Goods and Services Tax (Exemption of Healthy Food) Amendment Bill — First Reading 
Goods and Services Tax (Exemption of Healthy Food) Amendment Bill — First Reading 
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Goods and Services Tax (Exemption of Healthy Food) Amendment Bill 
First Reading 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 I move  
That the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be considered by the Health Committee. Timing is everything. Just over a year ago I stood to introduce my very first member’s bill—Te Ra o Matariki Bill/Matariki Day Bill. That bill was an opportunity to welcome a new dawn to celebrate our distinctly New Zealand culture and within that to acknowledge the importance of planning and preparing for our future the future that cared for all peoples of this land Aotearoa. Then just 4 days ago a violent earthquake shook my electorate to its very feet striking fear in the hearts of the people of Otautahi and leaving far too many families nervous about their financial outlook in the wake of damage done to business and home. Today this bill is a genuine attempt to make a difference for low-income families to make a difference for the health and well-being of New Zealanders and in doing so to create a new environment of care for the future of our nation. 
I want to extend my heartfelt appreciation to Dr Gay Keating the national executive officer of the Public Health Association; the Maori Women’s Welfare League; the Country Women’s Institutes; the Alliance; the Socialist Unity Party; and the Residents Action Movement. It was the Residents Action Movement that gathered up the support and signatures of some 25000 people and then embarked on a high-profile procession to Parliament in October 2008 rallying support along the way to take GST off food on the grounds that GST hits low-income people disproportionately. I acknowledge the influence of all of these people and organisations in putting together this bill. 
I want to lead off with the words of encouragement from Dr Gay Keating: “These benefits include helping New Zealanders improve their diet particularly families on lower incomes which are likely to be harder hit by any increase in GST. Supporting Ms Katene’s bill would be a great move towards increased fairness. It would also be a great start towards lowering the high rate of avoidable disease hospital admissions and premature deaths that plague lower income families.” 
I find it hard to believe that any politician could fail to be moved by such advice. It is in that spirit that I seek the opportunity across the House to at least enable this bill to benefit from the scrutiny of the select committee process. The Goods and Services Tax (Exemption of Healthy Food) Amendment Bill has emerged out of a growing body of Government and independent research that confirms the persistence of a high level of poverty and associated health and well-being effects in New Zealand particularly in our children. International research including the recent OECD report  
Doing Better for Children 
 has also confirmed the high rates of child poverty poor living conditions and poor health status for children in low-income families in New Zealand. 
Professor Tony Blakely from Otago University’s public health department has made a substantial contribution to this debate through his study surveying the health and nutritional habits of some 1100 shoppers. The study concluded that a 12.5 percent drop in price increased people’s consumption of healthy food by a massive 11 percent. The cold hard facts of life are that food prices have risen more than 20 percent in the last 3 years while real incomes have risen only very slightly and within this the increases for the staples of a nutritious diet such as fruit vegetables and milk have been particularly high. 
As New Zealanders have heard about my bill and written to me with their support I have heard some shocking stories about the mark-up on food prices by retailers. Some retailers have been charging 500 percent more GST to customers than they are paying in GST to the growers. If that is not outright robbery I would like to know what is. I emphasise that although all consumers will benefit from the removal of goods and services tax from healthy food those on lower incomes spend a greater proportion of their income on food and will receive a significant benefit as a result. My bill seeks to address rising food prices and the impact those have on the ability of those in low-income households to purchase healthy food by exempting this food from goods and services tax. 
I have been amused at some of the cynics who have complained that it would be difficult to define what is healthy and what is not. It reminds me of the words of a song: “You say tomahto I say tomayto.” It is all technical detail that could easily be dealt with by administrators and fine-tuning the policy for enactment. In my bill I have been very specific about how “healthy food” will be interpreted. It is fruit and veges including fresh frozen canned and dried; breads and cereal including all bread grains rice and pasta; milk and milk products including cheese yoghurt and plain milk— 
Charles Chauvel 
: Roquefort! 
RAHUI KATENE 
: —but excluding ice cream—sorry Charles—cream products condensed milk and flavoured milk; lean meat poultry seafood eggs nuts seeds and legumes. 
Another issue that some critics have sought to expose has been about costings. Analysis of the Statistics New Zealand household economic survey 2008 estimates that the annual GST on all fruit and vegetables sold in New Zealand households was $167 million. In fact an analysis collated for a Sunday paper in January 2009 showed that in reality the Government earned just under $51 million in GST revenue on fruit and veges in the year to June so it is not likely that this bill would break the bank. Instead it could well create impressive savings in health and well-being. 
There have been some wild allegations that the GST on food is $1267 billion but that figure represents all food and non-alcoholic beverages whereas my bill restricts the meaning of “healthy food” to the definition of healthy food based on the Ministry of Health’s food and nutrition guidelines. 
Finally I want to focus on the long-term savings that taking tax off healthy food could establish for this nation. Organisations such as the Public Health Association of New Zealand and the National Heart Foundation have called for the goods and services tax to be removed from foods that constitute a healthy diet to make them more affordable. Alongside their support I was interested in the views put forward by Fight the Obesity Epidemic spokeswoman Dr Robyn Toomath. Her view was that removing tax on healthy foods and putting high taxes on unhealthy food was ideologically sound. It does not need to be as difficult as some people make out. What we already know is that many countries including Australia and Britain have already removed the GST equivalent on certain healthy foods. In fact with all the talk about how great it would be to have a single Australasian market it would be perfectly appropriate to work with the Australian Taxation Office which has produced a computerised model that makes GST food and beverage compliance extremely easy to manage. 
I want to acknowledge the enthusiastic support of the Labour Party and in particular of Mr Phil Goff who has embraced the opportunity to at least explore the proposal to take the tax off food in an effort to encourage people to eat more healthy food. A GST food exemption is an easy and effective way to foster support for eating nourishing food for protecting families from exorbitant costs and for paving the way for a healthy future for all peoples of Aotearoa. I urge the House to support the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill. 
CRAIG FOSS (National—Tukituki) 
: 
 I would like to share with the House the fact that National will not be supporting the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill— 
Hon Members 
: Oh! 
CRAIG FOSS 
: —members on the other side groan—but I fully acknowledge the sentiment the aspirations if you will and the motivation behind this bill from the member Rahui Katene. I fully acknowledge that and I will speak a little bit more on that in a moment. 
I point out that New Zealand’s GST system is world-renowned. It is the envy of many of the countries that we compare ourselves with or the countries that many people visit. The system has been relatively unchanged in the many years—perhaps 25-odd years—it has been in existence. I note that when the Labour Government in the 1980s brought in GST from zero to 10 percent there were no exemptions to speak of. Exemptions were considered I understand but the then Labour Government chose not to make them. When Labour increased GST from 10 percent to 12.5 percent again it did not exempt items such as healthy food which this bill specifies. I note that the most recent Labour Government from 1999 to 2008 considered exemptions along the way but the point is that it chose not to exempt healthy food—or any other items for that matter—from GST. I fully expect members on the other side will speak in support of the bill as the previous member just noted. That is their right of course but when they do speak their credibility is totally undermined because suddenly they will have become supportive of such an exemption. Of course that is the nature of politics but it is somewhat shallow. But I guess we will hear the speeches from members on the other side. 
There is no doubt that the intent of the bill is to encourage a healthier diet and healthier living which is absolutely fine. It also has to be noted that many families already buy healthy food and vegetables but when the cost of GST is taken off then someone somewhere has to bear the extra taxation cost— 
Hon Phil Goff 
: Maybe the wealthy. 
CRAIG FOSS 
: —maybe—whatever the amount may be. We can see how it can become complicated. I could make the same arguments for how healthy red wine is. Red wine is very good for one’s heart apparently. I could make a case for exempting red wine from GST on the basis that it is good for health care heart care etc. But I will not. 
I will make a couple of further points. Some communities particularly lower socio-economic communities are able to access fresh fruit and fresh vegetables right now. I raise the example of Te Aranga Marae in Flaxmere where there is a community garden. Most of the seeds and most of the plants are donated by the community so there is zero GST for the people who participate in the garden; there is a great community spirit. The garden is managed by my good friend Henare O’Keefe. But my point is that the ability to grow and to access fresh fruit and vegetables is right there in our communities right now regardless of the debates on raising GST or not. 
Hon Annette King 
: That’s because you live in Hawke’s Bay. Try Newtown in Wellington. 
CRAIG FOSS 
: The member opposite tries to identify that it relates just to Hawke’s Bay. Well then maybe we should have exemptions in other places down south perhaps rather than in Hawke’s Bay. We can start to see how complicated this could get. For example an apple on a tree would not attract GST but an apple that has been washed and bagged would. Again I fully acknowledge the sentiment of the mover of the bill and I value her contribution but I really question what I am sure we are about to hear from members on the other side when they speak beyond this particular bill and perhaps somewhat dilute the good intent behind it. 
I also note as the previous speaker noted that in other jurisdictions GST or VAT is not charged on certain items. That is quite correct. But again after much debate most of those jurisdictions look quite enviously at New Zealand’s GST system as it was introduced. It has essentially stood the test of time over 25 or 30 years across Governments and across Parliaments and it still remains virtually unchanged. Of course there will be some politicking from some members about the measure but to be true to the integrity of GST and to be true to the integrity of debate a consistency of position is probably quite admirable. Thank you. 
Hon PHIL GOFF (Leader of the Opposition) 
:  
The member who has just finished speaking Craig Foss did not have enough information to debate during the 10 minutes he had. 
Labour will be supporting the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill to go to the Health Committee. We think we should hear the arguments in relation to whether exemptions should be made. This is a chance to hear from the experts. It is a chance to line up the officials and ask what the difficulties would be in exempting some categories of basic necessities from GST. Most important it is a chance to let the public have their say on this legislation. 
I want to know why National is frightened to send this bill to a select committee where the debate can be had. National should have the courage of its convictions. If it thinks that exemptions are so bad and that its arguments will stand up to that scrutiny then it should subject them to that scrutiny. I say to Mr Foss that he should not run away from the debate which is exactly what National is doing. 
Craig Foss 
: I raise a point of order Mr Speaker. The member speaking questioned the courage of members in the House and I believe that is beyond the Standing Orders. I ask him— 
The ASSISTANT SPEAKER (Eric Roy) 
: Oh— 
Craig Foss 
: I have not finished. 
The ASSISTANT SPEAKER (Eric Roy) 
: I do not need any assistance. I am listening carefully. When allegations are made against a party or against its style it is outside the margin of implying that individual members do not have courage. To say a member is running away from the debate—I do not think he has crossed that line. I am listening carefully and if he crosses it I will pull him up. 
Hon PHIL GOFF 
: Labour does not support the breadth of the exemptions that are proposed by the Maori Party and if the bill goes to the select committee we will be moving to limit those exemptions to a particular area—that is fresh fruit and vegetables. 
GST was brought in at a low rate and it was brought in to be comprehensive. That low rate was 10 percent. The rate that National is now introducing on 1 October of 15 percent—contrary to the sincere promise that it made at the elections; John Key broke his word—is 50 percent higher than the rate at which it was introduced and 50 percent higher than the rate at which our Aussie cousins pay GST across the Tasman. And Australia exempts food products. As a result of what this National Government is doing the GST rate as a proportion of GDP in New Zealand will become the fourth highest in the 30 countries of the OECD—the fourth highest. So the National Party cannot claim that GST is at a low rate. 
The thing about consumption tax is that it disproportionately hurts lower-income earners. It is a regressive tax. At the same time as the Government is hurting lower-income families it is giving tax cuts to the highest earners. One-third of the tax cuts—33 percent—is going to National’s wealthy mates the top 5 percent of income earners. Exempting fresh fruit and vegetables would be a way of giving some relief to those lower-income families. It is much fairer. 
More than that we know from the study done by the University of Auckland School of Medicine that when we take the tax off items like fresh fruit and vegetables people consume more of them. The medical experts are saying to us that if we want to improve nutrition then we should take the tax off fresh fruit and vegetables. The World Health Organization reports that we have the third-highest rate of obesity in the world—the third-highest rate of obesity in the world—but what is this Government doing about it? It is doing nothing. It could do something in a very positive sense. If we took this tax off to improve nutrition the cost of it would be small. It would cost $200 million to $250 million which is the same amount that National took in increased excise duties from those who smoke. If it is good enough to tax people more to stop them consuming then the Government should take the tax off something we would like them to consume more of. 
Hon ANNETTE KING (Deputy Leader—Labour) 
: 
 Labour members are very keen to speak on the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill. I will continue on from the previous speaker Phil Goff who put forward a very strong case as to why we support this bill’s referral to a select committee. I ask why National will not support it to a select committee. I ask why National will not allow the people of New Zealand to make submissions on this bill. It is probably the first opportunity in 25 years for people to say whether they believe that changes ought to be made. Is that not democracy? Is that not open government which we heard so much about today from the Prime Minister? 
Unfortunately as soon as the suggestion was made that GST ought to be removed from healthy foods—in particular Labour suggested that GST be removed from fresh fruit and vegetables—John Key said that National would not support it. He did not wait to see whether the public wanted to have a say. He came straight out and said that National would not support it and that the Government has compensated for the GST increase through personal tax cuts. Well in the House today I pointed out to Mr Key two increases not even mentioning the price of food that have come in before 1 October. Firstly there has been an increase in power prices right around New Zealand. Yesterday a letter arrived notifying me of a 6 percent increase in power from Contact Energy. Secondly I pointed out the increase in the cost of bus fares in Wellington for people to get to work which is $5 extra a week. So $11 of the so-called tax cuts to compensate the increase in GST has been cancelled out and we have not even got to the extra GST on food. Labour asks why the Government will not support sending this legislation to the select committee. 
The problem we have with this bill is that the definition of “healthy food” is complicated. Rahui Katene mentioned eggs and we would have to ask whether the definition of “eggs” includes Scotch eggs. Scotch eggs are eggs with sausage meat around them that are put into fat and deep-fried and they come out as a very fatty food. So we get into definition issues when we have such a broad definition. Labour would define “healthy foods” as fresh fruit and vegetables. There is nothing complicated about that and we would move an amendment to propose that definition. 
We support the bill’s referral to a select committee because there is a real issue in New Zealand of obesity and the cost of affordable food. A very recent study in New Zealand showed that low-income New Zealand families would have to spend up to one-third of their income on food in order to eat healthily. A separate study revealed that 40 percent of New Zealanders go hungry skip meals or scrimp on ingredients because they are not food secure. The studies also said that people in low socio-economic groups are more likely to have diet-related diseases such as diabetes heart disease and some cancers. 
I hope Dr Hutchison will take a call because as a doctor he should understand that there is a need to do something in New Zealand to address the obesity epidemic and to show some leadership. But all we have had since National came into Government is the rolling back of measures that try to address the obesity problem in New Zealand. Initiatives relating to healthy eating and healthy action have been laughed at and scoffed at by National and such public health measures are being taken out of circulation. 
DAVID BENNETT (National—Hamilton East) 
: 
 We all know the simplicity of the New Zealand GST tax system; it is renowned around the world. But in respect of the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill there is one point I think we need to make: do members really think that the price of fresh fruit vegetables and other healthy food will come down if we take off GST? No way. The market knows that it can get the same price for them. It will still charge that price and there will not be a 15 percent or 12.5 percent reduction. So the theory behind the Labour argument is completely wrong. There is no guarantee there will be that reduction. There is no guarantee because the market can get those prices now and it will continue to do so even if we took off GST. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 The Green Party will support the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill’s referral to a select committee. We think that it is an important bill and we want to hear the arguments on it. We want to have the debate in select committee on this bill. We think the intent of the bill to encourage people especially poorer families to eat healthier food is an extremely important intent. Moreover we think that the aim to reduce the price of food particularly healthy food is certainly noble and would make it easier for poorer families to afford healthy food. We also know that if we can get people eating better healthier food there are cascading benefits to the health of the individuals and to the cost of the health system itself. New Zealand has an obesity epidemic. It is one of the greatest problems facing the New Zealand health system and New Zealand health in general. The obesity epidemic is a slow-moving health catastrophe and the cost and treatment of diabetes will swamp the health system if we do not do something about it. 
One of the key drivers of the high cost of fruit and vegetables is the supermarket duopoly in New Zealand. One of the ways to address the high cost is to tackle the exorbitant mark-ups that supermarkets put on fruit and vegetables. Earlier this year my colleague Sue Kedgley surveyed fruit and vegetable growers in New Zealand and the growers reported that supermarkets or rather the two supermarket chains that dominate 95 percent of the retail trade in New Zealand routinely put mark-ups of 100 percent to 200 percent—and sometimes as high as 500 percent—on fruit and vegetables. So a grower will sell a kilo of lemons for 70c and the supermarket will charge $3.99 for them which is a mark-up of more than 500 percent. These mark-ups are excessive and frankly obscene. They are putting fruit and vegetables out of the reach of ordinary New Zealanders whereas it is fresh fruit and vegetables that we absolutely need ordinary New Zealanders to consume more of. That is one of the key issues this bill is trying to address. The bill is trying to get people to purchase more fresh fruit and vegetables and obviously GST is one issue but there are some other issues as well. These mark-ups that supermarkets are putting on fruit and vegetables are influencing the eating habits of New Zealand and discouraging us from buying them by making them too expensive. So dealing with supermarkets is one effective way to counter that and I encourage members to support the development of a supermarket code of practice similar to the one in the United Kingdom. My colleague Sue Kedgley has a private member’s bill to do that. We are supporting this bill because it is one way to address the high price of fruit and vegetables. 
Beyond the issue of the supermarket duopoly which drives up prices there is the further question of whether a cut in GST would be passed on to consumers. There are absolutely no guarantees that a cut in GST on fruit and vegetables would be passed on to consumers. It is of course a function of the duopoly that supermarket chains have an enormous leeway for setting their prices for fruit and vegetables. So in the select committee process which I am disappointed National does not want to engage in we can have the discussion about what is the best way to ensure that any cuts in GST would be passed on to consumers. National members have quite reasonably raised the issue of their concern as to whether cutting GST would result in that saving being passed on but they do not want to take evidence and have the debate about it in select committee. 
Supermarkets also have a complex set of internal price trade-offs so they discount one line in order to get consumers in. The question is how much of the cut would be passed on. The other concern about this bill is the compliance costs particular for small business. We know that supermarkets will have a system to make it easy for them to sort out what is GST-free and what is not. But for smaller businesses this can be quite a significant issue. So we would hope that in select committee we would look at that. The other issue is the reduction in Government revenue. A cut in GST involves a cut in Government revenue so the question that would need to be debated is whether this is the most effective use of that forgone Government revenue. That is the debate we would all very much like to have in select committee around this excellent bill. We can have that debate in the select committee only if the majority of the House passes this bill tonight. 
We certainly support this bill. There are very strong arguments for encouraging New Zealanders particularly poorer New Zealanders to eat fruit vegetables and other healthy food. We will certainly be supporting this bill’s referral to a select committee tonight. 
Hon HEATHER ROY (ACT) 
: 
 I rise to speak in the first reading of the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill. The ACT Party will not be supporting the bill for a number of reasons. However I commend the sponsor of the bill Rahui Katene for her intent and her motivation in trying to raise awareness of healthy eating in New Zealand. 
Unfortunately one word has been missing from this debate despite the fact that it has been raging backwards and forward across the House and that is “education”. If there is one thing— 
Hon Annette King 
: Read the research; it doesn’t work. 
Hon HEATHER ROY 
: Mrs King says it does not work. During her 9 years in Government she spent all her time saying that education is the best thing since sliced bread. 
This has been a very interesting and enlightening debate because Labour seems to have forgotten that it was in power for 9 years and had the ability to put this measure in place during those 9 long years that we were subject to its policies and Draconian outlook on life. Labour had the numbers. It would have had support from the Green Party and maybe the Maori Party. Labour could have done it but not for a minute did Labour think it was a good idea. It is interesting that all of the hard-hitters of Labour—the leader of the Labour Party the deputy leader of the Labour Party and other Labour caucus members here tonight who are not in Christchurch—are saying that this measure would be a good thing for the country yet in Labour’s 9 long years in power it did not take 2 minutes to even consider that this measure might be a good idea. 
There are several things wrong with this bill but I think that the sponsor of the bill should be congratulated on her motivation. 
Labour said that it does not support the breadth of the definition of healthy food in the bill; Labour wants “healthy food” to be just fruit and vegetables. 
Hon Annette King 
: ACT doesn’t support any of it. 
Hon HEATHER ROY 
: That is right; we do not support it because that is our principled position when it comes to these things. 
I ask whether this bill is about health and healthy eating or about taxation. That is the basic question. The assumption being made by those members who support the bill is that people’s behaviour will be altered by dropping GST. The Green Party stood up and told us that supermarkets are terrible because the prices are exorbitant—as if they are the only places we can buy fruit and vegetables. I ask whether anybody has given any thought to the fact that people can actually grow their own fruit and vegetables. Not very many people do grow their own but those who are serious about saving money go to nurseries or the supermarket and buy the seeds—[ 
Interruption 
]; thank you very much Mr Foss—which they have to pay GST on and I think that is a good thing. There is no proof that people’s behaviour will be altered in any way by reducing GST on healthy foods. 
I think there is also difficulty with the definition of healthy food. To be fair to Mrs King it was mentioned by her. Healthy food is a confusing area and it is much more complex than it may seem. For example fish and chips could be considered healthy because it contains fish and vegetables so it would make sense that GST was removed. But I do not think it should be removed. A Scotch egg was the example that Mrs King used and I agree with her. Part of the reason that Scotch eggs taste so good is that they have quite a high fat content. Eggs are relatively healthy and are accounted for in the bill. 
When we look at the Australian example we see that the issue is very confusing. We need to think carefully about taxation in respect of this bill because removing GST from certain products in the marketplace means that we would lose part of the success of the universality of GST. 
If GST was removed from healthy food of whatever description a precedent would be set and that precedent may affect other goods that people should be encouraged to utilise more. Toothbrushes in Northland might be a good example but I ask whether removing GST from such an item would affect people’s behaviour. Setting a precedent by removing GST from healthy food would raise further questions of whether other goods that are of benefit to society should be exempt. For those reasons and others that I have not had a chance to address the ACT Party will not be supporting this bill. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Assistant Speaker Roy. Kia ora tatou katoa. Unfortunately my colleague Rahui Katene had to get back to her home and her whanau tonight so I add to the comments that she made to the House in opening the debate on the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill. 
I say from the very start that there is no politics in this particular bill. This bill was on the agenda at the last election in terms of our platform as a Maori Party. It was ahead of any discussion in respect of what the National Party might do with GST. At the heart of it it is motivated by the factors that my colleague Rahui set out at the very start. The first is a real desire to help those who are struggling in respect of paying the bills and looking after their whanau and families. On the back of that by taking off GST from healthy foods in particular—and that it is healthy foods is deliberate—we might not only enable tamariki and whanau to have good food but also in the end contribute to the longer discussion on the health of New Zealanders across the board. Sure in our view the bill is aimed towards Maori but that is in the belief that what is good for Maori is good for everyone. I congratulate Rahui on taking on this bill for us as a party. 
I cannot help but refer to the bailing out of South Canterbury Finance which we debated in the House today. The amount paid out to the investors of South Canterbury Finance—according to our figures at least—is equal to $405 for every man woman and child in Aotearoa. What we are talking about with this GST bill is equivalent to a mere $38 for every man woman and child in Aotearoa. It hardly bears comparison. 
Removing GST from healthy food is a key Maori Party platform as I said and there are many reasons for that. The health impact is immediate; frankly we are not by a long shot winning the battle of the bulge. New Zealand’s obesity ranking is third out of the 31 OECD countries. We trail behind only the United States and Mexico. At its most serious 8000 preventable deaths a year are related to poor nutrition and obesity and there will be a rising cost of $1.3 billion in the next few years for type 2 diabetes alone. 
One of the most ironic factors setting the scene for this bill is that it can cost a lot to be healthy. Members should just look at the supermarket trolleys these days. The fruit and veges are rapidly allocated to the too-costly basket while the unhealthy items such as noodles a bottle of Coke or a packet of biscuits are far cheaper to stock up on. 
I remind members of the reality of poverty and say to the House that it is easy enough to rattle out the statistics. Twenty-seven percent of Maori children live in poverty and 150000 children are categorised as being in severe or significant hardship. The estimated cost of child poverty is about $2.8 billion. The greater question is how any nation can afford not to eliminate poverty and not to do all it can to invest in the health and well-being of its people. 
We are really proud of this bill and its challenge to the Government to exempt healthy foods from the goods and services tax. We believe that a responsible Government would encourage the purchase of healthy food and would make it possible for all people to benefit from fresh fruit and veges; to enjoy the luxury of lean meat poultry and seafood; and to have a bottle of milk in the fridge. It does not have to be difficult. It is hard to understand why a Government that is so committed to trans-Tasman relations is so reluctant to learn from Australia’s experience and the computerised model the Australian Taxation Office has developed to make it easy to take the tax off. The Australian tax experience has streamlined the process to make it simple for small businesses. 
To sum up for the minimal cost of $38 per person we can save billions of dollars in the health spend. We can do it tomorrow without too much difficulty. In doing so we would be investing in the long-term health of the nation. I will end with a simple question that was posed by Gordon Campbell in his article “Everywhere else countries recognise the need to exempt food from GST”. He asked: “The question then is not why do it—but why not do something so easy so readily manageable by business so justifiable on grounds of social justice and so likely to deliver practical health benefits to the community?”. That is the question. 
If this bill does not make it through tonight we will be raising this matter again as an ongoing issue to support those who are struggling. 
STUART NASH (Labour) 
: 
 What a couple of interesting speeches we have just heard. I rise to support the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill. I will talk on two points but before I do I will comment on Heather Roy’s speech. 
The ACT solution to the problem discussed in this bill is to give people seeds and let them grow their own vegetables. That is the solution from the party that talks about lowering taxes and empowering people. I invite ACT to take that solution to people who are living on the fourth floor of an apartment block and struggling to pay the bills. ACT should tell them to plant seeds grow their vegetables and do it all in the bathtub because they do not need a shower. Goodness me! 
The first of the two points I will make is that although I support this bill it was the Maori Party that supported legislation passed in this House to increase GST on all food including healthy food. No one can say there are no politics in this bill because that party supported the National Government’s Budget to increase GST on food and it cannot escape that fact. My second point is that obesity is a national epidemic which really does need to be addressed most urgently. The principle behind this bill is a step in the right direction. I find it a little backwards that a member of the Maori Party introduced this bill when she voted for a Budget that increased GST on healthy food not 6 months ago. If the Maori Party had the courage of its convictions it would have voted against National’s Budget which increased the rate of GST on all food from 12.5 percent to 15 percent. 
The Maori Party is in coalition with the National Party which has made the following changes. In February 2009 Anne Tolley removed the clause in the National Administration Guidelines that stated that where food and beverages are sold on school premises schools should make only healthy options available. That change provoked a  
New Zealand Medical Journal 
 headline that read “School is back in New Zealand—and so is the junk food.” In May 2009 Tony Ryall removed a district health board and Ministry of Health target to reduce obesity in New Zealand. The 2009 Budget cuts included a cut of $32 million over 4 years from Healthy Eating - Healthy Action. In addition $24 million was cut from the diabetes initiative “Get Checked” Diabetes Aotearoa. Those are only four initiatives that have been removed by the National Government which is supported by the Maori Party. I know we are not allowed to use the “h” word—and I will not—but it comes to mind. 
My second point is that obesity is a disease that is placing enormous strain on our health system. The cost to the nation in terms of loss of productivity sub-optimal productivity and health-related illness is staggering and is expected to grow. I will give members some facts. The direct cost of obesity to the health system is $500 million per annum—$500 million. The World Health Organization estimates that the cost of obesity is between 2 percent and 7 percent of a country’s health care costs. The OECD placed New Zealand as the third-fattest nation last year. In New Zealand 11 percent of deaths are attributable to obesity 26.5 percent of adults are obese 63.7 percent of Pasifika adults are obese 41.7 percent of Maori adults are obese and 20.9 percent of children are overweight. 
Labour has raised the idea of removing GST on fresh fruit and vegetables only in recognition that we simply cannot have fresh fruit and vegetables out of the reach of a significant proportion of New Zealanders and their families. A study undertaken by the Auckland School of Medicine on the purchase habits of over 1000 shoppers found that the price elasticity on healthy foods is about 0.85. That means that for every 1 percent drop in price there is a corresponding 1 percent increase in the purchase of healthy food. In that study two-thirds of the increase was attributed to fruit and vegetables. So there is merit in investigating this legislation which will encourage all New Zealanders to eat healthier food. 
In conclusion this bill is flawed. It was introduced by a member who voted for a Budget that increased GST on healthy food. However as I have mentioned the principle behind it is right because obesity is a national epidemic that is costing the country up to $1 billion a year. That is why we are supporting this bill being referred to a select committee. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I too congratulate Rahui Katene on her good intentions in encouraging healthy eating through the Goods and Services Tax (Exemption of Health Food) Amendment Bill but this bill is riddled with flaws. That is no better illustrated than by Labour which when it was in Government did nothing for 9 long years. I ask members to listen to what Mr Phil Goff said to Radio New Zealand. The broadcaster reported that Labour’s leader had “told a meeting in Nelson that removing GST on fresh fruit and vegetables would be positive for health reasons and could also ease the pressure on family budgets”—but Mr Goff said—“it won’t adopt it as policy if it turns out it would create more red tape than it’s worth.” Only 2 minutes earlier who but the colleague of Phil Goff none other than Trevor Mallard had posted the following on his blog—and I invite members to spot the irony. He stated: “In two weeks the Maori Party will vote for a very silly bill to take GST off ‘Healthy Food’. Just imagine trying to define that. And how much of each we are allowed to eat each hour/ day/ week before GST kicks in. And the army of inspectors to check the food. And the increase in GST or other tax to cover the diff.” On the one hand we have Phil Goff saying one thing and on the other hand we have Trevor Mallard saying the other. 
Tonight we have heard Annette King say that Labour thinks the definition is complicated. Rahui Katene said we should not worry about that because all definitions could be dealt with by administrators. Clause 5 which inserts the definition of “healthy food” in section 2(1) of the Goods and Services Tax Act contains a flaw in each of its paragraphs. For instance paragraph (a) talks about canned foods. Can members remember all that sugar swilling around in some of those magnificent canned foods? Paragraph (b) mentions “all bread” and I ask how much nutrition is contained in pure white refined bread. In paragraph (c) cheese and plain milk are mentioned; to some people those foods will just clog up the arteries. Paragraph (d) mentions poultry and seafood but whether they are healthy foods all depends on the way they are cooked. This bill is riddled with flaws and no one other than Labour members illustrates that so clearly. 
A party vote was called for on the question  
That the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill be now read a first time.  
Ayes 56 
New Zealand Labour 42; Green Party 9; Maori Party 4; Progressive 1. 
Noes 64 
New Zealand National 58; ACT New Zealand 5; United Future 1. 
Motion not agreed to.