Volume 706 Week 21 - Tuesday 30 June 2015Text is incorporated into the Bound VolumeVolume 706 Week 21 - Tuesday 30 June 2015[Sitting date: 30 June 2015. Volume:706;Page:4837. Text is incorporated into the Bound Volume.]Tuesday 30 June 2015Mr Speaker took the Chair at 2 p.m.Prayers.Questions to MinistersBudget 2015—Support for Families1.ANDREW BAYLY (National—Hunua) to the Minister of Finance: What Budget policies will soon take effect and help to distribute dividends from the growing economy to New Zealand families?Hon STEVEN JOYCE (Associate Minister of Finance)on behalf of theMinister of Finance:All seven of the National-led Government’s seven Budgets have included measures to help New Zealand families get ahead. From tomorrow 1 July children under 13 will have access to free GP visits and free prescriptions; paid parental leave payments will increase with the maximum weekly rate for eligible employees and self-employed parents going from $504.10 to $516.85 gross; and the average ACC levy for a private motor vehicle will fall by around $130 a year which is part of a $440 million levy reduction across the New Zealand economy. These are just three of the policies that this Government is introducing to support families on the back of our strengthening economy.Andrew Bayly: What other recent Budget measures are already in place to help New Zealand families and children?Hon STEVEN JOYCE: The Government included a number of other measures in Budget 2014 that took effect from 1 April this year just under 3 months ago. These include paid parental leave increasing by 2 weeks to 16 weeks and that will increase by another 2 weeks from 1 April next year. The parental tax credit rose from $150 a week to $220 a week and the entitlement will increase from 8 weeks to 10 weeks. The Government’s new HomeStart scheme will help around 90000 Kiwis into their first home over the next 5 years. Average ACC work levies paid by employers and self-employed people fell to 90c per $100 and New Zealand superannuation increased by another 2 percent meaning it has increased by 31 percent since April 2008—more than double the inflation rate over that period.Andrew Bayly: How does this year’s Budget build on the policies of previous Budgets particularly in the area of support for families and children?Hon STEVEN JOYCE: Budget 2015 included a number of measures in a $790 million package of support for children living in hardship. The following will apply from 1 April next year: benefit rates for families with children will rise by $25 a week after tax—this is the first time that core benefit rates have been increasedsince 1972 apart from inflation adjustments—extra support for low-income working families with both the minimum family tax credit and the base rate of the in-work tax credit increasing; childcare assistance for low-income families will increase reducing barriers for parents moving off welfare and into work; and there will be increased work expectations for parents on a benefit. The package targets around 160000 families—300000 children—with incomes of less than $36350 per year.Andrew Bayly: How did Budget 2015 build on the Government’s wider programme to support more jobs and higher wages for New Zealand families?Hon STEVEN JOYCE: One of the most important things we can do for vulnerable families is to help get the parents into work. Treasury’s Budget forecast shows there were 194000 extra jobs since late 2010 and another 150000 jobs are projected by 2019. Unemployment is expected to fall below 5 percent in 2016. Average annual wages have increased by $5700 in the last 4 years and they are forecast to rise to around $63000 a year in 4 years’ time which is an increase of a further $7000. So a growing economy supported by the Government’s responsible economic plan is working for New Zealanders and their families.State and Social Housing—Sale of Housing Stock and Social Housing Providers2.ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that “Locally-based providers can be closer and more responsive to their community” in relation to the Government’s policy to sell State houses to private providers?Rt Hon JOHN KEY (Prime Minister): Yes and registered community housing providers will need to have a local presence and a strong capacity to meet the needs of their tenants.Andrew Little: How would a company based in Brisbane be “closer and more responsive” to the needs of Kiwi families in social housing?Rt Hon JOHN KEY: Because they will have to be not only registered in New Zealand but have a presence in New Zealand and be subject to the community housing provider regulatory authority. If the head office of a company or an organisation rules somebody out from doing anything then I suggest the member never go and have another Big Mac because and this will come as breaking news the head office is in America. [Interruption]Mr SPEAKER: Order! I am wanting to call the Leader of the Opposition.Andrew Little: What lessons can a company that provides housing on the Gold Coast teach New Zealand about running social housing in Invercargill?Rt Hon JOHN KEY: Firstly this organisation would have to be if it bought those properties registered in New Zealand subject to the Community Housing Regulatory Authority be subject to regular engagement with its tenants be a responsible tenancy manager have routine inspections and be responsive when it comes to repairs and maintenance—so it would have to run a New Zealand operation. I am a little surprised that the New Zealand Labour Party hates Horizon Housing because here is a press release from the Deputy Prime Minister of Australia when the Labor Government was in office saying what an amazing organisation it is and how good it is and what a great job it has done. I know that something Australian is very scary to the Labour Party but over here we just want somebody who can provide a good service.Andrew Little: What precise measurable provable benefits would be realised by selling these houses to an Australian company that cannot be realised by Housing New Zealand?Rt Hon JOHN KEY: The member is asking a wider question about what the benefits are of social housing. If Horizon Housing were to buy these properties it would have to provide the same role as any other community housing provider. So what I can say in regard to that is that there is widespread support for community housing providers from all parts of this Parliament. In fact one member of Parliament has gone on to say in relation to this area that there is “no controversy” and “I see huge benefits in this vision of a bigger more diverse social housing sector.” That of course comes from Mr P Twyford of the Labour Party.Andrew Little: Point of order. [Interruption]Mr SPEAKER: Order! This is a point of order. I wish to hear it.Andrew Little: I raise a point of order Mr Speaker. My question was very straight and it was pretty concise—Mr SPEAKER: On this occasion I agree with the Leader of the Opposition. I am going to ask him to ask that question again.Andrew Little: What precise measurable provable benefits would be realised by selling these houses to an Australian company that cannot be realised by Housing New Zealand?Rt Hon JOHN KEY: The same as New Zealand ones.Tim Macindoe: What support has the Prime Minister seen for the Government’s policy of transferring ownership of houses to grow the community housing sector?Rt Hon JOHN KEY: I have seen lots of support including a good summary of the Government’s social housing reform legislation that passed last year. It says as follows: “What does this bill do? It shifts housing stock out of the hands of Housing New Zealand into the community housing sector. This is something that Labour is perfectly comfortable with.” It goes on to say: “The bill is extending—Chris Hipkins: I raise a point of order Mr Speaker. Last week you made it very clear and you have repeatedly done this over the last 2 weeks that the Government should not use Government supplementary questions to attack the Opposition which is exactly what the Prime Minister is doing.Rt Hon JOHN KEY: Point of order.Mr SPEAKER: No I do not need assistance. That is a judgment that I make. But when I look at the question “What support has the Prime Minister seen for this change of ownership the Government is proposing.” that is a legitimate question in my mind.Rt Hon JOHN KEY: I raise a point of order Mr Speaker. I would just urge you—your ruling is absolutely correct—to go away and consider what Mr Hipkins has just raised. What he is essentially saying is that it is impossible within a debate for the Government to point out in question time within a wider debate about social housing what has been said on all parts of this debate. That would be a ridiculous notion.Mr SPEAKER: That is exactly the point that I am trying to make in responding to Chris Hipkins. There will be questions that I think are put down that are no more than a cheap opportunity by a Government to attack another political party and they are the ones that I will not accept. In this case I think it is quite a legitimate question to ask about what support is out there in the community. If that answer happens to refer to another political party in this Parliament I cannot help. The Prime Minister can complete his answer if it is required.Andrew Little: In relation to the Government’s announced proposal to sell State houses to an Australian owner and given that the Salvation Army in New Zealand has backed out of the proposal to it to purchase State houses and also that iwi in New Zealand only want the houses for free so that he now resorts to Aussie buyers will his Government press ahead with selling State houses even if no New Zealand providers can afford to buy them and there are no tangible benefits to the families living in them?Rt Hon JOHN KEY: The member’s question is incorrect.Andrew Little: Is not the truth of it that this policy was always about the ideology of selling off State houses whatever the cost not about improving the lives of the families in those houses at all and like all his policies it is now falling apart?Rt Hon JOHN KEY: What was falling apart were the Housing New Zealand houses we inherited after 9 years of a Labour Government because it failed to maintain them. What everybody knows actually is there is more demand and has been under numerous Governments than there is supply. In Australia and actually in many countries we see the equivalent of social housing providers or community housing providers adding to the overall stock and that is why in a place like Australia the Labor Deputy Prime Minister gets up and celebrates this. This is the reality. The Labour Party in New Zealand is scared of an Australian charity coming to New Zealand. They must be incredibly scary because—Mr SPEAKER: Order! The answer has gone on for long enough.Tim Macindoe: What other support has the Prime Minister seen for the Government’s social housing reforms?Rt Hon JOHN KEY: I have seen a series of statements supporting the Government’s approach including for example: “The Minister’s vision is that Housing New Zealand should become just another tenancy provider competing in a contestable market with the community housing sector for both tenants and subsidies. We want to see a larger more capable empowered community housing sector. It is certainly a view that Labour shares.” That again was Phil Twyford.Andrew Little: Given that the mass sell-off of State houses was meant to be his defining policy for the year as outlined in January what is left after 6 months of fiasco and why does he not just give up on this failed experiment?Rt Hon JOHN KEY: On the latter because I actually care about New Zealanders who deserve some accommodation and I am not going to be driven by a bit of mumbo-jumbo into not providing more social houses to New Zealanders. And secondly that was an important policy announcement at the start of the year but also I have made a great many other policy announcements this year and so far we are waiting for Labour to have one policy announcement and guess what? Mr Little has not announced a single one yet.Paid Parental Leave—Increases3.STUART SMITH (National—Kaikōura) to the Minister for Workplace Relations and Safety: How is the Government helping to support young New Zealand families through paid parental leave?Hon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): Good news. Tomorrow paid parental leave payments will increase across the board with the maximum weekly rate for employees and self-employed—[Interruption]Mr SPEAKER: Order!Hon MICHAEL WOODHOUSE: They do not like good news do they? The maximum weekly rate for employees and self-employed parents is going from $504.10 to $516.85. This increase comes on top of changes that came in on 1 April this year that extended the provision of paid parental leave from 14 weeks to 16 weeks and increased the parental tax credit.Stuart Smith: What further changes can New Zealand families expect around paid parental leave?Hon MICHAEL WOODHOUSE: Last year the Government announced a $172 million—Hon Annette King: It’s a Labour Party policy.Hon MICHAEL WOODHOUSE: Shh!Mr SPEAKER: Order! The level of interjection from one particular member is now unacceptable.Hon MICHAEL WOODHOUSE:—a $172 million package over 4 years to boost paid parental leave. Another extension that will take place from 1 April next year will see a further increase to paid parental leave to 18 weeks. In addition I will soon be introducing legislation to the House that will extend eligibility to include other than biological or formal adoptive parents a wider range of non-standard workers and primary carers such as permanent guardians Home for Life carers whāngai parents and grandparents. More than 26000 New Zealanders take paid parental leave. Tomorrow’s increase and the further extensions that this Government has committed to will further help families and carers to give our youngest New Zealanders the best possible start in life.Sue Moroney: Will he honour his commitment to ACT leader David Seymour to introduce 26 weeks’ paid parental leave for babies born with disabilities for those born prematurely and for multiple births in exchange for David Seymour withdrawing support for my bill delivering those outcomes?Hon MICHAEL WOODHOUSE: I will certainly honour all commitments that I have made to our confidence and supply partner. That was not it. I am corresponding with Mr Seymour about what is already in place and about the supports that are being provided by this Government to multiple birthparents and parents of prematurely born babies and that is what we will do.Building and Construction Industry—High-alkali CementHon Gerry Brownlee: Who’s your deputy?Rt Hon Winston Peters: Well it wouldn’t be somebody like you.Mr SPEAKER: Order! [Interruption] Order! I have called the Rt Hon Winston Peters. [Interruption] Order! We are back to question No. 4—the Rt Hon Winston Peters.4.Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister for Building and Housing: Does he stand by all his statements?Hon Dr NICK SMITH (Minister for Building and Housing): Yes and particularly my statement today welcoming the third consecutive year of 20-plus percent annual growth in residential building in Auckland and the record $9.7 billion spent on residential construction in the last year.Rt Hon Winston Peters: Does he still stand by his statement on 19 February: “I have been assured by officials that imported cement must meet the New Zealand standard that the Drymix product referred to does in fact meet that standard”?Hon Dr NICK SMITH: Yes that is the advice that I continue to receive from appropriately qualified independent engineers. I have repeatedly challenged the member to provide me with some engineering advice that there is a problem with this product. I have asked him to do that three times. I have had zip.Rt Hon Winston Peters: Can he guarantee that the concrete used in the $40 million taxpayer - paid for Manukau District Court does not exceed the alkali content for normal concrete as specified in New Zealand concrete standard 3104 of 2013; if not why not?Hon Dr NICK SMITH: No it is not possible for me as Minister for Building and Housing to guarantee the millions of cubic metres of concrete that are produced every year.Hon Member: Why not?Hon Dr NICK SMITH: Well actually that is the responsibility of the commercial manufacturers of that concrete. There is a good system of quality control and there were issues as there were last month with some concrete being manufactured that was substandard and had to be replaced. If the member has got evidence of that then he should provide it—although I would say that he should provide it not from parties with commercial vested interests but from technical engineers and about legitimate concerns.Rt Hon Winston Peters: Talking about commercial vested interests when such non-standard cement causes concrete to rot from the inside out does he believe that he and the Cement and Concrete Association should have confidence in the supposedly independent report into this matter—this report here—when it was in fact paid for by Drymix; if so why?Hon Dr NICK SMITH: For a very wide range of building products it is the job of the person requiring certification to get a commercial company such as the Building Research Association of New Zealand and others to provide for it. I can assure the member that the advice I receive from my own engineers employed by the Ministry of Business Innovation and Employment—I have total confidence in their independence.Rt Hon Winston Peters: Is he confident that cement imported from Vietnam by Drymix was brought up to New Zealand standards through blending with other cement as Drymix claims and as he has said?Hon Dr NICK SMITH: I do not have any specific reports on a particular batch of cement. My officials have assured me repeatedly that they are satisfied that both cement and concrete being produced in New Zealand meet the standards of 3104.Rt Hon Winston Peters: How can he defend when Drymix claims to have blending facilities and it does not that it would have blended the cement when the only cement blending facility is Golden Bay Cement which has never ever blended cement for Drymix? Why is he now repeating his argument that the cement was blended and that it was therefore satisfactory?Hon Dr NICK SMITH: I had difficulty in deciphering that jumbled question. I have never made statements about blending—Rt Hon Winston Peters: I raise a point of order Mr Speaker. If he finds it—Mr SPEAKER: Can I just have the point of order please.Rt Hon Winston Peters: If he was confused with the question I am happy to repeat it. He started by saying that.Mr SPEAKER: No I think the Minister has understood enough of it to be answering. He was in the process of it. [Interruption] Order! I will allow the Minister to complete his answer and then if I am not satisfied with the answer I may think about it.Hon Dr NICK SMITH: I made no claims about this particular cement being blended. Those claims were made by the member.Rt Hon Winston Peters: When the claims in respect of blending are made in this report which says that because of that they became satisfactory and when Drymix never had the capacity to blend the cement because only Golden Bay Cement has it and it did not do Drymix’s concrete in that case and there are 39000 tonnes yet unaccounted for why will he not actually take a simple core sample of the Manukau District Court to tell us whether or not it is safe in the future? Why would he not do that?Hon Dr NICK SMITH: I simply lay back the claim to the member that I have now given to him three times: give me a chartered professional engineer’s advice that the cement is unsatisfactory and I will look into it. While he continues to peddle the arguments of other commercial interests I will not take him seriously.Cycling—Urban Cycleways Programme5.JONATHAN YOUNG (National—New Plymouth) to the Minister of Transport: What is the Government doing to support the development of urban cycleways across New Zealand?Hon SIMON BRIDGES (Minister of Transport): Last week alongside the Prime Minister I announced that $333 million will be invested in urban cycleways. Forty-one projects in 15 centres across the country will see world-class cycling projects get under way much sooner than may otherwise have been the case bringing the total number of projects delivered under the programme to 54. This is the single biggest investment in cycling in New Zealand’s history and will change the face of cycling in New Zealand. I am really proud to be part of a Government that is leading the way on cycling in this country.Jonathan Young: What centres are set to see new cycleways delivered through the Government’s Urban Cycleways Programme?Hon SIMON BRIDGES: Many—many. The country’s three main urban centres of Auckland Wellington and Christchurch will see significant investment that will change the cycling landscape in these cities.Ron Mark: What about rural New Zealand—the roads?Hon SIMON BRIDGES: I am excited that we have been able to deliver more than $87 million worth of projects Ron Mark in regional centres including Whangarei Hamilton Tauranga - Western Bay Rotorua Gisborne Hastings Napier New Plymouth Whanganui Palmerston North Blenheim Nelson and Dunedin. I would like to take this opportunity to also thank all of the local councils and leaders for sharing the Government’s vision and partnering in this great programme.Jonathan Young: How does the increased uptake of cycling benefit communities?Hon SIMON BRIDGES: The Government’s clear goal here is to make cycling a safer and therefore a much more attractive transport choice. That is because cycling contributes to healthier communities and safe and attractive cycling infrastructure can encourage people in urban areas to change their travel patterns. These benefits are why the Government committed to the Urban Cycleways Programme and I look forward to seeing Kiwis around the country enjoying the multiple benefits of the cycleways as more and more are completed in the coming 3 years.Denis O’Rourke: If the Government can find $333 million for cycleways why can it not find the funds needed to assist councils to seal and maintain rural roads to repair the damage done to regional roads caused by logging trucks to restore rail links like the Napier-Gisborne line and many other examples of transport neglect in the regions of New Zealand?Hon SIMON BRIDGES: The member must have missed the most recent news because this Government has been part of a $13.9 billion plan for the next 3 years—a 15 percent increase and the largest spend on land transport in this country ever.Ron Mark: Point of order. [Interruption]Mr SPEAKER: Order! This is a point of order.Ron Mark: I seek leave of the House to table a New Zealand Transport Agency document that shows that many rural provincial councils—Mr SPEAKER: Order! The member will resume his seat. Is it available on the website?Ron Mark: Not immediately no. You have got to look for it. [Interruption]Mr SPEAKER: Order! The member will resume his seat. I am assured from my right-hand side that it is. I will not be putting the leave.State and Social Housing—Sale of Housing Stock and Social Housing Providers6.PHIL TWYFORD (Labour—Te Atatū) to the Minister responsible for HNZC: Does he still intend to sell 1000 to 2000 Housing New Zealand houses by January 2016 and that “houses will not be transferred unless tenants get better services and taxpayers get fair and reasonable value”?Hon PAULA BENNETT (Acting Minister responsible for HNZC): In January the Prime Minister said: “These areas”—the areas where we will transfer the first houses—“will be determined after engagement and consultation including with community housing providers and iwi to ensure we understand everyone’s rights and interests. We’ll then look to sell between 1000 and 2000 Housing New Zealand properties over the following year for use as social housing run by approved community housing providers.” So it is unlikely to be by January 2016 but it is by the timetable that we had previously laid out. In answer to the second part of the question yes.Phil Twyford: Will he tell the public who the community housing providers are that the Government is considering selling to in Tauranga and Invercargill or does he agree with Paula Bennett that his policy is now so toxic that it would be a “poisoned chalice” for them?Hon PAULA BENNETT: On behalf of the Minister I certainly think that any comments like that by Paula Bennett have been taken completely out of context. So what I will say in answer to the question from the member is yes—in fact just in the last week we had more than 160 different people at meetings with Treasury about transactions. That will be made public on the website towards the end of the week.Phil Twyford: Is forcing our most vulnerable New Zealanders—including the elderly the disabled and people with mental illness—to pay their rent to an Australian company part of the compassionate conservatism he was bragging about at Budget time?Hon PAULA BENNETT: What I would say is that it seems that what the member believes is that the status quo for those very people is good enough. We do not think it is on this side of the House so we think we can provide them with better housing and better services around them. We want more of those and that is the commitment that we on this side make to those people who want it.Phil Twyford: What advice has he had that cashing up the State house portfolio in a fire sale to Australians or giving them away free to iwi will improve the Government’s books and better protect the most vulnerable New Zealanders?Hon PAULA BENNETT: Neither of those things is happening. So let me make it very very clear that neither of those things is happening. What we are looking at is doing what the very member himself has said both in this House and publicly that actually growing the community housing providers is better for vulnerable New Zealanders. That is the commitment that we make. Actually looking at building the asset base of some of those community housing providers so that they can provide better services is completely the motivation behind the work programme of this Government.Phil Twyford: Which of his three excuses so far is the most credible: that the houses are in the wrong place and the wrong size and that will be magically fixed by selling them; that the Salvation Army and iwi are keen as mustard to buy the houses; or that local groups can do a better job than Wellington but he is now selling the houses to Brisbane?Hon PAULA BENNETT: I think what needs to be clear is that there are a number of criteria that any purchaser would have to go through. One of them is having a local presence and the ability to actually look after those tenants better. So we have a number of community organisations that are actually already international organisations. They have branches throughout regional New Zealand and in our cities. That is exactly what it is. I know the member himself thinks that this is as good as it gets for those tenants; we believe that it can get better.Phil Twyford: Is he aware that the Dominion Post has described his State house sell-off as bizarre and muddled; if so will he follow Nick Smith’s example and set them straight by organising a magical mystery bus tour for the media to show them the houses that he wants to flog off to the Australians?Hon PAULA BENNETT: No I do not agree with that. What I do believe is that we are putting the interests of New Zealanders and tenants first. That member can go on and get on the sort of muddled hierarchy if he likes to but actually it is about providing better services for New Zealanders and that is exactly what we are intending to do.State and Social Housing—Social Housing Providers7.METIRIA TUREI (Co-Leader—Green) to the Minister responsible for HNZC: Does he stand by his statement that “Anyone that wants to have a go at this will have to show that they’ve got the capacity to manage the properties to manage the finances to look after the tenants and to help redevelop our social housing community”?Hon PAULA BENNETT (Acting Minister responsible for HNZC): Yes.Metiria Turei: Will the Minister guarantee to New Zealanders that every State house property sold to a community housing provider will be retained for social housing indefinitely so that vulnerable tenants are properly looked after?Hon PAULA BENNETT: As we have said previously part of the contract will be that they have to be taking on the tenants. If they wish to sell—to redevelop for example so where there are two or three houses to build five or six—they would have to go to the Community Housing Regulatory Authority to seek permission to do that. We would then have to know that it was in the best interests of the tenants and not a reduction in the number of houses.Metiria Turei: Has the Minister any of his officials or any other Government MP told Horizon Housing or other potential community housing providers that they can sell the properties on for a profit in the future as a sweetener for the deal?Hon PAULA BENNETT: I can only really speak for the Minister responsible for HNZC and certainly for the Minister for Social Housing when I say absolutely not and it is certainly not to our knowledge that anyone else has as well.Metiria Turei: Has the Minister any of his officials or any other Government MP suggested to Horizon Housing or other potential community housing providers a time frame by which they can stop providing social housing and sell the properties on for a profit?Hon PAULA BENNETT: No not to our knowledge and if they were doing that it would not be at the direction of Ministers.Metiria Turei: Will the Minister guarantee that if the Government permits the providers to sell the properties on for a profit at a later date the Crown will have the first right of refusal to buy back those properties and keep them for social housing purposes?Hon PAULA BENNETT: We are working our way through what that contract will look like as far as when the purchase is done and how we ensure that they need to go to the Community Housing Regulatory Authority for that but the purpose behind it most certainly is to ensure that we are still providing services to tenants and housing for them. So we cannot predict every situation that might occur but what we will be doing is ensuring that they are in the interests of tenants and not just a profit they are making for that.Metiria Turei: Has Horizon Housing or any other potential community housing provider discussed with the Minister his officials or other Government MP that any purchase would be reliant on those providers being able to sell the houses on for a profit at a later date?Hon PAULA BENNETT: I can speak only on the behalf of the Minister responsible for HNZC and the Minister for Social Housing and say absolutely not. If anyone else has it has certainly not been at their direction.Metiria Turei: What discount has the Government offered Horizon Housing or other community housing providers on the sale of the State-house properties given that New Zealand State-housing providers have said that they would have to be sold at virtually nil in order to make long-term social housing financially viable for those providers?Hon PAULA BENNETT: We have received no bids and we are not at the negotiation stage.Dairy Industry—Domestic Milk Prices8.DAVID SHEARER (Labour—Mt Albert) to the Minister of Commerce and Consumer Affairs: Is he satisfied that New Zealanders are not paying too much for their milk; if so why?Hon NATHAN GUY (Minister for Primary Industries): on behalf of theMinister of Commerce and Consumer Affairs: Yes; the Government does not set the price of milk in stores. Our job is to ensure there is sufficient competition in the dairy market. The Commerce Commission looked at this issue in 2011 and decided that no inquiry was needed. I would note that the price of milk has actually dropped over the past 12 months.David Shearer: Does he agree with the Ministry for Primary Industries or the then Ministry of Agriculture and Forestry in 2011 when it stated that “As an exporting nation New Zealand domestic milk prices are intrinsically linked to international prices which are trending upward.”; if so why are New Zealand prices not reducing now with the fall of global prices?Hon NATHAN GUY: I have seen that report. Yes there is some linkage but that is only part of the story. The retail price is affected by costs such as processing production and distribution and the member should be aware of that.David Shearer: Is the current price of milk too high for Kiwi families when families in Sydney and London can buy milk more cheaply there than they can here?Hon NATHAN GUY: You could drive a milk tanker right through the middle of that member’s argument. What he has not thought about is the different pricing mechanisms overseas. In particular GST is included here but it is not in the UK and there is a price war currently going on between those two countries. The member should keep up to speed with what is happening.Darroch Ball: Does the Minister not agree that attacks on farmers are unwarranted when this Government is creaming at least 42c in GST off a $3.19 2-litre bottle of milk while nothing is being done about the cosy supermarket duopoly?Hon NATHAN GUY: I would refute certainly the second part of that question and I would refer the member to the review of the Commerce Commission in 2011 to do with this issue.David Shearer: Given that the Prime Minister said yesterday “If the argument is solely one of price in New Zealand you could drink water out of a tap and that’s for free.” would he encourage Wellington mother of two Amanda Gardner who uses up to 5 litres of milk a week and can no longer afford to encourage her children to drink milk to drink water instead?Hon NATHAN GUY: I think when the Prime Minister was asked that question he was actually asked about Coke—nothing to do with water. And what I would say to that particular consumer is that there is a huge amount of competition in the New Zealand retail market and consumers should continue to shop around for good deals.Housing Market—Tax Reform9.BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Revenue: What reports has he received about changes which will bolster the tax rules around residential property speculation?Hon STEVEN JOYCE (Minister for Economic Development) on behalf of theMinister of Revenue: Yesterday the Minister welcomed the release of a consultation document on the proposed brightline test which will require income tax to be paid on any gains from the sale of most residential property bought and sold within 2 years. The brightline test will help clarify whether or not gains on the sale of residential property are taxable. Currently when assessing whether tax should be paid on a gain from a sale the Inland Revenue Department relies on a seller’s intent to either live in the property or sell it for a quick gain. The proposed new brightline test makes it clear that property buyers including overseas buyers who buy and sell a residential property within 2 years will be taxed on those gains.Barbara Kuriger: Will there be any exemptions from the brightline test?Hon STEVEN JOYCE: Although most property bought and sold within 2 years will be subject to the test there are some exceptions. In particular property that is a person’s main home including a main home held in trust is exempt as are property that is transferred after a relationship breakdown and homes that are inherited.Barbara Kuriger: How can New Zealanders have a say on these proposed changes?Hon STEVEN JOYCE: Public feedback is important and I would encourage everybody to have a look at the consultation document on the Inland Revenue Department website. We want to ensure that everybody pays their fair share of tax and New Zealanders can help by participating in the process. The consultation paper proposes new definitions of “residential land” and “main home”. It also clearly identifies the dates a property is deemed bought and sold so a seller and the department know whether a sale falls within the brightline test. The closing date for submissions is 24th of next month. Once enacted the brightline test will apply to residential properties bought on or after 1 October this year.Gaza—Prime Minister’s Statements10.Dr KENNEDY GRAHAM (Green) to the Prime Minister: Does he stand by all his statements?Rt Hon JOHN KEY (Prime Minister): Yes.Dr Kennedy Graham: Given that the Prime Minister has said he wants New Zealand to champion peace between Israel and Palestine will he condemn the Israeli boarding of the Freedom Flotilla yesterday with two New Zealanders on board?Rt Hon JOHN KEY: No but I will encourage both Israel and Palestine to continue to try to find a peaceful resolution to the problems in Gaza.Dr Kennedy Graham: Will the Prime Minister condemn Israel’s actions last year on the basis of the recent UN report on war crimes in Gaza which criticises both sides—but especially Israel—for its excessive use of force in using “huge firepower of 6000 airstrikes and 50000 artillery shells”?Rt Hon JOHN KEY: I do not think that it would be terribly conducive to the good relationship that New Zealand enjoys with Israel and Palestine to start throwing stones on either side in particular. I think the reportunderlines as I am sure the member knows yet again the inescapable reality that reaching a negotiated and lasting peace agreement is vital for the future well-being and prosperity of the people of that region.Dr Kennedy Graham: How can New Zealand even attempt to bring peace to the region as the Minister of Foreign Affairs has indicated it will when the Prime Minister is unwilling to condemn Israel’s war crimes and illegal blockade of Gaza—a clear indication that New Zealand has surrendered its impartiality?Rt Hon JOHN KEY: I think it is the opposite. I mean New Zealand enjoys a good relationship with both Israel and Palestine. We are one of a relatively small number of countries that do. We are not going to resort to megaphone diplomacy but we do encourage both sides to find a credible and constructive way through the issues and we do think a two-State solution is the right long-term answer to the issues between Israel and Palestine.Duty-free Limits—Tobacco11.MARK MITCHELL (National—Rodney) to the Minister of Customs: What effect is the lower tobacco duty-free limit having on the amount of cigarettes and tobacco being brought into New Zealand at the border?Hon NICKY WAGNER (Minister of Customs): In the first 6 months since the tobacco duty-free limit was lowered on 1 November last year a staggering 2.5 tonnes of tobacco—that is a small truckload—has been abandoned by passengers at the border. But the message is getting through: the amount of tobacco abandoned at airports has dropped considerably from about 100 kilograms a week to 30 to 40 kilograms a week. This drop in the duty-free limit works hand-in-hand with the great work that the Minister of Health Jonathan Coleman and Associate Minister of Health Sam Lotu-Iiga are doing to reduce harm caused by cigarettes.Mark Mitchell: How has the Customs Service ensured that passengers are aware of the lower limit for tobacco?Hon NICKY WAGNER: The change was well signalled in advance and a public awareness campaign informed travellers of the reduction of the duty-free limit leading up to the 1 November change. Passengers can also use the website or the What’s My Duty? app to calculate their tobacco concession. I am very pleased that this change in the duty-free limit is working to reduce the harm from smoking in New Zealand.Vehicle Registration—Levies and Risk Ratings12.SUE MORONEY (Labour) to the Minister for ACC: Why will people with older cars pay $90 more per year to register their vehicle than those who can afford the latest model Rolls Royce?Hon NIKKI KAYE (Minister for ACC): Firstly I am happy to let the member know that everyone is paying less due to this National Government’s $440 million ACC motor vehicle levy reductions. Secondly I disagree with the member’s question because not all people with older cars will be paying more. As I have said before a significant number of cars that are older than 10 years will attract the lowest levy which will be the same as for some of those cars that she has mentioned.Sue Moroney: Can she confirm the information tabled with the select committee last week that all motorists would have had their registration levies for petrol-powered vehicles reduced to $104.09 tomorrow if the Minister had stayed with the current system?Hon NIKKI KAYE: Obviously I do not have those figures in front of me but what I can say to the member is everybody would be worse off if it was not for a National Government whereby we have given $2 billion of levy reductions. That is because we have got the books in order so everybody is better off due to a National Government.Sue Moroney: I seek leave to table the document tabled with the select committee showing that—[Interruption]Mr SPEAKER: Order! I am having trouble hearing. I am going to invite the member to start that point of order again.Sue Moroney: I seek leave to table the information put in front of the select committee that said that the vehicle charges would have been reduced to $104.09 for all categories of motor vehicle registration—Mr SPEAKER: Order! The document has been described. I will put the leave. Leave is sought to table that particular information. Is there any objection? There is objection.Sue Moroney: Is it fair that under her new system more than 1 million New Zealand motorists driving older vehicles will collectively pay $41 million more than what they would have under the current system?Hon NIKKI KAYE: I believe it is fair because we are interested in reducing the road toll. Under our Government we have seen the road toll decrease. That is saving lives. That is a combination of things from reducing speed reducing issues like alcohol but also bringing in things like vehicle-risk rating to actually save lives. [Interruption]Mr SPEAKER: Order! Can we just have a little less chatter going on and it is occurring particularly on my right-hand side.Sue Moroney: Does she think it is fair that a person on a fixed income like New Zealand superannuation who has never had an accident in her life has to pay $90 more a year than the business executive who has a habit of driving his Merc—his brand new Merc—after long boozy lunches just because she can afford only an older car?Hon NIKKI KAYE: Well let me make a number of points. The first point is everybody is paying between $40 and $130 less because of our ACC motor vehicle levy reductions. The second point is that she has made a number of assumptions in that question about the kind of car that people drive and the point that I would make to her as I have already said is more than a large proportion of cars that are over 10 years old will attract the safest bands and will then attract the cheapest levies. So I think she has made a number of incorrect assumptions.Sue Moroney: Well can she please explain why the 2009 Toyota Avensis achieved the highest safety rating from an organisation composed of seven European Governments and motoring organisations from every European country but is given the lowest safety rating in her system requiring owners to pay $158.46 for car registration rather than the $104 it would have cost them if she had kept the current system?Hon NIKKI KAYE: I am making a number of points. The first point which I have already made is that people are paying less because we have actually managed the ACC accounts a lot better so she has made an assumption in terms of the document that has been tabled at the select committee. The second point that I would make is that obviously I do not memorise all of the cars and their exact vehicle-risk rating. So for me to actually answer that question in the House I think is a bit unreasonable. And then the third point that I would make is as I have said before everybody is paying between $40 and $130 less—that is 2.7 million car owners getting notices in the mail showing that they are getting less levies under us.Tim Macindoe: How will all New Zealanders with older cars be better off as a result of the ACC motor levy reductions?Hon NIKKI KAYE: The average motor vehicle levy as I have said before including the annual licence levy and petrol levy will fall by an average of $330 to $195. All car owners will receive annual licence levy cuts of between $40 and $130 for petrol cars and between $80 and $170 reduction for diesel cars. Also the ACC petrol levy falls to 6.9c tomorrow from 9.9c per litre. That is good news for New Zealand.Sue Moroney: How many more motorists risk being charged the wrong amount for their car registration because of the data-matching error that ACC admitted to on Saturday in the New Zealand Herald and how much will it cost to fix that data-matching error?Hon NIKKI KAYE: I think she raises a good point in terms of ensuring that that issue is fixed. I can tell her that my understanding is there are about 9000 people who have paid incorrect levies out of 2.7 million car owners—so that is way less than 1 percent—but what I can say to her is that we are working through to fix that and people will be getting a refund. So they may be getting another cheque in the mail.Harmful Digital Communications BillThird ReadingDebate resumed from 25 June.JONO NAYLOR (National): When we concluded on Thursday afternoon there was a bit of humour in the House. There were references to The Castle movie and all sorts of things going on but this is in fact a very serious bill and one that we do need to look at very seriously. To slightly recap just in my first few minutes what I said before we had to adjourn for the end of the parliamentary week we were talking about the very bad impacts that there are at times on young people in particular through online bullying and through social media that result in all sorts of terrible things like truancy at one end of the scale right through to depression self-harm and suicide at the more serious end of the scale. So it is very important that we have legislation in place to ensure that our young people in particular can be kept safe.There have been some people who have been a little bit concerned at the imposition on freedom of speech. Certainly I heard some members—or one in particular—talking about this during the Committee of the whole House. I just want to remind that member and anybody else who is concerned that this is an imposition on free speech that freedom of speech is something that we cannot just take for granted. It is not something that simply gives us the right to say anything we want whenever we want to whatever the consequences of that speech.I want to draw people’s attention to the principles in clause 6 of this bill because freedom of speech should still not give somebody the right to communicate in a way that discloses “sensitive personal facts about an individual”. Freedom of speech should not mean that their digital communication should be able to be “threatening intimidating or menacing.”; nor should it be “grossly offensive to a reasonable person in the position of the affected individual.”; nor should that communication be “indecent or obscene.”; nor should that communication be “used to harass an individual.” Freedom of speech should not be able to be used simply to make a false allegation about somebody. Free speech should not “contain a matter that is published in breach of confidence.” and it should not “incite or encourage anyone to send a message to an individual for the purpose of causing harm to the individual.” Free speech should not “incite or encourage an individual to commit suicide.” and neither should it “denigrate an individual by reason of his or her colour race ethnic or national origins religion gender sexual orientation or disability.”Yes we have got to have freedom of speech. Yes we need to be free to be able to communicate but the principles that are contained in this Act need to be absolutely upheld and so I am very proud to be voting for this legislation as it goes through.One of the other arguments I have heard as we have debated this at the various stages of the passage of the bill through the House has been that people are concerned that perhaps this is too heavy-handed in its approach. At the moment the only thing that is available to somebody is to take some sort of action through the District Court which to me seems far more heavy-handed as an approach. This bill sets up an approved agency that will do what it needs to do to ensure that people are kept safe from harmful digital communication. For those who have said—and I have heard them speaking—that this is something that is too heavy-handed and we need to sit down and take a more softly softly approach particularly where this is occurring with teenagers I want to remind them of clause 8 in particular and to look through what the functions of the approved agency are.Clause 8(1) states that this approved agency will be set up “(a) to receive and assess complaints about harm caused to individuals by digital communications: (b) to investigate complaints:”—but here is the kicker—“(c) to use advice negotiation mediation and persuasion (as appropriate) to resolve complaints:”. That is the benefit of having an approved agency that has the ability to delegate its powers to others as well. That will ensure that we have the measured response that is most appropriate whenever a complaint is laid.Finally I just want to talk about a particular role that has been identified within this Act and that is the role of the “professional leader” in a place like a school. I reflect on my own time as a school guidance counsellor. At times young people would often feel like they had been bullied and they would want to perhaps do something about it but then when the push came to shove they did not want to have to front that for themselves. I think what is critical is that we have this ability for a professional leader to act on behalf of victims and to be able to take this complaint forward to the agency so that the young person who may be affected by this is not having to front up on their own and perhaps feel victimised all over again by having to face up to something within a system. So this particular role of a professional leader in a school who is able to act on behalf of young people is absolutely crucial.This is a good piece of legislation. This is a piece of legislation that is moving forward. It is showing that we are keeping up with the times and that we are wanting to keep our young people in particular free from bullying and I commend it to the House. Thank you.JACINDA ARDERN (Labour): It is my pleasure to have an opportunity to use this third reading speech on behalf of Labour to rearticulate the difficult position that we as an Opposition party felt we were in when debating the Harmful Digital Communications Bill. We sometimes in this House talk about being wedged on issues and what does that mean? Well I think this bill is a reasonable example of that.We have a situation where no one denies that cyber-bullying is very very harmful. You know we have hadin the past the comparison as to the kind of bullying that happened perhaps in our childhood when things like notes rumours slanderous gossip were the kinds of things that were used as tools to hurt young people. Today what we have online is the equivalent of the old nasty note being passed in class now being broadcast for all to see and we have to acknowledge that that has much wider ramifications that do need to be dealt with.So yes there is total agreement that something needs to be done. The issue is what that thing is. The problem we have in this House is that when the Government puts up a proposal and says it is the answer to the problem we all agree on if you then as an Opposition party say: “We’re not really sure that’s true.” you end up being positioned as if you are not genuinely interested in dealing with the issue. That was part of the issue that Labour has faced with this bill. Yes there are elements that we think we were worthy of discussion and debate from this House—there are elements that we could see some merit in—but there are other elements that were deeply worrying for us. So what do you do?Well we want to use this opportunity to highlight some of the issues that we do have and continue to have. On balance our decision has been to vote in favour of the bill but as a party we hope that this House will agree to revisit this legislation in 1 year’s time. If there has been a manifestation of any of the issues that have been raised if the bill is not achieving what it set out to achieve or if it is doing any of the harm we contest may happen we would seek that this House be reasonable enough to come back and look at it again. That is our hope.So let us go through some of the issues that we do think need to be revisited. The first concern we had is that the bill puts forward a new regime over and above some of our existing laws. We have harassment laws already. It was our contention that they could have been used to deal with some of these issues. But the bill puts in a new penalty regime that could potentially include imprisonment or fines. For some people that may be an appropriate response. We have seen some extreme behaviour along that line which needs to be dealt with. But what about for children? When children are involved is it the most appropriate response to criminalise them? You know we are talking about kids as young as 14 here. It was our contention that that was not right. We wanted the bill to change so that we were considering only those considered adults in the law which is 17 and above. The Government did not agree with that amendment so that is one of the things we are deeply concerned about.What would we have done as an alternative? We do think there are models within schools around restorative justice that many schools use in place of expulsion and suspension regimes that maybe would have been a thoughtful way to engage with this issue. We know for instance that the Post Primary Teachers Association in its latest magazine is talking about forces within schools aligning against bullying through movements like Pink Shirt Day which is becoming much more widespread. Talking to the education sector about what we could do when children are involved would have been at least a good first step. So that is one of our first concerns.Our second concern was whether or not the definition of “harm” in the bill was too broad. The bill basically set out that harm was “serious emotional distress” but that is a very subjective measure so the bill allows the approved agency that is meant to deal with the bulk of cases to determine for itself what “harm” might be. When you are dealing with something as serious as balancing freedom of speech with the issue of online bullying and cyber-based harm our contention is that Parliament needs to play a greater role in determining where that line in the sand is. Freedom of speech must be jealously guarded by this House. Our concern is that this has been left wide open and we still have concerns about the way that that might be interpreted and about whether the approved agency will have the resources and be equipped to deal with that significant issue. That is definitely one that Parliament must remain engaged in because any threat to freedom of speech that goes beyond the tests that we put in place to make sure that freedom of speech does not become harm against others and harm against young people is the balance that we must continue to ensure we maintain.As I say we are also concerned that the proposed civil enforcement regime displaced the longstanding balance we already had in New Zealand law and replaced it with untested standards. So that was another concern.Of course there were opportunities for us to look at what overseas jurisdictions were doing. We are not the only Parliament tackling this issue. Australia has already tried and so has the UK. In the UK we have seen horrific situations of cyber-bullying where young people have taken their own lives. Its response has not been to legislate but to use alternative methods. We really wanted to see those explored in more detail.It was also our view that some of the provisions around having a safe harbour online were flawed. At the moment entities like Facebook and Google have their own policies—if something harmful is posted online you have the ability to request that it be taken down. Some of those entities operate a function whereby they take down first and check later. So they act immediately in order to remove the potential harmful communication and then decide whether or not that was the right course of action. So that can happen very very quickly.This bill however gives the ability to entities to remove potentially harmful digital communications no later than 48 hours. So actually we are broadening the window to make it a longer period of time than what might already be the practice of some of these entities. The harm of that is we know that in a viral digital age 48 hours is a very long time—it is a very long time—so we have the potential here that this legislation actually weakens what was happening as the status quo. We are very pleased though that the Minister of Justice did make some changes via a Supplementary Order Paper during the Committee stage to provide an opt-out from these provisions for online content hosts so that they can use their own terms and conditions. We are grateful for that. That does provide some leeway around that but it was an issue that we have raised consistently and we need to monitor whether those time frames are going to be effective.We also debated—I understand it was debated at the select committee—the issue around whether there needed to be exemptions for the media. I accept that in the digital age there is a very broad range of views as to what media is and much debate as to whether or not bloggers should be included in that official turn of phrase but what I am sure we can all agree on is that this bill—as much as there is satire out there around MPs reading out mean tweets this bill is not about protecting members of Parliament. That is not what this bill is about. You are not going to see MPs using the law to stop people criticising them. Of course not—that would be a blatant abuse of the freedom of speech. Nor is it about stopping trolls that affect members of Parliament. That is not what the bill is about. But nor is it about stopping satire—nor should it be. That again would also be a blatant breach of freedom of speech.So perhaps it would have been useful to embed in this law—to be clear—a public-interest defence around the media so at least it existed in law and at least we sent the message to the legal fraternity that it is not our intention to protect ourselves with this legislation but rather to prevent harm to some of the most vulnerable. Let the record instead state—let Hansard instead state—that that is not what this Parliament’s intention is. Rather it is a very different group that we intend to protect.On balance as I say we do want to prevent harm. We have massive reservations about whether this is the right way to do it but on balance we have agreed to see where it takes us. But let us at least as a Parliament be wise enough to accept that this is new territory and that it would be wise of us to keep a very watchful eye on the way that this legislation works.JACQUI DEAN (National—Waitaki): That contribution by the member who has just resumed her seat Jacinda Ardern was a good and thoughtful contribution to what is a pretty serious subject and it raised a couple of issues that have also been discussed quite widely during the passage of this bill—that is the impingement on freedom of speech and the approach of this bill being perhaps too heavy-handed. I would argue that the structure of this bill caters for and ameliorates those concerns and perhaps I will explain that a bit later as I go through it. Also I think it is good to recollect that this bill came from a piece of work undertaken by the Law Commission called The News Media meets ‘New Media’: Rights Responsibilities and Regulation in the Digital Age. So this bill has its foundation in some pretty serious work undertaken by the Law Commission. And it was brought to this House and to the attention of Parliament because of a number of very distressing and serious incidents that have happened that are happening now and that will continue to happen in cyberspace. Those incidents might manifest themselves as cyber-bullying. They might manifest themselves as inciting people to commit suicide or as just good old-fashioned bullying in the workplace—particularly as has been noted a number of times while debating this bill with regard to young people who are very vulnerable and very sensitive to people’s opinions and suggestions about them. We all know and we all agree across this House that it is time that this issue was addressed on behalf of young people.The main provisions of this bill are to create a set of 10 communications principles. Those will guide the approved agency which I will talk a bit more about in a minute and also the courts should that become necessary. For example one of those principles might be that a communication should not be threatening intimidating or menacing. As I have mentioned there will be a new civil enforcement regime created which will be an approved agency. That approved agency will receive complaints and where appropriate undertake an investigation into those complaints. The approved agency will have the ability to respond very quickly. The previous speaker was quite right in saying that the digital space moves incredibly quickly. In effect there is no news cycle any more just as there is no delay in digital communications because they are incredibly immediate and their dissemination can be huge—push a button and many many people will now see a message that can never be unsent or undone. So hopefully the agency will be able to resolve complaints pretty quickly and directly with the most serious of those complaints that are not able to be resolved to be referred to the District Court which can then in turn issue take-down and cease and desist notices. What the bill does is provide a legislative mechanism for people to provide for the taking down of damaging and harmful content from websiteseasily quickly and efficiently. It also clarifies the law regarding website hosts and that is in the safe harbour provision that I will talk about in a minute.This bill also makes it an offence to send messages and to put harmful posts online—for example where they are offensive obscene indecent menacing or knowingly false. And you know those incidents are all too common unfortunately. This bill provides for a maximum punishment of up to 2 years’ imprisonment so it is pretty grunty stuff at the higher end. It will also create a new offence of incitement to commit suicide even when a person does not attempt to take their own life. Again that is a pretty grunty measure in this bill. Again that new offence will be punishable by up to 3 years’ imprisonment. This bill also amends the Harassment Act the Privacy Act and the Human Rights Act to ensure that they are up to date for digital communications. This is such a fast-moving space that this bill is bringing some other pieces of legislation along with it because of course in many cases now existing pieces of legislation were written before cellphones and the internet were even imagined.Going back to the civil enforcement regime this was one of the key recommendations of the Law Commission. This Government agrees that when it comes to digital communication we do need better legal options for addressing complaints and for taking action on those complaints. Although I agree with the member Jacinda Ardern that there are existing mechanisms particularly within the school environment and also in perhaps the Youth Court environment I do not see that those existing measures where they work well cannot be utilised by this civil enforcement regime. In fact I would like to think that as part of the mediation provisions that are enabled by this bill those existing mechanisms could be utilised—diversion perhaps or Project Turnaround. Those sorts of good community-based options should be part of the suite of remedies available to people.We acknowledge that court cases can take a long time can be very distressing and can be quite costly on occasions and the reality is that the damage has already been done. And the victim naturally—particularly if it is a young victim—just wants the matter resolved as quickly as possible. So for those reasons victims may be very hesitant to lodge a formal complaint to the police. Again it is often the case that younger people do not always enjoy a particularly close and trusting relationship with the police and may be reluctant to come forward. It is well-known that victims of bullies often find the hardest thing is to reach out for help. This I hope with this civil enforcement regime will lower the bar and make it more possible for victims of cyber-bullying to reach out. So the approved agency having received a complaint can then decide whether there are grounds to proceed with an investigation or whether perhaps a complaint might be vexatious—it happens. It may be frivolous—it happens in this environment. It will advise people on steps that they can take to resolve a problem. Where it investigates substantial complaints it will attempt to reach settlements between the complainant and the person responsible—so mediation and again therein comes the utilisation I would hope of existing mechanisms in the resolution of disagreements. Where an agreement cannot be reached then of course there are the provisions of the District Courts which I have already mentioned.I just want to finish by talking briefly about the safe harbour provision. So a content host could be anyone these days: anybody who has a blog Facebook Twitter Vodafone. Most of our legislation was written before the internet was a consideration so it is not always clear when a content host is liable for the content posted by its users. So we are proposing a safe harbour. What that means is that a host will not be able to be taken to court for comments put on their website unless they have been notified by the complainant that the comments are in breach of the law and they then do not follow the process set out in the bill. There have been many thoughtful contributions on this Harmful Digital Communications Bill. I do acknowledge that it is a legislative response that some view as impinging on freedom of speech and perhaps might be too heavy-handed. What I would say is that the protection of our young people in particular—their protection from cyber-bullying—is so very important that I think this bill is a very good step and I commend it to the House.DAVID CLENDON (Green): I am pleased to take a final call on this bill to speak in support of this bill. As we go into the final reading it is worth noting as others have done the genesis of this bill if you like. It was the original policy work that was done around this issue which came from the Law Commission which did three pieces of work that were linked. The final and most substantive I think challenged the adequacy of the legislative regime around offending of this nature or nuisance of this nature if you like. It found the legislative framework wanting frankly and proposed a series of options and possible remedies for that.The bill as it has evolved does reflect some of the proposals contained in the Law Commission’s work. Others have been amended but overall it does undoubtedly plug a gap in our legislative framework. In fact that point was commented on by the Police Association in its very useful submission to the Justice and Electoral Committee on this bill where it pointed out that the police could deal with sort of the very low-level nuisance offending and they could deal with the very serious offending where actual physical threats or some sort of direct assault was made on somebody but it also highlighted that there was a large and growing gap in the middle where they were finding it very difficult to actually bring any action against people who were undoubtedly causing grief and causing harm.I think it is important. There has been some critique that we are creating a legislative regime or some statutory framework that is unique to online content unique to the internet or to digital communications and I think that is entirely appropriate. I think it is somewhat disingenuous to suggest that the digital platform if you like—the internet—is somehow not unique not different. The reach of the internet is unique. It is pervasive. It is ubiquitous. The accessibility of the internet is unique. It is possible to inflict considerable harm over a great distance with very very basic access to the internet and I think that has to be recognised.In a sense we have been here before. Clearly in the 1950s and 1960s when television became more commonplace there was a need to have some legislative response to that around censorship around what we would now recognise as broadcasting standards—those sorts of things. I recall a famous quote at the time that TV was simply another home appliance—simply a toaster that happened to have pictures on it. Of course television did change the media landscape in the same way that the internet is changing the way we do business changing the way we trade changing the way we educate people and changing the way we interact socially. It is undoubted that it is a new medium and we need legislation fit for purpose to deal with that.Support for the bill has come from many quarters and I will quote the Human Rights Commission which said: “In our view the bill strikes the correct balance between freedom of expression and access to the internet. A right cannot be interpreted so broadly that it allows others to be harmed.” We can take some comfort given the degree of concern that has been genuinely expressed in some quarters that this bill maybe goes too far. I think the Human Rights Commission among others is a reasonably good judge and in its view we have found that correct balance.I would just for the record reiterate the points Jacinda Ardern made in respect of the intention of this bill being absolutely not to suppress satire. It is not intended to suppress robust political debate. Politicians need to develop thickish skins—that is taken as a given. Cartoons satire—these are legitimate forms of expression of critique and there is no appetite I believe within the bill or from those who drafted it who have looked at it and who are supporting it to see any change to that environment. I am sure that the courts in their turn will understand that and rule accordingly.I think it is important to note also that NetSafe the organisation that is currently involved I guess primarily on an educative basis made the point in its supplementary submission. It commented on the number of people coming to NetSafe having already spoken to multiple organisations and having found that there was nobody to assist them. I do think that speaks to the need for this bill to establish a dedicated agency with some authority—a limited form of authority admittedly but nevertheless some authority—and ultimately if a matter cannot be resolved there for it to go to the courts.I think it needs to be noted that this bill in a sense creates a three-stage approach. A primary function of the approved agency will be to educate and one of the first steps taken at the select committee level was to ensure that very clear language was put into the purpose of the bill. Fundamental to the bill is the expectation the requirement that the approved agency will be heavily involved and one would expect it to be equally well resourced to educate around these matters not least of all with young people but also with people who are not so young.On the occasion when something does occur that upsets someone the next step of course after education is the mediation and negotiation process which the approved agency will seek to facilitate. Again that is a good process—to endeavour simply to get these matters resolved without recourse to the courts but ultimately having the confidence that if people are unreasonable and if they cannot come to a negotiated or a mediated outcome then the courts will step up. Again NetSafe made the point that “You can’t have part of the process and expect the full effect.” The point it made was that the court process is required to make the approved agency process work. There needs to be a little bit of the threat of a stick hanging over the negotiation if you like just to focus people’s minds and to assure them that actually this is serious stuff and will be treated accordingly in the event that people are not able to come to some negotiated remedy.To speak to a couple of points again in part to seek to allay fears or concerns that have been expressed I think we have to be aware of the communication principles that have already been identified. There are if my memory serves 10 of them and they do set the scope for the work that the court might be obliged to do and indeed that the approved agency will do. They set the criteria. They establish a framework for considering whether or not people could and should be genuinely understood as having been offended against and to put some pressure on people causing offence to remedy that situation. The digital communication should not disclose sensitive personal information it should not be threatening intimidating or menacing it should not be indecent or obscene it should make not make false allegations—these are fairly obvious criteria that anybody could understand and respect.I am also given some comfort by the fact that clause 6(2) of the bill specifically states that “In performing functions or exercising powers under this Act the Approved Agency and courts must–… (b) act consistently with the rights and freedoms contained in the New Zealand Bill of Rights Act 1990.” That is an absolutely clear statement that nothing done in the name of this bill or under its banner can be allowed to be inconsistent with the New Zealand Bill of Rights Act and I think that is a significant defence and one that has been perhaps overlooked.The threshold for proceedings—assuming the approved agency is not able to mediate an outcome and in the event a matter does go to the court then there is a threshold set. It requires that the court must be satisfied that there have been threatened serious breaches or have been serious breaches or repeated breaches of one or more of the communication principles and that the breach has caused or is likely to cause harm to some individual. So it is already a reasonably high threshold to even get the case into the court. The court is able on its own discretion to reject anything that it perceives to be frivolous or vexatious or that does not meet that threshold.Clause 19—again it is not sufficient to say that harm was caused; it must also be proven that there was an intention to cause harm that a reasonable person would expect that harm would be caused and that in fact harm was caused to an individual. So I think we can be reasonably confident that this bill has been well thought through and does put in place some significant protections.I will comment briefly on a matter that was brought up at a late stage which was the concern that in fact you might get a counter-productive outcome. The take-down or safe harbour provisions will take at least a number of days and the content that might otherwise have come down immediately would in this case actually persist for some time. There was an amendment made at the Committee stage—which we entirely support—to the effect that content hosts that receive a complaint can at their own discretion take down material that they in good faith believe is offensive or that conflicts with their terms and conditions.Finally I do indicate my support for this bill. We look forward to its implementation and we certainly support the notion of an ongoing review to ensure it is achieving the outcomes we seek.TRACEY MARTIN (Deputy Leader—NZ First): Kia ora Mr Deputy Speaker. First of all just to address some of the concerns that have been raised can I just say that New Zealand First was the only party in this House with the courage of its concerns to make an attempt at the second reading to send this bill back to the Justice and Electoral Committee. That motion was certainly supported by other parties in this House but at that time we were the only party raising those concerns that had the courage to actually move a motion to try to send it back. We also voted against the bill at the second reading. So I take particular umbragewith Mr Seymour actually and with the trivialising of the effect of cyber-bullying on our young people. I want to quote from the New Zealand Herald of 30 June in which Mr Seymour said: “Other online behaviour like sexual grooming was already illegal. ‘What are we actually criminalising—kids being mean to each other?’ ”. Kids who have been mean to other kids have killed themselves. That is one of the reasons why we need to traverse this ground. So I take exception to the trivialisation of some of the trauma that is actually being inflicted—and I am talking particularly about our young people—by internet cyber-bullying. That is the reason why it is important that we address this issue—but appropriately; we have to address it correctly.I want to take on board the comments about schools and whether the current anti-bullying programmes and mediation programmes inside schools are adequate enough to address this issue. The following is from the Post Primary Teachers’ Association (PPTA). Predominantly—at the moment anyway—the majority of the issues that we have inside our schools are focused at the secondary school level. The association said: “The Harmful Digital Communications Bill currently before parliament proposes to ‘deter prevent and mitigate the harm caused to individuals by digital communications with a quick and effective means of address’. The bill attempts to provide a legal solution to the harm caused by cyberbullying and recognises harmful online comments as a form of harassment. It includes new penalties for causing harm through digital communication and creates a new agency with the power to assess and investigate complaints. The agency will also have an education role similar to the Human Rights Commission … ‘Schools regard cyberbullying as a very serious problem especially because it often occupies the blurred space between home and school so it’s not always clear whose responsibility it is to deal with it’ ”.This comes down to the current ability of schools with regard to the discipline procedures inside the Education Act 1989. When children leave the school grounds they are in an interesting space. Are they still in their school uniforms and therefore still in school and so the school rules still actually apply? And believe me these are true cases and true conversations that I and other boards of trustees have had to have. Or have they removed their school shirts and therefore are just in their school shorts? Does that mean that the school rules still apply? But when they are at home in their civvies texting another student in the school it has been argued that they are no longer under the jurisdiction of the school and therefore the school can do nothing about it. That is one of the problems that we are trying to address here. That is one of the spaces that we are trying to address here.Another suggestion that has been made is that there is existing law and that we should just use existing law right now. I put up this example at the Committee stage. One of the suggestions was that we already have the Harassment Act. The problem is that the Harassment Act makes the assumption that there is a relationship between the person being harassed and the person doing the harassing. Before this bill passes there is no room inside the Harassment Act actually to create a relationship wherein somebody can harass a person without even knowing them—without even knowing a person they can harass them. They can do it without knowing anything about a person apart from the fact that perhaps they are say a really good singer in the school production and they themselves cannot sing and they have decided that they are now going to make that person’s life a misery. Inside that current Act there has to be a relationship.Misuse of a phone device—we went through that as well. Certainly there have been photographs taken on a phone; they have then been posted up on a computer. And once it goes from the misuse of a phone it becomes a whole other environment. You cannot take it down. You cannot deal with it. Certainly to threaten somebody with bodily harm is also I think within the Crimes Act section 306. Again the current Act makes an assumption that there is a relationship between the person being threatened and the person doing the threatening. What we are discovering is that these threats are coming completely out of the blue for many people—for example the young Sikh student who was on a bus. Not a single person knew him but they threatened him and there was nothing that the police could do about it. This is what we are trying to avoid.I talked about freedom and we have talked about freedom of speech. Freedom comes with responsibility. Freedom comes with responsibilities and obviously there are some people out there who do not figure out what those responsibilities are inside this environment. I go back to comments made at NetHui a couple of years ago that the internet is a place. If the internet is a place then we need to have some criteria in it. We need to have some rules in it because there are people being hurt in this place and part of the job of this Parliament is to stop people from being hurt. Also Ms Ardern addressed the question of whether—there was conversation at the select committee—bloggers were really “media”. I would make this statement: media can certainly be bloggers; bloggers cannot and should not ever be considered as media. The media has actually taken training. They have criteria. They have boundaries that they work inside of and they can be held accountable inside of them. Anybody who wants to set up a blog and just vent their opinion should not be considered media. So with regard to that I would hope—and I know it was pushed by certain members of the blogging society at the select committee—that the line maintained by media true media is maintained.In closing I think that probably the only other thing is that we agree in this House—all people agree in this House—that something has got to be done. I would certainly endorse Ms Ardern’s comments about our needing to have a look at this in a year’s time. New Zealand First was concerned about the fact that we did not want to criminalise children when there were other options available to us. So we worked constructively with the Minister and the Minister put in a Supplementary Order Paper that addressed all of New Zealand First’s concerns. We will watch like everybody will watch whether people can behave appropriately without Parliament stepping in and protecting those who are being attacked those who are being affected. Take Yik Yak for example. I do not know how many people in this House know what Yik Yak is. Yik Yak is an app on which people can actually make comments—just constantly “blah” their mind on this app. For university students it is about missing a lecture or whateverthe majority of the time. Down in Wellington it is being used in a relatively constructive way. Go out of Wellington and it is really interesting how vicious that Yik Yak is inside secondary schools—how absolutely anonymously vicious it is. And yet what is interesting is the way that they hook people into it. When you have made five or 10 really nasty comments you become famous. You become famous inside this app.New Zealand First will support the bill. As I said we did not support it at its second reading but we worked constructively and the Minister has taken on board our concerns. The bill has been rewritten to a certain extent with the Supplementary Order Papers and so therefore we will support it through third reading. Kia ora.CHRIS BISHOP (National): I just want to acknowledge the member who spoke just before Tracey Martin. I think it is pretty clear from listening to her speech that she played a constructive role in the gestation of this bill but also in the improvements that have been made to this bill through the select committee process and also through the Committee of the whole House stage. I think it is also clear from listening to her speech—and I know the honourable member serves on a board of trustees in Auckland in Rodney—that she has some experience in the school system so has some not unique but certainly useful experiences to bring to bear on this issue which primarily of course affects the young. Although not completely: but primarily it affects the young. So I think some of the examples that we have just had mentioned by Ms Martin have been a useful contribution to the debate. It is not often that Tracey and I agree so put that down for the record.This bill was introduced in November 2013. Unfortunately I did not have the privilege of being in Parliament then or indeed of serving on the Justice and Electoral Committee which considered the bill. But I have interrogated the bill and its principles pretty thoroughly over the last few weeks and I am very glad to stand here supporting it. The driver of this bill is really technological change. It is one of the paradoxes really of modern society that privacy to individuals is becoming more important whilst at the same time individuals feel free to place more of their lives online than ever before. They feel free to share photos. They feel free to put up photos of their cats even likening them to politicians. They feel free to share their poetry online. They take Instagram shots of their food and place them online. They place their holiday snaps online. Previously you had to go around to somebody’s house in the evening to watch a boring slide show of their holiday snaps whereas nowadays if you are really keen on seeing somebody in Angkor Wat or in Burma or anywhere you can just log on to Facebook and see them straight away.Technology really is changing everything. The world’s biggest transport company Uber owns no cars. The world’s biggest accommodation provider which is Airbnb does not have any hotel rooms and does not own any buildings. So really the internet is changing everything. But with that comes new threats. If you read the regulatory impact statement on this bill it rightly makes the point that there are new threats for harassment for abuse for threatening behaviour for the publication of invasive photos and for invasions of privacy that come with this new technology. If you read the regulatory impact statement it makes the point that TradeMe has 2.8 million users. It is actually quite astonishing. That is about 75 percent of the New Zealand population assuming that each user is an individual person. There are 2.8 million individual users with 25000 posts per day—and I think the regulatory impact statement was written about 18 months ago so I suspect that figure is actually far higher now. If you look at Twitter there are one billion tweets sent per week. Again I suspect that figure is actually far higher now.With these new technologies come new threats. In some ways the traditional school playground has moved online. Growing up I remember—you know we did not have cellphones when I was growing up or certainly they were a very nascent technology and they were too expensive. They were outside the realms of a chap like me. But I remember going home and logging on to MSN Messenger. That was the playground for abuse in my day the famous MSN Messenger technology—now sadly retired. Microsoft has got rid of MSN Messenger but that used to be the thing—David Seymour: No!CHRIS BISHOP: It has. It has gone. It is gone Mr Seymour it is gone. Mr Seymour is of a similar age to me so he no doubt remembers as well going home from Auckland Grammar School—finishing rugby practice and all of the extracurricular pursuits he no doubt pursued at Auckland Grammar—and logging on to MSN Messenger to catch up with the very same people he had been talking to at school that day but also people from other schools in his community. It is gone now but MSN Messenger was certainly a hive of interesting and challenging behaviour.Nowadays of course very many students at school have cellphones and they have 4G or 3G access to the internet. They even have Wi-Fi at schools. The potential for students to bully harass and make life a misery for other students in the school has certainly been heightened. If you read the background work on this bill something like one in 10 New Zealanders say that they have experienced harmful communications on the internet. That comes from the Law Commission. That figure rises to one in five for adolescents. The Minister in her third reading speech outlined some very sad cases which I will not repeat of harmful bullying and abusive behaviour that took place over the internet in New Zealand society. The question that confronts Parliament then is what is the appropriate legal response from the legislature to something that—I think there is unanimity on this in the House—is poor behaviour? What should be the legal response?Well the Law Commission did a review and it concluded that basically the existing remedies that we have in our law like defamation harassment and vilification do not effectively address the potential for harm from these new technologies. So we have a lacuna in the law. There is an argument I think—and it has been advanced by the some people—that we should just rely on defamation law and that we should just rely on the existing civil or tortious remedies in our law. I think with respect—and I think Tracey Martin pointed this out and others have as well—that it is a little far-fetched to expect that we could rely on a 13-year-old or even a 16-year-old to rely on defamation law to enforce their rights against those who seek to violate them. So I think that is a little bit far-fetched and I think the Law Commission went through that and came to that conclusion as well.So we have this bill put forward by the Government. So what does it do? It creates a new civil enforcement regime to quickly and effectively deal with harmful digital communications. That is its first major objective. Secondly it creates new criminal provisions that deal with the most serious conduct. There was some debate I think about whether or not there should be a criminal offence included in the bill but as the Minister has made clear I think it is correct to say that we do need that backstop provision for the most egregious vile and reprehensible conduct and I think it is clear that that is required. Certainly the United Kingdom has moved towards this; it has criminalised revenge porn for example. Australia I understand has had a law similar to this for a decade and there have not appeared to be many problems with that.So how will this law work in practice? I regard it as a cascading series of options—well not options but a cascading series of things that the law does. Firstly the law sets up this approved agency. It is very correct to say that the major priorities for this new approved agency are that it must have an educative focus it must be well resourced and it must be seen as a credible authority in this area. The Minister has given that assurance that that will be the case and I for one will be inside the Government caucus making sure that that is true. So it sets up this new agency and then what we have are mediated outcomes. The Minister has said that the vast bulk of the activity of the new agency and the vast bulk of complaints that take place under this new Act will be dealt with through these mediated outcomes and I think that is appropriate. Then of course we have the ability to apply to the court for civil orders for take-down notices to remove material and then of course the criminal sanctions that I have talked about.Just in closing I want to briefly talk about freedom of speech because section 14 of the New Zealand Bill of Rights Act protects that and it is very important. I was concerned that this bill would potentially impinge unnecessarily unfairly and unjustifiably on section 14 of the New Zealand Bill of Rights Act so I went and looked up the section 7 report—because of course the Attorney-General is required to report to the House if a bill is unjustifiably inconsistent with the New Zealand Bill of Rights Act. The legal advice is published so I went and looked up the legal advice from the Crown Law. The legal advice from the Crown Law is that this does not breach section 14 of the New Zealand Bill of Rights Act or to the extent that it does it is a justified limit because it finds that “expressions can be limited to the extent necessary to avoid or redress serious emotional harm or other harm or the incitement of harm:”. That is according to the Crown Law Office a justified limit on section 14 of the New Zealand Bill of Rights Act and that is in essence what this bill is trying to do. So I was comfortable to conclude that this bill is acceptable and a justified limit on section 14 of the New Zealand Bill of Rights Act. Because of that I commend this bill to the House.GARETH HUGHES (Green): Kia ora Mr Deputy Speaker. Ngā mihi nui ki a koutou kia ora. Today Parliament finds itself at the complex intersection of rapidly changing technology and slower-changing legislation. I have no doubt there is not a single member in this House who does not want to reduce the harm that is caused by posting personal and private content online without permission or the messages some poor younger Kiwis have received—a deluge of messages urging suicide. I have no doubt any member is standing for that. This bill though is a case of trying to do something or trying to do anything about a complex and serious phenomenon. The intent is noble—to try to reduce the harm of cyber-bullying—but this House should be measured by the content of our legislation not just by our intent.In my time here I have seen some very badly drafted tech legislation. We have seen the Telecommunications (Interception Capability and Security) Act and the Copyright (Infringing File Sharing) Amendment Act or the “Skynet Act” where badly conceived law came together with under-informed legislators all with the best of interests to pass terrible laws. So for the first time in my parliamentary career today I am casting a separate vote from my party because I believe this law this bill is the wrong solution to the right question which is: “What do we do about cyber-bullying?”. Ultimately this bill is overly broad it risks limiting our freedom of expression and the important role of the media in our democracy and it introduces a precedent that one thing can be legal off-line but illegal online. I agree with the intent of the bill which is to try to reduce cyber-bullying; however I am opposed to the way it is achieved and currently drafted. I believe there are better ways to go about reducing cyber-bullying such as the approved agency and funding education without making a new criminal offence just for the digital world.The bill comes out of some disturbing high-profile examples of online cyber-bullying and the Law Commission report from which the Government has cherry-picked some of the recommendations. The idea of an approved agency is a good one and one that I support to help people who cannot currently access quick redress or support or advice from agencies such as the police who quite frankly were incredibly poorly informed of how they could support victims to get hurtful material taken down under the current content providers’ terms and conditions. Likewise I would like to acknowledge the good work of NetSafe which is currently dealing with around 800 cases a year.Likewise the idea of a notice and take-down power with safe harbour protections for content hosts is a good one and will give the remedy most desired by victims of cyber-bullying where they just want to see the damn stuff get taken off the internet. However I would note this take-down provision applies only to the District Court not to the approved agency which is going to be most likely the highly respected NetSafe which will have to engage in a whole process of mediation before going to the court. Although the material which I think any member of this House would want to see taken down could be removed the risk is we will see it there for longer than desirable.However it is the new criminal offences and the offences for causing harm online by posting a digital communication that I disagree with. This offence carries a penalty of imprisonment for up to 2 years a fine of up to $50000 and is under the minimum jury level limit. I believe this new criminal offence is a step too far. I agree with the UK House of Lords which in its 2014 report said: “what is not an offence off-line should not be an offence online”. I see this as a worrying precedent that sees the online world as something different something foreign and somewhere where rules and laws and criminal offences can be different. It is just not the case. There is a rule for regulating specific technology because it does have unique characteristics and I understand that argument for the internet but I do not support a technology-specific criminal offence which in this case has different rules or standards for the content of speech or behaviour online and off-line.The criminal offence for causing harm by posting a digital communication could additionally have a chilling impact on freedom of expression and the important role of the media. The values we share of freedom of expression and a free media are important to our country and they should not be weakened lightly or in this case inadvertently. As technology expert Thomas Beagle has pointed out causing offence by posting digital content is so over-broad that it criminalises public interest political speech such as for example exposing corruption or the dodgy dealings of a member of Parliament. Likewise parody and satire have an honourable tradition across thousands of years yet often do cause harm to the powerful or the rich whom they seek to embarrass satirise or parody. There is no doubt these people are embarrassed yet they do not have the protections applied.As Tim Watkin has pointed out this law applies not just to bloggers but to journalists as well. He points to the ludicrous situation that a public interest story of say the corrupt MP as we have given the example of before who is subject to harm by the story would be perfectly legal if it were published in a newspaper but punishable if posted on that media organisation’s website or transmitted electronically. The Government unwisely has ignored the Law Commission’s advice to exempt the media and it should have listened to the Law Commission.“Harm” which is the crucial word in this new criminal offence is defined by the interpretation section as “serious emotional distress” which is I believe irresponsibly broad. It would have been far more preferable to modernise and plug the existing gaps in legislation such as the Harassment Act and not introduce a new vague “harm by posting online” offence. Now there are factors—the defence and supporters of the bill will argue this—that the District Court must consider including the context of the digital communication. But could any defence be broader or woollier than what is written in the bill which is context? It is incredibly vague incredibly subjective and it would have been much clearer to protect the public interest or to protect parody and satire. Likewise the truth of the online allegation can be taken into account as a defence similarly to defamation but the way we have gone about it in this bill circumvents 200 years of case law to get there. So a judge may interpret context as a defence in reasonable circumstances but having such a broad subjective view for the new criminal online offence is just inviting the powerful the vexatious and the litigious to use this to shut down legitimate comment.There has to be some irony that a law to address cyber-bullying could be used as a tool to bully and take down different opinions. Internet service providers the content hosts who are often in a highly competitive market working as hard as they can are going to face the pressure of these applications coming in and the quite frankly simple choice to maybe just take down the stuff to avoid a mess or avoid some work which could reduce the information the discussion and the democracy in New Zealand.In summary I support the bill and some the measures contained within it to reduce the harm of cyber-bullying but not the bill itself. It is too broad risks limiting our freedom of speech and introduces this new online-only criminal offence. This bill has sat on the parliamentary agenda for years and years. I urge the Government and members to take a bit more time to make sure we get it right. Thank you very much. Kia ora.DAVID SEYMOUR (Leader—ACT): It is an enormous privilege to live in a society that benefits from 800 years of common law which has given us among other rights and freedoms freedom of speech. It started perhaps most colloquially as the simple idea that “sticks and stones may break my bones but words will never hurt me”. In actual fact what has evolved is the idea that words can hurtsometimes. And over that long period of time an intricate network of defences has evolved so that people can for instance defend themselves against damage to their reputation that was done deliberately that was untrue and where the audience might be led to believe that it was true. That is our inheritance: 800 years of trying to figure out how exactly to protect freedom of speech on the one hand and people’s right not to be unfairly maligned on the other. Another great privilege that everybody in this room has—everyone on the floor of the Houseat least—is membership of this House of Representatives. To use the second privilege to destroy or at least to erode the first one—the way that this bill does—is something that I cannot support and therefore I must vote against this bill.This bill is a case study in bad lawmaking. All of the elements of bad lawmaking exist in this bill. Not since we microchipped dogs in the hope that it would prevent a particularly egregious dog event has there has been such a bad law before this House. First you had the high-profile and really quite disgraceful event. Then you had the discovery that in actual fact the laws in place had not been properly used by the agency in place to prevent the harms that occurred there. Then you had the knee-jerk reaction from the politicians who said: “We must do something. This bill is indeed something; therefore we will pass this bill and it must be the right thing to do.”What exactly does this bill do? Well the first thing that it does is introduce a set of communications principles that might be appropriate if we were about to embark on a school camp but which are not appropriate for the governance of 4.5 million people many of whom are adults—and the children among them are the responsibility of adults. It says that you cannot offend somebody. So for instance would Flight of the Conchords’ song Albi the Racist Dragon be offensive if it was communicated online? Well we are told in defence of the “badly burnt Albanian boy” from last week that of course this law would never be used in such a silly and un-sensible way. That is the problem with the law: it gives no protection. We are supposed to rely on the beneficence of the enforcers. That is bad lawmaking. If you were to say: “Happy 31st Liz” would that be giving away information of a personal nature about another person that you should not reveal? Would that be a bad example? How many of these bad examples will actually end up discouraging freedom of speech in what you might call a “chilling effect”?As I said in my maiden statement to the House it is ce qu’on voit et ce qu’on ne voit pas. It is not just what is seen but all of the unseen expression that will now not occur because of the chilling effect of the communications principles if the enforcement of it—even if not quite criminal yet you understand; you are going to be OK—by the approved agency is brought to bear. Perhaps that is why Voltaire said: “I defend to the death your right to say what you say” even when those are things he might have disagreed with. It is a sad day in this House when you have to rely on lots of dead Frogs to stand up for your civil liberties—and you probably will not be able to say that very soon either.It might be worthwhile to have this law if we truly believed that it was going to reduce harm and protect people. But in actual fact as soon as you start to look at the contradictions you can see that it will make little if any difference to reducing harm for people online. And there is genuine harm to be mitigated. You will find that there are much much simpler more straightforward ways to do that with far fewer side effects. For example we are concerned that children will bully each other. So the idea is to introduce criminal sanctions but of course you understand we are not really introducing criminal sanctions for children because they will go through the Youth Court. So somebody might ask why you would make a law that you did not intend to be enforcedproperly. Or for another contradiction you might ask how quickly most viral phenomena on the web take place. Well under this law you have at least 96 hours of back and forth before any kind of order can be enforced. So you might ask yourself how this seriously addresses the problem that most people face. Well I suspect that there is very little coincidence with the fact that it is the youngest members of this House who are most opposed to this bill. It is fundamentally a generational conflict—a law imposed by people who are not digital natives and who do not understand how the internet works on users of the internet who do.The pace of development on the internet is so rapid that in actual fact the incentive for the hosts of content is to give good experiences. If it is true that harm is being done then the one person who has both the incentive and the means to rapidly mitigate that harm is the host whether that be Facebook or Ask.fm or Twitter or whoever else hosts the website. For the same reason that harmful digital communication becomes exponentially greater those people have the tools to mitigate it. But you do not hear that from the Government or from the supporters of this bill. There is a moralising tone from them: if you have nothing to hide then you have nothing to fear; that these vague principles will not be enforced for silly reasons you understand; that as long as you are sensible and you are doing nothing wrong it will not be used against you. That is something that I cannot explain any further. Anybody who does not see the problem with that construction is incapable of having it explained to them but for those who do understand it that is why it is critical that this type of legislation becomes rarer and eventually obsolete in terms of being introduced to this House.Of course there are real concerns. Nobody denies that revenge porn and incitement to commit suicideare serious dangers and they are dangers that have come to some extent from technological advances. It would have been very simple—and I have to thank the Labour Party for supporting my Supplementary Order Paper last week—simply to say that in the Crimes Act it is a crime to make an intimate digital recording and to distribute it without the person’s consent particularly if your aim is to do harm. That is the right way to do it. I have to thank Clare Curran who approached me early on about opposing this bill and I apologise that we were not more proactive. I think we might have been able to defeat it. Ditto to some of my colleagues in the Greens who have bravely decided today that they will oppose this bill and support good lawmaking. I should probably compliment some of my friends in the National Government who have severe concerns about this bill but I do not wish to get them in trouble so I will not do that.In conclusion this is fundamentally about the quality of the laws that we make in this House. Do we wish to make laws that are fit for purpose and that address the problem with the smallest possible number of side effects or do we wish to make populist knee-jerk laws that will do very little to achieve their intended outcomes and yet have enormous unintended consequences and do great damage to the rights and freedoms that have evolved in our society over several hundred years? Do those of us who have the dual privilege of benefiting from 800 years of common law—and the freedom of speech that it has intricately delivered—and the privilege of being in this House want to use the second privilege to tear down the first one? Unfortunately it would seem that far too many of my colleagues in this House do.As a final thought it will not escape members that we often have a reputation in public opinion surveys as being very untrustworthy. Can I suggest to members that we will be back debating this discovering that we have overpromised in terms of our ability to reduce harm through digital communications and that we have under-delivered in terms of protecting rights and liberties. If we were to reverse that equation by opposing this bill we might very quickly improve that situation. Thank you.Hon DAVID PARKER (Labour): I find myself agreeing with a lot of the detailed objections that the ACT member David Seymour had to the detail of this bill. The Labour Party on balance is voting for the legislation because it does think that there is a social ill that needs the push back of the law against—I see Dr Russel Norman is smiling at my exposition of our position but this is the position we have reached. There is a social ill that needs to be addressed which is the inappropriate use of the internet to bully people and to make their lives a misery and this new technology needs a push back from Parliament to enforce the societal norm that disapproves of that sort of behaviour. On balance because there is this need to push back against what is happening we are voting for the legislation.The reason that we backed David Seymour’s proposed amendment at the Committee stage was that the legislation is in our opinion too broad and would be better were it narrower. So I readily agree with David Seymour that this legislation is imperfect and could have been made better by this House.What were our main three problems? Indeed I asked the Minister to respond to these issues in the Committee stage and the Minister declined to do so which I think is lamentable because I thought the issues that were being raised by David Seymour and the Labour Party as well were correct.The problems fall into three main categories. First of all you should always be wary where the Government is applying a band-aid to a subset of problems for a particular technology—in this case digital communications—rather than to all communications. This bill applies to harmful digital communications only and therefore does things in respect of digital communications that are not being done in respect of non-digital communications. It is an unusual thing to do—to legislate in a way that constrains rights of expression for only one mode of expression. You would think that if it was right to do that for one mode of expression it would be right to do it for all modes of expression and the fact that it is not across all modes of expression—you should ask yourself why? The answer is because if the Government was to make these proposals in respect of all modes of expression there would be a public uprising as to the limits of freedom of speech and whether we have got that balance right.In respect of this legislation there is no express preservation of the right of the media for example. There is no express reference to rights of freedom of expression under the New Zealand Bill of Rights Act and given that this legislation is passed after the New Zealand Bill of Rights Act and is more specific than the general provisions of the New Zealand Bill of Rights Act it is likely that where there is inconsistency with the New Zealand Bill of Rights Act the provisions in this bill are going to be interpreted in a way that will constrain rights of free expression.This could have been done in a way that is better than that and removes that ambiguity. The way it could have been done would have been to for example criminalise what is obviously and clearly wrong which is what they have done in the United Kingdom where they have criminalised what is called revenge porn—where if someone has taken in a personal relationship situation something that is an intimate photograph it should not be able to be put out there digitally for widespread utilisation after the relationship breaks down.That is essentially what revenge porn does. It takes what was done in personal confines perhaps unwisely but in a moment in a relationship and then it is used for a purpose that was not contemplated at the time. It is not a misrepresentation—it is actually an image that is accurate—but it is being used for a wrong purpose and so in the United Kingdom they have criminalised that. I can understand why and I think the criminal provision in this should have been narrow like that rather than broadly defined as it is because it covers such a wide ambit of communications in an ill-defined way that it goes further than it needs to do. So the first point is that the criminal penalty here will amount to an infringement of free speech without being clear as to the limit on the limit and I think it is poor legislation from that perspective.The second issue is the safe harbours that we voted for. I asked the question of the Minister at the select committee whether we were in fact creating safe harbours that do not exist for internet providers or for intermediaries for these means of communication—to the people who make money out of it—where they do not currently have a safe harbour. My concern was and the example I gave was if you were a provider of some internet communication forum that was attached to something that you made money from—you were trying to attract business to your website that you make money from—and in order to do that you ran an allied service to people that was a communication forum then currently you might face risks if you were publishing something that was defamatory.It seems that the safe harbour that we are creating here will be conferring protections on the organisation that is the intermediary that are greater than their current protections. So we might be undermining the current law which would place that provider at risk if they did not immediately respond to a complaint that something was defamatory and immediately take it down. I am not sure that that is good law because we could be making things worse rather than making things better by creating a safe harbour where there may be none now.I have not been able to get my head around that fully because the Minister’s refusal to engage with that issue in the chair means that I do not know whether that is correct or not.Dr Russel Norman: Is this speech for or against the bill?Hon DAVID PARKER: Well it is a speech against this part of the bill Dr Norman. So this legislation for those reasons is not nearly as good as it could have been because those sorts of concerns could have been dealt with if the Minister had been willing to listen—if the Minister had been willing to vote for some of the amendments that had been brought forward by the Labour Party and also by David Seymour on behalf of the ACT Party.Will it work? That is the other question that we need to ask. Well I suspect that it will not work completely but that it will have some effect really to heighten the stakes for inappropriate behaviour by some of those people who are currently deliberately promulgating harmful digital communications to the detriment of other people in society. So it will have some effect but it also creates complexity in respect of our communication laws generally that could have been avoided through a more targeted piece of legislation.Lastly before I sit down I just want to say again in respect of the definition of what amounts to serious emotional harm that it is very hard to tell because it is not defined and I think that is undesirable as well. With those reservations which are substantial and could have been avoided had the Government been more willing to listen to critics of its own legislation the Labour Party supports this bill.SCOTT SIMPSON (National—Coromandel): It is a pleasure to rise and speak in the House as the last speaker in the third reading of this Harmful Digital Communications Bill. The bill is in the name of my colleague the Minister of Justice the Hon Amy Adams but of course it was originally introduced by her predecessor the Hon Judith Collins in the last Parliament. In the last Parliament I had the privilege to be chairing the Justice and Electoral Committee where the bill was first sent—Tim Macindoe: You did that almost as well as your predecessor.SCOTT SIMPSON: —almost as well as my predecessor Tim Macindoe says notwithstanding that he was indeed my predecessor—so I had an opportunity as the bill was introduced to the select committee to hear the submissions and to take an active participatory role in the select committee process until the end of the last Parliament.This was always going to be testing legislation in terms of where this Parliament sits vis-à-vis its responsibilities to our society in terms of new modern technology and the harms that come from cyber-bullying harassment and those sorts of things. It was always going to be legislation that was going to test the minds of MPs as to where the balance should lie in terms of our involvement and the State’s role and people’s right to express themselves freely using modern technology. So I have watched with great interest as this bill has progressed its way through the House. I have been encouraged by the quality of speeches that have been presented in this third reading and I want to congratulate all members even those who have I think used the opportunity to speak against the bill. I think they have made good points—some of them in my view a little misguided but good points none the less.It is all very well and good in this House to oppose for the sake of opposing and to do so sometimes on the basis of high moral ground but actually there are times when this House needs to act and to do something and needs to take a lead. Often parliaments like ours around the world follow too far behind the innovations that come with modern technology and this is a case where our Parliament like other parliaments around the world is trying to grapple with the negative impacts and the downsides that occur from so much of the wonderful attributes and opportunities that new technology brings us.Jacinda Ardern in her speech earlier on this afternoon in this debate said that Labour members felt that they were wedged on this issue—that they were a little unsure about what to do and how to do it—and I think that she accurately summed up the position. It is probably not just Labour members who were wedged; it is probably all of us as parliamentarians that are wedged on this issue because we all come into this place wanting to profoundly enhance the rights of individuals to participate in an active free democracy where freedom of choice and freedom of speech and freedom of expression are all fundamental foundation stones of that democracy. But at the same time we are balancing as we always must the responsibilities that go with protecting those who are vulnerable in our society and in our communities and there are none more vulnerable and exposed to these things in the digital age than young people who do not have the ability to use the tools that existed prior to this legislation being enacted such as taking defamation actions and doing all the sorts of tortious legal remedies that actually do exist already in our existing legislation. Those options simply are not practically available to them.So this bill is a measured approach a measured response and a balanced response to try to juggle some of those difficult and hard issues. I note that the Greens are struggling with it as well and that some of those members are going to vote for and some are going to vote against.This is a bill that will test not only us as legislators but our fellow country folk as well because they are difficult issues. Here what we are trying to do is apply purely subjective measures to a whole range of challenging modern issues so with that comes hard questions about trying to find where the balance should be in terms of determining and then remedying the harm. How do we measure that harm? How do we identify it? Who decides what that harm should or should not be? What are the sanctions once harm has been identified? Where does the responsibility for the intervention lie? And who is responsible for righting the wrongs? This bill attempts to achieve an answer a resolution to many of those hard questions.Is it perfect legislation? Well it might not be perfect legislation but it is legislation that I think is much needed in this House. I have been heartened by comments made publicly by the Minister over recent times that if we have not got this quite right we will look at it again. I think that is the responsible and appropriate measure for a Parliament to take because on this issue there simply is not in my view a do-nothing option.Our young people and their future is too important to allow us to just abrogate our responsibility and leave it to organisations such as NetSafe or Facebook or Google or any of those other organisations to try to find their own way through it. Most of those organisations actually do already have their own rules and I remember going with the select committee to have a look at the offices of TradeMe where we saw how it tried to moderate the messages that were on its message boards and how it did it. But essentially it came down to a subjective values-based decision of one person sitting at a desk at a computer screen somewhere in the depths of the TradeMe organisation and making a call as to what was harmful what was right what was wrong what was offensive and what was not.If there is one thing we know as legislators around the world it is that offence and harm and things of that nature are a bit like beauty. They are in the eye of the beholder. So one person’s freedom of speech is another person’s offence and harmful bullying tactic. There has been a lot of comment on various channels on blogsites and in a whole range of other media commentaries about the infringement that apparently exists because this bill seems to somehow remove people’s right to freedom of speech.I listened carefully to the contribution of my colleague Chris Bishop a few minutes ago. He made mention of the section 7 report that the Attorney-General had presented when considering this bill and in particular he made reference to section 14 of the New Zealand Bill of Rights Act 1990 which of course guarantees to us all the right to freedom of expression. However what is really important is that that is not an absolute right. It is not an absolute right of freedom of speech because freedom of speech does not automatically trump offences and it does not of itself provide a way to evade the protections that are set out in other pieces of legislation. So the new proposals that are part of this Harmful Digital Communications Bill are consistent in my view with the New Zealand Bill of Rights Act and do not impose upon the freedom of expression that is set out in section 14 of the New Zealand Bill of Rights Act.There will be clear criteria used to determine whether someone has broken the law. For example the new communications offence would apply only where a person sending the communication intended to cause serious emotional distress to a victim. So there is this element of intent and where the intention cannot be proved or is not shown then the provisions of this bill obviously do not kick in. I think that is a sensible sort of process for this bill to be considering. The communication would not apply if the communication would not cause serious emotional distress to an ordinary reasonable person in the position of the victim. So there is a test of ordinary reasonableness. Our common law clearly sets out—and has done for many many years—a test and a strong foundation stone for testing what is reasonable and what is not reasonable.This legislation as I said is a difficult area. It is a difficult area for us all as MPs as parliamentarians to get our heads around and to try to grapple with but grapple with it we must because as MPs we are charged with making the hard and difficult decisions. We cannot simply say we are not going to take a role in trying to find a solution when our young people particularly are put in harm’s way by the use of modern technology.I do commend this bill to the House. It is a good piece of legislation and Parliament has done well to consider it as it has done.A party vote was called for on the question That the Harmful Digital Communications Bill be now read a third time.Ayes 116New Zealand National 59; New Zealand Labour 32; Green Party 10 (Clendon Delahunty Graham Hague Logie Mathers Roche Sage Shaw Turei); New Zealand First 12; Māori Party 2; United Future 1.Noes 5Green Party 4 (Browning Genter Hughes Norman); ACT New Zealand 1.Bill read a third time.Environmental Reporting BillIn CommitteeDebate resumed from 23 June.Part 2 Environmental reporting(continued)KRIS FAAFOI (Labour—Mana): It is an honour to take a call on Part 2 of the Environmental Reporting Bill and that will become a bit more apparent as I continue through my speech. I do want to speak to Supplementary Order Paper 92 under the name of Su’a William Sio which seeks to make amendments to clauses 7 and 10 and in a nutshell that is by inserting within the bill provisions to include the state of New Zealand’s economic environmental activities and the impacts on the Pacific region climate ecosystems and its people. I think that is a very important addition to this piece of legislation and one that I hope that the Government will consider because it is not just the environment of New Zealand as we know it but also of our Pacific neighbours and some of those Pacific nations that New Zealand has responsibility for.As I mentioned it does include a responsibility for this nation to take into account the Pacific’s climate and its ecosystems and I would like to take this opportunity if it is OK to pay tribute to someone from the Tokelau islands who passed away in the last week and who used to be the Faipule or leader of the atoll that my parents came from Fakaofo—that is Foua Toloa. He was as I say the leader of the Tokelauan atoll of Fakaofo. He also served on the Global Ocean Commission and he crusaded throughout his life in dedication to the health and well-being of the Tokelau islands around the environmental economic and social stability of that nation. I think the measure that has been posed by Su’a William Sio will be very well looked upon by Foua who passed away this time last week. To ensure within this Environmental Reporting Bill some kinds of measures to make sure that we can look after the Pacific is something that I think Foua would be very very supportive of.Can I take this opportunity to pass my condolences and the love of this House to his family: to Logo his wife; to their six children; and especially to his brother Luther whom we had been dealing with in the last couple of weeks as Foua fought the last stages of cancer and passed away. The health of the oceans was something that was very big to him and during last year he gave a very good speech to the Global Ocean Commission to make sure that not just this nation but all nations take action to make sure that the health of the Pacific Ocean and other oceans is there for not just our generation but generations to come.I think we are seeing some things happen in the Pacific Islands and the Pacific Ocean that most New Zealanders if they knew what was going on would be very very disturbed by. I think this Supplementary Order Paper in the name of my colleague Su’a William Sio makes sure that this piece of legislation does not pertain just to what is going on here in New Zealand but also to its territories and the Pacific Ocean and we have a big interest in what goes on there. So I would hope that members on the other side of the Chamber would take that into consideration because it does take on some of the responsibilities that this nation has to some of those smaller nations and we have talked about them within another piece of legislation—the likes of Tokelau the likes of the Cook Islands and the likes of Niue which we have a very special relationship with. So I would to like to commend my colleague Su’a William Sio for making sure that the environmental activities that we undertake and the economic activities that we undertake are taken into consideration when we look at what is happening in the Pacific and how that is affecting the ecosystems in the Pacific and as I mentioned especially the oceans.This is going to be only a 5-minute speech but I did just want to again pass on this House’s recognition of the contribution that Foua made to the Tokelauan community here in New Zealand and to that of the community the very small community of around 1500 on the three atolls themselves especially when it came to ensuring the environmental future of the oceans around the Tokelau islands and we wish his family all the love and respect that we afford them.TODD MULLER (National—Bay of Plenty): I rise to take a call on the Environmental Reporting Bill particularly on Part 2. Can I start by just acknowledging the comments from Kris Faafoi and obviously express condolences from this side of the Chamber on his loss—obviously of an advocate for the Tokelauan community.In respect though of the specific Supplementary Order Paper that he raised I certainly hold the view that the priority of this bill is quite rightly New Zealand and should remain New Zealand. The various impact categories that the various synthesis reports and domain reports are to cover as expressed by Part 2 should be focused quite rightly on New Zealand so in that respect I am not swayed that we should widen the scope at this point in time in terms of the enabling legislation to the Pacific Islands and the broader South Pacific community. That said—I think over time as the various synthesis reports are produced every 3 years—who is to say that in the future those synthesis reports might not talk to the interrelationship between the New Zealand environmental position and those of our Australasian and Pacific neighbours? Into the future that may well be a part of the synthesis report.Specifically in respect of Part 2 there are a couple of points that I would like to note. I appreciate that there has been some conversation on this already among members of the select committee. I think the changes to clause 7were useful particularly around providing clarity on the specific impact categories that came from our select committee deliberations. With regard to the previous clause 7(1)(c)(iii) which stated “economic benefits derived from utilising natural resources:” I think it was quite right that submitters to our collective deliberations pointed out that this was the only category that referred to benefits and the new wording that we have in that clause is more neutral. It specifically says that the economy just needs to be one of the categories considered.Also the introduction of Te Ao Māori—the Māori World—view again reflected significant feedback from the submitters to the process: that the language that the original bill used was perhaps not quite as comprehensive as it needed to be in order to capture that particular component and of course we are all pretty comfortable with the new proposed wording.I notice clause 8. It is very good to see the change there in respect of the first synthesis report now being required to be published not later than 3 years after the date of the first domain report. That makes sense. Further on in clause 8(2) we have a clarification of the timing in respect of the first domain report and then that triggers the requirement to have our first synthesis report within 3 years. So I think that is very useful. Under the domain reports in clause 9(2) I think the introduction of the requirement “As soon as is reasonably practicable after the Secretary and the Government Statistician have published a domain report the Ministers must jointly present the report to the House of Representatives.” is also a very helpful addition in terms of transparency and public awareness of the outcomes of these particular reports.In terms of clause 13 we had quite a long debate and discussion ably assisted by officials helping us through this particular challenge on the roles of the Secretary for the Environment and in particular the Government Statistician and on the requirement to ensure the independence of those two through the environmental reporting framework. We had quite a lot of debate about that. A number of submitters wanted to mandate explicitly that the Government Statistician and the Secretary for the Environment seek expert advice. I think that what we have here does enable the Government Statistician to be able to seek that advice. They are able to utilise expertise from other agencies. Certainly I feel that they have enabled through this proposed bill the capacity to be able to get the information that they need. It is certainly my view that clause 14 and the rather explicit duty to act independently provide the adequate safeguards to protect independence for both the Government Statistician and the Secretary for the Environment.We had a significant debate over the original clause 16 “Disclosure of information”. As the select committee has deliberated we have seen a significant change to that clause. Essentially there was a long debate about the ability to be able to disclose information and analysis to the public and about whether that was an open right and obligation all through the process. Clearly we felt that it would be appropriate to have in some part of that process—particularly around untested information that needed to stay protected as they tested their methodology and tested the ultimate conclusions of the report—a requirement for that definition of untested information to stay outside the public domain as the reports were being developed. I think that is a sensible way through. It focuses just on data and statistics and findings that have not been published previously and it does create I think the opportunity to protect the independence and the integrity of environmental reporting and does not hinder access. This untested information is of course time bound and once the publication ultimately becomes public in the public domain then of course the release of that background information is enabled. So this is a particular subset of information that is required to be kept out of the public domain as it is part of pulling together that final report with the integrity and robustness that is required.My last comment relates to clause 18. I appreciate that there has been quite a lot of debate about this but I would like to add my voice to that. Clearly a number of submitters opposed clause 18 as outlined. We have heard some very strong and impassioned views: that Ministers setting topics is incompatible with independent environmental reporting. I am not swayed by that view. I was not at the start and I am still not swayed. In my view it is absolutely appropriate for Ministers to be able to hold a view on the topics for these reports within the tight parameters of the clauses that are listed in clause 18. The topics are outlined. The robust data and statistical methodology is outlined plus there is a significant requirement for consultation. I am simply just not swayed by the view that somehow that is an environment for an overt politicisation of the process. If you move to the specifics particularly around the topics clause 18(2) states that the Ministers must be satisfied “that any—(a) pressure topic or impact topic affects significant areas resources or numbers of people: (b) topic can be measured with robust statistical methods: (c) pressure topic is closely related to any state topic…”.In essence what this is saying is that we have a framework that in my view materially constrains a Minister to be able to focus on signing off or proposing a topic within that framework. Bearing in mind that both the Minister for the Environment and the Minister of Statistics have an obligation under this to consult with the Government Statistician the commissioner the public iwi authorities and local authorities that is a very robust obligation on the executive to consult widely on what those topics should be. I have a lot of confidence that ultimately we will get an outcome here that is sensible and that delivers a significant improvement to the reporting on the state of the environment in this country.In conclusion it is worth repeating that this is another step of reform in a Government that has delivered significant reform in the reporting of the environmental state of this country enabling us to have a data-informed data-enriched discussion.EUGENIE SAGE (Green): I would agree with the comments of the previous speaker Todd Muller that the Local Government and Environment Committee did improve clause 16. But the fact is that it highlights one of the deficiencies in this bill—that it is the Ministry for the Environment that is going to be responsible for collating the state of the environment information along with Statistics New Zealand. Of course the Ministry for the Environment is primarily a policy agency. It lacks the technical capacity to do this work on state of the environment reporting. It is going to be relying very much on the information that is collected the data that is collected by other agencies such as regional councils Crown research institutes and the like. So that is why in Supplementary Order Paper 87 which is in my name we are proposing a further change to clause 16 that would ensure the information can be withheld by the Government Statistician only if it has been collected exclusively for the purposes of state of the environment reporting and this bill.One of the problems that a lot of the submitters raised was that clause 16 potentially constrains the release of environmental information that other agencies collect. So although the clause has certainly been improved it has not been improved enough and we would encourage Government members to support the Supplementary Order Paper. Given that the Government members voted down the amendments on Part 1 I am not encouraged to think that they will do anything different this time. I think that highlights one of the problems with this Government. It is a Government of “No”. It has rejected Supplementary Order Papers previously. It has highlighted the fact that it does not want to work collaboratively with other parties.The amendments in Supplementary Order Paper 87 were put forward in the spirit of compromise. They were not the major changes that the Green Party wanted to this bill but they were put forward in the hope that across this Parliament we could get a cohesive coherent agreement on this legislation so that it is less vulnerable to changes under future Governments but the Government members have rebuffed that in the voting on Part 1. That is really disappointing when comprehensive reporting on the state of our environment is quite critical to a better understanding so that we get good policy and because the health of the environment contributes majorly to the health of the economy.Another concern that we have about this bill is in relation to clause 18. The Parliamentary Commissioner for the Environment said in her 2010 report on state of the environment reporting: “The need for trust and transparency in state of the environment reporting is critical if it is to be taken seriously.” and “In order [for it] to be trusted [that] reporting requires independence accountability and technical capacity.” The history of state of the environment reporting under the Ministry for the Environment has been very stop-start in terms of progress. There was work done between 1996 and 2002 on developing some environment performance indicators but that abruptly stopped in 2002. We have seen one nationwide report in 1997 and another one 10 years later in 2007 with a major chapter missing.If the Ministry for the Environment is going to have responsibility here—rather than the Environmental Protection Agency which has got much more independence and much more technical capacity—then it is going to have to substantially lift its game because the work it has done to date has had major failings in it. That change in environmental performance indicators—the lack of consistency across the country—has been a major shortcoming.One of the other areas of unease and what we have seen when we have had Ministers being involved in agencies that do environmental reporting is a failure to do that work. In Environment Canterbury under elected councillors a comprehensive region-wide state of the environment report was published in 2009. Under commissioners we have seen no region-wide state of the environment report so Cantabrians and New Zealanders generally are kept in the dark about the state of water quality and the decline there. That is one of the other reasons we are concerned by this lack of independence in clause 18—by having the Ministers set the topics for environmental reporting and regulations it lacks the independence required.DENIS O’ROURKE (NZ First): I would like to respond to some of the speeches made by the members opposite with regard to clause 18 of the Environmental Reporting Bill and especially the question of independence when it comes to the choosing of topics under that clause. In doing so I would have five questions that I think the people of New Zealand some of whom may be watching this debate should ask themselves in relation to that clause.The first one is why it should be just two Ministers who should choose those topics when clearly much better options exist. I think that is a question that those members on the opposite benches have not properly answered and that I have not heard answered yet. Fundamentally there are two alternatives being put forward both of which seem to me to be better. One is that proposed by Eugenie Sage which would be for the Secretary for the Environment and the Government Statistician to jointly make those decisions. If that was the case we could then guarantee independence and transparency. Alternatively there could actually be a schedule to the Act which would then have to be changed every 3 years. That would not be a bad thing because it would involve the whole of Parliament in doing that and after all every 3 years is not so frequent that it would be impracticable. I think both of those would be superior to what is provided here.The second question I would ask is why those members opposite feel that the regime set up in clause 18 is indeed a robust one. That is a word that they have used and that I have heard several of them use. When you look at clause 18(2) in particular you see that the language used is for example in paragraph (a) of clause 18(2) that the Minister must be satisfied that “significant areas resources or numbers of people:”are involved or that in paragraph (b) any “topic can be measured with robust statistical methods:” and so on. So it comes down to the personal opinion of the Minister as to whether those Ministers are satisfied with those things. How do we know? What will be the backup information provided so that the rest of us can tell whether the conclusions reached by the two Ministers are reasonable in respect of those issues? There is a complete silence as far as those matters are concerned.The third question is whether consultation is a substitute for independent decision-making. I particularly remember Minister Smith commenting: “Don’t worry. It’s all OK because we have in clause 18(3) a provision for consultation.” as though somehow that was a substitute for independent decision-making. Well consultation is not decision making at all. It is simply an obligation to hear and to take into account the views of others. There is nothing wrong with that but it is not in fact decision making and it makes no genuine contribution to the requirement that many of us are concerned about which is genuine independent decision-making. So I say to those members opposite and especially to Minister Smith: you have failed totally to convince me that consultation is in any way a substitute for independent decision-making. I think that the people in the public listening to this debate today would understand exactly what I mean.The fourth question relates to one particular issue that I have not heard members opposite speak about at all. That is the point that this regime talks about which topics Ministers may choose. But they have not talked about the fact that under this regime Ministers could actually decide not to report at all on some topics and would have no responsibility to discuss them or tell people anything about them and we would never know. That is not good enough. I think that one of the most dangerous parts of clause 18 in this whole regime would be for Ministers to simply decide that there is a topic here that they do not want discussed in public and to be reported on and so they will make sure that it does not happen. I think that is one of the big defects in this. The final—STUART NASH (Labour—Napier): This sort of stuff is pretty important. Mr Bishop always has a go at me whenever I say this but this whole thing plays into our global brand of “clean green” and “100% Pure New Zealand” and we need to get this right. The reason this is so important is that it is our unique selling point. It is what we take to the world. It is what allows us to get a premium for a lot of our products. That is why we have to be seen by the world into which we go forth to be getting this right. If it is seen as dictating or prescribing in a way that is not utilising the expertise we have outside of Government agencies then it will just not be taken seriously. That is the real concern I have around this. It should not be hard to get this right.There are a couple of points I would like to pick up on that some of the other speakers mentioned. One of the Government speakers said he felt that the spirit of the Act means that the Government Statistician and the Secretary for the Environment can go out there and utilise outside expertise. But the bottom line is that if the Act does not state that then there is absolutely no mandate to go and do that. So instead of saying “Yes well this is all very well; they can do that because this is what we think the Act allows them to do.”—unless it is stated then it will not be done.I pick up a point that Mr O’Rourke made and that is about consultation. There are a number of cases and there is one I am dealing with in my electorate at the moment where the need to consult is seen as a box-ticking exercise. What happens is there are a whole lot of requirements that have to be achieved before anything can happen and they say “OK we must consult.” and so on and so forth. They go out they set up a meeting you get a few stakeholders come in and they tick that box and say “That is our consultation. Let’s move on to the next thing.” I do not mean to cast aspersions towards the Government Statistician or the Secretary for the Environment and I am not in any way suggesting that they will be devious or they will be negligent in the way they do this. All I am saying is that the guidelines in my view do not provide a strong enough incentive or a robust enough mandate to use the sort of expertise we have out in our community.Let us face facts: there are a whole lot of very very well-educated and highly engaged people who are doing some superb work on our environment and have a whole lot to offer. They may be included in this process. They may be but there is no requirement to include them and I suppose that is where I get a little bit concerned. If I look at clause 13 it says “In producing and publishing an environmental report the Secretary and the Government Statistician must utilise the expertise of the Ministry and Statistics New Zealand.” It would have been quite easy to say “and key stakeholders” even if key stakeholders were listed in an appendix to the Act. Then it could have been done in a way that broughtinto the Act itself a whole lot of people who are as passionate about this as we are.The other thing as well is clause 13(3). I just do not think that this is fantastic drafting. It says: “In deciding under subsection (2) what statistics will be used to measure topics the Government Statistician must …”—so there is a legislative requirement—“follow what he or she believes”—that is a subjective term—“to be best practice principles … and … be satisfied”—which is again subjective—“that the statistics accurately represent the topic they purport to measure.” So you have got some subjective measures with objective requirements there. Again I think that that just leaves things open to interpretation and it is very hard to argue from a legislative perspective that someone has got this right or wrong. If it had been more prescriptive then in fact it would be a lot harder to argue that either the secretary or the Government Statistician had done a role that was outside their mandate.Again clause 15 “Reports to be fair and accurate”: “The Secretary and the Government Statistician must in so far as it is reasonably practicable ensure that all environmental reports published give a fair and accurate representation …”. What happens when we have the term “as it is reasonably practicable” is that again it is just very open to interpretation. So what we may get is the Government Statistician and the Secretary for the Environment saying “This is as much as we can do within the time frame we have got.” and you are going to get others who are as engaged in this if not more so saying “No you haven’t undertaken what we believe is a reasonably practicable process in arriving at your end result.” Again: “reports published give a fair and accurate representation”. I mean again who is going to be the chief arbiter of what is fair and what is accurateespecially in an area again like I say where there are a whole lot of people doing academic research and real-life research? I just think there could have been—[Bell rung]—an ability to provide a lot more information on this. Mr Chair I was waiting for someone else to—The CHAIRPERSON (Lindsay Tisch): If you want to take a call you must ask for the call at the time. Ruth Dyson went for the call.Hon RUTH DYSON (Labour—Port Hills): Normally I am very pleased to be able to speak particularly on a bill such as this one. But it is a really big disappointment to me that as we see New Zealand finally break through into the area of environmental reporting the key issue that would give this reporting integrity—and that is the independence of the topics that are chosen—has been just cast aside by both Ministers actually who have been responsible for this bill and we are left with this division in Parliament which I think is unnecessary and could have been easily resolved.It would have given a great message to New Zealanders that we were very clear about our responsibility in terms of tracking—deciding you know across the environmental impact area—what issues we were doing well in what issues we were doing poorly in and where we needed to make more progress and how. But instead we are left with that key issue of division which is that the Minister regardless of whether it is a National-led Government or a Labour-led Government is able to interfere and have political influence over what topics are reported. That totally undermines the integrity and the value of a really important system—what could have been an excellent system.So I am really disappointed to not be able to support this bill because I think the theory of it was excellent: that we would have environmental reporting so that we can see as a nation how we are doing on different environmental topics. But instead we have ended up with a reporting system that is very liable to be accused of being a jack-up. You know a Minister will come under considerable scrutiny and I think New Zealanders will lack the confidence in the system that I wish they were able to be confident in.We have had some interesting contributions during the earlier part of the debate and I want to particularly refer to some of the earlier contributions that have been made around my colleague Su’a William Sio’s Supplementary Order Paper 92 which I think is one that the Government should support and I hope other parties in the Parliament will as well. It looks at environmental reporting and the impact on New Zealand what difference different topics are making in terms of New Zealand and it takes that one step further. For me this Supplementary Order Paper 92 actually sets a leadership goal for New Zealand in terms of our impact on our Pacific neighbours. It alters clause 7(2) by replacing “standards.” in paragraph (b) with “standards; and” and then inserting “how the state of New Zealand’s economic and environmental activities impacts on the Pacific region’s climate and ecosystems and its people.” Likewise in clause 10 it replaces “standards.” with “standards; and” and then inserts “how the state of New Zealand’s economic and environmental activities impacts on the Pacific region’s climate and ecosystems and its people.”I want to first of all acknowledge the contribution Kris Faafoi made in this debate and add my condolences to those that he expressed. It is a very good opportunity for New Zealand to show other Pacific neighbours that we understand the impact of such significant issues as climate change but of other impacts as well and that we are prepared to stand up and take a leadership role and look at how our activities impact on our Pacific neighbours.Paul Foster-Bell who is a National list member of Parliament said that he thought New Zealand’s economic and financial contribution to Pacific Islands climate change is negligible. I think that was a very interesting contribution to make. Therefore he dismissed my colleague’s Supplementary Order Paper because he said—he is now an internationally renowned scientist apparently—our economic and financial contribution to Pacific Islands climate change issues is negligible and therefore we do not need this Supplementary Order Paper. I think that was a really disappointing contribution to make on an issue that is not a passing one. It is not a minor one. It could affect the very life and livelihood of some of our Pacific neighbours and I think we need to take the issue more seriously. I know that people in affected Pacific countries do and they have always looked to New Zealand and to Australia for leadership on environmental—MATT DOOCEY (National—Waimakariri): I will take that word “leadership” and acknowledge the leadership role this Government is playing in bringing in such a bill around an environmental reporting framework. And it is leadership because all we are hearing from across the floor—it is really about guilt I suppose and embarrassment. Nine years Labour had to bring New Zealand up to an OECD standard of an environmental reporting framework—guilt embarrassment. I mean from the Green Party it is more about envy and resentment that we are—Kris Faafoi: I raise a point of order Mr Chairperson. I think you can probably predict what it is but I do not think he has referred to anything in the bill yet.The CHAIRPERSON (Lindsay Tisch): Sure. Look this is a debate. I ask the member—and all members—to concentrate on the content of Part 2. If a member has not got anything to contribute then there is no need for this Part 2 to continue. I would ask you to concentrate on the substantive matter of Part 2 and focus your attention there.MATT DOOCEY: Thank you very much Mr Chair. I would just like to look at clause 7(2)(b). It looks at how we are going to compare New Zealand’s environment through this environmental reporting framework with national and international standards. I think that is right. We are very much in a system now—we are in a global system—and it is right that we are going to benchmark ourselves internationally against other countries. Clause 7(2)(a) is also about the synthesis report looking at the changes to the state of the environment.I am sure many people around this Chamber have been involved in reportingin previous careers. Sometimes it is not exactly about the report at one stage but about looking at multiples of reporting and looking at that variance between the state of the environment and what has changed. I think that measurement that variance will be very important. I think what we need to look at is a common theme as we thematically review the content of these clauses and look at the content and the topics around the state of New Zealand’s environment and the pressures that may be causing or has the potential to cause as well as the impacts that the state of the environment and changes to that state may be having on such things as eco-diversity the economy and public health. So when you look at those three key areas—the state of the environment the pressures and the impacts—it is good to see that that runs through this whole piece of legislation.It shows up under the synthesis report. It also comes up under the domain report. When we hear about this being self-selection from the Minister or Ministers I disagree. The domain reports will come up every 6 months so within a pro rata time frame they will all come up. The domain reports are of air atmosphere and climate fresh water land and marine. So those topics and contents of the state the pressures and the impact on the environment are also included in the regulations in clause 18. So it is great that we will be able to track those three topics throughout the synthesis and the domain reports.I think Mr O’Rourke has touched on the independence but I would disagree with that comment. I think it is very clear and the consultation the Ministers will go through with the Government Statistician the Parliamentary Commissioner for the Environment the public iwi authorities and local authorities is outlined in clause 18(2) and (3). It is quite right that they will think about the issues and the state of the environment to do with that domain the changes in the state to do with that domain the pressures that are being put on those domains and the impacts of those domains on people’s public health the economy and the ecosystem. So those themes promote accountability and they promote responsibility. It is very much a merging of three quite separate disciplines but we need the synergy going forward of the Secretary for the Environment teamed up with the Government Statistician—I think we all remember our t-tests from university days—as well as the Minister to drive this forward.I also would like to highlight the reference to untested data because I think this is important. We need some protection around untested data. New Zealand’s clean green image and the economy was at risk of—DENIS O’ROURKE (NZ First): In my last contribution I said that there were five questions that I felt the public should ask themselves about clause 18 of the Environmental Reporting Bill and the regime that that sets out. The fifth one that I wanted to ask was about transparency. The first four had been first why it should be just two Ministers who make the decision; second how robust this regime really is in terms of providing a comprehensive way of reporting on our environment; third whether consultation can really amount to independent decision-making—which it obviously cannot—and fourth about the difficult issue of decisions not to report at all and whether anyone would ever know that. I think those are four very important questions that the public of New Zealand should ask about this section and about the Government’s motives in pushing it forward. What could they possibly be? What has the Government got to hide? What is it that it wants to do other than just make sure that Ministers can secure even more executive power for themselves?We have seen this Government year after year bill after bill issue after issue coming down on the side of giving more executive responsibility to Ministers and having less democracy less transparency and less independent decision-making where it is appropriate in New Zealand. I have not heard any rebuttal of those arguments from the members opposite.But I did want to just finish off with that fifth question that I said the public should ask themselves and that is why we are not seeing much more transparency when it comes to regulations that will prescribe the topics to be covered in synthesis reports and the topics to be covered in domain reports. Of course that is very important because without transparency you do not get public trust and you do not get the public feeling that we have a system with integrity. So it goes right to the root of this particular bill and why we need an environmental reporting system. It has to be one that the public can trust. It has to be one that has integrity. This bill does not deliver it and has not a hope in hell of doing so quite frankly.And what does transparency really mean? I will have to give the members opposite a little bit of a lesson in this because they do not seem to understand. In particular Mr Doocey when I heard his speech did not seem to understand it. They use the word but obviously do not know what they are talking about when they use it. So first of all it means that the background information upon which the decision is made must be clear. It must relate to the decision made. That should be set out and understood by everyone and of course it has to show what the decision is in detail and it has to say why the topics selected were the highest in priority and why others were not. And indeed it has to say which topics that could have been reported on are in fact not going to be reported on. Finally it has to set out what the discussion is and what the reasoning is that led to the decision being made.Those are the sorts of considerations that add up to transparency. Those are the sorts of considerations that people want to know about when they look at what the Ministers are doing in their regulations to decide whether they are the correct decisions or not. That is what transparency means. That is what this bill does not do. It gives executive power to just two Ministers to pass regulations just giving the conclusion just saying: “Here is what we have decided—full stop.” And OK there is consultation and that is a step in the right direction but it is a very very tiny step compared with what is really required for independent decision-making and a transparent regime of decision making. This is not what the public is going to see as a result of this bill.The bill is going to be a failure simply for those reasons. That is a shame because we all want a good regime of environmental reporting. So I could compliment the Government for bringing legislation forward that actually creates a system of environmental reporting but at the same time I would have to say this bill is so defective that there is no way that any responsible party in Opposition could possibly support it.NUK KORAKO (National): I move That the question be now put.A party vote was called for on the question That the question be now put.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.The question was put that the amendments set out on Supplementary Order Paper 87 in the name of Eugenie Sage to clause 7 be agreed to.A party vote was called for on the question That the amendments be agreed to.Ayes 60New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.Noes 61New Zealand National 59; ACT New Zealand 1; United Future 1.Amendments not agreed to.The result corrected after originally being announced as Ayes 58 Noes 63.The question was put that the amendments set out on Supplementary Order Paper 92 in the name of Su’a William Sio to Part 2 be agreed to.A party vote was called for on the question That the amendments be agreed to.Ayes 60New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.Noes 61New Zealand National 59; ACT New Zealand 1; United Future 1.Amendments not agreed to.The result corrected after originally being announced as Ayes 58 Noes 63.The question was put that the amendments set out on Supplementary Order Paper 87 in the name of Eugenie Sage to clause 10 be agreed to.A party vote was called for on the question That the amendments be agreed to.Ayes 60New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.Noes 61New Zealand National 59; ACT New Zealand 1; United Future 1.Amendments not agreed to.The result corrected after originally being announced as Ayes 58 Noes 63.The question was put that the following amendment in the name of Eugenie Sage to Part 2 be agreed to:insert the following new clause:11AGreenhouse gas reportThe Environmental Protection Authority must produce and publish a report no later than 6 months after the commencement of this Act and annually thereafter listing the 100 largest emitters of greenhouse gas in New Zealand.The Environmental Protection Authority must present the report required by subsection (1) to the House of Representatives as soon as practicable after it is published.A party vote was called for on the question That the amendment be agreed to.Ayes 58New Zealand Labour 32; Green Party 14; New Zealand First 12.Noes 63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Amendment not agreed to.The question was put that the amendments set out on Supplementary Order Paper 87 in the name of Eugenie Sage to clauses 12 13 and 18 be agreed to.A party vote was called for on the question That the amendments be agreed to.Ayes 60New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.Noes 61New Zealand National 59; ACT New Zealand 1; United Future 1.Amendments not agreed to.The result corrected after originally being announced as Ayes 58 Noes 63.The question was put that the amendment set out on Supplementary Order Paper 87 in the name of Eugenie Sage to clause 14 be agreed to.A party vote was called for on the question That the amendment be agreed to.Ayes 60New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.Noes 61New Zealand National 59; ACT New Zealand 1; United Future 1.Amendment not agreed to.The result corrected after originally being announced as Ayes 58 Noes 63.The question was put that the amendment set out on Supplementary Order Paper 87 in the name of Eugenie Sage to clause 16 be agreed to.A party vote was called for on the question That the amendment be agreed to.Ayes 60New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.Noes 61New Zealand National 59; ACT New Zealand 1; United Future 1.Amendment not agreed to.The result corrected after originally being announced as Ayes 58 Noes 63.The question was put that the amendment set out on Supplementary Order Paper 87 in the name of Eugenie Sage to add new clause 19 be agreed to.A party vote was called for on the question That the amendment be agreed to.Ayes 60New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.Noes 61New Zealand National 59; ACT New Zealand 1; United Future 1.Amendment not agreed to.The result corrected after originally being announced as Ayes 58 Noes 63.A party vote was called for on the question That Part 2 be agreed to.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.Part 2 agreed to.Clauses 1 and 2Dr MEGAN WOODS (Labour—Wigram): I think that talking to the title of this bill is something that we do need to spend a bit of time on because I would like to have thought that the Labour Party would and could support any piece of legislation called the Environmental Reporting Bill that came before this House—Chris Bishop: So vote for it then.Dr MEGAN WOODS: —given that New Zealand is one of the only countries in the OECD not to have this regime of environmental reporting in play.We are having some calls from the opposite side: “So vote for it.” Well we would dearly like to have been able to vote for this. We would have voted for this legislation if it had been truly independent environmental reporting. In fact we put it to the Government both at the select committee and in the Committee stage in this House that we would indeed vote for this legislation if the Government would agree to the amendments to clause 18—if we would make the changes that meant that we did have independent environmental reporting in this country.This is not any slur on any particular Minister because it is strongly our belief that Ministers on whichever side of the House—Ministers will only ever come from one side of the House I guess—Ministers from whichever party in this House need to have legislative constraints within our legislation to ensure independence. We do not want to be legislating and allowing the potential for political interference.So rather than the Environmental Reporting Bill I think this bill should more rightly be called the “Opportunity Lost Bill” because this is a huge opportunity lost. It is a good thing that New Zealand did turn its attention to putting in place an environmental reporting regime but we did lose the opportunity to do this properly. We have not done this in a way that is going to ensure that we have a robust and independent reporting regime in place that is going to report on the state of the environment and that is going to allow for better environmental outcomes. And for that reason to us it is a huge opportunity lost.I have been sitting in the Chamber throughout I think all of the Committee stage of this bill and I have heard some contributions—some of them more thoughtful than others. One that I thought was a thoughtful contribution from the other side of the House this afternoon was from Todd Muller who sits on the Local Government and Environment Committee. This was in response to the opportunity that my colleague Su’a William Sio put up in terms of New Zealand taking leadership in this region in terms of considering how what we do impacts not only on our environment but on our broader regional environment as well. Su’a and my colleague Kris Faafoi have made compelling cases around what the impact is on the Pacific. Todd Muller said that perhaps this is something we could consider later on in terms of synthesis reports—that this is something we could delay.Here is another example of how this is an opportunity lost. We cannot delay considering the impacts of what New Zealand does in New Zealand on the broader environment of the region and what the impacts are for our Pacific neighbours. We do not have time actually to think: “We’ll put this off until mañana. We’ll put this off until another day.” This is something that we have to confront now. This is something that we do need to take a leadership position on. This is something about which we cannot simply say: “We’ll look at that in the future.”Then we had some quite extraordinary contributions on this. My colleague Ruth Dyson has touched on the contribution from Mr Foster-Bell where he made some extraordinary comments around what the impact is of what New Zealand does on its environment and what its impact regionally would be. So once again we see examples of opportunities that are lost and how we did have the opportunity to do something much better.We also could suggest another name for this bill and it could be the “Not Independent Environmental Reporting Bill”. That is a topic that has been canvassed at length at various stages—at the Committee stage and in the earlier stages in this debate. It is in clause 18 where we sought those amendments around that where we could have fixed this legislation. We could have made this a piece of legislation I believe that did have support across this House. We could have come to a consensus around what good independent robust environmental reporting looked like and we could have had all parties—[Bell rung]The CHAIRPERSON (Lindsay Tisch): Sorry just before we continue—you have the call—the question before us is that clauses 1 and 2 stand part and those are the title and commencement clauses. I am making the point that it is not just the title; it is the title and commencement.Hon Ruth Dyson: That might be her last two calls.Dr MEGAN WOODS: That is right. The commencement is something I am planning on addressing in subsequent calls on this piece of legislation.Chris Bishop: Well that’ll be a cracker. Can’t wait for that one.Dr MEGAN WOODS: I know. Everyone will be eagerly anticipating it. I think that the title of this bill does deserve our consideration because as I was saying this is the “Not Independent Environmental Reporting Bill”. We have canvassed that and we have also indicated how this is a bill that could have had cross-party support and how we could have got there with actually I think some substantial but not huge tweaks.Unfortunately we have a Government that has not been willing to listen to this and that did not listen to the petitioners who came to the select committee and made their very good submissions and we are talking about some people who think long and hard about these issues. We are talking about the Parliamentary Commissioner for the Environment. We are talking about the Resource Management Law Association. We are talking about the Environmental Defence Society Fish and Game and Forest and Bird—substantial bodies in New Zealand that give a great deal of thought to these matters. They came to us and said: “Please make sure that this is truly independent environmental reporting because the bill you have in front of you”—and the bill we are now about to pass through its Committee stage—“is not independent environmental reporting.”It saddened me that Government members refused to listen to that and that at every stage of this legislation they have not listened to very good advice about how we could have had a much better piece of legislation. It would have been wonderful to have all parties in this House able to support it and to have all parties in the New Zealand Parliament able to say: “I think it is a good thing that we put in place a robust environmental reporting regime like the rest of the OECD and that we join the ranks of those countries that do that.” But instead what we have here is a dim piece of legislation. It is a dimmer version of what it could have been.When National first came to power it offered us a brighter future. Well here is the dimmer future in this piece of legislation. This is a shadow of what we could have had. This is not a brighter future. This certainly is not living up to that. The Minister in charge of this legislation Nick Smith has been in charge of a lot of things that are not really living up to the brighter future. We could perhaps rename this the “Nick Smith Blunder No. 323 Bill”. That could be another name. The number keeps rising so unless we pass this quickly we will probably be looking at No. 512 in only a few days’ time.What we are seeing is a Minister shepherding this through who should have been listening to the very sage submissions. It was started by Minister Amy Adams who introduced the bill and was then finished off by her successor the Hon Dr Nick Smith who should have listened to those submissions. He should have listened to what the substantial bodies were saying and what their advice was but that was not something he was willing to listen to. Maybe that is because he is quite preoccupied in other portfolios. We do see that particular Minister having to put out fires in other portfolios that he has and that is why I suggested that title. That title is something that I suggested and that is the reason for it.It saddens me that we are in this Chamber debating the Environmental Reporting Bill a bill that is called the Environmental Reporting Bill when it is not everything that it could be when it has not lived up to that name and when really we still have the opportunity for it to become a political instrument of this Government or of any Government. Whoever is in power this legislation allows environmental reporting to become a political instrument.It saddens me that we have the Minister being both poacher and gamekeeper. That is something I think we should avoid in any legislation that we pass in this House. It should just be part of good practice that we set up robust processes so that we do separate out those functions and that we do have someone else making the decisions for solely environmental reasons.If we look at the title the Environmental Reporting Bill that should be the primary driving force around what we choose to report on not what serves the Government of the day whoever that Government may be and what it wishes to report on. The Environmental Reporting Bill is not living up to its name. It is not going to adequately report on the environment.The CHAIRPERSON (Lindsay Tisch): I am going to call the Hon Ruth Dyson.Hon RUTH DYSON (Labour—Port Hills): Thank you Mr Chairman. I think that that was an exceptionally wise choice. I look forward to hearing my colleague Stuart Nash’s contribution on the conclusion. I am speaking to clauses 1 and 2 of the Environmental Reporting Bill. Clause 1 is just the title of the bill and clause 2 is the commencement.I want to pick up on the proposal that Dr Megan Woods made in her contribution and that is to replace the name of this bill the Environmental Reporting Bill with an alternative. In my view the “Lost Opportunity Environmental Reporting Bill” would be appropriate and I say that for three reasons. The lost opportunities in this bill actually sadden me because it is a bill I would have been very enthusiastic about supporting.The first lost opportunity is the one that has been predominant in the conversation in regard to clause 18 and that is the lost opportunity for independent environmental reporting. That key element in the division in this Parliament about the nature and progress of this bill should be reflected in the title of the bill. I know that independence in the reporting of the Government’s achievement and of the country’s achievement is a risk. I note that the current Minister in charge of this bill recently used that exact term “a risk” in relation to democracy in Canterbury when he talked about the possibility of his twice-broken promise and commitment to the people of Canterbury to restore democracy. The Hon Nick Smith said: “I won’t restore democracy in Canterbury because it’s too much of a risk.” Actually the risk in independent environmental reporting is accepted but I think that it is a risk that a Government that is courageous and wants to demonstrate leadership should take. This Government did not take that risk and did not take the opportunity and therefore the phrase “lost opportunity” should be properly reflected in the title of this bill.The second lost opportunity is not as significant in terms of integrity but I think it is a lost opportunity in terms of a message that this Parliament could have sent. If the whole of our Parliament had agreed and supported the Environmental Reporting Bill because it had independent topics set then we could have sent a very clear message to New Zealanders about the values we hold in terms of our environment and the standards we want to see progressed. Instead we have a divided Parliament and unfortunately a very closely divided Parliament on this bill. Again therefore it is a second lost opportunity which I think should be reflected in the title.The third lost opportunity which again I think should be reflected in the title is the opportunity that was provided to this House by the Supplementary Order Paper in the name of my colleague Su’a William Sio. That is in terms of our recognition of the impact that New Zealand’s activities have on our broader neighbours in the Pacific and our interest in supporting our neighbours in the Pacific by saying we are going to recognise not only environmental progress in New Zealand but the impact that has on our Pacific neighbours. Many of our Pacific neighbours look to New Zealand and to Australia—and hopefully New Zealand ahead of Australia—in terms of the support we can give them particularly against the impact of climate change. I know that the recently highly regarded scientist Paul Foster-Bell a list MP from the capital sees himself in a different aspect in the review of his scientific capabilities. He goes against the entire scientific community. He said that our contribution to climate change—economic social and financial—was negligible in the Pacific. That is what he said—“negligible”. I think we have lost an opportunity to provide leadership in this space and that is why I think that that lost opportunity should be reflected in the title of this bill.In terms of the commencement date the current bill says: “This Act comes into force on the earlier of the following: (a) a date appointed by the Governor-General by Order in Council”—then it goes on to say—“(and 1 or more orders may be made bringing different provisions into force on different dates):” and that really hides what is one of the key elements of this legislation in that the Ministers can bring in by Order in Council the actual topics that are going to be determined under this bill.JOANNE HAYES (Third Whip—National): I seek leave to correct the votes on behalf of the Māori Party on Supplementary Order Paper 87—all clauses—and Supplementary Order Paper 92—two votes in favour for each.The CHAIRPERSON (Lindsay Tisch): Leave is sought to correct the votes. So what would those votes be please?Joanne Hayes: The votes are for Supplementary Order Paper 87 all clauses—two votes in favour—The CHAIRPERSON (Lindsay Tisch): Just one moment. Leave is sought to correct the Māori Party vote on all the votes that were taken on Part 2. Is that correct?Joanne Hayes: Correct—it is just the Supplementary Order Papers.The CHAIRPERSON (Lindsay Tisch): Well there are a number of Supplementary Order Papers. There is No. 92 and there is No. 87 and there is an amendment to insert clause 11A as well.Joanne Hayes: No just the Supplementary Order Papers 87 and 92.The CHAIRPERSON (Lindsay Tisch): Supplementary Order Papers 87 and 92. Right leave is sought for that purpose. Is there any objection? There is no objection. Therefore the votes on those amendments as set out on Supplementary Order Paper 87 and Supplementary Order Paper 92 will be Ayes 60 Noes 61. The amendments are still lost.STUART NASH (Labour—Napier): I back up a lot of what my learned colleagues were saying and I think that it is quite rough actually to have a go at Ruth Dyson. She has been a valuable member of the environment caucus in the Labour Party for a hell of a long time and she knows a lot more I suspect than the vast majority on the other side of the Chamber could even hope to know. When we are talking about the commencement date it is slightly unusual I must admit. Normally a bill says “on the day after the date on which it receives the Royal assent.” But this actually gives a 9-month lead-in period.Dr Megan Woods: Gestation.STUART NASH: A gestation period—is it 9 months on purpose? Do they need to think about it? Do they need to give birth to this bill? The analogies are quite staggering. As Ruth Dyson said the commencement is “by Order in Council”. Therefore Ministers can determine when they are going to do this which again just plays into this whole argument about a lack of independence.When we talk about the name of this bill some very good names have been suggested but I would like to throw a couple more in there if I may. The first is the “Environmental Bitter Pill Bill”. Really this just does not acknowledge that there is a huge depth of competency and expertise in this country which absolutely could have been utilised in terms of making this bill so much better than it is. It would have been very easy. Labour offered a compromise to one clause which would have seen us support this bill and get it on the road and make it happen. Even that was turned down. One clause and we would have got across the line; we would have had the vast majority in Parliament supporting the bill.Another name that I think is quite apt is the “Brand Damage to the Wider Global Environment Bill”. By this I mean—and I talked about this in an earlier speech—that this is what we go to the global market place with: our clean green “100% Pure” image. If we are not seen to be playing that walking the walk then we can actually devalue our global brand to the point where we are not getting the premium on our products that we should be getting. This bill is the sort of thing that goes along that way of devaluing the brand because it is seen by outsiders as not being independent. This is seen as driving a Government agenda as opposed to providing a really objective report on the state of our environment. I suspect that there will be some parts of the environment that will come up with fantastic reports but as we know there will be other parts of the environment that will be a damning indictment of how we have allowed things to drop away over the years and of how we need to fix them. So this really does cut into what it means to be New Zealand and what that brand means and it is a missed opportunity. That is the thing that is so disappointing about this.Another title perhaps could have been the “Government Agenda (Environmental Mismanagement) Bill”. As a number of my colleagues have spoken about this bill is about the Government’s agenda as opposed to what is the right thing to do for New Zealand. And we could have got that across the line if only we had worked together in the way that the people of New Zealand expect us to. This is how legislation is supposed to work in this House: we go into a select committee and work together to come up with a bill that meets the requirements of everyone. Labour put a compromise an alternative on the table and it was rejected. I just do not think that is a great way to work together for something as important as the environment in a country like New Zealand.Another potential title is the “Government Knows Best (Bugger the Rest) Bill”. Again the reason I say that is that I do not think this title the Environmental Reporting Bill does this piece of legislation credit. As mentioned this is the Government’s agenda. This is what the Ministers want to see; it does not necessarily reflect what the wider New Zealand wants to see or needs to see—and that is the important thing. If this is not seen as being objective then it loses a lot of its power and it loses a lot of its credibility and this is where we are going to get into trouble.Another name that this bill could have been called is the “What Could Have Been But Is Now Unseen Environmental Bill”. Again it comes down to the whole notion of independence. I was not on the Local Government and Environment Committee even though I would like to have been for this bill because it sounds like it was a fantastic process and there was a fascinating list of submitters that came in. I have looked at some of the submitters and these are experts in their field. This is the thing about MPs: we can never be experts in absolutely everything so we rely on those outside of Parliament to give us advice.EUGENIE SAGE (Green): I think the title for the bill could certainly be the “Opportunity Lost Bill” when you have all the other parties in the House supporting a Supplementary Order Paper that will make some constructive changes and the Government rejects it. But I think another potential title is the “Environmental Reporting (Maintaining the Clean Green Myth) Bill” because of the provisions in clause 18 for regulation-making powers. The only reason these regulation-making powers exist in the bill is to enable Ministers to set the topics for environmental reporting. When you have a Government that is promoting agricultural intensification and more irrigation that means that it will be interested in ensuring that our brand the “100% Pure” brand is maintained overseas. The reality of what a lot of the expansion in agriculture and the expansion in irrigation is doing to our waterways in terms of declining water quality real stress on native species that depend on our braided rivers loss of riparian wetlands and loss of tussock grasslands and shrub lands in the Mackenzie as those areas are converted to pasture—the Government will not want that reality to be made known. So that is why the substantial flaw in this bill in clause 18 with the loss of independence I think would justify the title of the “Environmental Reporting (Maintaining the Clean Green Myth) Bill”.Another of the reasons for that title is in clause 18(2). The thresholds that the Ministers have to consider before establishing topics are very high and they will potentially constrain the topics that can be reported on. Just looking at clause 18(2) it says that “the Ministers must be satisfied that any—(a) pressure topic or impact topic affects significant areas resources or numbers of people:”. So it has got to be established that the topic actually has that impact on significant areas. That means that if there is an issue that might affect only a rare species that is found in only a small part of New Zealand then that aspect of biodiversity cannot be reported on.These thresholds also mean that issues that might potentially affect a large area cannot be reported on. That is a major flaw in the bill because we need comprehensive and robust state of the environment reporting so that we understand the health of the whole of our environment so that we can identify the causes of environmental problems and so that we can look at whether the policies that are being put in place are actually working. This quite strong constraint around the topics and the fact that it is a political decision rather than an independent decision by senior public servants will I think constrain the environmental reporting and will mean that it is dominated by work to actually ensure that New Zealanders have an impression that we are a clean green country when the reality is very different particularly in terms of the declining water quality with agricultural intensification. We have already seen that with the limited reporting that is done at the moment—things like the monitoring of recreational swimming sites and the fact that two-thirds of monitored sites are unfit for safe swimming.So there is a major opportunity lost in the bill and my concern is that it is a bill that just encourages complacency in terms of environmental reporting. It does not actually get to the nub of where the harm is occurring and that is particularly in terms of water quality and our biodiversity crisis. We have a large number of threatened species—over 2000—and I am not confident with the Ministers setting the topics that we will get a comprehensive suite of indicators. That is partly because of the stop-start nature of the work by the Ministry for the Environment in developing environmental performance indicators and we do not have good performance indicators for the state of biodiversity in our country.This bill would have been a good opportunity to get cross-party support. The Government has rejected that and there are major flaws in the bill. Thank you.PAUL FOSTER-BELL (National):Tēnā koe e te Mana Whakawā and thank you very much for the opportunity to speak on clauses 1 and 2 in this debate on this very important piece of legislation the Environmental Reporting Bill. This is a very aptly and appropriately named piece of legislation. In the style of the National Government it is named simply clearly and efficiently and it does what it says on the box. If we were less gracious as some of the members of the Opposition are we could give it a less suitable title. We might call it the “Correcting 9 Long Years of Labour Woeful Mismanagement Bill”. We might call it “A Bill to Fix Up 9 Years of an Impotent Green Party Propping Up a Labour Party that Did Nothing for the Environment in this Country” but luckily we are not a petty and small-minded Government. We are a Government that is focused on the issues that are important to New Zealand unlike the members opposite. The commencement clause clause 2 tells us that this bill comes into effect in 9 months’ time—not 9 long years. For 9 long years New Zealand sat in that very small minority of countries that did not have an effective environmental reporting bill in place but we are bringing this in in only 9 months and I think that is a very very positive thing.Some of the contributions from the members opposite show how little they actually care about the environment. The Hon Ruth Dyson just wants to have a go at me for not being a scientist—and I freely concede I am not a scientist. I have been educated at the very fine institution of the University of Otago in the noble art of archaeology. So although I may not know about nitrous oxide levels or other scientific matters I am well versed in the excavation of old fossils and that is why I understand the members opposite.I will wrap up by saying that this is an appropriately named piece of legislation. It will make a big difference to our environment in New Zealand. It will report on matters to do with the atmosphere the water the ground and environmental ecosystems in this country. It will bring us into line with the rest of the OECD and it is another very good piece of legislation from this excellent Government. I commend it to the House.KRIS FAAFOI (Labour—Mana): It is always a pleasure to go after Paul Foster-Bell. I am sure the technicians are very thankful to him for saving them some time in doing their annual check on the speaker system here in Parliament.There have been a number of alternative titles put up for this bill and I would like to again go for a simple alternative. We should change the name of this bill to the “Environmental Responsibility Reporting Bill.” I am a big fan of acronyms for bills and that would change this bill to the “ERR Bill”—or err as in mistake—because that is exactly what this piece of legislation is.This Government has erred in this piece of legislation. It has taken away a large degree of independence in the reporting that needs to go on here in New Zealand. We need to make sure that the current state of affairs with the monitoring of our environment is independent and that we are looking at the things that need to get looked at. This Government has erred in that because in this piece of legislation it is giving some of that responsibility to the Minister and that leaves that process open to political interference whereby things that should be looked at might not get looked at. In my opinion and in the opinion of this party and the Opposition the Government has erred with the “ERR Bill” as I would like to see it called. There needs to be independence when we are dealing with the reporting and the monitoring of the environment.Another instance where this piece of legislation has erred is in the fact that the Government did not take up the opportunity to support Supplementary Order Paper 92 which was in the name of my colleague Su’a William Sio. That would have inserted a clause to include consideration for New Zealand’s economic and environmental activities and how they impact of the Pacific region’s climate ecosystems and its people. That is a huge error.I do not see anything hugely controversial about that because we do not live in isolation at the bottom of the Pacific. What we do here in New Zealand and what the Australians do in Australia affects all those small nations in the Pacific. The likes of Tokelau—which my parents came from—with only 1500 people living on three atolls very much relies on the activities of other nations for its future. The highest point above sea level there is something like 50 to 75 centimetres. So I think we do have a responsibility to those Pacific nations to make sure that we include them in the monitoring of how what we do that affects them. I think especially with regard to some of those that we do have an official relationship with that we should be doing more to make sure that we are monitoring what is happening to us as well as what is happening to them. That is an error or an “ERR” on behalf of this piece of legislation.Sitting suspended from 6 p.m. to 7.30 p.m.PAUL FOSTER-BELL (National): I move That the question be now put.Motion agreed to.A party vote was called for on the question That clause 1 be agreed to.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.Clause 1 agreed to.A party vote was called for on the question That clause 2 be agreed to.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.Clause 2 agreed to.Bill to be reported without amendment presently.New Zealand Superannuation and Retirement Income Amendment BillIn CommitteePart 1 Amendments to principal ActGRANT ROBERTSON (Labour—Wellington Central): Thank you very much for the opportunity to take a call on Part 1 of the New Zealand Superannuation and Retirement Income Amendment Bill. This bill went through the select committee with considerable scrutiny from members across the House and I would like to have been able to say when I took this first of several calls that I would like to take during this Committee stage debate that the committee came to some broad agreement about the bill. I could have said that because that is exactly what happened inside the committee.We were debating as members who have been following this bill will know the establishment of fund investment vehicles for the New Zealand Superannuation Fund. These are a new type of investment vehicle for the Superannuation Fund to enable it to take advantage of investment opportunities for New Zealand to enable the Guardians of New Zealand Superannuation to structure their investments in such a way as to maximise the returns provide efficient returns and also get some cost savings in terms of the management of funds.The issue that I want to spend a little bit of time on in this call and perhaps another one is around what was included by the select committee during our consideration of this bill and that was effectively the changes to the new section 59A which is covered by clause 7 of Part 1 of the bill. This was the bit where the committee took advice as we do from officials about what we should do in order to ensure that a new and innovative idea such as this is well managed.On this side of the Chamber we have no difficulty with the idea that the Superannuation Fund—a very successful fund; JP Morgan’s pension fund of the year we note—should be given some latitude some opportunity and some flexibility in how it makes its investments so that is a good thing. It is a mature fund now. It has reached a point where we believe this is a reasonable exercise. But in discussing the power to create these new fund investment vehicles we got into a discussion about what would occur if it was not what is described in the bill as a passive holding entity. So if it is a passive holding entity essentially in layperson’s terms that means that the guardians of the fund have very limited involvement in how it is actually run.But the opportunity is there for there to be another type of entity one that is more active in the style of investment that it might undertake. In order for the select committee to be comfortable with that kind of vehicle we as a committee agreed unanimously to include the idea that the Minister of Finance’s approval would be required not if it was a passive vehicle but if it was any other type of fund investment vehicle. So what would have been under new section 59A(1B): “The Minister’s approval under subsection (1A)(b)—(a) may be given for any class or classes of investments or entities; and (b) may set conditions as to the governance framework for the implementation and operation of the entities and as to the application of this Act to the entities.”What this was about was providing some security that as we entered this brave new world of fund investment vehicles—Chris Bishop: Ha!GRANT ROBERTSON: —that we should actually have—thank you Mr Bishop—some more security. Well Mr Bishop might as he laughs like to answer the question why when he was in the committee he was all in favour of the Minister being involved—he was all in favour of the Minister being involved.Chris Bishop: I wasn’t in Parliament.GRANT ROBERTSON: Ah! He is now saying he was not in Parliament. We know he was manipulating the members of the committee from behind the scenes. No I do not mean that—I do not mean that. I would like Mr Bishop then to ask the National Party members of the Finance and Expenditure Committee who were on the committee last time—perhaps David Bennett might be an example of that—why they were happy and in fact proposed the introduction of this clause because that is what happened. The committee on advice from officials agreed that this was a protection that should be included in the law when we are trying out a new type of funding mechanism for the fund. But magically on the Table tonight appears Supplementary Order Paper 89 in the Minister’s name removing that section. It removes the section that the committee put in.Hon Ruth Dyson: Unanimously.GRANT ROBERTSON: That is right. We need to track this through.The committee working in a very collegial manner in a manner that is responsible said: “We want to give the Superannuation Fund the opportunity to make use of a new mechanism for its investments but if it is going to be anything more than a passive entity then”—[Bell rung] Mr Chair?The CHAIRPERSON (Hon Chester Borrows): Grant Robertson.GRANT ROBERTSON: There was such competition! “If it is going to be anything more than a passive entity there should be a mechanism by which the Minister of Finance now may have some say.” Mr Bishop when he gets up will say that compromises one of the core aspects of the fund when it was initially established so that it should not have ministerial involvement in the fund. We continue to support the fact that the Guardians of New Zealand Superannuation have done a very good job of managing the fund but it is also important to note that this type of fund investment vehicle was not envisaged when the fund was set up. The idea that actually the guardians would have any active role themselves in investment was not envisaged when the fund was set up. When the fund was set up it was all to be arm’s length and the fund has done a very good job in terms of managing that investment.But the time has come and the guardians came to us and said that they wanted this change and it was accepted by the committee. But it was accepted by the select committee on the basis of a series of checks and balances that are now proposed by the Minister of Finance to be removed. On this side of the Chamber we are very disappointed that that is the situation that we have come to now when a committee can go through a piece of legislation and as a House we can come together and say that these are the appropriate protections that would be put in here. So that is to be removed under the Minister’s Supplementary Order Paper 89.I need to indicate at the outset that the Labour Party although remaining very supportive of this bill finds it hard to go against a consensus decision of the select committee on this matter because we do believe that this is an important change and we do believe that this is one that the guardians themselves were not uncomfortable with. That is my recollection. I was on the committee only briefly when this bill was being discussed but I do recall that the guardians themselves remained comfortable with the idea that this vehicle would work well with the ministerial oversight in the way we have suggested. It is important to note that allowing the guardians to run fund investment vehicles is an exception to the general rule proposed in section 59 of the original Act. What that said was that the guardians should not be controlling any other entity. They are there to invest they are there to do their best on behalf of the taxpayer but they are not there under section 59 as it currently reads to control any other entity.The committee when we discussed this agreed that the prohibition on control does not preclude the fund from 100 percent ownership of assets and there are examples of that where they might own a forest but they do not manage the forest. So that is fine. We understood that and that the guardians wanted to work to increase the proportion of the fund invested in the New Zealand assets and that they realised that in doing that they may have to take a more active role in the way in which these fund investment vehicles were driven. That is fine but what is not fine is when the select committee comes in and says: “We believe there is a way of managing this that will give confidence to the electorate that we are maintaining the integrity of the fund that we are maintaining the independence of the guardians. We are not giving them carte blanche to run and manage investments; we are putting in place a way in which the Minister of Finance will have some say on a very very limited class of investment.”I think that members on the other side need to get on their feet and tell us why it is that they are going against what was put in as an agreement by their members at the select committee. It is pretty extraordinary actually for a Minister of Finance to come to this House with a Supplementary Order Paper that contradicts what National Party members in a committee have agreed to. It may be that time has elapsed and those committee members were not able to convince the Minister when it went back to the National caucus but I would have hoped that they would be able to do that and ensure that New Zealanders could have continuing confidence that these new fund investment vehicles will be used in such a way as to be appropriate.One of the key elements that the Minister of Finance was to be involved in was in the question of what kind of governance arrangements there would be around these fund investment vehicles. So again this is not saying that the Minister of Finance will make any specific decision on a specific investment. It is about the Minister of Finance having some say in the governance arrangements around that some say in the role that the guardians will play and some say in the role that perhaps an independent investment manager might play in an investment that is effectively 100 percent controlled by the guardians of the fund. That is a very useful and important check and balance.STUART NASH (Labour—Napier): I would like to agree with my colleague Grant Robertson. I have come to the Chamber to speak on the bill that went through a select committee process. As Grant said on the Finance and Expenditure Committee by and large—I was on it in my first term and I am on it again—we get some contentious bills but how it works is that we work very closely together to come up with consensus. Very very rarely in my experience do we disagree on anything or put a minority report in. A lot of work goes into this because we understand how important the bills are.But we also understand that the chair of the Finance and Expenditure Committee is under directions from the Minister of Finance. Of course we know this. It is the reality of the situation. So again it is a most peculiar situation that the chair of the Finance and Expenditure Committee who is no doubt in direct communication with the Minister of Finance on a regular basis in terms of the work of the committee and the bills before the committee would not have discussed this. I am not too sure where this has come from and I suspect the Minister in the chair the Minister for Primary Industries has no idea either because he is not a finance Minister at all—Chris Bishop: Not yet.STUART NASH: I was going to be rude but no I will not go there. But maybe Mr Bishop does know this because he was in the office. But let us get back to the purpose of this. He wrote a lot of this. You probably wrote this did you not Mr Bishop? You know the reason behind this. In fact I have no doubt that Mr Bishop said to Mr English: “This is how it should be done Bill.”—wink nudge—and it was done. That is how it works is it not mate? Well done.Dr David Clark: When you’ve finished ordering those hair straighteners.STUART NASH: Ha ha! Yes exactly.The thing they do not quite understand is that there will be a reason behind this. There will be a reason behind why the Minister of Finance has said that he does not want to have ministerial approval as was set out in this. I am not too sure whether it is because he thinks there may be some sort of liability or conflict as Mr Robertson has pointed out. As we all know about the Superannuation Fund one of the fundamental principles behind it was that it was politically neutral so we did not want to have any political interference and I suspect that is why it has run so well. In fact it is just a shame that the contributions have not been put back into it because its rate of return has been astounding since the global financial crisis—around about 18 percent if I am not wrong.But the reason why this piece of legislation which is reasonably technical I suppose in nature is before the House is because the Guardians of New Zealand Superannuation were in a situation where they effectively controlled an asset but they did not have control of the business entity. It has always been part of the rationale of the fund I believe that if it can invest in New Zealand assets so be it and that is a good thing. It is a way to boost our capital markets and actually control ownership of a lot of investments. In fact they have invested widely in this country. I think they invest in Z Energy and Kaingaroa Timberlands but part of the reason for this is that effectively they did not have control of the business entity itself.Where I would like to see some of this being exercised for example is this. We are selling a lot of our farmland our sensitive New Zealand assets offshore. If there is a good business model where the Superannuation Fund could actually justify the purchase of that I think that is a preferable option. In fact since 2005 when the Overseas Investment Act came into play there have been over 1000 consents for the purchase just of sensitive land that have been granted. It would be good if the Superannuation Fund was actually an investor in here as opposed to the Americans the Canadians the Chinese the Austrians and everyone else. But as has been said I am not too sure of the reason behind this Supplementary Order Paper 89 or the reason behind the changes. We really do need the Minister down here to explain these because it is a fundamental change in the way this whole thing is done and it would be good to know.But I come back to the purpose of the bill. I do not think that anyone doubts the veracity and the competence behind the guardians and the job they have done. In fact it has been fantastic and part of the reason for that is that—well I was going to say that part of the reason for that is that there has been no political interference; in fact that is not one of the reasons—they are incredibly competent and they do a magic job of doing it. But we all acknowledge that they cannot have any political interference except in very very specific circumstances which is what this bill was actually trying to put into place. But we also recognised that there were some instances where they did actually need to have a measure of control over the operating entity that they were buying into and that this was to do with the governance arrangements and in this day and age when there is a lot more focus on governance arrangements—DAVID BENNETT (National—Hamilton East): This bill is one that has been in front of Parliament for some time now and there has been a change at this level of the debate. One of the fundamental purposes of the New Zealand Superannuation Fund and one of the requirements of how it is managed is to make sure that there is a sense of independence from the Minister of Finance in the way that that fund is organised. It is a very fundamental point of policy in regard to the setting up of the New Zealand Superannuation Fund.The Finance and Expenditure Committee did in its great wisdom consider the issues around the Superannuation Fund at that time and one of the issues was in regard to land ownership. As that last speaker Stuart Nash spoke about the Superannuation Fund does—contrary to what he says—own considerable amounts of farmland. That farmland is predominantly in the South Island and those farms are effectively businesses in their own right. The issue the Superannuation Fund has is that as an owner of farmland it effectively controls that business entity.Under the rules of the Superannuation Fund it cannot have control of a New Zealand entity. So effectively the Superannuation Fund was engaging in those kinds of purchases in a roundabout way to enable it to get land purchases to give it that diversity in its book. In doing so there then comes the issue of where you take it to the next level around control and management. So it was considered by the Finance and Expenditure Committee and the select committee felt at that time that the Minister may have the ability to do an approval process for such investments. That was the original intent of what came before the House in the original bill.Subsequently that policy agenda of independence that policy driver that is fundamental to the Superannuation Fund has been decided to be the predominant policy rather than to look at how that control aspect may work. So to provide for that independence Supplementary Order Paper 89 takes away that test of having the Minister of Finance as the overall approver or disapprover of an investment so it maintains that independence.The other part of the bill which is a substantive change that was sought is in regard to investment through passive mechanisms for the Superannuation Fund. Effectively when you get to the scale of investment that they are at in the market and the rule is that they are not allowed to control the New Zealand business it becomes very difficult for them to invest to a significant level. What this bill does is it enables them through a passive investment vehicle to hold larger stakes. They will not actually be controlling those enterprises as such but they will have that passive ability to be a large-scale investor. Basically the thing we have got to look at in this bill is that giving them that ability to do so through the fund investment vehicles basically enables that passive investment by relaxing the control restriction that was section 59.Taking into account the fundamental principle that you want independence for this body as well there was no need for the Minister of Finance to have that other test on top of those investments. So that is the rationale behind why the bill is in its current state. It makes sense when you look at the fundamental principles of the legislation and why the Superannuation Fund was set up. It also enables the Superannuation Fund now to have much more flexibility in its investment portfolios and to take advantage of assets that it can actually invest considerably in for the benefit of all New Zealanders. We do have a small capital market and we do have a small number of significant players in that capital market. The Superannuation Fund is one of those significant players. We would not want to have them limited in their ability to fund the New Zealand market and to assist in the growth of the New Zealand entities by having unnecessarily controlled restrictions. The aspect of the change in this bill to enable those passive investment vehicles to make substantial holdings is for the benefit of all New Zealanders and the Superannuation Fund going forward. Thank you.Dr DAVID CLARK (Labour—Dunedin North): I want to say from the outset that fundamentally this is a good bill. It is nice to stand here on this side of the Chamber and be able to congratulate the Government on taking this step forward and approving some changes to the New Zealand Superannuation and Retirement Income Amendment Bill.Here we have some positive changes happening particularly in respect of superannuation in New Zealand which we know is a big issue that does need to be tackled. This is a Government that in the past has shied away from dealing with this problem. We know John Key has said for example that he would not tackle the superannuation age while he was Prime Minister. He has been very clear about that. He has not suggested any other ways to tackle the fact that currently we have five New Zealanders in the workforce supporting one person in retirement but in a few decades’ time we will have only two New Zealanders in the workforce to fund one person’s retirement. We have got as a country to have a mature discussion about this and come up with really sensible suggestions as to how we can tackle this particular issue.Part 1 of course is the substantive part of the bill and so it is good to see that the Government is tackling this issue in at least one respect here by making changes to the Superannuation Fund that are positive. I am sure that they will all be leaping to their feet shortly. I can see Chris Bishop penning some notes so he will certainly be a contributor who will have something to say about the good things the Government has done.But also let us not forget that at its outset Bill English called the Superannuation Fund a dog and it has proven to be an incredibly successful fund. We know that if the Government had continued with the contributions as was done previously in fact it has been estimated—and this is a 2013 estimate—that there would be $10 billion more in the fund and that is from the forgone contributions. The Government has not been particularly wise in the way it has handled the fund up until now.On the Finance and Expenditure Committee of course we did discuss the fund investment vehicles. What Grant Robertson has said about the nature of the debate is absolutely true from my experience on the select committee. There was a consensus around the kinds of changes that needed to be made in the bill in order to ensure the correct protections were in place. Because the Superannuation Fund is doing an active type of investment on all taxpayers’ behalf to give the Minister of Finance some oversight of those decisions on behalf of the taxpayer was part of the conclusion of the Finance and Expenditure Committee that was agreed across the select committee. We did debate long and hard the minutiae of the bill because this is New Zealand’s future. This is our Superannuation Fund that has got huge returns that is internationally respected and that is generating wealth for New Zealanders.We found it our duty to find out more about the nature of the proposed changes. The officials were fantastic. They supplied us with the information we needed to work through those decisions and to come up with the best recommendations back to this House. I want to put on record my thanks to the officials who served the Finance and Expenditure Committee. Some of them are sitting here in Parliament ready to advise should we need technical advice now. Thank you to those officials who helped us through that process and helped us work out what the tweaks needed to be to make sure that this Parliament’s oversight was protected to make sure that we had the right kinds of policies in place that would ensure that this new opportunity was grasped with both hands and taken into the future.It was a constructive process across the select committee as it usually is. That constructiveness is rarely seen in the media of course but I think it is worth commenting on it here. We know that it is a wise move and we have agreed that it is a wise move. The advice is that it is wise move to have these more active investment vehicles.Bill English is now proposing an amendment that would remove his oversight of this spending. Part of the reason that this oversight was suggested of course is the limits of the Official Information Act. That was part of the discussion that we had. Where was the Official Information Act in all of this? So we went back to look at the first principles. The Official Information Act gives Parliament the protection and the oversight of the spending decisions. Would these new fund investment vehicles be subject to the Official Information Act? Well actually no they would not be in their entirety. However the fund investment vehicles would be in so far as the Superannuation Fund itself is subject to the Official Information Act.The Superannuation Fund in recommending who the people were who were controlling the projects would have overall accountability and we could see that Parliament or any member of the public who had access to the Official Information Act—which is all members of the public—could ask legitimate questions about the oversight of these vehicles via the Official Information Act. Of course a good deal of material we would expect would be withheld for commercial reasons—certainly for a period of time when these investments were in place. But the principle remains that the public can request information about the governance arrangements to be sure that these new vehicles are being used in an appropriate way and in a way that benefits the taxpayers of New Zealand.So we had comfort that these new vehicles had sufficient oversight in place barring the suggestion that perhaps the Minister of Finance should also have some oversight on behalf of all taxpayers for these new investment vehicles. That seemed a perfectly reasonable point to reach on the evidence that we were given as a select committee and after the lengthy discussions that we had so that was what we settled upon and brought back to the House. So it is somewhat surprising to find that the National members on the select committee now support we are told an amendment that goes in quite the opposite direction and removes the Minister of Finance from that picture. So I think that people at home watching this debate will draw their own conclusions about what is happening here.Hon Ruth Dyson: They got rolled.Dr DAVID CLARK: They got rolled my colleague says—they got rolled. There is political expediency at play here. Perhaps the Minister of Finance did not wish to be caught in any fund investment decisions that went wrong. Maybe he was trying to remove himself one step further. We think that is abrogating a responsibility that the Finance and Expenditure Committee after seeing the evidence thought was a sensible step to take.This current Government does of course have a philosophy of allowing—it will tell us; and I am sure Mr Bishop will correct me if I am wrong—the market to have its way. So a part of that is of course having the fund at a distance at arm’s length to allow it to make wise investment decisions. We of course support that basic principle. That is why it was in fact Labour that introduced the bill that brought the Superannuation Fund to life a fund that has attracted international recognition for being a superior fund and producing superior returns. It has been set up that way.The changes that were proposed by the select committee were modest but they were there for a good reason: to preserve the oversight of that decision making; to make sure that there was accountability for this new direction that the investments are going to take. So we find it surprising of course to come to the Committee and find that the Minister has moved an amendment and that those very same people who argued on the select committee for the merit of a particular proposal now find themselves in the somewhat awkward and embarrassing position of arguing the opposite. I very much look forward to some of the logical contortions and the debates that will follow. We might have a bit of fun in the Chamber tonight as we hear some of those MPs stand up and say that black is white and that in fact white is black and that they knew that all along. I am sure Mr Bishop will have a contribution along those lines. He can be an entertaining speaker and I hope that we can all enjoy his contribution as he now explains to us why these fund investment vehicles should no longer have the oversight that the select committee agreed that they should.This is a great fund. The bill is overall one we would like to support because it is a small step towards taking the savings question seriously—a question that this Government has shied away from in so many instances in its seven cuts of the KiwiSaver scheme in its failure to put contributions into the Cullen fund and in John Key’s ruling out of tackling the issue of retirement savings costs going up without a plan to address it. In so many ways it has failed on retirement saving. This bill is actually a positive step overall in the right direction barring this one very unusual contortion which I am looking forward to members opposite explaining for our entertainment. Thank you.Hon DAVID PARKER (Labour): I rise to take a call on Part 1. The purpose of the amendment to the bill that came to the Finance and Expenditure Committee and that was recommended by that committee to insert new section 59A was not to allow the Minister of Finance to interfere in any one investment decision by the Guardians of New Zealand Superannuation but was to exercise some control over what class or classes of investments or activities ought to be allowed through a fund investment vehicle which overrides the original protection that was set out in the legislation that the guardians ought to be passive rather than active managers of investments.The reason for the insertion of that provision in the original legislation was sound. It was overseen by Dr Michael Cullen. He was concerned that the fund would come under the influence of politicians—an investment fund that would invest in the sorts of classes of investmentsthat ought not be funded by a superannuation fund but ought to be funded by a Government. The reason for that—Chris Bishop: Protecting the fund from his own party.Hon DAVID PARKER: That deserves a response actually. No that was not the intention at all. This side of the Chamber generally properly funds things that ought to be funded off the Government’s balance sheet by collecting enough taxation to fund the things that ought to be funded—things like roads things like—Eugenie Sage: Schools.Hon DAVID PARKER: —schools things like hospitals none of which would be privatised by this side of the Chamber but those are things that would be privatised by the National Party’s side of the Chamber. If the National Party privatised them in order to get its seedy little plans off the books it would actually be encouraging the superannuation fund of the day to effectively underwrite its mismanagement by paying for some of the things that the Government had not funded through the appropriate collection of taxation.Dr Michael Cullen foresaw that as a problem because he was and is a historian who has seen these things go down in the past. Where that comes unstuck at some future date is when the superannuation fund is wound up and the money is realised from their investment at a time when New Zealand will be cash-strapped in meeting the increasing costs of superannuation in the future. It is a nonsense if the Government is effectively asking for money out of the economy to put back into the economy at a time when the economy may be stretched to find a replacement investor. So the reason we had these underlying controls on what the superannuation fund could and could not do was to avoid that eventuality.Since then we have had a number of changes made by the National Government. It came to power remember promising to increase the proportion of the superannuation fund that was invested in New Zealand. How has that gone? I am surprised we did not see any reference to it in this bill because if there was a place for it to be it would be in Part 1 where the objectives are for the superannuation fund and what the restrictions arewould be restated. The Government has not actually achieved that objective. The reason it has not achieved that objective is not the inability to use fund investment vehicles but that the idea was not sound in the first place.Dr David Clark: Another broken promise.Hon DAVID PARKER: Another broken promise by the National Government. In any event we come to the change that is proposed. There are instances when controlling interests are held in New Zealand - based investments. In order for that to be done more practically it is good that the Guardians of New Zealand Superannuation will be given the ability to use fund investment vehicles. But it is none the less a departure from what was originally intended and lets us get closer and closer to the guardians becoming an active manager rather than a passive manager. That is why the control that was provided for unanimously by the select committee in new sections 59A(1A) and 59A(1B) was appropriate because it said that for the purpose of holding facilitating or managing the investments of the fund a fund investment vehicle could be used and the guardians were allowed to exercise that power in respect of passive entities and in respect of any other entities only with the approval of the Minister of Finance.So to go beyond passive investments required the approval of the Minister of Finance. The Minister of Finance could come back and say: “Having thought about it I’m going to approve this for a class of non-passive investments.” Now because the Government is stripping out this provision it is actually departing further from the original intention which was to leave the guardians as a passive investor rather than an active manager.I do not know whether many people can remember as far back to the old superannuation fund that the Muldoon Government—Grant Robertson: Crashed.Hon DAVID PARKER: —crashed after the election; the Kirk fund that was designed by Roger Douglas. The advertisements that were used to knock over that particular attempt at decent New Zealand savings were Cossacks marching across the screen in cartoons because the Government through the Superannuation Fund was going to own and control so much of the New Zealand market place that it would somehow be communism in the way that these Cossacks were marching across the screen.Now what are these guys doing? They are allowing in a general sense the Superannuation Fund to become an active manager rather than a passive manager. I am looking forward to the day when we see Steven Joyce using his control of the media as he has through his old linkages to actually bring back those advertisements to advertise the fact that in this amendment—Iain Lees-Galloway: I want to see Steven Joyce in one of those advertisements.Hon DAVID PARKER: Well actually those people did not have much hair. They had furry hats but there was not much under them.So that is why the Labour Party is opposing the Minister’s amendment and I want to hear the justification as to why we should holus-bolus be allowing active management through these fund investment vehicles without the Minister of Finance keeping an eye on it because that is what is happening here. Of course I do not trust the Minister of Finance on this because he has got it wrong from the start. He called it a dog. He stood up in this Chamber and said that this should be opposed because it was a dog. I do not trust the Government because it has under-invested in the fund and we know because the Guardians of New Zealand Superannuation measures how much wealthier we would be in New Zealand if the Government had continued the contributions to the fund. I think I will leave it there—Hon Paula Bennett: Oh!Hon DAVID PARKER: Well actually the Minister in the chair now the Associate Minister of Finance who has now taken on finance roles—I would be very pleased for her to stand and say why we should allow the Guardians of New Zealand Superannuation to have this holus-bolus right to actively manage what was meant to be passively managed.FLETCHER TABUTEAU (NZ First): This has become quite an interesting debate tonight—Hon Members: Here comes the “Professor”.FLETCHER TABUTEAU: —quite apart from the fact that I have stood up to contribute to it by the sounds of it. What has been interesting in terms of this debate—and New Zealand First for one was grateful to hear it—is that the Minister of Finance with Supplementary Order Paper 89 there amending new section 59A under clause 7 in Part 1 wrote himself out of these decision-making processes. We rejoice in that because in our interpretation of this bill at the moment what we see is new section 59A(1A) and (1B) ensuring and reinforcing that the fund investment vehicles are actually passive investment vehicles. The debate has been interesting in that it would seem that from parts of the Committee including from members on the other side of the Chamber there that was a relaxation of control in terms of allowing these fund investment vehicles as an investment fund but that is not my interpretation and that is not New Zealand First’s interpretation of this legislation.So I put it to the Minister in the chair tonight that some clarification on this issue would be incredibly important in order to get some consensus in the Committee. We understand that at this moment there is no relaxation of controls. The fund investment vehicles are an investment vehicle and we applaud them as a tool and particularly as a means of allowing the Guardians of New Zealand Superannuation to invest in New Zealand for example.It was expressly stated in the interpretation of this legislation and in the analysis of this legislation which New Zealand First wholeheartedly supports that these fund investment vehicles give the guardians an opportunity to invest in capital or actual machinery for example without—and this is the important part—taking control. That is an important distinction. The guardians to our knowledge are not taking control. So the fact that the Minister has written himself out of the decision-making process is to be very much applauded. The less the Minister—especially this Minister of Finance—has to do with the control of our New Zealand Superannuation Fund the happier New Zealand First will be.It is unfortunate that there was not some provision in the Act originally that said that the Government must contribute to the fund. As was noted previously we have forgone $11 billion in investment returns because this Government has opted out of contributing to this fund. Again Minister I would ask that in the analysis of Part 1 new section 59A in clause 7 we actually do look at that definition of control and at what the guardians are effectively now able to do. Our interpretation is such that they are not taking control of their investments which would be incredibly important because then we could easily support the Supplementary Order Paper.What we would also positively note is that the same amendment and the existing changes to the legislation will very importantly not only give them access to new investments but what is also quite significant is that it will actually lower the cost of the guardians’ participation in those investments. So not only are we now positively allowing our guardians to invest in New Zealand which we applaud but we note that with the fund investment vehicle tools we now bypass quite a convoluted process that had become and is currently quite a costly investment process for the guardians. So these tools are to be applauded certainly in that instance.Actually that is all I have got. Thank you.The CHAIRPERSON (Hon Chester Borrows): I call the much-awaited Chris Bishop.CHRIS BISHOP (National): This speech has been very hotly anticipated. I do not think I have had a speech more anticipated since I spoke to Todd Muller’s SuperBlues group in Tauranga. It is good to see that members opposite are so looking forward to this. Quite to the contrary of the assertions from Mr Robertson I was not on the select committee that considered this bill although the Finance and Expenditure Committee did do a good job of considering this bill.I want to make a couple of prefatory remarks. The first is that this is clearly a sensible bill. Despite the heat and the sort of venom from members opposite there is actually support for this bill. It is a prudent bill that will allow greater flexibility for the Guardians of New Zealand Superannuation to improve the returns of the New Zealand Superannuation Fund which it governs on behalf of all New Zealanders.The other prefatory remark I want to make is that the Superannuation Fund has done a good job. I think that you know some time ago that would have been controversial to say in National Party circles. It would have been somewhat controversial to endorse and praise the New Zealand Superannuation Fund or the Cullen fund as members opposite like to talk about but it has done a good job. That does not mean that we should have borrowed money during the global financial crisis and put it into the Superannuation Fund. That does not make much sense. The Government took the view that it was a prudent and considered use of taxpayers’ money not to do that. It does not make much sense to borrow money in order to invest it on risky sharemarket exchanges because at the end of the day you cannot beat the market in the long run and that was the view that the Government took. I know that members opposite disagree with that but I think that most New Zealanders agree that that was a sensible thing to do.The second thing I would say and this speaks to one of the issues that has come up in the Committee tonight is that the independence of the fund is vital. That is exactly why the Minister of Finance is moving as I understand it the Supplementary Order Paper in his name to remove from the bill the clause that allows ministerial approval of investment classes. Members opposite you know are saying we are tying ourselves in knots on this. I would just point to the Minister’s second reading speech on this which was when he acknowledged that this issue is a finely balanced one. It is a fine line. There is a diversity of views on this issue and I acknowledge that the Finance and Expenditure Committee which I was not a member of did consider this issue in some detail. But in the passage of time I think that the Government has come to the view that the independence of the Superannuation Fund is so paramount that we should not have Ministers involved in the approving of particular asset classes or particular investment classes. It is very important that we maintain the independence of the fund and we do not have politicians involved in that. It is a finely balanced issue. Members opposite have a decent argument on it but I also think that Government members have a good argument on this too and that is the view that the Government has come to.I just want to briefly mention the substantive change that the bill makes in this part which is to allow fund investment vehicles. As members have noted that was sought by the guardians. This is a useful change and it is the most substantive change the bill makes. It brings the Superannuation Fund into line with global best practice which allows it to fund the entities that are formed for the purpose of holding or facilitating or managing investment of the funds. As has been pointed out this will increase the efficiency and the flexibility of the fund. This will not allow the Superannuation Fund to hold a substantial controlling interest in the underlying operating entity. That is appropriate.The other change I want to point to is the change in clause 5 of the bill that prevents the guardians from being challenged legally by way of judicial review by dint of the argument that their actions are ultra vires. Again this was considered by the Finance and Expenditure Committee. This is a prudent and sensible change.I think that in the past the National Party has been somewhat critical of the New Zealand Superannuation Fund or the Cullen fund as members have called it. But I think there is now consensus and unanimity across the Chamber that it is a sensible fund that prefunds the cost of superannuation in the future. As a Parliament we have a duty to try to make sure that the fund operates in the best way possible so that it maximises returns for New Zealanders. The measures that this bill advances will do that.SUE MORONEY (Labour): It is indeed a pleasure to rise and speak. I think I am the first female speaker in the Committee stage of the bill. The reason I raise that is because actually when it comes to superannuation women disproportionately rely on superannuation payments. During the course of our lifetimes on average we earn less than men do during the course of our working lives and we live longer. So this bill is of particular importance to the women of New Zealand so on that basis I am very pleased to take a call. I am a little disappointed in this bill because I thought the New Zealand Superannuation and Retirement Income Amendment Bill may well have been the bill that saw the Government fix up its mistake of stopping contributions to the New Zealand Superannuation Fund. I had hoped that that was what this bill would do. Unfortunately it does not amend that particular big and costly mistake from the National Government. It does not reinstate the contributions.Christopher Bishop when he spoke gave an excuse for that and said it was because it would be remiss of the Government and wrong of it to have borrowed money to keep those contributions going in the midst of a recession. Well Mr Bishop why did your Government borrow for tax cuts in the midst of a recession? Actually what we know about the New Zealand Superannuation Fund is that the sorts of benefits coming from it the wise investments that were being made and the return on that investment would have been a better thing to borrow money for in the midst of a recession than to have tax cuts that simply went nowhere built no increase in our economy and did not create any jobs or do any of the things that they said it was going to do.Chris Bishop: Rubbish. You’ve got no idea what you’re talking about.SUE MORONEY: Well the member might well say “Rubbish.” but he is here debating a bill where National—I think that is the sound of National confessing that the Labour Party gets future planning better in this country that what National can. National said 15 years ago that the Labour Party was wrong to do this and that Dr Michael Cullen was wrong to implement this fund. Fifteen years later here they are saying yes it was a dog all right—it was a greyhound. It was a fast-running dog and it was one that got this country ahead of many other countries—many many other countries indeed. I think that is the sound of the National Party saying: “Sorry we are too focused on short-term gains and can’t see what the future looks like.” It is in fact the Labour Party that gets this right consistently time and time again. I am sure that is what the sound of that speech was.Part 1 of this bill sets up these fund investment vehicles and what the Guardians of New Zealand Superannuation can do to take some more control of those fund investment vehicles. I cannot stand today in this Chamber and talk about superannuation and vehicles without pointing out to the Committee that one of the reasons that New Zealanders are going to rely so heavily on the outcomes and the proceeds of the investment that this bill talks about is because superannuitants are going to be paying the highest level of vehicle registration under the changes that that Government is going to bring in tomorrow. Most superannuitants are going to be paying $158 for their car registration.The CHAIRPERSON (Hon Chester Borrows): Come back. Come back.SUE MORONEY: So that is why Part 1 of this bill is so important. I am going to disagree—as I quite frequently do actually—with David Bennett. When he spoke he said the reason why we have this and why we have the Superannuation Fund is all about Guardians of New Zealand Superannuation. Actually no Mr Bennett the reason why we have this fund is for people. It is so they can live in some level of dignity and respect when they retire and when they reach their older ages. It is something that I am very proud of and that the Labour Government put in place against vehement opposition from the then Opposition the National Party. But we did it because we knew that this was going to be something that would see New Zealanders looked after in their older age. The great pity of this bill is two things really: the National Government has not used this opportunity to reinstate the contributions to the New Zealand Superannuation Fund that us baby boomers are going to need in our older age and secondly it has demonstrated the chaos that National is still in—the day-to-day chaos when the National MPs on the committee recommended one course of action but the finance Minister has done them over.CHRIS HIPKINS (Labour—Rimutaka): I am happy to make a brief contribution on the New Zealand Superannuation and Retirement Income Amendment Bill. I want to respond to one or two of the comments that Chris Bishop made—the great hope of the National Party. I have to say that if he is the best debater in the National Party it has got some very tough times ahead given the lacklustre performance we saw from him this evening. Chris Bishop did understate somewhat the performance of the Cullen fund as it is colloquially known—the best sovereign wealth investment fund in the world.Let us actually talk about that. There has been a return of 19.6 percent per annum over the last 3 years. That is a fantastic rate of return that we all as New Zealanders should be proud of. That is a fantastic rate of return. But let us look at it from the beginning of the fund in 2003 when Michael Cullen set it up. Of course the National Party used all sorts of colourful language about how reckless it was for the Labour Government to be setting it up. But right the way through the entire period including through the global financial crisis the average return was 10.3 percent a year. That is a very very healthy level of return. It does show just how short-sighted the Government was in stopping making contributions to the New Zealand Superannuation Fund in response to the global financial crisis. In June 2013 the fund itself estimated that up to $10 billion had been forgone as a result of that decision.Why do we have this fund and why are we making these changes to the fund? The reason we have the fund is that we have a massive retirement boom coming and we need to prepare for it so that we have some savings set aside. This superannuation fund contrary to what some people might believe was never intended to cover the entire cost of the baby boomers’ retirement but it is designed and intended to be a contribution to that cost. It is not covering the entire cost; it is covering only a small portion of it. But the question remains: if we have not been contributing to this what is the alternative plan for paying that bill further down the track? The Government does not have one. It is happy to kick it for touch because it knows that the crunch point does not come for another 10 15 or 20 years further down the track.So how does that relate to the changes that this bill makes? The changes that the bill makes change the nature of the ways the fund can invest so that it can become a more active investor rather than a passive investor as was originally envisaged when Michael Cullen first established the fund. Why was it established as a passive investor? I guess basically Michael Cullen I am sure envisaged that he wanted the best return with the least risk. That would probably be a fair comment. But there are some good reasons why the fund would want to be investing in a different manner.The question that I have got for the Minister in the chair the Hon Paula Bennett asks whether the fact that the fund is now being given the power to be more active in the way that it manages its investments creates an opening for the fund to be investing in services where the Government itself is retrenching. So could we find for example that the Superannuation Fund is buying assets that the Government is otherwise selling? Public-private partnerships social housing—Sue Moroney: State houses.CHRIS HIPKINS: State houses. Buying up—or being given—the State houses that the National Government is trying to give away. Are the areas that the Government is exiting areas that the Superannuation Fund—Andrew Bayly: No.CHRIS HIPKINS: —could start investing in if it deemed those areas to be sufficiently profitable? One of the members over there says: “No.” How could they stop it? Bill English is actually removing the clause that would give the Minister of Finance the ability to direct what types of investments the fund could make. Therefore is there anything—this is a question for the Minister—that would prevent the fund from starting to invest in areas where the Government is retrenching? And if it can do that—and let us think back to the overall goal of the fund which is to increase New Zealand’s wealth the Government’s and the Crown’s wealth so that we have a provision here to deal with the baby boom coming—how does basically transferring assets from one arm of the Government to the other which could now happen help with that situation?So it is an open question. Is there anything to stop the Superannuation Fund the Cullen fund from now investing in those assets that the Government is selling? I am not getting any response from the Government so I am looking forward to the Minister’s contribution. She is reading intently. I am sure she is looking it up so that she can give a nice detailed answer to the questions I have been raising because there is no doubt that this fund is essential. It is required. I hope that the Government will take every step to make sure that we maximise the return out of it because we are going to need that money when the big retirement boom comes—and it is coming.Hon DAVID CUNLIFFE (Labour—New Lynn): Labour supports the New Zealand Superannuation and Retirement Income Amendment Bill. This is one of those little bills that make a fairly minor change. It provides for the Guardians of New Zealand Superannuation to be able to be exempted from liability as they take on the management of passive or active investment vehicles and it complements the portfolio investment approach so successfully undertaken by the fund to date.This bill does throw us back however on the why the what and the how of the New Zealand Superannuation Fund. Now it is commonly accepted by members across the House. This was an initiative of the previous Labour Government and the then finance Minister Dr Michael Cullen. It has been in anybody’s book a spectacular success—a spectacular success. Recent returns averaging around 20 percent per annum is unbelievable for a fund of that size. Average return since inception: 10.3 percent. Cost of Crown capital: around about 4 percent. This is an extraordinary win for every New Zealander because it means that we will be paying less in our taxes to support Kiwis in their retirement because of the prudent investments the spectacular investments that have been made in this fund.What did National do? National stopped contributing. National is such a party of short-sightedness that when times got at all tough it stole from the future to bail itself out in the present. And independent advice confirms that that bad decision has cost New Zealand taxpayers—wait for it—over $10 billion in lost profit; $10 billion. And I am taking the conservative numbers. The bottom end of the range is at least $10 billion. So here is the question members. Members across the Chamber: can any member tell me a single worse financial decision in the history of New Zealand Government? Can anybody tell me a decision by a Minister of Finance that has cost more—Iain Lees-Galloway: Scrapping the Kirk superannuation.Hon DAVID CUNLIFFE: OK I agree with you actually my two colleagues—you have topped this one. And it was Rob Muldoon—this is the worst decision since Rob Muldoon killed the last great superannuation scheme. Fortunately National did not quite kill this one; it just stunned it. But that stun gun cost $10 billion and here we are back now trying to get this back on its feet.Now we agree with this limited bill. It simply provides for the independent guardians of the fund to have a little more liability protection to cover a slightly broader range of passive and potentially active investment vehicles. Reasonably unexceptional provided that the structure of governance of the fund holds true and that is as designed by Michael Cullen: a double-blind system where the Government has a hands-off role in appointing the guardians who are then by law completely independent of Government policy so there is no way any Minister of Finance or any other Minister could possibly influence the investment decisions of the fund. Nobody told John Key because he campaigned on breaking the law. He campaigned on twisting the arms of the guardians so that they would put a certain amount in certain different asset classes. However in New Zealand—and of course we want to see more stuff going into New Zealand but that is not the point. The point was that really the Government needed a law change to do that and it did not bring it back to Parliament.Is that governance model still valid? Is it still worthy? Of course it is. Is the aim of the fund which is to smooth the cost of financing superannuation for our children and our grandchildren still valuable? Yes it is. Is the fund successful? Yes it is. It is incredibly successful: 19 percent return over the last few years 10.5 percent since inception more than double the average cost of the Government’s own borrowing. This is a spectacular success.I think this debate points us to a deeper truth: Labour does long-sighted change; National manages from day to day. So that is why the public of New Zealand say: “Oh yeah she’ll be right. Things are going OK can have that lot back again.” But whenever New Zealand is up against it whenever New Zealand has challenges to rise to New Zealanders vote for a Labour-led Government because they know that we have the far-sightedness and the insight to achieve major change for New Zealand. We have done it in foreign policy with the anti-apartheid movement and the antinuclear movement. We have done it by carving out an independent role in foreign affairs which has now seen us appointed to the Security Council. We have seen it—Chris Bishop: Under a National-led Government.Hon DAVID CUNLIFFE: Oh OK. Those members say it happened under a National Government; so it did with the Labour Party’s support. But we would not be there if we were not seen as an honest broker and the reason we are there is because Labour Governments from Kirk onwards have championed our independence. But back to the bill Mr Chair.The CHAIRPERSON (Hon Chester Borrows): Oh thank you.Hon DAVID CUNLIFFE: Thank you. I knew you were going to drag me back so I thought I would get in first Mr Chair.The CHAIRPERSON (Hon Chester Borrows): I was distracted by the humour.Hon DAVID CUNLIFFE: So this superannuation bill tells us something very very important about Labour-led Governments: we do change. We do major change that results in New Zealand being better off. What is the problem at the moment? Those clowns on the Government benches have been happy to follow along behind dairy prices the earthquake rebuild and a housing bubble and they think that is an economic strategy. That makes about as much sense as not paying into the New Zealand Superannuation Fund. It is policy that reinforces old advantage and does nothing to create new advantage and the smart jobs of the future.So we support this bill because this allows the fund to play a greater role in the smart jobs of the future by investing actively in New Zealand businesses. But if the Government is going to do this why will it not touch the tax system? Why will it not touch the banking rules so that we get more capital where it will do the most good creating jobs around our regions? Why is it just reinforcing traditional agriculture and giving foreign banks a free rein? Why will it not address the core problems that we all know are hamstringing the New Zealand economy? Well it does not have either the vision or the courage to get us there. And New Zealanders as they see Greece up against the wall as they see dairy prices going down the toilet as they see Christchurch starting to stutter and as they see the Auckland property bubble ready to burst are rapidly coming to the conclusion—the feedback we are getting is—that it is time for a change. The tipping point is coming—the tipping point is coming. The tipping point is coming and the same far-sighted courage that brought a 20 percent return to the New Zealand Superannuation Fund will be available to future generations of New Zealanders because the same team that brought New Zealand the Superannuation Fund can bring them the next generation of positive policies for the future.ALASTAIR SCOTT (National—Wairarapa): I would like to speak to the bill for a few minutes—just for a few minutes. It is pleasing to see thatin supporting the bill we are generally in agreement. I would also like to pick up a point that Mr Tabuteau talked about and to clarify—Hon Members: Professor.ALASTAIR SCOTT: —“Professor” Tabuteau—whether this bill does anything to change the activity or passiveness of any investment that the Guardians of New Zealand Superannuation make. The way I read this bill there is no change. This fund investment vehicle does not allow any change to the activity of investment or to the type of investment that the Guardians of New Zealand Superannuation are able to take. If you think that the power to grant a power of attorney is more activity if you think that the power to appoint an investment manager is a more active fund or if you think that the power to appoint a custodian is increasing the activity of the fund then you are wrong. This does not increase the active management that section 59 has and will continue to have to guide the Guardians of New Zealand Superannuation.I would like to discuss and clarify a couple of issues around the reasons why the Minister of Finance should not be involved and will not be involved in the interference of the management of this trust. It is interesting that Labour Opposition members particularly talk about Dr Cullen’s plan to have totally independent governance of this fund and I totally support that notion but then I am surprised that the Labour guys want interference from the Minister of Finance. As soon as you have got that foot in the door how is a Minister of Finance to react if—assuming that was he given the authority—as an example he or she is asked to approve an investment and the investment goes bad? Whose fault is it? Is it the fault of the Guardians of New Zealand Superannuation or of the Minister of Finance? If the investment goes well who takes the credit? Is it the Minister of Finance who approved this investment which was not passive or is it again the Guardians of New Zealand Superannuation who should take the credit?This fund as has been noted already is performing outstandingly. It is the top State-funded superannuation fund in the past 5 years. If we were to allow Mr Robertson or Mr Nash or Dr Parker as a potential Minister of Finance what would we have? What would we see? What investments would be approved by these people? Well for a start I can tell you that there would be a hell of a lot more going straight into their $100000 house project because these guys have talked about investing more into the New Zealand Exchange. That is not the purpose of this fund. The purpose of this fund is to have a diversified global fund across different equity markets across different countries and across different instruments without interference from any Minister of Finance and that is why this Supplementary Order Paper which removes the suggestion given by the Finance and Expenditure Committee must be ruled out. Thank you.GRANT ROBERTSON (Labour—Wellington Central): Thank you very much Mr Chair for giving me the call. I want to help out my colleague Mr Scott and I think the best way of being able to do that is to work through a little basic statutory interpretation exercise for the member. I want to refer him—Chris Bishop: Here we go. Grant the lawyer. Grant Robertson QC.GRANT ROBERTSON: Thank you very much. That sounds like a good name for a TV programme. I think I may do that—reality TV. Clause 6 of the bill talks about section 59 being amended and what is really important is what section 59 of the Act currently does.Hon David Parker: “No controlling interests”.GRANT ROBERTSON: It says that the Guardians of New Zealand Superannuation of the fund can have “no controlling interests”. That is the whole thing we have been discussing tonight: the fact that the fund when it was established allowed for this complete arms-length relationship. The Guardians of New Zealand Superannuation was there to have the overall control of the fund and what a good job it has done of that.But if we look at what clause 6 is it is a new subsection (5)(a) and it reads: “This section—(a) does not apply to a Fund investment vehicle referred to in section 59A …”. So it is changing things Mr Scott. That is the point of the law. Why would the law be proposed if we were not changing anything?Hon Member: Wasting our time.GRANT ROBERTSON: Well it could be. It would not be a big surprise if the National Party came here to waste our time on a piece of legislation but actually this one clearly says it does not.And then section 59A goes on to establish the fund investment vehicles and describe what they can do: “All or any of the investments of the Fund may be held in an entity that is formed”—for Mr Scott—“or controlled by the Guardians for the purpose of holding facilitating or managing the investments of the Fund (a Fund investment vehicle).” So something new is being created here. Something new that is different and requires us to amend the section of the law that says that the Guardians of New Zealand Superannuation have no controlling interest—Hon David Parker: So they can have it.GRANT ROBERTSON: —which means it can have controlling interests. It goes on which is why sections 59A(1A) and (1B) were added by the Finance and Expenditure Committee.I want to refer members to the words the committee used in its report. The committee considered these amendments would “provide a suitable balance between allowing the Guardians access to new vehicles to invest the Fund efficiently and effectively as it grows and complying with the Act’s intention that the Guardians not be involved in the business operations of the entities in which the Fund is invested.”The select committee “considers it desirable to reinforce the intention that FIVs be passive holding entities but we also accept that considerations of diversification and risk management might make some classes of asset a desirable investment for the Fund so the question of effective control of an operating entity might arise.”So to help reassure the member on one count subsection (1B) of section 59A which the Minister is now seeking to remove talks about the Minister’s approval being required for classes of investments or entities not the specific investments themselves not the specific entity that may be created but classes of them. It is to give a little bit of reassurance that the fund is not going off in a direction that taxpayers would be uncomfortable with but it is not about the Minister specifying a specific investment or controlling whether or not a specific investment would be made.That is exactly why those words of the committee that I have read out were unanimously endorsed by the committee because this does fundamentally change an original premise of the bill.Chris Bishop: It does not.GRANT ROBERTSON: Yes it does—of the Act. Yes it does Mr Bishop. Why would section 59 be changed? Why would it be changed if it did not do that? Why would it say: “This section does not apply to a Fund investment vehicle …”? Because the Guardians of New Zealand Superannuation came to the select committee and said: “This is now a mature fund. This is now a fund that we believe can do more to invest in New Zealand.” I think one of the things they said when they first came to us was the possibility of using these fund investment vehicles for investing entities for real property assets e.g. timber farming and investment property assets.Andrew Bayly: You are so confused.GRANT ROBERTSON: I am confused? Mr Bayly says I am confused by this law. Mr Bayly should turn round and ask Alistair Scott whether or not anything changes because he got up and assured the Committee that nothing is changing—nothing is changing here; we should be completely reassured. Well what is the point then? Mr Bayly tell us what the point is.CLAYTON MITCHELL (NZ First): I rise on behalf of New Zealand First to take a short call in support of this New Zealand Superannuation and Retirement Income Amendment Bill. To be fair it is not something that I was part of in the select committee but it has taken only 5 minutes for me to pick up on the fact that this makes common sense.David Bennett: Sit down Clayton.CLAYTON MITCHELL: To be honest Mr Bennett you remind me of the theme song from Team America: World Police—“I am so lonely!”—sitting over there so far away from all of your team mates. You are not making a lot of sense and like Alistair Scott and Mr Bayly you do not make a lot of sense either. In actual fact I am supporting your bill so what are you yelling at me for anyway? You are a very lonely and confused man I have to say.To be fair there is a serious need and some investment required to get the right people looking after the hard-earned money that we are investing for our future. Many of us put aside 4 percent to 8 percent of our money—sometimes more than that—to go into the Cullen fund which was created by Dr Michael Cullen to look after the future of New Zealanders. I have to say that this bill uses a language that in my opinion is very easy to grasp although there is an ambiguous term in clause 4—amending section 38—which says the explicit purpose is that “(2) The fund is not an entity separate from the Crown.” You have to say that over in your head a couple of times. That has to be probably the most ambiguous part of the whole bill. What it is actually trying to say is that that fund is very much part of the Crown and a very very important part of the future of New Zealand. So we support that as well.The bill talks about FIVs and other acronyms that we all love and hate back home. If anybody is watching and I am sure that many of you are an FIV is a fund investment vehicle. That is just a pretty way of looking at the way the Guardians of New Zealand Superannuation the people looking after those funds can get better returns for those hard-earned Kiwi dollars going into investments. When we heard Russel Norman speak about this initially when it was first discussed at the first reading he talked about his concerns about the Government’s interference in where those investments were going to go. To be honest the reality is that he does not want it to go into exploration or gas or mining but the reality is that we should be looking seriously at putting it where we can get the best investments for the future of New Zealanders. We are getting some fantastic returns on investment—around the 19 percent mark. That is absolutely fantastic and we hope that continues. Obviously with the Greece debacle at the moment interest rates and share prices have dropped along with our Kiwi dollar and I hope that the Kiwi dollar can come down some more yet.The purpose of the fund is a fund protection and to return as much as we can to those superannuitants. One of the things in this bill that I commend the most is the Supplementary Order Paper that takes away the Minister’s ability to interfere with that fund and to decide when or whether it is a good investment or not. In reality you need to put a firewall up to create some separation from those Guardians of New Zealand Superannuation—those investors; the people who are looking after New Zealanders’ hard-earned money and are putting it in the right location. So I commend the Minister for putting forward Supplementary Order Paper 89 deleting that subsection completely. This is a bill that we would like to see progress. We think that it sits well for the best part of all New Zealanders despite the confusing remarks we have had from over on the other side of the Chamber.Ron Mark: They don’t understand their own bill.CLAYTON MITCHELL: They do not understand their own bill and clearly they have not read it. To be fair it does make sense and those people sitting at home can rest assured that their investments are being looked after and are getting very good returns. As Porky Pig famously said one day: “That’s all folks.”PAUL FOSTER-BELL (National): I raise a point of order Mr Chairperson. I did not want to interrupt the member Clayton Mitchell while he was speaking. The member referred to viewers at home. I am still a relatively new member but I believe that that is out of order and I just wanted to bring that to your attention.The CHAIRPERSON (Lindsay Tisch): No. I have often heard members talking about drive time when listeners are driving home in traffic in places like Auckland. I have never heard that that is out of order. It is certainly not a ruling that I have made in the past and I am not going to uphold it.IAIN LEES-GALLOWAY (Labour—Palmerston North): It is a wonderful opportunity to speak to the Committee and to those at home listening on their crystal sets to the debate this evening. I think we might have got to the bottom of why the Minister of Finance overruled the Finance and Expenditure Committee and the National MPs on the select committee. I think he thinks the National MPs’ scrutiny of this bill was a bit dodgy. We have heard from Alistair Scott that the bill basically does very little. I was not on the select committee. This is not my area of expertise but after a 30-second conversation with my colleague David Parker I think I understand clause 6 and clause 7 considerably better than Alistair Scott does. It is clear to me that clause 6 does introduce a new subsection stating that section 59 which says that the fund can hold no controlling interests does not apply to the fund investment vehicles referred to in new section 59A and those are new fund investment vehicles that are created by this legislation. That appears to me as a layman in these terms as quite a significant change to the original legislation. So we have been wondering tonight why it is that after a lengthy period of scrutiny by a select committee which I assume has a majority of National MPs on it—Grant Robertson: It does.IAIN LEES-GALLOWAY: —it does I am told by my colleague—and after the committee unanimously deciding to include new section 59A(1A) and (1B) in clause 7 to give the Minister oversight in certain circumstances the Minister has come in and said not only that he does not agree with the position the National MPs took but that these bills after the select committee has considered them have to go back to the caucus. The National caucus actually said that this was OK when it scrutinised it closely. And I know it scrutinises these bills closely because it certainly looked at the Health and Safety Reform Bill very closely. In fact Mr Scott and his colleague Mr Bayly must be getting a little sick of being overruled by their caucus and their Minister with the work they do at the select committee then being overruled by their caucus colleagues because they have been looking at the Health and Safety Reform Bill as well. We know that the caucuses look at them closely and they would have looked at this bill closely. They agreed with the select committee that new sections 59A(1A) and (1B) should be included in the bill.So where was the Minister for that conversation? Surely that would have been the point at which the Minister if he had concerns should have raised those concerns with his caucus colleagues and sent the National MPs back to the select committee with a flea in their ear. But no obviously the left hand did not know what the right hand was up to which seems to be the usual state of affairs for the National Party at the moment and it was only after the bill was reported back to the House that the Minister decided to overrule his own colleagues on the select committee.We know that the National Party does not have an astonishingly good track record on these matters. Chris Bishop raised some issues around this. He said there was a time when the National Party MPs did not really agree with the Cullen fund but they have grown to love it. In the same way they did not agree with KiwiSaver but they have grown to love that as well. They did not agree with interest-free student loans and they did not agree with paid parental leave—all the ideas that were generated by the Labour Government alongside the Superannuation Fund to secure the financial future of New Zealanders. They were all things that the National Party opposed but that it now says it agree with.I think that just underlines the fact that actually the Labour Party is the party of ideas the party of the future and the party that thinks about the financial security and the future of the people and the citizens of New Zealand and the National Party is just the party of “No”. It is no to superannuation no to KiwiSaver and no to paid parental leave. It is the party that repeatedly says no to the new ideas. But that is OK because being conservatives those MPs eventually come round to the idea and about a decade later they realise that actually Labour was right all along and not just on superannuation and not just on the matters addressed in this bill. Maybe in 10 years’ time the National MPs will look back on tonight and say: “You know what? Labour was right and we were wrong.” Do not do it to yourselves National. Get on the right side of history now and vote against that Supplementary Order Paper.ANDREW BAYLY (National—Hunua): What a fascinating night. I have sat here and listened intently. I have listened to lawyers. I have listened to accountants. I have listened to political people and I am just staggered that people cannot understand a relatively simple piece of legislation. Let us just go back to first principles. This bill is obviously dealing with a good piece of what has gone on with the New Zealand Superannuation Fund set up by Dr Michael Cullen as we all know. It seeks to address superannuation for the future and to have a forward fund to be able to pay for it. We all know that it was set up in 2003 and has achieved outstanding results but what I want to remind you about are the two key underlying principles that Dr Cullen had for the Superannuation Fund. One was that the fund was going to grow to a size and we wanted to make sure that it did not have control of markets in New Zealand. To put that in context we have now got a fund worth $29 billion—Grant Robertson: Could have been more.ANDREW BAYLY: —and we know what the New Zealand Exchange is worth do we not Mr Robertson? It is worth about $100 billion. So at roughly 29 percent—if we applied it all to the New Zealand Exchange—it would mean we would dominate the New Zealand Exchange. So quite rightly we put into place some clauses to make sure that the Superannuation Fund could not control direct investments—right—other than real property.The second thing is we wanted to make sure it was free from political interference right? Part 1 of the bill deals with three key issues. Let us just deal with the first one which is about permitting fund investment vehicles as an appropriate investment vehicle. It is interesting right? I do not think that many people actually understand what they are. They are actually a very common vehicle for fund managers particularly if you use a “fund of funds” approach. I am sure many of you know what that means but for a large fund like the New Zealand Superannuation Fund you will use professional fund managers to manage certain assets.What this bill is doing after all those years since the fund was set up in 2003 is trying to modernise the situation at the behest of the Guardians of New Zealand Superannuation. These usual investment vehicles called fund investment vehicles are now going to be established right? The change permits them to be used to hold non-controlling equity stakes in direct equities or investment funds and secondly to hold stakes or to have influence over managed funds—that example I gave you before—that subsequently invest in equity or debt instruments like Treasury stock Government bonds and commercial bills.The third thing it permits is to hold investments in real property. This is where there is that little nuance I spoke about before—for instance the New Zealand Superannuation Fund does hold real property in the form of forests and stuff like that but the Act precludes it from holding directly the shares or having control over the entire equities like a company. So there is a difference between having control of the shares of a company as opposed to having control of the real property like forests land and all those other good things that the Superannuation Fund is entitled to invest in and should be investing in. So this deals with this.The other thing I heard early this evening was all about the passive fund and active fund. Well can I just correct you on that fault. This bill does not enable it to particularly become an active fund. The purpose of this bill does not address that issue. This is about putting an intermediary between the New Zealand Superannuation Fund managed by the guardians and what it has ultimately invested in right? So we are all on the same page hopefully on that aspect. Related to that at present the guardians cannot delegate or grant powers of attorney they cannot appoint an investment manager and they cannot appoint a custodian. I have got to say to you that it is absolutely unusual for funds not to be able to do this so what this bill does again is to provide normal operating rules for a fund such as a massive successful fund like the New Zealand Superannuation Fund.The second thing that Part 1 deals with is protecting the guardians against ultra vires acts that they may undertake. This means that if for instance the guardians through the fund manager enter into deeds contracts or agreements and all the normal things that you expect them to do and for some reason those acts are deemed to be ultra vires this part deals with this under new section 49A in clause 5 to permit those activities and transactions to take place and not be subject to a court challenge provided—and this is the overriding thing—that those transactions were all entered into in the normal course of events and there was nothing unusual about the extent of the activities that were undertaken.The third thing that Part 1 does is to confirm that the fund investment vehicles are not subject to the Official Information Act 1982 and the Ombudsmen Act 1975. Again we have heard a bit about this earlier on from the Opposition. Just to be clear what this bill provides for is that the fund investment vehicles are not subject to the scrutiny of both the Ombudsman and the Official Information Act but—but—the guardians still are.Again what we have got here is a comprehensive set of measures that will mean that these fund investment vehicles can be put in place like virtually any other fund in the world and that they can invest in a range of equities debt instruments and real property albeit they cannot control the equities that they hold because as I noted before they would have a huge dominant effect. Just to give you the context in that final point if you look at the range of New Zealand investments that the New Zealand Superannuation Fund is currently invested in the highest investment that it has got is Z Energy at 20 percent and Metlifecare also at 20 percent. All the rest are at about 10 percent and 8 percent of the New Zealand stock market.I think that this is a very good piece of legislation. It brings the New Zealand Superannuation Fund up into modern standards of practice and for that reason I commend it to the Committee.Hon DAVID PARKER (Labour): I just want to respond to the points that Mr Bayly made and the point that the prior speaker—I am sorry I have just got memory loss—Andrew Bayly: Mr Scott.Hon DAVID PARKER:—Mr Scott made in respect of controlling interests. I agree that the effect of clause 6 of the New Zealand Superannuation and Retirement Income Amendment Bill which adds to section 59 the new subclause (5) says that at the first level if you have got a fund investment vehicle that is wholly owned by the guardians then that in itself is allowed despite the fact that it is a controlling interest in the fund investment vehicle. But then it says—you look through that—it does not allow the guardians to have a controlling interest in respect of the underlying investment that is made by the fund investment vehicle. I know that; I understand that. But the point that we are making on this side is that through these vehicles you are getting closer to the point where you are going to turn the fund manager from a passive investor into an active investor. It might not have a controlling interest but it is getting closer in these new vehicles that are being allowed to actually moving from being a passive investor to an active investor.Across both sides of the House that was why the amendment was proposed by the Finance and Expenditure Committee—to reinforce that although we are going to allow these fund investment vehicles we were not going to encourage the guardians to move from a passive investment role to an active investment role. So we said therefore in respect of the power being exercised by the guardians ministerial approval would be given or withheld in respect of some of those classes of investment. That was the reason and so we are still waiting to have a contribution from the Minister in the chair the Minister of Education as to whether the Minister thinks that the select committee was wrong to say that this was actually moving along the continuum allowing more active investment than has been the case to date. That is a different issue from controlling interests. We still have not heard from members from the other side as to why it was wrong to actually have that greater level of control exercised in respect of investments that are not passive.The question was put that the amendments set out on Supplementary Order Paper 89 in the name of the Hon Bill English to Part 1 be agreed to.Amendments agreed to.A party vote was called for on the question That Part 1 as amended be agreed to.Ayes 75New Zealand National 59; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 46New Zealand Labour 32; Green Party 14.Part 1 as amended agreed to.Part 2 Amendments to Income Tax Act 2007GRANT ROBERTSON (Labour—Wellington Central): There is so much competition for the call Mr Chair! Part 2 of the bill relates largely to amendments to the Income Tax Act that are consequential on the establishment of fund investment vehicles under new section 59A in clause 7. It is a relatively non-controversial part of the bill and one that the Labour Party will support.A couple of points arise when we look at section HR 4B which is being substituted by clause 13 of the bill around the way in which the activities of the New Zealand Superannuation Fund are considered within the Income Tax Act. What it really does raise when we look at that—and it is a relatively straightforward application of those rules to the way in which these funds will be created. It is important for the sake of the transparency of the fund that fund investment vehicles are now specifically noted because they have not existed before and that all activities that the superannuation fund undertakes are currently noted within the Income Tax Act. So it is a sensible and transparent way of establishing that these are here. But it does raise the issue of the question of the payment of tax by the Superannuation Fund.We have had some conversations in the Committee tonight about what size the Superannuation Fund might have been had the Government continued to invest in it and make contributions to it. Mr Bishop in one of his earlier contributions was bemoaning what stupidity it would be to borrow money in order to invest in a fund such as this. I would perhaps put the question to Mr Bishop as to what he would do if offered the prospect of I do not know a return of around 20 percent when he could borrow money at—oh I do not know—around 3 percent or 4 percent. What would he do in response to that? That would be I would have thought—from a layperson’s point of view—quite an important and useful thing to be able to do because of the ability of the Crown particularly to borrow at such low rates and because of the impressive performance of the fund thus far.The way that this relates to this part of the bill is that the Superannuation Fund is the biggest taxpayer in the country. That is right I think—is it not Mr Bishop? It is the biggest taxpayer in the country. Although we can concern ourselves with the amount of money that the fund might have earned for itself as it went through this it is also a question of the amount of tax that it might have paid had contributions been restored. There is a debate of course about whether or not the Superannuation Fund should be a payer of tax in that but certainly if we think about the levels of forgone revenue that the fund would have got we are talking about billions of dollars of tax here potentially not being paid as provided for under Part 2 of this bill. It is just another reason to contemplate the folly of this Government in not having continued to build this fund.We have already heard in this Chamber tonight that the history of National’s interaction with the Superannuation Fund is a very sorry one because it played politics with it when it first arrived in Parliament. Michael Cullen’s whole mission as the Minister of Finance was to help establish long-term supports for the core Government provisions that were needed. You know that is why he left KiwiSaver to this House as a legacy. That is why he left the Superannuation Fund to this House as a legacy because he could foresee that we needed a stronger base for an ageing population. We needed a stronger base to ensure that we had our own money which we could invest. We have heard the story many times in this Chamber of what would have happened if the then National Government had not trashed the Kirk fund. Around $285 billion worth of investment potential in our country was taken away in an election bribe many many years ago. So National’s attitude has been poor around this fund.We have now got a situation where we have seen losses. We have had a number of figures thrown around the Chamber tonight but more than $10 billion—quite a bit more than $10 billion actually—could have been added to the fund that was not added to the fund because the National Government made a political decision. It decided in its words to “borrow” money for tax cuts. It decided that was the priority rather than making an investment in a fund that will pay out in the future for superannuation and rather than making an investment—Andrew Bayly: The tax cuts were fiscally neutral.GRANT ROBERTSON: “Fiscally neutral”! Andrew Bayly says that the tax cuts were fiscally neutral. He is still working off the 2010 talking points. They were not fiscally neutral I can let Mr Bayly know. That is not what happened. They were tax cuts that overwhelmingly benefited those on the highest incomes. They were given at a time when the Government told us there was no money to do anything. It had to cut back on all kinds of measures but there was money to do that. But the point I was making to Mr Bayly wasthat actually if you apply the rhetoric of not borrowing money for the Superannuation Fund you cannot then suddenly dispense with that rhetoric for what the Government did do with the money that it had which was to give tax cuts.But the point that I am bringing back to Part 2 of the bill—which we do support—is to say that this is the part of the bill that relates to the interactions with the Income Tax Act. This fund had the National Government actually committed to making the contributions it could have made would have been paying to the Crown I would venture to suggest at least $1 billion in tax that has now been forgone. That just typifies the attitude of the National Government to this fund.CHRIS BISHOP (National): I just want to take a short call to respond to Mr Robertson’s remarks. This deals with Part 2 of the bill which of course is clauses 10 to 14 dealing primarily with the Income Tax Act 2007. I just want to rebut the idea—the proposition that Mr Robertson made—that basically if someone can borrow at 3 percent or 4 percent the Crown’s cost of capital and invest and make a 20 percent return then it is lunacy not to do so OK? On the face of it that is true. But let us take off the rose-tinted rear-vision mirror glasses and just think the other way which is that we had done that—that somebody had gone out and borrowed at 3 percent or 4 percent or maybe even higher than that and had lost 20 percent; not gained 20 percent not improved the asset value by 20 percent but actually lost. That is a conceivable scenario at the time of the global financial crisis when global equities were tanking. It is highly conceivable that the Crown would have lost money. So it is all very well 8 years on to look back and say “Well we would have made 10 percent. We would have made this. If only the dastardly National Government had not done that.”—that is all very well. I can understand why the Labour Party wants to run that line as a political attack except for the fact that it is equally plausible that the Crown and the Government would have lost 20 percent or even moreperhaps.You will remember that this was at a time when the global economy was in total turmoil. Global equities were tanking and to say that the New Zealand Government should have borrowed money at a time of great global uncertainty in order to invest in risky assets that were extremely volatile is naive. Why do we know that what we did as a Government was the right thing? Well Michael Cullen the Svengali of the left the social democratic paramount chief when he set up the New Zealand Superannuation Fund in 2002 said that it was only going to be invested in by the Crown at times of surpluses. It was his attempt to squirrel away the money so that the National Party at the time would not spend it on tax cuts. That is what he said. Right? We can argue about whether or not that was right or wrong but what he said was that it was to be usedonly at a time when we had surpluses not when the Crown was borrowing to invest in the share market. So the very man whom the Labour Party has spent the last 2 hours lauding and to whom it continues to bend the knee all the time—go down to the Auckland Fabian association to hear from him about how Labour needs to reclaim the political momentum and all of the advice that he gives—that guy the guy who set up the fund that the Labour Party has benevolently named after him at least in the vernacular he himself does not support what the Labour Party is advocating now.Actually the Labour Party has form on this because at some point the Labour Party members had a road to Princes Street conversion and they decided that what National had done with the Superannuation Fund was a good idea. It was David Shearer in 2012 who turned up at the Wellington Employers’ Chamber of Commerce—and I think Grant Robertson was deputy then; he may not have been; at least he was a senior strategist inside the leadership team—and he said: “We’ve decided that until we are back in surplus any new spending will have to be paid for out of existing Budget provisions new revenue or by reprioritising.” That was David Shearer in 2012 when he was leader of the Labour Party. I know that they have changed their position now and that they have gone back to the typical left-wing orthodoxy that was the case under Phil Goff that was the case under David Cunliffe and that presumably is the case under Andrew Little—and quite possibly will be the case under the new leader of the Labour Party Carmel Sepuloni. I know her time is coming. She is making a run from the second benches from the whip position and the sterling work that she is doing in social development railing against vouchers social development and the National Government’s investment approach of trying to get people back into work. I know that she is making a run but anyway—the Chair is asking me to shorten it up—I just want to make the point that the Labour Party members are all over the place on this issue.Actually when it comes to superannuation policy more generally they are in the middle of a review. Grant Robertson is rampaging around the country with the amusingly titled Future of Work Commission and we have got Andrew Little musing about raising the superannuation age or maybe even means-testing it. David Clark just about 1½ hours previously in the debate on a previous part of this bill—Dr DAVID CLARK (Labour—Dunedin North): Thank you Mr Chair—oh what a relief! Well the future of work—I was wondering where that member Chris Bishop was going with that. The Future of Work Commission I am happy to inform the member is proving to be a great boon to our engagement with the public. It is very popular. Everybody has a view on the future of work. I suspect that member was about to expound some more had he had the time to do it because actually everyone has a view on where work is going. Work affects everybody and of course no matter where you come from politically it is something that people want to engage on. So I thank that member for raising that—The CHAIRPERSON (Lindsay Tisch): Come back.Dr DAVID CLARK: —but the Chair rightly draws me back to the bill at hand and I am only too happy to speak to Part 2 of the New Zealand Superannuation and Retirement Income Amendment Bill if I could only jolly find the thing because I am told it contains a number of amendments to the Income Tax Act. If somebody does have a copy of the bill I had a couple of things I wanted to say but I wanted to jog my mind just to see what they were. Thank you very much colleague. I was distracted by that member opposite—and laugh well he might—but I was distracted by his comments on the future of work which of course are entirely relevant although not to this debate.Amendments to the Income Tax Act—ah yes. The amendments that could have been in here but are not are the ones that I wanted to look at. We know that there are many things as I said in my earlier contribution on Part 1 that could have been done on retirement savings that this Government has not done and right here is a paucity of vision again in Part 2 because what we have here are the minutiae of how this bill affects the Income Tax Act. There are sensible things in here—do not get me wrong. There are sensible things in here that we should be doing which we on this side agreed to. Of course we agreed to all of it in select committee as did the members opposite who are now backtracking on one or two matters. But in here we do not see for example provisions relating to the Income Tax Act in respect of resuming contributions to the fund because the Government has not done it. It has not done it. It has forgone $10 billion in revenue—$10 billion it would have got had it resumed those payments—but here we do not see any kinds of amendments in that respect. We do not see any amendments that plan for a future where we have secure retirement savings because it is not the Government’s priority and this is what we are faced with over and over again in this House.We do see the fund investment vehicles affecting the Income Tax Act and that is recorded here in subsection (3) of section HR 4B in clause 13 of Part 2—the various changes that are being made there—and they are sensible changes. Of course—Andrew Bayly: What changes are those?Dr DAVID CLARK: The member opposite asks what those changes are and I invite him to read the bill right here. They are right here in black and white. It is a very short bill and I invite the member to read it. He is welcome to make a speech if he feels passionately about these technical amendments but the broader point must be made that we are not arguing about the resumption of those payments to the Superannuation Fund which would have seen New Zealand so much better off.It would see us in so much better a position had Government members not been so short-sightedly focusing on borrowing instead for tax cuts—borrowing and borrowing. It is a Government that has borrowed more money than Muldoon opposite there. I see those members hanging their heads. They have gone quiet and well they might. They have failed to resume these payments which would have increased the savings available to future generations and that is because they are failing to have a plan for the future. On that side of the Chamber they are failing to plan for the future. We on this side would have liked to see some more dramatic changes in this part of the bill that reflected the resumption of savings to contribute to the most successful scheme in the world—we are told one of the best schemes in the world if not the best scheme in the world. The Cullen fund the one that Bill English called a dog that has been hailed from Antarctica to Zimbabwe is a superb fund and something that does the job that we would hope it to do if they would only let it.Here in this bill—as I said in my previous contribution we do support the overall intention but we note again that it lacks the broad vision. The Government members lack the plan they are not making the big steps that they ought to be making and that is why we see in this part of the bill no big changes in respect of resumption of those payments or any tax implications that might be coming from that. Thank you.ALASTAIR SCOTT (National—Wairarapa): Part 2 of this bill clarifies a few issues around the tax status of the fund investment vehicles but I would also like to comment on the comments made by the previous speaker David Clark regarding a guy—well he is talking about a guy I know indirectly. His name is Harry—“Harry Hindsight”. He is the most famous trader on the planet. He is a guy who was around when I was trading on the markets and we always thought he was such a great guy because he just got it right every time.Unfortunately “Harry Hindsight” does not exist and I ask the member: “How would you have reacted? In hindsight would you have sold the Shanghai Stock Exchange Index in the last 10 days?”. Well yes you would have because it has dropped 22 percent in the last couple of weeks. In hindsight I would not have bought that Shanghai Stock Exchange Index and this is the issue—the rose-tinted spectacles that the Opposition members see through.Borrowing and investing is what is known as leveraging your position and that increases the risk for the investor to something that could wipe you out—completely wipe you out. So imagine if you have got a 20 percent deposit on something and you buy it. You are up you have leveraged 80 percent and you have a movement that we saw in the last week on the Shanghai Stock Exchange and you are out of business. That is why—The CHAIRPERSON (Lindsay Tisch): Come back.ALASTAIR SCOTT: Thank you Mr Chair. That is why you do not borrow for investing in something that is a risky asset and that is why we have not borrowed to continue the Cullen fund through times when the funds were simply not available.STUART NASH (Labour—Napier): “Harry Hindsight” is always right. There is absolutely no doubt about that but even better than “Harry Hindsight” is people admitting when they have made mistakes. Not once has anyone on that side of the Chamber stood up and said: “Yes you’re right. We should have put money back into this because it has earned 18 percent.” Since the global financial crisis it has been one of the best performing funds in the world actually. The New Zealand Superannuation Fund does not have to consider whether it is going to sell or buy the Shanghai Stock Exchange and “Harry Hindsight” has nothing to do with reality.The reality of the situation is that this is—Alastair Scott: It absolutely does. It is absolutely invested in the Shanghai exchange.STUART NASH: Let me outline the situation we have got at the moment. First of all superannuation is going to become unaffordable. We all know this. The second point is that Michael Cullen set up a fund to mitigate the risk to the Government finances around an unaffordable superannuation burden. Thirdly it has billions of dollars in it at the moment. Fourthly this National Government—and Bill English admitted this—stopped contributions because he wanted to give tax cuts to the people of New Zealand because that is what he promised. He did not have the wherewithal to say: “I made a mistake. We need to plan for our future. We need to plan for the future.” The fifth thing is we are still in a really bad position in terms of an affordable superannuation fund. Alastair you must know this. You were a trader. You know how these markets work. You talk about leveraging. This is all about managing risk.If I ask the question: “If we look at the risk 10 12 15 years out of a massive unaffordable burden on the taxpayer or the risk of breaking an election promise and not giving money back where do you think the New Zealand public would have sat?”. I firmly believe that they would have said: “We want certainty in our future. We want certainty in the future.” The Prime Minister could have managed that risk but he did not. He chose not to take that risk at all and as a consequence of this short-term thinking we have a superannuation fund that could be worth maybe $15 billion or $20 billion more. The Kirk superannuation fund which I have heard members on this side of the Chamber talk about would be worth $240 billion now. That is just predicated on an average rate of return from an average year. It could well be worth a hell of a lot more. So this is the difference between that side of the Chamber and this side. We like to plan for the future because we know “Harry Hindsight” is always right but we do not want to second-guess “Harry Hindsight”. We want to ensure that in fact when we look back we can say that we did what was right and this is the right thing to do.I come to Part 2 of the bill which is the part we are talking about. It is quite technical. But what it does do is it amends sections of the Income Tax Act 2007 so that these investment vehicles or companies in which an interest is held by the Guardians of New Zealand Superannuation will not be subject to exemption for public authorities. There are a number of clauses in Part 2 that are actually quite technical. We have been through them to a certain extent. If we were to get really technical I think it would send everyone to sleep not just my colleagues who were yawning but even those who are unfortunate enough to have to watch this on television. But it deals with things like activities relating to the Superannuation Fund itself. It deals with amendments to the Income Tax Act which cut to the very essence of the Superannuation Fund. It talks about when the sections apply and how it is going to deal with these. It talks about the activities of the Crown relating to the fund. We have done that to death when we have talked about the rights of the Ministers and the Crown to intervene—when they should and when they should not and why they would or would not etc. We have also talked about fund investment vehicles. This is about the consolidation rules continuity provisions and other rules relating to groups of companies that apply to the Crown as owner of the funds when an investment fund vehicle is referred to etc.You have heard members on this side of the Chamber say that this is actually an important piece of legislation. You have also heard them say that we actually supported Part 2 when it went through the select committee. You had no argument from us there. Where you do have an argument from us where you do have a massive bone of contention is how we manage the fund what we do with it how far we look out and the sort of expectation we create for New Zealanders who are now looking forward and asking “What does the future look like? Where am I going to be? Am I actually going to be entitled to superannuation?” which has been the fundamental right of Kiwis ever since it was introduced by the first Labour Government.Hon DAVID PARKER (Labour): I want an assurance from the Minister in the chair the Hon Hekia Parata that Part 2 is not going to effect a change to the principle that the fund should pay tax. It should pay tax like any other investor despite the fact that it is Government-owned. That is the underlying principle that we currently have and that is the principle that should continue. From time to time we hear claims—and I have even heard people who are very close to the Superannuation Fund questioning whether it should pay tax. The reason that it should pay tax is that otherwise it will be advantaged relative to other investors in the New Zealand market and it would also be encouraged to weight its investments to investments in New Zealand where it would have a tax advantage on those investments investing in New Zealand because it would not have to pay tax on those investments compared with investing overseas. That would cause it to weight its investments more into New Zealand than overseas for the wrong reasons.I want to have an assurance from the Minister in the chair that these amendments to the Income Tax Act 2007 and the amendments to sections CW 38 and CX 55 of that Act made by Part 2 of this bill do not affect the current status quo which is that the Superannuation Fund should pay tax as other taxpayers do. For some people that is counter-intuitive because it is a Government entity paying tax which decreases the amount that is left in the Superannuation Fund for the meeting of future superannuation and means more going into the Crown coffers because it is paying tax. But none the less I think that is an important point in principle that was imposed in the original design of the principal Act. As we know the Labour Party and Michael Cullen had more foresight—Brett Hudson: Dr Cullen was preparing it for privatisation clearly.Hon DAVID PARKER: Dr Cullen was preparing the Superannuation Fund for privatisation clearly! I mean I have heard some brain-dead comments from the Government on occasions but really that takes the cake. You should be brought forward to the front bench. You would be very comfortable on the National front bench. Of course this fund was created by the Labour Party and opposed by the National Party so how that member could say that this was preparing it for privatisation—fact is stranger than fiction sometimes is it not? No that is not correct.Indeed that gives me licence I think—responding to that interjection from the Government—to recount the fact ad nauseam really which we have heard before that we should take care in respect of the Superannuation Fund that we do not actually cause it to aid the privatisation agenda of any Government. Indeed because some of New Zealand’s largest listed entities now include energy companies one of the things that has happened through the Superannuation Fund since the Government privatised those entities is that we have cause to go from the Government balance sheet through direct ownership to the Superannuation Fund investments in privatised assets if the Superannuation Fund has invested in either Genesis Mighty River Power or Meridian.That of course was one of the things that Dr Cullen was trying to guard against when he set the fund up and he gave pretty clear directions that he did not want this fund to be weighted towards investing in New Zealand because he knew that one way or another there was always a risk that National Governments would plunder the fund in order to achieve their other objectives.Chris Bishop: Oh ha ha!Hon DAVID PARKER: We hear Chris Bishop laughing about that but if there was a subscription by the Superannuation Fund in those privatised companies it will have increased demand for those shares and will therefore have had some effect on the price that was able to be achieved on the sale of those shares. It may well be that it did not invest in those shares in which case that would not have happened but if it did it must have had an effect on demand and therefore an effect on price. And as Mr Bayly has already said this fund is already the largest investor in New Zealand. It is far bigger than any KiwiSaver fund far bigger than any private superannuation fund and far bigger than any other investment fund of the Government including the ACC fund. It is the largest investor in New Zealand. Therefore it does have the ability because of that size to influence price.So I invite the member opposite who interjected Brett Hudson to hang his head in shame and resile from those rather silly comments that he made at the start—Brett Hudson: Clearly he was more our side than your side Mr Parker.Hon DAVID PARKER: Say that again? Clearly—Brett Hudson: After all Dr Cullen was the one who said: “Don’t borrow to invest money in the Super Fund.”Hon DAVID PARKER: No he did not say that.Brett Hudson: He said: “Only make contributions when you’re in surplus.” Mr Parker.Hon DAVID PARKER: No Dr Cullen did not say that. No Dr Cullen thought indeed that contributions to the Superannuation Fund should continue. Again he is a very poor student of historythis particular member. I was here after the global financial crisis hit after we lost Government; so was Dr Cullen. That member was not. And you will recall that we were critical of the Government for making that short-sighted decision. I think it is actually testament to the independence of the guardians that despite the embarrassment to the Government caused by the guardians measuring the loss that the Government has caused to the Superannuation Fund by ceasing contributions they have continued to calculate what would have been in the fund had those contributionscontinued.That brings me to an inane contribution from one of Mr Hudson’s colleagues who said it was always stupid to borrow to invest. Well that is true if you are capital constrained but the current Government has not been capital constrained because it inherited very low levels of Government debt—zero net debt—and gross debt having been reduced from 38 percent to 18 percent of GDP. The member said that you can never beat borrowing rates—it would be silly. Well of course the Government’s stock rate is generally the lowest long-term rate to invest in and you get higher rates of return if you invest in security or balanced portfolio bonds as Mr Bayly knows well. So it should be no surprise to members on the other side that if they had borrowed they would have achieved a rate of return—Alastair Scott: If if if—“Harry Hindsight”.Hon DAVID PARKER: Actually you know the trouble with these guys is that they have got no foresight. I mean it would be nice if occasionally they got one of these decisions in advance right. We are not saying that you should judge everything by hindsight but it would be good if occasionally they got one right with foresight. They called it a dog; they were wrong. They now admit that they were wrong. They stopped investments when they should not have stopped them but they cannot bring themselves to admit that even though it was always obvious that the investment rate over the medium term exceeds the Crown cost of funds. They have not been able to acknowledge that that was a stupid decision too.IAIN LEES-GALLOWAY (Labour—Palmerston North): I have found the debate this evening very interesting—quite fascinating—and a lot of it has revolved around the question of whether it would have been appropriate to continue to make contributions to the Superannuation Fund during the period when the Government was borrowing in order to carry out a range of activities actually. I love the way that the National Party tries to sort of reduce this down to borrowing in order to put money into the Superannuation Fund. The Government has borrowed to an astonishing level actually—to levels that no other Government ever has before—but in order to do a range of things.One of the things that the Government borrowed to do was to provide tax cuts. There are really good arguments why you do not provide tax cuts especially tax cuts to the wealthy. There might have been an argument for it during the period of recession and then the very slow period of growth after the global financial crisis. There may have been an argument for tax cuts if the majority of the money returned to the citizens of New Zealand had gone to those with the least because those with the least have to go out and spend that money because they are struggling to make ends meet as it is and that would actually have provided the economic stimulus that was the argument the Government made for providing tax cuts while it was borrowing heavily just in order to keep the ship afloat. But no the Government did what National Governments do. It was true to form and it gave tax cuts to the most wealthy which was wonderful for the people who were most wealthy but did very little to stimulate the economy.During that period of time it may well have been prudent—and in fact looking back it would have been incredibly prudent—to carry on contributing to the Superannuation Fund. But actually the point I want to make is this: it is that achieving surpluses is actually incredibly important for the Government because if you are in surplus you remove that debate. It is actually a really simple decision to make if you are in surplus making a contribution—what the size of the contribution is might be a question for debate but making a contribution to a superannuation fund then is an easy choice to make. I accept that it is a more difficult choice to make when you are having to borrow for a range of things but if you are in surplus it is an easy choice to make and that is why achieving surplus is important. Alistair Scott is nodding away.The Prime Minister is not so sure about whether achieving surplus is quite so important. It was important—it was a very important—The CHAIRPERSON (Lindsay Tisch): Order! [Interruption] Order!IAIN LEES-GALLOWAY: Well it is relevant to this bill because what we are talking about is actually saving for New Zealand’s future—putting contributions into the Superannuation Fund in order to ensure that universal superannuation is actually available for future generations. That is actually one of the great issues facing this nation at the moment and should be facing that Government: how do we make sure that universal superannuation remains available not just today not just in 10 years’ time but in 20 years’ time 30 years’ time 40 years’ time? How do we ensure that it is still available? In the face of an ageing population in the face of a growing number of superannuitants in comparison with the working population in the face of all those challenges what do we have to do to ensure that universal superannuation is still available? That is why the Cullen fund—Todd Barclay: Keep National.IAIN LEES-GALLOWAY: No not keep National actually; the exact opposite of keep National because if the National Party had been in Government in 2002 there would be no Cullen fund. There would be no Cullen fund because members opposite are obsessed with hindsight and they have got absolutely no foresight. That is classic National Party thinking: always thinking about the past never thinking about the future. So actually if you want to ensure that New Zealanders in the future will be able to rely on universal superannuation what we need more than ever now is a Labour-led Government a Government that can actually look into the future a Government that actually believes in sovereign wealth funds and believes in putting money aside now to save for the future. That is not what the National Party wanted to do—not what the National Party wanted to do at all. It wanted to blow it all on tax cuts for its mates here and now not worrying about the future.Members opposite have gone quiet now because they know I am right. This is an important piece of legislation because it will help make the Superannuation Fund—JOANNE HAYES (Third Whip—National): I move That the question be now put.A party vote was called for on the question that the question be now put.The CHAIRPERSON (Lindsay Tisch): Just while the Clerk is adding these up there can be no discussion no noise whatsoever when votes are being taken. I will ask you to respect that.A party vote was called for on the question That the question be now put.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.The question was put that the amendments set out on Supplementary Order Paper 89 in the name of the Hon Bill English to Part 2 be agreed to.Amendments agreed to.Part 2 as amended agreed to.Clause 1 agreed to.Clause 2 agreed to.The Committee divided the bill into the New Zealand Superannuation and Retirement Income Amendment Bill and the Taxation (New Zealand Superannuation and Retirement Income) Bill pursuant to Supplementary Order Paper75.Bill to be reported with amendment presently.Reserves and Other Lands Disposal BillIn CommitteePart 1 agreed to.Part 2 Land dealingsIAIN LEES-GALLOWAY (Labour—Palmerston North): It is a pleasure to rise and take a call on Part 2 of the Reserves and Other Lands Disposal Bill—a bill that I remember fondly. Six and a half years ago when I came into Parliament I was given the portfolio of land information and one of the very first bills that I got to speak on was indeed the Reserves and Other Lands Disposal Bill. Here we are 6½ years later and the bill has only just reached the Committee stage. Clearly it is not a major priority for the current Government. I must admit I have not been watching it terribly closely in recent years but I understand that there may have been some matters of controversy around this legislation. I do hope that the Primary Production Committee has been able to traverse those controversial matters and has been able to land on some decisions that please all the people who are involved in these particular pieces of land because ultimately a Reserves and Other Lands Disposal Bill should not be particularly controversial. It should be the sort of thing that addresses matters that really have a fairly strong consensus around them. So if there have been matters that have been a struggle for the select committee to consider then hopefully it has been able to make some sensible decisions.The majority of the submissions that the select committee received were in relation to the Albert Park Auckland Art Gallery development—actually this is ringing a bit of a bell. I do recall that there was a bit of controversy around this back when we were first considering the legislation. In fact some of that controversy was around the fact that the city council had proceeded with a development on the land in question under the assumption that this was a non-controversial piece of legislation and essentially that the changes would be rubber-stamped by Parliament. There were a number of submitters who took considerable exception to that. I understand that the select committee received legal advice on the matter that indicated that commencing construction had not involved any alienation of the park land under the Act because the Auckland Council continued to own the land for recreational and amusement purposes. Most submitters however and some members of the committee actually believed the land has been alienated from Albert Park which is at odds with how the public believe reserve land should be treated. Although it was the council’s view that it had followed due process in gaining approval for the development a number of concerns were raised at the select committee about the way that the council had gained the necessary legal consents.So in a way I suppose what the council was expecting this legislation to do was to retrospectively approve development that it had undertaken on that land. It is never ideal for Parliament to make changes to legislation that apply retrospectively. Interestingly we have done it a number of times in the last couple of terms of Parliament in order to rectify errors that have been made by local councils. I guess it is arguable whether or not this is an error that has been made. It certainly seems as though the Auckland Council made the case to the select committee that it was perfectly within its right to carry out the developments on Albert Park and that seems to have been the centre of much of the debate and consideration at the select committee—and indeed there was considerable debate at the select committee. Some of the committee members in fact believe that the clauses relating to the art gallery should have been deleted from the bill for the very reason that reserves and other lands disposal bills should be non-controversial and clearly there has been quite a lot of controversy around this matter.Progress to be reported presently.House resumed.The Chairperson reported the Environmental Reporting Bill without amendment the New Zealand Superannuation and Retirement Income Amendment Bill with amendment and that the Committee had divided it into two bills progress on the Reserves and Other Lands Disposal Bill and no progress on the Standards and Accreditation Bill.Report adopted.Sitting suspended from9.57 p.m.to9 a.m. (Wednesday)