Volume 708 Week 27 - Tuesday 8 September 2015Text is incorporated into the Bound VolumeVolume 708 Week 27 - Tuesday 8 September 2015[Sitting date: 08 September 2015. Volume:708;Page:6295. Text is incorporated into the Bound Volume.]Tuesday 8 September 2015Mr Speaker took the Chair at 2 p.m.Prayers.VisitorsCambodia—Delegation National AssemblyMr SPEAKER: Honourable members I am sure that members would wish to welcome two members of the National Assembly of Cambodia who are present in the gallery.Points of OrderLeave for Introduction and First Reading—Immigration (Refugee Quota) Amendment BillDENISE ROCHE (Green):I raise a point of order Mr Speaker. I seek leave to introduce a member’s bill in my name to increase New Zealand’s refugee quota and for the bill to be set down for its first reading as members’ order of the day No. 1.Mr SPEAKER: Leave is sought for that purpose. Is there any objection? There is objection.Questions to MinistersRegional Economies—Taranaki1.ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Why did he say “Plan A is a good plan” given the state of regional economies?Hon BILL ENGLISH (Acting Prime Minister): He said “Plan A is a good plan” because plan A is a good plan. It enables regions to be resilient to shifts in global prices. The Government is supporting regions in a number of ways including water reform and Resource Management Act reform recognising that most regional economies are resource-based economies and we are investing in regions through better alignment in training and skills education and research and development. Some regions are under pressure from the volatility in dairy prices. The Government is working with those regions—for example through regional growth studies—to attract more investment jobs and growth.Andrew Little: Is plan A working for Taranaki which is in recession according to the ANZ Regional Trends report with the economy there shrinking by 3 percent so far this year?Hon BILL ENGLISH: Taranaki does have the highest GDP per head in the country because of long-running success on the back of its oil and gas industry and the dairy industry. It happens that right now the prices for both are low but unlike that member we maintain confidence in the people of Taranaki that they will be able to deal with these lower prices and continue to succeed.Andrew Little: Given the number of jobs in Taranaki fell by 700 in the past year and the number of people who are unemployed shot up by 44 percent is it not time to admit that plan A for the economy is failing?Hon BILL ENGLISH: The unemployment was particularly low in Taranaki because of its economic success. There are other industries there that are succeeding or being cushioned by the reduction in the exchange rate. One job of course that was not filled in Taranaki was by that member when he took a second thrashing in the New Plymouth seat.Andrew Little: Why did his Government undermine the Taranaki economy by slashing transport funding for the region by a third between 2008 and 2014?Hon BILL ENGLISH: We do not agree with the member’s characterisation of road funding given the size and number of projects going on in Taranaki and I might say the most recent injection of capital was the settlement signed on the weekend which is going to be worth $17 million to Taranaki and it will be supervised by iwi who have a long-running interest in the strength of the Taranaki economy.Andrew Little: Point of order—[Interruption]Mr SPEAKER: Order! This is a point of order and it will be heard in silence.Andrew Little: I seek leave to table a chart showing the cut in funding for Taranaki roading showing a cut to the tune of—Mr SPEAKER: Order! [Interruption] Order! I need the source of the document.Andrew Little: The source is from the New Zealand Transport Agency and not otherwise publicly available.Mr SPEAKER: OK I will put the leave. Leave is sought to table that particular chart from the New Zealand Transport Agency and it is not available on the website I am assured. Is there any objection to that being tabled? There is not. It can be tabled.Document by leave laid on the Table of the House.Andrew Little: Has he seen the Economic Survey of Manufacturing released today which shows manufacturing sales are falling and how will that affect regional economies?Hon BILL ENGLISH: We would expect that because of the low dairy prices in particular being quite low there are going to be flow-on effects through some parts of the economy. In respect of manufacturing it will be affected by the state of the dairy industry because some manufacturing is related to it. On the other hand there are other manufacturers who are doing very well because of the low exchange rate. Those who are under pressure have the full support of the Government with a regulatory and taxation regime that provides them with incentives to adapt to those circumstances and we have longer-term confidence in their ability to do so.Andrew Little: Given plan A is a failure that has led to higher unemployment weak growth and record debt why is he refusing to consider a new direction?Hon BILL ENGLISH: We do not agree with the member’s description of the future of the New Zealand economy. I know he is among the very few people who want to see the economy crash because he thinks it might benefit his poor leadership and party standing. But actually we have a longer-term view that although this is a softer patch for the economy and a difficult period for some industries we have longer-term confidence in the New Zealand economy.Andrew Little: Given that plan A has failed will he update National’s 2014 slogan to now read “Not working for New Zealand”?Mr SPEAKER: Order! The question was not heard because of the level of interjection mainly from my right—[Interruption] Order! I invite the member to repeat the question.Andrew Little: The question is and was: given that plan A has failed will he update National’s 2014 slogan to now read “Not working for New Zealand”?Hon BILL ENGLISH: No because plan A is working for New Zealand much better than Labour’s political strategy is working for Labour.Mr SPEAKER: Order! I require the House to settle.Refugees—Quota2.JAMES SHAW (Co-Leader—Green) to the Minister of Immigration: Does he stand by his statement to this House in June of this year that “The Government still has an open mind on that quota number”?Hon MICHAEL WOODHOUSE (Minister of Immigration): Yes.James Shaw: If his Government does have an open mind why did it vote down the Green Party’s bill and stop public consultation on the refugee quota at the select committee?Hon MICHAEL WOODHOUSE: I am not aware that there has been any shutting down of consultation at the select committee—Hon Gerry Brownlee: I raise a point of order Mr Speaker. The Minister has no responsibility for that. I would ask you to just reflect very carefully on it because it was the Parliament that actually denied the Green Party’s bill not the Minister.Mr SPEAKER: Order! No. There is an issue I think about the second part of the question—being a decision in the select committee. I did not quite catch the question but I am ruling that the question is in order and is quite capable of being answered by the Minister. Does the Minister wish to have the question repeated? Would James Shaw please repeat the question for the benefit of the Minister.James Shaw: I raise a point of order Mr Speaker. I noticed that the Minister himself did actually object to—Mr SPEAKER: Order! I appreciate the point that the member is making but that is not going to help the order of the House. The supplementary question I will rule is in order. I will allow the member now to ask it again and I will allow the Minister then to answer the question.James Shaw: If his Government has such an open mind why did he vote down the Green Party’s bill and stop public consultation on the refugee quota at the select committee?Hon MICHAEL WOODHOUSE: Although I have no responsibility for either of those things I am aware that the Foreign Affairs Defence and Trade Committee is hearing four submissions on that very issue this week.James Shaw: How can New Zealanders trust the National Government to increase the quota when John Key has already said in relation to the existing 750 cap that “We believe that that’s the right number for us.”?Hon MICHAEL WOODHOUSE: The public can trust the Government to redouble its efforts to ensure that the quota refugees we do take are well settled. The data I have seen is that there is despite very good examples of strong settlement amongst the quota refugees an unacceptably high number who are not doing well after they settle here and that is the Government’s focus.James Shaw: Why should the public trust the National Government to increase the refugee quota in a meaningful long-term way when as late as last week it refused to even consider an emergency quota and in the past has lobbied to cut the number of refugees that New Zealand takes?Hon MICHAEL WOODHOUSE: The member has something of a fixation on the quota and on the number 750. I remind the House that that is one part of the Government’s humanitarian response including another 300 places in family reunion the 250 or so convention refugees who are granted asylum every year and the emergency places that have been announced this week. In addition to significant other humanitarian contributions on top of the $15 million that the Government has already provided to assist the Turkish Government in supporting refugees on its border another $4.5 million was announced this week and I think that is a very very good contribution above the 750.James Shaw: So does he believe that New Zealand is doing its fair share given that since National was elected in 2008 we have slipped from 83rd in the world to 90th in the world for taking on refugeesper capita?Hon MICHAEL WOODHOUSE: The member is fixated on the quota so I will give him the numbers on quota. Of the 193 UN countries only 22 of them take quota refugees. New Zealand ranks about sixth or seventh on that list and I think we can be very very proud of that record.James Shaw: Does he believe that New Zealand is doing its fair share when we have not increased our quota since 1987?Hon MICHAEL WOODHOUSE: For the reasons that I outlined two supplementary questions ago yes.James Shaw: So given that the Minister’s office was already advised on increasing the quota when it was last reviewed in 2013 and there has not been an increase for the last 3 years why does the Government need to do another review?Hon MICHAEL WOODHOUSE: Well because in the absence of a review nothing would change. We are going to review that quota next year as we have set out and that is what the Government will do.Economy—Reports3.PAUL FOSTER-BELL (National) to the Minister of Finance: What recent reports has he received highlighting the resilience of the New Zealand economy?Hon BILL ENGLISH (Minister of Finance): Standard and Poor’s recently affirmed New Zealand’s foreign currency long-term sovereign credit rating at AA with a stable outlook. It pointed out New Zealand’s monetary and fiscal flexibility a resilient economy public policy stability and a sound financial sector. It acknowledged New Zealand’s high external debt and the possibility that foreign investors might become less willing to fund banks at reasonable interest rates. However it believes New Zealand’s banks will retain ready access to external markets. New Zealand’s fiscal framework was rated as credible and strong according to all three major credit rating agencies.Paul Foster-Bell: What was Standard and Poor’s assessment of the outlook for the New Zealand economy?Hon BILL ENGLISH: Standard and Poor’s says the rating outlook remains stable reflecting its expectation that New Zealand’s fiscal performance will continue to improve. Its assessment is that growth will slow to the low 2 percents in 2015-16 down from an estimated 3 percent in the year to 30 June 2015. Residential and other construction activity is likely to remain a key driver of growth and lower currency and falling interest rates should help to support economic growth. Standard and Poor’s says that New Zealand benefits from a high-income and resilient economy drawing on decades of structural reforms. Overall this is a reasonably positive assessment of the economy.Grant Robertson: When the last three ANZ Truckometer reports have been titled “Potholes” “Flat Tyre” and “Warning: Dip Ahead” and the last three ANZ business confidence surveys have been titled “Below the Belt” “Flagging” and—Mr SPEAKER: Order! Can I have the question.Grant Robertson: —“Slippery Slopes” is it not time for him to stop patronising New Zealanders and start getting real about the state of the economy?Hon BILL ENGLISH: I read past the first line of all those reports which is a time-consuming activity approximating work—Hon Steven Joyce: It’s called work.Hon BILL ENGLISH: —it is work; that is what work is—and I do not share quite as negative an attitude as ANZ does. But New Zealanders do not need to be told that things are a bit difficult. If you are dairy farming this week it is cold and wet the price is low and you do not need politicians pontificating about how tough it is.Paul Foster-Bell: What reports has he received showing continuing moderate wage and employment growth in the New Zealand economy?Hon BILL ENGLISH: Although the outlook for the economy has softened Treasury’s latest Monthly Economic Indicators report says that data released in August points to a moderation in growth over the June quarter and growth for the calendar year to 2015 is expected to be around 2 percent. That is below the Budget forecast that Treasury made. Total employment in the year to 30 June though was up by 3 percent and total weekly earnings increased by 5.3 percent. So up until 30 June jobs have been growing and weekly earnings have grown both significantly ahead of inflation.Grant Robertson: If he did read past the title of the latest ANZ business confidence survey did he see this graph here which the Prime Minister described as being positive or was he reading it upside down?Hon BILL ENGLISH: Yes I did see the graph and I am surprised and somewhat impressed that the member did—Hon Steven Joyce: It was further down the page.Hon BILL ENGLISH: —because it was a bit further down the page; that is right. But having seen the graph the Government has come to the conclusion that it is not the right thing to panic and go on about a crisis. The right thing to do is to support our businesses and our farms to export invest and employ more people.Paul Foster-Bell: How does New Zealand’s macroeconomic resilience compare internationally?Hon BILL ENGLISH: There are a number of indicators that together indicate a resilient economy—those being a broadly balanced Government Budget net debt less than 40 percent economic growth greater than 1.5 percent and scope to further cut interest rates should the economic situation worsen. These are not high economic hurdles but New Zealand meets all those criteria. In fact there are only four other OECD countries that meet the criteria of having a broadly balanced Government Budget net debt less than 40 percent economic growth greater than 1.5 percent and scope to cut interest rates. Those other countries are Australia Norway Iceland and South Korea. So by those measures this economy is as well placed as any to handle global turbulence.Health System—Funding4.Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Health: Does he stand by his statement on 29 July that core Crown health expenditure covers “most but not all inflationary pressures”; and what impact has this shortfall had on patients?Hon Dr JONATHAN COLEMAN (Minister of Health): I stand by my comments in the context that they were made. Inflation is at 0.4 percent meaning that the 0.6 percent contribution for inflationary pressure is actually above the rate of inflation. In terms of impact on patients this Government is delivering 50000 more operations 60000 more surgical appointments faster cancer care 5500 more doctors and nurses and free GP visits and prescriptions for 750000 children. Only a National Government can both handle the country’s finances and deliver more services.Hon Annette King: If there is sufficient funding why was Claire Davies a 24-year-old who spent 1½ years in pain waiting for an operation told by her orthopaedic surgeon 2 months ago: “Unfortunately you are being adversely affected by funding limitations felt throughout the New Zealand health system.”?Hon Dr JONATHAN COLEMAN: As the Canterbury District Health Board admitted on the news on Sunday night that statement made by that surgeon was incorrect and should never have been sent to that patient. That patient will be getting her operation as she should have got in the first place.Hon Annette King: I seek leave to table the letter to Claire Davies dated 3 July 2015 from her orthopaedic surgeon saying that funding limitations—Mr SPEAKER: Order! We do not need a description of it. Leave is sought to table that particular letter. Is there any objection? There is none. It can be tabled.Document by leave laid on the Table of the House.Hon Annette King: Did anyone in his office contact the orthopaedic surgeon who wrote the letter to Claire Davies or did his office speak to the media about the surgeon in an attempt to warn the media off reporting this appalling story?Mr SPEAKER: The Hon Dr Jonathan Coleman—either of those two supplementary questions.Hon Dr JONATHAN COLEMAN: No.Hon Annette King: Are 20 district health boards wrong when they report that 160000 people have been sent back to their GP without a specialist appointment even though the data has been collected using the new Ministry of Health National Patient Flow data set which he says will next year show the level of real unmet need?Hon Dr JONATHAN COLEMAN: As the member well knows always patients have been sent back to their GPs. They were when Labour was in Government and actually no Government has ever been able to supply all the operations that every person needs. But we are the first Government to ever build a complete picture of that. The member knows actually that that picture is not yet complete and the data will be available later next year. All we do know for a fact is that we are doing more: 60000 more surgical appointments 50000 more operations and 50000 more medical appointments. So the only answer to unmet need is to do more. We are doing more; the Labour people did less.Mr SPEAKER: Order!Hon Annette King: I seek leave to table an Official Information Act request from the Waitematā District Health Board dated 21 July 2015 stating that the data was drawn from the National Patient Flow project.Mr SPEAKER: Leave is sought to table that particular official information from the Waitematā District Health Board. Is there any objection? There is none. It can be tabled.Document by leave laid on the Table of the House.Hon Annette King: Was Professor Phil Bagshaw who runs the charity hospital in Christchurch wrong when he said that since 2008 the annual average increase in the number of people receiving a first specialist assessment is only on average 3.8 percent but needs to be increased to 6 to 8 percent to keep up with baseline population increases—Mr SPEAKER: Order!Hon Annette King: —and the ageing population?Mr SPEAKER: Order! Questions are to be—[Interruption] Order! Questions are to be in line with Standing Order 380. They are meant to be concise. The length of supplementary questions from this member today is unacceptably long.Hon Dr JONATHAN COLEMAN: Yes but what is also correct to say is that back in 2007 the same Mr Bagshaw said that unmet need was getting worse and the Labour Government was doing nothing about it.Research and Development—Funding5.Dr JIAN YANG (National) to the Minister of Science and Innovation: What new investment is the Government making in “high quality” research?Hon STEVEN JOYCE (Minister of Science and Innovation): Last week I announced funding for 48 new science research programmes through the annual Ministry of Business Innovation and Employment science funding round a total investment of $96.5 million over 4 years. A total of 157 proposals were received with the 48 successful programmes selected by the board following robust review by independent experts. The sum of $49.8 million over the next 4 years has been awarded to research in the environmental and biological fields and a further $46.6 million will go to the areas of high-value manufacturing energy minerals hazards and infrastructure and health and society. Research-led science is a key driver of economic growth and this Government is working very hard to invest in it.Dr Jian Yang: What sort of research will receive funding?Hon STEVEN JOYCE: What is really pleasing is the diversity of research proposals that were received. Medical implants bee-friendly insecticides 3-D printing dairy goat infant formula dental diagnostics sensors self-cleaning ceramic coatings water-proofing road surfaces family violence prevention and aquifer management are just a few of the programmes that have received funding. Funding is divided into two types: smart ideas and targeted research. The Smart Ideas programme supports new and promising ideas through to commercialisation while Targeted Research funds benefit New Zealand within six areas: biological industries—Mr SPEAKER: Order! Bring the answer to a conclusion.Hon STEVEN JOYCE: —energy and minerals environment hazards health and society and high-value manufacturing.Dr Jian Yang: Why is the Government investing more in research science and innovation?Hon STEVEN JOYCE: Growing our private and public sector spending on science is crucial to ensuring sustained economic growth in an increasingly competitive world. The programmes announced last week are part of that and they contribute to the $1.5 billion a year the Government now spends across New Zealand on science which is up by 70 percent in 6 years. We are investing in things like Primary Growth Partnership the new regional research institutes and an additional $80 million for research and development grants in the private sector research and development area.Regional Economies—Development6.Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister for Economic Development: Does he stand by all his statements?Hon STEVEN JOYCE (Minister for Economic Development): Yes in the context in which they were made.Rt Hon Winston Peters: Does he stand by his statement in August 2014 that “the good news is that the regions are actually leading New Zealand’s economic recovery and I think that’s pretty exciting.”; if so why?Hon STEVEN JOYCE: Yes I do and I am pleased the member is acknowledging it.Rt Hon Winston Peters: How are the regions able to lead the so-called economic recovery when Northland Waste a local company up north lost its contract with the Department of Corrections for waste management to a Chinese-owned company with no tender process whatsoever being held? [Interruption]Mr SPEAKER: Order! I have not yet called the Minister.Hon STEVEN JOYCE: The good news for the member is that he may just be learning about Northland himself but the Northland economy is about so much more than waste management. It is a very significant processor in the oil and gas industry for example. It is very significantly involved in aquaculture. It is a significant region of the dairy industry and the meat industry. It has significant engineering companies. It has a significant tourism industry and a significant education industry. All of these things are contributing to Northland’s growth.Rt Hon Winston Peters: Besides the last by-election being waste management day for him how does it contribute to the economic development of the regions when a local company gets shut out in favour of a foreign-owned company and the decision to do this is not fair it is a not a free-market decision and it is not open to competition but instead it is done by decree from the Inland Revenue Department?Hon STEVEN JOYCE: The member I know has been beating a drum against international investment for some time—in fact I think nearly 40 years—but actually most New Zealand regions welcome international investment. They welcome it when businesses put money into their regions. In fact the member himself may like to contribute by opening one of those parliamentary offices he keeps going on about now that he has won the by-election.Rt Hon Winston Peters: I raise a point of order Mr Speaker. Answers have got to be terse and to the point. When you do not acknowledge that the MP up north has already got three offices—Mr SPEAKER: Order! [Interruption] Order! The member will resume his seat certainly if he wishes to stay for the balance of question time. That is not—[Interruption] Order! That is not a point of order at all. Does the member have further supplementary questions?Rt Hon Winston Peters: Thank you very much. Could I ask “Mr Fix-it” how it is that the regions are going to support the economic recovery when the Chinese are buying the Paeroa Racecourse and Paeroa—Hon Members: Oh!Rt Hon Winston Peters: I know you are groaning. There is every reason to groan down there.Mr SPEAKER: Order! The member will resume his seat. He raised a point of order a minute ago suggesting that answers are meant to be concise. Equally questions are meant to be concise. Now—[Interruption] Order! I will give the member one more chance to ask a concise supplementary question. Otherwise we will be moving on.Rt Hon Winston Peters: You have got a point there. Can I ask the Minister for Economic Development as to how it supports the so-called recovery being driven from the regions if the Chinese are buying the Paeroa Racecourse and the Silver Fern Farms’ Paeroa plant?Hon STEVEN JOYCE: Once again the member is beating the anti-Chinese drum which he loves doing so much. But can I explain it to him. It works like this: when someone comes into a region and makes an investment in that region that is generally positive particularly if it is passed through the Overseas Investment Office and is shown to actually add jobs and growth to the region. I know that member is against that sort of economic activity. In fact he is against nearly all economic activity in regional New Zealand but this Government is in favour of it.Economy—Treasury Advice7.GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: When did Treasury first advise him that economic conditions were starting to mirror the downside scenario in his 2015 Budget?Hon BILL ENGLISH (Minister of Finance): Treasury has not specifically advised me of that. Treasury has advised me that since Budget 2015 dairy prices have fallen more than it expected broadly in line with its alternative scenario. It has also advised that the downside scenario in Budget 2015 does not take account of other offsetting factors—for example that both the exchange rate and interest rates are lower than assumed in the alternative scenario. These factors of course support all export-orientated businesses not just those in the dairy sector.Grant Robertson: Will the lower than expected exchange rate offset the negative impacts of other weak indicators which have been described by economists as portraying a very sluggish economy?Hon BILL ENGLISH: Yes eventually it will offset some of those. In fact it is probably offsetting some of them now but the exchange rate effects take some time to show through. But one has only to talk to businesses that were profitable at an NZ88cexchange rate against the US$1 to find them somewhat enthusiastic about their profitability at NZ63c.Grant Robertson: Did Treasury advise him that unemployment is likely to rise above 6 percent in coming quarters despite the worst-case scenario in the Budget being 5.5 percent?Hon BILL ENGLISH: I would not want to repeat exactly—you know to misrepresent Treasury in any way but it has certainly indicated that unemployment is likely to be sticky around the 6 percent mark.Grant Robertson: So therefore Treasury is telling him that there will be 16000 more unemployed people making 151000 unemployed people after that forecast comes to fruition and how can he see that as a successful economy?Hon BILL ENGLISH: No Treasury has not actually said that. What it has indicated is that the quite strong rate of job growth is likely to slow down. The interesting thing about the New Zealand market is that although there has been strong creation of jobs there have been large numbers of people showing up to that market including a net inflow from Australia for the first time in 25 years. We will get an update from the Reserve Bank this week with its forecasts and then from Treasury before Christmas on its forecast about how migration job creation and unemployment are going to interact.Grant Robertson: Has the economy reached “stall speed” as the ANZ business confidence survey indicated; if so does he intend to alter anything about his approach to managing the economy?Mr SPEAKER: The Hon Bill English—either of those two supplementary questions.Hon BILL ENGLISH: I am not quite sure what the ANZ means by “stall speed”. I think it means that it has slowed down and you do not have to be an economist to figure that out.Health System—First Specialist Assessments8.JACQUI DEAN (National—Waitaki) to the Minister of Health: Can he confirm that over half a million patients received a First Specialist Assessment in the last financial year an increase of 26 percent on the number performed in 2008/09?Hon Dr JONATHAN COLEMAN (Minister of Health): Yes I can. New data shows that in the last financial year 542000 patients received a first specialist assessment in our public health system compared with 432000 in 2008-09. That is an increase of 26 percent—an extra 110000 appointments per year. And listen to this: one in 10 New Zealanders had an appointment with a specialist in a public hospital. These improvements are a credit to our dedicated health workforce which is supported by the $400 million extra invested into health in Budget 2015.Jacqui Dean: How many medical first specialist assessments were completed as part of this overall figure?Hon Dr JONATHAN COLEMAN: There has been a large increase in the number of people receiving a first specialist assessment for medical as opposed to surgical needs. Medical first specialist assessments are for patients whose condition is managed by a physician rather than by a surgeon—for example for cardiology respiratory or renal conditions. In the last financial year 220000 patients received medical first specialist assessments compared with 171000 in 2008-09—a 29 percent increase. That adds to the great work being done to increase the number of surgical first specialist assessments over the last 7 years. As Annette King told a Southland audience recently: “overall the health system [is] working well … We do have a good health system …”Whānau Ora—Performance9.Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister for Māori Development: Does he stand by all his statements?Hon CHRISTOPHER FINLAYSON (Associate Minister for Māori Development) on behalf of theMinister for Māori Development: On behalf of the Minister for Māori Development yes.Rt Hon Winston Peters: Supplementary question for the man who always gets the words perfect—Mr SPEAKER: Order! The member will resume his seat. My patience will not last too much longer with the member. Rise and ask a supplementary question in line with the Standing Orders.Rt Hon Winston Peters: I raise a point of order Mr Speaker. It was for you to make that correction not him. That is why I pointed it out to him.Mr SPEAKER: Order! I will give the member one more chance—but it will be brief—to rise and ask his supplementary questions.Rt Hon Winston Peters: Does he stand by his statement yesterday: “ ‘we’ve got the platform right’ I think we are in the right space.”; if so why?Hon CHRISTOPHER FINLAYSON: Yes.Rt Hon Winston Peters: Does he think it is fair to say that he commissioned a report costing taxpayers over $20000 to defend his position that Whānau Ora is producing results despite that report not containing any hard data—which the Prime Minister admitted yesterday?Hon CHRISTOPHER FINLAYSON: This is hopeless. That is a question that should be directed to the Minister for Whānau Ora.Rt Hon Winston Peters: Can I ask the Minister for Māori Development as to whether he will ensure next time that if he cannot answer the question he gets someone proficient to do the job rather than come down here and act like a clown?Mr SPEAKER: I will invite—[Interruption] Order! I will invite the Minister to answer it if he so wishes.Hon CHRISTOPHER FINLAYSON: I will if he promises not to have late nights at the Green Parrot before formulating his questions.Mr SPEAKER: Order!Rt Hon Winston Peters: I raise a point of order Mr Speaker.Mr SPEAKER: Order! Will the member please resume his seat. The member is calling a point of order and I will hear it but before I do hear it I just want to say that if the member asks a supplementary question like that he can anticipate he will get an answer like he did get. Does the member want to raise a point of order?Rt Hon Winston Peters: My point of order is very simple. That sort of answer is likely to lead to two things: disorder and the worst of personal retaliation.Mr SPEAKER: Order! That is exactly—[Interruption] Order! I am on my feet for the benefit of Mr Faafoi. That is exactly the point I was making when the member asked that supplementary question. [Interruption] Order! Again—[Interruption] Order! I will invite the member now to ask a supplementary question but he is to do it within the bounds of the Standing Orders.Rt Hon Winston Peters: Always do. Which is a better use of taxpayer funding: $20000 spent through Whānau Ora on Dunedin gang members to buy cannabis over $60000 for an Ōtaki Māori club for a 1-day hooley or $140 million on 2750 more nurses in our hospitals 2725 more primary schoolteachers in our schools or 2360 more police officers protecting our streets from crime?Hon CHRISTOPHER FINLAYSON: That is a question that should be directed to the Minister for Whānau Ora. The member has been here for almost 40 years off and on—Mr SPEAKER: Order! The latter part will not help the order of this House.Ron Mark: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! [Interruption] Order! Can I remind members particularly members on the front bench on my right that this is a point of order. It will be heard in silence.Ron Mark: Could I ask you given that the report was released by the Minister for Māori affairs to look into the accuracy and the appropriateness of those answers that have been provided by that Minister today and to come back to us and say so—Mr SPEAKER: Order! I will certainly undertake to look at the accuracy of the answers. I am not giving an assurance that I will come back to the member.Building and Construction Industry—Construction Materials10.PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Housing: Why did he say that the building materials industry “needs a shake-up through increased competition and greater transparency to ensure Kiwi families can get access to more fairly priced building materials and homes”?Hon Dr NICK SMITH (Minister for Building and Housing): I said it because it is true. It is why in Budget 2014 the Government removed tariffs on many thousands of building products. It is also why we announced last month changes to anti-dumping duty law. It is why we have a bill before Parliament reforming the standards system because part of the problem is enabling the timely approval of imported building products. And it is also why we are working through the complex liability issues in line with the recommendations by the Law Commission which noted that because councils face high liabilities it should be capped. Then there is resistance from councils to innovative building technology which reduces competition. I can assure the member that we are very open to competition from products with Chinese-sounding names.Phil Twyford: Why has he done nothing to address the anti-competitive rorts in the building supplies market that are adding tens of thousands of dollars to the cost of a new home even though the Productivity Commission told him all about these rorts 4 years ago?Hon Dr NICK SMITH: This sounds like a bit of a rerun of the Shane Jones claims in respect of supermarkets which came to absolutely nothing. If the member has evidence of anti-competitive behaviour occurring in the building industry then I am happy to receive the information and to take it up with the Commerce Commission. I note that the Commerce Commission did an extensive inquiry into the issue around plasterboard. Apart from the issue around the duties which the Government has addressed it was satisfied that there were no breaches of the Commerce Act.Phil Twyford: Does he agree with the Prime Minister who said yesterday: “if people really feel as though the system isn’t delivering for them … there’s a number of avenues they could follow”; if so in the case of plasterboard what are the avenues open to people when Fletcher’s Gib board has 94 percent of the market and when it has sweetheart deals with the four major retailers—Mr SPEAKER: Order! Either of those two supplementary questions the Hon Dr Nick Smith.Hon Dr NICK SMITH: I will draw the member’s attention to the very comprehensive report by the Commerce Commission into the specific issue of plasterboard. I would also note that since Budget 2014 when we removed the anti-dumping duties we have seen almost a doubling in the amount of plasterboard imported from Thailand. I would also note that one of the key issues is actually both designers and councils continuing to specify the tried and true and that is why the Government is making changes to the Standards Act and to liability laws in order to encourage a greater and wider use of alternative plasterboard products.Phil Twyford: Does he think that these anti-competitive kickbacks rebates and sweeteners like Fletcher’s flying 150 Auckland builders to the Bledisloe Cup match in Sydney have anything to do with the fact that the German company Knauf the world’s second-biggest supplier of plasterboard was not able to put a dent in Fletcher’s 94 percent market share and has given up?Hon Dr NICK SMITH: I am interested in the principles of members opposite who find it obscene for builders to get free rugby tickets when I have noted those members at rugby games all the time when they take free rugby tickets.Phil Twyford: Has he advised the Minister of Commerce and Consumer Affairs that the Commerce Commission needs more teeth given that it confirmed all of the rorts and kickbacks are in fact going on in the building supplies market but it does not have the powers to do anything about them?Hon Dr NICK SMITH: I would draw the attention of the House to the wild claims that were made by Shane Jones in respect of the supermarket circus which the Commerce Commission found came to nothing when it investigated them. I simply say to the member: put up the detail. I am happy to take a complaint but just more rhetoric does not cut the mustard.Agricultural Industries—Herbicide-tolerant Swedes11.STEFFAN BROWNING (Green) to the Minister for Primary Industries: Will the Government provide compensation to farmers whose cows fell ill or died from eating herbicide-tolerant swedes?Hon NATHAN GUY (Minister for Primary Industries): No. It is the responsibility of the sellers of fodder crops to ensure that feed is fit for purpose. This was a regional incident in one part of the country with a range of contributing factors. The Ministry for Primary Industries advises farmers to apply caution when feeding all brassica fodder crops and to follow the advice issued by Dairy New Zealand.Steffan Browning: Given that he allowed herbicide-tolerant swedes to be sold to New Zealand farmers swedes that then caused the death of 200 to 300 cows at a cost of hundreds of thousands of dollars why will he not compensate the farmers?Hon NATHAN GUY: If the member had listened to the primary answer that I just gave he would understand the substance of my answer.Steffan Browning: Was Dr Mark Bryan’s paper which he presented at the New Zealand Veterinary Association conference in June wrong when it said that in winter 2014 cows in central Southland were seven times more likely to die on herbicide-tolerant swedes than any other grazing type?Hon NATHAN GUY: I have not seen that particular report but what I can confirm is that this was a regional incident. It was because of climatic conditions primarily that meant that the swede crops in question grew quicker than normal which meant that there were higher compounds of glucosinolates.Steffan Browning: If he will not compensate New Zealand farmers will he at least protect them and their cows from the toxic effects of herbicide-tolerant swedes by removing the toxic herbicide-tolerant swedes from the market?Hon NATHAN GUY: No because this was a regional incident. What has occurred is that there is a working group that has been working through this particular issue. There have been animal biopsies and blood samples taken. There has been a new scientific test that has been set up where we had to import equipment from three different countries. There has been a wide variety of communications that have gone through to farmers to lift their overall understanding. There is also an international peer-reviewed scientific report that is going to be released I think next month and I am sure that the member will be very interested in that.Aviation Industry—Jetstar Regional Services12.JONATHAN YOUNG (National—New Plymouth) to the Minister of Transport: What recent reports has he seen on increased competition in the aviation industry that supports regional New Zealand?Hon SIMON BRIDGES (Minister of Transport): Last week Jetstar launched its new regional destinations in New Zealand. That will result in more jobs—about 100 more—more choice and competition and lower fares from December in Nelson and Napier from February in New Plymouth and Palmerston North—[Interruption]Mr SPEAKER: Order! I cannot hear the answer because of the level of interjection coming from my immediate left. Would the Minister please continue.Hon SIMON BRIDGES: As I was saying they are from Nelson Napier New Plymouth and Palmerston North fundamentally growing the number of people connecting for work tourism and also with their families. What is not to like?Jonathan Young: How will Jetstar’s new regional air services benefit consumers?Hon SIMON BRIDGES: I am glad you asked. There is clearly a lot of interest. Consumers are the big winners in Jetstar’s move into regional air services which has triggered a price war—[Interruption]Mr SPEAKER: Order! Iain Lees-Galloway—if he wants to leave the Chamber I can make it easy for him. He is to cease this barracking. There is indeed ministerial responsibility for this issue.Hon SIMON BRIDGES: I will start that again. Consumers are the big winners from Jetstar’s move into regional air services which has triggered a price war on some regional routes. As we have seen in recent years competition between Air New Zealand and Jetstar has ensured that passengers travelling on main trunk routes have had access to low fares and more choice. So Jetstar’s move to offer regional services will bring these same benefits to regional communities throughout New Zealand. More generally—Mr SPEAKER: Order! I have now heard enough of the answer.Sue Moroney: I raise a point of order Mr Speaker. You ruled that there was ministerial responsibility. Is the Minister also responsible for Hamilton missing out on Jetstar?Mr SPEAKER: Order! The member will resume her seat.Jonathan Young: How will greater competition in regional air services benefit regional New Zealand?Hon SIMON BRIDGES: It is great to see increased air competition in some of our key regional centres—[Interruption]Mr SPEAKER: Order! I gave a fair warning to Iain Lees-Galloway. He continues to interject and he will now leave the Chamber.Iain Lees-Gallowaywithdrew from the Chamber.Mr SPEAKER: I invite the Minister to continue his answer.Hon SIMON BRIDGES: Transport linkages are crucial to regional development and Jetstar’s new air links will help boost business and tourism traffic into regions like Taranaki Hawke’s Bay Nelson and Manawatū-Whanganui. The new services will also provide convenient connections to international services. I take the member’s point—actually it is not just Jetstar; it is many smaller players in the West Coast Kaitāia and other areas providing an increasingly vibrant aviation scene in New Zealand.Urgent Debates DeclinedRefugee Quota—Syrian RefugeesMr SPEAKER: I have received letters from James Shaw and Andrew Little seeking to debate under Standing Order 389 the announcement of a decision to accept an additional 600 Syrian refugees. This is a particular case of recent occurrence involving ministerial responsibility. The business of the House should not be set aside just because an announcement has been made even though it may be important. There must be such an element of urgency that the matter must take precedence over other business. My perception is that there has been general support for the accepting of additional refugees. There has been and will continue to be discussion about whether the number of refugees accepted is sufficient. I am not persuaded that debating that issue warrants the setting aside of the business of the House. The application is therefore declined.Taxation (Land Information and Offshore Persons Information) BillSecond ReadingHon TODD McCLAY (Minister of Revenue) on behalf of theMinister for Land Information: I move That the Taxation (Land Information and Offshore Persons Information) Bill be now read a second time. I thank the members of the Finance and Expenditure Committee and particularly its chair David Bennett for their report on the bill. This is no mean feat given the very short time frame the committee members had to thoroughly consider the bill and the public submissions that were received on it.As members of the House know the bill will enable the implementation of a number of measures announced in Budget 2015. It does so by proposing amendments to the Land Transfer Act and the Tax Administration Act to improve compliance with tax law.Mr SPEAKER: Order! I apologise for interrupting the Minister. There are too many conversations being carried—[Interruption] Order! Would those people having conversations at the back of the House leave the House immediately and allow the Minister to deliver his contribution.Hon TODD McCLAY: Thank you Mr Speaker. Everyone here will agree that it is perfectly reasonable to expect that everyone who has an obligation to pay tax does so. As such the proposed changes in the bill are designed to enable the collection of information to ensure that people who buy and sell property for profit including overseas buyers and short-term speculators pay their fair share of tax. At the same time we have been careful not to unfairly impact on New Zealand owner-occupiers who have worked hard and saved to buy a family home. It is envisaged that the changes proposed in this bill will be implemented by 1 October.This said the Finance and Expenditure Committee had the significant task of analysing the bill and all public submissions in a truncated time frame as I mentioned earlier. I am pleased to say that the committee has done an exceptionally good job. Its recommendations have resulted in a number of additional provisions being added to the bill by way of two simple questions to determine firstly whether a property buyer or seller or a member of their immediate family is a New Zealand citizen or holds either a resident work or student visa and if so whether they intend to live in the property being transferred.I have also been sure to listen to the views of the New Zealand Law Society whose members will be directly impacted on by the requirements in this bill. I intend to propose an amendment to the bill by way of a Supplementary Order Paper during the Committee stage so that the new requirements will apply only to contracts entered into on or after 1 October with the information having to be provided after 1 April 2016 irrespective of when the contract was entered into.This bill will help us better understand the residential property market and will inform housing policy accordingly. New Zealanders have a right to know that everyone who should be paying tax does so. This bill will make sure that this happens. I commend this bill to the House.GRANT ROBERTSON (Labour—Wellington Central): Well that contribution from the Minister of Revenue kind of sums things up really. He could not find his notes he did not know what to say and he sat down after 2 or 3 minutes. That is the Government’s commitment—its rock-solid commitment—to getting to the bottom of who it is who is buying houses in New Zealand. It says it all about this bill and this piece of legislation which is all about being seen to do something. It is about the fact that public pressure has built up on the Government and so it knows it has to act in some form or other. So it puts up a half-hearted confused piece of legislation designed to make it look as if it is dealing with the question of speculators look as if it is going to provide some decent information for us to be able to assess what is happening in the New Zealand property market but when in reality it has completely failed to do so.The Minister told us that he was going to take some notice of the submissions of the New Zealand Law Society. I welcome that and I hope that when we see those amendments we will be able to support them. What I would ask is that the Minister take notice of some of the other submissions that he received on this bill—or even in fact whether he would take notice of some of the advice that he received from the Inland Revenue Department because we found ourselves as Opposition members during the progress of this bill in the Finance and Expenditure Committee being the advocates for the Minister’s own department. The Inland Revenue Department in its regulatory impact statement gave a number of pieces of advice to the Minister about how this bill could be improved and the Minister decided not to go there. Actually my understanding is that the Minister himself probably quite wanted to go there and quite wanted to accept the advice of his officials but other members of Cabinet overruled him told him that he could not do that and watered the bill down.When we look at the Inland Revenue Department’s statement the first issue that it had is one that all of us on the select committee had which is that time constraints meant that the Inland Revenue Department was not able to consult with potentially affected parties or estimate the compliance costs for this piece of legislation. So let us just stop and think about that for a minute. Here we are imposing a new regime on buyers of property in New Zealand and the Inland Revenue Department tells its Minister that it has not had time to consult with the people who are affected and it does not know what level of compliance costs are going to be imposed. That is the standard of legislation that this Government is bringing back to the House today. We on the committee felt that we were under a time pressuretoo. We did not get all of the information that we needed I believe to make this piece of legislation into what it should be. I say this: I believe that we will be back in this House within months correcting elements of this legislation because we have not had the time as a Parliament to get this right. The Minister is coming up with Supplementary Order Papers that he wants to put through in the Committee stage on the hoof and there will be more in the future.The other concern that the Inland Revenue Department raised—and it was raised by a large number of the submitters to the bill and is also in the minority report of the Labour Party and the Green Party—is around the definition of “main home”. The Government tries to explain away its desire to exempt the main home in its comments in the report. But what the Inland Revenue Department said was that it did not believe that exempting the purchasers of a main home would reduce compliance costs as almost all those people purchasing a main home here in New Zealand would have an IRD number anyway. That is the bottom line point. If you are going to be buying a main home you are going to have it anyway.But rather than accept that advice from the Inland Revenue Department the Government said: “No no we know best and we are going to exclude that.” Therefore the quality of information is fundamentally compromised from the get-goby doing that in this piece of legislation. The excuse that somehow or other this was going to place this outrageous burden upon New Zealanders that they would have to actually have an IRD number and a New Zealand bank account is completely ridiculous. It is not justifiable at all. The Inland Revenue Department in its advice to the Minister said that—because obviously this is linked to the next piece of legislation. I know we are not supposed to talk about an upcoming piece of legislation but the next piece of legislation—Hon Ruth Dyson: Just in passing.GRANT ROBERTSON: Oh is that right? In passing—right OK. The brightline test—the Government tried to link it up and say that it was important for that reason. The Inland Revenue Department has told it that that is not the case. We believe that the exemption for the main home is actually going to increase compliance costs. It is certainly going to create loopholes in terms of the kinds of data that can be collected.We also believe that the definition of “main home” within this piece of legislation is fundamentally flawed too. It is vague and it is open to interpretation. The Government has come up with the idea that a person’s main home should be the place of residence with which they feel the greatest connection. The problem with this is twofold. The first is that that phrase “with the greatest connection” has never been used in New Zealand tax law before. Nobody actually knows exactly what it means and there will be wholesale interpretation issues over the next few years. If somewhere is your “principal place of residence” that is I believe a clear and readily used phrase.The inconsistencies that arise from someone having a “greatest connection” may be that they do not necessarily live there full-time. Certainly if they live in other parts of New Zealand and travel from time to time to a place that they regard as their main home is that the place that they have the greatest connection to? Is it where their children go to school? Or is it where they work? We teased out some of these ideas with officials and quite frankly the officials were not able to answer because this has never been used before because the Government has come up with a brand new definition that we believe is subject to considerable loopholes.The Inland Revenue Department also told the Minister that the requirement to have a New Zealand bank account to obtain a New Zealand IRD number is unnecessary for individuals and of limited benefit as the department already has the power to require relevant identification verification upon application for an IRD number. The bottom line here is that the IRD number is what is the useful thing—the thing that will actually be able to be tracked. Opening a New Zealand bank account? Well yes it might be interesting but it really does not tell you very much at all in terms of where somebody is resident.We had a range of issues given to us by submitters during the select committee process. Some submitters said to us that the requirement for a New Zealand bank account for an offshore party to obtain an IRD number is unnecessary and will provide no net benefit whatsoever. We also agreed with the Inland Revenue Department which advised in the regulatory impact statement that it is unlikely that any anti - money-laundering checks carried out by a New Zealand financial institution would have any greater impact or give any greater information than the department would already get from the provision of an IRD number. So this is the worst of both worlds. On one hand we have got a series of unnecessary compliance and on the other hand we are not actually assessing the full range of information in terms of people who purchase their main home. So what started out sounding to most members of Parliament as being a good idea turns out to be an idea full of holes and one that does not give the right information that New Zealanders would expect to see coming from the Government.On balance the Labour Party members of the committee have agreed to support this bill. It at least begins the process of identifying a major gap in our information about the way that housing is purchased in New Zealand. It is inadequate. It fails the test of good legislation by being rushed through the House. The Minister has failed to take the advice of his own officials about how to take the strongest and best approach to getting this information.As a Parliament we have a responsibility to New Zealanders I believe to get the best possible information about who is purchasing homes and what rate of purchases is being undertaken by foreign speculators. Looking at the Quotable Value New Zealand data we know that speculators were responsible for around 41 percent of the purchases of homes in the Auckland area in the last year or so. That is an interesting piece of information but David Bennett will probably stand up and say to me: “Well that’s inadequate.” I agree but this bill should have been the piece of legislation that brought to the House a comprehensive register of home purchasing in New Zealand that we could all use to understand the origin of those purchases and what impact that is having on the housing market in New Zealand. Instead what we have is a half measure a confused bill which we will no doubt have to improve very soon.DAVID BENNETT (National—Hamilton East): That last speech was one of rhetoric but no substance and it is typical from that member Grant Robertson in his finance role. If Labour members had so many concerns about holes in this legislation surely in the Finance and Expenditure Committee they would have made those known and they would have sought to have them adjusted. They did not do so. They do not see any particular holes because it is all rhetoric that they are talking about. When we talk about the main home test—that is the exemption for ordinary New Zealanders that is in this bill and will be in the Taxation (Bright-line Test for Residential land) Bill as well—we have got to look at it from the perspective of the ordinary New Zealand purchaser as well and we do not want to put undue compliance on ordinary New Zealanders when they are purchasing properties. The register notion that the previous speaker talked about is a very Soviet-era type of approach where everything and anything that anybody does has to go through Government agencies before it can be approved.This bill is one that sets the information flows for the Government around those land transactions—the purchase of property—but that also sets some rules around what some purchasers have to engage with and deliver. The first thing is that buyers and sellers will be required to provide IRD numbers at the time the property is transferred. This tax information will be provided to Land Information New Zealand as part of the conveyancing process and then forwarded to the Inland Revenue Department. People who are tax residents in another jurisdiction will also be required to provide their foreign equivalent of an IRD number.The second part of the bill requires offshore persons as defined in the bill to have a New Zealand bank account before obtaining an IRD number. That is the second requirement. This ensures that offshore persons are subjected to New Zealand’s anti - money-laundering rules and it is an important part of the reasons behind this bill.There are some clauses in the bill that were the subject of some submissions. I think that 13 submissions were received by the committee and some of those presented were around the “offshore persons” definition the “main home” definition and suchlike. This is tax legislation that cannot be overly prescriptive. It needs to give the ability for the Inland Revenue Department to have some discretion in how it interprets some of that wording. They are new tests in some ways but at the same time they are tests that enable the Inland Revenue Department to be able to apply the principles and policies that this bill seeks to achieve through its application of the meaning of those tests rather than be totally explicit in this legislation which is something that tax legislation fails on many times because people just use those explicit definitions as a mechanism to get around it. There is a little bit of broadness in the way it is structured around that terminology but that is to provide the Inland Revenue Department with the ability to deliver the policy that this legislation seeks to achieve which is the information around IRD numbers and around those offshore persons and at the same time not putting undue requirements on New Zealanders who are buying their main home and who are exempt from those requirements.This is a good bill and it will be part of a suite of legislation that will deliver in this area. Thank you.Dr DAVID CLARK (Labour—Dunedin North): Labour will support this bill because we back the policy objective that is behind it which is to collect information on offshore residential homebuyers. However as my colleague Grant Robertson has already begun to canvass there are a large number of loopholes and weaknesses in this bill and that is as a result of a Government obsessed with wanting to look like it is doing something and actually making sure that it is not. There is no clearer example of that of course than the paper boy tax legislation that we saw in a previous Budget where the Government shifted things around to make it look like it was doing something but it actually created a grey economy where there was none before and created extra red tape and overheads for many who were doing those part-time jobs and for employers as well. Likewise with child support—requiring employers to collect child support arrears where they did not previously is an extra red tape burden that this Government has imposed on employers.Here we have an example of additional red tape but it is red tape applied without an offsetting assurance that we are actually achieving the policy objective. That is worrying because poor legislation does introduce costs to an economy and places an individual burden of costs on people on ordinary citizens. When no offsetting gain can be guaranteed that is a worrying thing. It is Parliament’s job to try to get this legislation right to make sure that we do make sensible decisions that do not cause extra compliance for ordinary citizens and to try to solve the problems that we see as a country. But no one these days would say that offshore property speculation is not a problem in New Zealand. I think even the Government acknowledges that offshore property speculation is a problem. At least that is the rhetoric and at least that is the driving reason behind bills like this one. But as to actually doing something about it in a sensible measured way and in a way that answers the questions of policy advisers well that is a different matter altogether.What we saw in the regulatory impact statement and in the advice from the Inland Revenue Department was advice that it was unable to estimate the compliance costs or consult on this legislation because there was not enough time to do that. So the department has not estimated what the cost of this legislation is what the overhead that goes with it is and whether in fact it is going to be as effective as it could be because the Government has placed time constraints on this legislation in order to rush it through Parliament to be seen to be doing something about the problem that we are facing as a country. The Inland Revenue Department also recommended to the Government that it not exempt main homes from the register because that will not reduce compliance costs for purchasers of a main home as almost all would have a New Zealand IRD number anyway and it would make rules more complicated for purchases and conveyances and create loopholes.There is a whole set of reasons why this legislation should not have been rushed through why it should have been given a second look and why the Government should have taken its time to make sure that it was right and was actually achieving the stated goal of cracking down on overseas property speculation. But of course what we on this side of the House suspect is a certain amount of cynicism from the Government opposite. We know that the Government is not particularly interested in cracking down on property speculators. We have seen little evidence of it. National has been willing to take a bit of a political hit on it over the years whereas it has been so responsive in other areas to polling and to its focus groups and so on. In this area we begin to suspect that it has other interests at play and so it is not wanting to crack down in this area in the same way. So it seems to be quite happy to let some of those loopholes remain and I think people can probably draw their own conclusions as to why that might be.We will support the bill because it is a first step towards achieving the goal. We recognise that when we are in Government a Labour-led Government will have to tidy this up and tighten it up to make sure that it does what the stated policy intention originally was.A Government that is not straight with New Zealanders is going to run into problems over the longer term. I think it is fair to say that this theme of the Government saying it is going to do one thing and then not delivering on it is wearing a little thin with New Zealanders who are now seeing this Government as being increasingly out of touch.The bill says that it supports the Government’s yet to be introduced legislation to create a new 2-year brightline income tax test for Auckland—the test that is not a capital gains tax but supports that tax on property gains over time. We will be debating that later I believe; in fact it might be the next bill on the Order Paper. We see it as part of a package that the Government is putting together to be seen to be doing something in this area. But we are mindful on this side of the House that although these new measures will improve the current complete lack of information regarding overseas house purchases they are but a part measure. They are needlessly weak and as Grant Robertson said in his contribution those on the select committee heard ways in which the legislation could be made stronger and we can deduce only that the select committee itself by burden of a Government majority decided against putting that recommendation through to Parliament and opted instead to adopt the weakened bill that we have before us.It is disappointing that Parliament and the select committee will need to visit this legislation again in the future to amend the inadequacies of this bill. Implementing a full and proper overseas homebuyers register the first time around would save wasting a whole lot of parliamentary time. The cost of putting a bill through this Parliament is quite extraordinary. I remember seeing an estimate. It is hundreds of thousands if not millions of dollars to put a bill through this Parliament when one takes into account the staff time all of the salaries sitting in this room the lighting the advisers for the select committee process and so on.It is a huge amount of money to put a bill through this House so that is why we find it frustrating that the Government wants to put through a half measure that will almost certainly have to be revisited. It is so obvious as we put it though this House that it is a half measure that it is needlessly weak and kowtows perhaps to property speculator interests rather than taking a principled stance and saying: “How do we rebalance the New Zealand economy? How do we make sure that we tackle the issue of a housing market in Auckland that has been out of control for some time where we have homelessness in our streets and growing social issues as a consequence? How do we make sure that the market is set to respond? How we make sure we actually have a country that is focused on productive activity that sets the incentives up right and that makes sure that overseas speculation does not drive our currency and our housing and our economy? How do we get focused on the issues that matter and on generating a better New Zealand?”.So for all the cost involved in putting this bill through Parliament we would have liked to see proper strong robust legislation. Instead we have the kind of legislation that you might expect from a Government that is arrogantly pressing ahead saying: “We’re not going to listen to anyone. We just want to be seen to be doing something. Tick that box. Move on.” We have a Government that is increasingly out of touch with ordinary New Zealanders. Those in the middle are getting squeezed and here again they will get squeezed by this legislation. Middle New Zealand will be the ones who comply with this legislation while the speculators find the loopholes and carry on as they were.Mr Bishop I am sure is going to stand up shortly and say that this is all wrong. But if he addresses the questions that have been raised by both Mr Robertson and me adequately now it will be a wonder to many that he did not do that in the select committee.CHRIS BISHOP (National): I just want to respond to the charge from Dr Clark who has just spoken that this is a cynical Government. The only thing cynical around offshore buyers that has happened in this Parliament and in this society in the last 3 months was the cynical cheap crass and outrageous attack on Chinese migrants by the Labour Party. That meets the very definition of cynical: exploiting and demonising an ethnic minority for cheap and craven political purposes. The Taxation (Land Information and Offshore Persons Information) Bill is not a cynical piece of legislation. This is a well-intentioned and well-meaning attempt to obtain tax information from people buying and selling property in New Zealand by amending the Land Transfer Act 1952 and the Tax Administration Act 1994 to improve the enforcement of non-residents’ tax obligations. The key change that the bill provides is to require buyers and sellers of property to provide an IRD number or the equivalent tax number in the case of residents of other countries. Individuals buying or selling a main home are exempt from that requirement and in my brief contribution to the House I just want to canvass that exemption which is in the piece of legislation we are considering and which came in for some pretty robust debate at the Finance and Expenditure Committee as has been alluded to by Mr Robertson a few moments ago.There was some suggestion from members opposite and some suggestion from others at the committee that we should include all property transactions within the scope of this bill—in other words all property transactions in New Zealand whether or not they include a main home or whether or not they do not include a main home; all buyers and sellers of property would be required to provide their IRD number. Why did the Government decide not to do this? The first reason and the most fundamental reason is that the proposed brightline test—which as members will know is in the companion legislation to this bill that we will consider in a few moments’ time—exempts the main home. So there is little point in requiring everyone who buys and sells a property in New Zealand everyone who buys and sells a main home or buys a property with the intention of living in it as their main home to supply their IRD number when they are going to be exempt from the brightline test which is the major point of the legislation we are about to consider. That is the most fundamental reason.The supplementary reason which relates to the main reason is that it would greatly increase the volume of information that people would have to provide through Land Information New Zealand and the Inland Revenue Department. We also believe on this side of the House that it would make people worry needlessly about whether or not a transaction was taxable. In the vast majority of cases when people buy and sell a main home—a place they are living in a place they have a great connection to—those transactions are not going to be taxable but the requirement for people to supply an IRD number needlessly will make people worry about whether or not that transaction is taxable. That is why we are exempting the main home from this legislation.Grant Robertson said that the officials advised against it. That is I have to say a little bit rich. Governments are entitled to listen to what officials have to say and they are entitled to take a different course. In fact the previous Labour Government made a virtue of ignoring Treasury advice year after year. It ignored the official advice from Treasury and the Inland Revenue Department about a whole range of matters. In fact it made a virtue of it. Michael Cullen used to turn up in this House and talk at length about how Treasury had had an ideological burp and other such matters. So yes Governments are entitled to listen to the official advice but that is actually why Governments and parliamentarians are elected: to weigh up the competing advice to weigh up what officials have to say and actually to apply their minds as to whether or not a piece of legislation is a good idea. Officials are entitled to have their say but actually officials do not run the country. We do not have a Government of the bureaucracy in this country; we have a Parliament that makes laws and we have a Government that is made up of lawmakers elected by the people who are responsible to Parliament. The official advice in this circumstance here has been listened to but the Government decided to take another path.This is not a cynical piece of legislation; this is a good bill. Members over the other side are politicking as they are wont to do with pieces of legislation around non-resident buyers and as they are wont to do with migration and the role of non-residents generally in this society. It is regrettable that the Labour Party and Mr Twyford have such little regard for migrants to this country and for foreigners but sadly that is the way it is. I commend this bill to the House.JULIE ANNE GENTER (Green): The Taxation (Land Information and Offshore Persons Information) Bill is one part of the Government’s “not a capital gains tax” tax that was announced around the time of the Budget. The Green Party is supporting that whole policy package if you will because it is taking a step in the right direction but we do not believe that this bill really is as good as it could have been unfortunately. What the bill does is it starts the very first steps towards getting information on what is actually happening in the housing market. This has been a very long time coming. It has made it very difficult for us to assess what exactly is causing the underlying inflation in house prices in Auckland because we simply do not have enough information.I remember asking the Governor of the Reserve Bank a year and a half ago—maybe 2 years ago—when he came before the Finance and Expenditure Committee whether the Reserve Bank had information on what proportion of sales were to overseas buyers and that was just to understand how much foreign capital is coming into the market because that can be one of the factors in price inflation. It is really important to have an understanding of whether or not that is making a difference and we simply did not have the data at all so we did not know to what extent house price inflation was caused by supply problems or whether it was caused by demand-side problems like the influence of speculators or a whole heap of foreign capital coming in and bidding up our market. The Reserve Bank at that time said it did not have that information it would very much like to have that information and that it required action from the Government in order for it to collect that information. Finally a year and a half later we have a bill that is going to start collecting that information and it is very useful and that is why the Green Party will be supporting this bill.Why is it important to understand this? It is because there are multiple factors at play in housing affordability. Everybody I think agrees that it is incredibly important for every person in New Zealand to have a warm safe secure dry place to call home. That is fundamental. It is important that people are not prevented from having this because of not having enough money to pay the rent or to pay the mortgage. It is also important that we do not have an overvalued bubble in Auckland because the amount of debt tied up in housing in Auckland becomes a liability for the whole economy and that is certainly something the Governor of the Reserve Bank has been worried about for quite a while now and we are finally seeing some very small steps in the right direction by this Government but it has failed to take action for a significant number of years.Back in 2010 Treasury was lobbying the Government to implement a capital gains tax which it failed to do and of course that would have had an impact on demand in the Auckland housing market and might have limited the bubble more. Obviously it is not a silver bullet and it is not the only solution but we do know for very understandable economic reasons that when you do not have a tax loophole on housing—as we currently have had and continue to have to a certain extent—then there is a perverse incentive to put more money into houses rather than into productive sectors of the economy and there is a perverse incentive for people to own more houses. When you do not have protection for renters there is also a perverse incentive for people to become landlords and not look after their properties and to make a loss on the rent because they are anticipating future capital gains that will not be subject to tax. It is simply not right that people who go to work in a hospital or at an engineering firm or whatever else they are doing have to pay tax on their salary but people who sit back and make a hundred grand simply by flipping houses in Auckland over a period of a few months pay no tax on that income. It is not right it is a distortion and it is something that we could fix and that we clearly understand how to fix.The relevant information that is going to be collected because of the changes in this bill has to do with understanding how much money is coming in from overseas. That is important to understand exactly what proportion of the house price inflation is being driven by that incoming capital. Lots of other comparable jurisdictions have already started to impose things like a stamp duty or a limit on foreign buyers in order to protect their own housing markets and that is something that we have failed to do in New Zealand. The previous speaker Mr Bishop insinuated I think that Opposition parties bringing this up are just simply politicking and they are playing on racism and fear of migrants. As a migrant myself I can say that that is certainly not why the Green Party has a policy that would limit sales of property to citizens and residents. It is not because we are afraid of migrants—we have been lobbying for an increase to the refugee quota and we have a very open and tolerant immigration policy—but it is important for the sovereignty of New Zealand that the people who are buying property here have a stake in the future of the country. It is for that reason that we would say it is important to be a resident or a citizen and it is entirely possible for many people to become a resident and a citizen even if they were not born in New Zealand.So it has nothing to do with racism and the fact is that we know that in comparable cities all over the world like Sydney Vancouver London and Hong Kong—places where house price inflation has been equally as high or higher than in Auckland—house price inflation is driven to a certain extent by capital coming out of China because it is a very big country and it is a very big market. There is nothing specifically against the Chinese it is just acknowledging the fact that there is a lot of capital coming out of China looking for a safe haven and looking for safe investments and given the tax-free status on housing in New Zealand it is certainly a very safe place for them to invest money. The issue for us is that actually it starts to impact the ability of New Zealanders to have a safe warm dry secure place to live. So it is important that we understand the problem and in order to understand the problem we have to have the information. That is what the Governor of the Reserve Bank had asked for a year and a half ago and that is what the Green Party asked for.This bill starts to do that so we are going to support it but I have to say that it really is not perfect. I think the single biggest problem with the bill is this main home exemption. What we heard from officials and other submitters is that making an exception for a person’s main home adds complexity to the rules—why would you want to add complexity to the rules—and limits the amount of information that is available about property transactions. So for that reason most of the Opposition MPs on the Finance and Expenditure Committee argued against the main home exemption and we have put that in our minority view. When it comes to tax and regulations simpler is better. Putting in exemptions just creates unnecessary complexity and loopholes which can then be gamed.The previous speaker Mr Bishop said that there was no point in collecting data because people for whom the property was their main home would be exempt from the brightline tax but that does not mean there is no point in collecting the information. It is certainly not onerous to collect the information. I would say that more information is better and I do not think it is credible to say that people are going to be terribly worried that they may have to pay a tax simply because they have to provide their IRD number. It is just not credible. It is not a big deal and it is certainly not a reason for making more complex legislation which is going to be more difficult to enforce and is going to leave us with less information that we could then use to analyse what is going on in the property market. So for that reason the Greens are not happy with the bill as drafted and we put it to the Government that a simpler regulation is better. More information is better. People are not going to be terrified by the fact that they have to provide their IRD number and given that they are not going to be taxed it does not make sense that we would say to them: “You don’t need to provide your IRD number. We’re not going to collect this data because we’re afraid that you might be scared that you have to pay a tax you do not have to pay.” That is just ridiculous. That is in summary the Green Party’s view on this bill. Thank you.FLETCHER TABUTEAU (NZ First): I would just like to take the opportunity to reply to some of the previous speakers because it is quite frustrating to hear the Minister for Economic Development talk about how the sell-off of New Zealand assets and land is coined as an investment. It just does not make any sense whatsoever. And then it was frustrating to be completely honest to see the Hon Todd McClay speaking on behalf of the Minister in charge of the bill the Hon Louise Upston and then the chairman of the Finance and Expenditure Committee David Bennett stand up and simply go through the motions. But as was noted before the Taxation (Land Information and Offshore Persons Information) Bill is a bill that is simply going through the motions and it does not achieve any of the stated objectives which the National Government has actually mangled in order to turn the legislation into something non-offensive. It does not even achieve what it set out to do in terms of identifying where the problem is and what we can do to help real New Zealanders cope with this almost maniacal rise in property prices in the Auckland housing market.The Minister spoke about the short time frame that he and the Government had to get this through but that just highlights an ongoing dilemma that New Zealanders are facing every single day more and more often in terms of the select committee process: there seems to be no time for consultation. There seems to be no time to listen to real New Zealanders. As it turns out there was no time for the Minister’s own department. There was no time for the Minister’s own department to do a detailed analysis of the cost-benefit and what the pros and cons of this legislation would be because it has been so rushed. The Inland Revenue Department said it itself.There was a statement from the Minister that said that the intent is to capture those who are evading their obligations to pay tax but what we are not being told about are the unrealistic demand-side pressures that we are seeing from overseas investors coming in to this country and artificially inflating the prices of the property market. It is a “waste of time” tax anyway. It is going to be the “dim-line” test which will achieve absolutely nothing. The experts on tax in New Zealand have said that it will achieve nothing. New Zealand First says that it will achieve absolutely nothing. This bill does not help us to understand New Zealand’s residential property market and where the pressures are.The Minister himself said that the Inland Revenue Department was ignored in terms of its advicegiven. The Inland Revenue Department said that there was no reason to exempt main homeowners from the requirements. There are too many loopholes already and so to exempt main homeowners and buyers—it has been raised so many times on this side of the House just pointing out the reality of the situation. The information is already there; it is not an extra collection of anything. It is simply a consolidation of that data so that we understand the property market. It would not increase compliance costs. The definition of “main home” is the place of residence with which people feel “the greatest connection”. Where on earth does that come from? There is no precedent in any legislation for that terminology for that definition. And this Government talks about reducing compliance costs and not wanting to confuse people. Goodness’ sake! This new definition which comes out of nowhere will do that very thing. It will confuse everyone and it will in fact confuse pieces of legislation that are trying to achieve some objective which New Zealand First suggests will not be achieved at all.The Minister spoke about money-launderers. This bill will not help the Inland Revenue Department to identify or do anything with the money-laundering issue that New Zealand has. Funding the police properly might be a good start to that but that is not what we are here to talk about today. But unfortunately I have to disagree completely with my Labour and Green colleagues—this bill does not start us down the track. This bill starts us down a pathway that is not so much filled with potholes and crevices; this bill starts us down a pathway that goes all of 2 feet and ends in completely empty air. Mr Bishop spoke about the bill being well intentioned and well meaning. Perhaps he did not actually read the bill. This bill dodges the whole point of the legislation around trying to identify what the problem is and how we address it because we know that foreign investors—not new New Zealanders but foreign investors—are creating a real problem in terms of young Kiwi couples for example wanting to buy their first home in Auckland.All New Zealand First wanted was a comprehensive register so that we could have a meaningful debate and discussion on that problem. We know it is a problem. Mainstream New Zealand economists know it is a problem. But this Government refuses to allow for a meaningful compilation of data so that we can have a meaningful debate about it. It does not even actually achieve the National Government’s mangled attempt at the objective in terms of identifying who these investors are because there are so many loopholes—which I will get on to in a moment—that anyone can drive through them. Then even if the legislation did what it said it was going to do we come to the brightline test—which is better termed a “dim-line” test—which will achieve nothing in terms of collecting a tax or dampening down the Auckland property market. Mr Bishop speaks of people worrying and misinterpreting the legislation around their being taxed for their personal homes and yet National refused to give New Zealanders a good and meaningful consultation period in the select committee process. It is just an overall farce.This Government continues to deny the demand side of the equation. Government members keep talking about a lack of supply but we know that demand for Auckland property is huge and it is not just Kiwis playing in that market. We have 60000 to 70000 new immigrants coming into New Zealand but apparently only 10000 to 12000 of them are actually skilled labourers those new Kiwis whom we actually need to help grow this economy. This Government is deliberately missing the point. This is a National Government that is led by a global trader. It is adamant and it insists on allowing the rest of the world to buy up our productive land our assets and our homes. We know why everyone around the world wants to buy our land but why is this Government so insistent on selling it off and allowing it to be sold off to foreign investors? It talks about investment but it is not an investment in New Zealand. I just wanted to point out to the Prime Minister that they do not let this happen in Hawaii. To buy land to buy a residential property in Hawaii you not only have to be an American citizen but also have to prove your heritage to the Hawaiian whakapapa—your background there—in order to buy land there. So it just does not make any sense.New Zealand First wants a full and comprehensive register so that New Zealanders can know the truth about this situation. This bill lacks substance. It is full of so many loopholes that although New Zealand First supported it through the first reading to select committee so that we could have a robust debate and flesh out the issues none of those were addressed. In fact it has become even more vacuous and so New Zealand First cannot support this bill. Thank you.ANDREW BAYLY (National—Hunua): It is a pleasure to be talking on this Taxation (Land Information and Offshore Persons Information) Bill. I think that this is a very good piece of legislation. In fact I think that this is a very smart piece of legislation and I am pleased to see that many of the Opposition parties are actually supporting it. The reasons why I believe that this is a good piece of legislation are fivefold. The first one is that—Fletcher Tabuteau: Oh goodness!ANDREW BAYLY: Yes that is right. The first reason is that this legislation reinforces the tax obligations that everyone has but that many people seem to forgetfor some reason. The issue is that when you are in the business of buying and selling houses and there is an intention test and you have a view that you want to buy and sell with the intention of making money then that is a taxable activity and it always has been in New Zealand. It is the same when you are buying and selling shares. Basically what this bill does is say that all property transactions sold within 2 years are captured by this bill unless: one the seller is selling their main home—and we can talk about the definition of that which we have expanded and have been clearer about—two the property has been inherited as part of a deceased estate or three it has been transferred as part of a matrimonial property settlement. So being absolutely clear about this is a very important component in terms of making sure that our tax system in New Zealand is robust transparent and operating very effectively.The second reason why this is a good bill is that it adds to our knowledge about the level and extent of transactions taking place in New Zealand with regard to non - New Zealand residents. I know that the Opposition has been very strong on this matter although it seems to want to apply it to everyone. So where this bill is being quite sharp and smart is that we have focused it on just the right area which is those people who are buying our properties from offshore or who are basically non-residents. What we have set in this bill is the ability for information on those transactions to be shared between the Inland Revenue Department and the Land Information office. There are two steps to it. One is the generic sharing and publicity of information which can be done on an aggregate basis and which will aid in terms of generally assessing the extent to which transactions are occurring with offshore parties. Also at a detailed level there is the ability for information to be transferred at a personal level which for tax purposes will aid in tracking people who may not want to meet their obligations. I think that this a very good thing and I believe the Opposition is very keen to see this take place as well.The third reason why this is a good bill is that it is a pragmatic piece of legislation. What we have done is exclude ordinary New Zealanders from supplying their information to the Land Information office unless they sell a house more than three times in the course of 2 years. This is where we seem to have a point of departure particularly from the Labour Party which wants to make sure that every transaction of every New Zealander is captured by this information and the excuse is that it should not take that much more work. Well the reality is that it will take a lot more work and we do not want to burden ordinary New Zealanders who want to go about buying and selling their houses without the encumbrance of all the issues that we want to impose on people who are non - New Zealanders. I think that is a fair and appropriate exclusion because at the end of the day many New Zealanders buy houses only a few times in their lifespan and we do not need to be watching and monitoring them like Big Brother.The fourth thing about this bill is that the select committee has considered carefully the implementation issues. The information is collected at the time of the conveyancing by the person responsible for managing that conveyancing. We had a number of submissions on this issue during our select committee hearings. Generally the conveyancing industry is happy with that obligation. We have been careful about the liabilities so we have made sure that the person doing the collection at the point of conveyancing is not encumbered with undue liabilities. What happens is that we have got a professional independent party collecting the information which is then supplied to the Land Information office.Finally the fifth reason why this is a good piece of legislation is that it meets our international obligations—principally relating to money-laundering. For all those reasons I believe that this is a bill that we should be supporting and that it is a good piece of legislation. No doubt when we talk about the next piece of legislation to be introduced into the House regarding brightline tests this is going to be a composite package to deal with this issue. Thank you very much.Mr DEPUTY SPEAKER: I call Eugenie Sage—a 5-minute call.EUGENIE SAGE (Green):Tēnā koe Mr Deputy Speaker. I am pleased to take a brief call on the Taxation (Land Information and Offshore Persons Information) Bill. We have heard at length from Mr Bayly and Mr Bishop about why the Government did not take the advice not only of the Inland Revenue Department but of tax specialists like Ernst and Young and is insisting on making this legislation more complicated creating potential loopholes and potentially increasing the compliance costs. Mr Bishop said that the Government did not want to increase the volume of information that people would have to provide and it did not want people to have to worry about whether they would be taxable and that was the reason for rejecting the Inland Revenue Department’s advice that this requirement to provide IRD numbers should apply to all transactions. It is a basic principle of tax law that it should be clear. But what we are getting here as Ernst and Young described it is “a confusing mix of tax immigration and overseas investment concepts which are likely to give rise to a number of technical and practical issues …”.The bill is a mishmash. Because the Government is rushing the legislation through—wanting to get it passed by 1 October because that is when it wants the new brightline disposal test for residential properties other than the taxpayer’s main home to apply—it is failing to take into account all of the concerns of submitters. It is a poorly drafted bill. There have certainly been some improvements at the Finance and Expenditure Committee but those improvements are not enough. The fact that there is this exemption for a main home as Ernst and Young said “may simply reinforce [the] ignorance and the lack of appreciation as to when there might be an income tax liability …”. The definition of “main home” as being somewhere that a person “has the greatest connection” with is just another example of the law being poorly drafted. That term “greatest connection” is not something that is used in tax law and it is not used in New Zealand law generally so there is no common or accepted understanding of what it means and how it should be interpreted and applied. Also when we are dealing with tax law something like that is far too subjective. Yes the Government is saying that there will be advice provided but this “greatest connection” test is likely to lead to disputes about whether someone has the greatest connection with the home that they spend the most time in or has the greatest connection perhaps with a holiday home because they have got much more of a heart connection with the place where they spend their holidays because these are much more memorable. When you have got subjective tests like that in tax law it is not good law. It is going to lead to disputes; good income for tax lawyers potentially but it is not clear.The Green Party is nevertheless supporting the bill because it is a very small step—and taking into account Fletcher Tabuteau’s comments—to getting tighter controls on overseas investment and the offshore purchase of New Zealand land and a bit more information on that. Of course the Green Party has been calling for a register of purchasers of New Zealand land by offshore investors for some time because it is ridiculous that we do not know that—that in this the 21st century we cannot have a register that is publicly available so that there is certainty around the percentage of New Zealand land that is being alienated to offshore interests. So although we support the objectives of the bill about obtaining more timely information from people who are buying and selling land and about improving compliance with the land sales provisions and tax legislation the unclear exemption in the bill the number of loopholes and the subjective nature of some of the drafting will not reduce red tape which this Government says the bill is about and it will not provide for better government because it is a mishmash of concepts and it is likely to increase the compliance costs because it is confusing.Mr DEPUTY SPEAKER: Phil Twyford—a 5-minute call.PHIL TWYFORD (Labour—Te Atatū): As my colleagues have pointed out Labour is voting for the Taxation (Land Information and Offshore Persons Information) Bill but as with so much Government legislation we are voting for it because it is better than nothing—but not by much. This is typical of the kind of housing policy legislation and initiatives that we have seen from this Government while Nick Smith has been the housing Minister. He is the “Minister of Grudging Half Measures” and this is a classic of the genre.We have got two main criticisms of this bill. One is that it is incoherent that it is shot through with loopholes and that it falls well short of what it could have done. The other main criticism is that this bill is pretending to be something that it is not. This bill is the National Government going into contortions trying to convey to the electorate of New Zealand that it is doing something about the housing crisis. But as with so much legislation that this Government brings to the House it is simply there to convey the idea that it is doing something.New Zealanders desperately want to see action on non-resident foreign buyers bidding up the cost of New Zealand houses and contributing to young Kiwi families being locked out of the housing market. Under that Minister Nick Smith we have got the lowest rate of homeownership in 64 years and he is responsible. He is responsible for that. Let us think for a moment about what New Zealanders want to see. A recent New Zealand Herald poll told us that 77 percent—77 percent—of New Zealanders want to see Labour’s policy of a ban on non-resident foreign buyers buying existing houses implemented. Only 15 percent support the National Government’s policy; 77 percent support Labour’s policy of a ban on foreign buyers buying existing houses. Fifteen percent of people support Nick Smith’s policy. 3 News did a poll in July last year that showed that 61 percent of New Zealanders support a ban on foreign buyers 54 percent of National Party voters support a ban on foreign buyers and 82 percent—82 percent—of New Zealanders support a register on foreign property ownership. That is why this bill is before the House: the polls got so bad on this issue for the National Government that it decided that it had to do something. Kiwis are sick and tired of seeing their land and housing sold out from under their feet under this National Government.The National Government however does not want to see a proper register of foreign property ownership that is transparent and that is clear because it does not trust New Zealanders with the information. It does not want New Zealanders to see it. That is why we have got this bill because it wants some half-hearted weak-kneed bill that does not actually collect the data that is needed. And it will not be data that is actually made accessible and transparent to New Zealanders because Nick Smith wants to release his half-hearted data selectively—for spin for his own political reasons—because he does not trust New Zealanders with that information.As Julie Anne Genter said earlier in this debate all over the world particularly in Pacific Rim economies offshore money is overheating domestic real estate markets. That is why the Australian Government has a policy like Labour does of banning non-resident foreign buyers from buying existing houses. That very successful policy—that very successful policy—is channelling Chinese investment into the building of apartments in Sydney and Melbourne something that it would actually be quite nice for us to have in Auckland right now. Tony Abbott has got that policy. David Cameron has the policy of a fully searchable and transparent register of foreign property ownership because he is concerned about money-laundering. But this Government is not.I think it is interesting to ask why the National Government is taking this position. Why is it being so blind to the desires of New Zealanders for some controls on offshore ownership in our real estate market? I think there are two reasons. You can find one reason in the recent report in the New Zealand Heraldof a couple who were on the electoral roll as students but who had amassed $26 million worth of property in Auckland. And do you know what that same report said in the New Zealand Herald? It said that the couple donated $370000 to the National Party’s last election campaign. That gives you a little clue as to why the National Government is not interested in shutting down this mile-wide loophole—Mr DEPUTY SPEAKER: Sorry to interrupt this member but his time has expired.ALASTAIR SCOTT (National—Wairarapa): What a shame that contribution from the previous speaker Phil Twyford. He is not interested in land information or offshore persons information; all that he is interested in is wanting to ban the Chinese. He talked about foreign owners and foreign investors but really he just meant the Chinese. He wants to pick on that group and to pick them out despite the fact that these people with Chinese-sounding names have been in the country for generations—they have been here since the gold rush.For him to speak as he has done is just a disgrace because this is about gathering facts not gathering hearsay evidence—not going to one real estate agent and gathering an opinion piece from one selected piece of data. This is about real information around who is buying property in New Zealand. There are two very simple requirements if you are an offshore person: an IRD number and a bank account. It is very simple with a home exemption. It is a very simple piece of legislation and I commend this bill to the House.Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): It is indeed an honour—and a responsibility in fact—to speak on this piece of legislation. I have to say that it is with some concern that I see we are supporting the bill. I guess half a loaf is better than none.I was just up on the Kāpiti coast today talking about the Pike River tragedy and I did a little bit of homework and referred back to notes on the 1992 health and safety legislation. You see it was a proposal by the then National Government to step in and provide a new regime that would give better security in health and safety. I do draw some parallels with this piece of legislation because the Government is pretending once again to come in with a new regime of accountability and accounting for what is a growing level of overseas ownership of New Zealand homes and in fact farmland as well.We cannot lose sight of the fact that it was Labour—and we are very proud of itin fact—that stood up back in the 1930s for the right to a home for each and every New Zealander. And although a lot of time has passed and there will have been many many hours of debate—millions of hours I guess—in this Parliament we are now in the situation in 2015 where the Labour Party is having to battle for the right to protect New Zealanders’ access to homes. This Government would have sat on its hands and done absolutely nothing if it had not been for my colleague Mr Twyford being prepared to take it on the chin and expose the growing reality of investment levels into the Auckland housing market in particular and the flow-on effect right throughout the country.The Government hastily rushed around like chooks with their heads chopped off trying to work out a way of coming up with a piece of legislation that might look OK that might do something but that would not offend any of its mates who were happy to come and invest their millions and millions of dollars—hundreds of millions actually—into the New Zealand real estate market.The drivers of that investment are still here. That is there is no capital gains tax in this country—no capital gains tax. And until that is resolved there will be ongoing interest in investing in our country. That must be put on the table. Until we know accurately who owns the houses now who is trading the houses and who is interested again we will be in the dark and will leave the door open for opportunistic investors who have the option.In Europe if you want to deposit your money in the European Central Bank you will be paying that bank for the privilege of looking after and securing your money. You will be paying them a fee—not receiving interest but paying them a fee. If you go elsewhere around the world you will see zero or very very low rates of interest. So for anyone with some capital looking for a place to park it New Zealand is a very positive proposition. It has no capital gains tax. It has got interest rates that drive up house prices across the board so that people can afford to pay back their loans on the basis of a capital gain and it is this merry-go-round that is driving up the price of houses in Auckland at an unrealistic and ridiculous rate.What we have got here is a situation that will not in any way be subdued by this token piece of legislation but what does the Opposition have as an alternative? Well we do not have one at the moment. We have put up some very good ideas for the Government that have been rejected. We have put up good ideas and will do so in the Committee stage of this piece of legislation no doubt. But for the moment the best that we can do is to support this piece of legislation but point out the flaws in it and hope that the Government is prepared to make the proper amendments in the Committee stage to give it some real teeth because at the moment it does not have the proper teeth.The confusion over things like offshore or active overseas investors is a bit beyond belief. These things should be very clear. We welcome migrants. In fact we are now welcoming refugees and I welcome that. More refugees today—we welcome these people into the country. So people are coming in who want to reside in and commit to New Zealand and we want to provide them with an opportunity to buy a house at an affordable rate. But if you want to park your backside in Zurich or in Berlin or in London or in Chicago or in Shanghai then we say that we do not really want you. We do not want you inflating our market to the point where New Zealanders can neither buy nor afford to rent homes. That social dislocation and the uncertainty caused by that have huge flow-on effects.Although the members of the National Party will jump up and down about the costs of social welfare the costs of special education and what they are having to do through so-called charter schools and the rest—all of these things can be improved and can be assisted by providing people with a home with access to a house that they can then turn into a home. When we have got legislation that does not even define accurately a main home that does not even clarify exactly whether a person is offshore or onshore or whether they are a Kiwi or not I say to you that the register the Government is going to form here will not be worth the paper that it is written on.We need decent legislation in this area. There is no doubt about that. We need homes now as much as we did in the 1930s. I say that everyone in New Zealand should read carefully the minority report of the Labour Opposition on this bill pointing out that we do support it at this stage but pointing to the flaws in it.We believe that all parties anyone involved in a residential property transaction—because after all you have got to pay the lawyer; you have got to go and check your land information memorandum with the local council; you have got to go through all this rigmarole to buy a house—should have to meet the same requirements. If there is an overseas tax number that should provide information as part of the transaction as well. That is so that people will be identified by who they are and where they live. They do not necessarily have to state what they have bought the property for. That may become evident because if they live in Zurich as their main home it is unlikely they will also be buying a property here in New Zealand for their main home. That would then deem the person to be an investor and I guess would add weight to the view that Labour has that the doors are too open.Access into the New Zealand property market has been encouraged by the National Government because it does not care where money comes from; it just wants to see money. Under the current structure that it has for this economy the money flows to the people at the top and makes it harder for those people at the bottom. That kind of Tory philosophy is part and parcel of every piece of legislation that this Government passes in this House. Let us not forget that. This piece of legislation does nothing to stop that flow or the division that is occurring in this country between those people who have the capital—those who can invest in rental properties assisted by overseas investors—who then come in and pay a bit more and then we give them a bit of profit and allow them to go. And so the merry-go-round continues.But what about the young Kiwi family? What about these refugee families that John Key is going to let into the country? What chance will they have of buying a house and turning it into a home if the Government continues to have an open-door policy for foreign investors? This piece of legislation is tokenism. It is tokenism to try to get New Zealanders who are struggling to buy a home to believe that the Government really does care.Hon Dr Nick Smith: Well why don’t you vote against it? Have some courage and vote against it.The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!Hon DAMIEN O’CONNOR: That member down there is calling for more land in Nelson—a ridiculous statement he made on the front page of the paper down there. He made a fool of himself. The Government is making statement after statement that is wrong and that is misleading in this whole area of homeownership and security for New Zealanders. This piece of legislation will be exposed for what it is but the Opposition must support it as one small step in the direction in which we need to go—that is accurately identifying who is buying houses what they are buying houses for and what that is doing to prevent New Zealanders having their own homes.TIM MACINDOE (National—Hamilton West): I thank members who have spoken in support of this sensible measure and I commend this bill to the House.A party vote was called for on the question That the Taxation (Land Information and Offshore Persons Information) Bill be now read a second time.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Bill read a second time.Taxation (Bright-line Test for Residential Land) BillFirst ReadingDebate resumed from 27 August.The ASSISTANT SPEAKER (Hon Trevor Mallard): On the last occasion the House was considering this bill the Hon Hekia Parata was speaking on behalf of the Minister of Revenue and she has 9 minutes and 30 seconds remaining.GRANT ROBERTSON (Labour—Wellington Central): I raise a point of order Mr Speaker. Just in the context of this point of order I hope you will allow me to do this. I see that the Minister who began the speech is not in the House and I draw your attention to Standing Order 287 which says that “The member moving the bill’s first reading must on the commencement of that member’s speech—(a) nominate the select committee to consider the bill” and then talk about any special powers or instructions that are required. As I recall I was in the House when the Minister was about to do that and was I suspect in the middle of the referral motion. It was certainly one of those referral motions that have both a shortened time frame and also a request for the House to allow the committee to meet when the House is sitting and on Fridays and so on.I just wonder Mr Assistant Speaker—and I seek your guidance on—what happens when that Minister who is the person noted under Standing Order 287 is no longer here and whether or not that Minister has to complete it. Can another Minister complete it? I am unaware of whether this has happened before but it seems like a very unusual situation particularly when I am not even sure whether the Minister had completed her introduction of the bill.TIM MACINDOE (Senior Whip—National): I think the important thing to note here is the question has not yet been proposed. It is true that the Hon Hekia Parata did commence the speech on behalf of the Minister. McGee is very clear that a Minister must introduce a bill if he or she is responsible for it unless he or she is unable to do so. That was certainly the case the last time this bill was being considered but it had literally just commenced. The Minister in charge of the bill is now here. The question has not been proposed and I submit therefore that the Minister in charge of the bill must be the person who continues to move this particular part of the first reading.GRANT ROBERTSON (Labour—Wellington Central): I understand the point that the member is making but I think he has slightly missed the point I was making which was that it is not a matter of who was or was not here at the time. Minister Parata began this bill. She moved what is specifically required under Standing Order 287 and that is my concern. I am not sure that we had even completed that. We are now going to have a different Minister stand up and I think we could be outside of Standing Order 287. I perhaps invite you to consider a ruling on this matter. I am not sure whether it has been considered before but clearly we have a specific Standing Order that requires the member moving the bill—that member was Minister Parata who is no longer here.The ASSISTANT SPEAKER (Hon Trevor Mallard): Is there any further comment? All right. I am sort of slightly lucky in that I was aware of the fact that this possibility would occur. If members will stay with me for a short time—Hon Ruth Dyson: We don’t really have a choice!The ASSISTANT SPEAKER (Hon Trevor Mallard): Well the member if she interrupts again will have no choice but not to. Ministers are generally entitled to act in the House on behalf of absent Ministers. It is long established in McGeeat page 175 and also in Erskine May so it is a tradition in Westminster parliaments.In this instance the Minister moved the first reading of the bill on behalf of the Minister in charge of the bill and that speech was interrupted. The same event arose in the House previously. In 2007 there was a Minister who moved the third reading of a bill on behalf of the Minister in charge of the bill the debate was interrupted and when it resumed in fact a third Minister continued the speech. It was the Weathertight Homes Resolution Services (Remedies) Amendment Bill. Whether members might like to think about the success of it—but we will leave it at that. People can see Hansard Volume 641 at pages 11251 and 11298. However this event went unchallenged. Other than giving the call to the Minister there were no Speaker’s rulings on it.So I think the first point that has to be ruled on is whether the Minister acting for the Minister in charge had in fact started her speech and Mr Robertson was marginally incorrect in that she had completed the paragraph with regard to the reference to the select committee and the restrictions. That is all she had done. So she had moved the bill and indicated the committee and the conditions with regard to the report back and speaking times that the Minister in fact was recommending to the House. If one does look at Standing Order 287 it is very clear that the Minister had started her speech because it says that the member moving the bill’s first reading must do so on the commencement of that member’s speech. So as to the question of whether the speech had started yes it had started.The next ruling that is necessary is whether a Minister can complete a speech that has been started by another Minister. It is not a matter that is referred to in the Standing Orders or in Speakers’ Rulings or in McGee or according to the relatively quick research that I have done in Erskine May. Strictly speaking having the Minister complete their speech is not necessary. The required motion and the conditions have in fact been put before the House. The Minister who started the speech could complete it but that would require the ridiculous situation of the Minister in charge of the bill having to leave the House. Another option available to the Government and a more likely one would be for the Government to abandon this speech or the rest of this call and the Minister to take a call later in the debate.A Minister’s speech in moving a first reading is something that is very important. Speakers have traditionally treated leniently such matters as reading out speeches because it is a matter of getting things on to the record of Hansard on behalf of the Government—probably more so than any other speech. There is also the question of what is before the House now. The question has not yet been stated as Mr Macindoe had pointed out and that occurs at the end of the speech.So the question of whether a Minister can complete a speech started by another Minister is one that I think should be considered by the Standing Orders Committee. I think it is something that we at least need a Speaker’s ruling on and possibly some clarity with McGee and/or Standing Orders. But in the interim I am not prepared to rule that Ministers cannot act for each other in this way and therefore the Minister effectively acts for himself in completing the speech started on his behalf by another Minister. I call Roger McClay.Hon Members: Todd.The ASSISTANT SPEAKER (Hon Trevor Mallard): Oh Todd McClay; one of them.Hon TODD McCLAY (Minister of Revenue): Thank you Mr Assistant Speaker and I thank you for the compliment. Can I also thank you for your ruling and agree that it is something that needs to be looked at in greater detail and—The ASSISTANT SPEAKER (Hon Trevor Mallard): Yes but the member will not refer to it.Hon TODD McCLAY: I thank all members for their understanding on this.Continuing with the speech on this important issue the Government is committed to ensuring fairness in the tax system and making sure that everyone pays their fair share of tax. This bill continues that focus. Its objective is to improve compliance with the current tax rules for land sales. The current land sales rules can be difficult to enforce particularly when they are based on a person’s intent. In this case for the gains made from the sale to be taxable the Inland Revenue Department has to be able to determine that a person bought a property with the express intention of selling it for a profit or property speculation. The Inland Revenue Department applies its current intention test which makes gains from the sale of land purchases with a purpose of intention of disposal taxable. That test stands. The Government is not proposing any changes to that.What this bill proposes is a simple but effective measure for the buttressing of that test. The brightline test will require income tax to be paid on any gain from the disposal of residential property that is acquired and disposed of within 2 years subject to some limited exceptions. The proposed brightline test applies to only the disposal of residential land. It does not apply to land used predominantly as business premises or farmland. Residential land is defined as land that has a dwelling on it land for which the owner has an arrangement to erect a dwelling or land that because of its area and nature is capable of having a dwelling erected on it.The brightline test will apply to gains from residential property that is acquired on or after 1 October 2015 and disposed of within 2 years. The 2-year period for the brightline test runs from the date of the acquisition of the land to the date of disposal. The date of acquisition is the latest date on which the person acquires an estate or interest in that land. Generally this will be the date that the title is registered for the purchase of that property. An additional rule applies for off-the-plan sales. The date of disposal is generally the date that a person enters into an agreement to sell the property. When the disposal is other than by sale—for example by gift—the date of disposal will be determined by current tax rules.The objective of the bill is to target people who seek to make a profit from property speculation. There are therefore three specific exemptions to the brightline test. These are for the disposal or transfer of property that is the main home of the owner inherited property and property under a relationship agreement. A property will be the “main home” of the owner when it has been mainly used for most of the time that the person has owned that property as their residence. Where a person has two or more homes their main home is the property with which the person has the greatest connection. If the property is owned in a trust the main home exemption applies when the dwelling is the main home of a beneficiary of the trust subject to limitations. A person cannot use the main home exclusion if they have already used the exclusion twice in the previous 2 years.Members may recall that this brightline proposal was announced in this year’s Budget as part of a suite of proposals to improve property tax compliance along with the requirement that a New Zealand IRD number is required as part of the land transfer that offshore persons will need a New Zealand bank account before they can get an IRD number in order to buy a property and that non-resident buyers and sellers must also provide their foreign equivalent of an IRD number from their home country. Together these measures and the proposed brightline test introduced by this bill will help improve tax compliance with the tax rules for land sales. It is with pleasure that I commend this bill to the House.Dr DAVID CLARK (Labour—Dunedin North): I think it is deeply symbolic the way in which this bill has come to the House and the way in which it has landed here unsure of its heritage and unclear on its passage. The Minister of Revenue has delivered some rhetoric around the need for change. We all know well the problem of housing speculation in New Zealand and certainly anyone buying a house in Auckland is well aware of the challenges of getting on to the property ladder for someone on a median income.The bill is a political measure and I have to say somewhat cynically timed with a 2-year run-in that ends about the time of the next election. The Government if it passes this measure will be able to say that it believes that it is working but will not know for sure until after the next election. It can say that it has acted but the evidence will not yet be collected on whether or not it is in any way effective.We on this side of the House see it as a rushed and ill-conceived measure. Forty-one percent of sales are to property investors worth billions of dollars and the Minister of Finance has admitted that he does not even know what effect it will have. That is what we are coming to expect from this Government—a Government that we see more and more often not being straight with New Zealanders. It is a Government that says one thing when New Zealanders know the situation is different. We saw earlier today my colleague Grant Robertson hold up a graph from ANZ about the economy which saw a deep trough at the end as the graph headed downward—in fact the member has it here with us today—The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!Dr DAVID CLARK: He speculated that perhaps the Minister was looking at it upside down because Mr Key had said it was a positive result for New Zealand. So that lack of clarity that desire to be seen to be doing something when in fact very little is happening is what we are seeing again in this bill. It is designed to look like it is doing something about the rampant property speculation that we are experiencing as a country and about the issue of offshore buyers. It is designed to look like it is doing something when in fact it will do very little at all.The bill sets up an incentive for property speculators to hold on to a property for 2 years and 1 day and to then onsell if they wish. It may postpone the effect but it will not affect land bankers and it will not affect those who are holding land for the purpose of speculative gain over time. It will affect only a small group of people and it is designed to affect only a small group of people. It is designed to look like it is doing something without doing very much at all. It invites property speculators to hold on to their properties and to flick them on after 2 years and 1 day.Labour’s policy is very clear on this measure. We would require a person to live here or to build a new home so that the supply issue is addressed. In Auckland we know that there are thousands and thousands of families who do not have a home. There are people living in cars and garages and this Government has cynically allowed that situation to continue creating misery by not addressing the issues of homelessness and the lack of supply of affordable housing and here is a measure designed to make it look like it is doing something without really having very much effect at all.We want this Government to be straight with New Zealanders. I think that New Zealanders are growing tired of rhetoric that is not matched by action. We know that it will not deter the land bankers. We know that it will capture only a small number of “buy and flick on” property speculators. And the test in this has been made even weaker by Cabinet agreeing to exempt New Zealand residents from providing their IRD numbers when buying or selling a house which opens huge loopholes for people to avoid ever being subject to the tax. It is a bill that is being rushed it is a bill that the Minister of Finance says he does not know the effect of and it is a bill designed to look like it is doing something from a Government that is no longer being straight with New Zealanders. It is a Government that is increasingly out of touch if it thinks that New Zealanders will swallow this hook line and sinker and if it thinks that New Zealanders will believe that this is going to stop the problem of rampant housing speculation and foreign buyers particularly in the Auckland market.Treasury documents show that this measure this test is likely to raise only $5 million per year and the reason it is likely to raise only $5 million per year is because of the high level of avoidance that is anticipated. That is what Treasury says. Treasury says it would otherwise gather something like $30 million or $40 million a year were it not for the high levels of avoidance that are anticipated. That is because of a deliberate Cabinet decision and that is the kind of thing we have discovered from this Government. It is a Government that deliberately opens up loopholes to protect the interests that it has always protected and will continue to protect. It is a Government that wants to be seen to be doing something but wants to make sure that it preserves entrenched interests.It is so out of touch with middle New Zealand it is not funny anymore. The Government ruled out in fact a more comprehensive 3-year test purely on the basis that it could be interpreted as a capital gains tax with an arbitrary cut-off period. It did not want to actually do anything. It was explicit about the fact that it did not want to do anything. This is a cynical Government. It is a Government that is out of touch and arrogant enough—arrogant enough—to even spell out the desire to do nothing and think that New Zealanders will not notice or will not care. Well the tide is turning. New Zealanders are growing sick of this arrogant out of touch Government that brings bills to the House dressed up as action when they are cynically designed—designed in the Treasury comments—not to capture what they are set out to do. Loopholes are opened up so that ordinary New Zealanders are captured but those who are speculators can walk right through the loopholes.The Government’s consultation measure was a farce. The regulatory impact statement showed only 14 submissions were received—three opposing and three supporting. Look that is probably three phone calls that were made in a rush saying: “We need some submissions in. We need to be seen to be consulting on this.” That is how cynical this Government has become. This is an issue that will affect thousands and thousands of Kiwi families who will be without a house who will be living in cars and garages and that is how many submissions the Government received. That was a rushed measure and a farce of a consultation.Of course we know that the bill will be retrospective as a consequence of the Government rushing it through. We know that by the time it has finally passed through the House it will be retrospective because it comes into play on 1 October—as I said about 2 years before the next election; a period long enough for the Government to be able to say it is doing something without evidence yet being collected to assess whether the measure is effective in any way whatsoever.We know of course that overseas countries have measures in place to stop property speculation. We know that in China you cannot buy land at all as someone who is not resident. We know that in Singapore there are taxation measures to ensure that overseas people cannot buy without paying an additional sum of money. We know that in parts of Australia there is the policy that the Labour Party has that you must be resident or build a new house rather than purchase an existing one and deprive a resident family of a house in a constrained supply environment.We in Labour will support this bill going to the select committee. It is a half measure. We believe it could be improved in the select committee and we will seek to do that. We will seek to work constructively because these are serious issues that need to be addressed. New Zealanders are sick of a Government that is arrogant enough to bring legislation to the House with such big loopholes with rhetoric wrapped around it. But we know that the issue is serious enough that it needs to be looked at properly in the select committee—addressed improved and hopefully brought through this Parliament in a way that actually has an effect and starts to address the problems in New Zealand that we have because of the housing crisis that this Government in 7 long years has done nothing to address.DAVID BENNETT (National—Hamilton East): That member David Clark just put out new Labour Party policy in his speech. In that speech he said and these are the words that I want all New Zealanders to remember: “You can own a house in New Zealand only if you live here or build a new home.” Those are your exact words. You must—The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!DAVID BENNETT: The member said that New Zealanders must live here or build a new home. What about if somebody owns a home and then decides to go on their OE? Are they still allowed to own their home? Are they allowed to own their own home? If they go away for a weekend go away for a month go away for a year do they still have to own their own home? They have to sell their home under Labour Party policy. The Labour Party is forcing New Zealanders to sell their homes under its approach for this legislation.What happens if somebody goes overseas and works for 10 years in London? If a New Zealand - born person goes to a New Zealand school New Zealand university and all their family are here then goes overseas for 10 years under the Labour Party policy that person has not got the right to buy a house in New Zealand. Under Labour Party policy they do not have the right to buy a house in New Zealand—and that member David Clark is supposed to be Labour’s tax spokesperson! At the end that member spoke about the Australian policy which was “resident or new home”. It is not the same as “live here or new home”. So maybe if we got a decent tax spokesperson for the left we might actually get some reasonable policy coming out of that side. That was his first mistake and that was his worst mistake.But his second mistake was another beauty as well because that member said that holding land for speculative gain is not taxed in New Zealand under—[Interruption] Once you get through the 2 years that member said you are not going to be taxed. Well the 10-year rule has always been there. If you have the intention of purchasing a piece of property with the intention of sale it is taxable—and that member better leave the House now because he knows he has stuffed it up. The reality is that in tax policy in tax law in New Zealand if a person or resident or whatever buys and sells a property with the intention of selling it within 10 years that is taxable. All this legislation does is deem that within the 2-year period it is featuring within the brightline test and will be taxable for those purposes.The Opposition has put up great new policy today: members of this country citizens and residents must live here or build a new home. That is the only way that people can own a house in New Zealand and that is policy that I am sure the Labour Party will come to regret. I am sure the next speakers will try to adjust it in the way that they normally do—through rhetoric in this House.GRANT ROBERTSON (Labour—Wellington Central): That apparently was the chair of the Finance and Expenditure Committee David Bennett offering us his deep insights into the issues facing potential New Zealand homeowners today. It was ironic in his interpretation of the words of my colleague Dr David Clark. He also managed to mis-ascribe his portfolio. Clayton Cosgrove a close friend of the chair of the Finance and Expenditure Committee is in fact the Labour Party’s revenue spokesperson. I am sure you will want the record corrected in that way.Chris Bishop: I thought it was David Clark.GRANT ROBERTSON: No no no. So that is the thing. It is Clayton Cosgrove Mr Bishop. Mr Bishop is also another close friend and colleague of Clayton Cosgrove.This bill is once again following on from the last piece of legislation and a fitting epitaph I hope to this Government which is that it wants to be seen to be doing something but it has to be the least that it can get away with—the absolute bare minimum that it can get away with. The pressure was building on the Government leading up to Budget 2015 about the fact that it had failed to do anything about a housing market out of control about a crisis in terms of New Zealanders being able to buy their own homes about the cost of housing in Auckland going up by 18 percent a year and then 20 percent in another year and the Government was on the back foot.We know now that there was nothing in the Budget to actually do anything about that so it rushed through a series of measures including this one to make it look as though there was something there. We know that because there was nothing in the Budget documentation. When the Budget documentation got released in July there was absolutely nothing in it about this. You know the normal process of ideas that are floated around Budget time—about now actually for next year’s Budget. Those ideas will be being debated within Government agencies road-tested and looked at by Treasury. This was not there because the Government had not yet decided to do it. It was a last-minute rushed job and typical of the way that this out-of-touch Government goes ahead.So what we are left with is a tentative and incremental approach to a deep-seated problem in terms of the way in which New Zealand’s housing market works. It is not going to do what the Government says it will. Bear in mind that this is not the Labour Party saying this; this is actually Treasury saying it. Treasury says that the test is likely to raise only $5 million per year due to high levels of avoidance. When Treasury was asked what it would be without that avoidance it said it would expect a revenue of somewhere between $30 million and $40 million a year. So it is half-hearted—it is less than half-hearted. It is quarter-hearted eighth-hearted. That is as good as it gets with this Government when it comes to putting forward this kind of legislation.When you ask yourself why that might be why the Government would go in such a half-hearted way it is interesting to look at the comments made by the New Zealand Property Investors Federation when this legislation was put forward. The federation itself sort of half-heartedly said that it did not really think this was a very good idea but then it came down to the end of it and said that “It is unclear if the move will have any effect on house prices.” This is the Property Investors Federation. It said: “Many New Zealanders believe that speculation in the property market is rife but there is no data to back up this belief. If property trading is rife and the cause of house price growth as many suspect then this announcement should reduce property prices. If speculation isn’t a significant contributor to house price increases then the effect will be negligible.” So the Property Investors Federation is delighted because the straw man has been set up. The straw man has been set up. It will not deliver because of the fact that there is such an easy way to avoid it and then the Property Investors Federation will say: “Well we said if this doesn’t reduce property prices therefore there isn’t a problem caused by speculation.”It is all part of the same way of going about this legislation. The Government and its good friends in the Property Investors Federation are setting this regime up to fail. That is as simple as it gets. If they were not if the Government was really serious about this why would it allow itself to propose a measure that its own officials say is going to raise only $5 million per year—$5 million per year—a drop in the bucket of the amount of money being made by property speculators? Whatever we in this House decide the definition of that is there would be no member in this House who would try to claim that the benefit from speculation is only in the 5 percent area.The intention test exists. We all know the intention test exists but the fact is that it is honoured barely in the breach. The Inland Revenue Department has come before select committees in the past and said: “Look we’ve got this. We’d like some more resources to pursue it.” More resources have been given to the Inland Revenue Department to pursue it and yet it is an ineffectual measure. The National Government knows that. That is why it has been forced into a position to do this but it is a particularly weak measure.It is particularly weak too when we learn from Auckland that around 41 percent of sales—and the Quotable Value data tells us that—were to property investors. Forty-one percent of sales were to property investors. I have no doubt and the Labour Party has no doubt that this is forcing up prices. This is pushing new first-home buyers out of the market. We do need to do more and we need far far more than this kind of half-hearted measure. When it was brought into place the Minister of Finance Bill English was quizzed repeatedly about the effect of it and he said that he did not know. He was not sure. He did not know how it was going to work did not know whether it was actually going to achieve what it set out to achieve and he kind of shrugged his shoulders in the way that Bill English does when he has been made to do something by John Key and the Crosby/Textor polling people. Bill just kind of says: “Oh well we’ll let it happen. We’ll put it in place because it’s going to scratch the political itch that’s out there.” Bill is actually a relatively upfront guy. He could not defend it. He could not get up there on Q+A and say yes—The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am just reflecting on what the member said. The member cannot say that a Minister was made to do something by an outside polling company. The member will withdraw that comment.GRANT ROBERTSON: I withdraw. Bill English heavily influenced by information that he has received decides that no he is going to shrug his shoulders and go ahead with something that he does not believe in—and I do not think he does. I think actually some of his colleagues might think they will get away with this but they will not.So the loophole that is here which we need to focus on too is the 2-year brightline test. This has been raised by a number of people. By having a 2-year brightline test all we do is move that arbitrary line a little bit. We say: “All right. You have to hang on to it for 2 years.” We have been told this by people involved in the property investment industry that quite clearly people will wait out the 2 years wait for their 2 years and 1 day and then move on to sell. We know that the intention test is not working so therefore 2 years will come up and people will be able to come up with whatever excuses they already use when the Inland Revenue Department comes knocking and then they will move on to sell their properties. So simply moving the arbitrary line to 2 years is not going to deter the land bankers and the small number of people who actually just work as short-term “buy and flick on” speculators.We need a much more comprehensive regime than this. We need a regime that addresses the overall problem of speculation. We need to ensure that those who do not have an intention to come and live in New Zealand are not encouraged to simply speculate in properties here. We want to ensure that people who make a commitment to live in New Zealand wherever they are from are given the ability to buy their own home. That is part of the New Zealand dream that all of us I believe in this House have some desire to protect. But doing a half-hearted measure like this does very little for that. We need a far more comprehensive policy than this.I want to finish on something that I will come back to at another stage in this debate. It is the question of when and for how long this bill will be debated. This bill because the Government is so hopeless and incompetent when it comes to managing the business of this House has to be reported back in very very short order to even remotely look like it might pass in time to be put in place this year. Bear in mind that it has to be retrospective now. It is going to be retrospective legislation. The Government cannot avoid that now. Why bother with such a short report-back time? Why not actually take the time to get this piece of legislation right rather than rush it through just as the policy thinking has been rushed through?This is a half-hearted bill designed to make the Government look like it is doing something when it is not. We will support this bill going to the select committee propose changes and amendments and try to influence this Government to come up with something better. But the Government’s failure to produce something after 7 years speaks volumes about whether it really wants to do anything.CHRIS BISHOP (National): This is an important bill. It seeks to improve compliance with current land sales rules in the Income Tax Act by supplementing the intention test—that we all know exists as Grant Robertson has pointed out—with an objective brightline land sales test. This will require income tax to be paid on any gains from the sale of residential property within 2 years of purchase but with some exceptions—the main one of course being when it is a person’s main home.In my short contribution to this House this afternoon I want to just run through some points in rebuttal of what we have heard from members opposite. First is the point made by Dr Clark which was repeated by Grant Robertson that this bill is all about appearances—that it is not actually about doing anything about housing affordability. We reject that on this side of the House. This is a serious proposal that supplements the test that is already in the law. It does not go so far as to introduce a comprehensive capital gains tax but it is a serious proposal that will make a difference to New Zealand.The more laughable claim that we heard from members opposite was that Labour Party policy is clear on this. Members opposite have been very careful to dance around any commitment to introduce what their policy was at the 2014 election and their policy at the 2011 election which was a comprehensive capital gains tax. Who knows what Labour Party policy is on this? It is certainly not as Dr Clark said very clear. Labour members know that that policy was put to the electorate in 2011 and 2014 and rejected comprehensively every time. In fact the current leader of the Labour Party won the leadership by promising not to introduce a comprehensive capital gains tax as Labour Party policy. So who knows where the Labour Party stands on this issue?The second assertion made by Dr Clark that is wrong and which was repeated by Mr Robertson as well I think is that there are loopholes in this piece of legislation and in the companion piece of legislation which is the bill that we were just considering. This is the brightline test bill—the name of the previous bill escapes me.Hon Member: Land information.CHRIS BISHOP: The land information bill—thank you very much.The ASSISTANT SPEAKER (Hon Trevor Mallard): And offshore persons information.CHRIS BISHOP: The offshore persons information bill—that is the companion piece of legislation. The assertion was made that there were loopholes in this because neither piece of legislation requires all New Zealanders to supply IRD numbers when they transact property. In the debate on the previous bill I pointed out the very clear reason for this. It is that there is an exception in both pieces of legislation for a person’s main home. So it is the view of the Government that it would be needlessly bureaucratic to ask New Zealanders to supply their inland revenue information to the Inland Revenue Department and to Land Information New Zealand when they are going to be exempt from the legislation. The people who are not exempt from the legislation have to supply their information but the people who are exempt should not have to. That seems fairly logical.Then we hear that this bill and its companion piece of legislation are all about—in the words of the Opposition—preserving entrenched interests. Mr Twyford right at the very tail end of his speech almost went so far as to impute all sorts of nefarious allegations as to the motives of this side of the House. We reject those. This is a Government that in Budget 2010 cracked down on investment property. It has put millions of dollars into enforcing current tax law with significant pay-offs. Budget 2014 put more money into cracking down on current tax law.Finally and just briefly to close off my contribution we hear the assertion from members opposite that this is a Government that has done nothing about housing affordability. That is absolutely incorrect. Look at what we are doing in Auckland with special housing areas and the improvement in building consent rates which we are hearing about at the moment. Look at the HomeStart scheme that the Government has introduced which I know is very popular in the Hutt Valley. Look at what we are doing to develop Crown-owned land.Phil Twyford: It’s made matters worse.CHRIS BISHOP: Here we go. Phil Twyford who spends most of his time rampaging around Auckland demonising Chinese migrants to New Zealand will soon stand up and give a typically incoherent contribution to the debate which will mainly be more about personal point-scoring and demonising a particular ethnic minority than being a useful contribution.The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am now going to ask the member to come back to the bill. He did mention it earlier.CHRIS BISHOP: I will just close by saying that this bill is part of a suite of measures that the Government is taking to improve housing affordability. I commend the bill to the House.JULIE ANNE GENTER (Green): The Green Party’s overall objective is to create and build a cleaner fairer economy that works for all New Zealanders not just for those who are already doing quite well. To that end we have been advocating for a tax shift for some time. One aspect of that is closing the current tax loophole in housing. That is going to be one way to address part of the problem with Auckland’s out-of-control housing market. We have seen house prices in Auckland increase by 20 percent just in the last year. The current house price to income ratio in Auckland is about eight. To put that into perspective in Wellington it is about four. There are other cities overseas that are experiencing worse house price inflation relative to incomes but there are not very many cities like that. Overall that is bad not only because it makes it more difficult to ensure that every New Zealander has a warm safe dry and secure place to call home which is incredibly important but also because it is a risk to the economy as a whole and the Reserve Bank has been talking about that for some time.There is a whole bunch of issues that we need to address in order to deal with housing affordability. On the one hand we have to deal with the demand side so that starts with closing the tax loophole on property. That is only fair. It is only fair that we would tax income from property sales in the same way that we tax income from other types of work. It does not make sense that the income of somebody who makes hundreds of thousands of dollars simply because they bought a house in Auckland at the right time and sold it later would not be subject to tax in the same way it would be for those people who go to work every day and earn their pay cheque.It also distorts the market to have this tax loophole because it means there are all sorts of problems. The first one is that it contributes to wealth inequality in New Zealand. We have growing wealth inequality in New Zealand. That is the gap between those who have and those who have not. It distorts how people make investment choices. They are more likely to invest in the housing market than into the productive sectors of the economy the way we actually earn our way in the world. That in turn contributes to our current account deficit which can affect the overall financial stability of the country. So we want to close the tax loophole on housing. There are different ways of doing that. I do not believe that this bill goes very far in that direction but it is a tiny little step so we will reluctantly be supporting the bill at its first reading and we will look forward to the submissions and conversations in the select committee although I suspect it is not going to be a very protracted process because the Government needs to get this through as quickly as possible.Other ways that we can address the demand side problem in Auckland include limiting the impact of foreign capital. That is not to say that we are opposed to people migrating to New Zealand and living here. If they are going to migrate and be residents or citizens that is great; but if we do not put some restrictions on the sale of property to foreigners then we end up having a lot of foreign capital coming in and that ultimately is not beneficial for New Zealanders. It makes it harder to ensure that all New Zealanders have a place to live. It bids up the value of houses in places like Auckland. So that is problematic and the Green Party has a very practical solution to that which is simply that if you want to buy property in New Zealand you have to be a resident or a citizen. It is pretty simple and lots of other comparable jurisdictions overseas do just that.Another way that we can reduce the demand pressure on housing in New Zealand is by protecting renters. We actually have some of the worst or least comprehensive regimes for looking after those people who are renting here in this country. It is for that reason that the Green Party proposed recently a warrant of fitness on rental properties. It is really really important that everybody no matter whether they are living in their own home or whether they are renting is sure that their home is warm and dry and secure. We have a real problem with substandard housing and without regulations what ends up happening is that we have a race to the bottom and we have really poor cold shoddy rental housing.Protecting renters impacts the demand side in two ways. It takes pressure off those who maybe do not want to buy a house but just want to have a secure place to live—at the moment they have got no guarantee of being able to live in a place and ensure that it is being looked after so there is more pressure for people who maybe want more flexibility to go ahead and buy a house—and of course it gets those dodgy landlords out of the housing market who are currently landlords simply because they are sure that they can make a tax-free capital gain in the future. They are not actually investing in the housing stock and they are not looking after their tenants. It is really important that we protect those renters. That is going to help get some marginal landlords out of the market and it is also going to take pressure off those who are looking to buy houses.On the supply side which the Government is always talking about there are some things that we can do and that the Green Party advocates. One is allowing more multi-family dwellings in places where land values are really high—that is places that are close to lots of jobs and close to education. At the moment we have a number of district plans particularly the proposed unitary plan rules in Auckland around the residential zones that actually prevent intensification. So there is a market out there for people who want to live in high-quality apartments town houses and character flats and they simply are not being provided because Government regulation actually makes it uneconomic and impossible to provide. So this is an area where one would hope that the Green Party could build an area of agreement with those who are constantly banging on about reducing local government regulations that are onerous yet this Government actually is not doing much in that area. I have not seen anything so far that would enable more high-quality apartments to be built where people really want to live.The other supply side issue is of course the involvement of the Government in providing homes. We think that the Government should be providing more State houses. If you look at the places where housing markets are working really well in OECD countries there is significant involvement from the Government in the provision of houses whether that is at the council level or at the central government level. I note that the Royal Commission on Auckland Governance recommended that there was quite an important role for councils to play in providing social housing and that of course has been completely ignored by this Government.So we will support this bill with extreme reluctance because it does take some tiny steps towards closing the tax loophole on housing. But I can see immediately from the bill as introduced that there are a couple of problems with it. Firstly the 2-year time frame is way too short. I think that in Treasury’s recommendations—if you go back a few years to when it was recommending to the Government that it take action on this which it finally has—it was looking at at least 5 years. But really why have a time limit at all? Does it matter what the intention is? If we have people who are earning money because they have bought property at the right time and sold it at the right time why should that income not be subject to tax just like income is subject to tax if you are an engineer or a doctor or a factory worker? Why not?We already have exemptions in this bill for the family home and for cases like inheritance and relationship break-ups so it is unclear to me why we need to have this 2-year time limit. I do not think it will do much. It certainly will not raise much revenue. Also it is going to affect a fairly small proportion of house sales and since we already have the exemption for family homes I do not see why we would not have at least a longer time frame or no time limit at all. If it is not your family home pay income tax on the income earned from owing the property.The other problem with this bill of course is that it applies only to residential land and really this fails pretty much all tests of how you would be implementing a tax regime if you want it to be simple if you want it to be comprehensive and if you do not want a lot of exemptions. This limiting it to residential land is I think extremely problematic. The distortion that exists with the tax loophole on property is not just a distortion that is impacting housing; it also exists for all types of land even if it is zoned for other uses.I think that the National Government ultimately has bowed to public pressure and to the pressure being put on by economists and by the Reserve Bank who said it had to do something about Auckland’s out-of-control property market because it is a risk to the economy and it is not good for people living in Auckland. But this bill is too little too late. It is not going to make a difference. The Green Party will reluctantly be supporting it because it is better than nothing but it is certainly not enough.FLETCHER TABUTEAU (NZ First): It is with some frustration that I stand today because New Zealand First would normally support a piece of legislation like this in its referral to the select committee but what I have seen and what New Zealand First has seen in this piece of legislation—just like the piece before—is that it is so facile and so vacuous that it serves absolutely no point whatsoever and will achieve none of the stated objectives of this Government. We know from experts we know from our own experience and we know from talking to the people in Auckland that these measures will achieve absolutely nothing. This is another token gesture that achieves nothing.Here is a bright idea: 82 percent of New Zealanders want a ban on foreign ownership. New Zealand First wants this Government to listen to the people for once—and in fact to listen to its own support base—who want something to be done and done now. So I put it to the members on the other side of the House that what we need right now is a moratorium on the sale of land and houses to foreign investors and foreigners full stop. We need to stop this freefall into foreign ownership. Only Kiwis should be able to buy Kiwi land and Kiwi homes.Alastair Scott: You mean Chinese don’t you? You only mean Chinese don’t you? That’s what you meant to say—Chinese. Just say it. You don’t like Chinese.FLETCHER TABUTEAU: Well the Chinese—the honourable member points out—do not let you go over and buy Chinese land over there either and the Prime Minister would be the first to admit that you cannot go and buy land in Hawaii if you are not a person of Hawaiian descent. So let us just be consistent with what is happening with the rest of the world. There is a huge problem going on. Let us put a moratorium on this. Let us stop it now. Let us create some real understanding. Let us get some real data so that we can address an issue that we all know New Zealanders understand to be a huge huge problem.This Government needs to stop talking about foreign investment. It is not investment when we sell off strategic assets and homes and lands to foreigners. It is not an investment to New Zealanders and it is of no benefit to New Zealanders; it is in fact the complete opposite. Yet again we have legislation that achieves nothing—as well as being completely redundant—because the legislation is already there. There are already powers to address these issues and Mr Bennett himself spoke about them previously. This National Government refuses to have them applied and so we have this huge housing crisis in Auckland for example right now. This Government is deliberately tinkering around the edges. Experts are in accord with New Zealand First when we insist that this bill will achieve absolutely nothing.Here is a brightline test definition: a brightline is a clearly defined rule or standard composed of objective factors that leave little or no room for varying interpretation. The purpose of a brightline rule is to produce predictable and consistent results in application. This Government says we need a brightline test because the current legislation and intention test is too difficult to enforce because of its subjectivity. New Zealand First says this new bill will only muddy the waters even further and will add another level of complexity to an already difficult and complex set of rules.We insist that this will be of no economic benefit to the country either. We are talking about a tax take of next to nothing. We also insist that the Inland Revenue Department’s unwillingness to apply the current legislation becomes a self-fulfilling prophecy and that poor enforcement of the current Act simply contributes to the perception that the intention test is too difficult to apply although it is not hard to understand the confusion. Mr Bennett’s contribution earlier in his examples of the problems that will only get worse ahead highlighted the confusion that is prevalent throughout New Zealand.I will read just one of the intentions of the bill: “This Bill proposes a new objective ‘bright-line’ land sale test to improve compliance. The bright-line test will require income tax to be paid on any gains from the disposal of residential property that is acquired and disposed of within 2 years subject to some exceptions.” So it is not much of a brightline test already within its own description.In a report it says: “The bright-line test will apply where a taxpayer did not buy property with a purpose or intention of resale but due to financial or other circumstances (such as loss of employment relationship breakdown [etc.]) … is required to dispose of the property within the two year period.” Even if there is no economic benefit and there is no intent—it has just simply happened that they have fallen within the 2-year period—they are going to be taxed and yet there was no intention.This legislation does not change that confusion it simply adds to it and already that level of complexity is ranked up with just that one example. The Minister of Revenue Todd McClay spoke about removing ambiguity but as stated New Zealand First believes that this new bill does not achieve what the Minister wants. The application of the main home test will introduce greater uncertainty. This legislation makes no effort to clarify at what point or over what time frame in the “dim-line” time period a property must be the main home. It speaks about a main home being exempt but nowhere in the legislation does it clarify that if you are in it for 2 years—but does it have to be 2 years? Can you be there for just a certain period of time in the 2 years? Does it become your main home then? The confusion and the complexity continue to mount.I will quote from a KPMG report. It notes that “a full two year period of occupation for the main home exemption to apply will not be feasible if the start date for the bright-line test is the date of the contract to purchase as recommended. This is because the property is unlikely to be occupied between the contract date and date of settlement.” So you are getting experts just querying: “Where’s your time line? Where’s the definition? Where does it begin and where does it end?”.Then we have the question around trusts. A lot of good well-intentioned people have their main home in trust. They own it and they probably own it with their children. This piece of legislation will add to the complexity because we do not know how the rule will apply because trusts are supposed to be able to be taxed under this legislation but what if it is the main home? We just do not know that at all.Then we have the question around farmland versus lifestyle block use. The statement is that farms or lifestyle blocks do not fall under this legislation. So if a person buys a small lifestyle block as an investment—maybe he wanted to retire on it—and rents it out and then because of unforeseen circumstances he sells it in 2 years actually he does not have to pay and he is not liable for the tax under this legislation. Where is the consistency? Where is the fairness?The other one that struck me when I was reading the legislation and doing the analysis was the example of people whose career it is to go and do up homes. They intend to sell their property and make some money out of it but if they are living in it and if it is their main residence then under this legislation they are not liable for that tax component. So this as far as a brightline test goes just makes no sense whatsoever.Just to conclude I think this Government is deliberately missing the point. There is nothing wrong with New Zealanders owning New Zealand land and just New Zealanders owning New Zealand land. Overseas speculation does not add any real value to the New Zealand economy. This Government is keeping its head in the sand. It knows that this and the previous legislation the Taxation (Land Information and Offshore Persons Information) Bill will achieve nothing. Therefore New Zealand First cannot support this bill any further. Thank you.JAMI-LEE ROSS (National—Botany): I am disappointed but not surprised to hear that the New Zealand First Party is not supporting this bill. I often find myself in the position where I am following Mr Tabuteau in these debates and once again I wish to correct him on his inaccuracies and the false statements he has made to this House. He is very wrong on a number of points. The heart of this bill is all about introducing greater fairness for all taxpayers and it is all about ensuring that those who are speculating on property do pay their fair share of tax. Rather than making it more complex as has been described by Mr Tabuteau it actually makes it far simpler for New Zealanders and those paying tax to understand how the system works.There has always been an intentions-based test where if one is purchasing property with the intention of trading that property for income then one should be paying tax. The difficulty is that that is very subjective. This bill is all about introducing a brightline test that makes it a lot easier for individuals to determine whether or not they should be paying tax. Should they buy and sell a property within 2 years and it is not their own home or it is not part of a deceased’s estate or a martial settlement then they should be paying tax. That is greater simplicity for all taxpayers that is a good thing for the tax system and that is why this Government supports this bill.Mr Tabuteau is wrong in his argument that the Inland Revenue Department does not want to enforce the existing rules—absolutely wrong. This Government under successive Ministers and under Bill English has put millions of dollars into enforcing the current rules. It has paid dividends for New Zealand. We have put in $33 million since 2010 to ensure that property tax compliance has increased in New Zealand and as a result we have seen $258 million of tax revenue come in. For every dollar we have put into tax compliance we have received $8 back. That is good for the Government. That is good for taxpayers. But what is more important is that we now look to having greater fairness within the tax rules and that is what this bill is all about.I also want to tackle the argument that has been proposed by Mr Tabuteau about foreign buyers. If one is to stand in this House and say that no person who is from another country and has migrated to this country should be able to buy a property—Phil Twyford: Oh don’t be an idiot. No one’s saying that.JAMI-LEE ROSS: That is what you were saying. That is what Mr Twyford has said. That is what—Phil Twyford: You fool. You’re an idiot. No one is saying that.JAMI-LEE ROSS: I raise a point of order Mr Speaker. I have got a pretty thick skin but I take exception to that.The ASSISTANT SPEAKER (Lindsay Tisch): Yes the member—I am referring to the member who made those comments. I will ask the member to withdraw those comments. You cannot refer to another member in that manner.Phil Twyford: I withdraw.JAMI-LEE ROSS: There are people in this House who have argued for many many years now that foreigners should not be able to buy property. Well if one is to say that then they should also be honest and say that no one would be willing to come here and bring their skills to this country. No one would be willing to come here and invest and bring capital to this country. No one would be willing to come here and migrate and bring their family for investment or skills purposes because that is the reality of saying no to foreigners.This bill is about greater fairness. Attacking the Chinese attacking migrants is not the answer and if the New Zealand First Party wants to continue to go on about supposed foreigners—people who do not look like them—I would ask them to really look in the mirror and ask themselves whether when they go on the Grey Power circuit they are going to be honest with the people with the thick British accents and say that no one should be able to buy property in this country if they are not from New Zealand originally. That is not the answer to housing in New Zealand. The answer is greater fairness. The answer is greater—Phil Twyford: I raise a point of order Mr Speaker. The member is wilfully misrepresenting other members in this House.The ASSISTANT SPEAKER (Lindsay Tisch): No no. Look these are debating points.JAMI-LEE ROSS: I am almost finished Mr Assistant Speaker. The answer is greater fairness. The answer is to ensure more houses are being built in New Zealand—and in Auckland particularly—and that is what this Government is doing.The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Dr Russel Norman—5 minutes.Dr RUSSEL NORMAN (Green): The origins of this bill really are in the Auckland housing market which is on fire. If you look at a 1960s house in a suburb that is not particularly in the centre of town you are talking about a doubling of price over the course of 4 years from $400000 to $800000. It is a housing market that is completely out of control—a 20 percent rise in the last 12 months.It is no mystery why this is happening. It is pretty well understood in fact. You have got a combination of migration pressures that are putting a huge amount of demand side pressure on Auckland; you have got a significant tax incentive because of course capital gains are tax-free in New Zealand more or less; and of course on top of that you have got a big surge in foreign demand. That is not just happening to Auckland; that is happening right around the Pacific Rim whether it is Sydney Melbourne Vancouver other cities in the United States and elsewhere. There is a big surge and of course China is a part of it. It is not the whole story but it is a significant part of it.On the demand side that is the issue and then on the supply side essentially what we have not been able to provide is affordable medium-density high-quality housing in sufficient volumes to meet that demand and so the increase in price is kind of inevitable. This bill that we have in front of us and the companion bill the Taxation (Land Information and Offshore Persons Information) Bill are an attempt to deal in a very minor way with that out-of-control housing market. You could think of it as trying to put a thimbleful of water on a giant fire. So we will be supporting these bills because they are positive moves if ever so small.This bill in a way is trying to deal with the issue around capital gains and how you tax capital gains. What it does is it says: “OK if you’re an investor and you flick the property on in a couple of years you pay tax on those capital gains and at your marginal rate.” That is a positive thing. It creates a brightline test around what kinds of income get taxed and what do not so that is a good thing. Unfortunately it sits alongside the intention test which is a very difficult piece of tax law because the intention test around tax law says that it all depends on whether you intended to flick the property on. Were you trying to make capital gains out of the property or not? Of course that is a very subjective thing and makes it very difficult for the Inland Revenue Department to deal with.The Green Party has for a long time supported having a consistent capital gains tax on investment properties—so excluding the family home. The reason for that is pretty simple and this law does go some of the way towards dealing with that in a very small way. We will support it for that reason. But a capital gains tax—the idea behind it is simply that whether your income comes from wages or whether your income comes from capital gains you should pay tax on that income. So we all pay our taxes and that is how we fund public health and public education.This bill makes some progress in the smallest way possible towards introducing a kind of a capital gains tax which is a bit better than the intentions test capital gains tax which is rather confusing and difficult to enforce. It is a brightline test which does have the benefit of clarity. Even if this new legislation will make only a marginal difference none the less it is good.What it means is that you pay tax on capital gains. If you think about it most people in New Zealand do not make capital gains. Capital gains tend to be restricted to those unsurprisinglywho have capital to invest which is a very small minority of the country. Most people earn wages and they pay taxes on those wages as we all should and that means that that is how we pay for things. So why should people not also pay tax on capital gains which is a kind of income? That of course is the idea behind having a capital gains tax which pretty much every other OECD country other than New Zealand has introduced to some extent or another to deal with this exact issue.It is a very common tax within the OECD to deal with the issues around fairness in the tax system but it also has other benefits. It also has some dampening effect on house prices by dealing with one of the drivers on the demand side. But we also do need to deal with some of the other drivers on the demand side and of those the offshore demand particularly is a significant problem. The companion bill in a very minor way also tries to deal with the offshore demand problem but we also really need to deal with the supply side problem.Medium-density high-quality housing—that is Auckland going up instead of out—is also central to the solution to this problem. If we do not get our heads around that then we are going to continue to have this kind of pressure on house prices not to mention the impacts on transport climate change and all the rest. Thank you.CLARE CURRAN (Labour—Dunedin South): I suppose that the quality of the debate from across the House tonight is an indication of the half-hearted drop-in-the-bucket lacklustre piece of legislation that we have got before us in the House tonight because of the inability of the National Party speakers to actually get up and make a coherent logical reasoned measured argument in its favour. Instead they have resorted to hyperbole and idiotic illogical arguments to pad out their thin speaking notes. They cannot even muster a strong argument around it.Labour is supporting this bill going to the select committee because we believe that this is a significant issue and because we want to have the debate at a select committee in a measured logical reasoned way and enable the discussion with submitters about what would improve this piece of legislation so that when it comes back to the House it will actually be a much better bill than the piece of legislation put before us tonight.You could drive a truck through this bill with the loopholes that it contains. It is an example of the many pieces of legislation that this Government puts up when the Government needs to be seen to be doing something and here is a half-hearted lacklustre approach to it that says: “We do not really want to make too much difference to it but we want to be able to say that we are doing something about this particular issue.” That is what we have got with this legislation unfortunately. But what we do hope is that when it gets to select committee we can tease out some of the issues particularly the issues that I am about to touch on.The two main issues are around the $5 million revenue estimate. What we are saying is that this has been rushed and it is ill-conceived and it actually is not going to deliver a great deal back. We want to tease out what the Inland Revenue Department has estimated which is that the new brightline test is going to raise just $5 million a year in additional tax revenue. What the Inland Revenue Department said about this bill was that it really expressed some real concerns. When you take into account that the Treasury figure for total tax revenue last year was $61.5 billion then $5 million is really just a drop in the bucket. You cannot argue with that—not you Mr Assistant Speaker but the members across the House cannot argue with that.In the regulatory impact statement the officials said that that revenue estimate of an additional $5 million a year was based on a number of behavioural assumptions that are inherently difficult to quantify such as the number of sales that could be delayed in order to exceed the 2-year holding period. I know that other members have canvassed those issues. That is one of the most significant problems with the bill and when the Inland Revenue Department is saying that then it really does need to be looked at further.The other issue I just want to touch on is really the lack of depth of investigation that has gone into the development of this bill. The Prime Minister himself said that he actually suggested this new brightline tax 4 or 5 years ago but they had only recently come round to the idea and the Minister of Revenue said that it has been only a month in the works. When you put a piece of legislation like this to the House you would have thought that there had been a great deal of work that had gone into it. There clearly is a difference in opinion about what the depth of that work has been and clearly there needs to be some more work done. Hopefully that can be done at the select committee stage which is going to be pretty important.Labour as I said does support this bill going to the select committee. We support measures that will cut property speculation and that is where the logical and measured debate needs to be—around what the best measures can be—and not around the hyperbole that is being delivered by the members opposite in the House.ANDREW BAYLY (National—Hunua): It is a pleasure to be talking on the Taxation (Bright-line Test for Residential Land) Bill. It is good to hear that the previous speaker Clare Curran as a member of the Opposition is supporting this bill which is a good thing because this bill is actually complementary to the other bill that we have been talking about tonight which is the Taxation (Land Information and Offshore Persons Information) Bill. What this really is is the second part of a package of measures to make sure that we are protecting the tax system that we have in New Zealand that everyone is paying their fair share of tax and in particular that investors in property assets are also paying their fair share of tax.Some people characterise this as a capital gains tax. It is not actually; it is actually an income tax and everyone has an obligation to pay tax. It is the same scenario if you are buying and selling shares on a regular basis—we have applied the same principle to those people who want to buy and sell houses on a regular basis. Essentially the brightline test requires tax to be paid on any gain from the sale of a residential property within a 2-year period. During the select committee stage we extended the definition of residential property to include serviced apartments and also vacant land when it is proposed that it be subdivided or when there is the intention to build a dwelling on it.As we have heard tonight there are three key exemptions: the first one is for the main home the second one is in relation to inherited property and the third one is when there is a sale as a result of a property settlement agreement—or in other words when there has been a divorce. Also I want to note that the exclusion also takes into account land used predominantly for business purposes or as farmland. We have been very careful about the definition of land that is used for business purposes so as to make sure that we come up with a pragmatic solution for that.The select committee also dealt carefully with the definition of what is regarded as a main home and we have introduced this new concept of “greatest connection”. This is particularly pertinent to owners of houses who have more than two houses and how we have applied those rules is really important in terms of this new definition or concept of “greatest connection”.I will say that the other side of this bill deals with making legitimate deductions and also deals with offsetting losses on the sale of property but we have put a caveat on that so that any such deductions or losses must meet the brightline test and secondly can be applied only to other such similar property arrangements when there has been a sale of land.I want to commend this bill to the House. I think it is a good bill and it is part of a good comprehensive package that we are putting in place.PHIL TWYFORD (Labour—Te Atatū): My grandmother was fond of saying that if a job was worth doing it was worth doing properly. With apologies to my granny this National Government believes that if the problem is worth addressing it is worth a grudging half measure because that is what the Taxation (Bright-line Test for Residential Land) Bill is. It is yet another grudging half measure. Property speculation is rampant in Auckland and the National Government does not need the polls and it does not need David Farrar and Curia Market Research to tell it that the Auckland housing market is totally out of control. Average house prices went up 24 percent in the last 12 months according to Quotable Value. According to Quotable Value also 41 percent of all mortgage lending in Auckland over the last 12 months went to speculators—41 percent. It is absolutely rampant. It is both foreign and domestic speculators—there is no doubt about that—and everybody in Auckland will tell you that.Under this National Government the policy settings are very clear. What they say to New Zealanders is that if you want to make a dollar and if you want to get rich in John Key’s New Zealand then become a property speculator. That is what this National Government’s policy says. It is not interested in the productive economy—it is not interested in people making things or in innovating the goods and services that the rest of the world wants to buy. This National Government thinks that we can get wealthy as a country by selling houses to each other—that is one of the defining qualities of this National Government over the last 7 years.There is a frenzy of property speculation going on in Auckland at the moment. It is unbelievable—buying and selling purely for the purposes of capital gain. The New Zealand Herald is full of it. You cannot pick up that newspaper without seeing stories of unbelievable windfall gains made by people buying and selling properties. But this National Government does not care. It does not care about that because the members of the National caucus including some of those sitting opposite on the National benches are multiple owners of residential rental property. That is what they do with their assets. They are big landlords over on the Government benches so they do not want to do anything about this problem. That is why this bill is a pretence. It is a charade.The bill is not intended to do anything serious about the rampant property speculation in Auckland. It is not just the fact that the National Party members in this House—so many of them—are major landlords with multiple properties; their donors also are making a killing at the expense of “Generation Rent”. I mentioned in the debate on the Taxation (Land Information and Offshore Persons Information) Bill that some National donors who donated $370000 to the last National Party campaign had amassed $26 million worth of Auckland property within a few years of being in this country. That is the other reason why National does not want to do anything about the problem of property speculation.But there is another reason and it is that the Prime Minister has made a cynical political calculation. He is happy to see house prices go through the roof in Auckland because he believes that there are enough votes to be harvested from Auckland homeowners who are happy to see their paper wealth increase day on day. He has made the cynical calculation that he can get more votes from those people than from the other half of the Auckland population who are renters—a whole generation of young Aucklanders who will never ever own a home of their own in Auckland unless these policies change and unless this Government is replaced.That is at the heart of this Government’s policy. It does not want to do anything about the flood of foreign money that is pumping up Auckland house prices. It does not want to do anything about the flick merchants who are buying and selling houses and who are bidding up prices beyond the reach of ordinary Kiwi first-home buyers. It does not want to do it because it is the party of speculators and land bankers. It is not a party that stands as we do on this side of the House on the side of young Kiwi first-home buyers. In a nutshell that is the difference between National and Labour—between the Government and the Opposition parties.Labour wants to rein in Auckland house prices. We believe that the Kiwi dream of affordable homeownership actually stands for something and that is why we will do something about itwhen the Government changes. We will crack down on speculators. Unlike this pathetic derisory little bill which will not make a blind bit of difference we will do something about property speculation. We will ban offshore foreign buyers from buying existing houses in this country. We will do that. We will have a register of foreign property ownership so that it is transparent and so that New Zealanders can see what is going on because Kiwis have had a gutsful of their land their property and their houses being sold out from under them under this National Government.This bill implements the so-called brightline test. It requires that anyone buying or selling residential property within a 2-year period pay tax. If the Government were serious about this problem and if it wanted to do something more than this insubstantial bill it so easily could have. Treasury’s own calculations are that this will net $5 million—that is all. John Shewan one of the Government’s most-trusted tax advisers said after the policy was announced that it would have little impact on house prices. He said that it would not deter property speculators. And it is plain for everybody to see because there is a loophole a mile wide at the heart of this bill that all that speculators need to do is hold on to the houses for 2 years and 1 day and then sell them.For goodness’ sake just be real with New Zealanders. Front up and admit that you do not want to do anything about this—when I say “you” I am talking about National Government members. Just be honest. Give up these pretences these media stunts these half-hearted grudging measures that the National Government announces day after day. Poor old Nick Smith; he cannot have any self-respect left—the indignity of standing in this House day after day and having to defend this charade of a housing policy.The game is up. No one believes this National Government any more. That is why on issue after issue on housing the polls say that 60 percent 70 percent or 80 percent of New Zealanders do not believe you any more. They want a register of foreign buyers. They want a policy that seriously cracks down on foreign property buyers. They want a policy that actually builds houses not this special housing areas policy that you have got. For goodness’ sake National Government members be honest with New Zealanders. They do not want this ridiculous pretence—one announcement one bill after another that are designed simply to convey the impression that you are doing something.The Reserve Bank has enacted more serious policy on curbing demand in the Auckland housing market than the Government has. This Government has outsourced its housing policy to the Reserve Bank. Listen to Grant Spencer’s speeches on housing. He gives one almost every week. What has he been saying for the past 6 months? He has been saying that the Government has not done enough about the shortage of Auckland housing. Speculators are a major problem. Just read his speeches—do not take my word for it. The Reserve Bank Governor and Deputy Governor—the mouthpieces of the central bank of this country—are hardly firebrand socialists. They are saying week after week time after time that this Government’s housing policy has failed. It falls woefully short.Speculators are a problem. They are driving up house prices. They are a threat to the financial stability of the banking system in the whole economy so do something about it—not this ridiculous bill which your own tax advisers say will not make any difference. This housing crisis calls for serious action. It is driving inequality between generations and between Auckland and the rest of the country. It is a social and economic disaster and this bill will not make a blind bit of difference.ALASTAIR SCOTT (National—Wairarapa): Mr Twyford almost got through his speech without criticising foreigners which is quite surprising. But in the end he did. He said that he would not let foreign owners buy property unless they live here. We also had a similar comment from the Greens finance spokesperson Ms Genter who said that there was too much foreign capital in this country. And of course we have the New Zealand First “Professor” Mr Tabuteau who railed against foreign owners and said they are not required they are a bad thing and they should not be allowed.The same people forget that the New Zealand Superannuation Fund is a major investor in overseas assets and property. They forget that Fonterra invests overseas. They forget that Turners and Growers owns leases and controls huge tracts of land in Europe where it grows apples. They also forget Miraka. Mr Tabuteau’s colleagues could look up the directorships of Miraka and see that as well as Vietnamese names there is a good stamping of Wairarapa names across that board of directors. And what a good thing that is.The wine industry has foreign investment. The Premier Beehive bacon company in the Wairarapa is owned by the largest food group in the world. This is a good thing. Foreign investment is a good thing for New Zealand. It is a necessity for New Zealand and it must continue for the benefit of New Zealand. And houses are but one class of asset—one class of asset alongside the sharemarket alongside the bond market and alongside the housing market.This bill fine-tunes and reinforces the part of the Income Tax Act that already exists around land purchased with the intention of selling. This is a good bill. It captures speculators and it taxes them fairly. I commend it to the House.A party vote was called for on the question That the Taxation (Bright-line Test for Residential Land) Bill be now read a first time.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Bill read a first time.Bill referred to the Finance and Expenditure Committee.Hon TODD McCLAY (Minister of Revenue): I move That the Taxation (Bright-line Test for Residential Land) Bill be reported to the House by 22 October 2015 and that the committee have authority to meet at any time while the House is sitting (except during oral questions) during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 191 and 194(1)(b) and (c). Our tax system relies on voluntary compliance with our tax rules. For the most part taxpayers do the right thing: pay their taxes and meet their tax obligations. The Inland Revenue Department works to help people understand and meet their obligations but there remain those who avoid those obligations. In such instances the Government will act to close off loopholes and help ensure greater fairness in the tax system.The measures introduced by this legislation apply to residential property that is acquired on or after 1 October 2015 and disposed of within 2 years. The brightline test proposed by this bill will work in conjunction with other measures introduced in this year’s Budget to improve tax compliance by property speculators. Along with the brightline test those measures are proposed to come into effect on 1 October of this year. This is what this bill is about and why I propose a shorter select committee period.GRANT ROBERTSON (Labour—Wellington Central): What an outrageous proposal from the Minister of Revenue. It is ridiculous at so many levels. The first of those is that he has just acknowledged that 1 October is the date that this comes into force. There is no way because of the incompetent running of this House by the Leader of the House that this bill can actually be passed by 1 October. So now we are going to have a bill reported back on 22 October. It is already retrospective legislation. That is bad enough but given that it is already retrospective legislation why not have a full select committee process? Why not actually give an opportunity for New Zealanders to consider the bill properly and for the Finance and Expenditure Committee to hear expert advice and take the time to get the legislation right? It is not as if there is a rush to get it done by 1 October because the Government has blown that already.Hon David Parker: It’s not going to work anyway.GRANT ROBERTSON: Yes it will not work anyway. We can actually spend some time in the select committee getting it right but no. The Government wants to sweep this away under the carpet. It wants to get it off the books before Christmas because it is embarrassed by this piece of legislation and so it should be embarrassed by this piece of legislation.Having a report-back date of 22 October means that we have a piece of retrospective legislation but we are not even giving the committee enough time to properly consider it. When the Standing Orders Committee decided that these kinds of truncation debates would take place this is what it said: “The truncation of the select committee process can have serious implications for legislative quality and confidence in the legislative process.” That is the problem here. This action by the Minister of Revenue in calling for such a short period of time for the select committee to consider this bill goes to the heart of that concern: the quality of and the confidence in the legislative process. What it does is it raises the concern that many New Zealanders will have having listened to the Government speeches tonight which is that the Government does not really want this measure. It is window dressing at best and it would prefer that there really was not a proper debate on this measure. That is why we are seeing a truncated select committee process to 22 October.If the Government really wanted to get this right it would take the 4 months have a proper consultation go around the country get tax experts to work through the detail look at the consequences test it with international ideas and then come back to the House with what I am sure would be a better bill. But the Government does not want that. It wants to sweep this away under the carpet because it is embarrassed by it and it just wants to look like it has done something right.The other part of the motion that I want to refer to is the question of when the committee will meet. This is under Standing Orders 191 and 194(1)(b) and (c) which have been suspended under this motion. It might be all very well for members on the other side of the House to say: “Well we can meet on Fridays and you know we can meet at select committee meetings in the evenings and so on.”David Bennett: What’s the matter with work? Don’t you like work?GRANT ROBERTSON: Well yeah. David Bennett asks: “What’s the matter with hard work?”. The constituents of—I usually get this wrong—Hamilton East? Yes. The constituents of Hamilton East do not expect their MP to show up on a Friday because they have had David Bennett as their MP for some time. But in other parts of the country they actually expect their MP to come in and do—David Bennett: I raise a point of order Mr Speaker. I take offence at that.The ASSISTANT SPEAKER (Lindsay Tisch): Oh that will not—no.GRANT ROBERTSON: No. Ridiculous. They actually expect their MPs to show up on a Friday and be there in their constituencies. Here I want to speak on behalf of the smaller parties that are on the Finance and Expenditure Committee which actually have limited numbers of members who can be available to do this. This calls on their time in the House because the suspension of Standing Order 194(1)(b)—if this passes—means that we will allow a committee to meet during a sitting of the House. A committee doing that means that if you are from a small party your resources are stretched very very thinly.This is a bill that is of significant interest to all parties in Parliament and by setting this up we actually set up quite an unfair process in terms of how many people will actually be able to be at the committee. We will also have the ability to sit in evenings on a day in which there has been a sitting of the House which a committee cannot usually do. Again MPs have other commitments. This is putting a lot of MPs in the position of not necessarily being able to attend all of the select committee meetings.We also know from previous experience with truncated select committee processes that this will be used as an excuse by members of the Government to limit the time for submissions. It will be used as an excuse to limit the amount of time for people to put their submissions in and then the amount of time that we have for hearings of submissions. That is not acceptable with a bill like this. We know that working through the implications of tax bills takes time. We have just had a bill passed in this House where the Inland Revenue Department said it did not have time to work out the compliance costs. It did not have time to do a full consultation with those who were affected by the bill. Then we are going to repeat it all over again with this bill.We have independent tax advisers who support the Finance and Expenditure Committee. They often take a considerable amount of time to sit down with tax accountants and with tax experts and to then debate the issues with the officials from the Inland Revenue Department. That debate often leads to better law. That is the nature of taxation work. It takes time to work out how it will be implemented—you know how people like Mr Bayly will organise their accountants to get around the latest tax initiative that comes out of this House. The tax officials and the tax experts who advise the select committee need the time to test those ideas out. Otherwise we come back to the Standing Orders Committee’s concern about legislative quality with truncated select committee processes.We could not get bills more in need of a lengthy process than taxation bills. I would challenge any member of this House to read through every page of every taxation bill that comes up. Sometimes they go over 1000 pages and the problem with that is that we rely so much on the officials having the time to get it right to test out the ideas and to come back to us. We have not had any kind of argument in this House from the Government to say why this should be different. This bill actually needs to be improved significantly and it deserves the time in the select committee to get it right. That is being denied today by the Minister.On this side of the House we have supported this bill going to the select committee. We have done that in good faith because we believe that this is an area where New Zealanders are crying out for the Government to do something to try to rein in the horrendous property speculation that is pushing so many New Zealanders out of the housing market. This Government is not giving us the opportunity to get that right. We have supported this bill in good faith. Good faith in return from the Government would be to say “Let us do this properly. Let us give it 4 months.” or even 6 months because it is going to be retrospective anyway. Those members know it is a shambles once they make it retrospective do they not? They know that all those people who are quickly trying to get in to avoid this will now be placed perhaps with a little bit more wiggle room if it goes on any longer.We know on this side of the House that this is an important measure. It has not been handled well by the Government. New Zealanders and the rest of this Parliament are not responsible for Gerry Brownlee’s disorganisation and that is fundamentally what is happening here today. The Leader of the House has not organised himself sufficiently to get this bill passed by 1 October. We have retrospective legislation—that is bad enough—and now we have a Government that is not interested in hearing from New Zealanders. It simply wants to shove this through so it can get the embarrassment that is this bill out of the way. That is wrong and we need to make sure that as a group of parliamentarians we do not allow that.We are strongly opposed to the motion that has been put forward by the Minister. I think National members could do a much better job.Sitting suspended from 6 p.m. to 7.30 p.m.Mr DEPUTY SPEAKER: Kia ora mai tātou. Tēnā tātou katoa. Members before the dinner break the House was discussing the debate on the instruction to the committee on an early report back-date for the Taxation (Bright-line Test for Residential Land) Bill. Grant Robertson had the call. He has a minute remaining.GRANT ROBERTSON: One minute? Mr Deputy Speaker thank you very much—a bonus minute to recap on the fact that the Government is now so embarrassed about how weak this piece of legislation is that Government members are in this House with a report-back date for this bill of 22 October. Bear in mind it is meant to come into force on 1 October. They have stuffed up. They have not got it in in time. It is already retrospective legislation and they come to this House and say: “We want to get it off the books.” They are embarrassed.They are embarrassed because this is a huge problem for New Zealanders who want to get in and buy their own home. They have come up with a half-baked solution. It is one that does just enough to make it look like they have done something to address the housing crisis in New Zealand and in actual fact they have completely failed. Bill English could not even tell New Zealanders what effect this would have. Treasury told him it would get $5 million of revenue because it was so poorly designed. This bill deserves a proper consideration from the select committee not a half-baked one—not one designed to serve the National Government’s political agenda but one where New Zealanders can have a say.Mr DEPUTY SPEAKER: I call Phil Twyford.PHIL TWYFORD (Labour—Te Atatū): It is a very good choice from a crowded field Mr Deputy Speaker. The thing that is most galling about the truncated select committee time frame for this bill is that the National Government has been denying that property speculation in the Auckland housing market is a problem—denying denying and denying it for the past 3 years. Now it brings this bill to the House—a tax bill. This is probably the last kind of bill that it should be rushing through the legislative process with a shortened select committee hearing time when there has been for at least the past 3 years intense public debate about the effect of property speculation in Auckland.It did not need to be this way. It did not need to be a truncated select committee hearing period. Tax bills of any kind deserve the right kind of scrutiny expert evidence officials giving considered advice to the select committee and the chance to really tease out the provisions of the bill because goodness knows this bill is fraught with problems. The problem that we have got with a shortened time period is that we will not actually do the much-needed job of improving the bill—going through it clause by clause putting it under the microscope and trying to improve it. If we do not do that there is every chance that we will be back in the House here at a later stage fixing those mistakes and rectifying the errors.In the papers supporting this debate Treasury makes it clear that it thinks this billwith the so-called brightline test requiring people who purchase and onsell a property within 2 years to pay income tax on the capital gain will raise about $5 million a year. It says that if there was not that avoidance—Mr DEPUTY SPEAKER: I just warn the member that he needs to restrict his comments to the issue of the shortened time frame for debate before the select committee not the value of the bill or his view on the bill—solely on the shortened time frame. He seems to be wandering away at the moment.PHIL TWYFORD: If we consider what Treasury said which I was just referring to how on earth are we going to get the proper analysisin a truncated time frame—Mr DEPUTY SPEAKER: Take your seat.PHIL TWYFORD: —from economists like Tony Alexander of the BNZ who I think said when this policy was announced when the bill was foreshadowed by the Government that he did not think that it would have any effect? How are we going to get people like Tony Alexander to come along and do the analysis and check the work that Treasury has been doing? John Shewan who is one of the most influential of the tax advisers the Government uses also said by the way that he did not think that this bill would have much effect at all on house prices and that it certainly would not deter speculators. That kind of technical expertise is exactly what we want to see at the select committee. If we do not have enough time at the select committee to go through this bill and give it the scrutiny that it deserves then the glaring errors and loopholes that are evident in this bill will never get fixed.As Grant Robertson said the legislation is going to be retrospective anyway. The handling of this bill has been so ham-fisted that the Government has made a commitment that the legislation is going to come into effect on 1 October and there is no shortage of commentators who have observed that the frenzy of speculative buying and selling in the Auckland housing market that we can see right now is a direct response to the fact that people are anticipating this bill coming in on 1 October. So there is an imperative now to see that the bill does pass into law but because of the Government’s ham-fisted management of the legislative process it is going to be retrospective. No one likes that.Why rush it now? If it is going to be retrospective you may as well take it through a proper select committee process air the issues and give the select committee the time to do its work. After all we have a unicameral Parliament—we do not have many of the other checks and balances. The select committee process is one of the few protections we have against the very inferior lawmaking that has been a characteristic of this Government’s time in office. We are constantly coming back to fix up the messes that Nick Smith and others have made with legislation that they have brought to this House yet here we are being asked to do it again. We are being asked to push a taxation bill that is actually a reasonably complex bill through and not give it the proper select committee scrutiny.This bill is hopeless and there are no shortage of commentators—not just members on this side of the House but experts—who have pointed out that there are real flaws with the bill. At its heart is a loophole that you could drive a bus through. The very intent of the bill is to stop or reduce property speculation but the fact is that people need to hold on to properties for only 2 years and 1 day in order to avoid the provisions of the bill. That needs to be properly scrutinised and we need to see the modelling on how many speculators will get caught by this bill. We want to see what the modelling is based on Treasury analysis about how many speculators will get caught and how much money will be brought in by this tax. If we do not have the time at the select committee we are never going to really unearth this.This bill is being rushed through. It was like so much of the legislation on housing that has been brought to the House by this Government. It has been cobbled together at the last minute because of the polls and because of the media. As a result of that shambolic political management we are being asked to support a reduced select committee process that undoubtedly will produce an inferior result. Thank you.EUGENIE SAGE (Green): I will be brief. The select committee process is fundamental to our lawmaking. It is the time when the public get an opportunity to have their say on the laws that this Parliament passes. If we have a truncated process there will be less time for submissions there will be less time for the public to actually present their submissions to the select committee and officials will be under strict deadlines in terms of reporting back. This is tax legislation. It is complex legislation. Having a truncated select committee process means less scrutiny by the public less scrutiny by officials and potentially bad law with more loopholes. That is why we are opposing a truncated process.CLARE CURRAN (Labour—Dunedin South):In relation to the debate on the referral of the Taxation (Bright-line Test for Residential Land) Bill to the Finance and Expenditure Committee the truncated period of time that is being allocated here by the Government is why we need to debate this issue. It really goes to a fundamental point about how this Parliament operates and the lack of respect that the Government of the day has for the parliamentary process.I for one in this House—and I would think all of the people on the Opposition benches—actually do take that parliamentary process seriously. But increasingly this Government is disrespectful arrogant and demonstrates hubris around the importance of the parliamentary process and the need to scrutinise legislation and have a proper select committee process—to get experts and people who want to have a say about laws before a select committee give them the opportunity to have their say and then to have the opportunity to get good advice and to have a decent amount of time to do that. That is why we are having this debate tonight in the House and that is why this Government is lacking in its respect for the fundamental democratic system that we have in New Zealand.I just want to refer to a comment that was made by the Minister of Revenue Todd McClay on 3 News on 18 May this year.Hon Simon Bridges: Oh that’ll be in context then.CLARE CURRAN: Well he is welcome to get up and dispute that he made the comment. What he said in relation to this bill was this: “despite only being a month in the works it was carefully thought-through.” The quote is—and I am sure there is video footage to prove that he actually said it—“Over a four- or five-week period we looked very closely at not only what the Reserve Bank is doing but what other measures may be there from a tax point of view.” I ask you whether that is in a rhetorical sense a decent amount of time—a month 4 weeks—for there to be a substantive piece of legislation put before this House. I actually feel a bit of sympathy for officials for being put in the position of being given such a short period of time to bring a bill before the House.There are times when short amounts of time are necessary—when there is a matter of great urgency such as the debate that we have been having around the refugee quota and the importance of responding in a compassionate way to issues of great moment in our time like humanitarian crises. It is also true that we have a crisis in the housing market in this country that we have a major issue of housing supply in Auckland and that we have a major issue with property speculators.This bill for which we are debating this motion on the truncation of the select committee process is an issue of great importance. It may be that a bill needed to be brought to the House in a hurry—and a month is a hurry—but it should also be given the opportunity to have a decent amount of time for there to be a good select committee process. That is the problem. We are not being given that. So 22 October is what around 6 weeks away? In order to advertise for submitters to actually get the submitters in the room how many days are we going to have for submissions?And not only for the actual physical submissions on this bill but how many days then does this select committee get for a response from officials and for the opportunity for members on that select committee to ask questions and to get adequate responses?This is a travesty. It is treating Parliament as a joke and it is happening over and over and over again. It is an embarrassment and anybody listening to this debate tonight should be deeply concerned about the “third-term-itis” that this Government is demonstrating—about the way it is treating the whole parliamentary process with absolute disrespect. The Labour Party is supporting this going to the select committee because we want to have this discussion but we are not going to get the amount of time that we need to have the discussion. Instead it is going to be rushed through. It is going to be sent back to Parliament and then the Government will say “Tick. Move on.” and actually there will be very little effect.I notice that Government members have all got their heads down over there because they know that that is what is happening and it is happening increasingly. It is an embarrassment. They should all be embarrassed to be representatives in this House with the amount of legislation where this kind of process is happening—where you are not getting proper public input where the officials are being disrespected and where the experts are not being brought in or if they are it is as a token gesture.This is a truncated period of time for a select committee process. I do not know how many times the Opposition members have got up and argued on these issues. It is an embarrassment. The Minister of Revenue himself says the legislation has been only a month in the works. The Prime Minister did the usual shrug of his shoulders and said: “Oh you know I might have said something 4 or 5 years ago but you know we’ve only just come round to the idea and oh what the hell. We’ll just give it a tick and move on and people will forget about it.” Well it is a matter of great moment. Parliament should be taking this seriously and we need to extend the period for this select committee process.A party vote was called for on the question That the Taxation (Bright-line Test for Residential Land) Bill be reported to the House by 22 October 2015 and that the committee have authority to meet at any time while the House is sitting (except during oral questions) during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 191 and 194(1)(b) and (c).Ayes 63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 58New Zealand Labour 32; Green Party 14; New Zealand First 12.Motion agreed to.Employment Standards Legislation BillFirst ReadingHon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): I move That the Employment Standards Legislation Bill be now read a first time. I nominate the Transport and Industrial Relations Committee to consider the bill and at the appropriate time I intend to move that the committee report to the House by 12 February 2016.This bill addresses a number of issues in the employment relations system. It includes measures to modernise the parental leave scheme improve levels of compliance with minimum employment standards and prohibit practices that undermine the mutuality of obligations in the employment relationship such as the zero-hour contract. Taken together these measures will promote fairer and more productive workplaces by providing enhanced protections and benefits to both employees and employers.The bill before us today is an omnibus bill in five parts. Part 1 makes substantial amendments to the Parental Leave and Employment Protection Act. These measures broaden the eligibility requirements of the parental leave scheme to better reflect current work and family arrangements and to provide more flexibility to increase choice and support labour market attachment. They complement Budget 2014 legislation that extended the period of paid parental leave to 16 weeks from 1 April this year and then to 18 weeks from 1 April next year.Currently eligibility for the entitlements in the scheme depends on being in continuous employment with the same employer for a certain period of time immediately prior to the child’s birth or adoption—6 months to be eligible for the paid leave entitlement and 12 months to be eligible for the extended unpaid leave entitlement. This leaves a number of hard-working employees unable to access the scheme—for example employees who have recently changed jobs casual or seasonal workers or employees with more than one employer. In addition only biological and formal adoptive parents are eligible ruling out some people who still have permanent responsibility for the care of the child.There is also no flexibility in how the leave is taken. If an individual goes back to work at any time during their paid or unpaid leave even if just for a few hours then the remainder of their leave entitlement is forfeited. The amendments to the legislation address these issues by extending eligibility for the scheme to employees in a wider range of working arrangements such as those that I have mentioned already and employees in a wider range of primary-care arrangements such as permanent guardianship Home for Life carers and whāngai arrangements. They also permit employees who have been with their employer for more than 6 months but less than 12 to take 6 months’ unpaid leave.The amendments in the bill also increase flexibility in the scheme in relation to how leave can be taken. The introduction of keeping-in-touch days will allow employees to work up to 40 hours during the period of paid leave. They will also be able to take their unpaid leave flexibly by mutual agreement with the employer. So for example if there was a period in which they were going to have extra support—perhaps they have parents staying who can help out—they could return to work by arrangement but then continue the unpaid leave afterwards.Today I also announced that the Government would extend paid parental leave to parents of preterm babies. Earlier this year I agreed to work with ACT leader David Seymour to review the support provided in situations of multiple births disability and preterm births. Assistance is already available to parents of multiple-birth children and to parents of children with disabilities. However I have had fruitful discussions with Mr Seymour and have accepted that for parents of preterm babies there is an opportunity to provide more assistance. As a result the Government will make changes to the Employment Standards Legislation Bill to extend paid parental leave to eligible employees and self-employed parents of preterm babies.Under the changes eligible parents of preterm babies will be entitled to a longer period of parental leave payments than the standard 18 weeks if the baby is born prior to 37 weeks of gestation. They will receive additional weekly payments for each week the baby was born prior to the 37-week gestation period. For example a mother who gives birth at 28 weeks would receive nine additional weekly payments making it a total of 27 weeks of payment. Contrary to media reports today that the example meant that the maximum number of weeks would be 27 this is not the case. Minimum viable gestation could be just 24 weeks meaning 31 weeks of paid parental leave would be available in that situation. I want to thank Mr Seymour for his contribution in helping make our paid parental leave framework more modern flexible and practical.The next main purpose of the bill is to address compliance with minimum employment standards. Non-compliance not only disadvantages the workers it directly affects but also the wider New Zealand economy through for example anti-competitive behaviour. The bill includes a number of measures to strengthen enforcement of employment standards. These primarily amend the Employment Relations Act through Part 2 of the bill though associated amendments are made to the minimum entitlement legislation in Parts 3 to 5. Broad new accountability provisions mean that persons other than the employer will no longer be able to avoid sanctions if they are knowingly and intentionally involved in committing breaches of employment standards.Other measures in the bill include requiring that in all circumstances employers have a record of the hours their employees work each day in a pay period and the pay received for those hours; overturning the statutory obligation on the Employment Relations Authority and Employment Court to send employment standards cases to mediation; and introducing an infringement regime in relation to the obligation on employers to keep records and where relevant individual employment agreements in relation to each of their employees.These measures are complemented by the Budget 2015 announcement of increased funding for the employment system. Among other things this funding will improve the provision of information to employers and employees on their rights and obligations and will provide for an additional nine labour inspectors—eight of these in Auckland—bringing the total number once appointments have been made to 53. Taking into account the six additional inspectors that were appointed in Christchurch in 2014 this is an increase in the inspector numbers of 40 percent over the last 2 years.Finally the bill includes measures to address what have become known as zero-hour contracts and other practices that undermine the mutuality of obligation in the employment relationship. These are found in Parts 2 and 5 of the bill. Although businesses need flexibility to be able to adapt to fluctuating demands it is also important that employees have enough certainty to plan financially and in their personal lives. However some practices have developed where there are not mutual and reciprocal obligations. Zero-hour contracts as distinct from casual working arrangements require employees to be available for work without a guarantee of work or any compensation for that time.To address this the bill requires that where parties to an agreement commit to a set amount of hours those hours are stated in the employment agreement. Employers and employees do not need to agree to an amount of hours. However the bill ensures that employees cannot be required to be available for work beyond what is agreed without either being paid compensation or being able to decline work on a case by case basis without fear of negative consequences. Similarly an employer will not be able to cancel a shift at short notice without the payment of compensation as agreed in the employment agreement or prevent an employee from taking up secondary employment unless there is a genuine reason based on reasonable grounds.Finally in response to the situation in which employers were making deductions from employees’ wages to compensate for loss or damage caused by third parties the bill also amends the Wages Protection Act to prohibit unreasonable wage deductions. This bill makes the employment framework fairer for employees and better for businesses and I commend it to the House.IAIN LEES-GALLOWAY (Labour—Palmerston North): I want to say at the outset that Labour will support the Employment Standards Legislation Bill going to the select committee. There is a range of aspects of the bill that we think need thorough discussion at the select committee and our continued support after that point will be reliant on there being some significant changes to the legislation. It seems unusual that the three issues that have been brought together in this legislation have been brought together under one bill. I suspect that what happened was that the Minister was intending to bring the changes regarding minimum standards. Then there was a campaign led by the Labour Party and others—fronted extremely well by Sue Moroney—on paid parental leave. The Government realised it had to do something about paid parental leave so that got tacked on to this legislation. Then there was the spectacular campaign led by the Unite union around zero-hour contracts. The Government realised that it needed to be seen to be acting on those as well so it tacked these other things on to this legislation. It is a bit of a dog’s breakfast but if this is the way we are going to get to address these issues then so be it.There are some valid issues that have been raised in this legislation. We do want to see it go to the select committee albeit there is some work that has to be done. I would like to focus my contribution on the issue of zero-hour contracts. Our first concern is that although the Minister promised he would get rid of zero-hour contracts what in fact happens with this legislation is that zero-hour contracts are legalised. What we get from this are rules for how to use zero-hour contracts not their abolishment which is what New Zealanders thought they were going to get.At the moment zero-hour contracts are of dubious legal status. Whether or not our current employment law actually allows permanent part-time agreements with no fixed hours is a matter that a lot of people have wondered whether it ought to be tested by the courts. In a way it has potentially restricted the use of these contracts because of that dubious legal status. This legislation gets rid of that dubious legal status and enshrines zero-hour contracts in law. We are deeply concerned about that. We think it has absolutely the opposite effect to what the Minister stated the purpose of this legislation is.Getting rid of zero-hour contracts is incredibly important. Zero-hour contracts is one of the most exploitative tools in the bad employer’s tool box. They leave people at the absolute mercy of the employer as to how many hours of work they get from one week to the next. The way they operate means that people have to be available for work whenever it is offered. They have no opportunity to turn down work. They might get 10 hours one week 6 hours the next week 15 hours the week after that and zero hours the week after that but they have to be available at all times. What we get are people who maybe have come off a benefit. They have done the right thing. They have done what the Government has asked them to do. The employer makes vague promises about how many hours of work they are going to get and what ends up happening is that they get far fewer hours than they were expecting. They do not get the certainty of income that they were expecting and they end up worse off often in an employment agreement in work than they were when they were on the benefit. They might have left other jobs for this.It does not affect just young people. The people whom I have found the most moving to talk to are parents often sole parents who are trying to make ends meet who are trying to provide for their children who are trying to put food on the table pay the rent and save some money and they just cannot do it without the certainty of guaranteed hours. When there is competition for rentals the tenancy agent will say: “Can you show us how much you earn from one week to the next?”. People on zero-hour contracts cannot do that let alone try to go to the bank and get a mortgage where likewise they do not have a chance of doing that when on a zero-hours contract.The Government is right to say that we have got to do something about this. But what we actually need is real change that gets rid of zero-hour contracts not enshrines them in the law. The Minister says that those people who are expected to be available for work will be paid compensation by their employer. How much compensation? That is not in the legislation. Will it be money? That is not in the legislation. Exactly how is this going to work Minister? Does the Minister expect that people will be able to bargain for good levels of compensation in their employment agreement? Well we are talking about people on zero-hour contracts. These are the most vulnerable workers in our society—the people who are offered zero-hour contracts and who have to take them or leave them. It is ridiculous to expect people in that situation to be able to bargain for reasonable compensation for being expected to be on call.Then we have got the issue of shift cancellations. Again what we are being offered here in the legislation is worse than the status quo. At the moment basic contract law says that if you are offered work and you show up for that work you have completed your part of the bargain. If the employer then says that that work is not available they have not met their obligations under basic contract law. They would be obliged to pay you for the work that you agreed to do and which they offered you. Under this legislation there could be a clause included in people’s agreements whereby those shifts could be cancelled and they would get again compensation. But how much compensation? And will it be money? Will the employer be able to say: “I’ve cancelled your shift. Would you like fries with that?”. Because that is the situation we could be facing. So in a lot of ways this legislation is going to leave vulnerable workers in a worse situation than they are already in.We might hear employers saying “Actually you don’t have an 8-hour shift; you have a series of 2-hour shifts.” so that they can limit their liability for cancelling shifts at short notice. There are too many gaps in this legislation as it is written right now. I think actually that this is legislation that increases flexibility. It increases the opportunities for exploitation dressed up as something that is supposed to make workers safer and more secure at work. It does the exact opposite to what the Government has been telling us it is supposed to do.It is good to see again that the Government is considering the issue of restrictions on secondary employment—so-called restraint of trade clauses. But again under our current law we already have quite tight restrictions on when restraint of trade clauses can be used. We are concerned that the way the legislation is currently worded actually makes it possible for an employer to include more pervasive restraint of trade clauses that capture more alternative forms of work than what is possible under the current legislation. We need to have a good look at all of those things. Most important we need to have a clear separation of casual agreements and permanent agreements—whether they are part time or full time. This legislation blurs those lines even more than what we already have. There may be some things that we can do about this and I would like to offer two possible ways forward before my time is up.First of all we could look at what Unite has achieved through their collective bargaining with the fast-food industry and look at setting guaranteed hours based on what hours people ordinarily work. You might have an initial period where there are no guaranteed hours and then after that people have to get guaranteed hours based on what they normally work. That is essentially how those collective agreements bargained by Unite work. We could look at enshrining that in the law. The other thing is that we could look at casual loading. If you want to put someone on a casual agreement you have to pay a little bit more for that and if you do not want to pay more then you have to give people guaranteed hours so that there is a clear distinction between casual agreements and permanent agreements that give people guaranteed hours.There is a lot of work that needs to be done to this legislation if it is to get the support of the whole House throughout the whole process and if we are to be sure that it is legislation that will actually make vulnerable workers more secure at work. At the moment we fear that this legislation will make vulnerable workers more insecure and do the exact opposite to what the Government has promised. But we are prepared to work with the Government to make it work properly.JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand and speak on the Employment Standards Legislation Bill at its first reading. I am sure that when this bill comes to the Transport and Industrial Relations Committee we will work through all the issues and that will bring the clarifications that the previous speaker Iain Lees-Galloway does not see.It is quite difficult to have just one-size-fits-all—we know that—when it comes to people who are on call. There are people on call right throughout our workforce such as glaziers. If a building is broken into or a storm shatters a window of a department store then the glazier comes in at all hours of the night to repair it. There are other people who are on call such as plumbers. I received a phone call from a friend of mine at 10 o’clock at night. I was driving to Auckland and got a message on my cellphone asking whether I knew a plumber because of a leak that had sprung in their house. I was able to get the person there to repair the leak. That person was on call. Of course they do get reimbursed and when the bill came in the following week we understood just how much people who are on call can charge.There is a lot of complexity about being on call. I understand the concerns and sentiments of the previous speaker. All of that will be become clearer and clearer as we go through the select committee process.What I want to speak on principally tonight is the paid parental leave component of this bill that has been presented. Thank you to the Minister for Workplace Relations and Safety for I think the broad range of amendments that this bill contains. They are determined to make this provision far more flexible for the modern workplace. It is so important that our legislation is not only the rule of law but also encompasses the will the understanding and the cooperation of people as people in the workplace have all sorts of different employment scenarios these days.The number of live births registered in New Zealand in the year ended March 2012 was 60860 and data shows that the proportion of paid parental leave recipients as a percentage of births was around 42 percent. So this does affect a very large significant number of people. The purpose of this bill which makes amendments to the Parental Leave and Employment Protection Act is to create a greater flexibility so people can take hold of these entitlements which can work for their family situations while at the same time they maintain build or support the connection with employment that they have had previously and desire to return to. That is very very important.There is no doubt that parental leave has economic and social benefits including a positive impact on a child’s cognitive development on child health on economic growth and on labour force participation. It also reduces child poverty. We are going to hear about all of these provisions in the select committee process. We look forward to submitters submitting and then coming to the select committee and I am sure we are going to have a very interesting and a very good debate over the issues.I believe we will end up with legislation that is going to greatly enhance the employment provisions of people in New Zealand. I am very happy to commend this bill to the House.SUE MORONEY (Labour): It is a pleasure to rise and speak to the Employment Standards Legislation Bill—a title that actually says nothing. It would be very very difficult for anyone listening to this debate to even work out what on earth would be in a bill with such an odd name that describes virtually nothing. The fact that we have just heard a speech from a Government member on a bill that Government members should be very excited about and very committed to that could not even last 8 minutes—I think it was probably about a 6-minute contribution—I think probably says it all in terms of the position the Government has found itself in. It has had to make these sorts of changes against its will. But none the less I am going to be generous and say congratulations to the Government on doing some good work on this bill.As my colleague Iain Lees-Galloway outlined before we do not think the Government has it completely right but we are prepared to work with the Government to get it right. We think there are some substantial changes that need to happen to continue to gain the Labour Party’s support for the passage of this bill through all its various stages. But I do want to particularly note at this point that the Labour Party has no difficulty voting for a bill that improves paid parental leave even though it has the National Party’s name on it.Hon Ruth Dyson: Unlike National.SUE MORONEY: Unlike the National Party which actually plays politics at the expense of parenthood at every step along the way. The amendment it has announced today I think perfectly describes exactly how mean-spirited and how political the National Party is on this issue. Just a few months ago in February this year that same Minister that National Party voted against my proposal to do pretty much what they have suggested should happen today and that is extending paid parental leave to 26 weeks for babies born prematurely. They voted against that.I was shocked to see reported in the media today that the Minister actually said out loud that if David Seymour had voted for my bill which he intended to do at that point that miserable Government would have vetoed it. National would have vetoed a bill that was going to support the most deserving of our families: families whose children are born with disabilities families where there is a multiple birth and families whose babies are born prematurely.That bill which I proposed in February of this year at its highest level of implementation would have cost $8 million—$8 million. The Government said today that if David Seymour had dared to vote for my bill it would have vetoed it—while it goes out and spends $26 million on a flag referendum that not many people want. I think that shows the mean-spiritedness of this Government. It shows the Government’s complete lack of commitment to families and it shows the lack of decent priorities it has for this country. The Government would rather invest in John Key’s vanity project than do the right thing even though it be in the name of a Labour member of Parliament. Politics is the thing that is at the front of Government members’ minds whenever they are addressing this issue.The Labour Party however does support the proposals in this bill but we do not think they go far enough and we will be dealing with that next week in this Parliament. We will be debating a bill extending paid parental leave to 26 weeks for all eligible families. We are going to be proposing that because we firmly believe that all children deserve the best start in life.I remember reading a book some years ago called Politics in the Playground: The world of early childhood in New Zealand written by Helen May. It is a fantastic book. It describes the politics going on around the funding of the early childhood education sector. I would recommend it to anyone. But I could just about write a book now called “Politics Interfering with Parenthood” because that has been my experience in this Parliament over the course of the last few years.For those who have not been keeping up here is what happened. In February after the election as a result of not having the voting numbers to get through 26 weeks’ paid parental leave for all families which the Labour Party was promoting I amended my bill so that it extended 26 weeks’ paid parental leave to families with premature babies families with special-needs babies and families with multiple births. That brought the cost right down to a figure that I really felt the Government could accept. If it genuinely was about cost—which I do not believe it ever was by the way—the Government should have been voting for that.What I was able to do was get one of the Government’s coalition partners the ACT Party to agree that it would vote for it. But here is where it all starting turning belly up: when David Seymour informed the Government of his intention to vote for my bill the Government begged him not to. Then it made him a promise that it would do what my bill did under its own name. Poor old David Seymour fell for it. He fell for it and today the Government has played him for a mug. The Government has played him for a mug because it accepted only one portion of that. So the children the babies born with special needs are going to miss out on having this extra bonding time with their parents. Although the Government will argue that there are other supports there for children born with disabilities they are not the supports that allow parents to stay in the home and not be forced into paid employment within that period of time. They are not the measures that will do that.The Government has got it wrong about bonding and attachment and how important that is. It fundamentally does not understand this. Government members are prepared to play politics with it. That is all they understand about it—the politics of it. They do not understand what it is really about.I want to read from one of the regulatory impact statements on this bill. I just want to read out the problem definition that the officials have told them about. They say the problem definition is this: “Currently some families experience poor outcomes due to financial pressure on working mothers to return to the workforce earlier than is desirable for social and health reasons. This can lead to sub-optimal bonding between parents and their children leading to poorer outcomes for children and therefore society. Secure attachment is an important predictor of resilience in later life and a large body of evidence suggest that many adolescent difficulties including crime substance abuse and mental health have their antecedents in early childhood. … Reduced time for mother to bond with children is also reported to have reduced health and development benefits and does not achieve the World Health Organisation’s recommendation of exclusive breastfeeding for the first six months …”—for the first 6 months Minister Woodhouse. That is what your own officials have advised you.This comes straight out of the Labour Party playbook about why we are promoting paid parental leave to 26 weeks or 6 months. That is exactly what your officials are advising you to do and yet you come forward with this watered-down version. Despite the official advice that you are getting from your own officials you come with this watered-down version because it is the least you think you can get away with.Because of the politics played by the National Party and because of the ability for it to dupe David Seymour there are around about 2000 families that would have been getting access to 26 weeks’ paid parental leave right now from 1 July if that Government had not played politics with their lives. If it had allowed David Seymour to vote for my bill as he intended to that would be happening right now for 2000 families. As a result of the Government watering down what it promised him it would do and for breaking its promise to him there are roughly—and this is a conservative figure—about 1000 families every year for eternity who will miss out on getting extended paid parental leave because of what the Government did.I just want to remind this House who those families are. The families that the Government has ruled out and has said are not deserving are those whose children—their babies—are born with disabilities. Their babies are born with special needs and that Government says they are not deserving of having extended paid parental leave. The other group the Government has singled out is the families who have the joy of having a multiple birth. They have twins or triplets—if they are really fortunate they may have the joy of even more children being born at one time. The pressures that go on those families are extreme and I am sad that the Government has ruled them out as being not deserving.ALASTAIR SCOTT (National—Wairarapa): Well it is pleasing to hear the Opposition is in support of the bill at this stage but I do dispute the fact—or the assertion—that the National Government does nothing for families given that we have just increased benefits by $25 a week for families on benefits. We have got the under-13s with free medical health care and we have doubled the early childhood learning budget in the last Budget. As well of course we have had a very high worker participation rate forever—or since records have begun.This bill is in three parts and we will I am sure be debating and changing some of the details as we go through the process but this does allow for workers to reflect the modern workplace and the flexibility that is required by employees to participate in the workforce.The second part deals with the Employment Relations Act and it discourages and brings in higher penalties for those employers who are breaking the rules. Of course we have heard about the Wages Protection Act which deals with the zero-hour contracts—or contracts that allow people to be on standby if you like—and be compensated for that and that is the requirement in this bill. The requirement for that standby participation is that that employee is compensated. Of course reasonable notice must be given to employees if their shift has been changed or is cancelled. There are three parts and there will be three good debates going on and I commend this bill to the House.DENISE ROCHE (Green): I rise to take the first call for the Greens on the Employment Standards Legislation Bill. After quite a lot of debate within our caucus we will be opposing this bill going to select committee. We do recognise that there are some really good aspects to it and what we would have liked to see was a bit more positive stuff before we could give it our support to the select committee. That is not to say though that we will not be actively participating in the select committee process to try to amend the things that we disagree with in order to have a bill that we could agree with maybe on the second reading. The things that we like that fit with the Green’s kaupapa are around extending paid parental leave the stronger enforcement of existing employment standards the introduction of higher penalties at the Employment Court and greater power being given to labour inspectors. But the fact is that this bill as it is written has the potential to legitimise zero-hour contracts and actually make the situation around zero-hour contracts and insecure work even worse. On balance we cannot support that.Let me start by describing one of the key purposes of the bill which is to extend the paid parental leave scheme. We are great supporters of paid parental leave. Our policy is to extend it to 13 months’ leave and it was excellent to hear the chair of the Transport and Industrial Relations Committee talk about the benefits of paid parental leave. We also support Sue Moroney’s member’s bill for 26 weeks of paid parental leave and I want to acknowledge the fact that the amendments that David Seymour has been able to make are as a result of the last bill around paid parental leave being 26 weeks which Sue Moroney brought to this House and the amendments and compromises she made in an effort to get it through and failed. We acknowledge that and these aspects of this bill are good and we would be supporting them.I would like to move now to the stronger enforcement of employment standards. We absolutely support this too. According to the Statistics New Zealand’s 2012 Survey of Working Life about one in five working New Zealanders was not receiving at least some of the minimum standards that we currently have. From our perspective this bill does three main things that support stronger enforcement of minimum standards: one it gives labour inspectors more powers to apply for orders from the Employment Court in cases of breaches; two it creates robust definitions of what constitutes breaches of employment standards; and three it provides higher penalties that the Employment Court can bring. We support all of these changes because basically we support working people having a fair go. However although the legislation does provide labour inspectors with more tools to deal with problems the legislation is only one of the steps we can take.Although I acknowledge that the labour inspectorate does a really good job and has received more funding recently it is still insufficient to police the sadly too common problem of labour abuse. In previous years and previous times we have had unions that did compliance work so it did not fall simply to labour inspectors. A classic example is in today’s paper with the New Zealand Herald reporting on the Masala restaurant which had abused and underpaid workers for 5 years between 2009 and 2014 with the most egregious example being a worker who was paid $2.64 an hour to work a 66-hour week. The question is: how has it taken 5 years for this tragic work environment and these breaches of minimum standards to come to light? Our inspectors do work very hard but there are not nearly enough of them. We have currently got in New Zealand one labour inspector for 53658 New Zealanders compared with Australia where they have better employment standards and one of the reasons is because of the compliance. They have one labour inspector to 19130 Australians. The employment relations climate that this Government has created through its imbalanced and disproportionate favouring of employers from the “HobbitBill” to the provisions in this bill that legitimise zero-hour contracts means that workers are afraid to speak out so there is far more work for labour inspectors to do. So although I do applaud the positive provisions in this bill that allow for stronger enforcement it seems to be a hollow gesture in light of how under-resourced the labour inspectorate is.The climate of fear that has been pervasive throughout the industrial relations environment in New Zealand is as a result of the changes that I have just referred to that this Government has made. The best example of how that plays out is zero-hour contracts. As with the Health and Safety Reform Bill it appears that National has capitulated to vested interests—although it has done it at the start of the process this time instead of at the end—in providing very weak provisions around it. There are some quite obvious flaws—and I hope they are not deliberate flaws—in this part of the bill Part 2.The first flaw is that the current legislation requires employment arrangements to contain only an indication of the arrangement relating to the times that the employee is to work. It is a very weak provision. The New Zealand Council of Trade Unions has rightly pointed out that this bill does not contain any provisions for a minimum notice period for an arrangement and actually workers need at least a week’s notice so that they can plan their lives.The second flaw around zero-hour contracts is the availability provisions set out in new sections 67E and 67F in clause 87. The key problem with this is that the bill does say that there must be payment of compensation but it does not actually define what that is. This could just be something as simple as 50 cents an hour. We think that is unreasonable and that there should be a minimum defined compensation payment. Furthermore although we applaud the intention of section 67F—that employers must not treat employees adversely for refusing to undertake additional work—we know from experience that this law will regularly be flouted and that the overworked and under-resourced labour inspectors will not be able to do much about it. The power imbalance exists in many industries that use zero-hour contracts and the lack of definition around compensation means I am afraid that workers will be bullied into signing broad availability clauses that basically undermine the whole deal.The third area is around shift cancellation. This is actually worse than the status quo where workers can actually be entitled to be paid for the cancellation of shifts but like the availability provisions there is no minimum compensation and there is no test for reasonableness.My final comment is around the departmental disclosure statement which actually said that the Ministry of Business Innovation and Employment tested some of these proposals and that Business New Zealand indicated that it was comfortable with the approach. I think it summarises the lack of balance in this legislation—that the Government is happy to consult with Business New Zealand but it has not actually taken on board the other side of the story which would have been represented by the New Zealand Council of Trade Unions. We are deeply saddened that we cannot support this bill. We will be following it through the select committee process. If there are major improvements in the areas that I have outlined here then we would probably reconsider and so I hope that we will have a good relationship and a good discussion when we come to the select committee. Thank you.CLAYTON MITCHELL (NZ First): I rise on behalf of New Zealand First to stand and speak on the first reading of the Employment Standards Legislation Bill. I have to say that we are going to support this bill going to the select committee—Alastair Scott: Good.CLAYTON MITCHELL: —and I think it is quite important that we do actually start heading in the right direction with this.I do feel though Mr Scott that it is one step forward and two steps back because you offer some good things on one hand but you really muff it up a little bit when we are talking about the zero-hour contracts. I think that is probably the biggest thing in today’s society around workers and contracts that people have got some serious concerns about. We certainly have those concerns. We have heard from Labour members today that they have the same concerns and I am sure that even the National Party and its members will be having some serious concerns around those zero-hour contracts.I will just point out some commentary through the media which has come out with comments relating to that. It says here on 3 News on 21 August 2015 “Bill allows zero-hour contracts in disguise”. Then it has got here on Radio New Zealand News on 12 July 2015 “Where’s the zero hours contract ban?”—because in actual fact they have not banned zero-hour contracts. That is what has been largely put out to the people of New Zealand—they are saying: “You’re right we don’t see the sense in zero-hour contracts. We’re getting rid of them.” When I have spoken to people building up to this legislation they have said: “Well I thought they’d gone. I thought they had actually been abolished and sent out.” In actual fact they have just been dressed up. They have put a bit of lipstick on it and they are calling it a pig but in actual fact we know that there is something a little bit more sinister hidden in that.We hope that when we get this piece of legislation coming through the select committee this Government will actually see the sense in what New Zealand First is saying and clearly in what Labour is also saying. While I am talking about that I would just like to point out a media release that was sent out on 12 July by the Ministerhimself Michael Woodhouse. It says here: “Workplace Relations and Safety Minister Michael Woodhouse today announced a package of measures to prevent unfair employment practices such as ‘zero hour contracts’. ‘New Zealand has a well-functioning labour market in general and our employment relations framework aims to strike the right balance between flexibility and certainty’.” But the flexibility for the employees I would suggest and the certainty for the employers—it just seems to be a little bit round the wrong way.The Minister says herein the media release: “ ‘For example zero-hour contracts refers to employment arrangements including permanent where the employer does not guarantee any hours of work yet requires employees to be available. This is unfair and makes it difficult for employees to plan their financial and personal lives.’ ” Yet what we are reading in this bill that is in front of us here is in actual fact that they are just dressing it up a little bit but keeping that ambiguity for those workers. There is no certainty around the hours that they will be able to work. They say that they can be compensated—and Mr Young mentioned people who are on call-outs—well if you are getting a glazier in to do a call-out at midnight then you are clearly going to be remunerating the glazier well and truly. But we are talking about extra work and call-outs and things for those workers who are more vulnerable who are not likely to get as well remunerated. We have some serious concerns aboutthat.There are two parts in this media release certainly that we do support. It goes on to say “employers putting unreasonable restrictions on secondary employment of employees”—well that is fair and reasonable. There is no way that an employer should be able to hold a staff member over the barrel and say: “You can’t go and work anywhere else.” However this bill will allow people to get around that legislation in various devious ways if we allow them to do that. I think that is an area that needs to be tightened up. Another area of the media release that is good is “employers making unreasonable deductions from employees’ wages”. Well we have heard the stories of petrol pump attendants who have had people drive up fuel up their cars and then scarper off without paying and the poor employee is being left to foot the bill because the boss has said that is not right. I am sure that is the very reason for this piece of legislation: to try and fix up some of those problems that are happening in workplaces.Certainly there are vast numbers of workplaces where deductions are made on wages—in kitchens with kitchenhands dropping plates etc. They can be charged. Waitresses and maîtres d’hôtel who are on queue who have people leaving without paying their bills could well and truly be forced to pay for those bills. We do support this through to select committee.We do have like everybody else some very serious concerns around those zero-hour contracts. I think this legislation is going to work very negatively and make it acceptable and almost bring it into law—the practice of actually allowing zero-hour contracts to exist.Also with the cancellation at the last minute of shifts there are ways in this current bill that employers could get around that by giving employees only 2-hour lots to work within. If they were doing that then at the end of their 2-hour shift employees can get another 2 hours and then another 2 hours which means that under this legislation and the way it sits and reads at the moment an employer could get around paying a staff member by simply saying “Well you are doing only a 2-hour shift anyway. Would you like to do an extension on that? We’ve got some extra hours.” and that would negate them paying anything.A big positive however is of course the extension on the paid parental leave. I think this is a step in the right direction. My wife and I are raising three small children ourselves. Knowing the absolute importance of having those first 6 months at home with your child a lot of mothers choose to breastfeed and it certainly is a very very important part of the child’s learning. It is good for their cognitive learning and good for their immune systems and it seems absurd that we force parents back into the workplace without giving them an extended period of time to actually bond with their child and get their child into some patterns.It is no surprise also that we see Mr David Seymour—who does remind me a little bit of Virgil from Thunderbirds Are Go with his “puppet on a string” type sideshow that we see from time to time. The reality is there should have been support for Sue Moroney’s and Labour’s bill earlier on in the year and we were disappointed that that was not supported. Labour enforcement officers are going to be a big part of this new legislation and there are going to be some big fees and fines dished out to those employers who are going to be breaching laws and regulations and I think that comes in positive grace as well.Again New Zealand First supports the direction of this bill. We have some serious concerns about some of the implementation and we hope that this Government—when we get down to the nuts and bolts of it in the select committee—will see the sense in a lot of what has been said here today because I have to say there is a lot of support on this side of the House for this piece of legislation this bill coming through. We are very concerned about a number of aspects and we would like to think that those changes could actually be modified for the proper benefit.I said before that it is one step forward and two steps back. Let us try to hope that the genuine intention of this Government is to minimise the steps back and make it three steps forward which would be a much better conclusion. Finally this bill being an omnibus bill is obviously very very clunky and mishmashed and put together quite oddly. Mr Lees-Galloway mentioned the same thing. We also believe—Clare Curran: A mash up.CLAYTON MITCHELL: —it is definitely a mash up—that things could have been done better in separation rather than trying to push it all together and to force it down our throat.So we look forward to seeing this bill in the select committee. I think there are a lot of good discussions to be had. David Parker’s bill will fit quite nicely into this which of course works in with the minimum wage for contractors bill. This is what it is all about—making the 21st century a place that is good for employers and employees so that this country can be the powerhouse back in the Pacific that we once were. Let us see some positive changes. Thank you.ANDREW BAYLY (National—Hunua): It is a pleasure to be talking on this Employment Standards Legislation Bill and it is great to hear everyone from the other side broadly supporting what we are doing tonight. I think it is an excellent thing.Do you know what? This bill really addresses four key issues. The first one is in respect of the Parental Leave and Employment Protection Act and it really complements what we did in the 2014 Budget when we increased paid parental leave to up to 16 weeks and obviously next year we will increase it to 18 weeks. But this bill makes two key changes. The first is it reduces the time limit from 12 months to 6 months if people are to access up to 12 months’ paid parental leave and that is a good thing. The other thing that it has done is it has extended the paid parental leave for those parents who have babies who are born early in their term and again I think this shows a very generous and a good and appropriate response to an important issue. We do want to help families with premature babies and enable them to grow up in a caring environment.The second thing that this bill does is in relation to the Employment Relations Act. What we have set out in this change is we are making it much more explicit around some of the requirements in terms of the holiday leave entitlement the minimum reporting standards and also minimum wages. I think that probably the most significant thing is we have increased the fines from $10000 to $50000for an individual and from $20000 to $100000 in respect of companies. These are quite significant penalties and again they reflect what we believe is a very appropriate change that needs to be brought into play quickly.The third element is around the Wages Protection Act. It was good to hear my colleague Clayton Mitchell talking just before about this dreadful practice where employers have been charging employees for actions caused by third parties. Of course we are all aware of the petrol stations but I think the examples my colleague mentioned before around restaurants and things like that are also very very relevant. It is good that we are addressing this. Again it shows a Government that is responding to what is happening has been aware of what is happening and is bringing in legislation to deal with it.The fourth element is in relation to the zero-hour contracts. What we have actually done contrary to all the hyperbole—and I have heard that word a lot this afternoon—around it is require that employers actually specify in their contracts and actually state the minimum number of hours that they want employees to work. We have also prohibited the practice of employers doing two things: first of all requiring an employee to work more than those specified minimum hours—and they might be quite a small number of hours—unless there is an agreement and also unless there is compensation paid. The second thing is that in the event that a shift is cancelled without reasonable notice then compensation is also required.When you look at those four key changes I think these are very important and worthwhile amendments to be making to these various Acts and I support these changes.The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Jan Logie—5 minutes.JAN LOGIE (Green): I rise to take a short call on this the first reading of the Employment Standards Legislation Bill on which my colleague Denise Roche has already outlined the Green Party’s position in some detail. So I would like to confine my contribution to looking at two particular aspects of the bill: first paid parental leave and secondly the zero-hour contracts aspects of the bill.Sadly the Greens as has already been stated cannot support the bill in the state it is in at the moment. I noticed that the member who has just sat down Andrew Bayly said that this bill is proof that the Government is aware of what is happening in our communities and in our workplaces and that National is the party to respond—to paraphrase his contribution. Well I would suggest that the zero-hour contract aspects of this bill are proof that this Government takes only superficial notice of what is happening in our communities that it is playing the numbers and that it is operating by focus group without any real consideration of the lives and the needs and the precarious state of many people’s lives in this country at the moment. That is at the heart of why we cannot support this bill as it is at the moment.The Council of Trade Unions has concerns that this bill will actually legalise zero-hour contracts whereas at the moment employers are actually taking legal risks using zero-hour contracts because they are not in our law and they are open to challenge. What this bill does is it puts them on a firm footing to enable employers to engage in those contracts. Sure the Government will say that it is about negotiation and we heard that again through the health and safety legislation—this absolute unwillingness to listen to people in the communities about that power differential and about how so many people in these jobs just feel completely unable to negotiate because they feel as if all of their hours and their wages are on the line if they complain and if they stand up for something. So people are being told that they should be grateful for work and they are acting as if they are because they are so worried about losing their jobs.I was speaking today with some workers who were saying that they are in full-time employment and that that now equates to 32 hours a week. They are earning what is now considered by many sadly to be a decent wage of $16.50 an hour. That is $27000 a year. They are having to feed their families and support their families on $27000 a year—on a full-time above - minimum wage salary or wage. This bill refers to people who are not even in that situation who cannot even be sure that they are going to have 10 hours of work a week who are still having to pay the rent and who are still having to try to put food on the table and feed themselves and send their kids to school. They deserve more certainty than that. The Government is suggesting that it is aware of what is happening and that it is listening and responding yet it comes back with a bill that actually entrenches in law the ability of employers to do that—for these people to have to work multiple jobs and not even be sure from one week to the next how they are going to pay their rent. I think that proves that you are not listening National members because that is not what our country needs.Those workers were telling us today when I asked them what their dreams were that they have had to put their dreams in a cupboard because they are so focused on surviving and on being able to put food on the table. This is an opportunity to have some aspiration for people in this country to enable them to have the very basic aspirations for themselves and to get their dreams back and this bill is a failure. It fails to give people any certainty. It onlygives employers a bit more certainty and that is not balanced that is not being aware and that is not what this country needs. Therefore at this stage we cannot support this bill.The ASSISTANT SPEAKER (Lindsay Tisch): I call Phil Twyford—5 minutes.PHIL TWYFORD (Labour—Te Atatū): Members of the public are often a bit disbelieving when you tell them that in Parliament the Opposition will often vote for Government bills. They think because they see the contest of ideas in question time that it is always about conflict and that we always disagree. On this side of the House we take seriously our role as legislators and when a bill makes even a small marginal increase in the well-being of the general population we feel compelled to vote for it. It might not be perfect; it might not have the kind of ambition that we do but if it offers even some very incremental gain we will vote for it.But it is so depressing and dreary to be in this House debate after debate bill after bill voting for completely inadequate legislation. This is yet another example of a bill that is at first blush a mixed bag to say the least. It has got some good parts in it which I will touch on but other parts we have serious misgivings about.This bill illustrates I think the fact that in National’s parallel universe not only is there no housing crisis and the economy is going fine but also this bill will end zero-hour contracts. That is what Michael Woodhouse promised. He went on TV and said that he was going to end zero-hour contracts because they are unconscionable. But actually what we find looking at this bill is that the effect of it is that it simply creates a new set of rules for zero-hour contracts. The Government is not abolishing them and it is not getting rid of them; it is simply regularising or legalising them.There was one very telling part of the regulatory impact statement that I want to refer to. There is a discussion in the regulatory impact statement about how the Ministry of Business Innovation and Employment prepared the first version of it and then when Treasury got hold of it—and I am sure the clammy hand of the Minister can be seen in this as well. The ministry had initially considered the option of a general ban on unconscionable practices—that is zero-hour contracts. It was deemed that it might have unintended consequences and the National Government’s actually putting a stop to zero-hour contracts would have been considered to be a very undesirable and unintended consequence.This bill is the National Government’s idea of a win-win. What it wants to do is polish the idea that it is listening to public opinion which was clearly outraged by zero-hour contracts and the incredibly exploitative situations that many workers find themselves in. The Government wants to polish up the notion that it is a moderate centrist Government that listens to public opinion but at the same time what it wants to do is pursue that most precious of National Government goals: pushing down labour costs undermining the rights of workers and weakening collective bargaining. That is what the provisions in this bill do not only on zero-hour contracts but also on some of the other issues that I want to mention shortly. They weaken the position of workers in the workplace.Let us talk a little bit more about zero-hour contracts because what the bill seeks to do is address this in a couple of ways. First it says that an individual employment contract is required to containonly an indication of the arrangements that relate to the times that an employee has to be available for work. That provides littleprotection if any at all. Under the bill if the employer requires the worker to be available for work beyond their contracted hours then they have to put an availability clause in the employment agreement and the availability clause must include some compensation for being available for work. It does not say how muchand as previous speakers in this debate have said that could be a minuscule amount—a symbolic amount. It could mean that the amount is rolled up into a salary. It actually makes matters worse. At the moment the legal position of zero-hour contracts is highly dubious. The courts do not look kindly on them. This bill will institutionalise them and that is the big concern that we have.SARAH DOWIE (National—Invercargill): Despite what the member opposite Phil Twyford had to say I think that this is a good bill and of course I rise in support of it. When the members opposite say that we do not take our role seriously I want to put on record that as a constituency MP I do. I know that members on this side of the House do and we will respond to an issue if it is raised with us.This is an agile Government that is going to respond in kind and put forward a bill that can be debated in the select committee and it may well be manoeuvred and malleable in parts but that is a good thing. We want to have that debate. With respect to zero-hour contracts anything that talks about prohibiting employers who do not commit to hours of work for employees and calls for prohibiting employers who cancel shifts without providing reasonable notice or who put unreasonable restrictions on employees with respect to secondary employment—those things are unreasonable. We agree with that and we want to take the time to debate it and make sure that zero-hour contracts are used appropriately and that flexibility is retained but that it is an appropriate mechanism of employment law.The other thing that I want to touch on briefly is of course paid parental leave. As a mother who has had two premature children—at 32 weeks and 36 weeks—I want to say that extending paid parental leave will be of benefit. I am pleased that both sides of the House agree with that. It is going to be a great help to those families who have premature babies including extending paid parental leave provisions to have keeping-in-touch days which I think for professionals and other women—or men for that reason—who take paid parental leave and who work will enable them to get into the workforce and keep in touch and not lose any confidence in respect of their profession.I think this is a good bill. I think that it will be well-received in the select committee. Of course we will have some robust debate but that is part of the process and I welcome that and support this bill.ANDREW LITTLE (Leader of the Opposition): It will be known to most members of this Parliament that every time the National Government touches a piece of employment legislation either it completely turns it to custard or it takes rights away from working people—that is what it routinely does. It does not necessarily enhance the rights of employers or make it easier or better for them but it always penalises workers. This piece of legislation is a bit like the curate’s egg. I know it is a cliché. Maybe some parts of it are not actually too bad but there is one part of it that is an absolute shocker and it will turn workplaces and those who use part-time workers and casual workers into an utter shambles. I am going to come back to that in a minute but I do want to acknowledge as I said before that there are some parts of this legislation that are maybe not too badon the face of it actually and we will work with the Government and our colleagues in other parties at the select committee to work our way through the bill and make sure we get the best out of it.It is disappointing that the provisions on paid parental leave do not meet the very clear expectations of most New Zealanders that we will have 26 weeks’ paid parental leave. This was in the Sue Moroney legislation—the work that Sue Moroney has championed and has been the vanguard of—but that is all right. It is typical for this Government—just do a little bit sort of put the reel out and just do enough to sort of get the monkey off the back. And it has done that.I am intrigued by this new reference this new provision—this new employment law beast called keeping-in-touch days. I wonder whether this is a bit of self-interest from the National Government. Knowing how far out of touch it is members opposite are now needing to set aside special days to put themselves in touch. I am not going to criticise them for doing it and I am happy to grant them leave for as many days as they need in order to be in touch again because they are desperately out of touch as has been demonstrated so often just in the last few weeks.I want to turn to what I think is the critical part the essential part of this piece of legislation bearing in mind that the Minister who introduced this legislation has gone on record publicly several times to say that it will deal with the evils of zero-hour contracts. Of course we now know that it will not. Anybody who says to the public of New Zealand to the workers of New Zealand that there is now legislation before Parliament that will put to bed the evils of zero-hour contracts is misleading New Zealanders and that is unacceptable.I do not want to turn this into a Committee stage speech but I do want to prevail for a moment on clause 87 and the proposed new sections 67C to 67H because I do not know how a Minister or Cabinet or members doing their job of looking through this legislation before it is even introduced could allow this to get through the approval channels. These are the provisions that are dealing with—or that Government members say will deal with—zero-hour contracts. They provide for hours of work to be provided in an individual agreement or a collective agreement and then they provide for this beast called the availability provision. The worker is required to be available under the employment agreement. It talks about an “availability provision” being “a provision in an employment agreement under which—(a) the employee’s performance of work is conditional on the employer making work available …”—no guarantee of work; it is conditional on the employer making it available—“and (b) there is no obligation on the employer to make work available …”.This takes us back to the 19th century and we are now back into the sort of stuff that Charles Dickens wrote many books about. This is true exploitation and the fact that this could even be contemplated as a reality is a disgrace on that Government. Things have become so bad with the slow and steady erosion of employment law by this Government that expectations on standards are now so low that this Government can write into a piece of legislation and describe what is abject exploitation of working people in this country. And those members opposite are doing it shamelessly and with smug little smirks on their little faces. This is what employment law has come to in New Zealand today.Then the bill goes on. It says that there might be a requirement for compensation but it does not specify what that is. It does not even specify how it is determined and of course we know how that works in the weird world of the National Government. The individual employee is meant to rock on up to the employer and exercise the fullness of their bargaining power by saying: “Oh I want compensation because you haven’t made the work available. Even though you’re not under any obligation to and even though there’s nothing in my employment agreement please pay me compensation.”Those opposite of a mad mind seriously think that this sets an employment standard that we should relish and welcome. It creates no enforceable standard at all. It is the removal of any standards. It is the absence of standards and they have the temerity to introduce this in a piece of legislation called the Employment Standards Legislation Bill.This is an outrage apart from being sheer stupidity. This is the appalling thing about this legislation. If this Parliament is doing its job and if the members opposite have any conscience then this clause this provision cannot survive the legislation-making process as the bill goes through this Parliament. As it goes from here to the select committee if this provision survives in any form at all then that will be an acceptance and an admission that under this Government this Parliament can no longer protect the rights and interests of good hard-working Kiwis. It is acceptable in the realms of employment to have casual employment. We have had it for decades in this country. It is acceptable to have part-time employment—that suits some people. But it has never been acceptable in the hundred and more years of employment legislation and employment regulation to have provisions that allow the sheer exploitation of working people. We have never tolerated that. We have never tolerated it and we should not tolerate it now.I prevail upon the members opposite and the previous speaker from the Government Sarah Dowie who stood up and said: “Yeah sure we’ll work some things out.” Well you have got a lot to work out. You have got a lot to change here. You have got a lot to improve because in its present form thisis nothing other than a sheer and utter disgrace. It has to change if this Parliament wants to hold its head up high and if every member in it wants to hold their head up high and say that we are a Parliament that is about fair and just laws because that is what should guide us.We are a fair people. We are a sensible people and a pragmatic people and we want good employment regulation because we know that alongside the army of very good employers there are the exploitative and the bad employers. Workers look to this Parliament and say: “Make sure that amidst all our employment regulation we cannot be taken advantage of. Make sure when you are passing laws affecting our rights and interests as workers that we cannot be exploited.” It is not too much to ask and it is what workers around New Zealand are asking of this Parliament. They are asking it of every MP in this Parliament and we owe them nothing less.We will support this bill to be scrutinised closely by the select committee but with a very clear expectation that all members of Parliament on that committee including the members of the Government make sure that this bill is something that we can be proud of something that adds to the rights and interests of workers something that helps employers manage their workforces carefully and sensibly and something that does not exploit.Dr PARMJEET PARMAR (National): Thank you for the opportunity to speak on the first reading of the Employment Standards Legislation Bill. I can tell the House that this bill shows the Government’s commitment to ensuring that employment law is fair and supportive for the diverse work requirements of both employees and employers. We are trying to fix various issues that are concerning employees. I was surprised to see the previous speaker Andrew Little getting so angry about us trying to fix those issues that workers are concerned about.To make employment law fairer and supportive for employees and employers this bill aims to amend various employment-related statutes. The amendments proposed in this bill are wide ranging. These measures are to strengthen the enforcement of employment standards like the minimum wage annual holidays and written employment agreements. To support that enforcement employers will be required to keep records to demonstrate compliance with minimum employment standards.In general our labour market is functioning well. Our employment relations framework is aiming to strike the right balance between flexibility and certainty. We want flexibility for employers and employees but we also want to provide them with certainty. This bill is also about addressing the issue of agreements called zero-hour contracts. Zero-hour contracts are where employers are not required to commit to any number of hours of work for employees but they expect employees to be available all the time employers can cancel any shift without reasonable notice or compensation to the employee employers can make unreasonable deductions from employees’ wages and employers can prevent employees getting into secondary employment. To me this is unfair because employees cannot plan their finances and they cannot plan their personal lives. To me both parties are important: employees and employers. It is about having that mutual agreement.This bill addresses the zero-hour contracts issue by making it a mutual agreement between employers and employees. For example if an employee agrees to work for 10 hours for an employer then that will be put up front in the agreement. Then the employee can decline to work for that employer for more than 10 hours. On the other side the employer will not be obliged to offer more hours to that employee. Also the employer will not be able to prevent the employee from getting into secondary employment unless there are real grounds for it. However they will be still able to ask employees to disclose information about their secondary employment which is fair because businesses need to protect themselves and they need to know whether there is any conflict of interest and whether there are any intellectual property issues.Finally as I said this bill addresses wide-ranging issues. The other component is the paid parental leave scheme extension and increased flexibility. This bill is to change the definition of an eligible employee and will be extending paid parental leave entitlements to more workers including seasonal workers casual workers and employees who recently changed their jobs. Paid parental leave will also be extended to primary carers. Primary carers do not include biological parents or formal adoptive parents but for primary carers to qualify for paid parental leave they should be in employment before taking up the role of a primary carer.This bill is about balancing the relationship between employees and employers and is also about meeting the needs of both employers and employees. It is a great bill. I support the bill. I commend the bill to the House. Thank you.A party vote was called for on the question That the Employment Standards Legislation Bill be now read a first time.Ayes 107New Zealand National 59; New Zealand Labour 32; New Zealand First 12; Mori Party 2; ACT New Zealand 1; United Future 1.Noes 14Green Party 14.Bill read a first time.Bill referred to the Transport and Industrial Relations Committee.Hon NATHAN GUY (Minister for Primary Industries) on behalf of theMinister for Workplace Relations and Safety:I move That the Employment Standards Legislation Bill be reported to the House by 12 February 2016.Motion agreed to.Passports Amendment Bill (No 2)Second ReadingHon PETER DUNNE (Minister of Internal Affairs): I move That the Passports Amendment Bill (No 2) be now read a second time. I am very pleased to do so so soon after the bill was introduced to the House in June. Immediately I want to thank the members of the Government Administration Committee for their efforts in considering the bill over a very short period of time—in fact the bill was referred to that committee on 18 June this year and reported back to the House on 24 August. The committee received 20 written submissions on the bill. The Passports Amendment Bill (No 2) is largely a technical bill that makes a relatively small number of amendments to the Passports Act 1992. The main change of course is in the key area of the adult passport validity period which the bill increases from 5 years to 10 years. Not surprisingly virtually all submitters supported this change.The select committee’s report contains one amendment which is to bring forward the date of the commencement of the bill from 31 December 2015 to 30 November 2015. I fully support this change. This will mean that the Department of Internal Affairs will be able to begin issuing adult passports with a 10-year validity period in time for the Christmas holiday season later this year a move that will benefit many thousands of New Zealanders. Bringing forward the commencement date will also benefit a number of refugees because the validity of the refugee travel document is being increased from 2 years to 5 years. That means that the validity period will in most instances be long enough to ensure that a refugee needs only one refugee travel document before they are eligible to apply for New Zealand citizenship and subsequently become eligible for a New Zealand passport. Currently refugees may need to apply for up to three refugee travel documents before they can apply for New Zealand citizenship.The changes in the validity periods of travel documents are the amendments in the bill that attracted the most public attention. The majority of the amendments that the bill contains are of a technical nature and are designed to modernise the Passports Act 1992. They do this by updating a number of sections of the Act to take into account the use of an electronic database to manage the issuance recall and/or cancellation of travel documents. I understand that this development was also commented on by one submitter to the committee. That submitter noted that I as Minister of Internal Affairs have had longstanding powers to recall and/or cancel passports under the Passports Act 1992 and that these clauses in this bill simply move the provisions of the Passports Act into the digital age.There are several other amendments contained in the bill all designed to increase transparency and clarify powers contained in the principal Act. These include the replacement of section 40 of the current Act which provides for powers to make regulations to set fees. Section 40 is being updated to remove redundant provisions and to clarify the range of services that fees may be set for. The new section 40 which is introduced by clause 34 of the bill clarifies that fees may be set on a differential basis including depending on where an application is lodged—whether it is lodged in New Zealand or overseas—and the way it is lodged; for example whether it is lodged electronically or in paper form. A different fee may also be set if the applicant is under the age of 16 years. This does not change the current practice because different levels of fees apply already to passport applications that are processed in London and Sydney where staff and building costs are substantially higher than in New Zealand. The committee has not recommended any other change of approach within the bill.There is a further small technical change to the bill that I propose to make. In reviewing the bill parliamentary counsel identified a change that was needed to the numbering of the schedules in the Act because the bill introduces an additional schedule. I will therefore be moving a highly controversial Supplementary Order Paper at the Committee stage to renumber the current schedule in the Passports Act to schedule 2. A new schedule 1 is introduced by the bill and sets out a savings provision in relation to any New Zealand travel document that is issued or renewed before the commencement date of the bill. That is really all I need to say at this stage with regard to this legislation. It has been well-considered and efficiently considered by the select committee and it is with a great deal of pleasure that I now commend the Passports Amendment Bill (No 2) to the House.ADRIAN RURAWHE (Labour—Te Tai Hauāuru): It is a pleasure to rise to speak to this bill. First of all I would like to say that we support the Passports Amendment Bill (No 2). I want to congratulate the Minister of Internal Affairs again on bringing this bill to the House. Over 1 year ago Labour announced that we indeed would extend the period for passports to 10 years. So it is great to be able to see one of our policies come to the House.Although 5-year passports were very important and they were brought in for a particular purpose that purpose is now no longer needed and that is due to biometric technology as the Government Administration Committee found out last year.Five-year passports have been very unpopular with Kiwis. A lot of the public feel that they have been ripped off that the 5-year period is not long enough and that some countries having an expectation that you have a certain amount of time left on your passport really in effect means that the passport is valid for only 4½ years. So we in the Government Administration Committee as the Minister has mentioned heard the submissions and most of the submissions were in favour of extending the passport period to 10 years.In fact if I was to summarise the submissions they basically said that we agree with 10 years; get on with it. Some of them literally actually said that: “Get on with it.” So I am pleased that the Government Administration Committee as efficient as we are did actually get on with it and brought forward the commencement date to 30 November. I think that was done as much as anything so that Kiwis who want to apply for passports in November or December to travel overseas during Christmas and the New Year will be able to do so. So I think that is a little something that the Government Administration Committee was able to achieve collectively. Of course as I said before 5-year passports have been very unpopular so it is good that we were able to do that.The other issue that I want to talk about is the cost. There have been reports and information that Treasury really wanted to charge $400 for passports. That indeed would be very unpopular as well. So I congratulate the Minister again on getting the cost at $180. But I just want to say this: it needs to be sustainable into the future beyond 2018. I understand there is a commitment to keep the price at $180. It is important because not only are passports travel documents they are also identification documents. Some businesses departments and different organisations require identification such as passports for certain activities and certain processes. I think it is important that we make sure that there is access to the ability to have identification of oneself. So it is not just a travel document.We want to make sure also that in supporting this bill the cost needs to be kept at a manageable level for ordinary Kiwis. The one million Kiwis in particular who live under the poverty line need to be thought about in this instance—$180 is a lot of money for some families. If one family is applying for passports for mum dad and two or three tamariki then that cost is a huge amount in some people’s budget.I also want to mention the employees at the Department of Internal Affairs with regard to the extension of passports to 10 years. We expect that over time there will be fewer passport applications to process because people will do that every 10 years not every 5 years. We have just heard concerns about the Employment Standards Legislation Bill which has just gone through its first reading. I want to raise the issue about Department of Internal Affairs’ staff who currently process passports. They ought to be redeployed within the department and not made redundant I think. I think that ordinary Kiwis out there receiving the ability to have 10-year passports rather than 5-year passports would be in general very concerned that people would lose their jobs under this bill. I think that is an important issue.I want to acknowledge also that there are some technical changes within the bill that the Minister has talked about. There are some I am sure that we will talk about further at the Committee stage. But for now we question whether or not it is really necessary for some of those technical issues and we look forward to debating those further.This bill is very straightforward. It is very much understood by the general public and we commend this bill to the House. Kia ora.SARAH DOWIE (National—Invercargill): Of course I rise in support of the Passports Amendment Bill (No 2). I think that for half past 9 at night on a Tuesday this is actually quite exciting because there is nothing worse than having to renew a passport after 5 years and having to go through overly complicated bureaucracy to do so. So 10 years will of course be well received. Kiwis are well known for flying even though technically the bird itself does not fly. But we fly. We love to travel and it will be wonderful to have a 10-year validity period for our passports and to be able to travel for extensive periods if desired without having to turn round and renew a passport and go through all of that documentation process again and again and again.It was a pleasure to sit on the Government Administration Committee and hear from officials and learn from submitters. There were 20 submissions; 19 were in support. It is wonderful that people in support can be so vocal in respect of a bill and the one had no concerns in respect of privacy issues so I take that as a pseudo support. It is wonderful that people can submit and be vocal on such a positive bill. The advances of course in our passport with biometrics make the document secure and it is a well-received passport around the world. To travel on a New Zealand passport is revered. We are well respected overseas and it is certainly something that I experienced as a traveller on my OE several years ago. We will not mention how many years ago that was.Chris Bishop: Where did you go?SARAH DOWIE: Well I based myself in Britain Mr Bishop with my now husband who was a professional cricketer for Wimbledon. We travelled extensively around Britain and around Europe and the passport was very well receivedin the EU especially in some of the more obscure countries you could say. We are well known and well known for our compassion as a country and as a civilised country.Chris Bishop: That member’s not well known.SARAH DOWIE: No. No I do not think so. Look this is a very positive bill and as I said before most people—well I would think all people—would be in support of it. The officials did a fantastic job in bringing the information together and reporting to us. They were clear and concise and that enabled the committee to be efficient and report back to the House in the timely manner that it did. This is a wonderful bill. I cannot wait to have a 10-year passport myself. Unfortunately I did have to renew mine prior to this bill coming into force so I will have to put up with a 5-year—Hon David Cunliffe: Oh no! Oh my God!SARAH DOWIE: I know you are pretty upset about that are you not? You are upset about that I know. But one day I will have a 10-year passport in my hot little hand and I will be able to roam throughout the world for an extended period and take in the culture that the world has to offer.Because it is such a positive bill we are bringing the commencement date forward by a month because everybody is so excited. I think it is wonderful to finally get to this stage and for half past 9 at night I think it is a fantastic way to end my time speaking tonight. So I commend this bill to the House.Hon DAVID CUNLIFFE (Labour—New Lynn): This is one of those occasions when we have pleasure in supporting the Government and particular pleasure in following the oratory of the speaker who has just resumed her seat Sarah Dowie for whom there is nothing worse than a short-life 5-year passport—someone who has been known to fly everywhere including to obscure countries. It is heartening to know that this crowning achievement of the member’s parliamentary career has been delivered at this moment and it is a pleasure to see a member so excited about coming to work to achieve the magnitude of change that is being delivered to the people of New Zealand. But there is just a little sobering memento that I might offer the member as she genuflects upon her life’s calling and it is this. This was in the Labour Party’s 2014 election manifesto brought to you by none other than the Chris Bishop lookalike the Hon Trevor Mallard. Thank you Trevor for making Sarah Dowie’s parliamentary career great. It is all downhill from here.Chris Bishop: Go Trevor—well done!Hon DAVID CUNLIFFE: Go Trevor. Go Trevor—well done! Even Chris Bishop is rising to his feet to congratulate the electorate member for Hutt South. I think that is tremendous and it is heart-warming to see the House rising in unison. All around the House as I look around at both the members who are here at 9 p.m. I see the genuine look of delight on the faces of members opposite as they know they have seized the moment—carpe diem vita brevis. Life is short rise to the challenge get this 10-year passport across the line implement Labour’s 2014 election manifesto and drive it home—drive it home. I am delighted to see the member in a positive lather of excitement as she gets her hot little hand on the 10-year passport which I am sure she will stretch to buy for purely emotive reasons because why have a 5-year travel document when you can have a longer one.The second thing that this momentous occasion teaches us is that the Government is good at nothing so much as copying good ideas from the Labour Party. In fact you can pretty much reel off a long list of them—Working for Families. How about increasing the refugee intake? What a very important week it is and I acknowledge the work of our Green colleagues there who have been working arm in arm with Labour over the last week to give National just a little bit of moral backbone. I think it was a National Prime Minister who once—and I will not discuss the subject—described somebody as being a whole lot of chills cold shivers looking for a backbone to walk up. How that phrase has come to roost—Paul Foster-Bell: It was Bill Rowling.Hon DAVID CUNLIFFE: I know. It now applies to John Key. It took a week of sustained pressure—The ASSISTANT SPEAKER (Lindsay Tisch): Order!Hon DAVID CUNLIFFE: —from the New Zealand people to get a 10-year passport that our increased refugee quota can use once they get here. So I would implore the member opposite the member for First World problems to spare a little thought as she recounts to her grandchildren those wondrous days in Wimbledon. She reminds those folks because her grandchildren will probably be married then into a Syrian refugee family that the time has come to celebrate the actual principles that New Zealand was founded on: Jack and Jill are as good as their masters and everybody deserves a fair go. It is those ethics that mean that we are well-respected around the world and it is this party this side of the House that has always stood up for them. Thank you.BRETT HUDSON (National): It is indeed a pleasure to rise and speak on this Passports Amendment Bill (No 2). It is almost like being at an evangelists’ review or reunion here such is the enthusiasm across both sides of the House for this bill and what it will do.I was actually a bit slow to rise because I was hoping the member opposite David Cunliffe was going to carry on for a bit longer with his impassioned speaking on behalf of this bill. I must note though that he did make a point that my colleague who spoke before him Sarah Dowie had made perhaps the wrong judgment on just how important this bill is. But to help Mr Cunliffe—a man who after all has spent a rather large chunk of his life in this place—I will point out to him that even when you have served for the amount of time that he has in this House you can still get a little bit of incorrect understanding of legislation and change.Mr Cunliffe when the refugees arrive in New Zealand they will not be handed 10-year passports but what they will get under this amendment bill is refugee travel documents that will have a validity period moving from 2 years to 5 years because that aligns to the residency requirement in order for them to apply for and receive New Zealand citizenship. So I will just help Mr Cunliffe to understand the bill a little better by pointing that out.The fundamental part of this amendment bill the one that has captured if we can use that term the public’s imagination—it certainly has got broad support outside of this House I would wager as well as inside—is the return to a 10-year validity period. It is a wonderful thing to be here and to be part of a united House in this case and a united Parliament making a change that the public are very very pleased to see.Nowhere more did we see it than in the submissions that we received. In fact the chair of the Government Administration Committee made an interesting observation. The Hon Ruth Dyson pointed out that Kiwis have this thing that when they broadly agree with a change or a bill going through a select committee they do not make submissions. And when they do make submissions that are in favour they do not actually want to appear to talk in favour of their submission.Such was the case here. I think we received around 20 submissions and no one not a single submitter—they were all basically in favour—actually wanted to appear in front of the select committee to argue strongly in favour. So we can bear that in mind the next time Opposition members start talking to us about the number of submissions that are opposed to a Government measure—that in their own words the many many in favour just do not bother submitting. So I will keep that one filed away.It is very very good indeed to be a part of making something that the public very much want and very much support. I will cover just a couple of other things that this bill will do because I think they are as important—perhaps not as important in the minds of the general public as the return to 10-year validity but they are important. As well as increasing the validity of refugee travel documents to align to the New Zealand residency requirement period the bill reduces actually the validity period of certificates of identity from 4 years down to a maximum of 2 years. These are documents that are issued to non - New Zealand citizens who cannot obtain travel documents from their home countries.There is some concern about some people who fall into this category because of the difficulty of establishing bona fides as to their identity and their validity. So it is a sensible thing to cap the validity period for travel documents in that category and that is a good change the bill will make. But one thing it will do particularly around that area of proof of identity and certainty of bona fides—we know that the New Zealand passport is one of the most desirable in the world. It is the eighth most desirable in the world according to Arton Capital which created a passport index—a passport power type ranking. We are ahead of Australia and that will come as no surprise to anyone in this House. We are behind a few other countries but we are well up with the very very best.Of course the flip side of that is that if you have got a passport that is so desirable it makes it a very very attractive target for those who would like to misuse it—to forge it or to misuse it inappropriately. One of the changes that this amendment bill will bring about is that it will allow an offence of false representation to be applied extraterritorially. It seems on the face of it an odd situation exists today that you commit a crime if you make a false representation as to identity within New Zealand in seeking to obtain a New Zealand passport but if you make that same false representation outside of New Zealand the power is not there to actually take a court proceeding against you at least not under New Zealand jurisdiction. I think that is a very very sensible change to bring about in this bill.When we had the first reading debate I focused my contribution a great deal on why we had come to the position that is in fact the current state—a 5-year validity. It was because of all of the security requirements the heightened security concerns around the world post - September 11 2001 and some changes that US legislation had effectively enforced in order for us to maintain our visa-free waiver status. So there were very very strong reasons why we had to and did create the first change to move to a 5-year validity.The select committee and the Government in putting the legislation forward looked very closely at ensuring that we could move back to a 10-year period and have confidence in the security and the technology behind our passports to make sure that we would not unduly compromise New Zealand or New Zealand’s standing by introducing great risks by doubling the validity period. We heard a lot from the officials on this. It gave us on the select committee great confidence. I think the New Zealand public has confidence and they certainly want to return to a 10-year validity period. I commend this bill to the House.DENISE ROCHE (Green): I rise to take a call for the Greens on the Passports Amendment Bill (No 2). The Green Party fully intends to support this bill.I would like to start my speech by looking at the genesis of this bill and where this policy change came from. I did this in my first reading speech too but I think it is worth mentioning. A gentleman called Kyle Lockwood set up a petition because he saw an upset mother with her son at Melbourne airport who could not fly because the mother’s 5-year passport had less than 6 months’ validity on it. I think that is reasonable. I think it is great that this triggered a petition which was then picked up by the Minister and became this bill.Since then the proposal has of course passed through the Government Administration Committee ably chaired by Ruth Dyson. I would also like to thank the other members of the Government Administration Committee. I am not a permanent member. I was filling in for my colleague Mojo Mathers. I would also like to acknowledge the work of Sarah Dowie Brett Hudson Mark Mitchell and Adrian Rurawhe.I think I waxed lyrical in my first reading speech on this bill about the democratic process and how this bill was a shining example of that. I would like to wax lyrical again about how important the select committee process is. It is an opportunity for parliamentary colleagues to work cooperatively to improve legislation and also for the public to feed in. The example of working together on this bill and examining the 20 public submissions that were fed into the process which were all universally in favour of extending passports for a 10-year period will I think be one of my treasured memories of cross-party cooperation for many years to come.I wish we had more opportunities to work cooperatively like this. We tried to reach across the aisle to work with the Government to introduce the necessary changes in the Health and Safety Reform Bill in the last sitting period. Unfortunately the Government chose not to work with us and came out with a universally derided bill which political scientist Bryce Edwards has included in his list of the most damaging incidents for this Government in his article of 6 September. The point is that everyone profits when the Government brings the voices of the Greens to the table. You get things like insulation campaigns Wai claims and now our support for a very sensible bill.The reason we supported this bill at the first reading remains now. Basically this change will save New Zealanders the hassles the stress and the money spent applying for a new passport and it will bring New Zealand into line with our neighbours and friends in other countries across the world. I did have some initial concerns I think about the security aspect. However through the select committee process and the information received from the officials who I have to say were great I feel that those concerns have been addressed adequately.However in my first reading speech I did also raise other concerns one of which was the underfunding of critical public services and that remains relevant. An example I guess is that this morning there was that shocking exposé in the New Zealand Herald about the Masala chain of restaurants that had been exploiting migrant workers. Some of these cases were things like a chef who was paid just $40 for 2 months’ work and a waiter who was working 66 hours a week for $2.64. So I applaud the heroic work of our labour inspectors but we have to recognise that they are underfunded and overworked as are many of our other core public services. Rather than wasting money trying to plug the gaps in the public sector by shifting our responsibilities and giving contracts to inefficient incompetent and discredited providers like Serco should we not be investing our money into our core public services? As I mentioned last time the fact that the department was saying that this minor change could lead to revenue problems was alarming. It is symptomatic of the strains that our hard-working public services have been put under—essential services like this one.We support the modernisation of the Passports Act 1992 and we support the provisions for electronic processing. We recognise that this will save New Zealanders time and money when renewing travel documents and this is something we support. I have to say it is a very efficient process right now having renewed my passport just a month ago. It took a day to get my passport back to me.Chris Bishop: Happy days.DENISE ROCHE: One day—it was amazing.Finally I would like to conclude by stating what a privilege this process has been. I would just like to stress that it could serve as an example of cross-party consensus. It is only a small change this bill but it is hopeful and it is a helpful template for parties working together to address common challenges. We could be working on a lot more things together—crucial things like the refugee quota and like climate change for example. We would welcome the opportunity to work with all parties on that. This bill could show us how to do it—how to work cooperatively. We commend it to the House.CLAYTON MITCHELL (NZ First): I rise on behalf of New Zealand First to join in the fanfare of entertainment this evening and to actually put New Zealand First’s voice out there to say we also show solidarity and a parliamentary collegiality in support of this fantastic outcome. Those are a whole bunch of big words I will tell you right now. They are not as big as the biggest word I know I have to say which is of course a Māori word but we do not even need to go there today.Meka Whaitiri: Say it say it say it.CLAYTON MITCHELL: Well why not? For the sake of the spirit of tonight and it being 10 minutes until 10 Taumatawhakatangihangakōauauōtamateapōkaiwhenuakitanatahu is actually the longest word in the world at 72 letters long but I just thought I would run that off just with big words.I have to say I very much enjoyed the speech tonight by Mr Cunliffe. It was very entertaining. It was sort of fun and sort of provocative at the same time. It reminded me of watching three frogs in a sock and of course that can be very entertaining. Conversely on the other side we had a speech that could actually turn a good bill into something horrid and morbid. Of course Mr Hudson—I do not know—you have just got this ability to turn something good into something so bad. When you “monologued” to us this evening it just about made me put my head in my soup. But anyway we diverge.Anyway getting on with the bill there is not a lot that I can actually add to this. It is common sense. We have been saying for some time that we should actually get along and make a 10-year bill out of this. I do have to give two thumbs up to the Hon Peter Dunne for of course bringing the cost of those passports down to a better area. We would like to see them less but we understand there is going to be ongoing costs so that is a positive. I would like to congratulate the Government Administration Committee. I think it has done a fantastic job of bringing that time frame forward a little bit further.Not just wanting to throw stones at the Government I think if it had taken the same sort of approach of the retrospective legislation that was pushed through earlier this year—this is the work to get the $1000 Kick-start programme for your KiwiSaver which the Government retrospectively took away. I was kind of hoping for some retrospective legislation here to actually bring this legislation back because there already are a large amount of Kiwis who have had to renew their 5-year passport just in the last couple of months. That would have been fantastic to be able to get them heard and get them on to the 10-year programme that we are now embarking on.All in all I think it is just an absolutely great thing. It is great to see that the House is in support of this. New Zealanders do enjoy getting out there around the world and as has already been said earlier we are a flightless bird that enjoys the cultures and societies around the world. I think it has got something to do with the fact that we have only one degree of separation in this country. I mean you only literally have to talk to your neighbour next door who knows a friend who lives down in Invercargill and vice versa. I mean you cannot close your windows and your curtains in your house without somebody waving out to you and you knowing who they are. I am not referring to you looking through my window Mr Hudson so do not get any ideas mate. I can see you smirking away to yourself. You are making me feel a little bit uneasy.Very very simply we do support this bill. We commend it going to the next stage of this process and doing anything we can to speed this up. There are only a few more minutes on the clock and so hopefully we can hear from another speaker tonight. We commend this bill moving forward. Thank you.STUART SMITH (National—Kaikōura): The Passports Amendment Bill (No 2) speaking as someone who has done a lot of business travelling is going to be a great thing. It will be great to be able to have a passport for 10 years. It is quite infuriating having just 3 or 4 years ago replaced my passport to then turn up in the US—I travelled through there quite frequently and to the UK—and have a biometric photograph and fingerprints taken. Every time you go through the US you line up and get all that and you wonder why on earth we have to have a passport renewed every 5 years. I understand the background as to why we went to a 5-year passport. However the rest of the world did not go along with us so it was time for a change.The previous speaker Clayton Mitchell stated just before that it would be good to have done this a few months ago as the people who have just renewed their passports would not have had to go through the process. But of course you would have to keep going back and back and there will always be people who renewed their passport the month before and would be quite annoyed about it. But that is just the nature of the beast.The ability to get a 10-year passport when their renewal comes up and also to do it at a much reduced cost over that 10-year period—$90-odd I believe—is a fantastic Christmas present for New Zealanders. I think it is a great thing for everyone and really it is good sense to get good law and good security and all the latest features that are going to be on these passports.Really security is so important around the world and we have to have the best travel documentation to ensure that we meet our security obligations around the world. It is not just ourselves we are looking after; it is the rest of the world. Someone alluded to the fact that our passport is the eighth most desirable passport in the world—that is something I learnt this evening—and we are ahead of the Australians on that. You can understand why.Hon David Cunliffe: What are you doing? Flogging them off? Auctioning them?STUART SMITH: No we are not auctioning them but we could auction off a few Opposition MPs although we would not get much for them I suspect. It is with great pleasure on that note seeing as we cannot get a bid for the Opposition MPs that I commend the bill to the House. Thank you.The ASSISTANT SPEAKER (Lindsay Tisch): I call Mojo Mathers—5 minutes.MOJO MATHERS (Green): I want to speak in support of the Passports Amendment Bill (No 2) on behalf of the Green Party. I was on the select committee when the petition was being considered by the Government Administration Committee. As well as the sheer number of people who have supported the petition the quality of the evidence that was presented by the petitioner Kyle Lockwood was of a very high standard. With a depth of the research he had gone into researching all the countries around the world that have a longer passport period the reasons why how we were actually out of step with where the rest of the world was going with having longer passport periods and how the concerns around security were no longer a rationale for keeping to a short passport time. So it was looking at that evidence and discussing backwards and forwards with the officials that persuaded the Government Administration Committee that we actually needed to recommend going back to 10-year passports. This is what the public wanted.Passports are part of many people’s extensive documentation in New Zealand both for identification but also because New Zealanders love travelling and a high proportion of New Zealanders do travel. They go to meet with family and friends around the world—in the Pacific Islands in Australia and further afield. We are a nation of migrants and we often want to reach out to friends and family in other countries. So passports are extremely important to New Zealanders and having to renew them effectively every 4½ years was incredibly stressful for many families. It is not just the cost; it is the inconvenience and the hassle planning for a trip and then going to look for your passport and suddenly realising that you have got to actually reapply for your passport and all the hassle that is associated with collecting and collating the documentation required. So it is fantastic that we across the House have agreed that we are going to make things smoother and easier for New Zealanders in applying for passports. Extending the term will be a popular move. We know it will be. That is why we on the Government Administration Committee recommended that the House look towards adopting this bill.The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair. This debate is interrupted and set down for resumption next sitting day. The House is suspended and I will resume the Chair at 9 a.m. tomorrow for the extended sitting.Debate interrupted.Sitting suspended from10 p.m.to9 a.m. (Wednesday)