers who exploit unlawful migrant workers can face hefty sanctions whereas those who exploit lawful migrant workers face much less serious penalties. The bill will address that mismatch by adding the exploitation of lawful workers as an offence under the Act. Employers who exploit migrant workers on temporary visas could face up to 7 years’ imprisonment and/or a fine of up to $100000.The second amendment will see employers who are themselves recent migrants and who have a residence class visa for less than 10 years liable for deportation if they exploit migrant workers. This will act as a further deterrent and was a provision in the 1987 Act but was not carried over when the Act was updated in 2009.Although changes to the law are important elements in improving protection for migrant workers the most important factor in achieving that is for exploited workers themselves to speak up. I want to take this opportunity to encourage those workers to do so in order that a brighter light can be shone on the practices of exploitative employers.The bill changes the way biometric information is collected to address gaps in identity management capability which will enable faster identification and improve the Government’s ability to manage risk. These amendments will enable biometric information to be collected from persons already known to be liable for deportation or turn-round enable a compulsion order to be sought to require a person to allow their biometric information to be taken where that person is liable for deportation and where a compulsion order is made enable police to use reasonable force to take the biometric information. It will also enable biometric information to be collected from non-citizens arriving in New Zealand either before or after they have been granted entry permission and while they are still within the immigration control area.The bill will help ensure that the Act has the ability to support the increased use of technology when the new Immigration Service delivery model is in place. These amendments will help provide a more efficient modern and cost-effective service to our customers and other stakeholders. It makes changes to the way information on the passenger name record is provided in order to improve the identification of travellers who may pose a risk or require further intervention and to improve airline compliance with immigration law—compliance that I am very confident is in excellent shape. Certainly after revelations this week and my checks I am even more confident but it is important to continue to improve airline compliance. These changes specify that passenger name information can be accessed by the Ministry of Business Innovation and Employment at specified times without having to make a formal request each time and that the information can be accessed for longer than the current 14-day period before and after the arrival of an aircraft. The information will be able to be used to identify patterns and trends which will help recognise and detect risks leading to better-protected borders and a safer New Zealand.The bill clarifies that the ability to request personal information under the Privacy Act 1993 does not apply to reasons for decisions made using absolute discretion. That parallels the existing exclusion under the Official Information Act and also includes a number of other miscellaneous provisions mostly of a minor or technical nature.I am confident that when this bill is passed it will build on the strong immigration legislative framework already in place. I commend it to the House.Dr RAJEN PRASAD (Labour): I am pleased to take a call on this bill the Immigration Amendment Bill (No 2) and to indicate to the Minister of Immigrationthat Labour will support this bill’s referral to the Transport and Industrial Relations Committee because it does address a number of shortcomings that have been exposed in the immigration system—in particular the exploitation by employers of immigrants and those who are here on short-term permits with work rights. So there is good reason to support it which we will.Labour wants to see a robust and effective immigration system because we as a country have become very reliant on immigration to a significant extent to meet our own national developmental aspirations. We would not have for example a growing population without immigration because if the number of New Zealanders permanently going abroad continued without being offset by the number of incoming migrants then indeed our population would be depleted and would certainly be on a downward trend because our fertility rates are not good enough for replacement. Our trading partners are also significant contributors to our immigration numbers so there is a lovely coming together of mutual interests. That has created very powerful diasporas in this country in New Zealand of those countries with which we trade and with which we will have an increasing relationship particularly from North central and South-east Asia. That applies also to our trade and tourism targets.However we have to record that we have not yet thought through in any detailed way how we might effectively capitalise on those diasporas. Development in this area is crying out for some serious attention and a good robust immigration system would do that.Furthermore when we reflect on the Government’s intention to double the value of our export education sector which is currently assessed at $2.6 billion over the next 12 years or so our immigration system takes on an even greater significance. That is because the export education pathway is becoming a pathway to residency for a growing proportion of people and for a growing number of those who come here initially on student visas. The education pathway also has a significant impact on our labour markets because of work rights that are granted to overseas students. So we could well ask in the context of the importance of immigration how good our current immigration system is whether it is well placed to meet the future challenges that are coming up and whether all aspects of the 2009 Immigration Act are fit for purpose or not. But that broader question must await another debate at another time.The Immigration Amendment Bill (No 2) attempts to keep the 2009 system fit for purpose by proposing a number of amendments. Some are technical in nature as the Minister has said and others correct minor inconsistencies. Those are not of concern to us. However there are a number of amendments included in this bill that are serious and that will require intensive scrutiny at the select committee. As I said earlier the proposals that have attracted the most attention to date relate to the exploitation of workers by employers. Stories of students who are being exploited in the labour market are now legendary and have been around for some time for several years. It is a credit to the union movement and union advocates for exposing these and for being available to those exploited migrant workers that this matter has now reached this point and come to Parliament for it to be fixed up. So despite what people from both sides might say about unions here is an example of how if it were not for unions advocating for this group we would not be debating these particular provisions today.The bill increases as the Minister said search powers for immigration officers including the ability to enter premises and search for unlawful workers as well as to examine employers’ records for their compliance with new employment law and the Immigration Act—all useful provisions. However as other speakers on this side will raise what are the checks and balances that those provisions are being appropriately used? These amendments will address the working conditions of workers who might bebeing exploited. However it is doubtful that the provisions will address some of the rorts that are reported to us confidentially around false job offers. My colleague Darien Fenton will have much more to say about this aspect of the bill.One of the changes is reintroducing the ability to deport residence class visa holders who are employers and who have been here for less than 10 years. I assume that there are very good reasons as to why that provision was not included in the 2009 bill so I would like to know—and the select committee will want to know—why it is being reintroduced now. I am not really arguing against myself here but I do wonder at what point a resident becomes a New Zealander. Here is a benchmark: 10 years. So we will now have two classes of people on residence class visas: those who have been here 10 years or less and who are subject to a particular set of standards and those who have been here longer than 10 years and who are not held to the same set of standards and therefore have more rights if you like. Without in any way wanting to be supporting the illegal activities of the migrant employers themselves there seems to be an inconsistency here that needs to be addressed. That is one provision that we would have some difficulty with.Also there are some retrospective sanctions here where if a person on a residence visa has committed an offence in the past 5 years and is exposed they will now be caught—so this is retrospective. We would need to ask whether a retrospective legislation is a fair one. Again I am not defending at all the activities of those who have offended in the past 5 years but why do we not start clean and say that from now on these will be the expectations? I look forward to hearing those arguments.The other major inclusion here relates to the migrant levy. We believe it is a major change. It has been changed to an immigration levy and its purpose is significantly altered. In the current Immigration Act 2009 the purpose of the migrant levy is to assist the successful settlement of migrants and to carry out research. But in this bill those provisions are extended quite considerably. The newly named immigration levy is to support “the infrastructure required for and the operation of the immigration system … for the following purposes: (i) establishing and verifying the identity of persons: (ii) managing risk to the integrity of the immigration system: (iii) managing immigration risk … (iv) managing compliance …” and indeed to attract migrant students and fund the Immigration Advisers Licensing Authority. That is quite a major change and I want to hear some arguments about that.The notion of absolute discretion of the Immigration Service which is being protected here is one that we are concerned about. It is not as if it has been a good week for the Immigration Service. We see what researchers are telling us about the rorts that are going on with people who are paying for job offers. In the present system students after qualifying must get a job in management. That is a big step researchers tell us and it is resulting in exploitation. Today there is a secret immigration blacklist that exists within the Immigration Service—185 lawyers and immigration advisers are on a blacklist within this service—yet we want to give this service greater discretion. It has not earned it and we want to know about the protections against some of the difficulties that have come up.The Minister of Immigration Michael Woodhouse talked about Canterbury where there is now already discussion about the rorts in respect of the Filipino workers coming through. It is almost like bonded labour where Filipino workers have to pay a big price to middle people to come here. The Minister’s comment as reported is that “it is very difficult for me as the Minister of Immigration to control that.” But indeed we must control that.The immigration system should be a robust one. We will want to make sure that the changes made in this bill do provide for a robust service. Thank you.DAVID BENNETT (National—Hamilton East): I just want to join in support of this bill the Immigration Amendment Bill (No 2). I just want to thank the previous speaker Rajen Prasad for his support from the Labour Party for this going to the Transport and Industrial Relations Committee. The 10-year rule is a general rule within immigration policy. If you commit a serious offence within that period of time you can be deported. I think it is just carrying that forward into the employment realm.I would just like to thank the Minister of Immigration for his special interest in this area. As new migrants to New Zealand many people face a lot of challenges and one of those is employment. Making sure that we have rules and regulations that give those people the most protection when they are in a vulnerable state is a very important thing. This Minister has taken a particular interest in that and has worked hard to deliver this result which will look after new migrants going into work and protect their rights so I would like to thank him for that.I also note that we have the New Zealand First leader Winston Peters here. I am sure he is going to get up and take the New Zealand First call and it will be another attack on people coming to New Zealand to make a better future for themselves. That is sad. We want an open and free country that has the best environment for people to make the best of their opportunities. To use these kinds of bills as a political stunt to try to attack people in vulnerable positions is something that you would expect of New Zealand First. We are soon to see it in the next half an hour I am sure. It is a very sad approach when a politician has to stoop to those levels to try to get some publicity. Thank you.Mr DEPUTY SPEAKER: I call Darien Fenton.Rt Hon Winston Peters: Oh come on Darien. Give me a break here. He attacked me you know.DARIEN FENTON (Labour): Take a point of order Winston. Take a point of order.Rt Hon Winston Peters: I raise a point of order Mr Speaker. I am sure I could indulge my colleague from the Labour Party and say look seeing as I was the subject of that very unwarranted attack—Mr DEPUTY SPEAKER: Order! That is not a point of order. The member will get a call in due course to deal with those matters.DARIEN FENTON: I am pleased to support this Immigration Amendment Bill (No 2) at the first reading for it to go the Transport and Industrial Relations Committee. I am also pleased to see the actions of the Government attempting to deal with the growing issue of migrant worker abuse. I am yet to be convinced that the bill does everything that it needs. I will talk to that a little bit more.We are seeing things in New Zealand that we have never seen before with migrant worker abuse particularly where I live in Auckland. Many MPs will have had migrants come to see them to talk about what has happened to them. I was an MP who had the workers from the Indian restaurant chain Masala come to see me. Their stories were horrific. They were being required to live on the premises. They basically had their jobs sold to them for something like $10000. It turned out they were being paid something like $4 an hour a minimal wage. I am pleased to say I went to see the Minister—it was not the Minister of Immigration; it was Simon Bridges Minister of Labour. I reported that fact to him as the Minister of Labour and then there was an investigation. I have also had an update from the labour inspectors in Auckland on that particular case. What they tell me—and I know they are working hard on it—is that it is really really hard to get the information to get the prosecution happening.Although it sounds straightforward it can be very complicated. It goes to the records that the business is keeping whether they are accurate or not or whether they arephoney as that can happen. It also goes to having migrants who are prepared to speak out. On the one hand I agree with the Minister of Immigration that we need migrants to stand up and speak out when they are being exploited in this way but on the other hand I think it has to go hand in hand with really good inspection powers both of Immigration New Zealand and of the Ministry of Business Innovation and Employment. I have repeatedly said that I do not believe that there are enough labour inspectors. There are not enough to deal with the health and safety issues we have got let alone the issue of migrant worker abuse. What it really needs is a team of people who go from place to place and inspect the wage and time records like they used to—labour inspectors used to do that—and talk to the people on the ground and just dig out these cases rather than waiting for poor migrants to stand up and say: “I am being exploited.” because the difficulties that they face are enormous.Job selling is something that we have never seen in New Zealand until recently. It is an abhorrent and disgusting practice where people who are desperate for work because their visas depend on it they want to stay here and they also want to support and feed their families are absolutely exploited by people who sell them their jobs. So they are told: “I will get you a job and if you pay $10000 or $20000 you can have this job. But you do not get paid.” Actually they pay for their own job. We have seen a lot of that. We have seen it. I think my colleague Rajen Prasad talked about the student visa issue. There are issues with students who are able to work 20 hours a week. There are also issues with the graduate visa programme where if people want to use the graduate visa programme to work towards residency they have to have a management job. So we have got managers in Burger King in—Dr Rajen Prasad: Shift workers. Shift supervisors.DARIEN FENTON: Shift supervisors? No they are managers. They are managers cleaning motels but they are called managers so that they meet the visa requirements in terms of working towards residency and that is just simply another form of exploitation.I want to emphasise that one of the questions that we will be asking a lot about during the select committee consideration on this bill is resourcing. I am looking forward to hearing from migrant groups. I think it will be very instructive for the select committee to hear from migrants themselves. Sometimes they will be represented by migrant organisations. So I suspect the Migrant Action Trust will have a lot to say and also Dennis Maga’s organisation Migrante Aotearoa New Zealand which is called something else now is it not—Union Network of Migrants. He is a really good advocate for migrants in New Zealand. He is constantly speaking out and can speak not only from his own experience but also from the experience of the people whom he has represented.I think there are some issues around employment law and when I spoke to Simon Bridges about the Masala situation he indicated to me that there was going to be a package. The Minister of Immigration Michael Woodhouse said just before that this is a package of measures. I have no idea what the other parts of the package are and it would be good to have some indication of that as we go through this. What it does need is some changes to labour law. It needs strengthening around that. Unfortunately—I have to say it—we are not seeing changes to labour law going in the right way to provide protection and make it easier for migrant workers. The changes are going backwards. It was very pleasing to hear the Minister of Labour today assure me that he is listening and taking into consideration submissions around proposed changes to Part 6A of the Employment Relations Act because in fact it is mainly migrant workers who end up in low-paid cleaners jobs. Those are the ones who are most vulnerable to exploitation. It is another form of exploitation if their jobs can be sold to the lowestbidder and they are dumped on the scrap heap with no redundancy pay and nowhere to go. A package would include actually not changing the Employment Relations Act in the way that the Minister is proposing. It would include actually strengthening it and making it easier for migrant workers to access their rights and would also look at things like the Wages Protection Act and prosecutions.One of the things that I have been told by migrant advocates is that it is very hard. The Ministry of Business Innovation and Employment can prosecute and it is hard enough for it but migrant advocates have migrant workers who come to them who have clearly been exploited and the employer has clearly broken the law and trying to take that through a court case is incredibly difficult particularly where the employers themselves are new migrants and have set up a business. There are all sorts of veils—corporate veils and other things—that cannot be unravelled. So although migrant workers often win a court case that exposes the breaches of employment law that they have been subjected to they cannot get any enforcement. The remedies are just simply impossible to obtain because the business disappears it does not have any money or it is hidden somewhere. There needs to be some consideration I think given to the Wages Protection Act whereby we are able to prosecute not just employers but individuals. I think again we will hear from lawyers who represent migrant workers in their situations and I know that they are quite strong on that.We do need to take this very seriously with the Christchurch rebuild as well. We have heard stories of course already and the last thing I heard was that the Ministry of Business Innovation and Employment was investigating 12 breaches in respect of migrant workers who have come to New Zealand and Christchurch. Again I do not think that it is resourced to do the job that needs to be done given that we are going to have 17000 migrants in the Christchurch rebuild and about four inspectors and have immigration offices that are actually not going to have people in them. They are going to be an online presence rather than enforcement. I think we do have to consider very seriously how we make this happen. If we are serious about stopping migrant worker abuse we have to think about how we help make it happen rather than simply sitting back and expecting migrants to come forward. I look forward to the discussion on that.The only other thing that I would say about this bill is that there are some things in it that seem to have come from the 2009 Act. They seem to have been left over and were maybe rejected at the time. We will be looking very closely at those and I am sure that we will have as much interest in those issues as we did in the Immigration Act 2009 when it was passed actually under Labour and when we went through a very extensive select committee process. But as I said I am pleased to support this bill. We will closely scrutinise it. It is good that the Government has taken some steps to deal with this very serious issue which could get completely out of control if we do not do something soon.JAN LOGIE (Green): The Green Party will support the referral of Immigration Amendment Bill (No 2) to the Transport and Industrial Relations Committee. There are aspects of this bill that are critically important in concept and we are very keen to explore the detail of them to ensure that they deliver for the people who need protection. There are other aspects of this bill that give us cause for concern and we look forward to also rigorously investigating them to ensure that they provide New Zealand with the solutions in immigration that we need.The primary purpose and the flagship of this bill is making the exploitation of migrants on a temporary entry visa with work conditions an offence and making the employer liable for deportation. Previously these sections covered only unlawful workers. It will enable employers who exploit workers to be liable for a sentence of up to 7 years in prison and/or a fine of up to $100000 and as mentioned earlier it opensthem up to possible deportation. It is really important to increase penalties. At least one of the reasons for needing to increase them is that up until now the penalties have often been less than the benefits of the exploitation and that is clearly not going to change the culture. Over the last few years we have heard of an increasing number of examples of the exploitation of migrant workers and I want to specifically thank FIRST Union for its fine advocacy on this issue and bringing it to the attention of all of us.We all lose when workers are exploited. In a case publicised last week an Auckland-based Korean food preparation factory is alleged to have exploited migrant workers with 16-hour working days few or no breaks below minimum wages and no employment contracts. A spokesperson for the Union Network of Migrants Dennis Maga has noted that this bill “… needs to be passed as soon as possible because migrants working on the Christchurch rebuild are being ill-treated.” As my Labour colleague Darien Fenton has mentioned there are 12 investigations under way but only four inspectors for what is expected to be 17000 migrant workers. We need to make sure that we have a system in place to protect our local economies and protect those workers from exploitation.There have been cases that the FIRST Union has mentioned of employees signing agreements in the Philippines yet when they arrive in New Zealand that contract and agreement has been changed and it knows of workers whose local employer is threatening to send them home if they do not work during the weekend without pay. That is not good for our international reputation that is not good for vulnerable people and that is not going to be good for the quality of the work on the rebuild in Christchurch either. Migrant workers and especially temporary migrant workers are vulnerable. Often they have limited knowledge of their rights. Sometimes they find it difficult to communicate and feel that their ability to speak up is constrained because they feel quite rightly that their immigration status may be at risk.There has been reporting where a migrant worker himself has described some of what he has seen happening up in Auckland. He talked about how when migrants arrive here to work for them work is their top priority because it will enable them to survive. But unfortunately as many of us know decent and well-paid jobs can be pretty hard to find no matter how keen or qualified someone is. Desperate migrants try to save money as hard as they can. Sometimes we have heard about people being sold jobs before they start which is a very deep form of exploitation. We have also heard stories of people being moved into sheds or garages in cramped cold conditions basically as a provision of their conditions of work and sometimes the money comes off the wages to pay for what are incredibly substandard conditions. There are also stories of people being asked to pay exorbitant rates for those same below-standard conditions. Then we have also heard of people being paid between $4 and $10 an hour without breaks and without their legal entitlements. As a Parliament we really clearly need to address these problems.I do want to via this bill point out a few of the concerns that have been raised by the people who are desperate for it to be implemented and I hope that we can have a discussion around that within the select committee. The FIRST Union has suggested that we also need to have stronger requirements on employers at the point of accreditation and tougher penalties for bad practice. This bill delivers on the tougher penalties but I have not seen the point around accreditation. The union has also raised the point—again raised by Labour—about the need for more labour inspectors up from the very low levels that we have currently because if we are going to ensure that the system that we put in place is able to work we need to have the people out there making it work and checking for people. The union also said that funding support to local community centres and organisations providing induction for new migrants needs to bestrengthened and many of these groups are currently struggling. That is something that we also would endorse and I think it would be better for the long-term well-being of our communities as well as for the migrants. It ensures that New Zealand gets the most out of the involvement of the people in our community. We can encourage them to stay and contribute rather than have a terrible experience leave and go somewhere else to add their labour to those communities.Also and possibly most important the Union Network of Migrants has raised concerns that if a migrant worker speaks out about abuse and leaves that exploitative job they will lose the work visa that is tied to that job. This is clearly a very significant barrier to those workers being able to get justice and be treated fairly. A visitor visa does not give them the ability to earn and this risks workers going underground into unlawful work in order to survive. What the union has been recommending is that an open visa should be given allowing affected migrants to find alternative work while their cases are being heard. It seems to me that that is the least we could do if we have not managed to protect them from that exploitation in the first place. This is clearly a very important area of work. We would like to offer our thanks to the Minister of Immigration for bringing it to this House and look forward to properly discussing it and working out the best solution for our communities and those workers.I would just like to mention briefly some of the other aspects of this bill that we see as not necessarily being an essential part of that policy platform and that raise concerns for us. This bill gives immigration officers the power to undertake personal and property searches including employees’ premises but is not specifically related to that aspect of their work at all. We would need to see evidence that immigration officers are unable to do their job properly at the moment without these extended powers. We have not seen evidence of that and we are very reluctant to see what is traditionally the work of our police force extended any more than it absolutely has to be. We also have concerns around privacy in relation to the extension of the collection of biometric information which is to be gathered for identity management. There is some lack of clarity around the purpose and extent of that which we would be keen to investigate.We are very clearly in opposition to what has been put in as an aspect in this bill in reiterating that requests for personal information under the Privacy Act will not apply to the reasons for decisions made using absolute discretion. We oppose that policy. We believe that people have a right to information and that the best systems are challengeable systems and we will encourage the Government to take that approach. Thanks to the Minister.CHRIS AUCHINVOLE (National): I support the Immigration Amendment Bill (No 2).Rt Hon WINSTON PETERS (Leader—NZ First): First of all I want to address Mr Bennett who got up and attacked me. I know that Mr Bennett has a love of Russians. I know that he has a love of Russians. A lot of us do but it is no reason to predicate our immigration policy. The second thing I want to say is that this Immigration Amendment Bill (No 2) purports to be robust. It talks about clarifying the existing Immigration Act and ensuring the integrity of the immigration system. The Minister of Immigration said that this bill will be strong support for the immigration framework already in place. I would like to know what planet his colleagues are on and what planet he is on because there is no evidence whatsoever to back up these fine words.Once again we are in the land of “Things are going to get better because the National Party says so”. It has had 5 years to sort out a sensible immigration policy. Today the immigration department is a corrupt mess. Very shortly I will name some of the things that back up that claim with evidence. Just the other day the Minister was asked how people get into this country and what is going on and he called it a heinouslie. Then 5 minutes later he was out talking to the media and saying: “Oh well we’ve got 30 cases of people getting here ripping up their passports—but they didn’t come from Lebanon.” What would that have to do with the price of fish?Hon Michael Woodhouse: It’s only half of what was going on when this member was supporting Government.Rt Hon WINSTON PETERS: If he had studied the programme properly he would have known that it was not restricted to those people. No no no—do not come here with your untrained Dunedin mind and think that you can give a shallow once-over to this very complex problem.It is all window dressing. It is camouflage. What we need is not this bill but a full-scale independent inquiry. We have the United Nations every year talking about people trafficking to New Zealand. The Minister denies it. So do all his colleagues. We know that women are used as sex slaves in this country. He denies it. So do his colleagues. We know that for example people are working in slave labour conditions 16 hours a day in substandard conditions. He has denied it. So have his colleagues. What we want is a full-scale investigation.In 2008 the Auditor-General set up an inquiry under Helen Clark reporting in 2009. I want to say that it said this: “We recommend that the Department of Labour … review the emphasis on target setting in Immigration New Zealand branches to ensure that the quality of visa and permit decisions is not compromised.” Did those members do anything about it? They did nothing whatsoever.Hon Michael Woodhouse: Done.Rt Hon WINSTON PETERS: “Done” my big toe! Just lately there has been an internal report that says 20 percent of the decisions made by Immigration New Zealand are of poor quality.Hon Michael Woodhouse: Used to be 40.Rt Hon WINSTON PETERS: What does this Minister do? Do you know what he just said? He said that it used to be 40 percent. He is just excusing his total incompetence of at least one in five—20 percent—and his excuse is that it used to be 40 percent. Minister you should be fired. You are incompetent. You do not know what you are doing.I want to say this too. I refer to the report of the Office of the Auditor-General of May 2009Inquiry Into Immigration Matters. This is what it said on page 49 of its investigation and review of Project Crusade: “The Department told us that the managers involved were held accountable for not adhering to the expected quality standards.” That is an utter lie. I will tell you why. I will just name you a number of people five in particular who were part of that investigation and this is what happened to them. Team manager Sarah Clifford undertaking Project Crusade was promoted to branch manager. She still continues to derive huge financial benefits in various roles in Immigration New Zealand. There is the first person. Then there is Ross Grigg at that time regional manager who has recently been promoted to area manager in the Waikato.Where is the accountability going on in this organisation? All the people who have been fingered by the inquiry are now getting—not demoted not held to account no—promoted. Team manager Kate Woodwards is still in the Christchurch branch and was recently presented with an award for her work. She was presented with an award for her work. What a joke. Immigration officer Dominic Ford was responsible for approving bulk visas. He has recently been promoted to assistant area manager in Shanghai with full diplomatic allowances worth $200000 per annum.What is going on in your corrupt department Minister? Do you not know? Branch manager Rex Heesterman was responsible for visa approvals in the Palmerston North branch as part of Project Crusade. That was the branch they called the visa factory. Itwas just stamping them left right and centre. There was no examination—just get the numbers up. Again Rex Heesterman has been promoted to an area manager role in Tonga as recently as July 2013. Where is the accountability? The Minister comes with this bill. He says that it is going to strengthen an already effective department. What a ministerial joke. Is that the best they can do?Listen to this. These five promotions are a clear example of institutionalised corruption within the department. The Office of the Auditor-General has a look and says that it is all going wrong. It gets told: “Oh no they’ll all be held to account.” They were not were they? Oh no they were not. This goes on and on and on. This department continues to abuse taxpayers’ funds by creating unnecessary diplomatic seconds with very generous allowances and salaries in places like Shanghai Pretoria Beijing and even Viet Nam. The department has recently appointed numerous managers in the Shanghai branch. These are the jobs that thousands of candidates would be willing to do on a locally engaged basis. Shanghai is obviously not such a Third World place that Immigration New Zealand could not attract candidates from New Zealand on a locally engaged basis. This is an utter and blatant example of abuse of taxpayers’ funds.But it does not stop there. Recently the Minister went to a big function in Wellington.Hon Michael Woodhouse: How many New Zealanders worked in diplomatic offices when you were the Minister of Foreign Affairs?Rt Hon WINSTON PETERS: No I was never the Minister of Immigration son—I was far more powerful than that. I was Deputy Prime Minister. I was the Treasurer. I was the Minister of Foreign Affairs. I was never as lowly as the Minister of Immigration. But I think that next time I might take that job and fix it up. I could do it in 6 months flat—I could do it in 6 months flat. The first thing I would do is get rid of people who think like that Minister over there.But here we go. Immigration New Zealand had a recent eating and drinking - fest conference in Wellington for all offshore and onshore managers. The Minister of Immigration himself—this man over here Woodhouse—attended the conference. More than 30 Immigration New Zealand offshore managers were flown to New Zealand on taxpayer funds. More than 30 were flown in on taxpayer funds. Who is paying for such lavish abuse of taxpayers’ funds? Has the Minister not heard of videoconferences? Why fly all these people in and then go along and lavishly live and stay in the hotels? The Minister comes along and it is all hunky-dory. I thought he was supposed to be from the party that believes in accountability and efficiency. It is just one scandal after the other.Of course the worst thing was that earlier this year he was asked how many overstayers there are in New Zealand. He said there were not 14 not 1400 but that there were 14000 overstayers in New Zealand. He dismissed that with a contemptuous view so renowned of some accountants. He said it was a low number—14000 to him is a low number. Well I do not know anywhere in Asia where you would find such incompetence in the immigration department. I do not know of anywhere—in fact in all of the Pacific—where you would find such incompetence in an immigration department. But the other day he was told by the Australian Broadcasting Corporation’sFour Corners programme that there is a whole lot of smuggling going on  and all the way to New Zealand. No the Minister bounced into the House—straight up no evidence no facts and no research—and he called it a heinous lie. Then outside he gets caught by the media and he says: “Well I’ll have to investigate that. I’ll have to investigate that.”You see he said it was a lie but here is the real point. When I asked the Minister whether he would resign if he was wrong all we heard was not a syllable not a sound not a mutter not a murmur not a squeak. He said: “Oh no no. I won’t resign if I’mfound to be what I know I am.” Incompetent. If he had any courage or conviction he would have said: “Yes I’ll resign. I’ve told the Parliament it’s a heinous lie. If I’m wrong I will resign.” Minister save us all the trouble and resign now.MIKE SABIN (National—Northland): The member who has just resumed his seat the Rt Hon Winston Peters seems to apply the standard of resignation to everyone else in this House. If he was to apply that standard to himself that member should have resigned about 15 times over but what he does instead is that he actually takes a Government down to avoid his own resignation. This is another good example of the xenophobic brand of New Zealand First and absolutely nothing to do with this bill the Immigration Amendment Bill (No 2).He wants an independent inquiry. What that actually translates to when we put that through the “complicator” is that he wants an independent media platform so that he can try to stand up to get a few cheap media shots away because he has been finding that he has been struggling to get some time on air with the old Green Party talking about their recent agenda and so forth. So he is trying to squeeze himself in to get a bit of time on air. He has done it time and time again but interestingly enough I looked around this House while the member was puffing out his chest and hot air was emerging forth and no one in this House was paying any attention whatsoever other than the Minister of Immigration at whom the allegations have been levelled.What Winston Peters is going on about here is the equivalent of when a Nigerian prince emails us all to tell us we have got $100000 sitting in a bank account because we are lucky enough to have won a lottery. That member Winston Peters would be the first to say: “Look at this! Look at this! There’s $100 million in the account.” It must be true because the liars the vagabonds and the people smugglers are apparently the people Winston Peters listens to and wants to get a media beat-up over. Why is it that the Minister has to prove that that is not true although Mr Peters does not have to prove it is true? If he had any clout if he would put his money where his mouth is that is what he would do. But he will not. He will not because he cannot.Mr DEPUTY SPEAKER: I understand that this is to be a split call. Andrew—Andrew Little 5 minutes.ANDREW LITTLE (Labour): It is one of those days when it is easy to forget even some of those who make a good contribution in the House. On that note I just want to make this comment about the honourable member who spoke last Mike Sabin. The Immigration Amendment Bill (No 2) follows on from one we had earlier this year about immigration. I recall the debates about that bill which was all about people-smuggling and the vast hordes of armies of people ready to be hoovered up and brought down here people who are sailing across the Tasman. It was the Government and its members who were saying that this was a real threat and that those people-smugglers had those potential refugees on the horizon ready to come down sweep down from parts hither and thither and flood the nation with otherwise unmeritorious claims for refugee status. It was the members of the Opposition who were saying: “This doesn’t sound right to us. Where is the evidence?”. I am pleased to see however that the Government now having seen the evidence which is a grainy recording of an alleged people-smuggler somewhere in Australia saying that there are people ready to come down here treats it with the scant regard we gave it at the time.This bill makes some important modifications. It is worthy of examination by the Transport and Industrial Relations Committee and for that reason we are supporting it. But I just want to sound this note of caution as we go into that process that scrutiny process and just say that there are some aspects that cause us concern. It goes back to that hoary old chestnut that seems to apply to so many pieces of legislation from this Government where basic human rights and citizen rights are ridden roughshod over.We can justify those things with all sorts of claims to nationalism saying that those people are a scourge and that local people will be affronted and affected by it. But the reality is that like it or not—and irrespective of the origins of people how they sometimes get here and the nefarious means by which they travel here—they are people.So I look with alarm at clauses like clause 33 which creates a new section 111 in the Immigration Act that allows the taking of biometric samples and information irrespective of the status of the immigration application. In fact the application could be declined and under this amendment to the legislation the unsuccessful applicant would still be obliged to provide that information. Regardless of all the assurances that we have had in the last 18 months or 2 years about how much work is being done to secure the information systems and the databases of the Government the reality is that they are not secure. People are being required to give evermore personal important and intimate pieces of information about themselves and we have no assurance about the security of that information. Nor do we have any assurance about how it might be used. We do not know whether the information having been collected for one purpose might be used for another. When we start talking about biometric information which can sound somewhat innocuous—it can be irises it can be thumbprints and fingerprints and all those sorts of things—I nevertheless have real concerns about giving Government officials of whichever Government the power to get more personal and intimate information when there may not be any need to do so.So we will look very carefully at those particular provisions that give power to override citizen and human rights and we will want to make sure that they are properly justified in the context in which they are being given.Mr DEPUTY SPEAKER: Denise Roche—5 minutes.DENISE ROCHE (Green): The Green Party will be supporting the Immigration Amendment Bill (No 2) to go to the Transport and Industrial Relations Committee. However we do have some concerns about it. We support the bill’s attempt to address the exploitation of migrant workers. However we are concerned that the provisions in this bill as it stands now may make it more difficult for migrants who are working in sweatshop-type arrangements. We have all heard the stories and seen the newspaper reports about immigration scams where workers are employed for extremely long hours for low pay or no pay and where some workers have had their passports taken off them by their employer. We have also heard the reports of workers who have actually paid their employer in order to work for them and get their applications for a work visa through. It is a growing problem and Darien Fenton I think spoke quite passionately about this. Certainly in Auckland where labour inspectors are working for the Ministry of Business Innovation and Employment it is one of the major issues that they deal with for a lot of their time.Although we support the provisions in the bill that are directed at employers who are migrants themselves and who exploit others—the provisions that make it an offence for employers who knowingly employ migrant workers on non-work visas—we are still concerned that this might force the problem of exploited migrant workers even further underground. These workers are so desperate to live and work in Aotearoa New Zealand that they are working illegally in the first place and they work in an environment where if they speak up they are likely to be deported. Although this provision may be a disincentive for those types of employers it raises the stakes for those who might be employed by them to ensure their silence. The pressure on them to remain silent increases and we may need to look at developing an open type of visa for those workers while those cases are being investigated.There is a climate of fear for those people but sadly it exists for many low-paid workers across the board and it is not helped by the amendments to the Employment Relations Act that are currently before the Transport and Industrial Relations Committee. It was not helped by the introduction of the 90-day trial period and it certainly has not been helped by the introduction of youth rates which legalises discrimination on the basis of age. Combine those factors with a punitive approach to the safety net of welfare where those who are on benefits are now deemed to be job seekers and we have an entire industrial relations environment where workers do not speak up anyway. For those who are even more vulnerable for migrant workers who are way over on the weak side of the balance of power between the employer and the employee it is even worse.The solution as we see it is to improve worker representation. That means to improve the rights of unions and promote their ability to bargain collectively. And we need to improve the industrial relations climate as a whole so that workers’ rights are the norm instead of having the current Government’s moves to deregulate the workplace environment which actively encourages bad employers to rip workers off.We do have some other concerns as well around other aspects of the bill which our colleague Andrew Little from Labour has already touched on. Those are the things like creeping biometrics privacy and the powers of the immigration officials. However we will be supporting the bill to go to the select committee because we want to see and hear from migrant workers themselves. Thank you.A party vote was called for on the questionThat the Immigration Amendment Bill (No 2) be now read a first time.Ayes111New Zealand National 59; New Zealand Labour 33; Green Party 14; Māori Party 3; ACT New Zealand 1; United Future 1.Noes7New Zealand First 7.Abstentions1Mana 1.Bill read a first time.Billreferred to the Transport and Industrial Relations Committee.VotingSocial Housing Reform (Housing Restructuring and Tenancy Matters Amendment) Bill—Recording Party VotesGRANT ROBERTSON (Labour—Wellington Central): I seek leave for the following votes on the third reading of the Social Housing Reform (Housing Restructuring and Tenancy Matters Amendment) Bill to be recorded in theJournals: New Zealand Labour 33 votes for the Noes; Green Party 14 votes for the Noes; New Zealand First seven votes for the Noes; Mana one vote for the Noes; and Brendan Horan one vote for the Noes. This does not affect the outcome of the vote.Mr DEPUTY SPEAKER: Yes as long as members are aware that it records the position in theJournals but does not change the vote. Leave is sought for that purpose. Is there anyone opposed to that course of action? There is not. Leave is granted. TheJournals will so record that.Parole Amendment BillFirst ReadingHon JUDITH COLLINS (Minister of Justice): I moveThat the Parole Amendment Bill be now read a first time. I nominate the Law and Order Committee to consider the bill. The bill implements the Government’s post-election action plan to reduce the number of unnecessary parole hearings where the offender has little prospect of release. The bill also includes a range of measures to improve the efficiency and effectiveness of the parole system. It is clear to the Government that hearings where the offender has yet to address the reasons for their offending and continues to pose a risk to the community serve little purpose. These hearings also cause unnecessary stress and anxiety for victims as they relive the offence again and again. Under the current Act the Parole Board is generally required to consider each offender at least once in every 12 months after they become eligible for parole. On average each offender has three hearings prior to release but there are four or more hearings in a third of all cases. The exception is where the Parole Board makes a special order postponing further consideration of a case for a longer period. I will talk about the changes to postponement orders in a few minutes.This bill increases the maximum interval between hearings in the general run of cases from 1 year to 2 years. This will give the Parole Board greater flexibility in scheduling future hearings. It will be better placed to align future hearings where appropriate with the completion of core components of this prisoner sentence plan. The existing requirement for a hearing at least once in every 12 months has led to a number of problems that this bill will address. Hearings often have to be brought forward to meet that strict requirement because of the scheduling of Parole Board meetings. A further hearing in a few months has to be scheduled in many cases because offenders are still completing core components of their offender plans.A third problem is that the entitlement to an annual hearing provides no incentive for unmotivated prisoners to address their offending behaviour. This bill requires the board when it declines to release an offender on parole to specify when the offender will next be considered for parole. It also gives the board the power to identify any milestones relating to the offender’s risk that it expects to be achieved before the next hearing. As an incentive for prisoners to address the reasons for their offending the bill includes a process for having their case brought forward when the milestones are achieved earlier than expected.I mentioned postponement orders earlier in the speech. Under the current Act the Parole Board can make one of these orders where it is satisfied that in the absence of a significant change in the offender’s circumstances they would not be suitable for release at the time when they are next due to be considered for parole. Under the existing legislation postponement orders can be for up to 3 years for prisoners serving indeterminate sentences and up to 2 years for other prisoners. The Parole Board makes these orders relatively rarely. There are about 20 postponement orders each year but they play an important role in parole decision-making not least by reducing the number of unnecessary hearings. Postponement orders are often made for offenders convicted of the very worst murders. They provide important comfort to the families of the victims knowing that they will not have to endure all the stress and anxiety that goes into a parole hearing for a period of years. The increase in the maximum interval between hearings from 1 year to 2 years in the normal run of cases will remove the need for postponement orders for prisoners serving sentences of less than 10 years. The bill therefore restricts postponement orders to prisoners subject to indeterminate sentences—that is life imprisonment and preventative detention—and determinatesentences of 10 years or more. The maximum term of the postponement order will therefore be increased to 5 years.The bill includes a number of other measures to improve the Parole Board’s efficiency and effectiveness and reduce the number of unnecessary hearings. For example the bill transfers the power to deal with written applications from prisoners to have their hearings brought forward from a panel of board members to the chairperson or a panel convenor. These applications do not relate to the sorts of issues board members are appointed to consider. The chairperson or a panel convenor is better placed to decide whether there has been a change in circumstances that justifies bringing a hearing forward leaving the board to deal with the substantive matter of whether a prisoner is ready to be released on parole. There are about 500 applications of this sort each year.The bill also removes the procedural steps in the Parole Act for deciding whether hearings should be held as an attended or unattended hearing. The existing processes have made unattended hearings unworkable in practice as they extend the preparation time by many weeks. This defeats the original purpose which was to increase efficiency. The bill takes the more practical approach of specifying the circumstances in which the board can conduct an unattended hearing although the prisoner will have the right to attend if they wish to do so.I am confident that the measures in the bill will make significant improvements to the parole system and that they deliver on important commitments made by the Government at the time of the last general election. I commend this bill to the House.ANDREW LITTLE (Labour): I rise to speak on the Parole Amendment Bill and to indicate from the outset that the Labour Party will support this bill at the very least to the Law and Order Committee. It is a bill that meets some obvious problems that there have been and we have seen in the management of parole in this country and it comes up with some useful solutions to them. It is worthy of examination by the select committee.I just say that this Government is basking in the success of the work of the previous Government in the criminal justice area—no less than the work of my colleague the Hon Phil Goff who will talk in this debate about his great achievements. The Parole Board as we understand it today was established by Mr Goff—probably one of the most far-sighted and visionary justice Ministers we have had in this country. He is entitled to take credit for the many positive achievements that have been made which this Government of course takes credit for and has no business doing so. I note in the regulatory impact statement the observation that the number of offenders who having been released on parole are committing offences has almost halved since the creation of the board.So the board is getting it right—it is moving in the right direction—but nevertheless there is a problem still. Too many parole hearings are being convened relating to prisoners who really have no prospect of success in an application for consideration for parole. The nature of their time in prison the passage through their sentence is simply not such that they would warrant being released on parole even under the strictest of conditions. This bill does address an obvious issue that needs to be considered so if there are changes that need to be made to accommodate that then all well and good. Let us ascertain whether the changes proposed in this bill will actually provide the remedy being sought.I want to make the point too—and we will come with this in mind in terms of examining this piece of legislation—that notwithstanding the fact that there clearly are unmeritorious hearings being conducted we do not want to lose sight of the fact that theParole Board continues to provide very important and very effective oversight when it comes to the management of prisoners who are serving out their sentences in prison.The truth is that some prisoners particularly those serving longer sentences may take some time to get to a point in the course of their sentence where they realise that they have to change. Whether or not they openly admit and acknowledge their wrongdoing and their fault as part of that journey towards change many nevertheless get to a point where they are willing to change and we would not want the deferral for a further extended period of the opportunity for consideration for parole when they may in fact be a suitable candidate for that. We would not want it to be pushed out so far that it becomes a hopeless prospect for them. So let us bear that in mind. We do not want those prisoners who are fit for parole whether under suitable conditions or not to be denied that opportunity when releasing them on parole would be not only better for the prisoner in terms of their rehabilitation and social integration but actually better for the criminal justice system and the community as well. So let us not ignore what the Parole Board is there to do and what the purpose of parole itself is notwithstanding the naysayers in our community who want to abolish parole altogether.The other point I want to make is this: this bill appears to be yet another in the growing heritage of criminal justice legislation under this Government that is haphazard uncoordinated incoherent and largely about responding to the odd sort of flare-up in public opinion. You know you need only look at some of the provisions in this bill. I am looking specifically at clause 14 and the proposed new section 29AA which relates to conditions being imposed on prisoners by the Parole Board—not something that is new but it now provides for special release conditions. Yet only a month or two ago we had the first reading of the Victims’ Orders Against Violent Offenders Bill which requires victims at their own expense and their own cost to go to court to get special conditions put on just-released prisoners. How absurd is that? I said at that time and I maintain it again now that when it comes to the protection of victims of offenders the criminal justice system should take responsibility for that. That is what a responsible criminal justice system does. That is what a Government that is genuinely understanding of the needs of victims would do. Would it not be a jolly good idea if a creative Minister of Justice and creative members on the Government side of the select committee could see that perhaps we could integrate parts of the Victims’ Orders Against Violent Offenders Bill into this Parole Amendment Bill thus obviating the need for the former and making the latter even more relevant than perhaps it might otherwise be?I think that this is a bill that opens the opportunity for fruitful debate and we are prepared to do that and we want to do that. But most of all—if I could make this plea to those members who have the ear of the Minister because I do not know who does in this House starting from the Prime Minister down—we think that it would be nice to have a justice policy or a justice strategy that actually develops and progresses the justice system so that it is coordinated and it is coherent and so that the time of this House is not taken up by sort of knee-jerk responses to yesterday’s headline. We should actually have an approach that is about having a good justice system and good criminal justice that is about looking after victims that is about managing offenders effectively with a view to minimising recidivism and ensuring rehabilitation and that is about that being better for the country as a whole.I want to just express this disappointment when we come to consider this bill. It is interesting in the regulatory impact statement that when it adumbrates the benefits of the bill the first thing that it comes to is the cost saving as if cost saving is the only thing that matters when it comes to managing prisoners. Yes of course it is desirable if the Government can save a dollar and not have to spend it if it does not have to but thetruth is that when we are dealing with matters of criminal justice and we are dealing with the awkward sometimes nefarious and sometimes utterly bad personalities who pass through our criminal justice system there is actually an investment that we make in getting the system right not only the processing of it through the hearing of crimes and the imposing of penalties but also the management of those who are sentenced. Whether it is imprisonment or whether it is other forms of punishment we actually do need to make sure that that investment is made for the best possible outcome. So just achieving a cost saving is not enough on its own in terms of supporting those measures.But as I said there is some worthwhile and fertile ground in the bill for debate discussion and scrutiny and we will give it that but we will go into that with Labour’s approach of wanting a coherent well-coordinated well-managed constructive and productive criminal justice system.JACQUI DEAN (National—Waitaki): This Parole Amendment Bill is another example of National delivering on its promises with a big plan for the justice sector that is being rolled out and has been very successful.This bill aims to reduce the number of unnecessary parole hearings. Victims of crime should not have to face the very stressful prospect of attending parole hearings year after year when an offender is clearly not safe to be released into the community and might have made little or no effort at rehabilitation. Each year there are around 5000 parole hearings and on average offenders have three hearings before they are granted parole. Our changes will provide strong incentives for prisoners to address their offending behaviour for the betterment of our community. I commend the bill to the House.Hon PHIL GOFF (Labour—Mt Roskill): Labour will be supporting this bill the Parole Amendment Bill. But at the same time at the Law and Order Committee which I sit on we will be examining it very closely because I think that the quid pro quo for the changes being recommended here being acceptable is that there are adequate safeguards to ensure that there continues to be fair and timely consideration given to parole decisions.It is not often I talk about movies in this House but there is a particular movie that I remember very clearly calledThe Shawshank Redemption. I remember very clearly in that movie the unfairness of the system that was prevalent in the United States at the time where you got called up for parole but they were never going to give it to you. That is taking the system far too far in the wrong direction even when people had reached the point where they had done their time they had shown remorse they were clearly on a better track in their lives and there was not much point in keeping them in the prison system. Even this Government has acknowledged that keeping people in the prison system beyond the time that is necessary to preserve the safety of the community is not a good idea.I put the Parole Act 2002 in place when I was the Minister of Justice. There was a huge amount of work that went into that new legislation and that legislation brought in huge changes which I think have had major and beneficial effects for New Zealand. The regulatory impact statement for this bill actually acknowledges that the reform put in place by the 2002 legislation has been really effective. It notes and this was something that I insisted on in that legislation that the Parole Board’s paramount consideration—and those are the words it used: “paramount consideration”—must be the safety of the community. That is exactly as it should be. The Parole Board has to be satisfied before it grants release on parole to any inmate that that person will not pose undue risk—those are the words that are used—to the public. That considerably tightened the parole system. It put the public and the victims first. When I say “victims” I mean not only the victims of the offending that saw that inmate put intoprison but also the potential victims if you let somebody out when it was inappropriate to do so and raised the risk that they would continue offending.The regulatory impact statement produced by this Government notes that the decisions made under that parole system that I put in place have resulted in a lot more prisoners serving a higher percentage of their total imposed sentence in prison but it also makes this comment which is absolutely vital: the result of that system is that the number of offences committed by prisoners between release on parole and the end of the sentence date has halved—the amount of offending by inmates on parole has halved. That is a huge achievement and that is a major vindication of what that Labour Government did in 2002. Not only was the offending halved but on the measurements of harm done to the community by people on parole that had also halved. So the legislation was a lot tougher it was a lot more effective and it has produced the results. It was not flimflam legislation designed to make the public think how tough you are on law and order; it was genuinely about the safety of the community and that is the way that it needed to be.Well that legislation is now 12 years old and I am happy for it to be reviewed. On first consideration I think that the changes proposed will be beneficial and they will be beneficial in particular to the victims who will not unnecessarily have to worry every time an inmate comes up for parole even if that inmate is patently unready or unsuitable to be released on parole. I and the Labour Party put a huge amount of emphasis on the position of the victim in society. The victim in the past has too often been the second consideration. It is the victim who comes first. If a person in all likelihood is not going to be released on parole why then put the victim through the trauma of having to attend the parole hearing or wait to hear the results of the parole hearing all the time fearing what the result might be from the release of the person who offended against them—particularly in the case of very serious offences? If you are in the situation of getting parole generally the offences are very serious. So what we put first is the position of the victim.The regulatory impact statement makes much of the fact that there will be a saving of about $700000 a year. Well you know it is always good to save $700000 a year but that is not I hope and should not be the driving cause for this reform. I think the cause for this reform has got to be that if a person is ready to be released on parole then they should be released. It is pointless and is not right to continue to incarcerate a person who is ready for release but we want to make sure that the person is ready for release.The regulatory impact statement also points out many of the problems that we have. Most inmates go up for parole three or four times before they are actually released on parole and that indicates to me that probably we are taking people to parole too early. There is a safeguard—that the prisoner himself or herself can at any time ask for parole to be given if there is a change in their circumstances. If a person has completed a programme and they have come through and all of the assessments—and the assessments today are much more professional—show that they are unlikely to reoffend then let us get the person off the taxpayer’s back out of the prison back with their family and back contributing to the community. That is quite important.The other thing with the 12-month review that we have in the present law is that because you have to do it within 12 months many people are coming up at the 11 month period each time. So the period is actually shorter than the 12 months set out in the current legislation.Further to that in many cases the parole hearing is taking place before the offender has completed the programme that they are on to address the causes of their offending. That is a bit dumb to be frank. You know if you go in there and if you have as so many of our prisoners do an alcohol or a drug problem and you are doing one of theprogrammes that we started up—which this Government to be fair has continued and expanded—for your alcohol and drug problem then you are not going to be released before you have completed the programme. So why would you have a parole hearing—because you have to every 12 months—if you are working on a 17-month offender rehabilitation programme that is going to vastly reduce the chances of your reoffending while in the community? So there is a certain amount of common sense in the proposals that are being made and that is the reason we are actually supporting this legislation before the House.I want to reiterate that although I am in favour of not holding unnecessary parole hearings I am in favour of those parole hearings in appropriate cases being unattended by the offender. That sounds extreme but there are many cases where the second parole hearing is just to get more information. If the inmate does not need to be there and provided those rules are followed fairly and honestly then I think there can be an exemption for the inmate having the right to attend that parole hearing. There are other cases where the only work being done is technical work where it does not require attendance.There is also a provision for the person seeking parole to attend by way of video rather than in person. I have been in court when inmates have appeared electronically before court hearings. That works perfectly well particularly in circumstances where it may be dangerous to transport the inmate. So there are some good things happening there but what we at the select committee will be doing is looking to ensure that this does not obstruct the right to a fair and timely parole hearing and that what we do will be about common sense. It will not be about actually keeping people in prison longer; it will be about not having unnecessary parole hearings when it is patently obvious to everybody that the answer will be no.Last but not least is that we need to make sure that what we are is consistent with all of the international human rights standards that we as a country have signed up to and have always acknowledged.CATHERINE DELAHUNTY (Green): Tēnā koutou katoa. Tēnā koe Mr Assistant Speaker. I am going to take a short call on this issue because my colleague who is the expert on justice is doing something else. But it is very important that we are on the record because we are at this stage opposing the Parole Amendment Bill. We are not saying we will continue to oppose it all the way through. We look to the select committee process. We believe in improving justice law parole law and all of those other strategies. We think that the Law and Order Committee could make some fair improvements to this bill and we will be watching it closely. We would like to be able to support legislation that improves things for victims and offenders but at this stage we cannot support the bill as it is currently written.The bill purports to reduce unnecessary parole hearings for offenders who do not acknowledge their offending and have made little or no effort at rehabilitation by increasing the maximum time between hearings particularly for offenders serving sentences of 10 years or more. We have real concerns about the strategy of keeping people in prison longer if they can be rehabilitated. We recognise as does everybody that there are people who need to stay in prison for the well-being of society and for whom rehabilitation is a very challenging issue. But we also believe that there is a large large number of people who are incarcerated at the moment—and we need to remember that this country has one of the highest rates of incarceration—who are not in that group and who may be moderately un-socialised at this time but through genuine rehabilitation and support once they are out of prison can actually become part of the peaceful synergy of a decent society. That is a big challenge.We support all parties’ efforts with rehabilitation but we think that this particular bill in lengthening parole could affect that in the sense that there are a number of experts who are concerned about this bill and do not believe that it is actually going to work to motivate offenders to join programmes. If we are going to motivate them then those programmes have to be of quality they have to available they have to be robust they have to be culturally appropriate and they have to actually address the issues. When we think about some people in prison who are illiterate who are dyslexic or who have experienced extreme abuse we see that those people’s engagement with rehabilitation in order to make changes in their lives is quite a sophisticated business. It is not simple for them to change their lives. It is not simple if programmes that would be helpful do not exist or are too overloaded at the time to actually work.We do listen very carefully to people who work in justice and we do acknowledge some of the suggestions of people like Kim Workman who says that these changes could encourage inmates to lie. He says that rehabilitation programmes could be inundated and are not resourced at this time to cope and that there could be an argument that the change could force prisons to improve access. The problem is that it could also deter innocent people from pursuing appeals. So there are a number of interesting issues associated with costs and associated with victims’ rights as well.The statistic that only 5 percent of victims attend parole hearings is an interesting statistic. In reality there is also a challenge we would make around cost. We would argue that the idea that saving $10000 per hearing by delaying parole hearings does not mitigate the cost of the $95000 that it costs to keep an inmate in prison for another year. So this bill does not necessarily address the issue. If one is thinking about financial efficiency the bill does not necessarily make for a more efficient system in terms of cost. The reduction in parole hearings may not be the most robust way to actually deal with rehabilitation. It may not be the best way to incentivise prisoners to engage in rehabilitation. I think that at all times we need to be thinking about how we can move people from incarceration into the community and we are not yet convinced that these strategies will firstly save money and secondly actually lead to the kind of motivation that is being discussed.We in the Green Party take a stance on justice that is very much about what is going to work. We have had a lot of punitive rhetoric in this country and it is very easy to support the “throw away the key” rhetoric when you see the pain that some people have inflicted on others in this society and some of the unthinkable things that have happened but that is actually a small percentage of the prisoners who are locked up sometimes for quite a long time.We need to look at the other body of prisoners the large body and look at why it is that they have ended up where they have ended and how we can change that so that they actually can leave prison—ideally much much earlier before the “University of Crime” makes it impossible for them to change—and regain a relationship with the community. There are many experts in this country who talk about the critical period when prisoners have reached parole and are about to leave prison. That is when we really need to look at these issues as well as before. So there are some serious issues here about parole and about postponement orders which already exist as a mechanism but are claimed not to incentivise behaviour change.We are not yet convinced that this bill is going to do what it says it is going to do so we will be coming to the Law and Order Committee and hoping to hear from those experts and from community groups that work in prisoners’ rehabilitation and in victims’ rights as well to see whether this bill actually does what it claims to do and whether it will actually make a substantive difference to justice for all parties in this situation.The regulatory impact statement does not claim that the New Zealand Bill of Rights Act has been breached in terms of parole delay and in terms of prisoners’ rights but there may be interesting select committee submissions on the issue of rights and what that does in terms of disincentivising people to rehabilitate if they feel they are being hard done by. There are complex issues around change in the prison system. There are complex issues around justice. If cost is the driver we are not sure that this bill is going to save money. Every year that we keep a prisoner in prison reduces the chance of rehabilitation. It reduces the chance of saving money for the State and for the taxpayer and we think that a more creative and innovative approach to justice is needed at every step in the justice system before we get so many people locked up for so long with little hope of change. If we take away hope that they can get paroled and if we try to force them in a way that does not work to stay longer in prison it is not going to work.We applaud rehabilitation; we just hope that it is going to be properly resourced. We will be watching this bill very carefully at the select committee so that if we see genuine change that is going to support genuine rehabilitation we will be open to it. But at this stage we are unable to support the bill. Thank you.MARK MITCHELL (National—Rodney): The Parole Amendment Bill is not just about cost. There are some very good things in this bill that relate directly to making the justice system just a little bit easier to negotiate your way through especially for victims.I am a member of the Law and Order Committee; I am looking forward to receiving this bill. It is a good committee. We work very well across parties. We have a very good chair in Jacqui Dean and I am looking forward to receiving this bill. Thank you.Le’aufa’amulia ASENATI LOLE-TAYLOR (NZ First): Talofa lava. I rise on behalf of New Zealand First to speak to the first reading of the Parole Amendment Bill. This is an interesting bill but one that aims to determine clear changes to the current legislation. There is a saying that has been echoed twice in this House before and that is that this country will not be a good place for any of us to live in unless we make it a good place for all of us to live in. This bill is more or less aiming to achieve that for society depending on how we are going to enforce it or how it will be enforced.The main changes in this bill intend to make alterations to the nature and the process of parole hearings for offenders. The fundamental change in this bill relates to the interval between parole hearings which the Minister of Justice aims to extend from 12 months to 2 years. Every offender will be able to apply for a parole hearing and I suppose it is a good thing that this change is going to introduce some positive savings to our country. On the other hand if an offender has been subjected to a postponement order then he or she will have to convince the board especially in one particular area which is having to achieve significant changes and to achieve those changes by eliminating “risk milestones” which have been highlighted from the previous hearings.I do find it rather odd that the term “risk milestones” is used in this context. I think it could be one of those things that perhaps the Law and Order Committee would like to consider. It could think of a proper or better word to use. Most of the prisoners are in prisons because they are either confused themselves or they come from confused environments and the last thing we need is to use a term that could easily be interpreted in the wrong way. The way that it is written into this legislation at the moment it can be viewed as achievement of risks associated with the offender or a risk that the offender has been able to achieve which is not exactly what it intends to do; or as that a milestone is the new extended definition of the work “risk”. Legislation should avoid creating loopholes that will raise flags or unnecessary barriers to its implementation. The postponement order must state the offender’s next parole hearing and this date must not exceed 5 years from the offender’s most recent hearing. That is actually statedin clause 12 in Part 1 of the bill. Postponement orders are within the scope of this bill and it is important that they are used and perceived as a tool to change the so-called risk milestones.The main driving force behind this bill is to reduce the number of unnecessary parole hearings and I suppose that 5000 parole hearings is quite a large number to be conducted or to be carried out. That amounts to at least three hearings before release approval is granted. We see from the bill that currently one-third of offenders eligible for parole have four or more hearings. The Parole Amendment Bill requires the Parole Board to specifically outline when an offender will be next considered for parole. Furthermore it enables the board to highlight and identify the so-called risk milestones if an offender is declined release. A risk milestone is currently being defined in clause 4 of Part 1 of the bill as “a milestone relating to the risk that the offender poses to the safety of the community”. I find that this definition is almost like a twisted explanation of somebody’s full understanding or to that effect. But a key element of reintegration via the parole process is recognition of criminal activity by an offender and a proven change in effort to correct his or her life. It is also important that the offender recognises the harm caused to victims of crime in the wider community which is why the Parole Board must put the victim’s situation in the centre of this bill. Although the board may highlight and identify risk milestones it is even more important that there are enough resources and support for the process of an offender taking reasonable steps to achieve their risk milestones.A problem as outlined by the bill was the mention of the postponement orders lacking incentives for offenders to address their offending behaviour. This means offending plans for those eligible for parole as current are not working. That is the reason why this bill has been introduced to the House because the current system is not working. I only hope the Minister can assure the communities of New Zealand that these so-called risk milestones will be the answer to that problem. One would see risk milestones as the mechanism that will also determine the length of time an offender will wait for their next parole hearing. For example if an offender does exceptionally well and achieves his or her risk milestones then he or she will have their parole hearing set at an earlier time. Although New Zealand First encourages achievement by an offender to achieve the expected outcomes again it is necessary to reiterate that these milestones as outlined by the Parole Board must ensure that the offender is no longer a risk to the communities. We know all too well of many cases where offenders were granted parole and reoffended. In some extreme cases the result was often death. The system fails its communities in these cases where offenders should not have been released on parole in the first place. The Minister cannot afford to release any offender who may pose a serious risk or danger to any member of the public.New Zealand First supports measures and mechanisms that will promote community safety and ensure that offenders are taking reasonable steps towards changing their offending behaviour. New Zealand First does not believe that the safety of the public and the communities should be compromised. Community safety is an essential part of our daily lives and this bill will ensure that the Parole Board is more flexible effective and responsive. It is no secret that the Parole Board is responsible for granting release to offenders but there is a need for the board to consider community safety as a priority in its decision making. It is common knowledge that the Parole Board determines the steps that need to be taken in order for an offender to be released on parole and in order for the board to diligently carry out its duties and responsibilities it will require legislative changes to improve the way it operates.I was amazed when I was involved in the Department of Corrections that many of the prisoners were often being called to Parole Board hearings every 6 months. There isa lot of work that goes on when a Parole Board hearing is being held. It is not just about having the prisoner being prepared and taking the right rehabilitation programmes for them to address their offending behaviour. It is also about the community and those who have to assess their behaviour and their achievements. That means that psychologists are often involved. What I found when I was there was that there was a long list—always a long list—of prisoners awaiting psychological assessments. I sincerely hope that this bill will activate the importance of offenders being engaged in suitable and effective rehabilitative initiatives in order to achieve risk milestones. Reducing the number of unnecessary parole hearings does not increase the length of time offenders spend in prison. That is a good thing and it leads to savings. It gives the board greater flexibility and reduces the stress and trauma that is often caused to the victims.This bill will provide offenders with a reality check for them when it comes to reintegration which they need to meet as part of the parole milestone requirements. It also gives a reality check to this Government that our parole process is an integral part of rehabilitation reintegration and reduction in reoffending. There are too many falling through the cracks of legislative loopholes. I believe that this bill deserves to go to the select committee. This is what an investment approach is all about. It is what this bill is trying to achieve. New Zealand First would like to support the bill at its first reading. Thank you.The ASSISTANT SPEAKER (H V Ross Robertson): I advise the House that this is a split call.IAIN LEES-GALLOWAY (Labour—Palmerston North): This is just a very very brief call. I can assure Jan Logie that she will get her opportunity very very soon to make a contribution on this Parole Amendment Bill. Labour does support this bill being sent to the Law and Order Committee. The Parole Amendment Bill amends the Parole Act 2002 to increase the minimum time between parole hearings from 12 months to 2 years for offenders serving indeterminate sentences or sentences of 10 years or more. The maximum time between parole hearings increases from 3 years to 5 years. Hearings will also be aligned with the completion of core milestones in an inmate’s offender plan and this is estimated to reduce the number of parole hearings by 800 per year.Labour looks forward to the discussion and the debate at the select committee and I am sure to the many public submissions. With that we commend this bill to the House.JAN LOGIE (Green): Tēnā koe Mr Assistant Speaker. The Green Party will at this stage be opposing this bill the Parole Amendment Bill although we are interested in the conversation that happens. I am happy to take a brief call on the bill at this stage.As previously stated I will restate the purported goals of this bill which are to reduce unnecessary parole hearings for offenders who do not acknowledge offending and have made little or no effort at rehabilitation. The mechanisms that we are being told will encourage them in rehabilitation will be by increasing the maximum time between hearings from 12 months to 2 years increasing the maximum time between hearings from 3 years to 5 years for those offenders who are serving sentences of 10 years or more and aligning hearings with the completion of core activities and goals to reduce that offending.There are several points that we would like to raise briefly in relation to this bill. We are yet to see any evidence—and we have had a briefing from officials on the bill—that this bill is going to make a difference or increase people’s chances of genuine rehabilitation. That evidence has not been provided for us. Concerns have been raised by us within the justice sector that it may lead to people who are not at that place of actually recognising they have a need for rehabilitation entering courses just to be able to access parole at an earlier level and to go through the motions. This will fundamentally change the dynamics in those courses and quite potentially limit thelearning of the others on those courses because the seats will be filled by people who do not have an honest intent to change or rehabilitate. It could affect the learning of everyone on those courses and that we have quite real concerns about.Also the courses are not necessarily available to everyone. There are a significant number of inmates who are illiterate and a significant number of rehabilitation programmes that require reading ability. So if we are going to limit somebody’s access to parole and tie it to those courses that they are not actually entitled to access I think we have a fundamental issue in terms of justice in this area. We will be very keen on hearing from submitters and exploring whether that is real or not though it has been raised with us already. It has also been raised with us by Kim Workman who said that he is concerned that it may encourage inmates to lie to say that they are ready for rehabilitation when in fact they are not and that the rehabilitation programmes such that they are at the moment are really struggling. We know many of them have waiting lists and they may be inundated and not resourced to be able to cope.Our hope with this bill is that it may actually provide a spur for a change in focus force the prisons into improving access to those courses and increase the provision. That would indeed be a great outcome because it is I think a terrible waste when people identify that they want assistance and they want to change and they are not able to access those services. So that is something that we could potentially support.Other concerns we have with this bill are that we have been told that part of the reason for it is to be able to take the stress off victims. That of course is a very important consideration. However we are aware that only 5 percent of victims attend parole hearings and we have been told that their attendance actually has very little impact on the parole decisions. So it does seem potentially a bit disingenuous to try to present this as something that is going to be increasing its focus around victims’ rights. We are also worried that there may be unintended consequences but we look forward to exploring the real issues and the community’s perspective in the select committee.A party vote was called for on the questionThat the Parole Amendment Bill be now read a first time.Ayes104New Zealand National 59; New Zealand Labour 33; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.Noes15Green Party 13; Mana 1; Independent: Horan.Bill read a first time.Billreferred to the Law and Order Committee.Objectionable Publications and Indecency Legislation BillFirst ReadingHon JUDITH COLLINS (Minister of Justice): I moveThat the Objectionable Publications and Indecency Legislation Bill be now read a first time. I nominate the Justice and Electoral Committee to consider the bill. This bill addresses an appalling issue that confronts not only New Zealand society but all areas of the globe. Offenders can now possess and distribute millions of images of sexually exploited children. In 2009 the United Nations estimated that internationally 200 new images were put into circulation every day. The internet allows offenders to access and share these publications with ease.One of the central features of the internet is its ability to simultaneously connect thousands of people and allow the continuous exchange of information including text audio and video. This connectivity can facilitate the possession and sharing of offensive material such as child sexual abuse online. Advances in technology enable the transmission retrieval and storage of an almost infinite quantity of data at speeds and costs unimaginable only a decade ago. These advances mean that distribution is significantly easier. Those who possess objectionable publications can at the click of a button further distribute the material to a large number of peers.There is also evidence that the content of the publications is getting worse and that the children being sexually abused are getting younger. In 2007 the United Kingdom’s Internet Watch Foundation identified a rise in the number of websites depicting the most extreme and brutal forms of abuse. This trend is supported by observations made by the New Zealand Chief Censor of Film and Literature the Deputy Chief Censor of Film and Literature and New Zealand’s enforcement agencies. In addition these images are often replicated and further distributed across the internet. These images can endure for the lifetime of the victim and beyond. Victims can feel revictimised by the knowledge that an image of them remains available to be viewed and shared.I say that to keep pace with this hideous crime the law needs to change too. Increasing penalties sends a clear message that the possession of and trade in child sexual abuse online is an abhorrent act. The bill increases the penalty for possession of an objectionable publication from 5 years to 10 years’ imprisonment; for importing or exporting an objectionable publication from 5 years to 10 years’ imprisonment; and for the supply distribution and making of an objectionable publication from 10 years to 14 years’ imprisonment. An increase of this magnitude will mean New Zealand has a high penalty regime for this type of offending compared with some other countries.The bill also ensures that the law adequately addresses this horrendous offending by making four further changes. First the bill will make it clear that possession of objectionable material includes intentionally viewing electronic material without consciously downloading or saving it. This amendment will remove any risk that offenders with particular technical expertise would be able to view objectionable publications without downloading or saving them. This will also futureproof the offences against unforeseeable advances in technology.Secondly the bill provides a presumption of imprisonment for repeat child sexual abuse offenders. This presumption will apply unless the court is satisfied that the repeat offender should not be sentenced to prison because of a particular circumstance relating either to the offender or the offence.Thirdly the bill removes the requirement to attain the Attorney-General’s leave to prosecute objectionable publication offences. This was historically a safeguard against inappropriate prosecutions. The Department of Internal Affairs the Customs Service and New Zealand Police now have significant experience and internal processes for checking the appropriateness of a proposed prosecution. Accordingly the requirement to seek leave from the Attorney-General is no longer serving any useful purpose.Lastly the bill creates a new offence of indecent communication with a young person who is anyone under the age of 16. There is currently a gap in the law between objectionable publication offences which apply only if the offender makes a record of communication with a young person and the sexual grooming offence. The sexual grooming offence applies only if the offender intentionally meets or travels with the intention of meeting the young person or arranges for or persuades the young person to travel with the intention of meeting him or her. Offences such as indecent exposure and an indecent act in a public place cover acts done in a public place. However they do not cover indecent acts performed in a private place but streamed over the internet.Indecent communication by an adult with a child can occur in a variety of ways including via text or picture messaging internet chat or telephone. Such communications are damaging to the child regardless of the medium. A specific offence is therefore needed to ensure that this damaging behaviour is criminalised regardless of whether the offender makes a record of the communication or whether the offender has taken steps to physically meet with a young person. To address that gap in the law clause 13 of the bill creates a new offence in the Crimes Act of indecent communication with a child or a person an offender thinks is a child. The new offence will be punishable by a maximum of 3 years’ imprisonment.The measures in this bill will improve the safety of young people by increasing the severity of sentences and deterring those offenders who would seek to exploit children for their own perverse ends. I commend this bill to the House.The ASSISTANT SPEAKER (H V Ross Robertson): I call the honourable member Andrew Little.ANDREW LITTLE (Labour): Thank you Mr Assistant Speaker—I am glad my name is not shortened because you would probably give me the longer version. That aside this is a serious matter. We of course naturally will support any measure that is going to assist yet again to tame the more anarchic and wilder elements of the internet and the world of digital communication and more so where it is used to offend against children and young people. We do not challenge the reason and the underlying purpose of the Objectionable Publications and Indecency Legislation Bill and we will support it because we think it is worthy of examination by the Justice and Electoral Committee.As the Minister of Justice has said the bill does a number of things. It removes for example the requirement for the Attorney-General to approve the commencement of a prosecution in relation to an objectionable publication. We understand that because those prosecutions have been rising and we would expect that they will become even more prolific simply because of the volume of material that is now being broadcast and communicated through electronic means—smartphones and through the internet and on social media. So that change is worthwhile.We note the increase in penalties and draw the House’s attention—and we will draw the select committee’s attention—to the disparity that now seems to be emerging between these objectionable publication - type offences and lifting the penalties for them and the physical offences against children and young people particularly when they are sexual offences. Whereas the maximum penalty now for for example an indecent act on a young person under 16 or meeting a young person following grooming is 7 years in prison a person who imparts an objectionable publication through for example an image on a cellphone may well be liable to a maximum penalty of 10 years. I would have thought that a physical act would arguably be more harmful and more risky to the young person. So let us examine this legislation to see whether or not there are some basic sentencing and criminal justice principles that are applying.The other thing the bill does is create a presumption at least in relation to repeat offences that the sentence will be one of imprisonment. Indeed it goes as far as to expressly override the Sentencing Act in that regard for the imposition of a sentence of imprisonment where there is a repeat offence under this particular provision. The bill creates the new offence in relation to indecent communication with a young person under 16. We agree and as I indicated in my earlier comments this is yet another time or another occasion when this House is having to catch up with the speed with which communication happens in the modern world and the extent to which young people are connected to it.You do not have to be particularly old now to have a cellphone as your primary means of communication—and not just your cellphone of course; your iPod touch canbe used to communicate through the internet. You do not have to have a phone number. So this legislation has to keep up with that mode of communication. I know that my own son is a regular—some would say frequent; I would say continual—user of this technology and we want to make sure and the legislation should make sure that there are some rules around it at least for the benefit of and the protection of young people. So we think this bill is well worth looking at and supporting in order to have that examination.I would however make the same plea I made in respect of the Parole Amendment Bill and that is: can we please have a criminal justice strategy that is coherent that is coordinated and makes overarching sense? I look at the Objectionable Publications and Indecency Legislation Bill and I wonder whether the Harmful Digital Communications Bill which was 6 months in the creation and had its first reading last week and I do not see why aspects of that bill could not be incorporated into this bill or the other way round—bits of this bill incorporated into that bill. But can we please not have little bits of legislation after little bits of legislation responding to little bits of problems—or actually quite significant problems—that in the overarching overall scheme of things are just one problem amongst many.Can we have an overarching strategy and can we have a Minister of Justice focused on a justice strategy or even a justice strategy for particular parts of the world in which we live? If it is about the internet social media and the risk of broadcasting objectionable publications can we have a strategy to deal with that and deal with all those issues? If it is about making sure that all of the penal provisions in our criminal justice legislation are up to date and reflect the mores of the day can we have something that deals with that as opposed to this haphazard ad hoc sort of approach that the current Minister is taking? That aside this legislation is well worth the time of this House and examination by the select committee. We will support it and we look forward to the debate.SCOTT SIMPSON (National—Coromandel): I rise to take a short call on the first reading of the Objectionable Publications and Indecency Legislation Bill which I am pleased to hear has the support of the Labour Opposition for its referral to the Justice and Electoral Committee. It is very appropriate that as a Government we are taking actions to increase the maximum penalties around sexual abuse of children that occurs online.These days people can access all manner of objectionable material in all manner of ways. Many of those avenues were never previously imagined by existing legislation and technology is moving at a very rapid pace indeed. One of the great challenges for legislators all over the world is how to ensure that legislation remains relevant and current in the face of fast-moving technology. I guess the real challenge here for us in New Zealand is to ensure not only that we address current issues of the day of this sort but that we futureproof our legislation to ensure that technology does not continue to outpace our legislation. I am looking forward to having the bill at the select committee for consideration and I commend it to the House.RAYMOND HUO (Labour): I rise to take a call to support the Objectionable Publications and Indecency Legislation Bill. The main purpose of this bill is to increase the penalties for producing trading or possessing child pornography by amending three pieces of legislation: the Crimes Act 1961 the Films Videos and Publications Classification Act 1993 and the Customs and Excise Act 1996.The bill introduces new measures to achieve the key purpose and improve the legislation in respect of objectionable publications and indecency. As outlined in the speech of my colleague Mr Andrew Little the bill includes the new measures of increasing the maximum penalty for possession import or export of an objectionablepublication from 5 years’ to 10 years’ imprisonment and increasing the maximum penalty for distributing or making an objectionable publication from 10 years’ to 14 years’ imprisonment.The new measures include creating a presumption of imprisonment for repeat offenders. So any person convicted of a child sexual exploitation offence for a second time will be sentenced to a term of imprisonment.What is worth noting is that the bill’s amendments to the Films Videos and Publications Classification Act 1993 make it clear that the possession of objectionable material includes intentionally viewing electronic material without consciously downloading or saving it. So intentional viewing without downloading or saving amounts to possession as far as the law is concerned.Times have changed and we are living in a very different world now thanks to modern technology and the lifestyle that is closely related to it. The creation of the new offence of indecent communication with a person under 16 is intended to reflect the ways in which offenders can use social networking sites online chat programmes and communication tools such as text messaging in order to communicate with children with abusive intentions. In Victoria Australia a parliamentary inquiry earlier this year called for the introduction of a “sexting” offence. However it also called for a new defence for child pornography offences to ensure that “sexting” teens are not treated like paedophiles.Times have changed. I recall that it was in 2002 also in Victoria Australia that the High Court of Australia delivered the most influential and probably the most controversial judgment involving the internet. TheDow Jones and Company Inc v Gutnick case has so far remained the leading authority in defamation case law involving the internet and has led to significant legislative changes in the common law jurisdiction in respect of forum competence jurisdictional limitation period and single publication rule.The UK for example earlier this year passed the Defamation Act 2013 and codified common law in the area of single publication rules. Earlier this year Twitter was sued in Australia for defamation. But the role Twitter played was only as an intermediary providing a platform for relevant parties. That issue aside the case involves a question as to whether a disclaimer published by Twitter would provide a certain kind of legal immunity for Twitter.I go back to the bill. Social media has become a very important part of our lives. Our Crimes Act and other legislation in the area of torts banking law company law etc. will need to be updated to address new media or practices or norms that are novel to us. This bill is heading towards that direction.Child pornography offenders have particular characteristics that set them apart from other offenders. Legislation therefore needs to be developed that addresses these characteristics. The recent Roast Busters incident exposes holes in our justice system. We need to have a robust regime to protect children from sexual exploitation. This bill needs to work in conjunction with the Harmful Digital Communications Bill so that we will have clear and consistent internet legislation.Labour supports this bill because it has a significant purpose: to try to stop the threat and use of indecent material and child pornography which is a worthy cause. But National needs to develop a coherent justice strategy not just come up with legislation on a limb to solve issues as they arise. Thank you.JAN LOGIE (Green): The Green Party will be supporting the Objectionable Publications and Indecency Legislation Bill going to the Justice and Electoral Committee and we thank the Minister of Justice Judith Collins for bringing it to the House. This bill increases penalties for producing trading or possessing childpornography by increasing the maximum penalties for the possession import export supply distribution and making of objectionable publications. It also clarifies that a person can have possession of an objectionable electronic publication without saving it or downloading it. It provides for the presumption of imprisonment for repeat child pornography. This bill also creates the new criminal offence of indecent communication with a young person under 16 years of age.It is very clear that the online environment can be a dangerous place particularly for children. It is important that this House considers the changes in technology the proliferation of abuse and the proliferation of the distribution of offensive images and child pornography online. This bill is furthering that conversation and we thank the Minister of Justice for doing that. It is shocking that the evidence is that the content online is getting more severe and that the age of the children involved in the offensive material is getting younger. Clearly we need to be having a public conversation about that and actually working to change the culture that is producing this material.It is not a given that we have a culture that supports rape. We can actually create a society that understands consent and embraces consent where enthusiastically consensual sexual activity among adults is the norm and what is approved of and where anything separate from that is shunned. We can if the will is there create that society and I for one am looking forward to the day when we can make that happen and make that a reality.We agree that advances in technology mean that offending is becoming easier and more damaging though I do need to put a caveat around our response to this bill and recognise that we have not seen any evidence that extending prison sentences is a deterrent or that offending or reoffending are affected by a change in sentencing. In fact I would caution the House that in the case of rape and sexual abuse legislation we have seen the reverse to be true.When we increased the penalty to 20 years it created a reluctance in the police force and in sentencing and reluctance is part of the problem we have in people coming forward and laying complaints when the consequence is so severe. We have also seen in this area that judges have not yet sentenced any offender to more than 5 years’ imprisonment despite the maximum penalty for some offences currently being 10 years’ imprisonment.So it is not going to solve the problem. We have to do the social and cultural work. We need to consider quite seriously the role that sentencing plays in this picture understanding the evidence and the impacts properly rather than that instinct. And it is an instinct that I completely understand—to want to lock them up and throw away the key—because the harm is so great and so significant. But if it is going to actually have the opposite effect of what we want then we need to be open to consider that and make sure we make the best decisions possible. Our children and victims of sexual violence deserve that.I do acknowledge that there is a gap in the present legislation that means it is not necessarily an offence to view indecent acts performed in a private place yet streamed over the internet. That clearly we need to fix and that has been done in this bill with the creation of the new criminal offence of indecent communication. We are very pleased to have that presented to us and to be able to support it.On the whole again I offer thanks to the Minister of Justice for bringing this bill to the House but I also echo Labour colleague Andrew Little’s request for a coherent vision and a plan for the legislative agenda that is based on the best evidence. We would see this ideally being fitted into the context of the Law Commission’s work which again I cannot help but bring up as being tragically taken off the agenda for the Law Commission. So I would hope that others in the House will join us in requesting theMinister to get that put back on the agenda so that we can actually have a more strategic response that is based on the best evidence to protect victims and ensure that justice is available to them. Thank you.PAUL FOSTER-BELL (National): I rise to take a brief call on the first reading of the Objectionable Publications and Indecency Legislation Bill. I speak in support of this bill. Those of us who have had a secure and loving average New Zealand upbringing can only struggle to imagine how horrific situations of child abuse must be. I think that those situations are made even worse by those depraved people who would seek to record distribute and view those sorts of materials online. So I think it is absolutely appropriate that the sentences for those very worst kinds of offending are being tightened and that the legislation is being updated to include technological changes such as the fact that these days materials can be viewed online without pressing a download button or committing it to a hard drive or a disk.I think this is very welcome legislation. The Minister of Justice should be congratulated on introducing it. I would like to thank other parties in the House for offering their support as well. I commend this bill to the House and to the Justice and Electoral Committee for consideration.DENIS O’ROURKE (NZ First): It is always a pleasure to support good Government legislation and the Objectionable Publications and Indecency Legislation Bill is one of a few such examples. We in New Zealand First welcome the increase in penalties that are signalled by this bill. We agree that there is a need for a clear and significant signal—strong deterrents—so I say beware to the Roast Busters and the others who are developing a culture of using the internet and other publications for illegal and indecent purposes. I welcome the provisions in the bill that clarify some of those offences and widen the net to catch a greater range of the people who are involved. New Zealand First welcomes the increases in penalties and the new offences that are specified in the bill.I will mention some of the most significant clauses. Clause 4 provides for an increase from 10 years’ imprisonment to 14 years’ imprisonment which is a very significant deterrent for supplying or distributing objectionable material whether doing so knowingly or having reasonable cause to believe that the material is objectionable. This needs especially strong deterrents. The social effects of such materials are significant. They encourage sex with under-age people street prostitution and a culture of sexual abuse generally and target under-age victims.Clause 5(3) inserts into the Films Videos and Publications Classification Act 1993 new subsection (2A) which states: “A person can have an electronic publication in that person’s possession for the purposes of subsection (1) even though that person’s actual or potential physical custody or control of the publication is not or does not include that person intentionally or knowingly using a computer or other electronic device to save the publication (or a copy of it).” This solves some evidential problems and as I have said widens the net to catch more of the people involved. It especially means that proof of possession where electronic means are used will not be needed and it will not be necessary for an offender to be proved to have saved an electronic document and there will be no need to prove the intention to do so. This is appropriate and necessary. Otherwise I think the evidential burden would be too severe. Possession per se should be enough because electronic material clearly has to be searched or at least knowingly accepted—otherwise the offender could not have obtained it.Clause 6 amends section 131A of the Films Videos and Publications Classification Act. Section 131A deals with offences relating to possession of objectionable publications and knowing or having reasonable cause to believe that the publications are objectionable. The maximum available penalty now is imprisonment for a term notexceeding 5 years or a fine not exceeding $50000. The amendment increases that maximum from 5 years to 10 years but I think it should also say “both” so that both penalties can by imposed. I think the fine should be increased to at least $100000 because some people do actually make quite a lot of money out of some of these activities.Clause 7 inserts new section 132B into the Films Videos and Publications Classification Act. New section 132B contains a presumption of imprisonment for repeat offenders. It applies only to a repeat offender who “(a) has been convicted of … a specified publications offence committed after the commencement of this section …” and “(b) before the conviction for the repeat offence was entered had been convicted of 1 or more specified publications offences committed before or after that commencement.” In deciding whether such a publication is objectionable the court must have had regard to the reasons in relevant classification office or board decisions. The offender must be sentenced for the repeat offence to a sentence of imprisonment unless the court considers the offender should not be sentenced having regard to the circumstances of the repeat offence and/or the circumstances of the offender including especially the age if he or she is under 20 years. That is a very important provision. These new provisions are appropriate and necessary. They are needed to provide the tools required by which it will be possible to break the cycle of offending in these ways by people for whom such offending often becomes addictive or for whom the financial rewards are too seductive.Concerning the amendments to the Customs and Excise Act 1996 clause 10(1) relates to being knowingly concerned in the importation exportation or other unlawful transfer of an objectionable publication covering films videos and other such documents. The amendment increases the maximum term of imprisonment from 5 years to 10 years. This is also supported by New Zealand First because we think that a strong deterrent is needed for that. Again some people make significant amounts of money out of these offences so a strong deterrence is required.Concerning the amendments relating to indecency in Part 2 of the bill clause 13 creates a new offence punishable by imprisonment for a term not exceeding 3 years. Clause 13 inserts into the Crimes Act new section 124A “Indecent communication with young person under 16”. New section 124A(1) states: “A person of or over the age of 16 is liable to imprisonment for a term not exceeding 3 years if he or she intentionally exposes a young person under the age of 16 years (the young person) to indecent material (whether written spoken visual or otherwise alone or in combination) in communicating in any manner directly or indirectly with the young person.”In a prosecution it is not necessary under the new provision to prove that the intentional exposure was for an identified purpose such as to obtain sexual gratification or to alarm distress or humiliate the victim the “young person”. But any identified purpose of that exposure may be considered in determining whether the material is indecent. New Zealand First welcomes this new offence and 3 years’ imprisonment will certainly cause an adjustment in attitudes. But New Zealand First does have some reservations about new section 124A(2) which ensures that “A reference in subsection (1) to a person under the age of 16 years or to the young person includes a reference to a constable … who pretends to be a person under the age of 16 years (the “fictitious young person”) if the person charged with an offence against subsection (1) when communicating with the fictitious young person and exposing the fictitious young person to indecent material believed that the fictitious young person was a person under the age of 16 years.”The problem here is that it raises rather too much of a risk of genuine cases of entrapment. This is a matter that I will be looking very closely at and discussing withmy colleagues on the Justice and Electoral Committee because there does need to be a balance between good legislation as I have said and some of the safeguards to personal rights which we all must be vigilant to protect. So we need to have a good look at that provision to see whether the balance is achieved. But overall this is a good bill and its referral to the select committee does deserve support. New Zealand First will be happy to vote for it.KATRINA SHANKS (National): It is my pleasure to take a call on the Objectionable Publications and Indecency Legislation Bill tonight. First of all I would like to congratulate the Minister of Justice on bringing this bill to the House. I also congratulate the rest of the parties in the House on supporting this bill. It is good to see that every party in the House is behind it today.Unfortunately our children are vulnerable and they are especially vulnerable when they are on the internet with the new technology that they have in front of them and available to them. Unfortunately there are predators out there who will prey on our children and abuse them. So this bill is very very important in that area in particular. I am not going to go into any detail on this bill. Denis O’Rourke just went through the bill clause by clause so I do not think I need to give you that detail straight after his speech.But what I do want to say to everyone listening out there is that you have the opportunity to come to the Justice and Electoral Committee next year to give your opinion on whether you think we have this balance right or wrong and on how we can change the legislation to make it even stronger than it is now. It is an opportunity for us to hear your voice. It is your opportunity to tell us about an issue that is really important to many people and impacts on their children.I encourage everybody to look at this legislation have the debate with family and your friends over Christmas and actually get the discussion going in New Zealand about how we can protect our children especially in this area. I commend this bill to the House.Hon MARYAN STREET (Labour): It does give me some pleasure to rise to speak to the Objectionable Publications and Indecency Legislation Bill and I too congratulate the Minister of Justice on bringing it forward. I think there is a malaise abroad that the incident on Facebook with the young men and their behaviour has brought to everybody’s consciousness in New Zealand recently. The malaise can be addressed by law but only in part. There are a lot of other things that need to happen. The way we bring up our children the way we train people to be parents the kind of alertness there is in the classroom to abuse and violence and all of the kinds of social exchanges where children are present are moments that we should protect with more effort than we currently do in my view. We need to train our children to think differently and behave differently. This is especially difficult when the role models they have are no role models at all. But as far as are concerned in this House there is something we can do and it is in legislation. As I said it is only one part of the fix but I am pleased to support it. This is what we do here; we pass laws. This is one that deserves support and closer investigation.I have been reading the regulatory impact statement on this bill and one of the things that the officials have said in the regulatory impact statement is that “Child pornography offenders have particular characteristics that set them apart from other offenders. Child pornography offenders are almost universally male and their occupations vary widely. Offenders often distribute child pornography in order to access the collections of other offenders. … Due to the diverse nature of child pornography offenders it is not always possible to make useful comparisons. However the majority of offenders have no criminal history. Further most child pornography offenders plead guilty and readilyacknowledge their involvement with this material. These mitigating factors can result in a reduced sentence.” All of those things need to be taken into account when we are determining either the increase of punishment or the level of punishment that should apply.I worry all the time that every time Parliament tries to pass a piece of legislation that deals with modern technology the horse has bolted. In fact there is another horse that we have not even thought about that is just about ready to bolt. I hope that in the course of the debate in the Justice and Electoral Committee which I look forward to participating in we can canvass some of the issues and make this both as broad and as specific as it needs to be in order to address the harm that is trying to be addressed through the bill.One other point I wish to make is the business of the change in the Attorney-General’s function and seeking the Attorney-General’s permission to prosecute. Clearly that has been done in the past. In fact the Department of Internal Affairs the New Zealand Customs Service and the New Zealand Police who are accustomed to bringing prosecutions in this area have had to with the exception of the Customs Service seek the Attorney-General’s permission. What I understand from my first look at this legislation is that that is being altered to apply only to private prosecutions and if that is the case that is fine. Certainly there are safeguards that needed to be protected where there are private prosecutions being brought so that nobody can bring a vexatious frivolous or damaging prosecution without reason. But where agents of the State are bringing a prosecution then I think they have now developed enough expertise over time to be able to do that without the Attorney-General’s explicit permission. They have some internal checks and balances I think that allow them to make sure that they are not overreaching themselves in that respect either.I look forward as I have said to good thoughtful submissions on this bill. I am sure we will get others as well but I look forward to the good thoughtful ones. I commend this bill to the House. Thank you.CLARE CURRAN (Labour—Dunedin South): I rise to take a short call on the first reading of the Objectionable Publications and Indecency Legislation Bill. Labour is supporting the referral of this bill to the Justice and Electoral Committee. We are supporting its referral to the select committee because it has an important purpose because we need to know what the submissions are and because we need to have a good discussion around this issue which is to do with attempting to stop the spread and use of indecent material and child pornography. I do not think that anybody could ever argue against that or ever would.The bigger question—and there are a number of bigger questions that I know my colleagues have posed tonight—is where this fits not only within a wider and coherent justice strategy but also within a wider strategy around harmful behaviours and harmful behaviours in the digital environment. The big question that I want to put to the House tonight with regard to this bill is the absolute importance—and I do hope that members on the other side are listening—of the meshing of those things and ensuring that there is consistency. One of the big issues that has been raised around this piece of legislation which has just been dropped upon us is its reactiveness and the potential for it to be a knee-jerk response made in isolation from a wider strategic response. [Interruption]Well you know Minister Tolley there are plenty of other things that could be being done at the same time that actually give the sense to the community that the Government is actually providing a wide coherent thoughtful consultative response around some of the behaviour that has been so concerning in our community. Those behaviours are concerning in the online environment and in the physical environment but the important thing is that the legislative responses have consistency across boththose environments and are well-thought-through and that they are not reactive and are not knee-jerk. That is why the discussion around that is so important.The conversations that I have had—and which may be of interest to those who are shaking their heads and muttering on the other side of the House—with reputable organisations that have been doing ongoing thinking in this area and which have not necessarily felt listened to are very important. Certainly my big message to the Government on this issue is that it listen; that it does not just react in a way that appears to be because the problem is the latest thing and therefore it has to be seen to be doing something; that it does take a longer-term consultative approach to any moves in this area; and that it does widely consult and actively listen. Unfortunately the Government is not known for doing any of those things.There are big questions in this space about enforcement because there are not enough enforcement resources in this space to do anything like a thorough job. It is true of New Zealand and it is also true of other countries. That should be acknowledged. If we are talking about the internet as the environment it should be acknowledged that it is a very difficult place to police using traditional enforcement techniques. So one of the big questions that needs to be looked at in the discussion at the select committee on this legislation is whether agencies like the police and the Department of Internal Affairs really have the resources to enforce these regulations online. I would like to end with that question because certainly the appearance of being seen to do something and the actuality of doing something and then backing it up with enough resources is critical in this whole debate. I look forward to that discussion in the select committee.Bill read a first time.Billreferred to the Justice and Electoral Committee.The House adjourned at 5.43 p.m. (Thursday)