Volume 667 Week 56 - Thursday 14 October 2010 
Volume 667 Week 56 - Thursday 14 October 2010 
[Volume:667;Page:14489] 
Thursday 14 October 2010 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon SIMON POWER (Deputy Leader of the House) 
: 
 When the House resumes next week priority will be given to the second reading of the Rugby World Cup 2011 (Empowering) Bill and other bills relating to various Treaty settlement matters. Wednesday will be a members’ day. 
Hon DARREN HUGHES (Senior Whip—Labour) 
: 
 I wonder whether the Deputy Leader of the House could advise us whether the Government is planning on a week of urgency during this particular sitting period and also whether next week we can expect the third reading of the New Zealand Public Health and Disability Amendment Bill which I understand contains an amendment from the Green member Kevin Hague. We would be interested to know whether that bill will be receiving its third reading next week. 
Hon SIMON POWER (Deputy Leader of the House) 
: 
 Despite misunderstandings the bill does not contain any amendments from the Hon Ruth Dyson nor were any voted on as I understand it. In respect of the first matter relating to urgency—and I assume the member is referring to this particular 3-week sitting—I am not aware of that at this stage. 
Speaker’s Rulings 
Committee of the Whole House—Correction to Report on New Zealand Public Health and Disability Amendment Bill 
Mr SPEAKER 
: Honourable members yesterday following the Committee of the whole House on the New Zealand Public Health and Disability Amendment Bill confusion arose as to the form of the bill set down for third reading. An amendment to Part 1 was agreed by the Committee but Part 1 was agreed to without amendment and the bill reported to the House without amendment. Standing Order 295(1) sets out the form of the question to be proposed on a provision of a bill. The question proposed is that the provision stand part of the bill or stand part of the bill as amended. An amendment to Part 1 having been agreed to a procedural error occurred and the incorrect question was proposed: “That Part 1 stand part” and agreed by the Committee. Such a procedural error cannot negate an amendment agreed. Only a recommittal to consider the amendment could achieve that now and that is a matter for the Minister in charge of the bill. However the Committee’s decision on Part 1 did leave doubt about whether the amendment to Part 1 agreed unanimously by the Committee had been properly incorporated in the bill. 
The Speaker cannot overturn decisions of the Committee. But the bill having been set down for third reading the Speaker must ensure it is in a form agreed by the Committee. Despite its report to the House the Committee agreed an amendment to the bill. The bill on the Order Paper has been reprinted to show that amendment. 
The Speaker is also concerned with the accuracy of the House’s records. A procedural error in proposing the question on Part 1 led to an error in the Committee’s report to the House. While the Committee’s decision on Part 1 was procedurally incorrect it will stand. However the record will be corrected to show that the report from the Committee of the whole House on the New Zealand Public Health and Disability Amendment Bill adopted unanimously by the House was with amendment. 
Questions to Ministers 
Financial Position Government—Reports 
1. 
AMY ADAMS (National—Selwyn) 
 to the  
Minister of Finance 
: What reports has he received on the Government’s financial position? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Today Treasury released the Government’s financial statements for the year ended 30 June 2010. Compared with the previous year ended 30 June 2009 Government spending was about the same. Revenue was down and both the operating deficit before gains and losses and the residual cash deficit were higher than in the previous year. Overall the Government’s fiscal situation remains tight. It is important that we continue to take balanced and considered decisions to control future spending get debt under control and return the Budget to surplus. 
Amy Adams 
: How has the Government helped the economy to make the necessary adjustments in the aftermath of the recession? 
Hon BILL ENGLISH 
: The Government has provided significant support for New Zealanders to protect people from the sharpest edges of the recession. For example based on the latest forecast the Government’s annual cash balance was $2.1 billion in surplus in 2007-08 and in 2010-11 there will be a cash deficit of $13 billion. That is a $15 billion turn-round. This amounts to a very considerable fiscal stimulus whereby effectively the Government is borrowing money from overseas lenders and pumping it into the economy in order to proceed with infrastructure investment to maintain core Government services and to continue with transfers to households such as Working for Families interest-free student loans and early childhood education subsidies. 
Hon David Cunliffe 
: When the Government’s books have deteriorated from a $2 billion surplus under Labour to a $13 billion deficit under him how can he possibly afford another $14 billion in tax cuts for people who do not need them when New Zealanders do not have jobs? 
Hon BILL ENGLISH 
: That is the opposite of what the Opposition usually argues which is that the Government is not running big enough deficits and that we should be running more jobs schemes and wasting more money on bureaucracy. The Government has taken a considered and balanced approach. We are running a $13 billion deficit this year for the reasons that I outlined before. The tax package that we have implemented is intended to rebalance this economy so that we can have sustainable jobs less debt and more exports savings and investments. 
Amy Adams 
: How are households responding to the Government’s programme to encourage work savings and productive investment? 
Hon BILL ENGLISH 
: The early signs of rebalancing in the economy are encouraging when we look at the behaviour of households. This can be seen from official data showing movements in New Zealand families’ equity in their own homes. Between 2003 and 2008 households effectively borrowed about $7 billion against their houses which was spent on consumption. This has been called equity withdrawal. There has now been a marked turn-round. Instead of households borrowing against their houses to go on overseas trips or buy second cars and flat-screen TVs they are now paying down their debt to the tune of about $5 billion. New Zealanders are now saving $5 billion whereas previously they had been overspending by $7 billion. That is a dramatic turn-round. 
Amy Adams 
: What does this change in household savings behaviour mean for the nature of the current economic recovery? 
Hon BILL ENGLISH 
: We need to keep in mind the state that the previous Government left this economy in which was an economy dependent on excessive Government spending and excessive borrowing. The impact of the global recession the New Zealand recession and Government policy means that New Zealanders are being very careful with their spending to the extent that the ratio of private consumption as a share of the economy is actually dropping. So we are going to see a recovery in which people are careful with their spending and pay down debt and in which the growth in the economy is driven by strong export prices. That kind of recovery will give us sustainable jobs instead of the ones that were dependent on excessive Government spending and excessive debt. 
Hon David Cunliffe 
: Can he confirm that his supposed rebalancing is occurring on the back of high unemployment low or no wage growth increasing prices and a stalling economy—all of which are making it harder for ordinary Kiwi families to make ends meet? 
Hon BILL ENGLISH 
: I wish the member had cared about that when he was in Government because the answer to the question is no. That member needs to remember that in the last year that he was in office—which was meant to be the best of times—real wage levels in New Zealand actually dropped and that was before the global financial crisis. Inflation was 5.1 percent in 2008. 
Hon David Cunliffe 
: When he told reporters this morning that the half-year Budget update in December is unlikely to contain positive growth was that an admission after telling New Zealanders for 2 years to tighten their belts and that they would get an aggressive recovery that they will have to wait just a few years longer? 
Hon BILL ENGLISH 
: As I have pointed out in the answers to earlier questions New Zealanders have decided to tighten their belts because they know that the fairyland economy that the previous Labour Government was running simply could not last. They know that we could not keep borrowing against our houses in order to fund overseas trips and that we could not afford to keep paying higher taxes than are necessary to fund billions of dollars of wasteful Government spending under Labour. [ 
Interruption 
] 
Rahui Katene 
: Is the reason—[ 
Interruption 
] 
Mr SPEAKER 
: I apologise to the honourable member but the previous issue is dealt with. I have called Rahui Katene and a little courtesy would be appreciated. 
Rahui Katene 
: Is the Government’s financial position the reason why Housing New Zealand’s Linwood branch is telling whanau in Christchurch that it has no more tarpaulins to give out? 
Hon BILL ENGLISH 
: The member may be referring to an aspect of the earthquake recovery effort. If there are particular issues there where people’s obvious needs are not being met then we are quite happy to follow up on that. I will be in Christchurch myself tomorrow and will be very happy to follow such matters up. 
Economic Recovery—Governor of the Reserve Bank’s Statement 
2. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Minister of Finance 
: Does he agree with Alan Bollard who said that the economic recovery is proving “brittle uncertain and full of surprises”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes generally I do. That is a description of recovery around the world but as I have pointed out in answers to previous questions the reason our recovery is not taking off is that New Zealanders are saving instead of spending. In the short term that means a slightly slower recovery; in the long term it is the right kind of adjustment and it means that we will get sustainable jobs and sustainable growth in incomes instead of some kind of sugar shock. 
Mr SPEAKER 
: Before I call the honourable member for her first supplementary question I encourage members not to start interjecting before the Minister has even opened his mouth. It is a little difficult when there is such a barrage of interjections before he has even uttered a word. 
Hon Annette King 
: Was he surprised to learn yesterday that grocery prices rose 2.6 percent and fruit and vegetable prices rose 6.8 percent in the last year just after he had claimed that food and vegetable prices had actually dropped by 6.5 percent in the last 2 years; and could that be why householders are not spending their money on frivolous things like flat-screen televisions? 
Hon BILL ENGLISH 
: The member was referring to figures that we have used in the House because Labour had overlooked its own track record. In respect of vegetable prices in the 2 years to September 2008—[ 
Interruption 
] They are so much better when Phil is away and David is in charge. In the 2 years to September 2008 vegetable prices went up 21 percent. In the 2 years from 2008 to 2010 they had dropped by 6 percent. 
Mr SPEAKER 
: I think the House has had its fun. A little decorum would be helpful. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. Just briefly you have previously ruled that it is inappropriate for Ministers to spend most of their answers talking about Opposition policy and I would argue that we have had yet another reminder that they cannot drop the habit. 
Mr SPEAKER 
: The member has raised a valid point of order; Ministers should not spend most of their answer talking about Opposition policy although on this occasion the Minister was talking about past record which is a little different. I draw a distinction between referring to past record and some policies of another party. That should not be. 
Hon Annette King 
: Was it another surprise for the Minister when the president of Federated Farmers said that the Government can propose cycleways but they will not get us far and that the situation they now face is like rearranging the deckchairs on the Titanic? 
Hon BILL ENGLISH 
: No. I was not surprised at the president of Federated Farmers making those remarks. The Government is focusing on the competitiveness that our export sector will need and that is why we have a comprehensive programme of regulatory reform infrastructure investment investing in skills and changing the tax system as we did on 1 October to make sure that this country can earn before it spends. Over the next 10 years that is what we will have to do. Under that member’s Government the country consumed and borrowed and spent before it earned. 
David Bennett 
: What was the economy like when the Government came into office in late 2008? 
Hon BILL ENGLISH 
: Well what a good question! In short it was a mess. The economy went into recession at the start of 2008 when the rest of the world was still growing. In 2008 inflation was rampant at 5.1 percent and that was without a GST increase; it was purely the product of the efforts of the previous Labour Government. Real wages were dropping in 2008. It will take some years to undo the damage. 
Hon David Cunliffe 
: Which of the following is true: that under the previous Labour Government the economy went through the best of times and ran a $2 billion surplus or that under the previous Labour Government the economy was mismanaged as he now alleges; if so did that have anything to do with a world record low unemployment rate cutting net debt to zero and gross debt in half and running growth for the longest expansion since World War II? 
Hon BILL ENGLISH 
: I do not think any of those things are actually correct. But the member needs to ask why if he did such a fantastic job he lost the election so badly. 
Hon Annette King 
: Was it a surprise when he heard that the number of people receiving the unemployment benefit had increased again and is now at 65281 when he previously stated just a few days before that “there’s no doubt that unemployment has peaked”? 
Hon BILL ENGLISH 
: As the member knows the figure that is used in the forecast is the household labour force survey figure which is the same one that the previous Labour Government always used. But I remind the member that the number of people on the unemployment benefit was higher than it currently is in 2004 2003 2002 2001 and 2000. That is for over half of Labour’s term the number of people on the unemployment benefit was higher than it is now and I do not remember her kicking up a fuss then. 
Hon Annette King 
: Was he surprised to learn that despite his belief that many supermarkets would be putting up their prices by less than the GST increase the cost of items such as onions has risen by 81 percent pasta has risen by 22 percent toilet paper has risen by 41 percent apples have risen by 5.9 percent and potatoes have risen by 2.8 percent; and will he now apologise for not knowing the price of anything or the value of anything either? 
Hon BILL ENGLISH 
: The answer to that is no. In fact I know that it is very disappointing for the Opposition but all the recent forecasts of inflation and the cost of living are moderating not going up. Despite the fact that the Government has increased GST as part of a $4 billion income tax cut we will not see high and increasing inflation. 
Hon Annette King 
: Was he surprised to learn in light of that answer of the flurry of complaints to the Commerce Commission of excess pricing regarding the increase of GST by 2.5 percent being attributed to the increase of 2.5 percent in GST and was he surprised to learn that Meridian Energy chose to impose 15 percent GST on people in Christchurch in September which was the coldest month they had and which included a force 7.1 earthquake? 
Hon BILL ENGLISH 
: In respect of the issue regarding Meridian Energy I understand that some discussion is going on now that amounts to an argument over the interpretation of the transitional provisions. What the member can be reassured about is that the Government anticipated that the transition could be complex and made provision for businesses such as Meridian Energy to choose the lower GST option. 
Dr Russel Norman 
: Is New Zealand’s economic recovery vulnerable to oil price shocks; if so how? 
Hon BILL ENGLISH 
: Yes the New Zealand economic recovery is vulnerable to any kinds of price shocks including oil price shocks. At the moment there is evidence of increases in commodity prices that would suggest that there could be risks in the future. That is why we have to manage the Government’s books very tightly in case things go wrong. That is why we need to get on with a programme of structural reform investment in infrastructure and in skills and changes in the tax system. Those are some of the things we can influence that will improve our outlook. Other things like the oil prices we cannot influence but we could be badly affected by them. 
Dr Russel Norman 
: In reference to the infrastructure investment does he think that future high oil prices should be considered in the business cases for new infrastructure such as roads of national significance? 
Hon BILL ENGLISH 
: That factor is taken into account indirectly through traffic forecasts and it is possible that if oil prices got very high and stayed that way there would be less traffic. I do not think that is likely. The record in New Zealand is that with economic growth traffic volumes tend to grow. But fundamentally we leave those decisions to New Zealanders to decide whether they want to face that cost and have the related benefits or get on their bikes or take public transport. 
Dr Russel Norman 
: Does he believe that the kinds of infrastructure investments that the Government makes have a profound effect on behaviour by providing opportunities to use public transport or opportunities to use motorways so given the length of time that these infrastructure investments last for he needs to take into account the future price of oil because these infrastructure investments will last for many decades? 
Hon BILL ENGLISH 
: The Government in the first place is not any better placed than anyone else to guess prices in 10 or 20 years’ time; but secondly we have spread our investment on infrastructure. For instance in the Auckland area we are spending about $3.5 billion on motorways but $1.5 billion on trains. I hope that in 20 years’ time both of those investments have proven to be useful and it will need a sharp increase in the patronage of people using public transport to make those investments viable. At the moment they are pretty marginal. 
Dr Russel Norman 
: Is the Minister aware of the comments made by the chief economist from the International Energy Agency just last year in which he said “oil … is running out far faster than previously predicted and that global production is likely to peak in about 10 years—at least a decade earlier than most governments had estimated.” and if global oil production peaks in 10 years does he think that will result in an increase in the price of oil? 
Hon BILL ENGLISH 
: I think that is anticipated to a significant extent because we are seeing any number of energy companies looking at investing in alternative sorts of energy. We are seeing significant investment in solar energy for instance which is bringing the price down and investment in electric cars on a pretty large scale. I think most people expect oil prices will be pretty high and they are looking for alternatives. In our view that is best left to the market which has stronger incentives to get it right than Governments trying to follow political fashions. 
Dr Russel Norman 
: Does he believe that it is possible if oil peaks within 10 years for the entire New Zealand transport fleet to turn over to electric cars? 
Hon BILL ENGLISH 
: No I do not think it is possible that the whole fleet will but Cabinet has made a start with Minister Nick Smith’s electric car parked at Nelson Airport. I am sure others will follow his example. These things never happen in one big swing; they will happen over time. But I do not think there is any doubt that electric cars will become more common and that will be a good thing if the economics of it are right. 
Law Commission—Review of Interaction between Internet and Justice System 
3. 
PAUL QUINN (National) 
 to the  
Minister of Justice 
: Has he recently referred any projects to the Law Commission; if so what? 
Hon SIMON POWER (Minister of Justice) 
: 
 Yes; earlier today I asked the Law Commission to undertake a review regarding interaction between the Internet and the justice system. It is my view that the law must keep pace with technology and that we must have one set of rules and ethical standards for all news media. It is my view that that may not be the case at present. 
Paul Quinn 
: Why has the Minister referred this review to the Law Commission? 
Hon SIMON POWER 
: I am concerned that the lack of regulation or professional or ethical standards for bloggers and online publishers has created a bit of a Wild West in cyberspace. The specific issues I am concerned about include how trials can be potentially prejudiced by information posted on websites and seen by jurors real-time online streaming of court cases breaches of court suppression orders and republication of a libel. 
Economic Performance—Minister’s Statement 
4. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: Does he stand by his statement: “this Government came into office with a plan to lift New Zealand’s economic performance”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes I do. In fact I think it was an understatement. I now say we came into office with a very sound plan to lift New Zealand’s economic performance. Everything I have read about what other Governments are doing in recent times has indicated to me that we are right to focus on longer-term structural performance in the economy not just on the quarter to quarter numbers around recovery. 
Hon David Cunliffe 
: Which of the following elements would he rank as the most important to his self-confessed “very sound plan”: high unemployment no wage growth increasing prices stalling the economy or doubling the deficit by continuing upper-income tax cuts that a primary school child could tell him that he and the country can no longer afford? 
Hon BILL ENGLISH 
: Listening to that list sounded like a description of the last couple of years that the previous Labour Government was in power actually when there was zero wage growth 5 percent inflation— 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. It would be a refreshing change if the Minister talked about this Government rather than the previous one as you have previously ruled. 
Mr SPEAKER 
: The member when making a point of order will not make that kind of comment. The member should reflect on the question that he asked. He asked which of the following facts that he inserted in his question was—I cannot remember the last part of the question. When a member asks a question like that the Minister is at liberty to latch on to some of those facts and to talk about them in a manner that the member may not have expected when asking the question. Discipline when asking questions is the secret in this place if members want there to be accountability. 
Hon BILL ENGLISH 
: As I said that sounds like a description of the last couple of years of the economy under the previous Labour Government when it did stall real wage growth was zero at the end there was 5 percent inflation unemployment was growing and the 2008 Budget—Labour’s last Budget—projected a decade of deficits. I would like to say to the member that if those are his concerns he should look in the mirror but he has never needed much encouragement to do that. 
Chris Tremain 
: What steps has the Government taken to lift New Zealand’s economic growth? 
Hon BILL ENGLISH 
: The most recent step has been the tax changes which came into place on 1 October. They reduced income taxes across the board reduced company taxes and therefore reduced the tax on work savings investment and exports and increased GST and the effective tax rate on property. However there have been other aspects of the Government’s programme. We have a very large programme of investment in infrastructure we are reducing the number of Public Service bureaucrats and we are making sure that we have efficient front-line services. We have an extensive programme of changes to the excessive regulation of this economy and have invested in lifting business innovation and research. 
Hon David Cunliffe 
: How can he maintain that he has lifted New Zealand’s economic performance when the June GDP figures were less than one-quarter of what was expected and had declined for the third quarter in a row and when the New Zealand Institute of Economic Research estimates that growth actually went backwards in the latest quarter? 
Hon BILL ENGLISH 
: As I said to the member earlier the Government is focusing on the longer-term structural strength of this economy. That is where it is focusing its policy. In the shorter term the reason that the economy is not growing rapidly is that New Zealanders have made up their own minds to save more and spend less. They need to do that because the excesses of the economy under the previous Government simply could not last so households have made the decisions that are slowing down the recovery of retail spending and of the housing market. 
Hon Rodney Hide 
: To the Minister of Finance when— 
Hon Pete Hodgson 
: When will he catch Australia? 
Hon Rodney Hide 
: I’m sorry? 
Mr SPEAKER 
: The member will just ask his question. 
Hon Rodney Hide 
: I am sorry Mr Speaker; they are so rude. 
Mr SPEAKER 
: Oh no. I say to Government Ministers that I have let them get away with a bit much today. We will not have any more of that. 
Hon Rodney Hide 
: Does the Minister agree that one of the central planks of lifting New Zealand’s economic performance is reversing the incredible flood of red tape that tangled up this country under the 9 years of the previous Labour Government and that this Government is making good progress in establishing the proper principles of good lawmaking to reverse the trend that it inherited? 
Hon BILL ENGLISH 
: Yes and I am pleased the member asked that question because sorting out the regulatory mess that was left by the previous Government is not a glamorous job. It is a very difficult job and it requires persistence. The member in his capacity as Minister for Regulatory Reform has in my view done an excellent job. I am sure the economy will benefit from those efforts through long-term higher growth rates. 
Prisoners—Employment Training 
5. 
Dr CAM CALDER (National) 
 to the  
Minister of Corrections 
: What advice has she received about the level of employment training in New Zealand prisons? 
Hon JUDITH COLLINS (Minister of Corrections) 
: 
 I am very pleased to report that a record number of prisoners are undertaking job training in literacy and numeracy education. In the 10 months ended July 2010 the number of prisoners in employment and job training increased by 9 percent to 4791. This means that nearly 70 percent of all sentenced prisoners are now engaged in some form of prisoner employment or job training. In addition over the past financial year the number of prisoners undertaking literacy and numeracy education has increased by 15 percent. These results are very impressive and I commend the department for its commitment towards rehabilitating offenders. 
Dr Cam Calder 
: Why is the Government placing such a high priority on increasing prisoner employment training? 
Hon JUDITH COLLINS 
: This Government is determined to reduce reoffending and to help offenders turn their lives round. Prisoners who have work skills and good literacy and numeracy skills are more likely to gain jobs and less likely to go back to jail. International studies have shown that participation in education can reduce the risk of reoffending by 9 percent and having a job can reduce the risk of reoffending by 6 percent. The goal of the Prisoner Skills and Employment Strategy is to have at least a thousand extra prisoners gaining skills and work experience on any given day by the end of 2012. This Government is committed to achievement of that goal. 
Rahui Katene 
: What progress has she been advised of about the level of Maori participation in prisoner employment and what information if any is there about the longer-term outcomes associated with such participation? 
Hon JUDITH COLLINS 
: Since the Prisoner Skills and Employment Strategy was launched the number of Maori participating in Department of Corrections’ inmate employment has increased from 42 percent to 46 percent of all prisoners employed. Maori prisoners also make up 56 percent of prisoners in polytech-run trade and technical training courses. As I mentioned earlier international studies have shown that prisoners with work skills and good literacy and numeracy skills are far less likely to go back to jail. This is particularly encouraging when taking into account that Maori make up half of the prisoner population. 
Health Services—Minister’s Statement 
6. 
Hon RUTH DYSON (Labour—Port Hills) 
 to the  
Minister of Health 
: Does he still stand by his statement in relation to health funding that “the important thing is not how much extra money they’re getting—it’s what extra services you are getting as a taxpayer”? 
Hon Dr JONATHAN COLEMAN (Associate Minister of Health) 
 on behalf of the  
Minister of Health 
: As the Minister replied to the same question yesterday— 
Hon Darren Hughes 
: Are you running the Mana by-election? 
Hon Dr JONATHAN COLEMAN 
: I tell you what; if you want to go on like that we are waiting for Chris Carter to start telling the truth about you “Dazza”. All right so I would get— 
Mr SPEAKER 
: I have to confess that I have no idea what all that was about— 
Hon Dr JONATHAN COLEMAN 
: Would you like the answer Mr Speaker? 
Mr SPEAKER 
: —and the Minister does not need to inform me. No one needs to inform me; I would rather ignore what that was all about. I was on my feet and the Minister continued talking. He will not do that again. 
Hon Dr JONATHAN COLEMAN 
: As the Minister replied to the same question yesterday every district health board provides several hundred different services each year to meet the changing needs of their population. Under this Government front-line services overall are increasing as has the budget by $512 million this year. So he stands by that statement. 
Hon Ruth Dyson 
: Are the people of Masterton who are being turned away by their general practitioner super-clinic getting extra services; if so where from? 
Hon Dr JONATHAN COLEMAN 
: I cannot confirm the situation there because the question put on notice made no reference to what was happening in Masterton. But I can say that the people of Wairarapa have had an increase in funding from their district health board of $7 million over the past 2 years. So there is more money going into health in the Wairarapa. 
Nicky Wagner 
: What reports has he received recently on increased front-line services particularly for older New Zealanders? 
Hon Dr JONATHAN COLEMAN 
: Yesterday the Minister advised the House that the number of patients receiving elective and acute surgery in the past financial year increased by over 12000 over the previous year—more than four times the average achieved by the previous Government. Today I can inform the House that in relation to surgical services for older New Zealanders in the last 2 years the number of patients aged over 65 benefiting from urgent and elective surgery increased by over 10500 people. A record total of 93000 patients aged 65-plus benefited from acute or elective surgery in the last year. That is yet another example of increased front-line services under this Government. 
Hon Ruth Dyson 
: Why has the Capital and Coast District Health Board lost its chief executive who left saying he would not oversee further cuts and has now lost both the acting chief executive and the chair Sir John Anderson; is it because the Wellington region is awash with extra services or awash with health cuts? 
Hon Dr JONATHAN COLEMAN 
: I can tell the member that we were left with a massive problem by the previous Government—[ 
Interruption 
] 
Mr SPEAKER 
: I am on my feet. An answer should not start with a lecture about the previous Government. An answer should start with an attempt to say something about the question. I invite the Hon Ruth Dyson to repeat her question. 
Hon Ruth Dyson 
: Why has the Capital and Coast District Health Board lost its chief executive who left saying he would not oversee further cuts and has now lost both the acting chief executive and the chair Sir John Anderson; is it because the Wellington region is awash with extra services or awash with health cuts? 
Hon Dr JONATHAN COLEMAN 
: I can tell the member again that the Capital and Coast District Health Board received an extra $24 million last year from this Government and an extra $33 million from this Government the year before. Under the previous Government the chief executive was dealing with turning round a district health board in terminal decline and a massive deficit that it had been lumbered with by that Government. 
Hon Ruth Dyson 
: Is the clinical director who described Christchurch Hospital’s intensive care unit as “in crisis” and said that the staff at the intensive care unit were turning a blind eye to care levels lower than expected a result of the extra services he was describing? 
Hon Dr JONATHAN COLEMAN 
: I have read the same newspaper as that member has and I have the same article. The fact is that the Canterbury District Health Board has had an extra $102 million under this Government and it is spending that money as it sees fit. The Minister of Health has been in touch with the Canterbury District Health Board and as is quoted in the article the member refers to there will be a Christchurch Hospital redevelopment which will include a significant increase in beds. I can tell members that its intensive care unit has had an increase of 16 extra nurses seven extra junior doctors and an extra one and a half full-time equivalent specialists this year. 
Hon Ruth Dyson 
: What extra services will the residents of IDEA Services and Timata Hou Services be getting as a result of the Minister’s refusal to comply with the Employment Court determinations of last year and this year in relation to payment of the minimum wage for night-time support staff? 
Hon Dr JONATHAN COLEMAN 
: As the Minister of Health said yesterday in the House that is a matter for the provider. 
Hon Heather Roy 
: What does it cost to select and run the 20 district health boards and what extra health services do they provide? 
Hon Dr JONATHAN COLEMAN 
: As members know $1.2 billion is going into health. It is a very expensive— 
Hon Darren Hughes 
: $1.2 billion? 
Hon Dr JONATHAN COLEMAN 
: Sorry $1.2 billion of extra funding has gone into health this year—$512 million over 4 years and $174 million for mental health. So there is more money more operations and more cancer treatment and more people are being seen in accident and emergency. The public are getting better service under this Government than they got under the last one. 
Hon Heather Roy 
: I raise a point of order Mr Speaker. I think the Minister misunderstood my question. I was not asking about Vote Health; I was asking about the cost to select and run the district health boards themselves. I am happy to repeat my question. 
Mr SPEAKER 
: I invite the member to repeat her question because it may well be it was not heard correctly. 
Hon Heather Roy 
: What does it cost to select and run the district health boards and what extra health services do they provide? 
Hon Dr JONATHAN COLEMAN 
: If the member likes to submit that as a written question I would be happy to supply the figure. 
Accident Compensation—Measures to Address Financial Losses 
7. 
MELISSA LEE (National) 
 to the  
Minister for ACC 
: What progress has the Government made in addressing the financial losses reported by ACC of $2.4 billion in 2007-08 and $4.8 billion in 2008-09? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 ACC’s annual report tabled today shows a marked turn-round enabling the corporation to reduce its net liability by $2.5 billion or to $10.3 billion. This has been possible because ACC has contained the scheme’s liabilities and grown its assets. This has been achieved by the corporation delivering a marked improvement in rehabilitation rates. I note that just a 1 percent improvement in rehabilitation rates reduces those liabilities by $500 million. The strong recovery in investment markets has also contributed to this positive result. 
Melissa Lee 
: What impact will this much-improved result by the corporation have on levies? 
Hon Dr NICK SMITH 
: The result is good news. It means we have the scheme back on a sustainable financial footing enabling New Zealanders to have confidence that they will receive proper care and rehabilitation if they have an accident and that this can be provided without significant levy increases. I stress that ACC still has a long way to go to get out of the woods and reduce its net debt. The advice I have from the board is that noting that a big part of the turn-round is a bounce back in investments ACC is still not fully on track to meet the balance of assets and liabilities that is required under the Accident Compensation Act by 2019. This Government is very aware of the cost pressures on families and that is why we have said to ACC that our preference is to contain costs rather than look at significant levy increases. 
Hon David Parker 
: Is the reason the Minister has publicly said he is not recommending levy increases for ACC next year that he exaggerated ACC’s problems last year and so put up levies by more than was necessary? 
Hon Dr NICK SMITH 
: The accounts of ACC signed by Maryan Street in 2008 showed a $2.4 billion loss. In the following year under exactly the same reporting standards ACC made a loss of $4.8 billion. No amount of exaggeration is required; those figures speak for themselves about the level of mess that that member left ACC in. 
Melissa Lee 
: What is the significance of the turn-round in ACC’s financial position to the Government’s broader finances? 
Hon Dr NICK SMITH 
: ACC as a Crown entity directly impacts on the Government’s accounts. The $4.8 billion loss in the 2008-09 year made up 46 percent or nearly half of the Government’s $10.4 billion deficit. That this has been reversed significantly strengthens the Government accounts and helps New Zealand’s broader economic credibility in the difficult current global financial environment. 
Hon David Parker 
: Which is more cynical: his exaggeration to justify last year’s levy increases or his statement that he will have no increases next year because those increases would come into effect in an election year? 
Hon Dr NICK SMITH 
: Members opposite were able to achieve significant increases in 2008 when Maryan Street put up the levies—at the same time there were massive deficits the worst of all worlds. What we have from this Government is a very responsible approach to ACC. I simply draw the member’s attention to the audited accounts from Ernst and Young that show the scale of the deficits left by his Government. 
Melissa Lee 
: Is the Minister aware that ACC’s administration costs went up by $28 million in 2006 $44 million in 2007 and another $42 million in 2008 which is a total increase of 30 percent in just 3 years; if so what steps have been taken to get these administration costs under control? 
Hon Dr NICK SMITH 
: Yes I can confirm that the administration costs of ACC blew out by 30 percent in the last 3 years of the previous Government albeit that bureaucratic cost increase was typical across a whole number of Government agencies. Not only have we stopped this ongoing growth but ACC in the last year has trimmed $38 million off its administrative costs: $5 million has been trimmed off marketing and promotions—a bit excessive for a monopoly provider—$6 million has been saved in information technology; there has been a 52 percent reduction in travel costs— 
Hon Maryan Street 
: How do people know what their entitlements are if they are not allowed to be marketed? 
Hon Dr NICK SMITH 
: —I remind the member that there has been a 52 percent reduction in domestic travel costs; and a 45 percent reduction in international travel costs. 
Hon Maryan Street 
: You’re just cutting entitlements. 
Hon Dr NICK SMITH 
: I ask the member who is piping up why she does not apologise for the ACC mess she left the people of New Zealand. 
Overseas Investment Rules— Declined Applications to Purchase Farmland  
8. 
Hon DAVID PARKER (Labour) 
 to the  
Minister for Land Information 
: How many farm sales to overseas purchasers has he declined since he became the Minister? 
Hon MAURICE WILLIAMSON (Minister for Land Information) 
: 
 When approving or declining applications from foreigners to buy land I am bound by the criteria set out in the Overseas Investment Act 2005 which was passed by the previous Labour Government. Since that Act came into effect very few applications at all have been declined. For example in 2005 just one was declined; in 2006 just one— 
Hon David Parker 
: I raise a point of order Mr Speaker. I asked this question yesterday. I put it down on notice today. It is a very direct question. We have had a lot of avoiding answering the question; I just want to be given the numbers. 
Hon Rodney Hide 
: Speaking to the point of order— 
Mr SPEAKER 
: No I do not need further assistance on this one. The question is a very simple straightforward question and material that is not necessary to answer a question should not be included in an answer. Mind you if I applied that to the questions that are asked there would not be many questions accepted to be asked either. But this was a commendably straightforward question. I want to hear the answer. 
Hon MAURICE WILLIAMSON 
: Well to summarise— 
Mr SPEAKER 
: No the member will just give the answer. 
Hon MAURICE WILLIAMSON 
: Historically it has been one; this year it has been none. 
Hon David Parker 
: Given that the Minister has now confirmed that he has not declined even one farm sale under his existing discretions since he has been the Minister why could he not say yesterday whether he would decline more sales under his new so-called tighter rules? 
Hon MAURICE WILLIAMSON 
: Because the member’s question yesterday required me to be a clairvoyant and work out how many applications we would get which class they would be in and whether they would conform to the criteria that are in the Act that Labour put in place. I cannot tell nor can that member know what will unfold next year or in the following year. 
Hon David Parker 
: When the Minister did not answer my question yesterday about how many farm sales he had declined was that because he was embarrassed that it showed the Government saying one thing but doing another? 
Hon MAURICE WILLIAMSON 
: No. 
Hon David Parker 
: Given that the Minister said yesterday he would not confirm that he would decline more than zero farm purchases does this not make a mockery of John Key’s hand-wringing about the sale of farmland to overseas interests? 
Hon MAURICE WILLIAMSON 
: No. 
Hon David Parker 
: Will the Minister decline applications by overseas purchasers interested in buying farms and defaults under mortgages owed to South Canterbury Finance given that those mortgages are effectively owned by the Crown? 
Hon MAURICE WILLIAMSON 
: What I will do as the Minister is comply with the law that was passed by the previous Labour Government. I will take advice from the Overseas Investment Office as to whether applications meet the criteria in the Act. If they do they will get through and if they do not they will not. 
Hon David Parker 
: I seek leave to table the overseas investment rules which show it is the Minister’s discretion not his department’s. 
Mr SPEAKER 
: The Overseas Investment Act can be—[ 
Interruption 
] Both the Hon Ruth Dyson and the Hon Maurice Williamson will not interject while a point of order is being heard. I think those rules are available to all members; we do not need to table them. 
Civil Defence—Get Ready Week 
9. 
SHANE ARDERN (National—Taranaki - King Country) 
 to the  
Minister of Civil Defence 
: What is happening over Get Ready Week? 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 Mr Speaker— 
Hon Annette King 
: Here’s the other class clown. 
Hon JOHN CARTER 
: It is a real shame given the events in Christchurch that the Opposition cannot take this seriously. 
Mr SPEAKER 
: Members interject and if they interject they are likely to get a response. But let us get on with answering the question. 
Hon JOHN CARTER 
: Mr Speaker—[ 
Interruption 
] 
Mr SPEAKER 
: Did Chris Hipkins not hear what I just said? I ask for a bit of common sense and common courtesy please. 
Hon JOHN CARTER 
: For Get Ready Week there will be an increase in radio and television advertisements— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. If you are to name members on this side of the House for interjecting before the Minister has started can you do that for the member who interjected just then from the Government side? 
Mr SPEAKER 
: Forgive me; I can only react to what I see and hear. Sadly for the member’s colleague I happened to see him making a very loud interjection. I did not hear or see the other one. I apologise for that but I cannot deal with what I do not see or hear. 
Hon JOHN CARTER 
: For Get Ready Week there will be an increase in radio and television advertisements the film  
Eruption 
 made its debut last night and very important civil defence volunteers will be recognised. For example long-service civilian civil defence volunteers in Manukau will be presented with awards. It is important that New Zealanders are ready to get through. 
Shane Ardern 
: What message would he like new mayors to know so they can help their communities to get ready? 
Hon JOHN CARTER 
: Firstly I would like to congratulate all the mayors who have been elected or re-elected especially Bob Parker who has done so much and a wonderful job in assisting earthquake recovery along with Kelvin Coe. I also thank Ron Keating for his work. Emergencies will happen in our communities and we will all want our communities to be as resilient as they can be. We do that through the four Rs of reduction readiness response and recovery. The importance of focusing on this cannot be underestimated. Mayors have a critical role to play in providing leadership and advocacy for their community in difficult times working with their local civil defence management controller and preparing their communities for emergencies that we know will happen sooner or later. 
Early Childhood Education Centres—Effect of Funding Reductions 
10. 
SUE MORONEY (Labour) 
 to the  
Minister of Education 
: Does she stand by her statement about possible responses by early childhood education providers to the funding shortfall they are facing that “I would be really disappointed if the first thing they did was increase their charges”? 
Hon ANNE TOLLEY (Minister of Education) 
: 
 Yes I would be disappointed. 
Sue Moroney 
: Has she seen then the results of a New Zealand Educational Institute survey showing that 92.3 percent of Christchurch early childhood education services will be forced to pass on cost increases to parents as a result of her funding cuts and will she ask the Minister for Canterbury Earthquake Recovery to delay the impact of funding cuts on Christchurch providers so that families do not face further cost increases? 
Hon ANNE TOLLEY 
: Yes I have seen that survey and yes I am disappointed that that is the reaction from those centres because they had 8 months in which to make changes to the way in which they deliver their services. They have a number of ways they can address those changes to their funding. The early childhood services in Christchurch have had tremendous support from the Ministry of Education to help them through the earthquake and the recovery period. In fact I was visiting one yesterday which was very grateful for all the work that the Ministry of Education has done on its behalf. 
Louise Upston 
: How is the Government supporting early childhood centres to manage the change to early childhood education funding bands? 
Hon ANNE TOLLEY 
: Budget 2010 provided an additional $46 million over the next 4 years for a 2.4 percent increase to early childhood education funding rates. Centres have also been given 8 months to adjust their business model to fit within those new funding rates. 
Sue Moroney 
: When Prime Minister John Key said on 31 May “I am not at all convinced that you will see large cost increases passed on to families.” had the Minister advised him that she had already received advice from officials in February that the Government’s decision to cut subsidies would mean that fees would rise by $40 to $80 per week? 
Hon ANNE TOLLEY 
: There was a lot in that question. First of all the Prime Minister does read his Cabinet papers and I believe that the member was quoting from a Cabinet paper that was released under the Official Information Act so yes he was aware of the advice. We were all aware of the advice but at the end of the day as I have said in this House many times these are individual businesses. They can make the decisions according to their own business. They have been given 8 months’ notice and they have a range of options available to them in order to meet the changed funding rates. However this Government was forced to take this sort of action because of the irresponsible actions of the previous Labour Government which saw the costs of early childhood education treble in 5 years whilst participation rose by less than 1 percent. 
Sue Moroney 
: Does she agree with TV3’s John Campbell that the Government broke its election promise to keep existing subsidies in place for 20 free hours of early childhood education because the Government will cut the top two subsidy rates for 20 hours of early childhood education in February? 
Hon ANNE TOLLEY 
: No and I did not agree with John Campbell when he put that to me. In fact he had a pretty selective sort of quote. But I have already said in this House that we have maintained the subsidies and the special rates that 20 hours of early childhood education delivered. We have kept our promise. 
Oil Prices—Government Support for Inquiry 
11. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Minister of Transport 
: Will he support an inquiry into the impacts of oil price shocks on the economy including the transport sector; if not why not? 
Hon SIMON POWER (Minister of Justice) 
 on behalf of the  
Minister of Transport 
: No because Government policy already recognises the potential for alternative transportation. The Government will also continue to invest in all modes of transport including public transport. 
Dr Russel Norman 
: Was the risk of an oil price shock considered in the development of the business case for the Puhoi to Wellsford four-laning motorway project? 
Hon SIMON POWER 
: I am sorry but I do not have that level of specific information in front of me. But I am sure that if the member puts down a written question to the Minister of Transport the Minister will be happy to answer it. 
Dr Russel Norman 
: I seek leave to table the business case for the Puhoi to Wellsford four-laning project which shows that the oil price shock was not considered by the Government in the business case. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Employment 90-day Trial Period—Statement Made on Behalf of Minister 
12. 
DARIEN FENTON (Labour) 
 to the  
Minister of Labour 
: Does she stand by the statement made on her behalf on 22 September 2010 in relation to the Employment Relations Amendment Bill (No 2): “the Government made sure there were adequate protections in the bill in a number of areas in terms of the trial period”? 
Hon KATE WILKINSON (Minister of Labour) 
: 
 Yes. 
Darien Fenton 
: Is the requirement for the 90-day trial period to be voluntary as she claims one of the so-called protections that she was referring to; if so will she rule out making the 90-day trial period a default provision for all employers? 
Hon KATE WILKINSON 
: Yes and no. 
Darien Fenton 
: What are the requirements for good-faith negotiations in relation to reaching agreement for a 90-day trial period and what protections are there in the bill for a prospective employee if genuine good-faith negotiations do not occur? 
Hon KATE WILKINSON 
: There are several protections in the legislation and I refer the member to section 4A section 134 and section 103(1)(b) (c) (d) (e) (f) and (g). 
Darien Fenton 
: Goodness! It is good to know the Minister can count. What protections—[ 
Interruption 
] 
Mr SPEAKER 
: I want to hear the question. 
Darien Fenton 
: What protections or remedies are available to an employee— 
Mr SPEAKER 
: I apologise to the member. Members the noise level is unreasonable. I want to hear what is possibly the last supplementary question today. 
Darien Fenton 
: What projections or remedies are available to an employee who is dismissed under the 90-day scheme and given no reason given that section 113(1) of the Employment Relations Act states that “If an employee who has been dismissed wishes to challenge that dismissal or any aspect of it for any reason in any court that challenge may be brought only in the Authority under this Part as a personal grievance.” yet section 67(1)(b) states that a person dismissed under the 90-day scheme may not bring a personal grievance or legal proceedings in respect of the dismissal? 
Hon KATE WILKINSON 
: There are many other grounds upon which a personal grievance may be pursued. The member as I explained can find them in the Employment Relations Act in section 103(1)(b) through to 103(1)(g) as well as in the breach of good faith conditions which are in section 4A and the breach of employment agreement conditions which are in section 134. If the member would like line-by-line advice or a lecture on how to read a statute we are happy to oblige. 
Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill 
First Reading 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
 on behalf of the  
Minister of Agriculture 
: I move  
That the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill be considered by the Primary Production Committee that the committee present its final report on or before 28 February 2011 and that the committee have authority to meet at any time while the House is sitting except during questions for oral answer and during an evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
Dairy exports contributed 27 percent of the value of total merchandise exports for the year ended March 2010 and it is estimated that the dairy production and processing industries contribute approximately 2.5 percent to GDP. Given the industry size it is important to ensure its long-term growth and dynamic efficiency. The Dairy Industry Restructuring Act 2001 promotes dynamic efficiency of the New Zealand dairy industry by regulating the activities of the dominant market player Fonterra. The pro-competition provisions ensure that despite its dominant market position Fonterra operates in an environment that is contestable—that is one where it faces potential competitive pressures. This environment drives Fonterra and the wider dairy industry to improve economic performance. However the Dairy Industry Restructuring Act contains sunset clauses because this regulatory intervention is necessary only until there is sufficient competitive pressure on Fonterra to ensure efficient market outcomes without that additional regulation. The current sunset clause could be met as early as April next year in the South Island. 
A competition analysis of the New Zealand dairy industry found that without the regulatory provisions contained in the Dairy Industry Restructuring Act there is unlikely to be sufficient competition to ensure the efficient operation of the New Zealand dairy markets at the time the sunset clauses are met. Consequently in July this year Cabinet agreed on a proposal that effectively extends the pro-competition provisions of the Dairy Industry Restructuring Act. This bill therefore amends the sunset clauses in the Dairy Industry Restructuring Act by resetting the market share thresholds that have to be met in order for the pro-competition provisions to expire. 
The new market share thresholds in the North Island are that at least 20 percent of milk solids must be collected by independent processors in a season and in the South Island at least 20 percent of milk solids outside the boundaries of the West Coast Regional Council must be collected by independent processors in a season. Before allowing the pro-competition provisions to expire it is crucial to examine the extent of competitive pressure that would be applied on Fonterra and the potential impact on the long-term growth and dynamic efficiency of the dairy industry in the absence of these provisions. 
This bill therefore puts in a place a new process so that when the market share threshold is reached in either the North Island or the South Island it triggers a comprehensive competitive review of the New Zealand dairy markets. At that time the Minister of Agriculture in consultation with the Minister of Commerce would devise and publish terms of reference for that review which would be undertaken either by the Commerce Commission or by officials depending on the complexity depth of analysis and information requirements. The review would consider such things as the relative market share the number scale and location of existing competitors the barriers to entry for potential new competitors and the expected impact and application of the Commerce Act. 
On receipt of the report the Minister of Agriculture would be required to notify in the  
Gazette 
 within 90 days his or her response including any intended action. The pro-competition provisions would then lapse irrespective of that response at the end of the following season unless legislative change was made in the meantime. If the Government considered that the state of competition in the dairy industry was insufficient at the time of the review there would be time to promote a new bill in Parliament that would see the Dairy Industry Restructuring Act in full or in part extended further. In effect this creates a window between the thresholds being met and the Dairy Industry Restructuring Act expiring in order to give enough time for the Government of the day to review an amended Dairy Industry Restructuring Act if necessary to meet policy objectives at the time. 
In order for the Government to know when the thresholds have been met it has to have access to information about the collection of milk in the New Zealand dairy markets. The bill therefore includes a requirement that dairy processors keep records relating to milk collection. Processors already collect this information so this obligation does not impose any additional compliance costs on processors; it simply provides a regulatory backstop to make sure that the Minister will always have access to the necessary information. The current rate of independent processor entry and expansion indicates that it could potentially be 5 to 10 years until either one of the new thresholds would be reached and the review of the state of competition in the dairy industry undertaken. At some point the transition should be made to a dairy industry that does not need industry-specific competition law and can rely on general competition law only. However the current market structure means that additional regulation is still required to ensure the contestability of milk supply and the dynamic efficiency of New Zealand dairy markets. I commend this bill to the House. 
Hon DAMIEN O’CONNOR (Labour) 
: 
 Although I was somewhat distracted throughout that speech from Maurice Williamson I am guessing from what I heard the Minister say that the speech was written a week or so ago probably by officials. It is somewhat redundant now because just yesterday—and the Minister may not know this—his Government announced a review of all these regulations believe it or not. 
The one thing I can say about the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill is that it proves that the Minister of Agriculture is intelligent because it has been said to me that anyone who does not change his or her mind does not have one. I can tell members that the Minister of Agriculture has changed his mind on this particular issue. A number of months ago he was saying on the advice of his officials that we had to bring this legislation into the House and extend the thresholds and time lines for dairy regulations because that is the best way to ensure that we have an efficient dairy industry. Well Fonterra got on the phone. It rang around a few people put on a bit of pressure and lo and behold yesterday the National Government announced that it will review the regulations. 
Minister Williamson has unfortunately been left to carry the baby because the Minister of Agriculture is way over in Europe at the moment. That is a shame really because he might have been able to bring some explanation to the House. I am sure that Mr Ardern will do so. He knows of the stupidity of the whole process. He knows that on the basis of the officials’ advice this legislation is being extended to guarantee the supply of milk from New Zealand farmers through their own company Fonterra to their competitors when and where they want it. It is an absolutely bizarre situation. This situation involves companies like Synlait of which Ruth Richardson was a director and Open Country Cheese of which Wyatt Creech was a director. I am not saying for a moment that any political pressure was brought to bear in this case but the fact is that those two companies in particular—Open Country Cheese and Synlait—get a guaranteed supply of milk where and when they want it almost and it is supplied by the farmer-owned company Fonterra. That is unfair. 
If we go back to the situation of why these regulations are in place we note that when Fonterra was formed it would have effectively been the monopoly supplier of milk to the whole dairy industry—with a couple of exceptions: Tatua and Westland Cooperative Dairy—for people who needed milk to manufacture milk-based products such as chocolates other cheeses other high-value products you name it. The regulations were needed so that those small purchasers of milk were able to guarantee supply and certainty for their business and their shareholders. The officials advised at that time that an amount of milk should be supplied to the industry. Those companies could ring up and get a ready reliable supply and run a business of value-added products. We want to create—and the Labour Party still supports—innovation and growth in the dairy industry. Value-added is exactly where we have to go. 
There was a reconsideration of that process and consideration of another process of supplying the milk because the analysis said that the supply was not only reliable and regular but also underpriced so a subsidy was going to the competitors of Fonterra. We recommended in Government that there be an auction system; I acknowledge the Hon Jim Anderton’s consideration of this issue. We arrived at the position that we needed a proper auction system and that we would move towards that system but we did not get there quickly enough and an extension was needed. However this bill lifts the threshold. The bill in the House at the moment is effectively redundant given the announcement yesterday. We are wasting the House’s time but never mind that; the National Government has wasted the House’s time on most of its legislation and we will have to fix up the mess when we come back into Government. 
On this particular issue the alarming thing about this bill is that the Government has effectively said that Fonterra should be at maximum 80 percent of the market in this country—Mr Ardern knows this—down from about 95 percent. Some say that dominance is a monopoly control while others say that the strength to negotiate with supermarkets around the world has made for the success of the dairy industry in the past. If the National Government is determined to reduce the size of Fonterra to 80 percent of the market and it is determined—or was; I am not too sure now given yesterday’s announcement—under this legislation that Fonterra will continue to supply milk on demand to Synlait Open Country Cheese Cadbury’s and other worthwhile users of milk then clearly there is some unfairness. Many many questions will be asked in the select committee. 
It is perhaps good that the Minister has changed his mind because one of the things that has emerged more recently is that with the changing international market place for funds flowing around New Zealand has a sound economy because of good management by the previous Labour Government. People appreciate that if they invest in New Zealand then they are likely to get a return on that investment. They will get their investment back. That has not occurred around the world in all areas of investment I have to say. We are a good bet and we are a good place to invest in so the funds floating around at the moment are likely to consider New Zealand for investment purposes. 
In fact just a couple of days ago the Government allowed the single biggest sale of farmland in this country ever—the single biggest sale—to occur without a murmur. There was not a murmur. Federated Farmers—no doubt prompted by their chief executive Conor English—came out and said something. They did not have to. Why a farmer organisation would come out and endorse at first announcement the sale of the Maniototo farm is beyond me. Why would they endorse it? It means that their farmer members will have to pay more for farmland into the future and it will make the viability of the operations less and less certain. It is bizarre that Federated Farmers should have said anything about it. They came out in my view because they had to support their Tory mates in Government on a sale that should have been intervened on. This was the single biggest sale ever less than a month after the insincere John Key said he would toughen up in this area. Yes right! 
Bill English has said that he is quite happy to have a sale go to anyone anywhere for any price; John Key said that he was not quite so sure. Then the Crafar farms situation came along and he said that we do not want to be tenants in our own land. The National Government has just shown that it has two faces on this issue. Mr Ardern who should have been Minister of Agriculture knows the truth in my argument. There is real concern about what is happening. 
This bill is a waste of time because the National Government announced a review into all of these regulations yesterday—the day before it brought this legislation to the House. What a waste of time. 
Hon Maurice Williamson 
: Not all of them. The member is wrong. 
Hon DAMIEN O’CONNOR 
: Mr Williamson got up and made a speech on behalf of a Minister who is swanning around in Europe or Japan. He knows it was a crock. He knows that what was announced yesterday makes this bill redundant. What a bizarre situation. The National Government has made a mockery of this House. 
We need to show more consistent oversight for the dairy industry and the primary production sectors into the future. Those sectors need to know whether there will be massive foreign investment. Will Fonterra be allowed to thrive or will it have to keep supplying its competitors? What is the situation? If the Minister is not prepared to ask the questions then I assure members that the select committee will be. I know that the chairman of the select committee will allow those questions. He knows they have to be asked. His ministerial colleagues have been too afraid to do so because they do not know what they think about foreign investment and they do not know what they think about Fonterra—who should own it and how big it should get. Until those questions are answered our economy is under threat. 
SHANE ARDERN (National—Taranaki - King Country) 
: 
 It is always interesting to follow the previous member for West Coast - Tasman Damien O’Connor particularly on dairy industry issues. In fact the member was chair of the Primary Production Committee at the time that the Dairy Industry Restructuring Act 2001 passed through that committee so I know that he knows a little bit about the detail. I also congratulate Minister Williamson on his fine contribution to the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. I know his history is in the dairy industry as well. He grew up on a dairy farm which I know he does not really want advertised much in the heart of the Waikato and has a history there. 
The Fonterra debate is interesting and has been occurring since the time that Fonterra was formed. Fonterra is only part of the dairy industry. There are now 20 exporting companies in the industry but Fonterra is by far the most dominant player. It is responsible for 84 percent of product exported out of New Zealand—84 percent. We hear all these figures bandied around. Sometimes it is useful to have a few facts injected into the debate. Eighty-four percent of dairy product is exported out of New Zealand which is around 91 to 92 percent of total milk processed in the country. That includes the regulated milk which this legislation covers. 
The debate on raw milk is only part of the equation. The review that was announced yesterday will look at the eligibility of competitors for raw milk. That will be the interesting part of the equation going forward I guess. There is a debate and it is a legitimate one about who should be eligible to receive up to 50 million litres of raw milk delivered to their processing site in a Fonterra tanker. It is a legitimate debate. I look forward to the submission process in the Primary Production Committee when it takes place. 
Going forward if we do not protect the critical mass that Fonterra has then we are in danger of fracturing it as we see in the meat and wool industry and we are in danger of losing value. There is no doubt about that. I do not know why it is difficult to understand in this country; when we play the Springboks in rugby we send the All Blacks who are a total monopoly. There is no competition within New Zealand with the All Blacks. But when we sell cheese meat wool or products like those then we need to send the Taranaki team to sell them. That part of it is something that I have been challenged by and there has been vigorous debate over the whole time that I have been involved in this process. 
The select committee process looked at the change in the principle Act that we made recently of the farm-gate price plus 10c and a whole lot of interesting issues came up about how some of the very small entrepreneurial and sometimes unique companies in the world can be protected. This bill is designed to try to get a balance in how we provide milk to these small cottage industries although some of them are not so small. Some of them provide a very very diverse dynamic within the private capacity of their companies and also within the New Zealand dairy industry as a whole. How do we protect them so they do not get run over by a large performer and player like Fonterra at the same time as we allow Fonterra to go forth and export to 150 countries and continue to maintain a strong market branding and a strong market position? To strike that balance is challenging. 
The review that the Minister of Agriculture announced yesterday is I think very timely. It is certainly something I have pushed for for a long time. I know that those who are shareholders of Fonterra—bear in mind that there are only 10300 shareholders in Fonterra of which I am one and I declare an interest in that—at this point in time are keen to see the detail on how that raw milk competition can be fairly regulated so that they are not disadvantaged at the same time as providing that raw milk which is so necessary to some of those small companies. 
I look forward to the bill coming before the Primary Production Committee. I know most of the players who will submit to that committee and I look forward to seeing them there. I also know that the Labour Opposition is basically in support of the concept despite some of the rhetoric that we have heard from the other side of the House. I am sure that at the end of that process a sensible pragmatic approach will be found and the bill will pass through Parliament in a timely way. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 It is a pleasure to speak on the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill this afternoon. The original Dairy Industry Restructuring Bill was introduced by the then Minister of Agriculture Jim Sutton to facilitate the amalgamation of New Zealand’s two largest dairy cooperatives New Zealand Dairy Group and Kiwi Cooperative Dairies Ltd and the absorption of the New Zealand Dairy Board by the new cooperative Fonterra. The provisions that we are amending and discussing today were to ensure that such a large cooperative a potential monopoly would not stifle competition within the industry. We believe that regulation to support and ensure competition is an important part of a developing and strong free-market economy so the Opposition supports this bill. We support the amendment of the sunset clause to increase the market threshold after which Fonterra no longer has to provide 5 percent of its dairy solids at a regulated price. 
We do so because we agree with the Government’s concern that the current thresholds may not be sufficient to adequately support a thriving competitive market but we question why we are debating this bill the day after the Government announced its review. We wonder whether we will be back in a short period of time to debate the same issues again and amend the bill one more time. It mirrors the larger issue of the increasing sale of farmland to foreign investors. This risks pushing Kiwis off their own farms and handing over shareholding rights in Fonterra to offshore investors and offshore owners. That is a larger debate that needs to be had. Although this bill is necessary and Labour will support it we wonder whether the timing is a little bit odd when there is that larger debate that needs to be had. 
Whilst I am on my feet I add that Palmerston North takes a strong interest in Fonterra’s activities. We have the Fonterra Research Centre located within our city; therefore the way it operates within the market and its strength as an international player is of extreme interest to my electorate. We appreciate the fact that Fonterra brings a lot of money into the country through its innovation and the creation of products like savoury products with reduced salt probiotic products that assist in gut health and the immune system a product called Anlene which assists with bone health and the reduction of osteoporosis and low-calorie high-protein chocolate bars and other such products. 
Interestingly very few of those products are available in New Zealand which I suppose is a sad thing but our market is so small that a player like Fonterra has to be in the international market. That means it is bringing money into New Zealand. A lot of those products promote good health within the population and it is a little bit sad that products like that are not available within New Zealand. But that is just an aside to note that Palmerston North appreciates the presence of Fonterra within our community and within our economy and the fact that it provides a large number of jobs to graduates of Massey University who go on to work at Fonterra and at a number of the nearby Crown research institutes as well. 
I am interested to see what the ACT Party’s position is on this bill—I see Mr Ardern is nodding—because as I said this is necessary regulation to ensure a healthy and competitive market. I know that is something that the ACT Party is interested in but sometimes it worries about the introduction of regulation and red tape. I will be very interested to see where the ACT Party comes down on this because Federated Farmers’ initial response has not been too positive about this bill. It has expressed some concerns and I know that Lachlan McKenzie who is the federation’s dairy chairman has suggested that the Government is missing an open goal to ensure real farm-gate competition in prolonging its bias towards independence. I suppose that Federated Farmers expresses some of the concerns that we in the Opposition have expressed as well about subsidies to foreign-owned milk processors and the continuing support they are receiving. 
Although we support this framework and the need to enhance competition within the market we know that those subsidies cannot go on for ever. At some point in time those milk processing companies will have to stand on their own feet. We share the Government’s concern that they are not at that point yet and that continued regulation is important to ensure that the market can be developed further. 
It goes without saying that the Opposition supports this bill. We look forward to rigorous debate at the select committee to receiving plenty of submissions—no doubt Federated Farmers will be among them—and to the continued progress of this bill. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 The Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill extends the subsidies from New Zealand farmers to overseas owners of competing dairy companies. Its purpose is to move money from New Zealand dairy farmers and give it to the overseas owners of Fonterra’s competitors in New Zealand. In fact paradoxically one of the effects of this bill will be that New Zealand dairy farmers will be subsidising the Communist Party of China. It seems extraordinary but it is true. The reason it is true is that Synlait one of the competitors of Fonterra has just been bought by Bright Dairy and Food Co. Ltd. Bright Dairy is in fact fully owned by a combination of the Shanghai provincial government and the Chinese central government. They are the two parties that own Bright Dairy. Bright Dairy is now buying Synlait. Synlait through this legislation which is being extended here today is subsidised by Fonterra’s shareholders. So Fonterra’s shareholders are in reality not even in a metaphorical sense but in a literal sense subsidising the Communist Party of China. If this Parliament thinks it is a good idea for Fonterra’s shareholders to subsidise the Communist Party of China then it will vote for this bill. 
I hear National and Labour members saying they have lots of concerns about the bill but they will still vote for it. They will still have their ideological burp “Oh we must do this and vote for this bill.” But why should Fonterra’s shareholders subsidise the Communist Party of China? That is the question. Why would the New Zealand Parliament pass legislation to extend subsidies to the Communist Party of China which are due to expire some time next year? We already have a special law to subsidise Fonterra’s competitors. That law will expire probably some time next year once Fonterra’s competitors reach a certain size of the market some time next year. We are now shifting the goalposts on poor old Fonterra’s shareholders and saying that originally we had this law that said it had only to subsidise its competitors until they reached a certain size. But now we are shifting the goalposts and Fonterra has to subsidise its competitors so they can become even larger and Fonterra will continue to subsidise them well into the future—possibly for ever—if they do not get large enough. 
Fonterra will have to provide milk at a guaranteed price on a guaranteed time in its trucks and to its competitors such as Synlait Open Country Cheese and New Zealand Dairy Group all of which have very significant overseas ownership. In fact some of them are totally overseas owned and controlled. Fonterra will have to do that possibly for ever. Fonterra is our most important single company a cooperative no less and is one of the world’s great cooperative companies—a producers’ cooperative. Surely this is one of the great things we aspire to and it demonstrates the fantastic nature of cooperation as opposed to competition. Fonterra—a great New Zealand cooperative—will have to subsidise the Communist Party of China competitor called Synlait. So Synlait is the competitor to Fonterra in New Zealand and as a result of the vote this afternoon to extend these subsidies because National and Labour will vote for this stupid bill New Zealand dairy farmers will be punished. The dairy farmers have cooperated which makes a lot of sense—cooperation is a really valuable thing—and have been so effective at building the New Zealand dairy industry into an international giant and they will be punished because we have some ideological position that says we must subsidise Fonterra’s competitors in New Zealand. These overseas-owned competitors are trying to buy up New Zealand’s processing facilities and are trying to buy up New Zealand dairy land so that they can undercut Fonterra and slowly take over the New Zealand dairy sector but National and Labour say: “No Fonterra you must subsidise the Communist Party of China.” Well that is really brainy is it not! The New Zealand Parliament says that Fonterra’s shareholders have to subsidise the Communist Party of China competitor called Synlait in New Zealand which is fully owned by the Communist Party of China. That is pretty daft. 
One would have to be a fairly hard-right ideological kind of person to think that we should continue with this set of rules. When we set them up Fonterra had a certain set of goals. We said that once there was a certain amount of competition in the system then Fonterra would not have to subsidise its competitors any more. That will happen probably some time next year. Now we are saying that is not good enough any more. Now that there is this level of competition in the sector we will move the goalposts and Fonterra will have to subsidise those companies more and more until they are big enough. When they get big enough who knows? National and Labour might vote for another rule change. It seems that Fonterra is to be punished for ever for being successful. Fonterra and all the dairy farmers who own Fonterra producers’ cooperatives are to be further punished for being so successful at building the New Zealand dairy sector. 
The Green Party thinks this is a stupid idea. The Green Party has its disagreements with Fonterra. The way it treats rivers is terrible; there is no question about it. We have put enormous pressure on Fonterra to clean up its act and it would be great if it did. But the idea of a producers’ cooperative getting together presenting one face to the world for the New Zealand dairy sector is a really clever idea. It was invented by a bunch of dairy farmers in New Zealand a long time ago and they were right. Do members remember that dairy farmers were the ones whom everyone looked down on? It used to be that sheep farmers were the aristocracy and those “filthy old dairy farmers” had to go out at 5 o’clock in the morning and do the milking and everyone looked down on them. Well dairy farmers are the ones who are having the last laugh now because they got together and formed a cooperative—unlike the meat industry and the sheep-wool industry. The dairy farmers formed a cooperative and they have been incredibly efficient. So now National and Labour are getting together and saying that we cannot have that. They have been too successful; they have to be punished for another few years. 
The Green Party certainly thinks that we want a set of rules in place that protect New Zealand producers particularly the small specialist producers so that they can access milk. But we can establish such a set of rules. We do not have to provide massive subsidies to these foreign-owned competitors to Fonterra in order to make sure that we have adequate milk supplies at an affordable price to New Zealand - owned processors operating in our country. We do not have to have a whole set of special rules that say there have to be massive subsidies running from Fonterra to its overseas-owned competitors. 
We have to ask whether this is a perversion of the original Dairy Industry Restructuring Act. When the Act was originally established nobody imagined that Synlait owned by the Communist Party of China would be undercutting and undermining Fonterra in New Zealand. Nobody imagined that we would have a global land grab which is under way at the moment whereby countries are seeking to buy up land in other countries. We have seen it particularly from China which is actively buying up land all over the planet and we have seen it from South Korea and other places. Those countries have an active global land strategy and it makes perfect sense for China. They also have a strategy of gaining access to resources—in particular food and minerals. So the strategy in New Zealand for the Communist Party of China is very simple: it wants to get vertical integration from land through processing facilities and export the product back to China in order to guarantee food supply and security in China. It makes a lot of sense for the Communist Party of China to do that and it is pretty organised and a bit smarter than this Parliament. But it is not acting in New Zealand’s best interests. 
It might shock members to know this but the Communist Party of China does not have the best interests of New Zealand in its heart of hearts. So when we pass legislation that benefits the Communist Party of China which will result in extra costs on Fonterra shareholders it is not really acting in the best interests of New Zealand. Some would call it a bit of economic treachery. Why we would pass a law that states that Fonterra shareholders have to subsidise the Communist Party of China is hard to fathom because it does not have the best interests of New Zealand at its heart; believe it or not. So why would we pass a law that requires Fonterra shareholders through its success to subsidise Synlait which is fully owned by Bright Dairy and owned by the Communist Party of China? The New Zealand Parliament says yes it will pass that law and it will extend the special subsidies for however many years we like because that is what this legislation states. That there is no sunset clause any more is really beyond the pale. 
The Green Party will not vote for this legislation; it is daft. This is not acting in New Zealand’s national interests. If we were to act in our national interests we would look after Fonterra. We would also look after the New Zealand processors in our country. We would present one face to the world so that we can maximise the benefit to the New Zealand dairy sector. This is stupid law. 
SANDRA GOUDIE (National—Coromandel) 
: 
 I applaud the speeches from the excellent Minister the right honourable Hon Maurice Williamson and the excellent chair of the Primary Production Committee Shane Ardern—they gave excellent addresses on this Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. I have to say that Fonterra is a fantastic company for New Zealand and provides a large majority of its income from its exports and the hard work of its farmers. The farmers do an extraordinary job so I would like to acknowledge them. National has a proud history of supporting New Zealand farmers quite contrary to the Opposition and I find it interesting that we have a communist bagging another communist. This year we announced— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I do not know whether you were focusing on the comments that the member just made but they have been ruled out of order on a number of occasions and although it might not be the grievous insult that it was some years ago to describe a member in that way it is something I think he would take offence at. Certainly it has been ruled out by Speaker after Speaker. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I was listening very carefully and I recall the words very carefully. The member referring to the bagging of one by another did not identify a person in particular so it was indirect in its reference. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. The member said that it was the member she had just been listening to. Only one person spoke before her. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I did not recall what she said in that way. I heard her say that it was interesting to hear a communist bag a communist. Whether or not it was the person who spoke immediately before the only person who made the connection directly was the member sitting here. I say to the person speaking that I will not rule it out but the point has been well made by Mr Mallard that she should not bring people into disrepute in this House and that is a term that has been taken as offensive before. The member sailed very close to the wind but not over it. I invite her to heed the warning and carry on. 
SANDRA GOUDIE 
: Thank you Mr Assistant Speaker Barker and I will keep sailing. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I am doing this reluctantly because as you know I do not like arguing with you but that was not a marginal case—or one close to the line. That was a member indicating that another member of this House was a communist. I was not the only one who made that connection. I think it is fair to say that the co-leader of the Green Party made that connection as well. I indicated that I would take the point of order. It was absolutely blatant and it was I think offensive. It has been so for a long time. I know I am relitigating a ruling and I know that that is not a healthy thing to do in this House but I ask you to reflect on the ruling. Just because the comment was made by a relatively junior member whom members do not take seriously does not mean that you should not rule in the same way you would if the Hon—the right honourable as she described him—Maurice Williamson had made the comments. 
Hon John Carter 
: I have a number of points. Firstly your ruling has been challenged. You have already made your ruling. Secondly a member cannot take offence on behalf of another member. Thirdly if the co-leader of the Green Party had taken offence she was quite capable of making that point herself. Quite honestly the member did not refer to anyone directly. I was sitting right beside her and heard what she said. She did not state it as the member has said; she just talked about one person to another. The matter should lie as you have ruled. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: There are several points I want to make about this to the Hon Trevor Mallard. Once a matter is ruled it is ruled and that is it; there is no going back. Whether the ruling is right or wrong that is the end of the matter. If I have made a mistake in that ruling I just have to live with it. Having said to the member that I am not going to require her to withdraw and apologise I am not then going to turn round and say that she has to withdraw and apologise. It is just like in sport: if a referee awards a try the try stands and that is the end of the matter. The matter is closed—game set and match. 
The second element is that the Hon John Carter makes the point that members can take offence only on behalf of themselves; they cannot take offence on behalf of someone else. That rule has been longstanding in this House. I do not want to go over and relitigate this matter any more but the third point I make is that I thought on balance the member made the comment and I did not hear—had I heard the member make a reference to a person’s name and the accusation I would have seen it in a different light. She did not. One had to make the connection—to be here and listen to the whole debate and make all the connections. It was not so easy. But I have chided the member and made it clear to her that those sorts of references and that style are unacceptable and if the member makes them either in this speech or in a subsequent speech I will tell her that she is to withdraw and apologise. That is her final warning. The matter is closed. 
SANDRA GOUDIE 
: I shall continue to laud the excellence of our dairy farmers in New Zealand—in fact of all the agricultural sector—and recognise the hard work they do. Of course I was one of those hard-working dairy farmers and I understand what it takes to produce their export product for the benefit of New Zealand and I applaud them all for that. 
This year in support of the agricultural sector we announced hundreds of millions of dollars for research and development in the rural sector. We are driving the Primary Growth Partnership to boost our rural sectors and the Global Research Alliance on Agricultural Greenhouse Gases to find ways to make our farming sector more efficient productive and environmentally friendly. So we are committed to delivering growth to ensure prosperity for all New Zealanders. A huge part of that is through our agricultural sector and that is why it is so important that we support our agricultural sector. 
I will cover a few specific points in the bill. Concerns have been raised about the eligibility criteria for access by independent processors to the regulated raw milk made available under the Dairy Industry Restructuring Act. The Government shares many of those concerns about the current eligibility criteria and that is why we have committed to reviewing them so that all concerns can be considered in full. And we know that we have the support of the majority of the House for that. The Dairy Industry Restructuring Act 2001 promotes efficiency and the pro-competition provisions ensure that Fonterra operates in an environment that is contestable and where it faces potential competitive pressure. This environment drives Fonterra and the wider dairy industry to improve economic performance. We are looking to have a good discussion around this issue we are pleased that the bill is going forward and we welcome the opportunity to have that discussion. 
SUE MORONEY (Labour) 
: 
 It is indeed a great pleasure to take a call on the first reading of the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. Of course in reality this is not the first time this legislation has been before the House; this bill simply extends very good legislation that was initially brought before this House by a Labour Government. 
Just following on from the last speech made by Sandra Goudie I note that the sector the member was referring to is actually deeply disappointed in the current Government. That sector has worked out—and Federated Farmers has worked out—that this Government does not have a plan. This bill demonstrates that the Government has simply picked up what the previous Labour Government had put in place and is extending those provisions. That is simply what this bill does. The Government picked up what Labour did and decided to do it for a bit longer. I think that demonstrates once again that this Government really does not have any fresh ideas. It does not have a clue about what to do for this sector. 
I was surprised that the previous speaker chose to speak about research and development investment in this sector because that is an area where this Government has performed woefully. One of the first things National did upon taking office was to cancel the Fast Forward Fund. The Fast Forward Fund was brought in by Labour. The dairy industry in particular thoroughly endorsed it because it knew that having large amounts of funding guaranteed going forward for 10 or 15 years was the way of the future. That fund was going to do something comprehensive and yes for the future—not just the here and now which this Government likes to focus on fiddling around with tax swaps and those types of short-term measures. The Fast Forward Fund was actually going to deliver something tangible in terms of research going forward for that sector. 
The dairy sector is the backbone of New Zealand but it can be so much better. It is my belief that the dairy industry sector will really excel—it does pretty well now but it will really excel. Our place in the sun is to produce niche products. That is our place in the sun. We are a food producer and we will do best when we are smart and are ahead of the pack. That is why the Fast Forward Fund was so important. It was going to deliver this country and that industry the ability to be smart and to be ahead of the pack. 
We will not win by producing just more and more volume. Our competitors in the markets that are opening up worldwide for the products the New Zealand dairy industry produces are so much larger and so much closer to those markets and they can produce products much more cheaply. We will not win the race by trying to produce more and more volume more and more cheaply. We will win because we are smarter we have niche products we market them well and we are at the top of the pack not at the bottom of the pack. We will not be going for the low-value high-volume product but the very niche market. 
I do not want to give the impression that Labour is not supporting this bill because of course it is; it is our own piece of work. This Government has run out of ideas and the only thing it can bring forward now is to just extend legislation that the previous Labour Government put in place. 
The bill seeks to extend the period of time that Fonterra must provide fixed-price dairy solids to other dairy processors in order to foster competition in the domestic industry. I will focus on that element for a little bit in this first reading. It is quite interesting to think about fostering competition when we look at the players in the industry. Of course we have Fonterra but we have other competitors such as Open Country Cheese. One of the things I ask the Government to consider is whether it would regulate on that basis so that Fonterra has to have certain obligations towards other players. Is it prepared also to regulate to ensure that competitors like Open Country Cheese have to pay the same wages as Fonterra does for processing milk solids? 
If our memories are not too short I think that we can all remember that about this time last year a major dispute happened in the Waikato in Waharoa. It is a wee community that I happen to know pretty well. It is where my mother was born and raised. In fact the dispute happened right next door to her family farm. That dispute was over the workers of Open Country Cheese—a processor that will benefit from this legislation—being paid significantly less than workers processing milk for Fonterra. I do not think that is fair and I would like the Government to have a good think about this while it considers this bill. 
Why do we not look at having the same wages set within industries? With this bill we are regulating to say that Fonterra must do things to foster competition but on one side of the equation that is a little bit unfair. Fonterra has a collective employment agreement that it negotiated in good faith with the Dairy Workers Union. That collective agreement requires Fonterra to pay decent wages to the people who work in its factories. But Open Country Cheese does not have to pay those same wages. Fonterra has to give Open Country Cheese the dairy solids at a fixed price but can we fix the price for wages in the factories where they will be processed? That is a question that I would really like to hear a Government MP respond to. 
If we are going to have this legislation there is other legislation that needs to be considered also in order to make it fair right across the board so that the same processing costs exist in terms of labour costs. Not only is that fair but also it is good for improving wages but the Government seems to have no clue about that. As we have seen recently wages in this country have been stagnating if not going backwards. It would be good to see some regulations in the dairy processing industry that make it fair and lift wages across the board. I think that would be a really fine thing to see. 
The other issue that this bill causes us to think about is the issue of overseas investment. As we know some of Fonterra’s competitors are owned by foreign interests. Fonterra is a very good example of a cooperative. It is owned by New Zealanders and it competes against companies some of which are owned by foreign investors. That causes me to think about what the Government is doing in reviewing overseas investment which is one of the things it has done recently. But that is not even a half-hearted effort to protect New Zealand against increasing foreign ownership of land. 
Foreigners with access to cheaper capital find the prospect of tax-free capital gains from buying New Zealand land very very attractive but there is no benefit to New Zealand in that. Labour’s position on that issue will be much clearer and stronger. This review makes it even more apparent that Labour is the only party that can be trusted to keep New Zealand in Kiwi hands. 
Hon Maurice Williamson 
: Did Labour allow the sale of land to foreigners? 
SUE MORONEY 
: Maurice Williamson has something to say about this but at question time today the only thing he could tell the House was that he had denied zero land purchases by overseas investors. In fact the Government has been just tinkering around the edges and what it has done does not make any difference. 
National has polled itself to a standstill on that issue. It knows that it is unpopular to sell more land but it has no idea what to do about it. It started off by saying that the review would liberalise overseas investment in New Zealand land. Then the Minister of Finance Bill English said the strategic asset test was a nonsense that it was too confusing and too difficult. So what did the Government do? It kept the same strategic asset test and it added some more confusion to it. That has resulted in the Minister for Land Information Maurice Williamson approving all of the purchases that have come before him. He has not denied approval for any of them because the Government has done nothing real to protect New Zealand’s investment in that regard. 
I conclude by reiterating that Labour is supporting this bill. Why would we not; it was our approach in the first place. This Government has run out of ideas and this bill is an example of that. The only thing that the Government can think to do for dairy industry restructuring is simply extend the time frame of very good legislation that Labour put in place in the first instance. Thank you. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Deputy Speaker. Kia ora tatou e te Whare. I say from the outset that the Maori Party will be supporting the first reading of the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. We do so as we usually do: in order for the debate to be taken outside to the community to allow the nation to have a say about the legislation. Clearly from the view of the Greens through to that of the major bigger parties there is a difference in opinion so we will be supporting the notion of allowing the bill to have some air across the country. 
If I can cut to the chase this bill is designed with the intent of increasing the operating efficiency of the dairy markets in New Zealand by regulating the activities of Fonterra. Its purpose is to ensure that New Zealand markets for dairy goods and services are contestable. Just to put some history to the debate I am not too sure about all of the detail but as far as I can understand it when the Dairy Industry Restructuring Act 2001 came into being it allowed the merger of New Zealand’s two largest dairy cooperatives and the New Zealand Dairy Board to form one single cooperative company—namely Fonterra. At its establishment Fonterra collected approximately 96 percent of New Zealand’s milk production. Given this dominant market position the Government decided to regulate the behaviour of Fonterra in relation to its suppliers and potential competitors to ensure the efficient operation of dairy markets in Aotearoa New Zealand; hence there is the notion of a contestable market. Even if there is only one seller in this case Fonterra the seller may be forced to act as though there were many more sellers. 
What does this bill mean for tangata whenua? I want to state the case just for the record that this nation recognises the enormous contribution that Maori dairy farmers make to our community and our export markets farming as I understand it an effective area of around 720000 hectares. Worth an estimated $7.5 billion Maori are the largest natural grouping of pastoral farmers in New Zealand. Given the collective nature of our landholdings and the number of shareholders they support there is also a strong case for saying they are the most sustainable farmers in New Zealand. 
Maori dairy farmers own an estimated 10 million shares in Fonterra with some of the major players in the sector being large incorporations like the 2006 dairy competition winner Parininihi ki Waitotara Incorporation which has an estimated $50 million of farming interests in Taranaki. Another big player is Wairarapa Moana Inc. which owns two dairy units milking a combined total of about 7200 cows and producing 2.3 million kilograms of milk solids annually. The group also claims assets of around $150 million. The Maori proportion of shares in Fonterra I am led to believe is around 8.3 percent. 
Given this background how will this bill enable Fonterra to be a successful and innovative dairy company and still remain a low-cost commodity producer? How does regulation enable Fonterra to weather any volatility in the market without necessarily sacrificing milk payouts at the expense of farmers? We know that the Fonterra payout is increasingly a barometer for our domestic economic conditions since dairy farmers’ incomes and investment plans are closely tied to international dairy product price movements. It is of fundamental importance to Maori and indeed to the nation that this bill provides certainty in the market although also keeping a strong relationship between New Zealand dairy markets and the Government’s policy direction. 
The key way that this is to be achieved is that the bill sets out the market share thresholds that if met would bring about the expiry of Subpart 5 of Part 2 of the current Dairy Industry Restructuring Act 2001. Subpart 5 provides for effective regulation and transparency of Fonterra’s activities within the dairy industry. Subpart 5 also deals with the expiry of these regulations on a certain condition when the dairy market share threshold is met. Currently if independent processors collect 12.5 percent or more of milk solids within a season the market share threshold is met. Let us remember that Fonterra collected approximately 96 percent of New Zealand’s milk production so there has never been much room for independent operators outside it. The new legislation provides for a more detailed approach in determining when the threshold is actually met and increases that threshold to 20 percent. However the new legislation is very specific in defining the process of determining the threshold and it effectively empowers the Minister of Agriculture to forcibly enact the expiry of this subpart in the event that the threshold is met. 
From our reading of the bill the apparent increase in the power of Government intervention would worry us. In essence this bill affects approximately 1700 dairy industry workers farm owners farmers and farmhands who are Maori. We will be very interested in their views obviously and we would like to hear from them and from the Federation of Maori Authorities. We know that the Federation of Maori Authorities’ dairy cluster has long battled for better Maori representation in relation to Fonterra but has been told that sector representation at a board level cannot happen. We will be interested to hear just how involved the federation has been in the negotiations around changing the threshold. 
As the proud member for Waiariki I will be looking out in particular for the advice of those involved in the Maori-owned Miraka Ltd which I know wants to build a milk processing plant at Mokai about 30 kilometres north-west of Taupo. 
Louise Upston 
: It’s looking great. 
TE URUROA FLAVELL 
: It is looking great. The Miraka partners Wairarapa Moana Inc. and Tuaropaki Ltd have been doing some great work in that particular area. Already dairy farmers in the region are running about 10000 cows between them. The proposed plant is located in the catchment around the Taupo area and it could also take Maori-supplied milk from further north around Rotorua and from other Tuwharetoa-owned land in the region. I suggest that this bill will be very high on Miraka’s agenda in terms of its initiative in establishing an independent plant for the processing and marketing of milk. I want to share with the House the comments of PGG Wrightson’s Maori agribusiness manager Clinton Hemana about the excitement associated with Miraka Ltd. He said: “Maori have been seen as a sleeping giant for some time and this is them coming to life it is the next step forward to pursuing their own path.” 
We welcome all of these views and as I said we will support this bill in its first reading to make sure that we can capture the views across the nation. Kia ora tatou. 
Dr ASHRAF CHOUDHARY (Labour) 
: 
 It is my pleasure to speak on the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. The dairy industry is the largest industry in this country. There are 10500 dairy farmers who produce a huge amount of milk and we are the largest exporter of milk and milk products in the world. We are very proud of the quality of products we sell overseas. When one travels overseas one sees the products from New Zealand and feels proud of the quality that is being exported. Anything we do in terms of improving the efficiency of our system and the quality and standards of our products is always welcome. 
I am proud to stand in this House to support the bill because it is intended to improve the dairy industry particularly in its restructuring. The bill sets up new sunset provisions in this restructuring. Along with Government members particularly those on the Primary Production Committee—and I am sure this bill will be coming to that committee—I will be very happy to scrutinise it further. 
The purpose of this bill is very clear. It amends the threshold sunset clause in the Dairy Industry Restructuring Act to increase the market threshold after which Fonterra no longer has to provide 5 percent of the dairy solids at a regulated price. The threshold is currently set at a 12.5 percent market share of the collected raw milk for independent processors in the North Island and at a 10 percent market share in the South Island. These thresholds will likely be reached in May 2011 and 2012 respectively but a more recent analysis of the dairy market suggests that at this stage the independent dairy processor will not be sufficiently developed to operate effectively and provide adequate competition to Fonterra in the domestic dairy processing market. So it is important that we advance the date further into next year and the year after. 
Although we support the bill at the first reading we have some reservations about supporting it further because we want to make sure that when the bill comes to the Primary Production Committee the submissions from various groups in the dairy industry will be taken into account. We also want to make sure that the dairy industry is competitive and that dairy farms and the dairy industry are not taken over by foreign people particularly in relation to the fact raised earlier with regard to what this Government is doing in terms of selling our farms overseas. I know that thousands of hectares of land have been sold into overseas hands in recent times. I was reading the other day that some farms have been sold to universities in America and it will be interesting to see what the Minister Maurice Williamson will do. 
Hon Maurice Williamson 
: We’ve hardly sold anything compared to you lot. I’m ashamed of how little we’ve sold compared to you lot. 
Dr ASHRAF CHOUDHARY 
: I am watching actually; I ask Mr Williamson what he is going to do about those farms being sold to the Chinese. I wonder whether he will sell those farms into Chinese hands. That will be a real test. I have heard the comments that he has been making in recent times about foreigners but it will be very interesting to see what he does about that potential sale to Chinese buyers. I think that that is an issue for all New Zealanders. 
We want to make sure that our land particularly our productive land is kept in our hands and not sold to foreign enterprises. There are people who have a lot of money who want to buy into our farms. It is important that this Government should take cognisance of what New Zealanders are saying in terms of sales to foreigners. 
Labour supports the extension of the threshold at this time but we note that dairy processing companies should not expect this treatment for ever as New Zealanders’ farms could not afford to subsidise them indefinitely. It is both interesting and confusing that this bill is being read just a day after the Minister announced a review of Fonterra’s obligation to supply milk to independent dairy processors. It is interesting that the Minister on one day is saying one thing but today we have the bill coming through. I suppose it has taken some time to prepare the bill but clearly there is a bit of confusion in the Minister’s mind. 
We support the review of Fonterra’s obligation to supply milk to competitors as it is of concern to see companies such as Synlait which is owned by offshore interests being subsidised by New Zealand farmers. That really just mirrors a larger issue whereby the increasing sale of farmland to foreign investors risks pushing Kiwis off farms shareholder rights are being handed over to Fonterra our largest company and our profits from this $20 billion industry are being funnelled offshore. That would be really unfortunate. 
As a scientist with a farming background I can see the potential particularly in Asia. There is huge potential coming up not just for the Chinese market but for the Indian market and the wider Asian and Middle Eastern markets. There is huge potential for milk products. We have to make sure that there is enough competition in the market and that we do the right thing in terms of exporting our products. 
Only a few minutes ago before I came to the House I was speaking with Mr Graeme Peters from the New Zealand Association for Animal Health and Crop Protection. He was telling me about some of the potential issues that could be coming in terms of residues for example in our soils and crops and in the use of chemicals in New Zealand. I think that those issues are concerning New Zealanders as well. We have to make sure that on one hand we have the right products but at the same time we ensure that those products do not carry any residues particularly pesticides in the products we export. There will be pressures particularly of a competitive nature coming from overseas where people want to have products that do not have any residues particularly from chemicals. It is important that as we delve further into the Asian market the products we have not only from our dairying industry but also from the rest of the farming industry are produced to the standards required by customers—and we do that in the EU now and in the American markets. 
Once again I say that Labour supports the bill and we are looking forward to submissions in the Primary Production Committee where we hope to scrutinise this bill further. With those words I support the bill. 
CRAIG FOSS (National—Tukituki) 
: 
 In relation to the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill 2010 there are a couple of points I need to clarify. I notice for the record that previous speakers particularly those from the Opposition are supporting the bill at this stage. The bill is only five-odd pages long so quite how they have managed to fill up 10 minutes on all other topics I do not know. I must also take issue with Mr Russel Norman the co-leader of the Greens. Yes he made an interesting speech but you know he was taking one plus one to equal 36 or something. Actually the bill is five pages long and it simply extends the balance and the competitive pressures that we are putting into the New Zealand dairy industry whilst other reviews are going on and other changes are under way—as other members have spoken about. It is actually as simple as that. There are all sorts of conspiracy theories running around the House but it is very very simple. 
For the record I must address one fact. The previous speaker Dr Ashraf Choudhary and one or two Labour member who spoke before him spoke about sales of New Zealand land to foreign entities. I point out because I have checked with the Minister concerned that this year a grand total of 8000 hectares of farmland have been sold from New Zealanders to offshore players whomever they might be. Some may argue that even that amount may be too much; some may argue it is too small. But we must put everything into context. In the year 2006 when Labour was in Government just in that single year a total of 384000 hectares were sold offshore—384000 hectares were sold in 2006 under the previous Labour Government. That Government followed due process just as the current Government is following due process around such sales. I am not making a judgment about whether that is right or wrong; all I am saying is that when we hear these loud speeches from the other side we must put things in context and work the numbers out. If we do so we will see that in 1 year under this National Government—this year—8000 hectares have been sold offshore and in 2006 384000 hectares of New Zealand land were sold to entities offshore under the previous Labour Government which was supported by the Green Party at that time. I needed to make that clear. 
I am very very proud of the New Zealand dairy industry—very proud. It has made some mistakes on the way but I am hugely bullish in respect of where the industry is going and its upside. Like many of the entities in that sector there is a growing awareness of the need for environmental integrity in relation to the products that are produced and sold. We fully acknowledge that and I fully acknowledge the steps that the industry has taken. But I resent it when some members tar all farmers—or all dairy farmers in this instance—with the same brush. Most farmers I know are hugely concerned about looking after the environment and being custodians of it for their children and the next generation. 
I say very quickly that some of the commentators have missed one of the key points of the need for this bill. For Fonterra and the New Zealand dairy industry to compete and to gain access to markets offshore they must have domestic competitive pressures within New Zealand. Otherwise they will come up with trade issues within the jurisdictions where they are trying to maintain quota. So that is a key point. That is why in conjunction with other measures such as the review announced yesterday it is relatively harmless but very significant that this bill is in place today. I look forward to working on it at the Primary Production Committee with other members. The review that was announced yesterday will address many of the concerns that members have raised in this House. Thank you. 
COLIN KING (National—Kaikoura) 
: 
 It is a pleasure to have the last word so to speak on the first reading of the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. As I do so I reiterate those fine words that have been uttered today about the success of the dairy industry. 
But I will touch on a subject that is fairly close to my heart. I can remember dairy farming when we used to put our milk into 10-gallon or 45-litre cans and we would lug those around. Technology has certainly been applied to the dairy industry and it is that innovation that has created a range of products today that certainly meet the needs of a modern society. We are living in a global economy. We have a globally competitive organisation called Fonterra; it is incredibly successful. That having been said I tell members that we do lumber it with some pretty balancing sorts of requirements and one of those is to pick up milk no matter where the milk is produced in New Zealand. We certainly do expect an enormous amount of vigour and enthusiasm from Fonterra’s management and the 10000-odd farmers who are its shareholders. 
When we look at dairy farming in the context of what it has meant to New Zealand over the last hundred-odd years we see that it has been an opportunity for many families to get on to farms and that is one thing that the National Party is very very proud of. Down in Marlborough down in Canterbury in the Waikato in the Manawatu in Northland and all over New Zealand in places like that we have seen very large properties cut up and farming practices change to milking cows and to harvesting the product from growing grass. So when we look at the context of where we have got to today with the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill we can see that we are just critiquing the provisions to the extent that we are enhancing them as we move forward. We are giving certainty to the industry certainty to the banking fraternity and confidence in the dairy industry. 
One thing that would be appropriate to mention at this time is the tax cuts—the switch in the balance of the economy on 1 October that occurred courtesy of Budget 2010. It will do a great deal for those dairy farmers. It will enable them to continue investing in their properties investing in the provinces investing in training and investing in research and development. This bill is an excellent bill and I look forward to working on it in the Primary Production Committee. 
A party vote was called for on the question  
That the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill be now read a first time. 
Ayes 112 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 5; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Bill read a first time. 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
 on behalf of the  
Minister of Agriculture 
: I move  
That the Primary Production Committee consider the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill 
 that the committee report finally to the House on or before 28 February 2011 and that the committee have authority to meet at any time while the House is sitting (except during oral questions) and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
Motion agreed to. 
Student Loan Scheme Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Bill be now read a first time. 
 At the appropriate time I will move that the bill be referred to the Finance and Expenditure Committee. 
This bill represents one of the most fundamental reforms of the student loan scheme since its implementation in 1992. The changes contained in the bill follow two closely linked elements. The first which forms the primary purpose of the bill is to make it easier for borrowers to manage their loans and pay back what they owe and to encourage earlier repayment. This will be facilitated by the second element in this bill which allows borrowers to have all their loan details in one place and for both borrowers and the Inland Revenue Department to communicate electronically with each other. Together these reforms will help simplify the way that the scheme’s 560000 borrowers manage their loans and will help the Government to better manage this $10.3 billion Crown asset. 
Currently the administration of the scheme is complex with several agencies administering different parts of the scheme. This means that borrowers must deal with different administrators regarding their loan which can make it difficult for people to have a clear view of their overall loan position and their immediate obligations. These problems are compounded because the Inland Revenue Department currently collects student payments on a system that was originally designed for the collection of tax. The system relies on largely paper-based communication. It is complex and inflexible. That adds to the challenges of maintaining communications with borrowers who by their nature tend to be highly mobile as they either progress through their careers or go overseas to gain further experience. 
The process of annual assessments for determining borrowers’ loan repayments also results in a complicated annual interaction with borrowers and generates compliance and administrative costs for both parties. This bill introduces a suite of measures designed to address these problems. The first of these measures paves the way for all loan information to be provided electronically to borrowers by the Inland Revenue Department and at the same time it will allow those borrowers to access and manage their loan account from anywhere in the world at any time. This move from paper-based systems towards a greater use of electronic technologies is the first part of wider reforms towards building a world-class tax administration one that supports the Government’s plans for economic growth by collecting revenue as efficiently as possible. It is based on making new technologies available to allow taxpayers a greater use of modern interactive electronic services. This will result in a lot less paperwork for the Inland Revenue Department and for taxpayers or in this particular case for student loan borrowers. 
Under the proposed changes in this bill borrowers will be able to access a consolidated view of their loan balance from April 2012 when the changes will come into effect. This means that borrowers who are currently studying will no longer have to contact two agencies for this information as they do presently. The result will be increased certainty and lower compliance costs for borrowers because of the improved quality of information made available to both borrowers and the Inland Revenue Department and the information will be provided in a format that is easier to understand. The overwhelming majority of borrowers will also benefit from a further change in the bill that will remove the current annual end-of-year assessment if their income is from salary and wages only and their income before tax is over the pay-period repayment thresholds. 
Under the provisions in the bill the Inland Revenue Department will instead consider loan repayment deductions from a borrower’s salary or wages to be correct and final for the pay period. Minor over or under-deductions will be ignored so there will be no surprise bills for those borrowers and no costly assessments and square-ups for the Inland Revenue Department to administer. The borrowers will be able to get a refund if they have significantly overpaid their pay-period obligation. Only borrowers who have income from other sources that are not required to have loan deductions made from them such as interest from investments or business income will need to file a declaration of pre-taxed income or continue to file an end-of-year tax return and make loan repayments accordingly. To make these repayments as easy as possible they will be aligned to provisional tax dates. 
Finally to encourage further borrowers to repay their loans the bill introduces changes to simplify the current penalty rules that should apply when borrowers fail to make the payments that they are required to. So we are making the penalty rules for under-payments or non-payments more closely aligned with the tax penalty rules. The late payment penalty rules will be replaced with a lesser interest rate so that penalties for non-payment or underpayment do not escalate so rapidly that borrowers perceive them as a barrier to paying off their debts. They are the main features of this bill. 
In addition the bill introduces an annual administration fee for student loans as was announced in Budget 2010. It also contains several minor policy and technical changes to clarify certain functions for the student loan scheme more generally. These include the rules on the exemptions from the requirement to be in New Zealand to qualify for an interest-free loan the rules for entering into instalment arrangements and some transitional provisions to move this legislation forward from the current Student Loan Scheme Act to the new legislation following the passage of this bill. 
Overall this is a very positive bill for everyone who is involved in the student loan scheme. It has been consulted on with a wide range of groups prior to coming before the House and I acknowledge particularly the contribution of the New Zealand Union of Students’ Associations and the other groups that have taken the opportunity to take part in the process. Therefore I have great pleasure in commending this bill to the House. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 It is a pleasure to rise to speak on the Student Loan Scheme Bill. I will say at the outset that although the Labour Party will be supporting the first reading of the bill and its referral to the Finance and Expenditure Committee we have a couple of particular reservations about it that I will mention. We want to seek from the Minister of Revenue an assurance that as we go through the select committee process we can address what I suspect are unintended consequences or if not unintended consequences ones that hopefully can be mitigated as we go through the process. 
As the Minister has outlined the overriding purpose of the first part of the bill is to improve the administration of the student loan scheme by moving to an electronic format so that it is easier for borrowers to interact and communicate with the Inland Revenue Department about their loan. I know that around the world there are borrowers and former borrowers of student loans who will be celebrating the notion that the student loan scheme can enter the 21st century and be dealt with electronically. I was recently looking at a case concerning a constituent who is having an issue with their student loan repayments. I looked at the forms they were getting from the Inland Revenue Department and I recognised them. In 1996 when I was president of the New Zealand University Students Association I had helped to design those forms at a time well before people were considering Internet banking. The fact that the department is still using those kinds of forms is a sign that they need to be updated and I think we are all pleased that they will be. 
Craig Foss 
: Still cleaning up your mess. 
GRANT ROBERTSON 
: No actually that was Wyatt Creech’s mess; I was just trying to help him at the time. 
It is true that the material that students and borrowers receive is difficult to understand. Anyone who has been a student and borrowed under the scheme or perhaps is a parent of a student who has borrowed will know that it is very difficult to know what balance people have. It is extremely hard to know what payments have been made. Deductions are made at different times of the year. When students believe they have finally paid off their loan many times they have not. They often have a small amount of money owing that ends up attracting an enormous amount of penalty interest that then has to be wound back with huge amounts of paperwork in the process. Certainly on those grounds this bill is a step forward and is something that the Labour Party welcomes as an improvement for the experience of borrowers and future borrowers. 
We also support the idea of aligning the penalty payments as the Minister has just mentioned. Anything that we can do to encourage the repayment of loans by borrowers who are overseas is good. Far too much money borrowed by people who are now living overseas is not being paid back and obviously the incentives that we can put in place to make repayments occur are a good thing. 
Where we have more significant concerns is around the idea of moving from an annual assessment to the pay-period assessment. Although I can certainly understand that this would simplify the process it will have some negative consequences for people who are already borrowers and work or who are currently students who work during the holidays and manage to earn more than $367 a week as many students do during their holidays. They will then have a full and final payment made from their pay during a week period or whatever their pay period is. This surely is not what we want. Students tend to work for long periods in the holidays to save up money so they can use that money when they are at university or polytech. If we are moving into a process whereby they will have to make repayments on the basis of their weekly pay rather than having an annual assessment whereby they possibly would not even reach the $19000 threshold I do not think that is fair. 
I do not think that is the kind of incentive we want to be putting on students in their holiday period. There are far too many examples of students who work very long hours during term time. Their studies suffer they come under more pressure and there are health consequences. If people are able to secure full-time work during the holidays I think they should be able to keep the money that they earn rather than losing some of it in repayments. I do not think that is the intention of the Minister in putting this bill forward. He is attempting to put forward a more simplified way of assessing people’s incomes and making the payments as a result. I do not think it is fair on those people who will be earning $367 a week or slightly more than that perhaps and then not earning over $19000 over the whole year. Under this bill that will be considered as a full and final payment for the weekly or fortnightly pay period. I do not think that is fair and it is an issue that we are particularly concerned about and want to address in this bill. 
I note that this concern has been raised in the regulatory impact statement. In fact the Ministry of Social Development has raised the concern that removing the end-of-year square-up and moving to the pay-period basis may increase cash flow difficulties for some. It may make the scheme more affordable for others but it may increase pressure on the Ministry of Social Development for financial assistance. I think we need to be very careful about going down this pathway. The regulatory impact statement offers a couple of options for Ministers and I am sure that these can be explored during the select committee process. In particular there is the idea of whether the repayment obligations should fall on students. I think it is a very important thing because Labour spent a lot of time when in Government on removing the interest on loans while studying then removing interest totally. To start moving back to a position where people are still studying and having to repay some of their loans starts to wind back a system that we were trying to make more fair. I think by doing that we will go down a path that is taking us backwards and I do not believe that is at all fair. The Labour Party opposes that particular provision as it stands. 
We think there is another option which is the possibility of ring-fencing holiday work—specifically saying in the law that holiday work would be ring-fenced so that the particular anomaly I just mentioned could be kept out. We would like to discuss those matters with the Minister when we get to the select committee process. I acknowledge that the process of simplifying and improving the administration and moving to an electronic format is a good thing but not if it is at the expense of some people being out of pocket. People who work during the holidays will feel that they are losing some of their income and therefore will have to work more during term time or indeed have some form of financial hardship during term time. 
On an administrative level this scheme does some good things but it is worth setting the context of this bill for the other changes that are happening in the student loan scheme. The Minister himself when he introduced the bill said it was one of the major changes that had taken place in the student loan scheme since 1992. Perhaps if one was very focused on administrative matters one might believe that. Some of the other things that are happening to student loans at the moment are far far more significant. The Minister for Tertiary Education Steven Joyce has mentioned that he is quite pleased that some of the changes to the student loan scheme will dampen demand for tertiary education. I have to say that that is one of the most outrageous things I have heard from a Minister for Tertiary Education for a long time. The Minister for Tertiary Education feels that it is his job to dampen demand. Stopping people going into tertiary education is what that actually means. The Minister’s priority is to stop people getting into tertiary education. 
The first specific change to the student loan scheme that I want to mention in that regard is the notion that students must pass half of their course over a 2-year period in order to retain eligibility for a student loan. We all want students to work hard but what the Government has done is bring in a provision that is retrospective. If one is to be eligible for a loan in 2011 one will be judged on one’s grades in 2009 and 2010—2009 a year before anyone knew that these would be the rules. That is demonstrably unfair. I have been approached by the chief executive of a tertiary institution who gave me a specific example of a student who went to university. In their first year they should not have been there; they struggled and failed everything. That student is now doing reasonably well at a polytechnic this year but if they fail one paper one course they will have no loan eligibility for 2011. That is demonstrably unfair and needs to be changed by this Government. 
There are also unforeseen consequences of another change which is the 7-year limit on student loan borrowing. 
Carmel Sepuloni 
: How long did it take Steven Joyce? 
GRANT ROBERTSON 
: Well funnily enough it took Steven Joyce about 7 years. That is an interesting choice of year is it not? By putting the 7-year limit in place that means that if someone does an undergraduate degree perhaps in science and goes on to do medicine towards the end of their medical qualification they will have no eligibility for student loans. 
Moana Mackey 
: That’s happening in Gisborne. 
GRANT ROBERTSON 
: That is right. Moana Mackey has a constituent in Gisborne whom this has happened to. That is a perverse outcome. Those sorts of changes to the student loan scheme are not positive for the future of New Zealand. 
We need to be investing in tertiary education and getting people into tertiary education rather than as Minister Joyce has as his priority dampening demand for tertiary education. The student loan scheme nowadays is part of making sure that people can stay in tertiary education. It is part of people’s ability to participate in New Zealand society in the future. We need to continue to invest in students to make sure that they can afford to be there and to invest in overall tertiary education. Although this bill does some useful administrative things it is putting in place some potentially dangerous and difficult changes for borrowers. 
CRAIG FOSS (National—Tukituki) 
: 
 I acknowledge particularly the first half of Grant Robertson’s speech and the positive nature with which most parties seem to be approaching the Student Loan Scheme Bill. As a member of the Finance and Expenditure Committee I am sure that that member’s colleagues will raise the issues he picked up on. I again acknowledge the positive nature and essentially the good public policy changes that are going on in this bill—at least in the administration and the implementation of student loans. 
First of all I congratulate the Minister of Revenue the officials and all those who were consulted leading up to this bill. In fact as part of other briefings and discussions around tax and revenue we learnt that some of the consultation on this bill was done using the new medium of Facebook I believe. There was very good feedback and engagement from students and those who will be affected by this bill who are in tertiary education right now. By and large and on the whole the essence of their message was that we should just get on with it and do it. They do their banking and they communicate online. If they want to know further information they want to be able to click on a link or give someone a phone call. Their lives are very busy and they want to see what they owe and when they owe it and the terms and conditions around it. They see it as just another expense on their outgoings. I do not mean that in a facetious way; they just did not seem to see a different kind of platform. 
I acknowledge the direction that this legislation has taken. It is a bit of a biggie because as the Minister noted student loans are one of those things that particularly stress-tested the hardware and software in the Inland Revenue Department simply because of the nature of managing a loan in a department whose origins were simply revenue gathering not loans and the complication of zero percent loans plus the other changes that have gone through over the years. 
The key words of this proposal are that the bill makes it easier not only to operate the student loan system but also for the final user of the student loan system which I spoke a little bit about earlier. At the end of the day it is an overused term but I am quite sure it is win-win all over the place. It should be a win for the taxpayer in terms of the cost of the administration of this policy but also for those who have student loans in complying with the obligations they signed up for when they originally took on their student loans. 
There are of course questions around some of the issues that the previous member raised about whether taxpayers should expect some kind of return on their investment in the tertiary education of someone who has a student loan and—in these proposals—measuring that by some kind of returns or success in those studies. That is a fair discussion to have I think. I guess the discussion will be somewhat robust at the select committee around those issues. But I am very very comfortable as a taxpayer—and I am sure many others are—that despite the stresses and strains on our Budget at the moment it is a fair bet. It is fair on all taxpayers—who invest money in tertiary education particularly via student loans—that those who are enjoying that investment from the taxpayer are doing their utmost are achieving some of their personal key performance indicators and are achieving the ability to maintain their student loan. It is about streamlining; it is about making it easier for borrowers to keep track of their loans. 
Labour’s concern about annual assessment versus the pay period is fair enough. That will be an interesting discussion to have. There will be a million and one different examples but it is a fair discussion to have. I acknowledge though that there are other points in the bill where some penalties have changed: they have been clarified and simplified. So there is a little bit of balance to it and I am sure it will form part of our discussion and part of the submissions at the select committee. At this stage I am comfortable with that but I am more than open to engaging in that discussion—as obviously we will at the select committee. 
There is one key point though when we are discussing anything about the student loan scheme and that is we simply must acknowledge the size of it. The student loan scheme is an asset on the Crown’s balance sheet; the way I always like to put it is that it is an asset on the taxpayers’ balance sheet. Every New Zealander has lent that money at a zero percent interest rate to students to invest in their tertiary education. 
Carmel Sepuloni 
: Thanks to Labour. 
CRAIG FOSS 
: Thanks to whomever that is what taxpayers are doing so we have to manage that asset on the balance sheet. The size of student loans is $10.3 billion. Whether the scheme is interest-free or whatever it is still a significant item on our balance sheet. So it is very good that it is looked after measured and administered as well and efficiently as possible. 
As other members have noted the bill does not involve any policy change. It is mostly about the administration and implementation of the interest-free student loan scheme which has gone across Governments and continues under this Government. 
I have just a couple of other points. The National Government is working for better value for every single dollar in tertiary education—every single dollar. We are funding more student places than ever before because we are finding efficiencies in the tertiary sector. We want a more accountable and higher-performing sector and higher participation but with the constraints around the Budget every single cent and every single dollar is a very precious cent and dollar. We owe it to taxpayers—and future taxpayers who have a student loan right now—to use those tax dollars as efficiently as possible. Thank you. 
STUART NASH (Labour) 
: 
 I stand in support of the Student Loan Scheme Bill in its first reading but I will make two points. First I will elaborate on why I think this bill is worth supporting to go to the select committee. Anything that makes it easier for Kiwis to pay back their student loans has my absolute support and the support of the Labour Party. 
H V Ross Robertson 
: He’s got a big one. 
STUART NASH 
: Absolutely. The second point— 
Craig Foss 
: How do you know? 
STUART NASH 
: Where do we go from there Mr Deputy Speaker? 
Mr DEPUTY SPEAKER 
: Order! 
STUART NASH 
: The second point I will make is that I have some concerns about the bill. As Mr Grant Robertson alluded to earlier the bill does not take into account the circumstances of many students with regard to working during varsity holidays. Therefore rather than eliminating complexity and uncertainty the bill has the potential to create a level of uncertainty. 
This bill transforms the administration of the student loan scheme and brings it into the 21st century. It is now the norm for many people living in New Zealand to use online payments Internet banking and electronic transfers. One could argue that those who have studied at tertiary education level and have taken out a student loan are technologically enabled. I do not know how people could cope in tertiary education if they were not to tell the truth. Therefore this fundamental shift is long overdue. Another argument is that people who have attended a tertiary education institution are probably more online than off it; we just look at Facebook Twitter and all these others sorts of online communication to understand the level of literacy that exists in this day and age. 
One of the major reasons why I support this bill is that it promotes efficiency. It initiates the implementation of a new electronic loan management solution which will allow student loan borrowers to manage their loans online. They can look at the state of their loan at any time from loan draw-down to final pay-off. That is good. It is proactive and it gives students a chance to feel as if they are in control. 
It may surprise the House to learn that student loan debt is currently over $10 billion and is predicted to reach $15 billion by 2015. As Mr Foss said that is a lot of money. Over 500000 New Zealanders have a student loan. The average student loan debt is over $11000. Medical students however graduate with a loan of about $75000. Student loan holders who live overseas account for 15 percent and 30 percent of all students in payment arrears live overseas. This new system will make it easier for those who live overseas to manage their student loan liability and their responsibilities. Maybe they have been out of contact or the Inland Revenue Department has found it hard to contact them. One of the reasons that I support this bill is that the department believes that the new system will increase student loan receipts by up to $22 million a year by 2014 and that is a good thing. 
Most student loan processes are paper-based. Electronic tax services currently simply convert paper processes into an electronic environment. The student loan repayment system is overlaid on an electronic system that is designed for tax collection. It is therefore difficult; it is expensive to administer; it requires significant resources to address a whole lot of errors; and the risks to the current system are increasing with the growing number of borrowers. As I said 500000 New Zealanders have a student loan. 
The implementation of a new electronic loan management solution will offer borrowers the advantages of an electronic environment and allow the Inland Revenue Department to deliver improved services to all borrowers. I doubt that anyone in the Chamber would think it is not a good idea for the department to improve services to borrowers—no one would. An electronic environment will give borrowers services that are tailored to suit their specific needs and the ability to access relevant personal information and manage their loans with a greater level of certainty. 
I will list five benefits of an electronic environment for borrowers. The first is increased certainty and reduced compliance costs. The second is a reduction in the number of contacts that have to be made and an increase in the ease with which borrowers can communicate with the department. The third is improved quality of information for both borrowers and the department. The fourth is faster processing times by the department. The final is a more prompt and accurate response to borrowers. 
There is a second point to make when talking about this bill and it is a fundamental problem. It was outlined by my colleague Mr Grant Robertson. The bill replaces the annual assessment which sits at about $19000 for the vast majority of borrowers whose income is largely from salary and wages only with a pay period assessment. Quite simply if students earn over $367 a week they will automatically start paying back their student loan. The problem is that for students who are in the middle of their tertiary course and earn money during the holidays to pay for their rent food etc. let alone their tuition fees for the following year it is totally counter-productive. The reason that students work is to earn money so that they do not have to borrow so much. Yet this bill as it is drafted at the moment proposes to take money from students before they have finished their courses therefore forcing them to borrow more. It is a sort of insidious money-go-round. I can only conclude that this is one of those unintended consequences that sneak into bills only to be ferreted out by diligent Opposition MPs who obviously have a slightly better understanding of economics than those in the Government. As it stands the logic behind this section of the bill is flawed and will have to be tidied up by the Finance and Expenditure Committee. I think we heard the chair of that committee Mr Foss acknowledge that we will tidy up this issue during the select committee process. 
During my years as a student I had many jobs; I always had a job during the university holidays. I was either pruning pine trees working in wool stores working in freezing works or labouring on building sites both here and in Australia. They were great times in hindsight I say to members. But it was hard enough paying off end-of-year overdrafts let alone having to make student loan repayments. So I hope that the Minister sees the sort of dilemma that we are putting forward and that it will be addressed. 
The legislation contains some square-up provisions but instead of making it easier for students in fact it makes it more difficult and adds another level of complexity to the whole situation. It is a level of complexity that is not needed. It can be avoided and provisions should be in place to ensure that it is. I understand that the repayment method is being simplified to avoid end-of-year square-ups for most borrowers and late repayment penalties are also being simplified and eased. I like that because all of these changes will hopefully make it a lot easier for the student loan system to work more efficiently and make it easier for borrowers to repay debt particularly overseas borrowers who have significantly lower repayment rates. Having sat on the Finance and Expenditure Committee for nearly 2 years now I know and understand the problem that the Inland Revenue Department has making contact with young New Zealanders who are overseas—usually in the UK earning money by working in pubs—and who are quite transient a lot of the time. This bill moves the responsibility back on to the students. The bottom line is that when they have taken out a loan they have a responsibility to pay back that loan. However if we can fix up this one issue that I have just outlined I am sure that Labour will support this bill all the way through the House. 
In conclusion I have talked about the importance of communicating information—important information—to a group of technologically enabled taxpayers and about the importance of an enabling system that allows people to better manage their student loans in a timely and affordable manner. That is most important. I have also talked about the importance of rectifying the situation outlined in the bill that penalises students who work in the holidays to earn money to pay for their further education. I am sure that as mentioned this was an unintended consequence. It is easily rectified. We will do that in the Finance and Expenditure Committee. It was picked up by Labour because we understand economics we understand business and we understand the sorts of dilemmas that a lot of these students face. It will be sorted out. That aside I am broadly supportive of the bill and I am certainly supportive of the principles it addresses so I commend it to the House. Thank you. 
CATHERINE DELAHUNTY (Green) 
: 
 Tena koe Mr Assistant Speaker Roy. He mihi nui ki a koutou katoa. I rise to take a call on the Student Loan Scheme Bill. The Green Party will vote to send it to the Finance and Expenditure Committee for further investigation. As with all tax legislation the devil is in the detail and we look forward to the submissions. Although we support the bill on its first reading our continuing support is not guaranteed. 
The national student loan debt is over $11 billion. The loan scheme is a major disaster and a giant experiment gone wrong. This particular technical tax bill although introducing some common sense and some uncontroversial ideas as well as some ideas that are more controversial fails to tackle the elephant in the room—the scheme itself. This bill fails to address the debt problem and continues to value and measure the loan burden as a national asset. While we fiddle Rome for the indebted generation is still burning. 
Perhaps I should stop at this point and congratulate Sir Roger Douglas and the men of his time who introduced the student loan legislation. We have created a generation of people who are economically disempowered by this model and who no longer believe that their Government their country and their elders think that education is something worth investing in. It is all up to them as individuals. They are on their own. The consequences of the ideology that we are all on our own can be seen right across the board in our communities today and it is not a pretty sight. 
The student loan scheme was introduced in 1992 under a previous National Government and it was a giant mistake. The current total debt is $11236962000 and is growing by the second. Total debt is growing by a billion dollars a year. Surely that is not sustainable at the national macroeconomic level especially not for the individual students and families affected. Gareth Hughes MP is one of the more than 560000 New Zealanders who have a student loan. I am lucky; I do not have one. I am too old. I got a free education so I feel very reluctant to punish those who did not. However my daughter has a debt and so do the children of many other parents here. Gareth’s debt is on a similar scale to the 2008 average individual debt which was $28000. 
I come back to the bill itself. The Student Loan Scheme Bill sets out changes to the way that student loans are handled by the Inland Revenue Department replacing the current Student Loan Scheme Act 1992. The bill seeks to make the system electronic-based and under the realm of one provider the Inland Revenue Department. It tightens up penalties for non-payment which some of us are very dubious about and replaces the annual assessment for the vast majority of borrowers whose income is largely from salary or wages only with a pay period assessment. 
There are some complex counter-productive implications in this proposal which have been touched on by some of the Labour speakers. We hope the select committee will take those seriously and address them. But let us start with the good things in the bill. It does not fundamentally alter the interest-free loan status introduced in 2006 by the previous Labour Government. That was probably the biggest change to the scheme since its introduction yet it still did not alter the unfair experiment that is crippling this generation and future generations with debt. No matter how much lipstick one puts on it it is still a pig in a sow crate. The bill aims to make the student loan scheme simpler and this will benefit students as well as graduates. It cuts down on the administration of loans. At the moment two bodies share the information—the Inland Revenue Department and StudyLink—and they and we who are trying to find out about the level of debt in our families have to go back and forth between those bodies. So focusing it in the Inland Revenue Department is a step forward. 
Gareth in his previous speeches on this talked about not knowing how much he owes. It is a bizarre situation when we are all supposed to be so economically savvy that we cannot know how much we owe. That is because he cannot not go online and check it out. It is a big step forward if he can do that. It is amazing that it has taken till 2010 to see an electronic version and be able to access the amount of the loan. 
This in particular makes it easier for overseas borrowers to access information. There are hundreds if not thousands of student loan refugees overseas each with their own tale of how the student loan bill got out of control. I will quote an article from the  
New Zealand Herald 
 of 4 September 2010 about somebody known as Trev. “Trev is not this Kiwi loan refugee’s real name but that’s what we’ll call him because he wouldn’t be too happy to be outed and get a knock on his Queensland door from a debt collector thanks to a small loan he took out as a 19-year-old largely to buy a stereo. That loan has spun out of control and looks set to plague the New Zealander”—now living in Queensland—“for the rest of his life. Five years ago the original $7000 had risen to $157000 and was accelerating so fast Trev fears the total is likely to be approaching $250000 by now.” I mean talk about an unintended consequence. Trev “can’t face looking anymore and as he hasn’t a hope of affording the huge monthly repayments he has decided to put his head in the sand.” That is the legacy of a system for overseas borrowers based on interest. It means that many New Zealanders are now permanently alienated from their home country. If members think that is a good thing they might like to reflect on the consequences for future generations of this kind of debt-based punitive system. 
The bill sees the student loan as a Government asset not a Government burden and it introduces an admin fee. The Minister knows he cannot mess about with the popular interest-free loans policy so he is trying to get round it by charging interest by stealth. The Minister has floated the idea of an annual $50 charge to all former students with an outstanding loan balance. This would affect 500000 New Zealanders and net the Government about $15 million per year. It seems unnecessarily punitive to hit all these people with an extra annual fee that they cannot avoid. However why are we surprised? This whole system was always about a punitive view of getting education. Believe it or not there are countries in the world that invest in their young people that value education and that do not see it as something they should punish young people for by creating a permanent debt for them. But we are not in the modern world when it comes to this; we are still in punitive mode. 
However the Greens do think this bill will make the administration of a loan cheaper. That is where the saving should come: better administration and more electronic process not more fees and burdens on students. Otherwise it is just a continuation of this Government’s cold-blooded approach to the student debt issue and failure to recognise that student loans are an investment in education and the future of our economy. One area we seek to investigate in detail is the process for people earning under the $19000 compulsory repayment exemption level. The process appears difficult and puts the onus on the student or graduate firstly to know about it; secondly to approach their boss about it; and thirdly to obtain a certificate for exemption. I think many younger people have thrown up their hands at the bureaucracy and complexity of the existing situation and they will not embrace or understand any more changes. There is the possibility that it may be easier for graduates to get caught out with repayments. 
One very worrying clause allows for “Further means of recovering amounts that remain unpaid.” We are guessing that means reading between the lines debt collection. As the  
New Zealand Herald  
editorial pointed out we need a fair approach to student loans and calling in one’s burly debt collector mates will just see more spent on debt collection than is collected. We do not use debt collectors for those who skip overseas and skimp on child support do we? 
The portfolio is currently projected to grow to $14.5 billion by 2014 driven by growth in the number of new borrowers. Thus we are saddling an entire generation with crippling debt that could impact on all areas of their lives and will only get worse unless we act now. We need real solutions to student debt and the sector in general. 
As Gareth has made the Minister for Tertiary Education aware we are seeing a cut in the tertiary education spend which is seeing institutions shut their doors to prospective students. The Minister has also introduced a lifetime limit for access to student loans. This Minister is limiting those who want to do a double degree change midway through their studies study a long course like medicine or take a while—like the Minister himself—to get their zoology degree. That means the system is very inflexible and very rigid and we need to give it a D. 
So in summary the Greens will be voting to investigate and possibly amend this bill at the select committee on the basis of the issues that I have raised. Our support is not guaranteed. I have to say that I agree with Grant Robertson that the quote of “dampening demand”—a comment made by the Minister for Tertiary Education—is an appalling comment from that Minister. If he wants to talk the language of the market obsessively—like so many people do in this House as if there was no other reality— he should at least understand that education is an investment. The Green Party is very concerned and at every opportunity with every student loan bill we will lay this concern on the table while also supporting the positive things that are in the tidy-up legislation as far as it goes. So we are watching this space. Thank you. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Kia ora tatou. Kia ora tatou e te Whare. I say from the very outset that we have advised the Minister for Tertiary Education that the Maori Party will not be supporting the Student Loan Scheme Bill at its first reading. The reasons are fairly straightforward and I will try to elaborate on them this afternoon. Philosophically what we put out in our election manifesto at the last election is the key thrust behind our position in opposing this bill. As others have said the purpose of the bill appears to be pretty straightforward: it will reform the way student loans are paid reform the way borrowers can manage their loans reform the way loans are to be administered and rewrite the current student loan legislation. But what does all that mean in terms of dollars and cents? For us it will increase the loan establishment fee from $50 to $60 and it will establish an annual $40 Inland Revenue Department administration fee. I put it to the House that for some of us that may not be too much. Fifty dollars is maybe not a lot; it may be neither here nor there—I suppose it could be a bottle of pinot noir perhaps a meal at Bellamy’s or whatever. But for students in a sense it is a little bit more than that. In fact it could be crucial to whether they stay in the game. We are talking about maybe a down payment on course textbooks or a weekly bus pass. I suppose that in the end it is all a matter of scale. 
A student loan covers course fees and/or living expenses for full-time students. The central policy challenge for the Maori Party is that although we recognise and celebrate the fact that the loan scheme has clearly opened the door to tangata whenua entering tertiary education the related issue is that they end up with disproportionately high levels of debt. We understand that more Maori have a student loan debt than any other group although the level of debt held is similar to other groups. Maori do however have the lowest post-study incomes and repay their loans more slowly than other groups. So although we accept the need to review the administration and repayment regime we are most concerned about the impact of these new increased fees and loans on students who are already struggling with things like rising food rent and petrol costs. 
Notwithstanding the reduced compliance costs achieved by the introduction of the electronic management system the introduction of the Inland Revenue Department’s annual administration fee will increase the cost of a Maori student loan by $200-plus or so over a 5-year period. We consider that both the annual Inland Revenue Department administration fee and the loan establishment fee will have a negative impact on Maori students who have student loans. Like others we are absolutely committed towards a key goal of increasing accessibility to tertiary education as a front-end investment in the nation’s future. To this end we believe that tertiary education should be freely available to all. 
I shall draw on a case study from Nga Kete Wananga Marae at the Manukau Institute of Technology. The Manukau Institute of Technology serves a population base characteristically of people of low socio-economic status and high unemployment. It has a high percentage of Maori and Pasifika peoples. It has reported that the immediate pressures of Maori and Pasifika students are financial difficulties and survival within a tertiary institution. They describe the fact that a high number of Maori and Pasifika students rely on a student loan to finance study. Retention of these students is largely dependent on their financial ability to remain studying while family pressures mount. Maori and Pasifika students also tell them that they find it increasingly difficult to remain in study without additional academic cultural and personal support. So at their institution Te Tari Matauranga Maori—the Maori education department at the Manukau Institute of Technology—takes an active role in providing some degree of academic and cultural support within the programmes it offers. Central to this support is the institution-based marae that sits near Te Tari Matauranga Maori on campus. I recall that one of my kinsmen Toby Hapimana Rikihana was appointed as the first matua kaiwhakahaere back in 1990 so it is great to know that it is still going strong in 2010. 
I tell this story because it reflects where we want to demonstrate our support as a party in terms of helping to ensure that all people have the chance to pursue tertiary education. In line with this policy direction we have always thought that a brave and visionary Government would introduce a fee reduction policy to reduce fees to a nominal level over time. Ideally we would also want to increase access to student allowances by reintroducing a universal student allowance that would be set at the level of the unemployment benefit. This is of course if we assume that increasing tertiary participation is something worthwhile and of general value to the nation. 
The Maori Party believes that participation in tertiary education is something we should be actively encouraging all of our young people to consider or our not-so-young. We were very pleased to hear the comment from Dr Roy Sharp the Chief Executive of the Tertiary Education Commission that they would assume that as the Maori population is on average younger higher Maori participation levels in tertiary education would be desirable. The commission has published performance indicators for the sector showing 9 percent of university students and 20 percent of those at polytechnics are Maori. In the wananga sector the population at Te Wananga o Raukawa and Te Whare Wananga o Awanuiarangi is more than 90 percent Maori but only 51 percent of Te Wananga o Aotearoa’s 36000 students are Maori. 
Our policy focus around student loan repayments has been one of our key platforms. Therefore in helping to achieve higher Maori participation levels in tertiary education our approach is that debt repayment should start only when one starts earning one and a half times the average wage. In this same policy we advocate for a 5-year grace period for repayments after graduation. We are also committed to the concept that student loans will remain interest-free. This then as members will appreciate is the policy context in which we have responded to the Government’s intention to repeal the current student loan scheme legislation. There is a massive contrast between our expectations and the reality outlined in this bill. Therefore we are unable to support this bill at its first reading. 
DAVID BENNETT (National—Hamilton East) 
: 
 The Student Loan Scheme Bill is part of a reform of the tax system and it is also to make the student loan scheme more effective easier for students to use and easier to enforce. 
Chris Hipkins 
: Put some passion into it. 
DAVID BENNETT 
: Is that Chris Hipkins the youngest member of the Labour Party and one of the 17? He is one of the three who were in the room. He was there and he knows that he has no future under Phil Goff. He wanted a different future. Look at him. He will not deny it in this House. He will not stand up and deny it. No he will not do that. He is one of the 17 and he knows it. Tonight we should be focusing on what is a real piece of legislation before us not talking about how the Labour Party will roll its leader in the next couple of months. 
H V Ross Robertson 
: Move on! 
DAVID BENNETT 
: Now we have Ross Robertson who has moved to the front bench. That is the only way he will get on the front bench—if he rolls Phil Goff. He knows it. Ross knows a lot of things about the Labour Party that he will not tell us. They will come out in the next couple of weeks I am sure; it is just a matter of time. 
I will talk about the bill and not the Labour Party and its mess at the moment. This bill is important because it reflects a more modern form of communication of information through the Internet. The format of the proposed scheme is one that students will find a lot easier to use. The bill also deals with some areas around the taxation consequences and how it will be done for wage and salary earners compared with how it will be done for those with passive income sources as such and whether the previous process of a square-up is needed in both situations now or just in the case of passive or other sources of income. In essence this bill is important in preparing the student loan scheme for a more modern format. The student loan scheme was brought in by a previous Government. The legacy of that scheme is that we have not been able to offer as many people education in the tertiary sector as we would have liked with the cap on student numbers that the previous Government brought in. 
Moana Mackey 
: What? 
DAVID BENNETT 
: Well it is. You brought in a cap on the number of students when you brought in interest-free student loans. 
H V Ross Robertson 
: I raise a point of order Mr Speaker. I let it go the first time but the member has now said “you” twice bringing you into the debate. I am sure that is not what he intended. He should have referred to the member by her title or her position. 
The ASSISTANT SPEAKER (Eric Roy) 
: I will uphold the point of order. The member should be a bit more careful. 
DAVID BENNETT 
: Thank you Mr Assistant Speaker. That was Ross Robertson soon to be Labour’s shadow Minister of Foreign Affairs once he gets rid of Phil. 
When we look at this bill we see it reflects the more modern technology of the Internet so that students can get greater access to what their loan liability will be and can have real-time transfers of information about their loans. It also enables the Inland Revenue Department to have more access around borrowers and their repayments. We see that the Inland Revenue Department is looking at forms of communication other than just written forms which are quite expensive and very difficult for it to control over time. This is part of a wider movement within the Inland Revenue Department to more electronic forms of communication with taxpayers. I guess it is easy to start with the student population which is very in tune with modern technology. They go into occupations where they can access and use technology to a large extent. This bill is important not only for modernising our tax system but also for enhancing the student loan scheme so that it is more effective and easier to operate. We look forward to the bill passing through this House. 
CARMEL SEPULONI (Labour) 
: 
 Before I start on the Student Loan Scheme Bill I say to the previous speaker Mr Bennett that I think he should thank the member Mr Bakshi for looking at him adoringly the whole way through his speech because he was the only person to whom Mr Bennett delivered his speech. He was facing him the entire time. It is fantastic to see such strong relationships within the National caucus. I think Mr Bennett should thank Mr Bakshi. 
There is a lot that I have to say about this particular bill but I would rather talk about the wider context in terms of the tertiary environment at the moment. However before I get on to that I will touch on some of the aspects specific to this bill— 
David Bennett 
: You can’t help yourself; you can’t talk about the bill. 
CARMEL SEPULONI 
: —which is what Mr Bennett did not do. 
Labour supports this bill as it makes some positive changes that will make it easier for borrowers to manage their loans and pay back what they owe. However we hold serious reservations about some aspects of it particularly its impact on working students. We believe there are changes that need to be made at the select committee to make sure this bill is fair. 
Overall Treasury expects that the changes will increase student loan receipts by up to $22 million a year by 2014. We think that is a positive step forward for borrowers and for the Crown. Anything that assists people with paying back their student loans and making it easier for them is welcomed by this side of the House. I myself at the beginning of this year after 14 years since commencing study although I finished studying much earlier than that paid off my student loan. It took me 14 years to pay off my student loan. I know there are a few other members in the House who were in the same situation. 
To this end Labour particularly supports the changes to late-payment penalties from a total of 19.56 percent interest a year to just 10.6 percent or 8.6 percent if the student enters into instalment arrangements. We are opposed along with the Maori Party to the increase in the student loan establishment fee from $50 to $60. We believe that this is part of an effort by the National Government to reintroduce interest by stealth on to student loans. A second area of concern we would like to highlight is the way changes to the repayment system will impact on student incomes. Under the proposed changes students would have to begin making repayments weekly fortnightly or monthly depending on when they get paid. The proposal would require them to make repayments once they have earned over $367 a week. Under the current system students have to make repayments only once they earn over $19084 a year. I know my colleague Mr Grant Robertson talked a bit about that before. The problem with this is that many students would earn more than that each week during the holidays but less than $19084 over a year. This means that some of the money they were saving for the student term through their holiday jobs would have to be used to repay their loans instead and it would probably force them to increase their loans. That is an issue we have with this bill. 
Given we are talking about student loans I think it is important to talk about as I said earlier what is happening in the wider tertiary sector at the moment. We on this side of the House have major concerns in that respect. Recently I have been out and about talking to our Pacific people who are teachers academics and parents. They have concerns about what is happening right across the education sector—from early childhood education through to the compulsory sector and on to the tertiary sector which I plan to talk about now. 
Under the Labour Government tertiary education became more affordable and accessible for New Zealanders. Labour introduced the policy of paying no interest while studying so that students were not charged interest on their student loans while they were studying. This was followed in 2006 by the introduction of universal interest-free loans for all borrowers living in New Zealand. I will go back to something that Mr Dunne said earlier. He was trying to say that the legislation we are discussing today in the House is the most fundamental change to the Student Loan Scheme Act since its introduction in 1992 but I think that that might be going a bit far I tell Mr Dunne. I think as a former student and as a person who had a student loan the most fundamental change was undeniably when Labour introduced interest-free loans not the useful administrative changes that are being made by this particular bill that Mr Dunne is pushing through. 
The interest-free student loans that I talked about as being so fundamental and so important to people like me who had student loans to pay back were introduced in 2006. In 2005 the Labour Government had made changes to the parental income threshold for student allowances raising it by 20 percent followed by further 10 percent increases in 2007 and 2008. Those are the things that really matter to students and to people who are forced to take out student loans because they do not have parents with the means to pay their fees or they do not have the means themselves. I tell Mr Dunne that the administrative changes that we see in this bill—useful though they are—are hardly the most fundamental thing ever to have been done with student loans. 
What we have seen over the last 2 years from the National Government is a series of changes a series of cuts across the board to our education system in each and every one of the sectors including a $349 million cut over the next 4 years from student loan funding. This cut will be made through restricting access to student loans requiring students to pass more than 50 percent of their full-time courses over 2 years in order to keep borrowing from the student loan scheme introducing a lifetime limit on access to student loans—7 years for an undergraduate degree—and preventing permanent residents and Australians from accessing a student loan until they have lived in New Zealand for at least 2 years. 
On paper some people might look at that and think it sounds fair but we know its implications and know that it is in fact not fair. It means that those restrictions will result in 17000 students losing access to student loans and for our Pacific community the implications are even more prevalent with a disproportionate number—2500 of those 17000 students—being Pasifika. That equates to 10 percent of all Pacific students currently receiving a student loan. The introduction of student loan restrictions is a huge setback to the Government’s tertiary education strategy for 2010 to 2015 and its goal of increasing the number of Pacific students achieving at higher levels. Recently we have heard concerns raised by several different ministries including the Ministry of Pacific Island Affairs which has stated that the package may result in Pasifika students dropping out of university and going on to the unemployment benefit or shifting to cheaper avenues of study. Both of those things hardly seem aspirational—to use the word the National Government seems to like to use—yet that side of the House would continue to go down that track and put these types of changes into place. 
We are concerned because under the previous Labour Government the number of Pasifika children in early childhood education increased the percentage of Pacific young people achieving National Certificate of Educational Achievement level 2 increased the number of Pacific school-leavers taking part in Modern Apprenticeships schemes increased and the number of Pacific students in tertiary studies grew faster than for any other ethnic group. Yet all of that at the moment is at risk because of decisions being made in the tertiary education sector by the National Government. Decisions are being made that show that that side of the House has a lack of aspiration for Pacific people in education is neglectful of Pacific communities at all stages of education and undervalues both Pacific people’s culture and heritage and the importance of the contribution that the Pacific community currently makes has made and will need to make in the future. 
We heard from Mr Foss that the changes the National Government is making are supposed to be fairer on the taxpayer. Well let us keep in mind that it is the young people who are taking up student loans and are engaged or intending to be engaged in tertiary study who will be the taxpayers of the future and who will have to pay back the debt that the Government on that side of the House has incurred for our country. 
Hon Steve Chadwick 
: They won’t be there. 
CARMEL SEPULONI 
: Those members will not be there because they will be sitting pretty in their retirement villages over in Hawaii or wherever and leaving that debt to be paid back by the young New Zealanders for whom they are trying to restrict access to student loans. 
I will end it there. As I said we support this bill we are discussing in the House today but I think it is important that we look at the wider context in terms of the damage that the National Government is doing to our tertiary sector. Thank you. 
AARON GILMORE (National) 
: 
 Let me just state the fact that National is completely committed to interest-free student loans. I want as I normally do to share a story the story of my student loan which will give one of the reasons why an important aspect of this Student Loan Scheme Bill will help students. 
Most members across the House have had a student loan and have tried to repay it but for a period of time have never really known the balance. When we have tried to pay it back balances have been sent to us monthly saying whether we were in or out of credit whatever the case might be. In my case I spent 3 months trying to repay a dollar but every month I would be out by 3c or 4c. It took 6 months to finally get a balance that said I was 2c in credit. This bill will fix that; this bill will bring about a situation whereby students will be able to go online and work out what their balances are at any one point in time. I think that is a good step in the right direction. 
There are some really interesting things in this bill that I think Opposition members seem to be scaremongering on which has seemed to be their way recently. I will talk particularly about the area they have talked about—that of a full-time student working throughout the holidays and the issue that that person earning $300-odd a week might have his or her pay deducted for their student loan. Clauses 48 to 54 of the bill state that such students can get an exemption. If they believe that their holiday earnings throughout the year will total under $19000 they can apply for an exemption so that deductions would not apply which completely ruins the argument put forward by Labour. 
One of the interesting aspects of this bill—and I am a big fan of information disclosure—is that it exempts students from the Credit Contracts and Consumer Finance Act which is quite an important aspect and requirement of this bill for it to work. The Credit Contracts and Consumer Finance Act requires a whole lot of consents for electronic communication and other niceties. They are there for good reasons but this bill makes student loans exempt from those consents to make information disclosure online which people expect these days to work. I think that is a sensible thing. Some people might believe that it is taking away a few people’s rights but it is actually a good step to give that information to students who in this modern day and age expect not to rely on bits of paper flying back and forth month by month but instead to know their balance online day by day. That will allow those students to have a better understanding of what they owe to pay it back and get out of debt a little bit faster then get back to saving more money for the productive part of society. 
That is what we want to see. We want to get that loan balance to come down a bit both personally and as a group. That is what we want. We want a more accountable higher performing tertiary sector and a lower loan balance in order for these people to get back into the workforce and pay off their loans as soon as possible and that has to be a good thing. Thanks very much. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 It is a pleasure to follow on from Aaron Gilmore in this particular debate on the Student Loan Scheme Bill. I noticed he said that when he tried to repay $1 of his loan he was always 3c or 4c short. Well we in the Labour Party have been saying that Mr Gilmore is short of sense for quite some time— 
Aaron Gilmore 
: I raise a point of order Mr Speaker. I found that mildly offensive and I think the member should apologise. 
The ASSISTANT SPEAKER (Eric Roy) 
: I think the member got pretty close to breaching some conventions of this House. I ask him to debate the bill. 
CHRIS HIPKINS 
: I am very happy to do that. I am very proud to rise as a Labour speaker on a student loan bill because I think Labour’s track record when it comes to keeping our promises regarding student loans stands in pretty stark contrast to the promises made by National. 
Let us go back and have a little bit of a history lesson. Back in 1992 how did we end up with the student loan scheme in the first place? We ended up with the student loan scheme because National broke its promise. Lockwood Smith went up and down the country signing pledges saying that if he did not do away with student fees altogether he would resign as Minister of Education. In fact he did not do away with student fees at all; the fees went up. He increased them he introduced the student loan scheme as the way that students would be able to pay the fees and he cut eligibility for allowances by introducing parental means-testing. That was how we ended up with the student loan scheme in the first place—because National broke its promise. 
What did National do at the last election? It promised that it was going to keep the interest-free student loan scheme. That was after John Key had said it was a hoax it was a bribe it was recklessly irresponsible and he was going to fight it with every bone in his body—that was what he said. 
Iain Lees-Galloway 
: Every bone in his spine. 
CHRIS HIPKINS 
: Well one would not find many there. But then Mr Key decided that he was going to keep the interest-free student loan scheme because it was very popular. National promised to keep it. 
What is National doing with this bill? National is increasing the annual fee that a borrower has to pay from $50 to $60. The annual fee was never in existence until National came into Government. It was never there. It is a new tax introduced by National on student loan borrowers. Of course it is a form of interest because it is an annual fee but it is a very regressive form of interest. Students pay the same fee regardless of what their loan balance is. So the people who have quite small loan balances are more disadvantaged by having to pay what will now be an annual $60 fee. It is a broken promise. National said it was not going to change the interest-free student loan scheme. It has broken that by introducing this annual—I do not know what National is calling it—administration fee or whatever. As my colleague Damien O’Connor said it is a new tax introduced by the tax-cutting National Government. We could add up several new taxes that National has introduced and this is yet another one. 
As I have established here Labour has a pretty proud track record of keeping our promises when it comes to student loans. We promised interest-free student loans and that is exactly what we delivered. We delivered interest-free student loans in 2005. Prior to that we promised to remove interest on student loans while a student was still studying and we kept that promise. We are very proud of our track record and we think it is in pretty stark contrast to National’s track record when it comes to student loans. 
I will talk about some of the facts of the student loan scheme. I think it is important that we know what we are talking about here. As of 30 June 2009 student loan debt totalled $10 billion. When I was at university and involved in student politics back in 2000 and 2001 we were running campaigns to raise public awareness about the $3 billion of student loan debt. It is now up to $10 billion and it is continuing to grow. One of the things that was really interesting during that period of time is that we got the Ministry of Education to release its projections showing at what point the student loan scheme would break even—would collect back the equivalent of what it was paying out. I think the ministry said that it will be about 2025 before the overall debt stops growing. When Labour introduced interest-free student loans that date came back quite a long way and the scheme was going to reach the break-even point at a much earlier point in time. I would be interested to see and I hope the Minister for Tertiary Education will provide them to the select committee some revised projections based on the settings provided in this bill and on the other changes that the National Government has made in order to find out the exact point that the student loan scheme will stop ballooning out becoming a larger and larger item on the Government’s balance sheet. I hope the Minster will provide that information to the select committee when it is scrutinising this bill. 
We are talking about a significant number of New Zealanders. Back in June last year over half a million people had a student loan balance with the Inland Revenue Department. I am assuming that there will be more on top of that because for the first year a student’s loan balance is administered by Work and Income; it is not transferred to the Inland Revenue Department until the following year. So each year the new borrowers do not move over to the Inland Revenue Department for a period of time. Potentially we are talking about at an estimate at least 600000 New Zealanders who would have a student loan. There were 57000 new student loan borrowers in the last year which would suggest that we are looking at about 600000 people with a student loan balance. 
The average amount borrowed by each student each year is about $6900. For a lot of students that will simply be their tuition fees and that is the way they manage their studies. They work or they receive an allowance to pay their cost of living or they stay at home with their parents but they use their student loans to cover their tuition fees. Of course for students who have to borrow to live the average loan balance would be significantly higher. The average student loan debt held by the Inland Revenue Department is about $11000. 
I will talk about the number of student loan borrowers who are overseas because I think that is particularly important. Fifteen percent of student debt holders are based overseas. These are the people whom John Key said he would bring back. In the bright future that he promised New Zealand everyone was going to come flooding back to this country if we had a National Government. I am not sure what happened along the way but we have not seen this huge tide of people queuing up at the airport at Heathrow to come back to New Zealand now that John Key is the Prime Minister. Fifteen percent of our student debt holders are still based overseas. 
But one thing this bill does—and this is one of the reasons why Labour supports it—is to make life a lot easier for those people who are overseas to get up-to-date information about their student loan balance. Going online is the way that we have to go. I am one of the online banking generation. I do all of my banking online. I do not get paper statements from my bank any more. I would like to think New Zealanders can get their student loan balances electronically and can do away with paper-based statements. Potentially there is a saving there for the Inland Revenue Department. Actually I suspect there is quite a big saving there for the department because although I was fortunate enough to pay off my student loan 2 years ago every year the department in its good charitable way sends me a new student loan balance sheet that says I have a zero loan balance. Normally it sends me two or three and they are normally sent a few days apart. So I get duplicate student loan balances every year telling me that I have a student loan account that has a zero loan balance. If we move to an electronic system I think the department could save a bit of money on postage and printing at the very least. 
Hon Peter Dunne 
: We’ll just send you emails instead. 
CHRIS HIPKINS 
: Yeah that is right—the Inland Revenue Department could spam me instead of wasting money on postage. I think that would be a very welcome addition to the student loan scheme and it is something we would support. 
However I do raise a concern having now read a bit more detail about what this bill will do about the repayment provisions that it introduces. Moving from a yearly threshold for repayments to a pay-period threshold for repayments means that students who are still borrowing and who work hard over their summer holidays to earn enough money to live off so that they can borrow less will be disadvantaged because they will have to make repayments on their student loan during their holiday employment. If we were to let them keep that money for a little bit longer they would be able to reduce the amount that they borrow in the first place. Therefore at the end of their study they could potentially pay off that amount a little bit faster. I think we should stick to the threshold of $19000 a year or so and only when students go over that yearly threshold should they have to start making mandatory student loan repayments. Calculating it on $367 a week will capture all those students who do seasonal work. It may be fruit picking. I do not know what seasonal work students do down in Invercargill Mr Assistant Speaker Roy but I am sure that they do some down there— 
The ASSISTANT SPEAKER (Eric Roy) 
: Heaps. 
CHRIS HIPKINS 
: There is heaps of seasonal work in Invercargill which they would be doing to help pay for their tertiary study. Of course if they are at the Southern Institute of Technology they would not be paying fees at all because it has zero fees. Either way I think it is important that we encourage students to do holiday employment and we should make it easy for them. Therefore I do not think they should have to make student loan repayments while they are doing it. 
Labour is supporting this bill’s referral to the select committee and we are looking forward to the debate. 
A party vote was called for on the question  
That the Student Loan Scheme Bill be now read a first time. 
Ayes 115 
New Zealand National 58; New Zealand Labour 42; Green Party 8; ACT New Zealand 5; Progressive 1; United Future 1. 
Noes 5 
Maori Party 5. 
Bill read a first time. 
Bill referred to the Finance and Expenditure Committee. 
Identity Information Confirmation Bill 
First Reading 
Debate resumed from 9 September. 
JACQUI DEAN (National—Waitaki) 
: 
 I will continue my speech on the Identity Information Confirmation Bill which was interrupted in its first reading. This bill is sponsored by the Minister of Internal Affairs Nathan Guy. Its intention is to help combat identity fraud. As we know that is a very important issue for us all. The bill helps to prevent the use of fake identities that somebody has created. It extends the use of the web-based data validation service to public and private sector agencies but on a strictly need-to-know basis. This allows agencies to check whether the identity information presented by a customer is consistent with that held by the Department of Internal Affairs through the citizenship registers the passport database and the various registers of Births Deaths and Marriages. 
Importantly this bill will help ensure compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act which was put through the House in 2009. It requires banks and other financial institutions to undertake more comprehensive checks on customer identity so they are now really compelled to know their customers to a greater level. The bill is also an important tool in preventing identity fraud and in reducing compliance costs. 
At the same time the Government is mindful of privacy concerns. Any agency using this tool must have the consent of the customers. It is up to individuals whether to give permission. Agencies must also have an alternative process for dealing with people who do not consent to a check via this service. This means that they are effectively not being forced into consenting. This is a point I make because I think it is important to note. The service is designed to protect the privacy of personal information. The tool confirms only whether the information provided by customers is accurate and does not give out any additional information about the person. The data validation service will be available only to organisations that meet strict security privacy and integrity criteria. The Government has also agreed that the Privacy Commissioner will monitor this service. With those few comments I commend the bill to the House. Thank you. 
H V ROSS ROBERTSON (Labour—Manukau East) 
: 
 Tena koe Mr Assistant Speaker Roy. Kia ora tatou. No reira e te Whare e nga iwi e nga reo e nga hau e wha tena koutou tena koutou tena koutou katoa. Firstly I acknowledge the author of the Identity Information Confirmation Bill the Hon Nathan Guy and thank him for the work he has put in. But that acknowledgment extends also to my own colleague the honourable member Chris Hipkins who will steer this bill through the Government Administration Committee on behalf of the Labour Party. 
With identity fraud and related crime on the increase and a growing problem not just here in New Zealand but also internationally this bill is an idea whose time has come and one would say it is not before time. We want to see the Government and business have an enhanced ability to combat identity fraud. But of course the question that has to go with that is one of privacy. That is an issue that we on this side of the House are most concerned about. 
We have already had identity fraud in New Zealand on a number of occasions and there have been a few high-profile ones at that. I draw the House’s attention to the  
Bay of Plenty Times  
in August of this year: “The dishonesty of an alcoholic Te Puna man jailed yesterday for using his brother’s name to dodge criminal charges struck at ‘the very heart of the justice system’ a court has been told. Brent Baxter 37 was sentenced to 10 months’ imprisonment for attempting to defeat the course of justice and received a further three months’ imprisonment for drink driving.” and the article goes on to give further details. There is also the case of innocent youngsters using Facebook which is concerning principals in some schools. I quote: “Norfolk School principal Jason Elder had to investigate an identity theft this week after reports one of his students was being impersonated online. An older boy had allegedly been posing as a girl from the school upsetting her and her family …”. Those are just a few of the cases. 
This is an interesting one headed “Robin Hood charged with identity theft”. I quote: “Authorities said a 34-year-old named Robin Joshua Hood found someone’s wallet in downtown Denver and apparently began using the man’s name in a ploy to avoid being caught on a warrant. Hood told investigators he was being investigated for drug charges. Hood was charged … with identity theft and impersonation.” 
There are many other cases that one could draw to the House’s attention but I do not want to take too much time in doing that because this is very important legislation. We live in a multi-ethnic society—nowhere more so than my own area of Manukau. In Manukau at the last census we had 184 different ethnic groups residing within its boundaries. That is exciting. The diversity enriches our society it helps us to grow as a nation and it also brings a new round of expertise to our nation. But even though it is vibrant and exciting—I love being there and I am passionate about the area—diversity brings challenges to the bureaucracy and officials. I understand the need for them to combat identity fraud. So in complying with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 one is mindful about the cost of compliance. That is the issue that we have here. 
I will never forget that while campaigning in the South Island some years ago—and this is to do with compliance—I walked into a small business and talked about the issue of compliance. I said we were going to do something about compliance costs. The guy there was sitting at his desk and he had all of his papers in front of him. He said “Hallelujah!” and he threw them all in the air. So compliance is a real concern and it is inherent when one looks at this legislation. The regulatory impact statement prepared by the Department of Internal Affairs describes how this bill benefits businesses by cutting the cost of complying with this Act. That has to be a good thing. It is a positive that comes out of this bill. 
I want to outline what is required. There are a number of things. The first is that the Anti-Money Laundering and Countering Financing of Terrorism Act passed in 2009 provided that reporting entities such as banks and other financial institutions must undertake customer due diligence in order to verify the identity of their customers. That is an important consideration. I am sure we know that when we go into a bank one of the first things that the staff want to know is that the person whose account they are dealing with is in fact the person who is in front of them. Another important part of this bill is that one of the aims of this requirement is to reduce identity fraud which in turn will reduce money-laundering and the financing of terrorism as well as other criminal activity. That is an important consideration as well. There are substantial business compliance costs associated with these requirements. 
This bill which proposes the establishment of a consent-based service whereby public and private agencies can check identity information is important. 
Debate interrupted. 
The House adjourned at 6 p.m.