Bayly Andrew; Faafoi KrisANDREW BAYLY (National—Port Waikato): Thank you Mr Chair. I want to respond to that sanctimonious speech by the Minister Kris Faafoi just before about this issue around clause 6 of this bill. I find it incredibly rich that COVID struck our shores in March last year and we immediately saw the financial impact of that on small businesses and if anyone knew much about small businesses they would know that wages are their highest costs in general and the second-biggest component is rent.Small businesses have been clamouring for support since March last year and here we are this whole situation has arisen because as a result of poor managed isolation and quarantine facilities we have allowed COVID—this Government has allowed COVID—to enter our shores and as a result our small businesses have been decimated in terms of cash. They've been decimated because they've been unable to trade as a result of Government-imposed lockdowns. And for the Minister to say that he's standing up for small businesses 18 months after the first hit of COVID I find incredibly rich.And the solution that he is so keen to introduce under this bill is one that was proposed in the last Parliament and quite rightly was refused by their partner in Government New Zealand First because of its poor design and its inappropriateness as a proposal. And here we are now that the Government has a full and ultimate majority in this House it is seeking to introduce the same piece of remedy to try and somehow help small businesses get around this issue of lack of cash. And I think the delay in the Government responding to this is appalling and I think the Minister who's just sat down has been incredibly tardy in trying to readdress a significant issue.To that end the solution itself is a very poor solution for a number of reasons. The first one is that first of all it socialises the cost of the Government-imposed lockdown not from the Government to recompense small businesses but actually it socialises it and forces those costs on to landlords. And that Mr Chair I would suggest to you is a form of social transfer from the Government to a group that the Government for some reason regards as a bank balance and will have the ability to be able to pay and recompense and actually deal with this issue because they are deemed to be rich by the Labour Government. And in fact many of the landlords are not wealthy; many of the landlords will have borrowings on the property that they tenant to very good business owners. And yet this Government steadfastly has this view that they're rich and therefore they should be the one writing out the cheque. That is the flaw in this whole proposal and that is why New Zealand First quite rightly ruled it out in the last Parliament and the Government should be ruling it out for that very reason.The second thing about this bill is that it cuts to the sanctity of law—that is people can have contracts of law and yet this Government is running roughshod over legal rights between two parties that have entered into proper agreements—and lease agreements are proper agreements; they are often very lengthy and well defined and have established precedent. Yet again the Labour Government thinks it should stride in there and intercede itself in between what are viable and longstanding agreements and yet as part of that transferring the cost to landlords.The third thing is the definition around the law that is being proposed. Again it is just as wonky as anything because the first one is: what on earth is a fair proportion"? And when you're talking about tenants who have very very little money and who are absolutely stressed to the max because they cannot trade because the Government has imposed a lockdown on them—remember it is the Government who has imposed the lockdown and therefore has made it impossible for them to trade—when they're in that situation it is highly unlikely that they have the money the capability the mental resources and the resilience to be able to—[Time expired]Hon KRIS FAAFOI (Minister of Justice): Thank you Mr Chair. Nice to have the chance to respond to some of the points made by the Opposition. So if I get the logic of the member who just resumed his seat right and looking at the policy that they have talked about as I say the majority of landlords and tenants in commercial situations have already come to some form of rent relief so the parties have sorted them out themselves. With no intervention or assistance from the taxpayers a majority of landlords and tenants have come to an amicable arrangement to make sure that they given the COVID situation have found a fair proportion of rent. In the logic of the National Party we should do away with that and instead of trying to come to an arrangement between the two parties in the contract we should load up the cost on taxpayers. Now this does not make sense in terms of the plan that National outlined last week or the week before that because that will then increase the impost on taxpayers at the same time that the National Party says it wants to be decreasing spending and reducing debt. So which one is it? You can't have it both ways. So if you would clarify your position as to what we should do in this situation for the vast majority of tenants and landlords whether or not you want them to sort it out between themselves and for them to figure out given the situation that they may be in both the landlord and the tenant what a fair proportion of rent should be and that it should be flexible in order to account for the situation that both parties are in. In some cases the landlord may have a fair case that a reduction of 20 percent may be fair; in other cases it may be close to 100 percent that may be fair. You have to have the flexibility there Mr Bayly in order to make sure that you can account for those situations. But the situation is that either you let the parties sort this out amicably—and for the small number of contracts that don't have a fair rent reduction clause this is what this bill does. But it seems on the other side of the House they want to instead load up the taxpayer for the impost for the inability to access the property. So which one is it? What do you want? Do you want to reduce debt and lower Government spending? Or do you want to load more debt up on taxpayers? The choice is yours.ANDREW BAYLY (National—Port Waikato): Thank you Mr Chair. Well that's a fascinating proposition that Minister Faafoi has just talked about. The issue is where a landlord has agreed that will inevitably mean that the landlord has already given the tenant a discount and so the situation is undisturbed. The issue with this proposal from the Government is one which is that if you are having a debate it will be because the landlord will not want to give a discount. Therefore by using terms such as "fair proportion" that means that you're inevitably in a dispute position and that means that the tenant has basically got to go to the court or to arbitration to seek redress. The issue is: how do you define "fair proportion"? And that is when you are in a situation where you've got a tenant who is highly stressed has no money and is in a difficult situation and every week means that they will be losing more money. Therefore you're in a situation where this clause actually is unlikely to present much of an option because in many cases a lot of these businesses have gone or will go to the wall which we're seeing in increasing numbers. So that is the issue with this one. It's that "fair proportion" is not well defined and will require time to be sorted and unfortunately when you're talking about these types of small businesses they simply do not have time. The other issue about this is that when you talk about the issue of fair proportion it gives no guiding principles. It doesn't confine it to small to medium sized businesses. It doesn't link it to the wage subsidy scheme which has been up to date the way that the Government has implied it. Whether it's the resurgence payment or wage subsidy where there's a specified reduction in income there's no specification around that. The final thing is that it doesn't relate to whether it's income or capital. So you can imagine if someone went and got very smart lawyers they could have a field day. That is why again the issue of the lack of clarity around this proposal that the Labour Government has put forward and why New Zealand First undoubtedly refused to support it is that it is a sham. It doesn't actually achieve what it says it's going to achieve. What it's going to do is create a lot of work for lawyers and it's going to take so long to actually work its way through that the benefit to these businesses that are crying out for cash today will be such that they do not get the benefit that they need immediately. That is why we have proposed to be absolutely clear that if a company meets the requirement of a 40 percent or greater reduction in revenue then it should be entitled to actually get support from the Government because after all it's the Government that has imposed the lockdown. It's the Government that through its actions has led to that company not actually being in a position where it can trade and that is the crying-out issue for small businesses because it means they do not have access to cash. That is why we came up with a proposal that was specific definitive and also it gave the outcome where if there was a situation where a landlord had previously been incredibly generous it could be resolved through arbitration in a quick manner. Unfortunately this proposal by the Labour Government does not achieve that. I can't see why the Minister thinks that overnight we're going to see a whole lot of businesses—and I suggest to him that there are a lot of businesses that are still crying out for cash—that are going to have any reliance that this is going to be achieved or resolved overnight because every week that passes will mean that more companies fail in this business. I think this is the biggest shame about this whole thing. This level of support from the Government has been woeful. We're now into the 10th week 263 days of having Auckland businesses being in lockdown—this is one of the longest lockdowns of any city in the world—and yet this Government has sat around for 18 months and come up with a patsy solution to a major major issue. As I've said before rent is the second-highest cost for these small-business owners and I think it is incumbent on this Government to actually come up with a meaningful solution to it because you've been so woefully slow in trying to deal with this issue. I look again at the Minister and suggest to him that maybe he should go to Auckland and go and see some of these people and just talk to them. Even the ones that have the 27.5 element in their agreement are still in trouble because a lot of landlords are saying "You've still got access and we're not going to listen to you and we still want you to pay your rent." Hon KRIS FAAFOI (Minister of Justice): Just want to make sure we take opportunities to answer questions from the members. You will notice through the Supplementary Order Paper that is accompanying this reading that there has been a clause added to ensure that revenue loss is taken into account for a tenant in that situation.As I mentioned in an earlier contribution to the member keeping the parameters of what a fair proportion of rent is broad given the plethora of permutations that could come up for different situations—different tenants sizes of tenants their financial situation also the financial situation of the landlord—is extremely important to make sure that we allow that flexibility.The member also gave judgment on whether or not this is going to be effective for small and medium sized enterprises. What we have certainly seen is that there has been a constant trickle of correspondence and messages back to the Government that we've already seen a behavioural change in many landlords who have not been able to engage or for one or other reason to start engaging with those small and medium sized enterprises since the Government announced these changes about a month ago.So what I would say is that is an early sign of success is that we're actually getting parties to the table to ensure some of these high fixed costs that can't be met when the access is an issue for those businesses are starting to be addressed and dealing with the frustrations that those business owners have been feeling especially in the last two months."