Volume 656 Week 20 - Tuesday 4 August 2009 
Volume 656 Week 20 - Tuesday 4 August 2009 
[Volume:656;Page:5359] 
Tuesday 4 August 2009 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Questions to Ministers 
Greenhouse Gas Reduction—Analysis 
1. JEANETTE FITZSIMONS (Green) 
 to the  
Minister for Climate Change Issues 
: What analysis if any has the Government done to determine the extent of cost-effective climate change emissions reductions that could be achieved within the New Zealand economy by 2020? 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 Significant work has been done on mitigation options by the Ministry for the Environment the Ministry of Economic Development the Ministry of Agriculture and Forestry and the Energy Efficiency and Conservation Authority. This advice confirms that New Zealand has mitigation options but they are more limited and more expensive than those of most countries because half of our emissions come from agriculture and there is a high proportion of renewable electricity. I urge caution to those who say reducing emissions is easy and I draw the House’s attention to the very significant increase in emissions that has occurred over the past decade. 
Jeanette Fitzsimons 
: Has the Minister seen the Green Party’s plan for New Zealand to reduce domestic emissions by 36.2 million tonnes by 2020; if so does he now accept that a 30 to 40 percent reduction target is achievable at modest cost and is vastly preferable to enduring dangerous climate change? 
Hon Dr NICK SMITH 
: No I have not had the opportunity to see the detail of the Green Party announcement. But I would note—and it was released only at 1 o’clock today I understand—that during the period that that member was the Government spokesperson on energy efficiency emissions grew very rapidly. 
Nikki Kaye 
: What advice has the Minister received on the statement by those who are promoting a 40 percent reduction in emissions by 2020 that a 100 percent renewable electricity supply is easily achievable by 2020? 
Hon Dr NICK SMITH 
: I am advised that that would require first the writing-off of $4.5 billion of thermal generation assets. It would also require $11 billion for the replacement capacity of 2500 megawatts and $2 billion for additional renewable peaking stations needed to ensure security of supply in a dry year. This amounts to a total capital cost of $17.5 billion excluding the additional transmission investment that would be required and this would amount to a 30 percent increase in the power price for all consumers. Going 100 percent renewable would also require the equivalent of another seven Clyde Dams to be built by 2020. I do not describe $17.5 billion a 30 percent power price increase and seven Clyde Dams as being easy. 
Jeanette Fitzsimons 
: Has the Minister seen the Green Party’s plan to cut the emissions from energy by 5.25 million tonnes which I sent over to his office this morning and which does not include 100 percent renewable electricity but includes replacing the Huntly coal-fired power station with geothermal wind and interruptible load as modelled by the Electricity Commission; if so does he accept that this is achievable and vastly preferable to enduring dangerous climate change? 
Hon Dr NICK SMITH 
: As I said I have not seen the Green Party proposals but I would note that over the last 18 years New Zealand’s emissions from electricity have grown by 130 percent. And if— 
Hon David Parker 
: Are they going down now? 
Hon Dr NICK SMITH 
: The member who interjects was actually the Minister during the period in which there was a very steep increase in emissions. 
Hon David Cunliffe 
: Are they going down now? 
Hon Dr NICK SMITH 
: No. Over the period of the last Labour administration thermal emissions grew hugely and there was a threefold increase in the amount of coal burnt to generate electricity. 
Charles Chauvel 
: Does the Minister think that the recent New Zealand Institute of Economic Research and Infometrics modelling on possible targets overestimates the cost of the different emissions targets given that it assumes no increase in forestry plantings given that New Zealand business will face the full price of carbon when overseas companies will not and given that the modelling uses different carbon prices for different emissions targets; and what other advice has he sought about how to remedy these emissions so that the Government has an accurate picture of the real cost of a bold target? 
Hon Dr NICK SMITH 
: Firstly I do acknowledge that any sort of economic modelling is incredibly difficult—for instance trying to make a pick about the amount of trees that might be planted. At the time when the Kyoto Protocol was signed we were planting over 70000 hectares per year and nobody projected the huge drop-off in plantings that occurred after that. In terms of the analysis that shows there would be an increase in the carbon price with more ambitious targets I think that applies reasonable common sense—that is if the global community in the negotiations in Copenhagen goes for an ambitious target it is reasonable to expect that will result in a higher carbon price. No economic analysis will be perfect but I assure the member that the Government is getting advice that is as wide and as accurate as possible in making this important decision for New Zealand. 
Nikki Kaye 
: What proposals has the Minister seen for reducing emissions in agriculture that would enable New Zealand to achieve a 40 percent reduction in emissions by 2010? 
Hon Dr NICK SMITH 
: I have seen proposals from those who promote a 40 percent reduction that agricultural emissions can be dramatically reduced through using a smart farming approach. These methods entail a one-third reduction in stock intensity which would of course reduce emissions accordingly. However the consequences of cutting by one-third our stock of sheep cattle and deer would cost New Zealanders approximately 50000 jobs and $6 billion in export earnings and would significantly reduce living standards for all New Zealanders. Such policy options for agriculture are not being considered. Our efforts as a Government are focused on investing in the new technologies that will enable emissions reductions while maintaining our important agricultural economy. 
Jeanette Fitzsimons 
: Does the Minister accept the research done by AgResearch and Dairy New Zealand that shows that if the milk payout price is less than $5.50 it is not profitable for farmers to increase their stocking intensity—in fact they lose money—that the average for the last 10 years has been $5.20 which is where it is at the moment and that it is expected to head downwards next year; and does he not think that farmers are actually becoming less profitable by increasing their stocking intensities to over 5 stock units per hectare in some cases with a lot of bought-in inputs that they cannot pay for? 
Hon Dr NICK SMITH 
: It is true that dairy farming has become less profitable as a consequence of declining prices for produce. The issue of the intensity of agriculture in my view is not the solution to our challenge around climate change. We have to find the technologies that will enable us to maintain the economic contribution that agriculture makes while reducing the emissions. In my view the sorts of proposals that are put forward by those promoting a 40 percent reduction in emissions and a huge drop by one-third in the intensity of our agriculture would have a devastating impact on the New Zealand economy. 
David Garrett 
: What does the Ministry for the Environment forecast New Zealand’s net emissions would be in 2020 under the do-nothing option and what does it forecast net emissions would be in 2020 under the emissions trading scheme as legislated or does the Minister not know that? 
Hon Dr NICK SMITH 
: Officials advise me that on a business-as-usual basis in 2020 we would expect New Zealand’s emissions to be 41 percent above 1990 levels. Currently we are about 24 percent above the 1990 levels and I think that really brings home— 
Hon David Parker 
: Quote the net figures! 
Hon Dr NICK SMITH 
: The member opposite interjects asking for the net figures. The difficulty is this: I am advised that in 2020 the contribution from forestry will be offset by the harvesting of trees. In other words although we have banked on forestry offsetting our increase in emissions over the period of the Kyoto Protocol we cannot count on that in 2020. That is why the member’s question is quite relevant. Because our gross emissions are 24 percent above the 1990 levels it will be a very difficult challenge for New Zealand to get back even to the 1990 levels. 
Hon Rodney Hide 
: I raise a point of order Mr Speaker. This is about the Minister addressing the question. There were two parts to the question. The Minister addressed the first part which was what the emissions would be on the basis of the do-nothing option. Then a member from the other side interjected and I think he got diverted into answering that question. He did not answer the second part. It may be that it was not his intention to answer it but the second part was about how much the emissions trading scheme would reduce the net emissions by. 
Mr SPEAKER 
: The honourable member knows that only one part of a question needs to be answered. If the honourable member wishes to provide the information to the House that would be helpful. 
Hon Dr NICK SMITH 
: I am very happy to oblige the member. In respect of the current emissions trading scheme I do not have the number on me. It is contained in the regulatory impact statement on the original emissions trading scheme. One of the uncertainties in respect of that is the extent of the carbon price because the higher the carbon price is the more likely it is that the emissions in 2020 would be lower. However the Government is working on a package of amendments to the emissions trading scheme to better balance the environmental and economic factors that need to be carefully considered. 
Jeanette Fitzsimons 
: Has the Minister seen the research from the forestry industry that shows that with a price on carbon of around $25 a tonne and policy certainty from the Government it would plant $25000 hectares a year of additional forests for the next 10 years and that if it did that this would completely cancel out the effect of the harvesting of the post-1990 forests and give us 10.9 million more tonnes of carbon stored by 2020? 
Hon Dr NICK SMITH 
: The member is correct. The extent to which we plant trees has a huge impact on our capacity to be able to meet targets in 2020. The difficulty is that although it is true that foresters get credits at the time they plant trees and those trees grow they also receive a debit at the time of harvest. Some of the caution from forestry investors is that with the carbon price likely to rise over time forestry is not necessarily as profitable as some of the analysis would show. One of the very important issues in the international climate change negotiations is for New Zealand to get recognition for the stored carbon from forest products and that is why this Government gives that issue such priority in those international negotiations. 
Charles Chauvel 
: Is it not highly misleading to the New Zealand public to claim that a bold target will cripple the economy when the reports relied upon by the Ministry for the Environment and others show that under all scenarios GDP actually increases and when those reports also fail to take into account any changes in behaviour to reduce emissions or any complementary Government measures that reduce emissions? 
Hon Dr NICK SMITH 
: I think the underlying important issue is that reducing emissions is actually quite difficult for New Zealand. I simply say to the member opposite that if it is so easy why is it that over the last 18 years we have seen such a dramatic increase? The Labour Party may say that the $14.5 billion per year that a minus 40 percent emissions reduction target would entail which the New Zealand Institute of Economic Research - Infometrics analysis shows is insignificant. Members on this side of the House think it is significant and that is why we intend to carefully balance just as we campaigned on this Government’s climate change policies with our objectives for New Zealand to be more successful economically. 
Jeanette Fitzsimons 
: Does the Minister accept that meeting a bold target is not just about sitting back and waiting for business-as-usual to do it for us but actually needs some proactive Government actions; that if he caps the price of carbon as the Australians are proposing we can expect much higher emissions in 2020 than now; and that the design of the emissions trading scheme if it is weakened is going to make it harder to meet a target in the future? 
Hon Dr NICK SMITH 
: The member is absolutely right to draw attention to the balance. The more ambitious the target is the greater the cost is for New Zealanders. Where I would challenge the Green Party to be more upfront with New Zealanders is that if we want to promote a 40 percent reduction target—and remember we are already 24 percent ahead of 1990 emission levels—then the Green Party needs to be upfront about the sort of impact that achieving that would have on power prices on petrol prices and on jobs for people in sectors like the agricultural sector. All that I have seen from the Greens to date grossly underestimates what those costs would be for ordinary New Zealanders. 
Dr Russel Norman 
: Does the Minister stand by his statement that it is too hard and too expensive for us to have a responsible target in light of the fact that the Greens today have released a study that shows that New Zealand can meet that kind of target—a responsible target of 30 percent to 40 percent reductions—and not only is that the case but in the long term New Zealand has no choice but to do so and that the real challenge to us as a nation is that our economy must become a low-carbon economy if we are to have a prosperous economy in the 21st century? 
Hon Dr NICK SMITH 
: Firstly I have never said what the member alleged; I have said that a minus 40 percent target when we are starting at about plus 24 percent in relation to 1990 emission levels is unrealistic. I simply put this to the member. During the course of the 1990s New Zealand’s emissions went up by 10 percent. During the course of this decade they are predicted to go up by another 14 percent. Do I think that over the course of the next 10 years we can do minus 64 percent? I think that is unrealistic and I would remind the member that when his colleague Jeanette Fitzsimons was the spokesperson for the Government on energy efficiency emissions went up. 
Vulnerable Citizens—Prime Minister’s Statement 
2.  
Hon PHIL GOFF (Leader of the Opposition) 
 to the  
Prime Minister 
: Does he stand by his statement that “This Government is not prepared to turn its back on our most vulnerable citizens when they most need our help.”? 
Hon BILL ENGLISH (Acting Prime Minister) 
: Yes that is why this year’s Budget maintained entitlements to welfare benefits New Zealand superannuation and Working for Families despite Government revenue falling by billions of dollars. That is why we have just announced a $152 million package to create opportunities in work education and training for young people who are particularly vulnerable during this recession. 
Hon Phil Goff 
: Why then did the latest Budget cut $2.5 million from our most vulnerable and disadvantaged children—those who have major disabilities—who rely on that support to stay well and to continue at school? 
Hon BILL ENGLISH 
: As the member will be aware in fact in the Budget the Government committed an increase of $51 million over 4 years to special education to allow around 1000 extra children to access special education funding. With regard to the particular issue the member raises I am advised that some schools got considerable amounts of funding. Other schools with children with similar needs did not receive any additional funding. The Ministry of Education is working with the 23 schools that are affected by the change. It specifically intends to consult with those schools and parents in the upcoming review of special education. 
Hon Phil Goff 
: What does the Prime Minister say to the parents of those children who are so vulnerable when they ask why the Government cannot afford just $2.5 million to give them essential therapy treatment when the Government can afford to give $35 million to the most advantaged children in private schools? 
Hon BILL ENGLISH 
: The Ministry of Education is undertaking detailed work with those 23 schools. I am advised that to provide a similar level of assistance for all children with similar needs could cost about $30 million. As the member will know from his time in Government everyone understands the complex needs of those children; the challenge in Government is to make sure that all children with special needs and their families get as much support as the Government can reasonably provide while being fair to all those who are affected. 
Chris Tremain 
: Has the Prime Minister seen any reports of alternative approaches to Government support? 
Hon BILL ENGLISH 
: I have seen a number of propositions about how to use any public money that may be available. The reports from the Labour Party indicate that actually it would not spend extra money on those children. It would spend it on providing welfare to millionaires whose spouses have lost their jobs. 
Hon Phil Goff 
: Does he accept the concerns of the parents of children with major disabilities like muscular dystrophy and cerebral palsy that the removal of that funding will compromise the well-being of their children and their ability to stay at school; if not why does he reject the advice of both the schools and parents in that regard? 
Hon BILL ENGLISH 
: The Government does accept the concerns of those parents and those children will be eligible for Ongoing and Reviewable Resourcing Scheme funding in the same way— 
Hon Phil Goff 
: No they won’t be. 
Hon BILL ENGLISH 
: —they will be—as many other children are. The Government is always listening to parents who express need in a vigorous fashion. That is one of the reasons that in the Budget the Government allocated an extra $51 million. Ongoing discussions between the Ministry of Health and those schools will be aimed at addressing the concerns of those parents where it is feasible. 
Rahui Katene 
: What specific initiatives is this Government supporting to respond to the disproportionately high numbers of Maori and Pasifika youth job seekers who together comprise 47 percent of all young people receiving the unemployment benefit? 
Hon BILL ENGLISH 
: I think it is well understood that Maori and Pasifika youth are overrepresented in the unemployment figures. The Government expects that the $152 million youth opportunities package that was announced over the weekend will pick up significant numbers of Maori and Pasifika youth. In particular the Community Max policy offers opportunities for grassroots Maori and Pasifika groups including marae iwi and land incorporations to provide work for their own youth on community projects. Te Puni Kokiri and the Ministry of Pacific Island Affairs will work with those communities to ensure that young people take up those options. We would expect to see Maori and Pasifika young people overrepresented in those projects. 
Hon Phil Goff 
: Will the Prime Minister accept the invitation he has received from schools and parents to visit schools to see the work being done with children to see the challenges that those children and their families face daily to hear from them that he is absolutely misinformed when he says that there is some compensatory funding that they will get out of a different pool of money—because they will get none—and to hear from them the consequences those cuts in funding will have on those children? 
Hon BILL ENGLISH 
: Obviously I cannot answer that supplementary question on behalf of the Prime Minister. The Associate Minister in charge of special education has undertaken to go to each school and meet with those parents. I also point out to the member that we as MPs meet with parents whose children get no resources because they did not qualify under his Government for the Ongoing and Reviewable Resourcing Scheme. The $51 million announced in the Budget will enable another 1000 families who have children with special needs to access the kind of Government funding that those children ought to have. 
Hon Phil Goff 
: Does the Prime Minister disagree with the statement made in the  
New Zealand Herald 
 today in the editorial: “Society should seek to provide every opportunity for those unfortunate enough to have been born disabled. When a small sum is delivering immense improvement and clearly providing value there is no reason to discontinue it.”? If he does agree with it will he reconsider the decision to cut the funding; if he does not agree with it why not? 
Hon BILL ENGLISH 
: Where small amounts of funding make a big difference of course any Government would target them as a priority. As the member will know from his time in Government the challenge in those cases is to get fair treatment across the wide range of needs and the wide range of families who need considerable support. The Associate Minister in charge of special education is visiting each school. Ongoing discussions with the Ministry of Education will lead I am sure to a better understanding of their needs and how they can be met. 
Youth Unemployment—Initiatives 
3.  
CRAIG FOSS (National—Tukituki) 
 to the  
Minister of Finance 
: What steps is the Government taking to tackle youth unemployment during the recession? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The Government has set out from the start of this year to take the sharp edges off the recession where it can and it has taken several steps to combat youth unemployment which is one of the sharp edges of recession. The package worth $152 million announced by the Prime Minister at the weekend will create about 17000 job opportunities for young people over the next couple of years across a range of activities. Education and training is a key part of our economic plan and the package will create 4000 new tertiary training places for 16 and 17-year-olds. In addition it includes 4000 job placements of 6 months for low-skilled young people in businesses and about 3000 jobs of up to 6 months in community programmes. 
Craig Foss 
: Why is the Government undertaking such a comprehensive package? 
Hon BILL ENGLISH 
: The number of young unemployed has climbed from 4000 last June to nearly 17000 this June. As the Government signalled from the start of the year and again in the Budget we believe it is important that young people do not become completely detached from the world of skills and work. We want to make sure we do not risk diminishing the potential of a generation of New Zealanders hit by a combination of the New Zealand recession that began at the beginning of last year and the global recession that hit about 9 months ago. 
Jacinda Ardern 
: Will the funding for the $152 million package come from the $167 million that was slashed in the Budget from skills training the scholarship schemes that helped low-income young people into tertiary education and the Enterprising Communities fund; if so is the Government’s approach to unemployment less about sharp edges and more about cutting and pasting? 
Hon BILL ENGLISH 
: The Government has spent some time evaluating the effectiveness of spending decisions left over from the last Government which clearly made decisions when it thought that surpluses would go on for ever. Some of those decisions we have now reversed. In this case we are focusing strongly on keeping young people in contact with the workforce and skills. We believe that is the right response to the recession. 
Craig Foss 
: What is the intended result of this package? 
Hon BILL ENGLISH 
: There are a number of intended results. One is simply to ensure that the young people who would be on the dole and losing a sense of discipline and losing their work habits are in some kind of constructive activity. In itself that will be of benefit. But in the longer term we think it is an opportunity for those young people to pick up skills and a work record so that as this economy recovers they will be able to get real sustainable jobs. Many of them are on the dole because they relied on jobs that were the product of 10 years of bad economic management with too much borrowing and Government spending. 
Rahui Katene 
: How does the focus on youth unemployment align with the focus on whanau ora? 
Hon BILL ENGLISH 
: The responsibilities for a young person who is unemployed can easily fall back on the whanau. In this case we want to contribute to supporting whanau by supporting their young people and also provide the opportunity for Maori iwi and other community groups to get together and provide opportunities for their young people. Of course that will also support the health of the family. 
Craig Foss 
: Has the Minister seen any reports on alternative approaches to unemployment? 
Hon BILL ENGLISH 
: I have heard some calls from the Opposition to “do something” but the ideas the Opposition comes up with seem to involve extending the welfare State not actually saving jobs or creating jobs. 
Question No. 2 to Minister 
Hon PHIL GOFF (Leader of the Opposition) 
: 
 My apologies to the House. I should have sought leave at the end of Question No. 2 but I would now like to seek leave to table four separate letters. The first is a letter from Mount Roskill Primary School to the Prime Minister talking about the strain that funding cuts are placing on parents. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is none. 
Document by leave laid on the Table of the House. 
Hon PHIL GOFF 
: The second letter is from Mount Roskill Grammar School to parents and caregivers indicating that the school’s therapy service will need to be significantly reduced because of the cuts. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is none. 
Document by leave laid on the Table of the House. 
Hon PHIL GOFF 
: The third letter is from Mount Roskill Intermediate School to the Hon Anne Tolley saying that the rights of the children who will be affected by the cuts will be compromised by that decision. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is none. 
Document by leave laid on the Table of the House. 
Hon PHIL GOFF 
: The last letter is from the Carlson School for Cerebral Palsy. It is an open letter to the families of the school. It says the school will lose half of its occupational therapy and physiotherapy staff if the funding cut goes ahead. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is none. 
Document by leave laid on the Table of the House. 
Question No. 1 to Minister 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 I seek leave to table information provided by the Ministry of Economic Development on the cost impact of a target of 100 percent renewable energy by 2020. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is none. 
Document by leave laid on the Table of the House. 
Youth Unemployment—Estimates 
4.  
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Minister for Social Development and Employment 
: What estimate if any have her officials at the Ministry of Social Development provided to her on the level of unemployment by December 2010 and how many of those unemployed will be between 16 and 24 years of age? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 The ministry’s most recent forecast provided to me predicted that unemployment numbers would reach 83000 in December 2010. The ministry does not forecast by age. 
Hon Annette King 
: Is the Minister aware that according to predictions by both Treasury and the New Zealand Institute of Economic Research youth unemployment is set to rise to around 20 percent by 2010 which would see over 36000 youth unemployed and as she has said the recently announced youth opportunities package is a “short-term targeted solution” what more will she do to address the 20000 youth who will not benefit from the package over the next 15 months and beyond? 
Hon PAULA BENNETT 
: The numbers the member is putting out there are from the household labour force survey. They represent young people who are legitimately not engaged in anything. They could be young people who are taking a break prior to starting university are supported by their parents those who are about to head off on their OE or those who are undertaking voluntary work—a number of people and not necessarily those who are on the unemployment benefit. Those figures are predictions not targets as members of the previous Government seem to see them. The role of this Government is to try not to reach those numbers and that is what this package is all about. 
Hon Annette King 
: In the May Budget why did the Minister scrap the successful Enterprising Communities scheme which employed around 3000 New Zealanders of all ages and now 2 months later is introducing the Community Max scheme for up to 3000 people—simply a watered-down version of the Enterprising Communities scheme—funded for a shorter period and open only to youth workers? 
Hon PAULA BENNETT 
: The Government stopped that scheme simply because we did not think it was working. Over a 3-year period the Enterprising Communities scheme was expected to be self-sustainable. In reality it was not. The 3000 young people going into Community Max represent a positive initiative that we think will generate work for them and see projects fast-tracked in their communities. We are incredibly positive about it. 
Hekia Parata 
: Tena koe e Te Mana Whakawa o te Whare a tena tatou e te Whare. Has the Minister seen reports of other assistance that could be made available for people on the unemployment benefit? 
Hon PAULA BENNETT 
: Yes. I have seen reports in the media quoting Annette King as saying that Labour is contemplating extending in-work tax credit to beneficiaries at a cost of $450 million. 
David Bennett 
: More money! 
Hon PAULA BENNETT 
: More money! I simply ask the member whose taxes she would increase or what programmes she would cut. 
Hon Annette King 
: Can an employer joining the Job Ops scheme use the 90-day Act and dismiss a young person without cause after 6 weeks and thereby keep the $3000 paid by the taxpayer and get an employee at no cost to the business for that person; and if that is possible what has the Minister put in place to prevent rorts like that? 
Hon PAULA BENNETT 
: There are criteria about when employers can get that $3000 and how long the period is for. The 90-day probationary period does apply to the scheme. Unlike members opposite we think that employers want to step up want to offer work to young people want to do well by them and want to keep them in work as much as possible. I see members opposite shaking their heads at me thinking: “Not those nasty employers.” Actually employers want to do those things. They believe in society as much as this Government does. 
Darien Fenton 
: Will the Minister guarantee that no older workers will find themselves being made redundant and replaced by a youth worker as a result of her Government’s Youth Opportunities package and will she make it an obligation on businesses that while on the scheme they are not able to make any of their existing workers redundant like she has for those on the 9-day working fortnight? 
Hon PAULA BENNETT 
: Work and Income is working with employers. The scheme is for new entry-level roles and the Government is making that very clear to employers. We make no apologies for focusing on youth and on our young people in that particular package. In a 5-month period this year 42 percent of participants in the old scheme were aged under 25 years. However of the total number of people who got a job and went off the benefit—and those percentages are there—70 percent were over 25 years. Young people are disadvantaged through a lack of skills and experience. That is what this package will fix. 
Youth Job Opportunities—Employer Subsidy 
5.  
KATRINA SHANKS (National) 
 to the  
Minister for Social Development and Employment 
: What recent announcements have been made on creating job opportunities for our young people? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 We have announced we are providing a subsidy to employers of $5000 for every young person they can employ into an entry level position. We are paying $3000 up front and $2000 after 6 months. This Government now needs employers to step up and get on board. We know there are employers out there who need a bit of confidence to take on another person and this measure will help them to do so. I would urge them to give Work and Income a ring. 
Katrina Shanks 
: What interest has there been in the programme so far? 
Hon PAULA BENNETT 
: We have already had three inquiries from community groups about the Community Max programme but 21 job opportunities have been registered with Work and Income and I am delighted that after just 24 hours two young people have already been placed into jobs. One is a factory worker the other is a cafe assistant and they actually started work today. 
Carmel Sepuloni 
: Has the Minister received reports showing that a child’s level of education is determined by his or her mother’s; if so will she consider reinstating the training incentive allowance for level 4 courses and above so that both sole mothers and their children can have a better chance of educational achievement resulting in better employment opportunities in the future for both youth and their mothers; if not why not? 
Hon PAULA BENNETT 
: Yes we certainly do have a focus on teen parents. I know that Minister Tolley has been doing a lot of work around the education of teen parents and how that works. This Government is very focused on them and on how this might affect their children because at the end of the day happy educated parents mean happy educated children. 
Katrina Shanks 
: What reports has she seen that support the introduction of the Government’s youth opportunities package? 
Hon PAULA BENNETT 
: I have seen a number of encouraging reports. Michael Barnett from the Auckland chamber of commerce called it a supportive positive initiative that gives young people another option for becoming contributing members of society. Graeme Dingle has said: “The government’s intention here is great” and that it will help young people stay off the unemployment benefit develop work skills grow confidence and connect with their community. Mayor Dale Williams said it “should not only achieve a decrease in youth unemployment but also an increase in the skills of our young people.” 
Adult and Community Education—Funding 
6.  
Hon MARYAN STREET (Labour) 
 to the  
Minister for Tertiary Education 
: Will she consider reinstating the funding for adult community education for next year allowing a review of its adult community education classes and presenting a renewed programme at the end of 2010 as called for by the adult education lobbyists learners and supporters who are marching on Parliament today? 
Hon ANNE TOLLEY (Minister for Tertiary Education) 
: 
 No. The Government remains committed to adult and community education and that is why we are investing $124 million into the sector over the next 4 years. We have had to make decisions to reprioritise some adult community education funding in order to fund tertiary education opportunities for younger New Zealanders and I stand by those decisions. 
Hon Maryan Street 
: Does she agree with the report of the Post Primary Teachers Association on building the educational infrastructure for economic recovery which stated that adult and community education was central to job creation; if not why not? 
Hon ANNE TOLLEY 
: I agree with some parts of that report but I say again to the member that this Government remains committed to adult and community education. That is why as I have just said we are investing $124 million into it over the next 4 years. 
Louise Upston 
: What evidence has she seen to suggest that tertiary education priorities in New Zealand need to be refocused? 
Hon ANNE TOLLEY 
: The first piece of evidence is that New Zealand has relatively low participation rates of 15 to 19-year-olds in all types of education. The second is that although tertiary funding has increased substantially since 2000 the number of people completing degrees has remained constant over that time. We have to ensure that the limited tertiary education budget focuses our dollars and attention on lifting the educational attainment of young New Zealanders and on increasing the number of people achieving higher-level qualifications if we are to lift the economic performance of this country which is this Government’s goal. 
Hon Maryan Street 
: Is the Minister aware that even the Prime Minister John Key when asked whether the Government had seriously underestimated the impact of adult and community education cutbacks on communities has been reported to have said: “You’re probably right” and will she now back down on her decision to cut that funding and get a real estimation of how important these courses are to people in our communities? 
Hon ANNE TOLLEY 
: I always agree with the Prime Minister. We understand that people are disappointed but many people I have talked to also understand that we are in very difficult economic times which means we have to budget and prioritise where we spend our education budget. As I say we are continuing to support adult and community education to the tune of $124 million. To the Opposition over there that might not seem a lot of money but it is a great deal of investment by this Government in adult and community education over the next 4 years. 
Hon Maryan Street 
: Does the Minister intend to meet the adult and community education protesters today given that according to her ministerial diary she has no engagements to attend today? 
Hon ANNE TOLLEY 
: No I do not intend to meet with them. A look at the question sheet will show that I am busy in the Chamber. 
Question No. 4 to Minister—Amended Answer 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 I seek leave to correct an answer I gave earlier. 
Mr SPEAKER 
: Leave is sought to correct an answer. Is there any objection to that course of action? There is none. 
Hon PAULA BENNETT 
: I made an error about the 90-day rule. The rule does not apply to Job Ops or Community Max. It is a 6-month contract. As such the 90-day probation period does not apply. 
Youth Guarantee—Implementation 
7.  
ALLAN PEACHEY (National—Tamaki) 
 to the  
Minister for Tertiary Education 
: What recent announcements have been made about the Youth Guarantee? 
Hon ANNE TOLLEY (Minister for Tertiary Education) 
: 
 The Government announced on Sunday that it would be jump-starting the first stage of the Youth Guarantee. Next year we will fund 2000 fee-free places for 16 and 17-year-olds at polytechs private training establishments and wananga. The Government has always believed that some students will be more motivated to succeed in non-school settings and we are very proud of the fact that we are able to jump-start the Youth Guarantee so that by the start of next year 2000 students will be able to take advantage of it. 
Allan Peachey 
: How will the Government decide which providers and courses will be part of the initial roll-out of the Youth Guarantee? 
Hon ANNE TOLLEY 
: The providers involved next year will be those in areas with high youth unemployment rates that have a demonstrated track record of delivering programmes at levels 1 to 3 to young people. The courses offered will be vocationally focused courses at levels 1 to 3 with literacy and numeracy embedded in the course content. Examples include certificates in mechanical maintenance computing agriculture and forestry skills—the list goes on and on. 
Iain Lees-Galloway 
: What advice does the Minister have for the 6000 students who are not covered by the extra places in polytechs provided by the Youth Guarantee scheme and how can those 6000 students be expected to get into training or education when the Minister refuses to make room for them to learn? 
Hon ANNE TOLLEY 
: I would say to the member that those students do not exist so it is very hard to give them advice. Those students are hypothetical; they are based on predictions that various institutions have made. Each institution that makes those predictions uses a different basis. In the past those predictions have not tended to be very reliable. 
Allan Peachey 
: What reports has the Minister received on the reaction to the jump-starting of the Youth Guarantee? 
Hon ANNE TOLLEY 
: I have received a report that states that the institutes of technology and the polytechs are right behind the Youth Guarantee. I have also received reports that private training establishments and wananga are busy putting together applications to be part of the 2010 jump-start. I am really heartened by the response from the wider education sector. It seems that everyone except the Labour Party thinks the scheme is a good idea. I look forward to all those training organisations providing 2000 high-quality tertiary education opportunities for 16 and 17-year-olds next year. 
Question No. 10 to Minister 
Hon DARREN HUGHES (Senior Whip—Labour) 
: 
 I raise a point of order Mr Speaker. At 3 o’clock today a rally is being held at the front steps of Parliament to protest against cuts to community education— 
Mr SPEAKER 
: The member will resume his seat. I do not see how this can possibly be a matter to do with the order of the House. If the member can assure me that it is to do with the order of this House then I— 
Hon DARREN HUGHES 
: I seek leave for question No. 10 to be held over until tomorrow to enable the Minister of Education to attend that rally because she gave her responsibilities on the Order Paper as an excuse for her not attending. 
Mr SPEAKER 
: I apologise to the honourable member. Leave is sought for the question to be held over until tomorrow. Is there any objection to that? There is objection. 
Hon Member 
: Chicken! Chicken! 
Mr SPEAKER 
: Order! [ 
Interruption 
] When I am on my feet interjecting will stop. There will not be that kind of interjection across the House and the member knows that he must not do that. 
Finance Minister—Line by Line Review Progress and Priorities 
8.  
Hon TREVOR MALLARD (Labour—Hutt South) 
 to the  
Minister of Finance 
: What progress has he made on line by line reviews and what are his priorities for the next 12 months? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 As I said in the Budget departmental reviews have freed up $2 billion over the next 4 years. This money is being put back into Government priorities such as boosting front-line services by training more doctors and nurses and employing more police and probation officers. Over the next 12 months we will continue to focus on ensuring that front-line services are improved and that resources are shifted from back-office functions to front-line services. 
Hon Maryan Street 
: Did the cut to adult and community education target the lowest-value expenditure; if not will the Minister give an example of lower-value expenditure? 
Hon BILL ENGLISH 
: The departmental chief executives sat alongside brand new Ministers and worked through the processes that were required for the Budget. The reviews are largely driven by the judgment of those who are much closer to front-line services and reflect clearly expressed Government priorities. 
Hon Sir Roger Douglas 
: Why has the Minister of Finance made line by line reviews his top priority when surely the more important question is whether agencies such as the Families Commission the Charities Commission the Ministry of Women’s Affairs and the Ministry of Youth Affairs should even exist; if they should exist which of their functions should continue—for example $3 million on racing sponsorship $13 million on the Contestable Waste Minimisation Fund and $9 million on strengthening relationships with Maori on brokerage—and if those functions should continue can we deliver the service more efficiently through competition? 
Hon BILL ENGLISH 
: Those are all very good questions that I hope the departments are asking themselves. But the Government is not focusing on small agencies; we are focusing on large ones like the Accident Compensation Corporation. The liability to the taxpayer and the levy payer has got completely out of control because of the reckless management of the previous Government; it now amounts to almost $24 billion. Getting that under control will have more impact than a discussion on the Ministry of Youth Affairs. 
Lynne Pillay 
: Did the cuts to physiotherapy for the most disabled children in our schools target the lowest-value expenditure; if not will the Minister give an example of lower-value expenditure? 
Hon BILL ENGLISH 
: I covered in answers to an earlier question the issue of special education. The Government made it clear that it felt that special education was a high priority; that is why it allocated an additional $51 million so that another 1000 young people with challenges would be able to get the support they need. 
Carmel Sepuloni 
: Did the cut to the training incentive allowance which was designed to assist beneficiaries in gaining skills and employment target the lowest-value expenditure; if not will the Minister give an example of lower-value expenditure? 
Hon BILL ENGLISH 
: I will repeat the answer I gave earlier: the departmental chief executives and Ministers—particularly the chief executives and departmental officials who are familiar with the wasteful ways of the last Government—decided what was low-priority expenditure. 
Criminal Law—Partial Defence of Provocation 
9.  
CHESTER BORROWS (National—Whanganui) 
 to the  
Minister of Justice 
: What changes is the Government proposing to the partial defence of provocation? 
Hon SIMON POWER (Minister of Justice) 
: 
 Today the Government has introduced the Crimes (Provocation Repeal) Amendment Bill which will abolish the partial defence of provocation provided for in section 169 of the Crimes Act. There are fundamental problems with the application of the partial defence of provocation. Historically the reason for this provision was to avoid the mandatory murder penalty which was originally capital punishment. As I have stated previously provocation enables defendants to besmirch the character of victims and it effectively rewards a loss of self-control. 
Chester Borrows 
: What impact will the proposed repeal of the partial defence of provocation have on those who are battered and those with mental impairments? 
Hon SIMON POWER 
: I am advised by the Law Commission that the defence of provocation is rarely relied upon by the victims of battering; in fact it is more likely to be used by the perpetrators of battering. In appropriate cases though self-defence would be available to the victims of battering. I am further advised that the mentally impaired are generally precluded from relying upon the partial defence of provocation as provocation requires that the defendant has the power of self-control of an ordinary person. 
Education National Standards—Single Standard 
10.  
KELVIN DAVIS (Labour) 
 to the  
Minister of Education 
: Does she still stand by her comments reported in the  
New Zealand Herald 
 on 1 August 2009 in relation to national standards in particular where she says that the system would not force teachers to meet a single predetermined standard as in the United States and Britain? 
Hon ANNE TOLLEY (Minister of Education) 
: 
 No because that is not a direct quote from me. National standards will provide nationally consistent benchmarks that will assist teachers to make judgments about a student’s progress and achievement in literacy and numeracy. Teachers will continue to use evidence from a range of sources to inform their teaching and learning programmes. 
Kelvin Davis 
: How will the Minister expect teachers to report to parents in plain English whether their child has met a national standard that is not set at a specific level and will this not just add to parents’ confusion as to whether their child is achieving to the level he or she should? 
Hon ANNE TOLLEY 
: I say to that member Kelvin Davis that if he were to look at some of the suggestions that were put in front of parents and educators during the consultation period and were to hear the comments from the many parents who took part in that consultation process he would see that they are very clear that the standards will be of huge assistance to them as parents in understanding what are the strengths and weaknesses of their children. 
Colin King 
: Why is the Government introducing national standards? 
Hon ANNE TOLLEY 
: National standards are being introduced to provide clear expectations for children at primary school and to provide parents with simple plain language explanations of their children’s progress. That is what the parents tell us they want and that is what we are providing. Parents want to be involved in their children’s education and to do that they need to know how their child is progressing. 
Kelvin Davis 
: What is the point in just showing progress against the standard as the Minister stated in the  
New Zealand Herald 
 when the rate of progress towards a standard is more important but neither are of any use if a teacher does not know where the standard sits in the first place? 
Hon ANNE TOLLEY 
: The national standards will provide very clear expectations of just what progress a student needs to make and the formative assessment by the teacher that takes place in the classroom will provide good results showing the progress that a child is making against those standards. 
Kelvin Davis 
: In relation to the Minister’s answer can she explain what her understanding of formative assessment is? 
Hon ANNE TOLLEY 
: Formative assessment is an assessment technique that is widely used by New Zealand teachers and worldwide to inform the teaching and the learning that happens in a classroom. It is a continuous process of the assessment of the effectiveness of the teaching and the effect of learning on students. 
Marine Energy Devices—Marine Energy Deployment Fund 
11.  
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister of Energy and Resources 
: What steps is the Government taking to accelerate the deployment of marine energy devices in New Zealand? 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
: 
 The Government has recently opened applications for the third round of the Marine Energy Deployment Fund which aims to have wave and tidal stream energy devices operating in New Zealand. 
Peseta Sam Lotu-Iiga 
: Why is the Government interested in accelerating the development of marine energy? 
Hon GERRY BROWNLEE 
: The Government would expect that marine energy would take quite some time to develop given that it is not in any significant commercial operation anywhere in the world. The fund was put together by the previous Government and we felt it was worth continuing with. New Zealand does have a very large coastline. There is opportunity to develop fast-moving waters which could result in tidal energy contributing to New Zealand’s energy requirements. 
Auckland Local Government Reform—Government Leadership 
12.  
PHIL TWYFORD (Labour) 
 to the  
Minister of Local Government 
: Does he believe the Government is providing clear leadership on the reform of Auckland governance? 
Hon RODNEY HIDE (Minister of Local Government) 
: 
 I thank the member for the question. Yes Prime Minister John Key and this Government are providing Auckland with precisely the leadership that it needs and has lacked for many years. I am particularly pleased to have the support of one special commentator who when comparing the present leadership with the previous Government stated: “There was a feeling for quite a long time that the city wasn’t working” and who stated that the previous Government “was very late in coming to the party and doing something about it.” That commentator was Mr Phil Twyford commenting in the  
Listener 
 on why Labour was punished at the last election and why it remains unforgiven by the public. 
Phil Twyford 
: Does the Minister agree with Mayor of Auckland City John Banks who was telling his mates that a deal has been done with the Government for 18 ward and six at-large councillors on the new Auckland Council? 
Hon RODNEY HIDE 
: I have no idea about whatever comments Mr Banks might be making. But I can say that under this Government and this Minister things are looking up for Auckland compared with the situation under the 9 years that Helen Clark and the Minister with responsibility for Auckland Issues Judith Tizard managed things when one commentator of whom I am fond stated that “the city wasn’t working properly with traffic problems crappy infrastructure and a downtown that looks like a bomb site.” That was after 9 years of Labour and the commentator was list MP from Auckland Mr Phil Twyford. 
Phil Twyford 
: Does the Minister stand by his recent statement that none of the current incumbent mayors in Auckland are “up to the job of super-mayor” or is it that he now wants to call off the race because his horse—John Banks—is coming second? 
Hon RODNEY HIDE 
: I stand by all my comments. It will be up to the people of Auckland to decide who will be the next mayor of Auckland and it is quite clear that they have decided that they do not like Labour. That is not surprising when Phil Twyford stated that after 9 years the city is not working that the Government is late in fixing it and that there are “traffic problems crappy infrastructure and a downtown that looks like a bomb site.” If that is the legacy of Labour in Auckland then it is no wonder the people of Auckland love this new Government. 
Phil Twyford 
: Which of these statements made by the Minister is correct: “Rate rises should be capped at the rate of inflation or less.” which was made in February this year or: “I am not proposing rate capping or rate setting.” which was made last week? 
Hon RODNEY HIDE 
: Both of them are correct. 
Phil Twyford 
: How does the Minister respond to reports that his “make the boat go faster” reforms met rough waters at the Local Government New Zealand conference last week where many of the 600 delegates said they wanted him to “drop the anchor on Auckland’s Super City” and his plans to restrict councils to core services? 
Hon RODNEY HIDE 
: I respond very positively to the warm welcome that the Prime Minister John Carter and I got at the Local Government New Zealand conference. It contrasted sharply with the comments that I got about the visit by the Hon Phil Goff and that is not surprising when Phil Twyford actually summarised what happened in Auckland after 9 years of neglect by the previous Government. Mr Twyford’s comments are so memorable that I seek leave to table them plus Clare Curran’s comment about Phil Goff which was: “He is a real man and we need one.” 
Mr SPEAKER 
: The House needs to know what the document is that the member is seeking to table. 
Hon RODNEY HIDE 
: It is from the  
Listener 
. 
Mr SPEAKER 
: Leave is sought to table that article from the  
Listener 
. Is there any objection? There is objection. 
Road User Charges Amendment Bill 
Second Reading 
Debate resumed from 30 July. 
ALLAN PEACHEY (National—Tamaki) 
: 
 I appreciate the opportunity to rise and speak in support of the Road User Charges Amendment Bill. My objective will be to try to bring back some structure to the debate. Members will recall that on Thursday when the debate was interrupted the Minister of Transport had clearly and concisely laid out for the House the provisions of the bill and its intentions. What then followed were Opposition and Green Party members who floundered around and talked on just about everything except the bill—although I give Mr O’Connor some credit for being somebody from Labour who finally acknowledged that the bill was good legislation. It is a just a shame that his fellow speakers spent so much time wandering all over the place—and they were members who sat on the Transport and Industrial Relations Committee and who should have been totally on top of their material. 
The purpose of this bill is twofold. It makes two distinct amendments to the Road User Charges Act 1977. The first is to enable regulations to be made exempting light electric cars from road-user charges and I want to focus on that for a moment. Firstly I say to the House that this is one more example of the way that this National Government keeps its election promises. National made it very very clear prior to coming into Government that it was its intention to do that. Maybe that is why Labour members spent so much time floundering around; they do not know a lot about keeping election promises which is why they were thrown out on their ear in November last year. 
If members look at the legislation they will see that there is a compelling logic to what the Government is proposing to do. Firstly and I guess this is what the Greens choke on private vehicles will continue to be the most significant mode of transport for New Zealanders for as far as we can see in the future. To deny that is to deny gravity. When we combine that with the major competitive advantage New Zealand has in the generation of renewable electricity the logic is compelling. The intention is that the exemption will be granted for 4 years coming into effect on 1 October 2009 and will apply until 2013 at which time it is estimated that there will about 300 electric cars in New Zealand’s vehicle fleet. The exemption is designed to encourage the use and development of a new technology and one that will in coming years have a significant future. The second provision— 
Hon Annette King 
: National laughed about that policy last year—said it wouldn’t work! 
ALLAN PEACHEY 
: I am sorry the member will have to speak up; I am a long way away. 
The second provision is to give 42 days’ notice of any increase in road-user charges for all diesel motor vehicle owners. That is fair and it is proper. Again it is necessary to refer back to the behaviour of the previous Labour Government which in 2008 showed that it did not have a clue about business and the effect of Government charging on business. In 2008 the Government increased the road-user charge rates without notice at a time that coincided with high fuel prices. Transport operators were unable to pass the increases on to customers straight away and they publicly demonstrated against the increases. It was one more example of the insensitivity to the needs and best interests of business by that Labour Government and its Minister of Transport at the time and of a lack of respect for fairness in the process. You see for heavy motor vehicle operators the road-user charge represents a major cost of doing business. Changes in the road-user charge rates that cannot be passed on to consumers in a timely manner significantly decrease marginal profitability and we cannot afford to have our businesses put into that position. The 42 days’ notification will improve businesses’ ability to operate by providing them with the opportunity to pass on the new costs that derive from any road-user charge increases. 
This bill the Road User Charges Amendment Bill is a significant one that marks out a new direction for transport policy in this country. It will open up the way for further development of electric cars and it will be fairer to heavy transport operators when it is necessary to increase road-user charges. I commend the bill to the House. 
MICHAEL WOODHOUSE (National) 
: 
 I am very happy to take a call in support of the Road User Charges Amendment Bill but I am a bit bemused at the comments by members opposite about the manner in which the Transport and Industrial Relations Committee went about the consideration of this bill. I think Ms Fenton used the term “sketchily” when she referred to consideration of the bill. She wondered why the time for the report back was just one month and why the Minister had not given any justification for why the report back was so quick. We also heard from Mr O’Connor who was very articulate but slightly misinformed about the lack of consultation on the bill. Consultation was sought. It was sought from an organisation that represents 1.2 million road users the Automobile Association. It was also sought from the Bus and Coach Association and the Road Transport Forum both of which are very large diesel transport users. They represent the lion’s share of the owners of those vehicles. 
Eight of the nine organisations that were asked to submit did so. Although the time frame was tight there was certainly an opportunity for oral submissions if they were sought. Only one of those organisations sought one and then it withdrew that decision. During the consideration of the bill not a single word came from the Opposition about a lack of consultation or unseemly haste. In fact everybody seemed to think that the bill was very strong tight and appropriate for what was intended. I have no doubt that some of the amendments suggested during that consideration will be discussed during the Committee stage. 
I am sure I am not the only member and I am sure there are many members on this side of the House who get the irony of the Labour Opposition complaining about a lack of consultation regarding road-user charges. That is really interesting when one casts one’s mind back to 30 June last year when the then Minister of Transport Mrs King without any sort of notice imposed road-user charge increases to take effect on the following day. As we know that tapped into a very deep vein of disaffection. 
Hon Annette King 
: What happened the year before? 
MICHAEL WOODHOUSE 
: The year before the Minister undertook to give a month’s notice to the road transport lobby and the road transport lobby said that she went back on that agreement. In fact what the lobby really said was: “We understand. We don’t agree but we understand why the Minister was worried about the significant cost impact of a lead-in in the arbitrage that might go on.” I think there are some debatable points around that given that the Crown has significant investments to earn interest from. The road-user industry cannot just simply go out and buy squillions of dollars worth of credits if they cannot pass that cost on. There are some cash-flow implications but that was not the point. The point was that the Minister said she would consult and the industry said that she did not. 
Members know what we saw: rush-hour gridlock when the industry decided to vent its anger. What did the public say about that? They said “Good on you!” because they shared the mushrooming feeling that the Labour Government had spent 9 years saying one thing and doing another. That is why the response seemed to an out-of-touch Government to be quite disproportionate to the issue. But it was important to the industry and it quickly became important to the electorate. 
But the solution was not that difficult was it? All that was needed was a Minister who was prepared to listen and for plenty of notice to be given which is important to industries that need time to build those cost increases into their fees. That is something that Opposition members might not understand or care about but it is very important to the issue. The select committee had the pleasure of the company of the legal-eagle eye of the member for Selwyn Amy Adams. She has pointed out a potential ambiguity in the relevant clause that gives notice of the increase but limits the time for the use of the credits bought prior to the increase to 30 days. I understand that that will be fixed by a Supplementary Order Paper but that is again I think a measure of the calibre of the present Minister the Hon Steven Joyce who is prepared to listen and build those nuances into the legislation. I congratulate the Minister on his fair intelligent and decisive action in bringing this bill to the House and the Transport and Industrial Relations Committee on its speedy but I think thoughtful consideration. 
I will touch on the second main purpose of the bill which is to incentivise the purchase of light electric vehicles. In that regard we had the pleasure of the company of the Labour member Mr Barker who provided a useful challenge to the officials around the definition of a light electric vehicle the fact that it has to be plugged in and whether that definition was sufficiently broad to account for new technologies that might come about—for example solar power or the advancement of hybrid vehicles which are not included in this bill. I am advised that that is because there are not at present any diesel hybrids. I think that Mr Barker has a point about that but given that there is a sunset if you like on the exemption for light electric vehicles I am sure that those new technologies can be built in later. 
The other issue around light electric vehicles was raised by the Greens and in particular by Jeanette Fitzsimons at the select committee. On the one hand she was worried that there would be cost shifting from those who could afford light electric vehicles to those on lower incomes who had vehicles with much older technology. But at the same time we heard from Sue Kedgley in the debate on this bill that in fact probably no more than 30 vehicles would be purchased in that period. I do not think we can have it both ways. Either this is a problem for low-income people or it will not really be taken up. Thirty vehicles at that rate would probably add the sum total of about 0.25c on everybody else’s diesel road-user charges. 
But also I think it is important to reflect on what happened when we looked at something like liquor deregulation in the 1960s when it was brought in by I think that fine National member Ralph Hanan. When this House passed legislation enabling the licensing of restaurants in New Zealand he thought it was so good that we might have as many as 50 licensed restaurants in New Zealand. Well we probably have 50 licensed restaurants in the Octagon and a little bit around it. The point I am trying to make is that when we start small often from those small beginnings we have a very speedy roll-out. I think that very soon instead of 30 electric vehicles we will see several hundred then several thousand as the technology becomes more efficient and the cost of the technology comes down. 
So in 2013 will we be debating the extension of this measure? Who knows whether we will be extending it to include new technologies but I think this bill is a very good start and I certainly commend it to the House. 
Hon DARREN HUGHES (Labour) 
: 
 I rise to speak on the second reading of the Road User Charges Amendment Bill. In opening I note with interest the extraordinary praise the Minister of Transport is getting from National members this afternoon. When people are on their way up in politics everyone wants to be their friend. I think that a lot of those National backbenchers are keen to be very close to the Minister of Transport; the potential for his continued promotion as a result of other activities within the Government seems to be causing an outbreak of good old sycophancy across the National benches. Those members are thinking that if the current Minister of Transport were to move to another slightly more senior portfolio they want to be on his side. When listening to members opposite today talking about how talented the Minister is one would have thought he created the motorcar. 
Hon Trevor Mallard 
: They all want to be in his house! 
Hon DARREN HUGHES 
: It is probably best that we do not explore that too far this afternoon. 
The other interesting thing is being lectured by members opposite about changes to road-user charges and particularly what happened in 2008. Many members on this side of the House recall the absolute outrage from National members at any change to road-user charges. That they had not changed for 18 years was one of those facts that got in the way of the story a wee bit for members opposite. They joined every protest around the country they could find to say how shameful it was that road-user charges were going up in order to reflect the costs on the roads of the trucking fleet. They were so outraged by that. 
I have sat here all year we have had a Budget and the Speech from the Throne and now we have a bill that particularly and specifically addresses road-user charges and the National Government is not reversing the charges that were so immoral insensitive and outrageous last year. At that period of time the price of diesel had not headed north. As you will know Mr Assistant Speaker it has headed south quite significantly since the road-user charges were changed last year. It makes me wonder about the crocodile tears that were shed so blatantly by National Party members in election year. They thought there should be no additional costs to the roading industry or the trucking fleet by way of road-user charges. They thought all the costs should fall on to the petrol-using motorcars across the country. That is where the costs should have been. Those members have now come into office and apparently those decisions taken by the previous Minister of Transport Mrs King were quite wise. 
I am curious about whether the member opposite supports the current level of road-user charges. The Dunedin member was so verbose and articulate in his speech and I am asking him now whether he believes that the current level of road-user charges is appropriate. 
Michael Woodhouse 
: I’ll answer it in 30 days. 
Hon DARREN HUGHES 
: Well we do not quite have 30 days; we have about 15 minutes before we have to vote on this second reading. It is curious to me that National members now think that these road-user charges are at an acceptable level. National has not addressed the issue of fairness on road users who buy petrol and pay excise tax through that system. 
We support the 42-day change that is coming in through this bill. It will be interesting to see what it is like in operation because there is a chance of a lot of bureaucracy being involved in this. These are not so much bureaucrats at the front line as at the pump line but National does not seem too worried about that. It is clear that on some things the cost does not really matter to National. There are some topics where anything goes and this will have to be added to the list of some of the other topics. 
The period for consultation on this bill is an issue for the Opposition. This bill went to the Transport and Industrial Relations Committee for consideration for only one hour as Darien Fenton has told the House. There was not an opportunity for there to be— 
Hon Annette King 
: Because Tony told them to! 
Hon DARREN HUGHES 
: They might have been acting under advice but we have to be very careful in terms of the Standing Orders on that particular matter. 
There were only nine written submissions only eight of them were considered by the select committee and there were no hearings. It was also a truncated select committee process for an issue that last year National members said was so important that there had to be a chance to debate it. Members opposite may see irony in us raising this point but we have listened to what they said last year. They won the election by saying those things. But when we scratch the surface we see that although the words from some of these new members are pretty flash there is not a lot of depth to some of these points. There is not a lot of context to the history. 
I finish by referring to the exemption that light electric vehicles will get in the legislation because I think it is one of the more exciting parts of this short bill. It creates a real opportunity for New Zealand. It is good that there will be an exemption until 2013 but I am concerned about making sure that the Minister will show some leadership on driving that period so we do not get to 2013 and find that New Zealand has not taken the opportunity to really develop a strong light electric vehicle fleet for New Zealand. There are a lot of exciting things happening around the world particularly in Denmark where a huge spend of over US$135 million was announced this year that will be invested in an electric car-charging network throughout that country. I think this raises enormous chances for New Zealand to follow along that path. A lot of the costs with light electric vehicles are very low therefore making them attractive to a country of our size. We need to have a bit of adventurousness and forward-thinking from the Government. 
One of the concerns that we have had with all the transport statements made today is that the Minister does not seem to be transfixed with the contribution the transport sector inevitably makes to greenhouse gas emissions and how we can try to use this powerful part of our economy—and indeed our society—to rather than contributing to this problem come up with new technologies as to ways of dealing with it. It seems to me that on this topic of light electric vehicles creating incentives and creating opportunities for a proper industry to develop would be quite visionary for the Government. 
My message to the Minister would be not to just turn up in 2013 and roll over this exemption but to use the period to really get cracking on the ability of light electric motor vehicles to contribute to the New Zealand transport infrastructure and networks throughout our country. The Labour Party will be supporting the second reading of this bill. 
Bill read a second time. 
Limitation Bill 
First Reading 
Hon CHRISTOPHER FINLAYSON (Attorney-General) 
: 
 I move  
That the Limitation Bill be now read a first time. 
 At the end of this debate I intend to move that the bill be referred to the Justice and Electoral Committee. 
This is a great day for black-letter law because it represents the day when reform of New Zealand’s Limitation Act 1950 will have finally begun. The Act has been widely criticised by the judiciary litigators academics and members of the legal profession and it is really quite unsatisfactory that this kind of important law reform should have taken so long. The “mother” of the Electoral Finance Act Annette King should have been working on reform of limitation and on removal of the partial defence of provocation rather than on spending her time developing Stalinist electoral legislation which will forever be a blot on her record like everything else she has touched. The people of Rongotai will not forget very easily at all. 
Limitation periods are a very important part of the law and have been for centuries. There has been a Limitation Act in England since 1623. Limitation periods must balance three interests. The first is the plaintiff’s right to bring a well-founded claim which in justice the defendant should satisfy. The second is the defendant’s right not to be vexed by very stale claims for without limitation periods people could face liability indefinitely. The third is the public interest in the timely resolution of claims as expressed in the Latin maxims “Interest reipublicae ut sit finis litium.”—it is in the public interest that there be an end to litigation—and as Mr Auchinvole was saying to me just the other day “Vigilantibus et non dormientibus jura subveniunt.” which means that the law assists those who are vigilant and who do not sleep on their rights. Limitation statutes were described by the former Chief Justice of England and Wales in 1825 as an “Act of peace”. 
This bill has had a very lengthy gestation period. The Law Commission considered the 1950 Act in 1988 in 2000 and again in 2007 and concluded that limitation laws should be simplified and clarified. 
Chris Auchinvole 
: What was the Government of the day? 
Hon CHRISTOPHER FINLAYSON 
: The Labour Government did nothing on this issue as on many issues for 9 years. In December 2007 the Law Commission published an exposure draft bill for consultation based on the commission’s earlier recommendations. The submissions on the draft bill raised a number of significant issues so a working group of which I was a member was established to review the draft bill in the light of the submissions and to address other technical issues. This bill implements the conclusions of both the Law Commission and the working group. 
The 1950 Act is creaky and outmoded. It is fair to say that it is in an advanced state of legislative putrefaction. It drew on a 1939 English statute that was repealed many years ago. The 1950 Act does not adequately define very important concepts. In some cases its rules can be unfair because people may be time-barred from gaining relief before they are even aware they have a claim. These flaws have led to a complex maze of case law in this area and the Supreme Court has stated “The surgery now required is beyond the proper province of the courts.” This bill addresses these concerns by both improving and simplifying the general limitation rules. 
First the bill simplifies the rules considerably by providing a general civil limitation defence to most claims. The bill introduces a new concept called “money claims” which is defined to include any claim for monetary relief whether at common law in equity or under an enactment. This general defence will replace the piecemeal approach in the 1950 Act which sets out different limitation periods for different causes of action. This reform means that the general civil limitation law will now cover claims for monetary relief for a breach of the New Zealand Bill of Rights Act 1990 and in addition claims for bodily injury will now be dealt with as money claims and the existing procedural requirements for bringing these claims will be removed. 
The definition of “money claims” has a small number of exceptions. For example claims for damages in respect of trespass or injury to Maori customary land that are not brought against the Crown will continue to be treated separately in accordance with the scheme in Te Ture Whenua Maori Act 1993. The limitation period for almost all claims will be 6 years after the act or omission on which the claim is based. After this time has expired a defendant can raise a limitation defence against the claim. The bill provides some exceptions or modifications to this time period—for example where the act or omission complained of occurred when the plaintiff was under 18 years of age was incapacitated or was unable to bring a claim. For minors this ensures that the time period will start to run when the minority ends. If the claimant was incapacitated or became incapacitated during the limitation period the courts will have a discretion to extend a limitation period where it is just to do so. Similarly special exceptions or modifications will apply where the case involves acknowledgment of liability part-payment or fraud. 
Secondly the bill more clearly identifies the start of the primary limitation period. Currently for most claims the limitation period begins to run on the date that the cause of action accrued—that is the date on which all the elements necessary to establish the claim first came together. Identifying that date has been contentious and has added to the cost of litigation. Under the bill the start date of the primary limitation period for most claims will simply be the date when the act or omission on which the claim is based occurred. That date will be readily identifiable. The bill also sets out special start dates for certain types of money claims. Other special limitation periods are created by other legislation such as employment and securities legislation the Fair Trading Act the Commerce Act and the Building Act. In the event of any conflict between the general rules in this bill and specific rules in other legislation the specific rules will continue to prevail over the provisions in this bill. 
Thirdly the bill introduces a late knowledge period to address the difficulty caused when a current limitation period can end before a person knows enough to consider bringing a claim. The period will apply after the primary limitation period has expired in cases where the claimant has not known and could not reasonably have known the key facts required to make the claim within the primary limitation period. The late knowledge period will start on the date when the claimant has gained or reasonably ought to have gained knowledge of the key facts and it will run for 3 years. The longstop period is a new feature of general limitation law and I look forward to people making submissions on it to the select committee. 
Finally the bill addresses the issue whereby in some cases it may be inappropriate for a limitation period to bar relief and in certain areas the court will have a discretion to enable relief to be granted even if a limitation defence can be made out. Those three areas include that where the case involves sexual abuse of a minor. It is important to note that the 1950 statute will continue to apply to claims for events occurring prior to the commencement of the Act. 
In conclusion the bill provides clearer and more comprehensive and accessible limitation law. It balances the interests of claimants to have access to justice the right of defendants not to have to face stale claims and the public interest. The bill will substantially improve the law. I commend the bill to the House. 
Hon DAVID PARKER (Labour) 
: 
 Before dealing with the substance of the Limitation Bill I will just respond to the Attorney-General’s rather intemperate criticism of the previous Government for not implementing— 
Hon Shane Jones 
: Gratuitous! 
Hon DAVID PARKER 
: It was a gratuitous complaint saying that the previous Government did not pay attention to that sort of housekeeping legislation. In fact it is a matter of public record that the last Government implemented more Law Commission reports than any prior Government has ever implemented. I would be very very surprised if the current Government does as well as that because the reality is that we cleared it out; we passed virtually all of those measures that were there to be passed and not much remains to be done. Some measures remain to be passed and this bill is one of the most important of those. That is why the Labour Party will be supporting the bill going to the select committee. 
It is important to reflect upon why we have a Limitation Act. It attempts to balance two interests. The first interest is the right of people to bring claims in court where they have suffered injury or have been damaged in some way that offends common law rules or statutes. That is the first interest. We should be preserving the right of people to litigate their claims in court. The contrary interest that we need to balance is that we ought not to be letting that period run on indefinitely and there are a number of reasons for this. We ought not to let plaintiffs or claimants sleep on their rights and if they do so for too long they should be barred from bringing their claim and they should effectively lose their rights. 
The reasons that underline that position are pretty common-sense reasons. For a start when people are called to defend a case that has been brought against them the more historical it is the harder it is to get the evidence they need to properly defend themselves. For example witnesses might die memories fade documentary evidence is lost and computer files that would have been in existence a number of years ago are lost. So the quality of evidence available to a court to determine a dispute that comes before it deteriorates over time. That is one of the reasons why we have a limitation period: the longer that period of delay the more prejudice there is towards the defendant and indeed the harder it is for the court to reach a good decision. Balancing those two interests is what this legislation is about. It protects defendants from stale or ancient claims. 
One of the other things the bill does is stop stand-over tactics. People do make mistakes in life and they have consequences but those consequences ought not to be held above someone’s neck forever like the sword of Damocles. That is another reason why we have a limitation period: it is so that people can get on with their lives. If there is something to be done against them because of a mistake they have made or something for which they bear legal responsibility a complainant should get on and pursue his or her rights; that complainant should not be able to hold the sword of Damocles above the neck of someone who could be threatened by those proceedings for ever. That is another reason why we have the limitation period. 
In another context we need to make sure that people have security over their property interests. When people buy a piece of property whether it is land or a car they need to be able to have certainty as to the title they are acquiring. The claims that are adverse to that title should not be open-ended as to time. In the property context there are various mechanisms for people to protect themselves if they want to lodge a claim like caveats. However they ought to have to pursue their claim within a period of years and after that period—normally 6 years as we have heard from the Attorney-General—buyers ought to be confident that the item they are buying is free from those sorts of claims or controversies. 
The Limitation Act is old legislation. It does need to be reformed; it does need to be updated. The Labour Party supports the main changes being made. For a start I am sure that when the New Zealand Bill of Rights Act 1990 was passed no one in this House contemplated that when people made a claim under that Act the claim would not be time limited. I certainly did not know that until I read the review of the Limitation Act. That is unlike most claims—for instance a claim for damages to a motor vehicle after an accident damage to a property negligent damage done when a house is being built or negligence shown by a professional in his or her duties. People have 6 years to bring that kind of claim under the Limitation Bill. However under the New Zealand Bill of Rights Act there is no 6-year limitation period so effectively people can bring a claim forever. That is wrong. That needs to be brought within some limitation framework and that is what this bill achieves. 
I also agree with the Attorney-General that the current rule which states that the 6-year period starts from the date of the cause of action arising is difficult to apply in practice. I disagree with him when he said there would be no future uncertainty. There will still be future uncertainty as to the date of the act omission negligence or breach of contract that gave rise to the claim. There will be some doubt still but there will be less doubt. I think it would be an improvement in the law if we could make the law less complex in this area. 
I also agree with the concept of introducing a 3-year period that can run after the normal 6-year period because after the 6-year period people may not know enough for it to be reasonable for the law to expect that they knew they had a right to sue. That is what this 3-year late knowledge period is being introduced for: there are circumstances where people have a right of action but do not know they have a right of action. There may be some fact that is unknown to them and it could have been deliberately hidden from them—and that might be the reason that they do not know it—but because they do not know that fact they do not have enough information upon which to base their action within the normal 6-year limitation period. In that circumstance this legislation says that people have 3 years from when they accrued sufficient knowledge even if that 3-year period takes them outside the 6-year limitation period. But then there is a safeguard beyond that and it states that even that period ought not to last forever. So there is a longstop liability period of 15 years beyond which even that 3-year extension cannot extend. I think that is a pretty wise balancing of the different interests involved as well. 
I also agree with the carrying forward of the exceptions relating to incapacity. At the moment the Limitation Act’s normal 6-year period to bring a claim does not apply to minors. Obviously children cannot exercise their rights except through someone else doing it for them. Sometimes the person who has been the cause of the child’s injury might be the person who would do those things for the child were that person properly representing the child’s interests. We can easily see a situation where a child suffers abuse at the hands of the people who should be protecting him or her. As rare as these events may be none the less they occur on occasions. In that situation minors ought not to lose their rights just because 6 years go past before they exercise those rights. The law deals with that situation by saying there is an exception to the normal limitation period; the limitation period ought not to start running until the minor is of full capacity. In the case of children that is when they become of the age of legal capacity. Someone can correct me if I am wrong but from memory that is 18 years of age. So minors have from that age to bring a claim. It runs from the time when he or she is no longer a minor. There are other causes of incapacity such as mental incapacity due to insanity and they can be covered by related exceptions. 
The Labour Party will be supporting this change to the law. We think it is important that there is an end to the period in which people can bring claims. That is why we have a Limitation Act. That principle I think has served very well in jurisdictions like New Zealand and in other jurisdictions around the world. We ought not to have an absolutely unrestricted period in which people can bring claims. There are public interests that mean that people should either pursue their rights or lose them. In respect of the complexities around the current date starting from the date the cause of action accrues rather than from the date of the act or omission that led to the claim I say that the latter is preferable to the former. That is what this legislation achieves so the Labour Party supports its first reading. 
AMY ADAMS (National—Selwyn) 
: 
 It is my privilege this afternoon to take a call in support of the first reading of the Limitation Bill. I think it is fair to say that the Limitation Bill is the sort of law that perhaps lawyers become most excited about because we recognise the extreme importance of some framework legislation like this to put in place the rules around bringing these sorts of claims. As the Minister and the Hon David Parker have already said it is a difficult exercise and one that I do not think any lawyer would suggest there is an easy answer to in terms of getting the balance right. 
 This bill is about balancing the entitlement of wronged people in society to bring a civil claim and their entitlement to do that without loss while also recognising there is a real prejudice to defendants who are forced to defend claims well after the event. That is an issue that we do battle with on almost a day-to-day basis in legal practice and I can think of many occasions where we have been grappling with those very issues: when does the limitation period start is the claim statute barred and how do we work that out? The whole point of legislation like this is to set clear parameters and I think that one thing we will hear general consensus on is that the current 1950 Act is not terribly clear. We all support its principles; we all support what it is trying to achieve. But I think three Law Commission reports and the general feeling in this House will convey that it is time for a change a restatement and a comprehensive relook at the rules that make up our limitation requirements. I am very pleased to see this bill in front of the House today. I think it is a fundamentally important piece of law although as I have already said I think it is one that perhaps the average man on the Clapham omnibus will not get terribly excited about. 
As I have already said this bill replaces in whole the 1950 Act and provides a comprehensive one-stop restatement of limitation measures. In doing that the bill is not seeking to reinvent the wheel in that it will provide some consistency around what those limits fundamentally are and it will not depart from the general principle as much as we can state it at the moment that in essence people have 6 years to bring a claim. That is an easy statement and when we say it quickly it sounds straightforward. But the difficulties have always really started in respect of when the starting point is. The Minister in his first reading address has already talked about the difficulties of determining the prior trigger the point at which the cause of action accrued. That brings in some very difficult legal issues and a fair amount of legal knowledge but even if people had that sort of legal knowledge they would get into some quite complex time-consuming and very uncertain debates around the timing of when a cause of action accrued. 
I will throw up a couple of examples. There is some famous case law around negligence in the building of a very tall brick smokestack. There was negligence by the builder in constructing it. Unfortunately that negligence did not show up for many years until the thing fell down. But short of climbing up ladders and getting it inspected from the ground up on the day it was handed over it was very difficult for the people who commissioned the smokestack to be statute barred for something they would have had no knowledge of until the thing hit the ground and until the after-the-fact analysis showed that the collapse was due to the negligence of the builder. So these were the sorts of inequities people were seeing and they would get into arguments about whether the cause of action accrued at the time the bricklayer was negligent or at some time after that. That evolved into the even more complicated doctrine of reasonable discoverability which frankly probably made the waters muddier rather than clearer. 
Similarly we can imagine a situation where a contract has been prepared by lawyers but it is not until some years down the track when it has all turned to custard and the parties have found they are at each other’s throats that they pull out the contract only to find there is a significant error. But if the time is 6 years after the contract has been drafted then the people will have some real issues about whether the negligent drafter is off the hook. These are some of the issues that have to be grappled with and it is not actually that easy when we start getting into it to assess the right place to put that balance. I will be very interested to see what the select committee decides in terms of this legislation and whether that balance as now framed is appropriate. It is an excellent start. 
I am particularly interested in the late-notice period replacing the reasonable discoverability test and the circumstances in which that will apply. Like the Hon David Parker I think that the 3-year limit even with the late knowledge provision still has to have some drop-dead time frames so that even if a late knowledge system applies people cannot be exempted entirely from limitation rules. I think it is very sensible that we will have a principal period of 6 years that is subject to a late knowledge exemption which will itself be subject to a 3-year drop-dead time frame. Similarly even with those sorts of provisions in place I think we would be doing defendants a disservice if there was not an ultimate longstop period to the claims and this bill provides for a longstop period of 15 years. I think that is important because if people are carrying out their business and going through their business indemnity insurance provisions it is very difficult when sitting down with insurers for them to work out where their liabilities and contingent liabilities start and stop when they are in any sort of trade or service. Under this bill people in business will have reasonable ability whatever else happens to believe that 15 years on they are reasonably free and clear. So they can carry run-on insurance for any services provided for a period of 15 years with pretty much total confidence in the fact that 15 years will mark a full stop to any liabilities in that prior period. I do not want to move away from the principal focus which is the 6-year frame. That is the frame we have now but as I have said we have much more clarity around when it starts what claims it will apply to and what the exceptions to it are. 
The other point to note is that there are some other exceptions we have to take into account. One is in respect of sexual abuse claims of minors. I think we are all aware that there are some very difficult issues around that issue; we would not want to ensure that we go so far as to deny people proper access to justice but we have to bear in mind that this provision applies to civil claims and not to criminal ones. 
The other thing I think worth mentioning in respect of this bill is the way it operates which is that it effectively provides a defence. So if a claim is filed against a person he or she can apply this legislation as a defence on the grounds that the claim would be statute barred pursuant to the Act if the claim transgressed it. If there was any dispute then as to whether the provisions and the tests of the legislation were being met that could be worked through and if the court was satisfied then that would provide a complete defence to the claim. 
I have talked about some of the exceptions for sexual abuse of minors. I will also take up another point around minors in a general contractual sense. My understanding of the Limitation Act of 1950 is that previously the limitation period could not start to run until the contracting party was 20. Under the amended legislation the period will start to run from when the contracting party is 18. Once again I think that fits in neatly with the Minors’ Contracts Act framework and parties contracting with minors are aware that minors have reduced legal capacity before that time. This bill fits nicely into that framework so that the limitation will run from the time at which minors are considered to have full knowledge of their claims and full ability to act on their rights. 
We are also aware that the bill will set up a different schedule for money claims as opposed to non-money claims. I want to highlight the point the Minister made in his first reading speech because I think it is an important point. This new bill if passed will apply only to new acts and omissions that occur after the bill’s commencement date which is 30 June 2010. So any litigation that commences in the future if it still relates to an act or omission predating this bill will still be under the prior law and I think that is important for consistency and to ensure that parties have the arrangements they thought they would have in this respect at the time they entered into their contract. But we will see this bill starting to apply to new acts or omissions after the date the bill comes into force. 
Just in closing I think it is worth nothing that the court will retain an ability to have a discretionary waiver of some of these provisions if it believes that the incapacity of one of the parties makes that fair and just and I think that is entirely appropriate. So I am very very pleased to see that this important area of law is now being tidied up as it deserves to be. It has taken three Law Commission reports to get there. We now have a very comprehensive piece of work. I am looking forward to seeing the select committee work through its processes in hearing submissions. I am very pleased as I say to see this bill before the House. It is an important area of law and I commend it to the House. Thank you. 
CHARLES CHAUVEL (Labour) 
: 
 The previous speakers are right—limitation periods do matter and they matter not only to lawyers but to ordinary people. I have just been reading an excellent history of the recent Supreme Court appointments in the United States and some of the important cases that have been decided by the justices on the wafer-thin margins between the conservative and the liberal wings of the court. One case that really captures the attention is the case of  
Ledbetter v Goodyear Tire & Rubber Co. Inc 
. It was a case that the Supreme Court of the United States came to decide in the spring of 2007. The dissenting opinion of Justice Ginsburg in that case is very interesting. Professor Ginsburg when she was practising represented many women who had been discriminated against in the workplace. The relevant part of the US law required individuals in that category to file their cases within 180 days of the “alleged unlawful employment practice”. For years and years the American courts ruled that that meant that as long as the woman brought a suit within 180 days of receiving the last pay cheque from the workplace that had engaged in the alleged discrimination and then proved her case she could get compensation for the entire period over which she had suffered say a discriminatory underpayment. But reflecting the change in ideological composition on the court in the latter part of this decade in 2007 the Supreme Court or at least the five very conservative justices who had become by then the majority on that court overturned that rule of long standing and said that plaintiffs could be compensated only for discrimination that happened within the 6-month statute of limitations. Justice Ginsburg’s reasons for her opinion are worth a read. She says “this court does not comprehend or is indifferent to the insidious way in which women can be victims of pay discrimination”. The judge knew very well that that would be a problem for future cases. She said that women cannot possibly know within 180 days that they might be paid less than men. The judge said that Ledbetter’s “initial readiness to give her employer the benefit of the doubt should not preclude her from later challenging the then current and continuing payment of a wage depressed on account of her sex.” 
I think that shows that limitation periods are not just abstract arcane concepts to delight and fascinate lawyers; they matter to ordinary people in the real world. Limitation periods can mean the difference in any case between recovering damages for having suffered a legal wrong or not recovering damages. 
The Attorney-General on his introduction of the bill said that the previous Minister of Justice Mrs King during her term in office should have been concentrating on introducing legislation to repeal the partial defence of provocation and should have been progressing this legislation rather than preoccupying herself as he said with the Electoral Finance Bill. Let us set the record straight first on provocation. We might as well have the truth the whole truth and nothing but the truth before the House. 
Hon Steve Chadwick 
: For new members to hear. 
CHARLES CHAUVEL 
: That is right; new members might want to know this. In fact anybody who has not read the Law Commission’s report on provocation might want to know the truth of the matter here. The Law Commission said two things. First it said that the partial defence of provocation should go because it is archaic outdated and a relic of a former time. In fact it dates to the time when we had the death penalty and was a way for juries to avoid bestowing the ultimate punishment on somebody if he or she had lashed out in the moment rather than having engaged in a premeditated crime. The defence of provocation is a product of its time. It has not really had any relevance to New Zealand since the 1960s. The Law Commission said it should go but it said at the same time that there should be some recognition in the law of New Zealand that there is a difference between lashing out in the moment and premeditating a cold calculated crime of violence like murder. The Law Commission’s recommendation was that the Sentencing Council should be asked to produce a sentencing guideline to guide the judges as to the difference and how their practice should differ in dealing with the different types of offence. 
It is a matter of record that the Sentencing Council was still being established late last year. It did not have time to prepare any sentencing guidelines. One of the first things the incoming Government did was abolish the council. So it has not been possible—it certainly was not possible for the previous Minister of Justice—to implement the Law Commission’s report. As the House knows I am delighted to see Simon Power tabling legislation today that will do part of what the Law Commission said should happen. I am delighted that it is in identical terms to the bill I drafted for our justice spokesperson Lianne Dalziel. But we should recognise that there was another aspect to the Law Commission’s report and that—and that alone—is the only reason why the outgoing Government did not act to put its recommendations in place. 
I think the less said about the Electoral Finance Act the better but if members opposite want to revive that debate then we can recall the reasons for the legislation and the need for it prior to an election. No one on this side of the House ever wants to see an attempt to steal an election again. The Electoral Finance Act is a good thing. It was very important to legislate to prevent the sort of practices that new members might not remember but that some of us remember very well from the 2005 election. I am simply signalling to members opposite that if their Attorney-General and others want to revive that debate we are very happy to have it and to remind the public why some form of legislative redress was required for the sorts of practices we saw from the National Party and its allies in the 2005 election. 
Anyway I will get back to the text of the bill. Although the Attorney-General does not have it in him to be generous about terribly many people I will try to be generous to him about his contribution in this matter. He was one of the people as a representative of the profession who had a close interest in the Limitation Bill over a number of years. I would say that he has contributed constructively to the debate over the need for new limitation legislation. It is also appropriate—and I am a little sad that the Attorney-General did not do this—to acknowledge some of the other people who have been involved in the construction of the bill: the Hon Justice Blanchard who chaired the 2008 reference group that led to the particular legislation we are considering now; the Parliamentary Counsel Office; the New Zealand Law Society; the Bar Association; the Ministry of Justice; Christopher Corry; and law commissioners John Burrows and George Tanner. They are all people from the profession and from elsewhere many of whom— 
Paul Quinn 
: Doing their job. 
CHARLES CHAUVEL 
: Mr Quinn just said “Doing their job.” He does not understand. He has heckled like this before about people who have agreed to be appointed to public bodies and who are paid quite a lot less for that than they would earn in their ordinary professions. But they give up their time none the less to contribute to our law being better. I think they deserve respect not mocking from members opposite. 
Paul Quinn 
: I’m not mocking them; I’m mocking you. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. The member saying “mocking you” is the immediate point of order. The other thing is that when a member is making a serious speech on a legal bill and is showing respect to learned members of the judiciary it behoves Parliament to have a slightly higher standard than it generally does. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I think there is only one standard in this House regardless of the bill. I am sure others want to think there are differing standards but I think there is just one. I say to the members that saying “you” in terms such as “you do this” or “you do that” is inappropriate. The Speaker does not do any of those things. The Speaker does not mock people. Can we just come back to the bill. 
CHARLES CHAUVEL 
: The only other point I will make that I think is of relevance is that there have been three reports from the Law Commission on limitation. Again it is a shame that the Attorney-General was not a little fairer in his introductory remarks about where responsibility lies for not progressing these reports. The first report came out in 1988 and recommended reform and the second one came out in 2000. In the 12 intervening years we all know who was in Government for most of that time when no reform was progressing. To somehow lay the burden for not producing any new limitation legislation at the foot of the Labour Party for all time is grossly unfair and inaccurate and it really does not wash. As the shadow Attorney-General David Parker said Labour supports the bill. It is timely. It is the product of careful thought by the Law Commission. We respect the Law Commission and during our last term in office implemented a large number of measures that originated from the commission. The bill is a good one and I commend it to the House. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: Before I call the next speaker I say now that I should have said in response to the Hon Trevor Mallard that one would hope that this House continues to strain for the highest possible standard on every occasion not just on some. 
Dr KENNEDY GRAHAM (Green) 
: 
 I rise to support the Limitation Bill being referred to the Justice and Electoral Committee. I believe Green Party members share the view expressed just recently by the Attorney-General that this is a great day for black-letter law. The existing Limitation Act 1950 is in an advanced state of putrefaction and as he put it the surgery now required is beyond the reach of the judiciary so it falls to the legislature to clear up the matter—and that indeed is overdue. 
The bill sets up a new regime for time limitations for civil claims in the courts. The current law in the Limitation Act has been widely and trenchantly criticised by the Law Commission and by the courts as being unfair outdated and uncertain. In addition some of the important terms were left undefined. The bill therefore seeks to tidy up the civil limitation laws to make them clearer more equitable and more accessible. We see certainly six key measures that are highly desirable: first retaining the current 6-year limitation period for most claims; second providing for exceptions or modifications to the general limitation period in cases of minority incapacity acknowledgment or part-payment and fraud; third providing for a 3-year late knowledge period replacing the phrase “reasonable discoverability” which is somewhat dense; fourth the provision of a longstop final limitation period of 15 years in most instances; fifth the clarification and simplification of the current laws and rules for land claims; and sixth giving the court or tribunal discretion to order that monetary relief may be granted in respect of a claim of sexual abuse of a minor or to enforce arbitral awards or ancillary awards even though a general limitation defence has been or could be established against the claim. The bill in general is based on the Law Commission recommendations and the key proposals seem to us eminently reasonable. As such we support its referral to the select committee. 
We do have one area of concern and that pertains to clause 26 concerning Maori customary land claims. We recall the quite tortuous and somewhat opaque legislative history commencing with the Maori Affairs Act 1953. Section 155 of that Act prohibited the enforcement of customary law interests against the Crown. It was repealed 40 years later in 1993. Further legislation which was repealed made it clear that the repeal of that section did not apply to the Crown. So we are left in a somewhat uncertain legislative situation which can pose difficulties for the way the Waitangi Tribunal conducts its investigations particularly in respect of the date on which a claim may be based and in respect of the question of the onus of proof. I do not think we are about to resolve those rather arcane issues here in the first reading but I do think it requires considerable scrutiny in the committee and it will be our intention to explore that pertaining to customary Maori land rights. With that reservation signalled we have considerable pleasure in supporting this bill. Thank you. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker. Tena tatou katoa. The Limitation Bill is part of a recurring theme around updating legislation in such a way as to ensure it is clearer more comprehensible and more accessible. The legislation also wears the influence of the Law Commission. The Law Commission in its 2007 report  
Limitation Defences in Civil Claims  
recommended many of the changes that are set out in this bill. 
The Maori Party has a special interest in one clause clause 26 which we would turn to for any explanation of how the limitation defence rules apply for Maori customary land. Clause 26 gathers together all of the rules concerning Maori customary land into one provision. Although we are happy for the legislation to be updated we have some concerns around clause 26. The problem is not about the clustering of provisions into one place; it is more fundamental than that. It is about the purpose of having such a clause included at all. We do not believe that there should be any limitation periods applied to Maori customary land claims. All limitation periods pertaining to Maori customary land need to be removed. They should not be there and this is a chance to make that change now. In practice the limitation provisions are yet another mechanism by which Maori customary land can become Crown land and we have had a lot of experience of that. 
Clause 26 of this bill specifies that nothing in the Act should limit or affect section 344 of Te Ture Whenua Maori Act 1993. In effect this means that Te Ture Whenua Maori Act takes precedence and this should not change. 
Although the bill has sought to clarify provisions of when the time period starts to run it is not always simple because of the complexity of Maori land law and management. It is not always clear what is and what is not customary land. There have been many instances where Crown assumptions of statutory extinguishment do not hold up under investigation; the foreshore and seabed legislation is perhaps the most well-known example. These are issues for the Waitangi Tribunal to investigate or for further dialogue with hapu and iwi without limitation. Because of this it becomes very problematic to put a time limit on the claims. It gives the Crown the advantage which in the interests of justice it should not have. 
The Maori Party considers that the general philosophy needs to be different. The philosophy might be that when it comes to matters of Maori customary land the conditions for the ongoing Crown-Maori Treaty relationship are prioritised not subject to a limitation date. It is through that Treaty relationship that matters can be continuously worked at so there is time to discuss and work through new matters as they come to attention. This is a key issue for discussion at the select committee and the Maori Party looks forward to participating further in that debate. In order to enable the debate to proceed we will be supporting this bill at its first reading. 
SIMON BRIDGES (National—Tauranga) 
: 
 It is a pleasure to take a call on the Limitation Bill and to talk about what is— 
Hon Shane Jones 
: Small speech! 
SIMON BRIDGES 
: I agree with the member; it is about a small discrete issue. Nevertheless the bill is very important in terms of the rule of law. It has been interesting to listen to other speakers in this debate. I agree with them that there is a tension in this area between on the one hand the interests of the putative claimant who wants to bring his or her claim for ever and eternity and on the other hand the interests of the defendant who wants there to be certainty and finality. But when one gets away from the individual players one finds there is indeed also a higher purpose and principle involved here which fundamentally concerns the rule of law. I will touch on that shortly. 
But firstly I will talk about someone who knows it seems quite a lot about limitation periods: the Leader of the Opposition Phil Goff. My reading recently has made it quite clear to me that he knows his limitation period is not 6 years as it is in this bill but in fact 3 years. That has been made quite clear in recent writings. One senior Labour MP said “We had a pact. It was for the full three years.” Another former Labour Minister who was at the Cabinet meeting that was said to have been held also said there had been a pact. So it is quite clear that the Leader of the Opposition has a 3-year limitation period. Of course that does not mean that his time will not expire before then and that is a critical point in relation to limitation periods. It is about the limits the outside limits and Mr Goff may not reach that period. As I say it is quite clear that Mr Goff should be speaking in this debate. He is someone who knows a lot about having not a self-imposed limitation period but a party-imposed limitation period if things do not go well. 
I will say the concepts and principles involved in this bill are very important then I will touch on the practical aspects. But I now come back to another debate that is being held here between the Attorney-General— 
Hon Steve Chadwick 
: You make a mockery of the law. 
SIMON BRIDGES 
: I have got them going have I not? 
Hon Member 
: You have! 
SIMON BRIDGES 
: The members opposite know that what I am saying has a little ring of truth to it. They have read the  
Listener 
 article as well. There were a lot of other interesting points in that material. I can tell that Opposition members want to read it. I liked what Phil Twyford had to say— 
Jacqui Dean 
: What did he have to say? 
SIMON BRIDGES 
: He said: “We allowed ourselves to be associated with a set of reforms that really provoked the right wing because the family and gender relations and parenting are the inner sanctum of the—” 
Hon Steve Chadwick 
: I raise a point of order Mr Speaker. The member is clearly not referring to this Limitation Bill that we are debating in the House. I wish he would stick to the bill. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: The member is correct. This debate should be within the confines of the bill. The member is entitled to make points that are outside it or draw them in briefly but that should not be the substance of the member’s speech. The member will continue. 
SIMON BRIDGES 
: I will talk about the concepts involved with limitation law. Before I do that I come back to a debate between the Attorney-General and Charles Chauvel from the Opposition. The Attorney-General is quite right when he says this bill has languished. It is an issue that has languished. We have had three reports from the Law Commission in the 1980s the 1990s and the 2000s yet the previous Labour Government was more interested in electoral finance reform—let us be charitable to it—than in dealing with the real issues. 
Hon Steve Chadwick 
: Could the member read somebody else’s lines? 
SIMON BRIDGES 
: I am happy to say those are the Attorney-General’s lines and quite right they are as well. 
The concept here in this bill is very important because court adjudication really is the ultimate means of enforcing rights. It is the mainstay of any system governed by the rule of law yet what we must also factor in here is that the prospect of litigation also creates substantial uncertainty: uncertainty for the defendant who is yet to know whether a claim will be brought. That can weaken the rule of law because people cannot fully enjoy their rights. Yes the issue is about the claimant and the defendant and their interests but there is also a point here about the rule of law because fundamentally people have the right to have some certainty in the law to know what they are up against and to not go on indefinitely with uncertainty wondering about what may come and what the legal position may be. So there is a strong public utility in ensuring that the possibility of initiating litigation is not open-ended. In practice of course this means time limits and the limitation period and in this bill a limitation period of 6 years has been chosen. 
There are other tensions involved not just between the claimant and the defendant but also between finality and the truth. When we put a limitation period in we are saying that is it and no one can go past it. We are saying it does not matter about the merits of the case and we do not want to know the truth; we want finality. Those two values come in and clash with each other in relation to limitation law. I think this bill gets the balance quite right with a limitation period of 6 years. Six years is a period known to our law in this country and it is right here. 
Something else that I will touch on while I am talking about principles and concepts is the issue of resources and the consideration of resources. The courts like other public bodies that we deal with whether they are ones in the hospital sector or the education sector have limited resources. So it is reasonable when putting parties through the not insubstantial—and often exceptionally expensive—process of litigation that we do it on the basis of fresh disputes. It is reasonable that we litigate on disputes where people can still remember with accuracy what happened where the documents are still there and where everything is still as it should be rather than trying to litigate grievance issues that are quite old and have been around for some time. That raises another point: the rectitude of the outcome which is very important. That is the necessity that we have claims and cases going to court where the evidence is fresh and has not eroded. 
Those are some of the principles in this area. I will also touch on the practicalities of this legislation. I agree with the member Charles Chauvel and what he has said here which is that this bill is about fairly nuts and bolts stuff. It is pretty practical in its application to legal claimants and defendants so that they know whether cases can be brought. A lawyer worth his or her salt really knows that the first question he or she has to ask is whether a matter is statute barred and whether the parties are out of time because if they are it is all over and there is no examination of the merits of the case. 
Finally I say quite clearly this situation is not like the matters shown in  
Cold Case 
. This bill does not apply to criminal cases so it is not about situations like those shown in that programme where the characters go back and solve murders that occurred many years ago. This bill applies only to the civil sphere. I think we as a society make the clear policy choice that we feel we can and should limit civil claims. But certainly truly criminal matters such as murder and the likes of it are much more serious matters and we do not have a limitation period applying to them although the courts can and do issue stays of proceedings for exceptionally old cases where the evidence has eroded too much. 
This is a good bill it is a solid bill and it is a significant bill. It is not just about the individual participants; it is also about the rule of law. As we have also seen it is quite clear that Mr Phil Goff the Leader of the Opposition knows a little about limitation periods as well. His period is 3 years. It will be interesting to see what follows it. 
LYNNE PILLAY (Labour) 
: 
 It is a pleasure to stand and speak on the Limitation Bill. I will talk a little bit about the history of this bill because the previous speaker— 
Hon Steve Chadwick 
: Remind the member. 
LYNNE PILLAY 
: Yes I will remind the member. I see Chris Finlayson who I know was part of the reference group under the Labour Government while the Law Commission report was being considered. I think it is a bit rich for Simon— 
Simon Bridges 
: That’s all right. That’s my name. 
LYNNE PILLAY 
: —Mr Bridges; Simon Bridges—to stand in this House and say that the previous Labour Government did nothing on the issue. I think that the National Government could become quite renowned for its practice of racing bills through the House and not ensuring that consultation takes part. In fact I do not think the National members understand the word “consultation”. We have seen so many examples of that. My goodness! We are seeing the result of it with the super-city proposal are we not? Those of us who have been on select committees from time to time will have heard the absolute surprise in the chairperson’s voice when saying how great it is to have people coming along to make comments on the bill. It is absolutely ludicrous that the members on the other side of the House do not accept that it is appropriate that a bill gets the appropriate consultation before it gets to this stage. The Limitation Bill should undergo the scrutiny of the Law Commission with many people out there in the community and within the law fraternity and a reference group should consider it really carefully. 
I note that the bill is being referred to the very hard-working Justice and Electoral Committee— 
Paul Quinn 
: There you’re right! 
LYNNE PILLAY 
: Yes that is right. There is a lot of work before the committee. I assure everyone in this House that the Labour members on the committee will ensure that this bill is very very carefully scrutinised and we will listen very carefully to the points that are made by the submitters. 
I have talked very briefly but I would like to go over the background again. The consultation on the draft bill happened only in December 2007. Again I acknowledge the Law Commission and the hard work it does; its recommendations were published for comment in December 2007. Some significant issues were raised during that consultation period and as we know—well we certainly know on this side of the House—consultation is worth its weight in gold. It flushes out problems or unforeseen circumstances that may arise. I know it is not a view that the Government holds but it is very important. In this case it was deemed important enough for the Law Commission to convene a working group of key submitters and stakeholders. I think that the Hon Chris Finlayson—correct me if I am wrong; I think I see him nodding there quite proudly— 
Hon Christopher Finlayson 
: I was here to help. 
LYNNE PILLAY 
: He was there to help the Labour Government and he worked very hard and put a lot of time into it. So I know that Chris Finlayson sees this bill as the culmination of much work that was done over a considerable period. From what I have been told I believe the working group’s review resulted in the proposed new rules being restructured and refined and made simpler clearer and more comprehensive. 
In summary what does the bill do? It provides clearer and more comprehensive law on general civil limitation defences. One thing I will say is that it is about getting that balance it is about the right of people to take claims and it is about justice being served. But it is also about not letting stale claims just hang about and not be redressed. I think that for everybody whichever side they are involved on or sit on a degree of clarity and certainty is very important. This bill should—and the select committee will scrutinise whether it does—balance fairly the rights of claimants to have access to justice with the rights of defendants to not be disadvantaged by stale claims hanging around for long periods of time. 
The bill also makes some substantive improvements to the law on general civil limitation defences. As has been said it repeals and replaces the Limitation Act 1950. It provides general civil limitation defences to certain other claims including claims in respect of lands and goods. It makes the start date of the primary limitation period for most claims the date of the act or omission on which the claim is based rather than the date of accrual which is sometimes very difficult to identify. For almost all claims it retains the current primary limitation period of 6 years. It provides for exceptions to those periods for cases involving minority incapacity acknowledgment or part-payment and fraud. For money claims and certain other claims—for most of which time runs currently even if they are not reasonably discoverable—it introduces a 3-year late knowledge period. It can apply if the claim is made after its primary limitation period and the claimant has late knowledge of the claim. 
I see the members of the Justice and Electoral Committee looking quite excited about this bill coming before them. I know that all members will pay very strong attention to it. 
Simon Bridges 
: It’s up there with the Disputes Tribunals Amendment Bill. 
LYNNE PILLAY 
: It certainly is important as that bill. In the last Government the committee talked about the Sentencing Council Bill which was a very important piece of legislation before the Justice and Electoral Committee. It was based on a Law Commission report and was an excellent piece of work. Very sadly one of the first actions of the National Government was to disestablish the Sentencing Council which would have given a lot of transparency and clarity to sentencing. That saddens me; it meant that a lot of the work that was done at that time by the Justice and Electoral Committee which was chaired by a very good chair was a waste of everyone’s time. Sadly something that would have put a lot of consistency into our justice system did not happen. 
However this afternoon we are here to talk about the Limitations Bill. I strayed for a moment but not as much as the previous speaker Simon Bridges—not nearly as much. I look forward to this bill coming back to the House. I am absolutely sure that even with the consultation and even with the working group and the reference group which worked very comprehensively on the bill through the submission process something will be brought to the committee’s attention that may well improve the bill or flush out something that had not been noticed before. I really look forward to that. 
I have nothing more to say about this bill except that I look forward to its being referred to the Justice and Electoral Committee where it will receive the full scrutiny that it deserves. 
PAUL QUINN (National) 
: 
 I acknowledge the very kind compliments that my colleague Lynne Pillay who is the senior member of the Opposition on the Justice and Electoral Committee paid to all the members of the committee on their diligent and committed hard work. I will say that committee runs a very close second only to the Maori Affairs Committee in terms of its camaraderie and members’ respect for one another. We look forward to that continuing of course driven by the outstanding chairmanship and leadership of that wonderful gentleman Chester Borrows. I along with my colleague Lynne Pillay in terms of the very fine remarks that she has made acknowledge the committee. 
Unfortunately those are about all the fine remarks that Lynne Pillay made. She started off by talking about consultation in terms of this Limitation Bill that we are going to send to a select committee. But I recall something called the Electoral Finance Act. 
Chester Borrows 
: Who was the chair? 
PAUL QUINN 
: Who was the committee chair who rammed that legislation through ignoring all the input and who then by his own words “mea culpa”—I think “mea culpa” were the words the shadow Attorney-General used—bared his soul before this House for having rammed that nasty piece of legislation through? It was probably the worst piece of legislation that has been put through this House closely followed by the Foreshore and Seabed Act. I ask the honourable member across the House where the consultation was on that. Does the member remember the foreshore and seabed legislation? Where was the consultation on that? I am advised—I was not aware of it—of another piece of legislation: the building legislation. Apparently the consultation on that legislation was such that the Standing Orders were suspended for the first time in 15 years. So all I say to my friend and colleague in the Opposition is that when we use words like “consultation” we had better make sure we are lily-white before we actually start to throw around accusations. That is all I would like to say on that. 
I now return to the Limitation Bill. To put things in perspective it is worth acknowledging that the current 1950 Act stemmed from the original English law the Limitation Act 1939 and it was from that Act that our current statute the Limitation Act 1950 was derived. Like the Sentencing Council that legislation has had its day. The reason we moved on from the Sentencing Council which the previous speaker referred to was that it was past its use-by date. In the same way the Limitation Act 1950 is past its use-by date. 
I think it is appropriate to reflect on a bit of the history as some of the speakers have done—and on the fact that there have been three Law Commission reports on that Act. I do not want to conjecture or comment on why the previous administration took so long to act on this issue; previous speakers have covered that sufficiently. More important I would like to refer to two or three cases that have highlighted—and where the justices have raised—issues about the legislation. I refer of course to a case in 2004  
P F Sugrue Ltd v Attorney-General 
 
in which the Court of Appeal passed a judgment about the fact that monetary relief did not come under the gambit of the Limitation Act 1950. Another case in the Supreme Court in 2008  
Thom v Davys Burton 
 referred in the judgment to the date of accrual or the commencement date in terms of any claims. 
The other case I want to refer to is  
Murray v Morell & Co Ltd 
 which was a Supreme Court case in 2007 and I will give a couple of quotes from the justices there. Blanchard J made the comment: “It is notorious that the New Zealand law concerning limitations is long overdue for reconsideration. It is to be hoped that Parliament will soon have the opportunity of giving it some attention.” Tipping J in the same case and I think this is worthy of my friend and colleague Parekura Horomia’s ears said: “What is required in New Zealand and has been required for some considerable time”—he is not referring to a National Government; he carries on to say—“is a complete legislative overhaul of the Limitation Act. All of the competing interests can then be fully considered and reconciled. Piecemeal attempts by the Courts to cure the difficulties with the present outdated legislation have already created their own difficulties and have produced a distinct lack of harmony in the areas being addressed. The surgery now required is beyond the proper province of the courts.” 
It is these sorts of comments that have led our outstanding Attorney-General to take up the challenge that was left on the table for so long by the previous administration and to deal to this issue. It is one thing to claim that one thought about the idea; it is the ability to actually get something done that counts. Thoughts count for nothing. It is like Parekura’s All Black team; it is the actions that count I say to my friend. I say this Government is about actions not about thoughts. We have shown the leadership that the All Black team lacked the other day. The issue is about showing leadership on the Government side of the House. We are acting on this issue. We have turned our attention to the some of the specific issues that have been raised in those three judgments and by the Law Commission in its three reports. Like all things we have to bring the legislation into modern times and refresh it so that it is applicable to the modern day that we face today. 
The bill tidies up conflicting issues that various judgments through time have raised and as a number of the speakers have referred to it responds to the fact that evidence does deteriorate over time. When people sit on a claim because they think there might be leverage in doing that or it might be to their advantage to do so that can impact on other people’s lives or on the activities of companies or commercial entities. This legislation tells people that if they have something they are going to actually take a claim about they should get on with doing that. It tells them they should not pester other people in their lives but just get on with proving their case up and down. It may well limit in future the opportunities for lawyers to drag cases out but what really counts here is justice for people. What this legislation now does—because we are behind the people—is to provide solid and sound justice for people. The legislation says lawyers should get on with it and not dilly-dally around. 
With those few words I say it has been a pleasure to be able to stand here and support the first reading of this bill. Thank you Mr Assistant Speaker. 
JACINDA ARDERN (Labour) 
: 
 It is my pleasure to have the opportunity to speak on the Limitation Bill. I intend to speak on some of the substantive matters in it; to my disappointment not all of my colleagues from across the House have done the same. In fact I was somewhat disappointed on hearing the majority of my colleague Simon Bridges’ speech; I expected a little more from Mr Bridges as a lawyer particularly in terms of his level of analysis and particularly given that he seems if his pace is anything to go by to be paid by the word. Perhaps he will do more next time. I was pleased to hear also the speech from Minister Finlayson in particular when he gave us an education on his great knowledge of Latin. I find it particularly ironic when we are talking about the simplification of a bill to hear such a large amount of Latin in one speech. I enjoyed it none the less although I have to say that Mr Guy seemed somewhat confused through most of the speech. 
But I will go back to the bill. As my colleagues have pointed out this bill has been in the pipeline since 2007. In fact it was in the pipeline well before that. As I believe Mr Chauvel pointed out there have been three Law Commission reports on the subject since the 1980s. Based on that fact it is somewhat disingenuous for anyone from across the House to say that one particular party is to blame for the length of time that this bill has taken to come before us. Sir Geoffrey Palmer’s words probably reflect the general feeling across the House towards the substance of this bill: “It has been a long and tortuous journey to reform the limitation law of New Zealand”. That long and tortuous journey has continued while both sides of the House have been in Government so I think we should be clear that this has been a lengthy journey and it is not useful to place blame on either side of the House. 
 This bill amends the Limitation Act 1950 although the explanatory note of the bill states that that Act closely mirrors the UK Limitation Act 1939. So perhaps we are going back to some issues from well before 1950. 
Members have talked about the importance of this bill and the substance contained within it but I want to focus on a particular section of the bill today. In the explanatory note reference is made to the exceptions for when particular sets of limitations apply. One of the exceptions is based on age—the age of majority. It is clearly set out in the explanatory note that the old law stated that if a claimant “is under 20 years” then quickly followed on with “or of unsound mind” certain exceptions existed. That aspect of the law has changed quite significantly in the new bill we are discussing. I want to spend some time talking about that change because I think it is significant and goes beyond just this bill itself. 
Let us reflect on the relevant provision which is clause 42. The explanatory note states in relation to clause 42: “If at the close of the start date of a claim’s primary period longstop period or Part 3 period the claimant was younger than 18 years old the period does not start to run until the day after the date on which the claimant becomes 18 years of age.” Then it goes directly on to suggest how this is different from the current law: “By contrast current law … deems an infant (that is under section 4(2) of the Age of Majority Act 1970 a person younger than 20 years old)) to be under a disability.” So it can be seen that we are doing two things here. We are modernising the law to reflect the fact that people under the age of 20 are deemed to be an adolescent or a child and not necessarily to be under a disability and I think it also simplifies the law. 
But we see that the outcome is different from what the Law Commission recommended during its review. The Law Commission said in paragraph 151 of its report relating specifically to the issue of minority: “NZLC R6 recommended an extension of time which can be expressed as deferring the start date until the date the plaintiff obtains majority.” majority again being set out in the Age of Majority Act 1970 as being 20 years of age. “NZLC R61 recommended no change to the present law namely that time does not start running against a minor until majority so that the cause of action does not accrue until the disability period has ended.” Of course “disability period” means if one is under 20 until one reaches that age. Paragraph 152 of the report states: “It is recommended that the recommendation in NZLC R6 be adopted in the case of minority. It is recommended the start date be the date majority is attained.” Let us be clear here: the New Zealand Law Commission said that for the sake of consistency in our law we should refer back to the Age of Majority Act 1970 which says that the age of majority is 20. That was the recommendation from the New Zealand Law Commission. This bill has instead said explicitly that the age of majority should be 18. 
In order to be clear I think it helps to go to the clause itself rather than read the explanatory note. Clause 42 states: “If the claimant proves that at the close of the start date of a claim’s primary period longstop period or Part 3 period the claimant was younger than 18 years old the period does not start to run until the day after the date on which the claimant becomes 18 years of age.” Clearly we have strayed from cross-referencing to the Age of Majority Act and saying that 20 years is the point at which these limitations will kick in. Instead we have said they will kick in at 18 years. That difference is significant for several reasons the main one being the consistency issue. In New Zealand legislation we have consistently moved around the point at which we consider a young person to be an adult in the eyes of the law. Contract law refers to the Age of Majority Act 1970 and it is clear that it is 20; it is quite clear for that legal purpose. One would have thought that if under 20 one cannot enter into a contract yet the Limitation Act applies when one is 18 then we have again created an inconsistency in law. 
Where are these other inconsistencies? I am keen to review some of them because I think we will come up against this issue time and time again. Currently the Social Services Committee is looking at youth justice law and it has highlighted the fact that we consider a person to be young if that person is aged 17 years or under—not 18 years. Again we have created an inconsistency and it also flies in the face of the United Nations Convention on the Rights of the Child which sets out clearly that the expectations on the New Zealand Government is that it treats a young person as young at 18 years or under. This issue exists not just in our youth justice system where we now have 17 as the cut-off age; it is my understanding that we may look again at the drinking age. Currently it sits at 18 but debate exists on whether it should be moved up to 20. The age of voting is 18. Under the domestic violence law one is considered a child until age 17. Depending on where one’s parents sit on the issue of marriage one can be married at 16 years. 
It is high time that we in this House made a decision as to at what point a young person is a young person and at what point he or she is an adult. The Government has clearly flagged here by setting aside the recommendation of the New Zealand Law Commission that it thinks that point is age 18. If that is the case that age should apply in our youth justice system as well. If that is the case it should apply in the way we treat our alcohol legislation. If it is not the case then is 20 the age for everything? I think there is a very clear principle here: we have to decide when we want to treat children as children and adults as adults. If we are going to put contractual obligations on people at 20 years and everything else at 18 years I think there is an inaccuracy that needs to be rectified. 
I look forward to having a little more discussion on this issue at the select committee which I am privileged to be a part of. I also look forward to having this debate in the House because I think it is time we had it. I assure members that I will be bringing up this very issue again when the youth justice bills come before the House. 
CHESTER BORROWS (National—Whanganui) 
: 
 I wish to take a relatively short call on the Limitation Bill in order to make two or three points. The key message of the bill will be to provide a clearer and more comprehensive law on civil limitation periods that will be more accessible to New Zealanders. The bill seeks to achieve a balance between the competing right of access to justice and the right of defendants not to be accountable for stale claims. Of course that is concerned totally with the idea or the theme of fairness. I can think back to a number of matters that I have worked on over the years that were bound by limitation periods. There are statute limitations on various statutes within our criminal law and other statutes that my friend Jacinda Ardern just referred to. Some of them are very easy to explain. For instance in the Crimes Act there is no statute of limitations on crimes. Under the Transport Act for instance there is a limitation of 6 months on bringing a charge. That is because it is unfair to expect a driver to remember something that occurred when he or she was driving between Ikamatua and Reefton at 10 o’clock on a Sunday 3 years ago. So it is a matter of fairness. 
In thinking about this Limitation Bill which relates to a civil limitation on offences I believe that it is easy to see where some people can get caught out. For instance many of the members of the public who are listening will have bought and sold a house over time; fairness is easy to explain in relation to that. During the course of the sale and purchase of a house one signs a sale and purchase agreement. The fine print on that agreement reassures the purchaser that a number of things have been done and a number of pieces of law have been complied with. One of those particular things for instance is that any alteration to the house that required a building permit had a building permit at the time the alteration was done. 
I recall representing the respondent in one of those matters and I felt very much that I was on the wrong side of it. There was a definite tension there. The people I was representing had sold a house that was built about 1910 and a number of alterations had been done to it. At the time they signed the sale and purchase agreement the vendor who was not the person who had done the work on the house but who was the owner at the time that work was done signed that building permits had been obtained because that vendor believed that the building permits had been obtained. On inspection of the house the would-be purchaser must have noted that there was a mezzanine floor on a standard circa 1910 villa in New Zealand where none had ever existed. The ordinary plans of that house were replicated hundreds of thousands of times for houses all around the country and the people I was representing had never bothered to go to the local district council and look for the land information memorandum or some sort of proof that those building permits had been obtained. So there is a real tension between the “buyer beware” side of it and the ability of vendors to get out of the tentacles reaching down through the years and pulling them up for something that in this case they had no real knowledge of even if they probably should have. 
Within the limitation periods of the bill then a number of things relate to fairness. In fact I would argue that most of it is all about fairness in those competing tensions between access to justice and the right of defendants not to be accountable to stale claims. 
The ability in the new bill to have extended periods based on awareness—when someone should have been aware or was made aware—of certain vulnerabilities to people in respect of a contract of the way of the law or of the law impacting on them down the track is something I am pleased to see in this bill. I have felt that in some of the cases I have been aware of it is difficult to feel entirely comfortable with people hiding behind a statute of limitations when anyone looking at it fairly coldly and maybe with a moral set of eyes would say that there should still be some ability for someone who has been caught purely by a limitation lapse from taking any action to be able to do that. The ability to extend the period based on the factual scenario that the person exposed to whatever the vulnerability was within the contract should have been aware of it is a good thing. I note that that can extend as far back as 15 years in respect of the longstop provisions ensuring certainty against stale claims and a number of applications run down through the law there. 
I want to mention one other thing which I mention because it relates to constituents of mine. That is a recent judgment in the Keith and Margaret Berryman matter. That case is no longer before the court because it has been decided and the only application it has in respect of the Limitation Act is that the Act is referred to a number of times throughout the judgment. I am not making any comment on the decision or on the likelihood if the Limitation Act did not apply of any success or otherwise but they are people who over a long period of time have been the subject of a significant inequity of arms as they have tried to get some sort of settlement from the State. The case is something that is fairly raw in the minds of rural New Zealanders in particular and of people looking at their situation from a principal of fairness. 
A bridge was built by the army in 1986 on a public road that accessed the Berrymans’ land as part of an army exercise. The bridge eventually collapsed in 1994 and it has been the subject of a lot of debate and political debate. At the by-election in 1998 the would-be Prime Minister Helen Clark stood on the bridge and said that she promised to have that matter settled by Government. In actual fact it went nowhere near that. There was a sum offered that was nowhere near what the Berrymans thought they needed to have as a result of the continued litigation initiated by them. Because of the processes around the inquest and the prosecution by the Department of Labour under Occupational Safety and Health Service regulations they found themselves before the court and they used up a vast quantity of their reserves. They now find themselves in a position where they are old and minus a large number of the reserves that they had put aside for their old age. 
From my point of view as their local member of Parliament and as someone with a little bit of experience in civil law it is difficult to see how they have been treated fairly. It is an awful shame to see that a lot of their ability to continue making their argument is prevented by the run-out of limitation periods within the Building Act and the Limitation Act. I think it is a real shame that this matter was not dealt with by the previous Labour Government and I hope that we can get some sort of settlement between the Crown and the Berrymans these constituents of mine who are getting elderly and who are finding this a real suppurating sore in respect of their history and their willingness to more on. Thank you. 
Bill read a first time.  
Bill referred to the Justice and Electoral Committee. 
Search and Surveillance Bill 
First Reading 
Hon SIMON POWER (Minister of Justice) 
: 
 I move  
That the Search and Surveillance Bill be now read a first time. 
 At the appropriate time I intend to move that the Search and Surveillance Bill be referred to the Justice and Electoral Committee for consideration. The previous Government introduced the Search and Surveillance Powers Bill late last year but it was decided to extend the procedural provisions to a wider range of law enforcement and regulatory agencies including the Inland Revenue Department the Ministry of Fisheries and the Reserve Bank of New Zealand. The new Government took the decision that rather than amending the existing bill at select committee it would introduce a new bill and withdraw the existing bill from the Order Paper. 
The Search and Surveillance Bill before the House today is like its predecessor largely based on the Law Commission’s 5-year review of search and surveillance powers which culminated in its 2007 report. The main finding to emerge from the commission’s report was clear: reform of New Zealand’s search and surveillance laws was well overdue. Current core police search powers are scattered through a complex array of statutes some of which are up to 50 years old. Furthermore search powers have been granted to non-police law enforcement and regulatory agencies in an ad hoc and piecemeal manner. The result of this fractured development is inconsistent and inadequate law that does not always meet law enforcement or regulatory needs or just as importantly does not adequately provide protections to those who may be subject to search—something I will come back to shortly. 
The bill will reform our search and surveillance laws to provide a coherent consistent and certain approach that balances law enforcement and equally significantly human rights. The bill will bring the law relating to search and surveillance together into one coherent and comprehensive statute thereby making the law easier to find understand and interpret. In addition to the consolidation of core police search powers the bill provides for firstly an examination power that compels a person to answer relevant questions in particular circumstances; for example where the investigation relates to serious or complex fraud or organised crime. The Serious Fraud Office currently has similar powers; however under the bill an examination order can be granted only with the approval of a judge creating a necessary safeguard in the application of the law. 
 Secondly the bill provides for a single production and monitoring order which will be available to law enforcement agencies where they are able to obtain a search warrant. Thirdly a residual warrant regime is introduced for the use of devices procedures techniques or activities that may constitute an intrusion into reasonable expectations of privacy. Next there is clarification of the law relating to consent searches and plain-view seizures. There are standardised procedural provisions relating to the application for issuing of and execution of search warrants to post-execution procedures and to the treatment of privileged and confidential material. 
The bill also introduces a coherent framework for reporting on the exercise of search and surveillance powers and a surveillance device regime that regulates the use of visual surveillance interception devices and tracking devices. A surveillance device warrant will be available to law enforcement agencies where they are able to obtain a search warrant. The regime also clarifies when such devices may be used without a warrant in situations of urgency. 
The Search and Surveillance Bill will complement other initiatives in the investigation of crime most notably the Gangs and Organised Crime Bill the Criminal Investigations (Bodily Samples) Amendment Bill and the Criminal Proceeds Recovery Act 2009. Through this legislation the Government will provide the police and other law enforcement agencies with a more sophisticated set of tools to investigate drug offences organised crime and other offending. 
The standardised procedural provisions of the bill relating to search warrants and searches will apply to all law enforcement powers unless an exception has been justified. The law is also to apply to all regulatory powers where this is considered appropriate following discussions with the agencies that exercise such powers. 
Bringing law enforcement and regulatory agencies under the standardised procedural provisions of the bill will provide benefits such as access to a pool of issuing officers available on a 24/7 basis; the ability to submit warrant applications electronically; clarification of the actions searchers may take when exercising search powers including what they may seize; the power to secure search scenes; the power to stop vehicles in order to conduct a search; and clear rules and procedures regarding items that have been seized during a search. 
In short the Search and Surveillance Bill makes the law more certain accessible and comprehensive. This reduces the scope for legal challenges to the admissibility of evidence obtained through searches. 
The current law on search and surveillance needs modernisation and reform and must take into account current and future technologies. Law enforcement officers must not trail behind criminals in using modern technologies. They must be able to use the most advanced technology available to tackle crime. The bill therefore enables law enforcement officers to retrieve evidential material that is stored electronically. It authorises remote access and search of Internet data and storage facilities that are not situated at the physical location being searched. Provision is also made for the taking of forensic copies or clones of computer hard drives. 
The provision of effective search and surveillance powers must not come at the expense of human rights. The bill ensures human rights are adequately protected without impeding the ability of agencies to investigate offending and enhances rights in areas where current protection is inadequate. Visual surveillance is currently not subject to legislative regulation. The bill brings visual surveillance within a single surveillance device regime covering audio visual and tracking devices. 
Search and surveillance powers are by their nature intrusive. Checks and balances to guard against their inappropriate use are essential and they take the following forms: requiring a law enforcement officer to obtain a warrant and prior judicial authorisation before executing a search except where the nature of the search requires it to be carried out immediately and a detailed framework for reporting on the use of search and surveillance powers both within the agency concerned and more significantly to Parliament. 
Public safety is of paramount importance to this Government. The Search and Surveillance Bill and the Government’s other initiatives such as legislation regarding organised crime and DNA testing are important steps the Government has taken to create a safer New Zealand. I take this opportunity to thank the Law Commission and the Ministry of Justice for their work in getting this substantial legislation before the House this early in the life of the new Government. I commend the bill to the House. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I too would like to begin by congratulating the Law Commission for its excellent report which really is the predecessor to the Search and Surveillance Bill we have in front of us today. A quote from the Law Commission’s report might be a very good way to begin my comments: “The Law Commission has set out to bring order certainty clarity and consistency to the sprawling mass of statutory powers of search and surveillance scattered throughout the statute book. We have also addressed the glaring gaps where the law has failed to keep up with changes in modern society.” In that context the legislation we have before us today is certainly worthy of our support for referral to select committee and further examination. 
I am surprised though that the Minister of Justice Simon Power did not mention at any stage in his comments what is probably the most controversial aspect of this legislation which is the examination powers the bill contains. I am surprised that he did not refer to it. That provision certainly was in the bill that the previous Government introduced and in introducing it we knew it would be controversial but we did so in the context of bringing the jurisdiction of the Serious Fraud Office into the framework of the New Zealand Police. The bill had a basis for bringing powers that sat within the Serious Fraud Office into the powers of the police more generally but subject to some pretty strict controls. Given that the new Government is not proceeding with the transfer of the jurisdiction of the Serious Fraud Office to the New Zealand Police I was surprised that those provisions are still contained within the bill with no explanation whatsoever coming from the Government. I am a little disappointed that the Minister did not spend any time addressing that particular issue and I look forward to other Government members picking it up as an issue and really trying to provide some substance about the matter because it is a very serious matter. 
One of the principles of our criminal law is the right to remain silent. Some people have been somewhat disconcerted by the reality of somebody who has exercised that right to remain silent and who has successfully used the provocation defence as we saw in the earlier of the two cases that have recently concerned our headline news. It is very important that we think very carefully about why certain protections exist in our criminal law. To set them aside requires very good debate consultation and working through all the issues. I am not saying that this is the wrong approach to take. I simply say that I am surprised that the introduction of such a major change which was not the subject of the Law Commission’s report at all had no mention whatsoever by the Minister himself. I think that is rather disappointing. 
In respect of the broader issues within the bill I think it is important to acknowledge that it is of no use to anyone to have all our search and surveillance powers essentially spread throughout a multiplicity of different statutes. I was interested to hear the Minister say the reason the Government had withdrawn the bill and presented it again to Parliament was to ensure it could cover additional different Government agencies and statutes. I guess that when we are dealing with an omnibus bill such as this one it is important to get all the statutes within the context of the bill. In that context it is easier to withdraw provisions than to add them. Certainly we are very pleased to work through the detail of the additional search seizure and surveillance powers that are covered by this particular bill. 
 Just as a rough aside though—because I have an absolute abiding interest in regulatory impact statements—it would be really good if the regulatory impact statement was not just lifted out of the Cabinet paper and stuck within the bill. It would be really good if the regulatory impact statement was— 
Paul Quinn 
: At least we’ve provided one. 
Hon LIANNE DALZIEL 
: There was a regulatory impact statement in the previous bill as well. The point that I make in respect of this particular matter is that the regulatory impact statement states: The recommendations made in this Cabinet paper if agreed to will allow a new Bill to be drafted …”. All I am saying is there is no point taking the phrasing out of the Cabinet paper and just putting it in the bill; it is better to just make a tidy-up adjustment to it so that we are reading off the same page. As the regulatory impact statement states this legislation does not have significant costs for business. There will be additional costs for new forms new ways of doing things and of course the massive amount of training that will be part of the implementation of the legislation. 
One of the things I really like about the new bill—and I am sure the Government members will be very pleased to know there are things about it that I really like and that have improved it in my view—is the mechanism for introducing the law over a longer period of time. This bill will be brought into force by an Order in Council with any provisions not already in force by 1 April 2011 to come into force on that date. The explanatory note states: “The reason for having the commencement date for the Bill set by Order in Council is that considerable administrative change including the training of all affected law enforcement and regulatory officers will be required before the Bill can be brought into force. It will also be necessary to promulgate regulations dealing with a range of matters. It is not possible to determine precisely how long this will take.” I think that is a very very worthy approach for the Government to take and it is one that I support. It is really important when a Government is making huge changes as proposed in this bill that sufficient time for their implementation is allowed. 
The point the Law Commission made when it looked at the issue was that essentially the state of the present law was a mess. It highlighted—and this is an important thing for people to consider when the bill goes to the select committee—that there has been a significant variation in the tests laid down for the exercise of search and surveillance powers that stem from an accident of legislative history which is the way I think the commission described it. It essentially said that sometimes non-police agencies for no apparent reason have more powers than police have in very similar sets of circumstances. So it is really important to bring all of those powers together whether they are powers of the police statutory officers or other agents. The Law Commission made the important point that legislation frequently does not tell law enforcement officers what coercive powers they have or how to exercise them and it leaves a lot to individual discretion and judgment. That means that we hear about the exercise of those powers when the matter comes before the court and an individual court has to decide whether the particular action was legal and whether the individual acted reasonably—but it is always after the event. The intention of this bill is to set out the rules in advance so there is certainty and consistency of application of those important principles on all occasions no matter the agency that is acting. 
The Law Commission when it originally started looking at this matter decided that the rationalisation of the statute book—the commission’s original ambition—was not sufficiently ambitious. It became very apparent to the commission that that approach would not cure the problem. The law simply has not kept pace with technology or with changing trends in crime. One particular area I guess is that much of the law relating to search and seizure is still framed as if most information was contained in hard copy. Those of us who walk around with mini computers—our BlackBerrys—will of course know that a lot of information is now stored electronically and that the old rules are therefore simply not keeping up to date with modern technology. 
The Opposition welcomes the introduction of the bill. We do think there are challenging issues for the select committee to consider but I recommend that people take the time to make a submission to the select committee. I commend the bill to the House. 
CHESTER BORROWS (National—Whanganui) 
: 
 As the chair of the Justice and Electoral Committee which will be considering the Search and Surveillance Bill I rise to take a call on its first reading. It will be very interesting legislation to have a look at and to consider over time. I want to reiterate a number of points that have been made by the previous speaker the Hon Lianne Dalziel especially as they relate to fairness in justice and access to justice within our community. The point she made around the law changing over time and getting out of step with where the community is is very real. It bothers me that we live in an age where whoever squawks the loudest can tend to have an effect on things that impact on access to justice and that have been held as tenets of the rule of law. It bothers me that we may see over time justice attrit for those who are most vulnerable to that. 
I am drawn to a comment made in the explanatory note under the heading “Objectives”. It states: The principal objective of the proposals contained in the suite of Cabinet papers is to provide coherent and effective powers of search and surveillance which will increase certainty in law enforcement and allow use of available technologies to tackle crime in the 21st century while at the same time recognising human rights values.” I believe that the principles of certainty and clarity that will inevitably come from dragging together all those powers of search seizure and surveillance which are right across our legislation at the moment and some of which as has been said earlier are up to 50 years old are very important. 
I recall sitting in the back of a court one day in New Plymouth and listening to a prosecution of a person we had had a number of problems with over many years who was a burglar and a thief. He preferred to break into veterinary clinics and doctors’ surgeries to obtain hard drugs and he had been tipped out on to Broadway Stratford with six police. He was prosecuted for possession of a firearm possession of cannabis possession of burglary tools for being disguised by night and a number of other charges that related to his activity and behaviour that night. But the thing that was comical at the time and gives me pause for thought now is that the six different officers who gave evidence in the court case all gave a different reason for searching the car and a different source for their powers. One was searching without warrant pursuant to the Misuse of Drugs Act. One was searching without warrant pursuant to the Arms Act. One was searching with consent although he found difficulty in explaining how the defendant could continue to give his consent while he was across the bonnet of the car with his arm up his back. One was searching pursuant to the Transport Act. One was searching in respect of the burglary tools and one was searching because he believed it was just good police work. 
It was hugely embarrassing to be sitting in the back of the court and listening to those six policemen giving six different reasons—all very colourful—that could all be applied to the circumstances: a sawn-off firearm a pistol was found; ammunition was found; drugs were found; a gas torch and tools for burglary were found; and the person was disguised during the period of night. 
Jo Goodhew 
: Was he speeding? 
CHESTER BORROWS 
: No he was not speeding. In fact he was doing all he could to remain within the speed limit but it did not help him. Eventually he went down for all the right reasons. But that example explains very clearly why we need to have some certainty and clarity around our law not only for those who may have the force of the law impacted upon them as those charged before the court but also so that those who have to enforce the law can have some clarity and certainty around what they are doing as they exercise their duties on behalf of the rest of us. 
 I look forward to hearing the submissions that come before the select committee and exploring the bill’s powers as they take account of where we are at this stage in our development and the technologies that are available to us. It is also important to note that the bill extends surveillance powers to those regulatory agencies that already have the ability to inspect and search a person’s home. Most regulatory agencies can search homes as a number of small businesses in New Zealand keep business records in individual homes and enter the regulated industry with the full knowledge of the regulators’ powers. So there is a mixture of what would be the minutiae I suppose that will affect people’s ability to withhold records that may be sought under a number of different provisions—some criminal some administrative—and using various technologies. It is interesting legislation. A lot of excellent work has been done by the Law Commission over an extended period of time and I look forward to the select committee process. I commend the bill to the House. 
CHARLES CHAUVEL (Labour) 
: 
 The House will already know that the Labour Party supports sending the Search and Surveillance Bill to a select committee for public submissions. Perhaps what I should do is foreshadow an area where the party is quite keen to see discussion of some potential amendments. The first amendment that we feel it would be in order for consideration is around whether the bill should have a sunset clause stating a time by which a review of its provisions should be conducted by an independent agency. Given that there is a degree of novelty around the powers that are to be enacted by the legislation and given that we are in this bill standardising what are after all intrusive powers of the State it does seem to be a useful exercise for this House to put in place that sort of safeguard so that we can have a look at how the unified search and surveillance powers have been carried out in practice by the police and other enforcement agencies after a reasonable period of time. It does seem appropriate during the bill’s first reading to foreshadow the desirability in our view of that exercise. 
As other speakers have noted this legislation began life out of a Law Commission report in 2007. The present bill has had an interesting history. It is a new bill rather than the original legislation which was based on the Law Commission report and was introduced by the previous Government. That legislation the Search and Surveillance Powers Bill was withdrawn. Notwithstanding the fact that it was reinstated in the forty-ninth Parliament it was discharged on 2 July and replaced with the current measure under the name of the Minister of Justice Simon Power. 
My colleague Lianne Dalziel has spoken a bit about the differences at least on our initial analysis that appear to exist between the Labour Government’s bill and the present bill. As far as I can see the major differences relate to the ability to procure warrants electronically. That seems to be a relatively sensible provision given the availability of technology these days. There is a proposal to extend the powers of the bill to a whole host of administrative provisions: the Biosecurity Act the Commodity Levies Act the Dairy Industry Restructuring Act the Driftnet Prohibition Act the Fisheries Act the Health and Safety in Employment Act the Major Events Management Act the Meat Board Act the Pork Industry Board Act the Reserve Bank of New Zealand Act the Social Security Act and the Tax Administration Act. It would be I think useful to have a good look at whether it is justifiable to extend the uniform provisions of this legislation to that host of administrative provisions and we would expect that to occur during the select committee process. 
I want to say a couple of general words about measures that originated as Law Commission recommendations. When I was a new member of Parliament 2 or 3 years ago a conference about law reform in general was held in the Legislative Council Chamber. One of the very interesting presentations came from as he now is retired Justice Kirby of the High Court of Australia; at that point he was a sitting member of the court. He started his judicial career as the inaugural president of the Australian Law Reform Commission so he does know a bit about law reform. One of the phenomena he commented on at that conference was the propensity for reports of law reform commissions to gather dust on the shelves when legislatures such as ours and those of the states of Australia the Commonwealth and the territories turned their minds to more exciting and populist ventures as we are sometimes wont to do. 
It is true that at that time there was a bit of a backlog of reports from the Law Reform Commission awaiting action and I think that one of the good things that came out of that conference was that the Government of the day recognised that that was not a desirable state of affairs. So it searched for some mechanism by which to make sure that the very good work of the Law Commission—there is no doubt I think in the minds of anyone in this House that it is an excellent body that produces very useful and desirable work—is not ignored by Parliament. It was announced some months after the conference that a default procedure effectively would be incorporated into the  
Cabinet Manual 
 whereby when the commission produced a report unless there was some violent objection to the recommendations of the report by the Minister responsible for the area that the report touched on drafting instructions based on the report would be issued and followed in the event that legislation was not already proposed as an appendix to the report and that would go through the official process and effectively come to the House as legislation. I am paraphrasing the terms of the  
Cabinet Manual 
. 
Given that this afternoon we have debated the first reading of the Limitation Bill and we are now concerned with the Search and Surveillance Bill and I see that there are other measures originating from the Law Commission on the Order Paper it would be useful I think for the House to learn in a formal sense from the Attorney-General the Leader of the House or some other responsible Minister whether that is still the procedure that is followed by the current Government because it does seem to be a very sensible procedure and it is one that worked well under the previous administration. My friend David Parker referred in his speech on the Limitation Bill to the very good progress that was made in the last triennium on getting Law Commission bills through the process. That progress does owe a lot to the fact that the  
Cabinet Manual 
 was reformed in the way I have described. It would be useful to know whether as I say that procedure still exists. It would also be useful I think for the House to hear why on this occasion it was thought that rather than simply amending the bill introduced by the previous Government and heavily based on the Law Commission report it was thought necessary to withdraw the legislation and then reintroduce the bill that we are currently debating given that as I have said the particular differences at least on the analysis we have been able to conduct on a preliminary basis do not seem to be terribly significant. 
The Labour Party supports the referral of the Search and Surveillance Bill to a select committee as it normally supports bills based on Law Commission work. The Labour Party is keen to see some sort of review mechanism built into the legislation so that we can have a mechanism by which Parliament can have a look at whether this venture has been successful after a period of time. Subject to those comments I commend the legislation to the House. 
KEITH LOCKE (Green) 
: 
 The Search and Surveillance Bill highlights the dilemmas we face in catching criminals without intruding in an unjustified way into the privacy of ordinary citizens. I say at the outset that there are several good provisions in the bill flowing from the 2007 Law Commission report on search and surveillance measures. The provisions include requiring warrants for visual surveillance which were not previously required and systematic reporting procedures after surveillance has taken place. 
However the bill goes too far towards intruding on privacy. Much of the public discussion has so far rightly been on examination order requirements forcing people to answer questions when the police and other agencies have “reasonable grounds to suspect” that a crime punishable by imprisonment has been committed or will be committed and that that person has evidential material. This undercuts the citizen’s traditional right to silence outside of when a person is a witness in the courtroom. The bill allows these examination powers to be extended beyond the business environment where the Serious Fraud Office previously had extra powers for dealing with complex white-collar crime. 
These new examination powers will apply for any investigation of an imprisonable offence as long as three or more people are deemed to be involved in committing that offence. People can now be forced to produce documents under production orders for any offence qualifying for a search warrant. Owners of computers will also be required to assist in providing passwords in order to allow their computers to be accessed during searches. The traditional provision against self-incrimination effectively goes out the window. Even if a person does not under these provisions have to tell the enforcement officers anything that will incriminate him or her under clause 125(4)(a) he or she has to provide access to computer data that “contains or may contain information tending to incriminate the specified person”—the specified person being the one who is in control of the computer. Accessing computers also opens up a serious privacy problem. Police and other enforcement officers are specifically allowed by clause 108 which governs search powers to take a forensic copy of computer material. 
The Law Commission report goes into some detail of the problems here particularly as evidential material is mixed up with all sorts of private material—in fact much of the private and intimate parts of a person’s life. Basically the bill does not put any controls on intrusions into people’s legitimate privacy via computer searches. Computer searching is also very useful if the police want to go on fishing expeditions for evidence of other offences committed by the person particularly if the police cannot get the original charges to stick or have a grudge against the person or the organisation he or she might belong to. That might not sound like much of a danger at the moment but it could become more so if the political or policing environment in New Zealand became a little more oppressive as it was in Mr Muldoon’s day. Clause 119 enables the police to gather evidential material on offences other than those specified in the search warrant if that material is in “plain view”. That could perhaps cover data seen while searching a computer which could well come into plain view. 
The bill contains a clause 101(4)(k) which allows police to remotely access people’s computers or hack in to them to use the common parlance. The illustration given in the provision relates to things on servers and on the Internet but it could include ordinary computers. It is a scary provision. As civil liberties lawyer Michael Bott says it could give the police power to read someone’s email. 
The Law Commission report goes into some detail on remote-access problems including the need for more explicit controls and reporting procedures. The problem we have is that the technology of surveillance is developing so fast that there is greater and greater potential for the State to intrude on our privacy in the name of law enforcement. That is why we need strong controls and no-go areas. 
The bill provides some useful authorisation and reporting procedures regarding surveillance warrants which cover visual surveillance interception of communications and tracking. It is good that there will be annual reports on the number of surveillance warrants issued the number of times surveillance was conducted without a warrant the duration of the surveillance and whether convictions ensued. It is good that there is some provision for subsequently telling the targets of surveillance that surveillance has been conducted but on this matter there are also opt-out clauses that the police will be tempted to use. 
One thing that is quite worrying is the provision for residual warrants for surveillance—that is surveillance not of a visual electronic interception or tracking variety. But that could be anything because the definition in clause 57 covers any “technique procedure or activity that may constitute an intrusion into the reasonable expectation of privacy of any person.” It could for example cover the covert entry of premises and the copying of materials therein of the sort already done by the Security Intelligence Service. The provision is dangerous. 
Just in case people think that this is all just theoretical and that the Greens might be overstating the problem let us look at what the police did in Operation Eight at the end of which some Maori and Pakeha activists were arrested and charged with arms offences. Nearly 2 years later the cases have not come to trial. Operation Eight involved massive surveillance and search culminating in the 15 October 2007 lockdown of much of Tuhoe country and the raids of houses across the North Island. Although I am not privy to the evidence my information is that thousands of communications were intercepted and recorded. Bugs were put in cars and phone calls and texts were intercepted. The privacy of thousands of New Zealanders—virtually anyone who communicated with those charged—was breached. That would probably include emails from MPs in this Parliament because some of those arrested were working with MPs such as myself on peace and environmental issues. 
It might sound good and proper when surveillance warrants are granted but we are now so reliant on electronic communications which can be intercepted so easily that lots and lots of innocent people can be caught in the electronic surveillance net. That is a big downside of the surveillance authorised in the bill. 
Then we have police special investigation group agent Rob Gilchrist being paid $600 a week for infiltrating peace environment and animal rights groups and monitoring others including the Green Party. He collected hundreds of emails from internal exchanges within the groups he spied on and forwarded them to the special investigation group—all presumably without any surveillance warrants. Gilchrist’s then partner Rochelle Rees engaged in counterintelligence and took what the bill would call a forensic copy of the data from Gilchrist’s computer and made public that information. 
It is disturbing that the police will not publicly admit to the interception activities of the special investigation group through Rob Gilchrist. It illustrates one of the likely shortcomings regarding the surveillance reporting procedures in the bill which is that the police will regularly use the opt-out clauses and refuse to tell people what surveillance they have been under because the investigations are deemed to be ongoing and could be compromised. The Police Commissioner told the Law and Order Committee that the surveillance of animal rights and other lobbying groups is ongoing. 
Operation Eight also involved the searching of many homes. Often computers were taken away for checking—even in one case the computer of an overseas speaker who was briefly visiting New Zealand to speak at an environment conference. The seizure of a person’s computer is disabling particularly when someone relies on it for work. If we are worried about what the police might do with their new powers we should be just as worried about what other agencies granted extended search powers under this bill might do. These agencies range from the Commerce Commission the Reserve Bank the Civil Aviation Authority and the Ministry of Agriculture and Forestry. The granting of such extended search powers beyond the police force is causing serious concern in business communities and in the law firms that serve them. 
DAVID GARRETT (ACT) 
: 
 I rise to take a call on the first reading of the Search and Surveillance Bill. Let me say first that ACT will support this bill going to a select committee but not necessarily beyond that point. It is always pleasant as a new member—one who is still somewhat wet behind the ears—to find oneself in agreement with members on other sides of the House. To take the comments of the previous speaker Keith Locke first though I will make the point that the removal of the right to silence which is one of the bogeys that are often brought up is often misunderstood. It is not and never will be in my view a situation where the police or anyone else can tie persons to racks or Taser them or put them in a choker hold and force them to speak. No it is about inferences to be taken. But other than that a great deal of what my colleague Keith Locke said is worthy of further examination. When I was much younger than I am now I believed that the police were always right. But I am of that generation who remembers the Arthur Allan Thomas case and I am probably one of the very few people who have read the 1981 royal commission report on the Thomas case. After that I never believed again that the police were always right that they always acted with integrity and that they always told the truth. So I share with Mr Locke some of those concerns as do many members of our party. 
The speaker before Mr Locke Charles Chauvel raised the very good point in my view of the possibility of a sunset clause applying to all or some of the provisions of this bill. Again I am conscious of being wet behind the ears in this House but it seems to me that a sunset clause could be of great benefit perhaps not in all but in many if not most pieces of legislation that come through this House. Then we would not have perhaps the situation described by Chester Borrows whereby six policemen gave six different reasons under six different Acts. In one case simply police practice was used as justification for what was being done. It would not lead to lawyers having to conduct extensive searches through both paper and electronic formats to work out just what the law was. 
This bill is lengthy. Its powers are extensive and serious and it certainly requires extensive scrutiny at select committee which is why we support it to that point. As other speakers have noted it arises from a Law Commission report in 2007 which identified a number of weaknesses and issues contained in laws relating to search and seizure. The Law Commission found that powers of not only the police but also non - police agencies had been granted in an ad hoc piecemeal and scattered fashion through various Acts as several prior speakers have noted. This dog’s breakfast of legislation in case law has led to inconsistencies and a lack of coherency. It is no wonder that the commissioners in their careful and considered way found the situation to be quite simply a dog’s breakfast. I join the two previous speakers or at least Mr Chauvel in particular in noting with reverence the work of the Law Commission in this kind of legislation. I venture to say that this is exactly the kind of role that the Law Commission should play. 
The commission identified worrying anomalies for example whereby non - police agencies have greater powers than the police to investigate offences for which those agencies are responsible. To take just one non - police agency let us look at the powers of the Inland Revenue Department. As I understand the law the Inland Revenue Department can bust into any New Zealander’s home business or farm. Unlike the police it can do so without a warrant. After requiring a person to answer every question that it puts—which is another power the police do not have as most or all members are aware—the Inland Revenue Department can allege that the person in question or the person subject to its scrutiny owes a debt and that person has to prove otherwise. Therefore there is reversal of the long-cherished presumption of innocence and such a person becomes guilty until proven innocent. Even with a change of Government that situation—the piecemeal nature of powers—seems to be getting worse as our Parliament passes more and more legislation. In my very short time here I have wondered how many of my colleagues in the law would have any idea as to just what has been passed in 7 months. But to return to the Inland Revenue Department this bill as I read it will give it and others even more power; the powers that agency has and will have are a perfect illustration of the mess referred to by the Law Commission. 
ACT has a number of concerns with the bill as drafted. We feel that some of the provisions are overly Draconian. I note that many sections refer to warrantless searches which vest arguably too much trust and control with State agencies—including the police I am sad to say—who have shown themselves and not just in recent times to be far from up to the task. Other aspects that are troubling for the younger generation—and here I am surprised to differ from Mr Chauvel who if I am not mistaken is somewhat younger than me—are the provisions about the electronic use of warrants. That sounds sensible but members’ attention has been drawn indeed in my time here to the perils of the Internet. Phantom Twitter and Facebook pages have been set up with the appearance of being legitimate pages of MPs from both sides of the House. One of our concerns is that this bill will open the door to allow what we have seen abroad whereby warrants have been issued via these very social networking sites such as Facebook among other things. 
ACT will support the passage of this bill to a select committee solely for the purpose of a comprehensive review of the law in this area. As it has been said legislation in respect of search seizure and surveillance as it stands is a hodgepodge of thrown-together statutes and case law. At best it is outdated; at worst it contains glaring and dangerous anomalies. I will take this opportunity to urge the many people who have contacted our party and I am sure other members of Parliament with concerns about this bill to make those concerns known by making a submission to the select committee. That is the place to do it; that is the way to do it. Writing to or emailing one’s MP is one thing but making a formal submission to a select committee is the correct process and we will be following the deliberations of the select committee with interest. Thank you Mr Deputy Speaker. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Two years ago in the magazine  
LawTalk 
 the context of the Search and Surveillance Bill was laid out fairly and squarely. When the Law Commission president Geoffrey Palmer has described the present laws providing for powers of search and surveillance as a mess it is a pretty good indication that something needs to be done. And just how big a mess the laws were in was evident in the range of deficiencies outlined by Mr Palmer. Existing statutory powers are sometimes too restrictive. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
The ASSISTANT SPEAKER (Eric Roy) 
: Before the dinner break the Hon Tariana Turia was speaking and has about 9 minutes and 40 seconds remaining. 
Rahui Katene 
: Could I speak on her behalf? 
The ASSISTANT SPEAKER (Eric Roy) 
: I am not sure whether we have established the process for this but I am expected to accept the call. I think it is a good call to inform the Speaker before he arrives in the Chamber. Please proceed. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 When the Law Commission president Geoffrey Palmer has described the present laws providing for the powers of search and surveillance as a mess that is a pretty good indication that something needs to be done. Just how big a mess the laws are in was evident from the range of deficiencies outlined by the Law Commission. Existing statutory powers are sometimes too restrictive and unduly limit the ability of the police and other enforcement agencies to gather evidence and prosecute offenders. At the same time current legislation contains insufficient safeguards to ensure that the rights of citizens are adequately protected. The importance of being able to achieve a balance between human rights and increased powers of search and surveillance is made even more complex by the fact that core police powers are scattered throughout the statute book with some enacted up to 50 years ago. The law has also failed to keep pace with technology. Existing legislation sanctioning the law enforcement use of interception and tracking devices is cumbersome and outdated yet silent in respect of the use of visual surveillance devices. Something had to be done and this bill is the response. 
This bill then is designed to improve laws that have developed in a piecemeal fashion and are out of date; real people have been disadvantaged by these flawed laws. There would be no stronger example of a flawed process than the search and surveillance methods used in the police terror raids in 2007 which have already been referred to this afternoon and the subsequent human rights breaches. This shameful episode in our history unfolded with police marching into Ruatoki armed with search and arrest warrants issued under the Summary Proceedings Act and the Arms Act while all the time the public perception was that evidence was being sought under the Terrorism Suppression Act. When people are remanded into legal custody they need to be given reasons for the deprivation of their liberty as stated in part of the Magna Carta. But no reasons were given at Ruatoki despite being asked for repeatedly. At the time the fact that people were being held in custody without reason led to comparisons with Guantánamo Bay. The jury is out as to whether the Tuhoe raids would have been carried out differently had this bill on search and surveillance been part of the statute when Operation Eight took place. What it would have achieved however was a more legislatively defined process for police action and subsequently a better ability to mount a clear legal challenge against it. 
The Maori Party has entered into the debate around this proposed new law on search and surveillance mindful that there needs to be adequate provision in the law and in practice for human rights and privacy. Any such review needs to be undertaken through a tikanga and human rights framework. It is important that in enhancing the law to provide certainty for agencies in their application of search and surveillance powers we balance any changes against the rights of people being searched. Law enforcement needs must be adequately met but at the same time in a way that is consistent with human rights values. 
I suggest that the Ministerial Review of the Foreshore and Seabed Act 2004 a case of recent occurrence provides a positive framework for such an undertaking. Essentially the foreshore and seabed issue resides around the displacement of mana. The previous Government chose to ride roughshod over the Treaty partner. Reconciliation of kawanatanga and tino rangatiratanga was far from the Labour Party’s collective mind. When the new Government was formed an understanding was developed that mana maintenance and enhancement for hapu iwi and whanau was central to the resolution of the foreshore and seabed issue. The ministerial review has now come back with a report that assumes that the Act will be repealed and that the framework of the Treaty of Waitangi and international human rights helps to provide the basis for moving forward. 
This then is the precedent being proposed from the review of the Foreshore and Seabed Act and it is a precedent that leads us all to recommend that this bill on search and surveillance powers is especially important legislation to have a Treaty clause inserted. The Tuhoe raids have shown that search and surveillance powers and how they were interpreted by the police demonstrate the importance of legislation being administered and implemented in accord with the Treaty. To this end we will be hoping to see changes come through the select committee that will bring the concept of the Treaty obligations to the fore. 
There are other crucial issues that we hope further debate will provoke. A key concern for the Maori Party is that the people’s voices are heard. The Government has stated that the bill complies with the principles of the Treaty but there is no Treaty clause and no consultation with Maori in the development of the bill. The Government has also said that this bill complies with the Human Rights Act 1993 and the New Zealand Bill of Rights Act 1990 although there is no mention of human rights in the bill and there has been no consultation with the Human Rights Commission. It is not enough to say that there are no human rights concerns under the New Zealand Bill of Rights Act as this was not a sufficient check as we saw with the Foreshore and Seabed Bill. The Government has also said that the legislation is consistent with the Privacy Act 1993 although the Assistant Privacy Commissioner has raised privacy and human rights issues. These are major issues for us and we are certainly unprepared to guarantee support until we can gain access to a wider view. 
I think it is very important to note that the scope of the generic and modernised provisions is mammoth in terms of the legislation it affects. Apparently over 50 separate Acts stand to be amended including the Boxing and Wrestling Act the International War Crimes Tribunals Act and the Wine Act to name a few. A wide range of regulatory schemes also come within the scope of the bill ranging from the Commerce Commission to industry-specific regulatory bodies such as the Civil Aviation Authority and the Meat Board. We want to be assured that in the rush to gain legislative commitment to the one-size-fits-all approach we do not end up with some bodies accessing powers that significantly exceed those required or appropriate for their roles. We would be nervous if in the creation of extraordinary powers for dealing with serious organised crime these powers are then extended to investigate suspected lesser crimes simply because they can. The worst-case scenario would be if any manner of agency official can call upon disproportionately invasive search and surveillance powers or worse yet that unwarranted surveillance takes place based on the provisions of this bill. 
Perhaps the biggest concern of all is that nothing prevents a regulator from conducting surveillance on the homes of officers and staff. The bill introduces new covert surveillance and investigative powers which might include installing recording devices to intercept calls tracking devices to determine the movements of staff hidden cameras and the like. The Privacy Commissioner made the recommendation to look more closely at the New Zealand Bill of Rights Act and in particular at section 21 which maintains that everyone has the right to be secure against unreasonable search and seizure. We are hopeful that this can be teased out further as the bill progresses. 
Finally one of the concerns we have raised with the Minister is that there is no purpose clause in the bill. It may well be that such a statement can give clarity about the balance of law enforcement values and human rights and an interpretation to justify the use of particular powers for specific purposes. There are many issues raised but we are prepared to let the bill go to the select committee at least to enable the debate to occur. Thank you. 
Hon NATHAN GUY (Minister of Internal Affairs) 
: 
 This is a great opportunity to take a call on the first reading of the Search and Surveillance Bill. My understanding is that it will be heading to the Justice and Electoral Committee which is chaired by Chester Borrows. 
This is a chunky bill of over 200 pages and it has taken a while to get here. 
Chris Hipkins 
: How many pages has the member read? 
Hon NATHAN GUY 
: The existing police powers are up to 50 years old and it is important that this bill addresses that point. I should alert the member opposite Mr Hipkins to the Law Commission’s 2007 report; I am sure that he would be aware of it. It took about 5 years of public consultation research and discussion for this bill to get here so that member needs to know that this bill has taken a long time. That is why it is of the nature that it is—a couple of hundred pages in length. I look forward to the member’s contribution in this debate this evening if he is willing to take a call. 
This bill does a couple of things. It corrects the inconsistencies in the way that search powers are framed and in how they may be exercised. Legislation does not always meet law enforcement needs or adequately provide protections to those who may be subject to a search. Another significant point is that there is uncertainty as to the nature or extent of some existing search powers and procedures. So bringing law enforcement and regulatory agencies under the standardised procedural provisions of the bill will provide benefits. 
I think it is important to go through some of those benefits because members of the public might be interested as indeed might some in the House as well. There will be access to a pool of issuing officers who will be available on a 24 hours a day 7 days a week basis and that is very important. There will be the ability to submit warrant applications electronically. Also there will be clarification of the actions that searchers may take when exercising search powers including what they may seize. The power to secure search scenes is another important one as is the power to stop vehicles in order to conduct a search. The final point is that this legislation will enable clear rules and procedures regarding items that may have been seized during a search. 
I think it is important to realise where technology has got to over the last 50 years and what this bill enables those who are very technologically skilled to do. We need to think about the advances that society has made over the last 50 years. The bill allows remote computer searches only where it is not possible to access a physical location to search for example a computer. That is important. It might be a situation where there is an email account at various Internet cafes or where not all of the data is located in a particular hard drive or at the physical location. So the information could be stored at a variety of locations. 
The other important contribution I will make this evening is to say that regulatory agencies that already have the power to physically search homes and individuals will have the ability to apply to carry out other covert surveillance as long as there is—and there are a couple of important points here—sufficient information to suspect an offence. The other important point is that the desired covert surveillance will have to produce evidence of that offending and the surveillance will have to be reasonable as to whether it is proportionate to the offence being investigated. The other important point is the issue as to whether New Zealanders consider covert surveillance to be any more intrusive than physical searching of their homes or of themselves in person. 
This is a very very good bill. It has taken a while to get here and the Justice and Electoral Committee looks forward to hearing submissions right across the board. I am sure there will be a great deal of people among the public who want to get involved in this bill. From listening to some of the speeches this evening my understanding is that there is a great deal of support for this bill and I look forward to seeing those people getting involved in making a submission and turning up to the Justice and Electoral Committee to be heard if they so wish. The Government supports the very important first reading of the Search and Surveillance Bill. 
Hon DAVID PARKER (Labour) 
: 
 As has been stated by earlier speakers on behalf of the Labour Party we are supporting the Search and Surveillance Bill’s referral to a select committee. Search and surveillance legislation is a necessary part of the laws of any modern democratic country. Either one has rules that regulate the extent of police powers or one has no rules. If there are no rules then the only way to effectively do these things is by diktat. In democratic countries we rely upon getting the balance right between the powers of the State to search and seize and the right of individuals to freely go about their lives without interference through having appropriate legislation. When we design this kind of legislation we always have to be mindful about powers that can be abused. 
When I come to considering legislation like this I do not think about the current Government or the previous Government both of which are relatively benign on these matters; I try to think about what could be the worst-case scenario in which these powers could be abused. We ought not to pretend that the risk of governmental excess or executive excess does not exist in New Zealand. We are lucky to have long proud traditions of pretty moderate ways in which Governments be they Labour-led or National-led have approached these matters over the years but we ought not to be lulled into a false sense of security that on that basis we should be giving Governments of any persuasion wider powers than they really need. Because of the complex issues to be balanced reforming law in this area is something that we in New Zealand are good at depoliticising. 
I think it is easier for parties and for the public to have confidence in this legislation because the Law Commission has been central to the reports that led to the drafting of this legislation. The Law Commission is made up of some pretty wise men and women including very senior members of the judiciary who have been in their careers for a long long time. They understand the balance required between having civil liberty and giving appropriate powers to the police to apprehend and prosecute criminals. In addition the Law Commission has people who have been politicians as well as academics like Sir Geoffrey Palmer. 
The Law Commission brings considerable wisdom to bear on these issues. If members ever have the chance to read its reports as most members of Parliament do they will see that it approaches these things in a considered way. It shows both sides of the argument before balancing the different interests to be weighed and coming up with recommendations to Parliament that we in Parliament generally find that we are able to agree with. That does not mean to say that we delegate our decision-making role to the Law Commission; we do not. In the end it is our responsibility to decide whether the law changes proposed by the Law Commission go forward but generally we pay great heed to its endeavours because it takes time and goes into the detail of these matters in a way that is really impossible for us to do as politicians. 
In this case the legislation that is being reformed by the search and surveillance legislation is sometimes over 50 years old. That legislation was designed primarily with a view to the powers that the police needed 50 years ago given the technology of the time. A number of things have changed since then often in a piecemeal way as we in Parliament have grappled with new issues that were not around when the original police powers were last legislated for. The piecemeal additions include things like the Biosecurity Act 1993 the Fisheries Act in various incarnations the Health and Safety in Employment Act the Reserve Bank of New Zealand Act the Tax Administration Act the Electricity Act and the Gas Act. All of these different Acts of Parliament for good reason give different arms of the State powers of search and seizure. Because a somewhat ad hoc development of powers has been given to different agencies inconsistencies have crept into the law in some of the finer provisions. 
This legislation attempts to standardise some of the legal tests that apply as a prerequisite to people being able to exercise powers of search and seizure. It does that in a number of ways. For a start it states that some things cannot be done except in the most exceptional circumstances. I take considerable comfort that my personal liberties are being protected by this proposed legislation. Clause 5 states that internal searches are generally prohibited so a policeman or a policewoman or any other official of the Government in another department cannot just come along to me and say that he or she wants to give me a personal invasive body search—and that should be the case. There are only very limited exceptions to that prohibition and those exceptions are so limited that they ought to be expressly set out in law. Members will not be surprised to see that the express exception relates to the Misuse of Drugs Act because of course it is possible to secrete drugs upon one’s body and an internal search can be deemed necessary in cases dealing with the Misuse of Drugs Act. 
The other thing that is made clear in this bill is the legal test that applies as a prerequisite to being able to get a search warrant. The person who is seeking the warrant has to satisfy the person who is granting the search warrant that he or she is satisfied that there are reasonable grounds to suspect that an offence punishable by imprisonment has been committed is being committed or will be committed and to believe that the search will find evidential material in respect of that offence. That is a paraphrase but it is the essence of it. That wording has had a lot of work done on it. A lot of consideration has gone into the exposition of the proper wording of the prerequisite threshold that has to be met before someone gives a warrant. That standard currently differs across different statutes and it is desirable that it be standardised in the way that is being proposed here. 
There are some limited circumstances where someone can carry out a search without first getting a warrant. The warrant protection is appropriate. One needs to convince a judge that the police should have the power to infringe someone else’s rights to privacy rather than just giving the police the power to use their warrant powers. 
If members or listeners want an illustration of how people given excessive powers can use them excessively the Serious Fraud Office is an example. It has two ways in which it can gather evidence. The first is that it can go through the normal process and get a warrant and the second is that it can exercise some additional powers and do things because it can. Despite the fact that in probably 90 percent of cases the Serious Fraud Office could use the warrant route because it has had the power to use the short-cut route it has chosen to use that instead. In the majority of cases it has used its short-cut route rather than the warrant route. That is an illustration of why we need to take care that we have judicial oversight of these things because I have no doubt that in some of those situations the breadth of the information the Serious Fraud Office sought through the warrantless process was probably wider than what would have been agreed to by a judge or some other body that had oversight. So I for one think that generally the Serious Fraud Office should have to have a warrant. I also recognise that there are exceptions. Those exceptions are properly set out in the legislation. 
One final thing that I think should be looked at by the select committee is the power to require people to answer. We have a right to silence in New Zealand. There are exceptions for Serious Fraud Office investigations. They might be valid but the granting of wider powers to require people to answer questions is something that the select committee needs to consider quite seriously. 
SIMON BRIDGES (National—Tauranga) 
: 
 Mr Assistant Speaker— 
Chris Hipkins 
: This’ll be good! 
SIMON BRIDGES 
: It will be. It is good to take a call on this bill. [ 
Interruption 
] Members opposite are excited already. It is good to take a call on the Search and Surveillance Bill and make what I hope will be a few salient and pertinent points in relation to it. But first can I just dwell for a moment on this afternoon when we also had the Limitation Bill for its first reading before this House and now as I say we have the Search and Surveillance Bill. [ 
Interruption 
] I do not want to dwell on the Leader of the Opposition’s limitation period of 3 years; we have already been there done that— 
Chris Hipkins 
: Because he will be Prime Minister after that. 
SIMON BRIDGES 
: That is unlikely. The member Chris Hipkins says that the Leader of the Opposition will be Prime Minister after 3 years. I am sure he will not be putting money on that. In all seriousness I will dwell on some of the similarities and the differences between the two— 
Hon Darren Hughes 
: Will you resign if that happens? 
SIMON BRIDGES 
: Will I resign if that happens? I suppose anything is possible at a theoretical level. It is highly unlikely but possible. 
I will say that both bills have really benefited from some significant work from the Law Commission: some weighty tomes by the commission in the case of the Limitation Bill three reports and in this case as I understand it one fairly hefty tome. I agree really with what Charles Chauvel has said on the Limitation Bill and with what Mr Parker said just now about the Law Commission and I commend its members for the good work they have done. I emphasise something Sir Geoffrey Palmer I think said to the Justice and Electoral Committee earlier this year—that the benefit of the Law Commission the substantial benefit is the research it does. The heavy workload of research that it has really aids our Parliament and our society. We have the Search and Surveillance Bill which is a product of that work as the Limitation Bill which was debated before it was. 
Of course there are other similarities between these bills. They are very significant in their own way one in the area of civil procedure and one in the area of criminal procedure. They both deal with—I suppose we could say—a rubbing against of principles. In the case of the Limitation Bill it is the principles of finality against the search for truth and justice. In the case of this bill—and to echo something the previous speaker said—the rights and liberties of an individual to be free from unnecessary and illegal searches and surveillance against the other really very important need for the State to fulfil its duty to keep citizens safe and to enforce laws and solve crime. Both are significant bills one in the civil area and one in the criminal area. This bill like the Limitation Bill is one where there are important principles at stake. 
I went over and asked my colleagues from both the ACT Party and the Maori Party about them and I think I have it right. Anyone who has gone through law school will remember the case of  
Entick v Carrington 
. It is a case going back several hundred years and it really goes to the principle that a man’s—I suppose these days we should say a person’s—home is his castle. It was an initial piece of case law in the search and surveillance area. It established a very important principle as I recall going back now about 15 years to my law school year one class that a man’s home is his castle and people should be free from unnecessary searches on their own property. I suppose today we would also say in a general sense on their person and in all sorts of ways as I think Nathan Guy said earlier in the realm of computers email and the Internet. The limits on it are essentially endless. 
Of course I have had quite substantial experience arguing search and surveillance cases in court and arguing the admissibility of evidence. I suppose the most common search cases to come before the courts every single day in the District Courts in this country are to do with drugs and searches of cars real property the bush out the back of someone’s property and the legality or otherwise of what the police have done. Again to emphasise the significance of this bill and the need to give it close examination at select committee its purview—and the purview of this bill is much broader than that—extends to any crime one can envisage: any kind of property crime pornography child pornography computers obviously a whole range of sexual offences frauds—you name it this bill will have application to it. 
 In starting to talk about  
Entick v Carrington 
 where it all started and the heavy workload that search and surveillance puts before the courts the point I make is that a lot of ink has been spilled in this area of law and a lot of trees have been killed. I do not think we will ever do away with that entirely. Often these cases turn on the facts: do we believe the policeman or do we believe the accused as to what actually happened when the search took place or in relation to the surveillance and the evidence? Nevertheless my point is that it is entirely possible that this bill will free up some court resource and streamline the process by codifying the laws in relation to search and surveillance in one essentially omnibus bill that runs to 197 pages and has 316 clauses. We will not see the to-ing and fro-ing that we saw certainly in the District Court but also in the High Court and the Court of Appeal with numerous cases such as  
Grayson v Taylor 
  
R v Shaheed 
 and more recently the case of  
R v Williams 
. Those are cases that will be very familiar to criminal lawyers in this country. Hopefully under this bill things will settle down as a result of the codification of the law in one place. 
If anyone is in any doubt that that is what this bill does it is instructive and interesting to look at the explanatory note of the bill where it lists the dozens and dozens of bills that are amended by this new bill. If I deal with just the As there is the Agricultural Compounds and Veterinary Medicines Act the Animal Products Act the Animal Welfare Act the Antarctic Marine Living Resources Act the Antarctica (Environmental Protection) Act and the Aviation Crimes Act. My hope is that this bill will lead to more certainty and to a less movable feast in relation to search and surveillance. As the explanatory note states the bill I hope will provide a coherent consistent and certain approach in balancing the complementary values of law enforcement and human rights. 
JACINDA ARDERN (Labour) 
: 
 It is my privilege to again follow my colleague opposite on this matter. He is obviously learned in this area. 
I want to reflect on the comments made by Mr Guy on the justification for the Search and Surveillance Bill. When giving the reasoning behind the bill he mentioned mostly that the existing legislation was old and therefore change was justified. Although the current legislation is 50 years old its being old is not reason enough to change it—and we could use Roger Douglas as an example of why that might be the case. Having said that there are very good reasons why we should look to review the current provisions for search and surveillance which are spread across a number of different Acts and which we would well benefit from pulling together. As has already been mentioned the bill will be referred to the Justice and Electoral Committee of which I am pleased to be a member. The committee has been particularly busy over this last period and obviously the area we are looking at here is a clear focus for the current Government. 
On bills such as this one it is really important that we go back to the first principles of what we are trying to achieve and on what it is important to retain at the end of the process. My colleague David Parker pointed that out really articulately. Firstly we have a responsibility to ensure that our law enforcement agents are given the powers required to do their job within certain boundaries. The second element concerns those boundaries and the need to ensure that we maintain the protection and rights of citizens. I believe that this House has already seen that tested. For instance the Criminal Investigations (Bodily Samples) Amendment Bill which is currently before the Justice and Electoral Committee is a test of the boundaries of some of those rights. There is a challenge to see as our modern crime-fighting tools move on how far we should allow those tools to be used in the investigation of criminal acts. 
I want to talk a bit more about that balance and to make an international comparison. Before I came into this House I had the opportunity to work on a review of policing in England and Wales under Sir Ronnie Flanagan who led Her Majesty’s Inspectorate of Constabulary in the UK. I guess one could say he was the equivalent of the Commissioner of Police. One of the areas in the UK that he wanted to look at was the rising amount of bureaucracy in the police force under that jurisdiction. He was interested in what had triggered the increase in bureaucracy and that was the element of the review I worked on. What became quite clear was that in the UK there had been an increase in the powers granted to the police but rather than testing whether those powers should have been granted in the first place the immediate response was to put layers of accountability checks which came in the form of bureaucracy on top of those powers. For instance keeping everything in writing was seen as a counterbalance rather than the questioning of principles at the time. 
Probably one of the best examples was the stop and search powers that existed in the UK. In the UK police officers are able to stop and search any individual or person they suspect of having committed a crime without there being much check on that. I will reflect again on how that is portrayed in this bill where at least we have a balance. In the UK in order to provide a counterbalance any police officer who exercised stop and search powers or who even questioned where an individual was going would then fill in a lengthy form. The consequence was that the individual who was stopped felt as though his or her details were being recorded for a massive database. One can see why people might assume that given that the UK is the most watched nation in the world and one might argue one of the most heavily bureaucratic as well. So that is a clear example of where powers went to a particular point and the assumption was that a layer of bureaucracy would be enough of a protection for citizens when in fact it was not and gathering of information in and of itself was seen as an invasion of people’s privacy. 
I reflect on that because in the Search and Surveillance Bill we see a quite lengthy discussion on the use of warrantless powers for the gathering of information that may be useful for tackling various criminal acts. These are set out in Subpart 4 through to Subpart 7 in Part 4. In each of these subparts I am pleased to see that the bill is very explicit and that although a police officer may have the right under particular circumstances to act without a warrant this is kept in check by the fact that it may be only for an imprisonable offence of 14 years or more. So already we see a counterbalance in there that is not bureaucracy-based but based on a standard that is recognised and understood in law and which means that an element of seriousness must first be present before a police officer may act in that way. I think it is a useful attempt at ensuring that we have balance. That provision applies for the gathering of evidence and material from a vehicle and in relation to the Misuse of Drugs Act. I think it would be useful for the select committee to spend a little bit more time on that area because it strikes me as being much more open-ended than some of the other subparts of the Search and Surveillance Bill in relation to warrantless searches. 
I want to refer quickly to the reporting mechanisms that have been added to the law itself. It is interesting that in drafting this bill it was obviously seen as important that we have the counterbalance of including the reporting procedures. We did not see that in the UK and that was another reason why the bureaucracy became out of control as a measure of accountability. I think it is useful for the Government to point out its expectations from the outset when it comes to reporting. Otherwise reporting can be a mechanism that is used on the job as an accountability measure and a way for individual law enforcement officers to say they have done what was required ticked a box and filled in a form and that the accountability does not need to go beyond that. 
 These reporting structures are much broader. They set out on an annual basis the information that the Government expects to be provided to this House on the use of warrantless searches and I think that is useful. Those provisions are contained in Subpart 7 in Part 4. In clause 162 it says explicitly: “Any person who exercises a warrantless entry power search power or surveillance power conferred by this Act or by a relevant enactment must provide a written report on the exercise of that power to an employee designated to receive reports of that kind by the chief executive …”. It also sets out the information that must be included within that report including a short summary of the circumstances surrounding the exercise of the power and the reasons why it needed to be exercised as well as statements on whether any evidential material was seized and whether any criminal proceedings have been brought or are being considered as a consequence of that evidential material. 
I point out that we must ensure that the putting of reporting mechanisms into this bill does not become an excuse or a justification for the broad use of what are very far-reaching powers. That is why I am pleased to see that clause 163 states that those reports must come to Parliament. It will be up to members of this House to ensure on an annual basis that the powers within this Act are being used in the way that this House intended are not being misused by law enforcement agents and are achieving the ends that were intended. 
As a member of the Justice and Electoral Committee I look forward to going into greater detail on the other aspects of this bill and to ensuring that we have struck the crucial balance between the individual liberties of members of the public whilst also ensuring that we adequately reinforce our law enforcement agents. 
PAUL QUINN (National) 
: 
 I will take a short call on this first reading of the Search and Surveillance Bill. I support this reading and the contributions of my friends and colleagues on this side of the House and perhaps some of the contributions from our friends and colleagues on the other side of the House. 
I was struck by Jacinda Ardern’s opening comment about the use of the word “old” to describe the current legislation; she said that something being old was not of itself a reason for changing it. I agree with her to the extent that being old of itself is not a reason but being out of date is. One thing is for sure: the current legislation is way out of date. Times have moved on methods have moved on technology has moved on and the way we do things has moved on. As a consequence it is time to take a fresh look at the legislation through this omnibus bill and to bring it into today’s times so that the law enforcement agencies can use modern techniques to assist their honourable work in protecting society the community and individuals. I cannot help but reflect that this modern and focused Government has today brought in two long-overdue bills to modernise legislation. To some extent that is a reflection of this modern party and its drive to put the focus on doing rather than doting which we have had over a lengthy period. 
I want to make a couple of comments on some other previous speakers. Lianne Dalziel said there might be some contradiction as set out in the regulatory impact statement. I say to her that this Government at least has an open book and is prepared to provide regulatory impact statements. I was a bit confused by the messages provided by Charles Chauvel and David Parker in respect of the Law Commission. Although I agree that the Law Commission does some excellent work I do not think it has a free licence to have all its work considered excellent. I reflect on one particular bill where I was involved in a consultation process that from my recollection was completely against what the community wanted. That was the Waka Umanga (Maori Corporations) Bill and fortunately it languishes way down the Order Paper. I think that yes the commission provides expertise in some areas. Search and surveillance and limitation are technical in nature and the commission can provide some expertise on them but I think we need to follow the wise counsel expressed by David Parker that ultimately Parliament must take responsibility for passing laws not the Law Commission. I heartily agree. 
I also want to pick up on the concerns expressed by the Maori Party and to say that I am sure that the Justice and Electoral Committee will diligently work through those issues. Some of those issues have been raised on both sides of the House. I am sure they will be taken into consideration when this bill is referred to the Justice and Electoral Committee which is under the excellent leadership and chairmanship of Chester Borrows. 
I do not have much more to add other than to say that it is always good to be working on very important bills that enhance the crime-fighting capabilities of our law enforcement officers in order to make our communities and society safer. On that basis it is with much pleasure that I look forward to this bill being referred to the Justice and Electoral Committee. Thank you. 
A party vote was called for on the question  
That the Search and Surveillance Bill be now read a first time. 
Ayes 112 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 4; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Bill read a first time. 
Bill referred to the Justice and Electoral Committee 
Taxation (International Taxation Life Insurance and Remedial Matters) Bill 
Second Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (International Taxation Life Insurance and Remedial Matters) Bill be now read a second time 
. I do so with a great deal of feeling because I am delighted that this very large omnibus taxation bill has at last progressed to its second reading. It has taken a great deal of time and a huge amount of hard work to bring the bill to this point. It was originally introduced in July of last year and referred in August of the same year to the previous Finance and Expenditure Committee for consideration. It was one of nearly 80 bills that were before Parliament and lapsed when the House rose for the general election. It was then reinstated by the present Parliament and resumed its place before a new Finance and Expenditure Committee. A major factor in the slow progress of the bill which introduces a number of important highly technical reforms has been its sheer size complexity and scope. 
The bill attracted a large number of submissions many of which were equally very long and extremely technical in nature. The resulting officials report to the committee had to be spread over several volumes in order to deal fully with the points made in the submissions. The bill as reported back to the House is now over 800 pages long. In its report the committee commented that the bill’s size as well as the depth and breadth of the material it covered made its consideration “more difficult than it might have been otherwise”—a very euphemistic statement I think—and it placed the committee and its processes of consideration under considerable pressure. The committee also expressed its preference for future taxation bills to be of a more manageable size with major reforms divided into separate bills. I concur with that view and it is my very sincere hope that in future we can keep our taxation bills to a more manageable size and scope. 
I note in passing as a start that the Taxation (Consequential Rate Alignment and Remedial Matters) Bill that I introduced on 21 July consists primarily of consequential and remedial legislation and at about 50 pages in length it is one of the smaller taxation bills I have introduced in recent years. Many of the committee’s recommendations relate to the application dates of specific measures which needed changing as a result of the time that has passed since the bill was introduced. Other recommendations fine-tune the proposed legislation so that it achieves the desired policy outcome. 
The central feature of the bill is the first stage of the reform of New Zealand’s international tax rules. This reform is intended to help New Zealand - based companies compete more effectively overseas and to encourage New Zealand businesses with international operations to keep their head offices in this country. The reform represents a complete change in the way we tax the offshore income of our controlled foreign companies and by that I mean foreign companies that are controlled by New Zealand residents. In doing that we are better aligning our international tax rules with those of our main trading partners. 
The bill exempts the active income of controlled foreign companies from domestic income tax. Active income is income derived from activities such as manufacturing and agriculture in contrast to passive income which is income from things such as rent and interest. To reduce compliance costs where there is limited risk to the tax base the bill proposes some exceptions to the rule that passive income will be subject to New Zealand income tax. For instance controlled foreign companies operating in Australia which is usually the first destination of New Zealand businesses that decide to expand overseas will generally not be subject to income tax in New Zealand whether their income is active or passive. Likewise there will be an exemption for controlled foreign companies that pass the active business test set out in the draft legislation. They will not be required to attribute their passive income if it is less than 5 percent of their total income. 
The committee has recommended some changes to the reform’s application date as originally proposed in the bill. It will now apply to income years beginning on or after 1 July 2007. One of the most important changes recommended by the committee is that the 5 percent active business test which is based on accounting information be simplified. These changes will make it possible for businesses to place greater reliance on their accounting information and will require fewer adjustments on their part. 
The committee has also recommended a number of other technical changes to the proposed reform. They include relaxing the carve-outs for small and medium sized enterprises in the interest allocation rules and taxing deductible and fixed-rate foreign dividends as non-exempt dividends instead of interest. I am satisfied that these and other changes recommended by the committee will help to reduce compliance costs associated with the new legislation while maintaining its fundamental design structure and policy intent. 
The bill also modernises the tax rules relating to the life insurance business which relate to 1990. Then term insurance was less than 10 percent of the life insurance business so it was not a major consideration in the development of the present tax rules although today it constitutes over 50 percent of the business. Under the current rules life insurers are effectively not being taxed on the profit they make on term insurance business a tax benefit that is not enjoyed by other businesses. So the bill introduces an integrated framework of changes to deal with these problems. It extends the tax benefits of the portfolio investment entity rules to all savers in life products and taxes term insurance business on actual profits as other businesses are taxed. The committee has recommended deferring the application date from 1 April 2009 to 1 July 2010 with term insurance products sold before that date subject to concessionary transitional rules. However life insurers will be able to operate under the new rules earlier than that if they wish to do so. 
The bill also introduces changes intended to strengthen and rationalise the definition of associated persons in the Income Tax Act. These definitions are used mainly to counter tax practices that could undermine the intent of the law because of the closeness of the relationships of those involved whether they are relatives trusts partnerships or entities. The definition relating to land sales is in particular need of strengthening to prevent developers and the like from circumventing the land sale tax rules by operating through closely connected persons. The committee has recommended a number of amendments aimed at reducing uncertainty in the proposed legislation and narrowing the scope of some of the proposed tests of association to ensure that they do not apply more widely than originally envisaged. It has also recommended that the general application date for the changes except for those pertaining to land be deferred to the 2010-11 income year. It has further recommended that the changes to the land provisions generally apply to land acquired from the date of enactment. 
The bill also introduces a voluntary payroll giving system for charitable donations that will operate through the tax PAYE system a measure that has been warmly welcomed by the charitable sector. The committee has recommended that the application date for the introduction of the payroll giving scheme be deferred to 3 months following enactment of the bill. That will give employers and the Inland Revenue Department alike more time to roll out the systems that are needed to implement payroll giving. 
The bill also introduces a change to the KiwiSaver legislation to resolve the problem that was highlighted on the  
Close Up 
 programme last week about KiwiSavers who die without leaving a will and the difficulties surviving families have in accessing their contributions. The bill resolves that problem and the relevant provisions are backdated to the introduction of KiwiSaver in 2007 so that no family should continue to have to suffer in this way. 
These are but some of the many changes the committee has recommended to this very large and technically complex bill. I give notice that at the Committee stage I will release a Supplementary Order Paper that adds a further five measures to the bill. Although they will add to the bulk of the bill the additions are taxpayer-friendly amendments that generally apply to a small number of taxpayers for the already completed 2008-09 year. They are being added to this bill because they need to be legislated for as soon as practicable. Three of the measures amend the financial arrangement rules to reduce tax volatility and the timing of recognition of income and expenditure. We announced one of those in December last year as law changes to prevent unanticipated tax liabilities from arising for troubled finance companies and certain other debtors that enter into work-out agreements with their creditors. 
There will be other measures relating to the range of circumstances under which the Inland Revenue Department can offer relief from use-of-money interest when taxpayers are physically impeded by an emergency such as a flood from paying their tax on time and we are extending that to include pandemics which is completely relevant at the moment. There will also be some amendments to clarify the policy intent of the current provisions allowing life insurance companies to access tax refunds in particular circumstances. 
I put on record my thanks to the Finance and Expenditure Committee for bringing this bill through to its second reading for a considerable piece of work it has done. It was a challenging task. I also acknowledge the work of my officials and the drafters who have worked tirelessly on this bill for a very long period of time now often to near-impossible deadlines and who I dare say are beginning to twiddle their thumbs at what might lie ahead. I commend the committee’s report and the bill as amended to the House for consideration. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 We have just heard from the Minister of Revenue who gets a lifetime achievement award for bringing the Taxation (International Taxation Life Insurance and Remedial Matters) Bill to the House in his capacity as Minister of Revenue—indeed the same capacity in which he launched the bill in the previous Government. That is extraordinary. We have the same Minister despite a change of Government giving birth as it were to the bill and seeing it now through the legislative process. Perhaps it should be called the “Charles Chauvel Lifetime Achievement Award” because he is here to ensure that this is probably the last time the Minister has this august opportunity. 
I would like to echo the Minister’s words thanking the officials who have worked tirelessly on this bill. It is a huge bill—the second-largest tax bill that I have seen in my time in this House. It would not have been possible without the dedication and the deep and broad expertise of a very expert team of officials from the Inland Revenue Department’s policy team some of whom are represented in the Chamber. I acknowledge also the good work of the Finance and Expenditure Committee chairman Craig Foss and the other members of the committee who did a good job of bringing together a range of expert advice on some 60 very complex submissions on this bill. 
But there the compliments for the moment shall cease because it remains a fact that this was a very imperfect legislative process as we went down to the wire to report back on this bill. It was imperfect because of the breadth and depth of the provisions of this omnibus bill some of which we will mention shortly. The pressure of time on the select committee meant that in my heart of hearts I questioned whether the members were able to fully discharge their duty to this House and to the public as they worked their way through the detail of the bill. As a consequence they became reliant to a high degree on the esteemed professional advice from our independent tax and drafting advisers and from officials. It was not an improper process but it was a process under the pressure of time which I would not want to see repeated any time soon. 
This bill makes important changes to taxation law. It provides for the fundamental reform of one of the most complex areas of tax law the international tax regime. For years now we have had a “grey list” of countries that have a broad range of exemptions from the controlled foreign company rules. That area has been substantially reformed in this bill as we move to a more systematic set of rules which provide for a range of exemptions so that New Zealand is not an uncompetitive domicile for capital that is internationally mobile. We will talk some more about that. 
This bill aligns life insurance taxation rules. The accounting treatment of life insurance profits will follow more closely the life insurers’ savings products. The bill provides for payroll giving which is of course a boon to our charitable sector at a particularly important time of pressure on that sector. We around the House commend that change. It provides for the taxation of emissions units both Kyoto and non-Kyoto units. That distinction remains important although both will be treated the same. It relaxes somewhat the definition of associated persons a matter that the select committee spent considerable time on. Topically today of all days the tax treatment of relocation payments has changed. I see some raised eyebrows on the Government benches when I mention relocation payments; perhaps relocating from Southland to Wellington might come to mind? 
Hon Dr Jonathan Coleman 
: What about Ponsonby to New Lynn? 
Hon DAVID CUNLIFFE 
: That is absolutely fine I say to Mr Coleman. The tax treatment of relocation payments is covered in this bill and so are the rules around petroleum mining. The bill includes changes to the Screen Production Incentive Fund and a number of other changes. 
This bill focuses on several of the reforms to reduce tax costs that were brought in by the previous Labour Government. The bill as we mentioned transcended the change of Government. It was brought to this House by the incoming Government because the content is largely apolitical; it is either technical or taxpayer-friendly. It is designed to update our tax law for a more modern environment. But in some regards where the bill raises certain tax thresholds it is not immune from controversy. Although the particular tax thresholds have been deleted from the bill now as they were rendered redundant by the passage of the Taxation (Business Tax Measures) Bill it is also true that that bill ensured that 3 percent of taxpayers benefited from a third of the tax cuts and that 71 percent of taxpayers missed out because one had to be earning over $40000 to qualify. That is nobody’s definition of either good equity or indeed good stimulus at a time when both are sorely needed in our economy. 
With that nod to another debate I will return to the substance of what is in this bill. Let me say again that in respect of associated persons there was considerable soul-searching by the committee. All members got their heads around the detail of it. I commend officials for showing us various charts of various tax structures which helped us understand what was at issue. The amendments were designed to avoid the unintended consequence that relatives or other formally defined associated persons are penalised for their association with others the contents of whose tax affairs they could not possibly or need not possibly know. The bill avoids those unintended consequences by reducing the stringency of the tripartite test. The select committee wrestled with an equal and opposite risk: that in relaxing those rules it was possible to become too relaxed and thus not catch people who should be caught by an associated persons rule. We all acknowledge that the implementation of this provision will be very important and that the ongoing supervision and monitoring by our officials will be important. We will need in future to get further reports on how the provision is travelling. 
Let me return to the other area that the committee spent the most time on the international tax rules. Those really are key provisions related to controlled foreign companies. They are set out in one place in the legislation to make them more accessible—this of course being a question of degree. The select committee recommended some technical amendments to the accounting-based active business test for controlled foreign companies to reduce the cost of applying the test. It talked about currency conversion rates; royalty payments as active incomes; and allowing an active controlled foreign company to pay royalties interest and rent to an associated controlled foreign company without the associated controlled foreign company having to recognise any passive income. The bill allows a full deduction for interest paid by a controlled foreign company for a loan that is on-lent to associated controlled foreign companies. 
We quite quickly get to layers of complexity that reflect the ongoing game of poacher and gamekeeper. Many private entities of course hire the very very best tax advisers to ensure that their tax is minimised and their so-called tax efficiency is maximised. The Crown’s officials are required to stay one jump ahead. This bill strikes a reasonable balance between the need to remain internationally competitive and the need to provide clear rules that will allow the tax base to be preserved. 
As we mentioned the bill talks about life insurance business general insurance and risk margins. It covers matters such as the tax treatment of petroleum mining and tax pooling rules which further facilitate the efficiency enhancing measure. It covers the GST treatment of transactions relating to emissions units. The bill covers both Kyoto-based and non - Kyoto-based units. Both units for reasons of simplicity and coverage are the subject of the provisions of this bill. But it is important to note that not all emissions units are created equal. We do not want the public in the future to be in any doubt that the select committee had its head round the idea that there are different levels of risk attached to different layers of emissions units. But we did not on balance believe that was such as to require a difference of tax treatment in that regard. 
To sum up this bill is large and hideously complex. It has had a long gestation. The Minister has brought it to the House after having been present when it was first launched. We owe a great deal of debt to our officials and our advisers but we do not want a repeat of the time pressure of the process that the legislative process was put through to have this bill reported back to the House today. 
CRAIG FOSS (National—Tukituki) 
: 
 In speaking on the Taxation (International Taxation Life Insurance and Remedial Matters) Bill I acknowledge the two earlier speakers and particularly the Minister for finally getting this bill to the House for its second reading tonight. That is a relief. There are 824 pages in this bill. I am not quite sure but I think the bill was about 700 pages long when it had its first reading. The Minister in his speech has just announced that a Supplementary Order Paper will be tabled during the Committee stage. So what are another few pages to add to the 824? I reinforce and continue the earlier speakers’ thanks to and acknowledgment of the Minister and of the Labour Party spokesperson on finance the Hon David Cunliffe for their hard work. 
I also thank the Finance and Expenditure Committee of which I am the chair for its hard work. I am only as good as the rest of my team from across the parties on that committee and I fully freely and openly acknowledge their cooperation. This bill was introduced by the previous Government but we did have to stress our own time frames. We paid strong attention to making sure process was followed although we tried to get things through as quickly as possible while also having regard to the complexity of the legislation before us. As previous speakers have noted this bill was carried over from the last Parliament. It was introduced in July 2008 and in between times we had an election and a change of Government. We had a lot of stress and strains late last year and early this year before getting to the point where the select committee opened the submissions process in December I think of last year and extended it to—just from memory—the end of February 2009. There were numerous submitters—60-odd—to the committee and many written submissions. 
I also acknowledge the many officials who have worked on the bill. There were times when the room was overflowing with officials whose areas of expertise were the various areas that this bill covers. 
I would like to read a bit of the commentary on the bill. I know we will touch on this issue during the Committee stage but the commentary reflects very well the feelings of the committee as we did our best to move through this bill and get it back to the House. I do acknowledge that the Minister also acknowledged and generally agreed with this point but if members will excuse me for a moment I do want to put it on the record. The select committee in its report back on the bill notes: “The proposals contained in the bill are significant and complex and cover a wide range of taxation issues. The size of the bill and the depth and breadth of the material it covers have made our consideration more difficult than it might have been otherwise. In trying to meet the report due date for the bill”—which was very tight given the complexity and size of this bill—“we and our committee consideration processes have been put under considerable pressure. We do not consider it desirable to put a number of very distinct and significant proposals into one bill simply because they relate to one area of law. In future we would prefer to see such proposals introduced to the House as separate more manageable bills. If such proposals are not divided sensibly the House might wish to accord significantly more that the usual consideration time to committees charged with considering such bills. Ministers should remain mindful that if departmental advisers are appointed to advise committees on such bills they will need to meet committee deadlines and information needs under pressure.” 
I do take that point and note it and I put it on record in  
Hansard 
. I know that it is stated in the commentary on the bill but it does reflect the sentiments of all committee members. We took that on board. We got the bill back into this House and yes there are some quite significant changes compared with the bill as it arrived at the committee during the last Parliament. But—and I acknowledge that the Minister did tend to agree with this; famous last words—I do reiterate the points the committee made on page 3 of the commentary on the bill. That was a unanimous view from the committee. 
I also note that because of the complexity of the bill when we tried to deal with some of the changes we did something unusual—at least unusual in my memory in this House which is of only the last 4 years. As well as our normal independent adviser for taxation issues we appointed an independent drafting adviser because as members can imagine with 800-odd pages of legislation once we nailed it down to maybe the second or third level we needed to be sure as much as possible that the drafting followed the committee’s intent and was robust. Having said that there is a Supplementary Order Paper coming I understand. But I do acknowledge our independent drafting adviser. We will follow that process with other taxation bills as they arrive at the committee. 
There are significant changes to the bill originally sent to us. As the previous speaker noted the tax changes for small business have all been taken out of this particular bill. They were made part of the Taxation (Business Tax Measures) Bill which was put forward in February of this year and those measures were passed in March 2009. They were given some urgency because of the need for fiscal stimulus and measures to assist New Zealand as we move through the recession. Those measures have all been taken out of this bill as they have been dealt with in other legislation. 
One of the key changes to the bill is simply to the application dates. When this bill first came into the House the application dates were 1 April 2009 mostly. It became patently obvious as the time for submissions was extended that such dates would make life very difficult for the areas businesses and sectors that this bill affected—and of course there were many of them including the Inland Revenue Department as it tried to manage with what would have turned out to be retrospective application dates if they had not been changed or if the committee had not considered it necessary to alter them. I acknowledge that on 24 March we received a letter from the Minister. He made some wise suggestions as to how we might deal with the application dates for various sectors. I acknowledge industry officials who were constrained in their lobbying if you like when bringing to the attention of various MPs Ministers and the press the need to change some of the application dates. I acknowledge their professionalism because there was a fair bit of tension not only in the fiscal sense and revenue sense but also in a technology sense as various areas particularly those in and around the insurance industry had to start to redo their accounting or start to use a different accounting methodology. 
Previous speakers have gone into a bit more detail than I will in this short speech. Although the bill is very complex and very wide-ranging there was constant reference to the need to try to make it as taxpayer-friendly as possible. The question we asked was always whether this bill was better than the existing legislation given the policy direction the Minister was trying to put in place. We will have to see whether this legislation stands the test of time but given the expertise of the officials the depth of their work and the time spent on it I am confident that we may well get there. I certainly hope so. 
The Minister outlined the principles in and around this legislation. I want to quickly touch on them before I sit down. When the select committee was looking at the dates it kept in mind that the key principles of the legislation were firstly providing taxpayers with as much certainty as possible given the processes and time frames of Parliament; secondly providing benefit for taxpayers as soon as possible—this bill is taxpayer-friendly—and thirdly protecting the tax base by providing anti-avoidance measures. This Parliament and this Government particularly must keep a careful watch on the fiscal situation and particularly on the deteriorating revenue situation. 
I have one more point. The “associated persons” part of this bill got a lot of press coverage all of last year and in the lead-up to this one. It was quite interesting that one particular submitter made a very strong submission and tried to turn every MP into a trustee of a trust arguing that therefore we were all associated persons in relation to I think his wife’s—or someone’s wife’s—property. Actually the absurdity of that brought attention to that point which was noted. It was a very strong submission but in fact officials and advisers acknowledged later that that absurd situation already existed and that this particular bill improves on the current law. 
STUART NASH (Labour) 
: 
 It is with pleasure that I rise to speak in support of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. What a mouthful! One needed a dump truck to carry this tome from one’s office to the Finance and Expenditure Committee. In his speech on the bill during the previous Parliament the Hon Lockwood Smith—now our esteemed Speaker—stated: “The select committee is in for a lot of work on this bill.” Dr Smith was not wrong. 
I especially thank all the Inland Revenue Department officials. I acknowledge Robin Oliver and his team here tonight for the dedication and hard work they put into the bill. I also acknowledge our own advisers for their help and for the work they put into the bill. It started out as 700-odd pages and turned into 824-odd pages. The work the officials put in was directly inverse to the amount of sleep I think I missed every Tuesday night and Wednesday morning for many a week. But I assume it probably went both ways considering the amount of work the officials put in and the amount of papers they gave us to read which were of excellent quality. I thank them very much for that. 
Mr Foss is now the chair of the Finance and Expenditure Committee. I will admit and give credit where credit is due that he did a great job of chairing the committee on the bill. But at the first reading he was an Opposition member of the Finance and Expenditure Committee. He stated that he would need to sit down over a couple of bottles of good Hawke’s Bay wine in order to digest the contents of the bill. I have no doubt considering the size of the bill that the honourable member now residing in the Bay is a committed alcoholic or the owner of a winery. 
John Hayes 
: Mr Fairbrother? 
STUART NASH 
: Mr Who? The bill is the largest tax bill ever to be considered apart from a rewrite of tax legislation into plain English which I know seems like a little bit of an oxymoron. One of our officials suggested that it be split into a number of bills—at least two bills—due to its size and complexity. Unfortunately it was too late to do so but I hope that advice will be heeded in the future. 
The bill is a Labour bill. Like everything the Labour Party does it is aspirational transformational forward-looking and bold. It is bringing us into the 21st century. As we all now know Labour is the party of tax reform and certainly of business tax reform. After all we are the only party in a generation to have lowered the corporate tax rate. We did it twice. Do members know that one party voted against it? Which party was it? I think it might have been National that voted against lowering the corporate tax rate. Labour is the party of business tax reform. 
But let us get back to the bill. It is interesting to note that during the bill’s first reading both Mr Tremain from Napier and Mr Foss from Tukituki were very lukewarm on the merits of the bill. In fact they were quite negative towards the bill. Yet Dr Cullen another MP residing in the Bay at the time understood its value for New Zealand as an important player on the international stage. Dr Cullen brought his characteristic vision knowledge and understanding of international tax and the regulatory environment to the legislation in so far as he recognised that if we did not overhaul our international tax legislation and take a global perspective we would be left behind. Neither Messrs Tremain nor Foss understood that fact. They now seem to have come to their senses and are supporting this aspirational Labour bill. 
As a Napier-based MP I am happy to pick up on the promotion of the bill on behalf of Hawke’s Bay Labour from where Dr Cullen left off. I understand its value to the people and businesses of the Bay even if Tremain and Foss did not. Then again Tremain and Foss both voted for personal tax cuts— 
Craig Foss 
: I raise a point of order Mr Speaker. 
Mr DEPUTY SPEAKER 
: You must use the members’ full names when you are referring to them. 
STUART NASH 
: Mr Chris Tremain and Mr Craig Foss voted for personal tax cuts that 75 percent of taxpayers in Hawke’s Bay will not be able to access because they earn under $40000. That 75 percent of taxpayers in Hawke’s Bay will get no benefit from the National Government’s personal tax cuts is just not right. 
Hon David Cunliffe 
: It’s typical though. 
STUART NASH 
: It is typical but it is not right. Dr Michael Cullen however understood the demographics of Hawke’s Bay and of New Zealand and that is why he introduced packages like Working for Families one of the greatest pieces of income distribution legislation this House has ever seen. 
Brendon Burns 
: They kept it. 
STUART NASH 
: Thank goodness the National Government kept it. National members stand up and say “Aren’t we wonderful; we’re keeping Working for Families.” Labour was the party that had the vision to introduce it. 
Dr Cullen also instigated personal tax cuts for those who most need the help in these tough economic times. But do members know what happened? The National Government repealed the tax cuts in favour of tax cuts for those who earn the most. The price of the National Government’s tax cuts was cuts to KiwiSaver and the axing of the research and development tax credit—two schemes designed to address our savings issue and our lack of overall investment in innovation. The National Government cut those two innovative initiatives in order to fund tax cuts for those who need them least. I would say that some of the $700 million put aside for the Fast Forward Fund which has also been cut was also used to fund the tax cuts. It is just not right and it is just not fair. Thanks to Mr Key for nothing. 
John Hayes 
: We remember your grandfather’s Black Budget. Oh yes we do. We know what your grandfather did. 
STUART NASH 
: Absolutely. Do members know what he did? He knew what was right for the people of New Zealand. There is no way that that man who delivered nine Budgets ever did wrong for the people of New Zealand. He took them out of poverty and brought them back to the road of prosperity. At least we now know the National Government’s vision for this wonderful country. The Government is blind and the only dog in sight is barking up the wrong tree. 
When Labour was in Government we had to fix one hell of a mess inherited from the National Government Minister of Finance in 1999. Who was that? It was Bill English. Last century he totally mismanaged the last recession and the Labour Government fixed it up to the point where we could finally start investing in tax cuts and innovation spending. It took 8 years to repair the damage done by the raping and pillaging of our public services. We were in a position to start investing but true to form the Nats have torn it all down. There are cuts to education cuts to health and cuts to superannuation. It is so true to form. 
John Hayes 
: Your granddaddy did it all in his Black Budget. 
STUART NASH 
: Absolutely. Do you know what Sir Walter Nash did? He built the social welfare system and you guys have torn it down. You are a disgrace. 
Mr DEPUTY SPEAKER 
: The member cannot bring me into the debate. I know what the member is trying to say but I remind the member not to bring the Chair into the debate. Thank you. 
STUART NASH 
: A great quote is that the first thing we learn from history is that we do not learn from history. The National Government cut adult and community education. 
I come back to the bill. The bill introduces changes to many areas in current tax law. It reforms our international tax rules by amongst other things introducing tax exemption for foreign active income of controlled foreign companies and exempting most foreign dividends received by New Zealand companies from tax. The bill will “allow New Zealand residents with active businesses in overseas markets to compete on an equal footing with their competitors.” It will “align life insurance taxation rules more closely with the actual profits of term life insurance business and extend portfolio investment entity”—that is PIEs. I noted that the honourable member for the Wairarapa’s eyes suddenly lit up when I started talking about pies but these are portfolio investments and the bill extends the rules on those investments to life insurers’ savings products. 
The bill is wide ranging. It will introduce a voluntary payroll giving scheme. It will amend the Goods and Services Tax Act 1985. It includes remedial amendments to the tax pooling rules in the Income Tax Act 2007. Numerous other changes are proposed but I think everyone gets the message. The bill is visionary and wide reaching. As mentioned many people have put significant developments into the bill. The bill mirrors the type of person Dr Cullen is and the type of politician he was: visionary aspirational intelligent and always working for the people of New Zealand. Dr Cullen always asked what was right for the people of New Zealand and he always knew that what was right for them was right for Labour. That is why he sponsored the bill. Thank you very much. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I stand to speak on the second reading of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. It was introduced by the previous Government and followed through on by the current one. 
There are some good things in this bill. Payroll giving tax exemption for honoraria some of the changes being proposed in the associated persons test in order to try to catch more tax avoidance and some of the changes to life insurance are not bad ideas at all—in fact they are good ideas. Some of the good things that are found in this bill are undermined by the changes to the taxes for controlled foreign companies—that is companies owned by New Zealanders that are operating overseas. I will focus on this issue in my speech tonight. 
These changes mean that New Zealand companies that manufacture goods overseas will not pay New Zealand tax on the income derived from these activities while New Zealand companies that manufacture goods in New Zealand will pay New Zealand tax on that income. Go figure. It means that New Zealand companies that create jobs in New Zealand will pay tax on their income while New Zealand companies that create low-paying jobs in China will not pay tax on those overseas operations. Go figure. It means that New Zealand companies that create demand for goods and services from New Zealand suppliers will pay tax on their income while New Zealand companies operating overseas that create demand for goods and services from overseas suppliers in the countries where those companies are operating will not pay tax on their income derived from the overseas operations. Go figure. It means that New Zealand companies that meet basic human rights and environmental standards in New Zealand will pay tax while New Zealand companies that meet lower human rights and environmental standards—if any at all—while producing goods and services in other countries such as China will not pay New Zealand tax. In fact they will be exempt from New Zealand tax. Go figure. 
This bill creates a tax disadvantage for New Zealand companies that remain in New Zealand. Conversely it creates a tax advantage for New Zealand companies that relocate overseas—that is it encourages New Zealand companies to relocate overseas. So New Zealand firms that manufacture in New Zealand will find themselves competing with foreign-based manufacturers that have a significant tax advantage over them. Surprise surprise. As has been said in the  
Independent 
 and in many other places this bill will drive production overseas and will help to drive New Zealand - based producers of goods and services out of business. 
Why would any New Zealand Government make it harder to manufacture in New Zealand? It is already hard enough. We probably need to reflect on some of the ideology that has been embraced by the mainstream Labour and National parties since the 1980s and 1990s. Part of it relates to the comparative advantage ideology which they have embraced for quite some time. It is part of a broader neo-liberal globalisation ideology that was trendy for a while but is not so trendy since the global financial collapse. This ideology says that it does not matter whether we manufacture in New Zealand. It just does not matter. Manufacturing is so last century. We do not need to manufacture; we will simply import all of our manufactures everything we need and we will export goods and services to pay for them. The basic idea behind the comparative advantage ideology taken to its illogical extreme—something David Ricardo would never have imagined any one would do with his theory—is that it does not matter whether we manufacture in New Zealand. This was also very fashionable for a while because manufacturing was seen as kind of dirty. It was the kind of dirty thing that people who get their hands dirty do. It was not very trendy. We have had a systematic policy from Labour and National over 25 years now to try to get rid of manufacturing—that rather dirty old-fashioned industry. Systematically throughout the 1980s and 1990s and into this century we have seen policies designed to grind the manufacturing sector into the ground. This current bill contributes to that even further. 
The small glitch in the comparative advantage theory taken to an illogical extreme is that if domestic manufacturing stops then it needs to be replaced with the export of a huge array of goods and services because manufactured goods are a very large part of consumption. A lot of other stuff is needed to pay for all the manufactures we now import. As we change the tax incentives with this bill and drive more of our manufacturing overseas we will have to export more and more. Of course in spite of the theory the outlook has not been quite so rosy in terms of our trade deficit and our current account deficits. We have replaced the manufacturing base that we have systematically destroyed with three other sources of income: dairy tourism and debt. Instead of making things through manufacturing we now make milk and export milk solids—lots of it. It is not necessarily a bad thing except that there are ecological limits to how much dairy can be exported. It might be great that we have a comparative advantage in making milk and milk products but there are real ecological limits to replacing the entire manufacturing sector with the export of milk products so that we can buy all the manufactures we no longer make. One of the downsides is that most of our lowland rivers are now so polluted that our children cannot swim in them. 
Instead of making things and manufacturing things we now invite tourists to come and look at so-called “100% Pure New Zealand”. Unfortunately although the tourism sector is a significant contributor it is a low-wage sector compared with manufacturing. This bill adds more incentives to undermine our manufacturing sector and to replace it with tourism. Tourism is a very important part of our export sector but it is a low-wage sector. 
The third and perhaps most important thing that we have done to replace the manufacturing sector is to borrow. We have the second-highest net debt after Iceland as a proportion of GDP. We are now approaching about 100 percent net debt as a proportion of GDP. Manufacturing produces jobs yet we have destroyed manufacturing and have low unemployment. Why is that? Because we have borrowed and consumed our way to employment. There is and was a debt-fuelled consumption-led boom in the non-tradable sector. Bill English is absolutely right on that point. We borrowed money to buy goods and services from other countries—goods and services that we had systematically stopped making in New Zealand because of a bizarre neo-liberal ideology that said manufacturing is bad and we do not want it here. These days we borrow money in order to pay the interest on the money we have already borrowed. But I will get on to that. 
As a result of this long-term position of destroying the productive sector to which this bill contributes by making it harder for manufacturers based in New Zealand our net international investment position has rapidly deteriorated. Our overseas assets minus our liabilities currently stand at about $176 billion or $177 billion or about 98 percent of GDP. Just 12 months ago—that is as of 31 March 2008—we owed only about $154 billion or about 86.4 percent of GDP. So it is rapidly escalating. This is in part the result of 5 years of deficits in goods and services. We are looking at returning to a balance in goods and services but after 5 years of deficits in goods and services we are adding to our overseas debt repeatedly. 
The interest paid on our overseas debt in the year ended March 2009 was about $5 billion. We needed to come up with about $5 billion just to pay the interest on the debt excluding the return that overseas investors get on their equity. We needed to come up with $5 billion just to pay the interest on the debt. Of course on top of that we needed more. So we borrowed to pay for all the goods and services we imported and we also borrowed to pay the interest on the debt we already owe. Of course because of our destruction of the productive sector—something this bill further contributes to—we are borrowing in order to pay the interest on previous borrowing. This is not a sustainable economic strategy. The world will not continue to fund our lifestyle with borrowings forever. The sooner we realise that we cannot destroy the manufacturing sector and the productive sector and that the country needs to produce things not to just borrow money to pay the interest on the money we have already borrowed the sooner we will deal with this reality. 
When this bill comes before us yet another bill that will make things harder for New Zealand manufacturers I say that it is not a very clever strategy. It will make our trade deficit worse. It will exacerbate the trade problems we already have. We have had 25 years of the New Zealand experiment—this crazy new-right experiment—but it has not worked. Why would we add another nail in the coffin of New Zealand manufacturing? It is not clever it is ideological and the Green Party will not vote for it. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 I am really pleased as a member of the Finance and Expenditure Committee to speak to this bill. We have come to know this bill in quite some detail as we came to grips with at last count 824 pages of amendments and adjustments. I am delighted that it has left the committee and is before the House. Like previous speakers I add my thanks to the officials and to the independent specialists for the help they gave to us and for their patience shown towards all of the amendments they had to make and explanations they had to give throughout. I have to be honest and say that the thorough and detailed analysis of taxation legislation would probably not register as the most exciting of challenges that have come before me as a member of Parliament but there is one issue that has really stood out in the process which I want to focus on in this second reading. 
The focus of my interest is the payroll giving scheme as I believe it reflects what we in the Maori Party attribute great significance to—the concept of manaakitanga. Manaakitanga plays an important role in Maori society. Within its purest sense it refers to the relationships between people. In essence the expression of manaakitanga is seen in the demonstration of generosity and hospitality towards another. Over recent weeks some concern has been raised over the concept of giving to charities and community organisations. The involvement of a professional telemarketing company cast a shadow of doubt about the direct transfer of donations through to the charities concerned. The Charities Commission and the Minister for the Community and Voluntary Sector both came forward and encouraged donors to look critically at the actual percentage of funding that goes through to the charity. My colleague the Hon Tariana Turia was however only too clear in her response to the situation. In essence her words are summed up in the proverb inherited from Ngati Raukawa : “He iti pou kapua ka ngaro ka huna tini whetu te rangi.” Though a cloud may be small it is sufficient to obscure the many stars at night. It is important that the recent cloud of doubt cast on a couple of charities does not obscure the vital issue of encouraging the goodwill of New Zealanders to invest in our communities through gifts of money time and in kind. In light of these recent events and of course the impacts of the economic downturn the fact that this bill is back before the House is extremely timely. This bill contains two initiatives to support and grow giving in Aotearoa—the giving of time and the giving of money. These gifts of the heart contribute to improved social cohesion and stronger more resilient communities. 
The other aspect of the timeliness of this legislation that I want to draw on is the fact that this bill follows the release of a groundbreaking report from Statistics New Zealand called  
Measuring New Zealand’s Progress Using a Sustainable Development Approach 
. We are very interested in this publication as it resonated with the key policy direction that we in the Maori Party have promoted—that is the concept of a genuine progress index. In essence it means that in order to achieve any assessment of our society as a whole we need to consider environmental economic social and cultural dimensions as a true measure of progress. In this report therefore the concept of voluntary contributions by people to society is seen as a measure of social connection and governance. Seventy-five percent of New Zealanders support the community and voluntary sector in some way be it through volunteering donations of money and goods or other types of support. The Maori Party believes that the Government needs to support and foster this kind of generosity across every sphere of influence that it can. This bill does this through referring to voluntary contributions in the focus on donations. 
The two new initiatives contained in the bill build on the earlier work to remove tax benefit thresholds for donations. Pre-tax payroll giving will make it easier to give money and to use the existing tax incentive mechanisms. I think this is an important development in the legislation that warrants our support. Pre-tax payroll giving offers a simple mechanism for individuals to give through work-based payroll deductions while simultaneously receiving the tax benefit for their gifts. It eliminates all the extra paperwork leaving the emphasis on the giving. The payroll giving scheme will be voluntary for employers to set up and offer to their staff. We would however expect that businesses that already practise some form of corporate social responsibility will be the ones that will take advantage of this opportunity—the first to lead the rush. It is heartening to see more and more businesses realising that what is good for their communities is also good for their employees and their own companies. Pre-tax payroll giving will demonstrate how Government employers and employees can all work together to build strong resilient communities. 
These are really important issues that the Maori Party is pleased to support. For tangata whenua as for Pasifika peoples and many ethnic groups gifts of time money and even in kind form part of our cultural obligations and are essential for the maintenance of our cultures and languages. We know too that across Government the concept of promoting generosity is one that is gaining more and more credibility. The Hon Tariana Turia as Minister for the Community and Voluntary Sector has been proudly supporting the Promoting Generosity project that explores ways to encourage individuals and businesses to participate in their communities and local community organisations by giving time money or in-kind donations. For many of us the traditions and values of looking after others have been part and parcel of the way we were brought up. Yet sadly in recent years we know that many community and voluntary organisations suggest that a lack of resources and volunteers is dramatically impacting on their ability to achieve their goals. The Promoting Generosity project is being advanced by Philanthropy New Zealand Volunteering New Zealand and the Office of the Community and Voluntary Sector to put the spark back into giving. This bill then is another step towards making that happen. 
In the select committee report we noted that the Inland Revenue Department website did not appear to have the information readily available or easily accessible to the public. We therefore made the recommendation to encourage the department to complete the work as soon as possible and to communicate the changes to employers and employees. We also encouraged the department to include the information in the  
Tax Information Bulletin 
 that will accompany the bill. The bill also removes the confusion around the tax law for volunteer expense reimbursement and honoraria. It is about time! Back in 2001 the International Year of Volunteers our communities first identified this as a problem. It has taken 8 years for change to be brought about. I have concentrated on this one aspect in some detail because I believe it is an important development that the Maori Party fully endorses. We therefore declare our support for this bill. 
JOHN BOSCAWEN (ACT) 
: 
 It is also my pleasure to speak this evening on the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. Like the speakers before me I would like first of all to acknowledge my colleagues on the Finance and Expenditure Committee the chairmanship of Craig Foss and the officials. Earlier this evening Robin Oliver was present. Robin and his colleagues marched many times into the select committee room during the months I was sitting on the committee—February March April May and June—along with our own advisers who were recruited directly to the committee. 
I also acknowledge the many submitters. Reference has been made this evening to the fact that there were 60 submitters on this bill. I acknowledge the philanthropic work that so many of these submitters do. I can recall sitting in on the submission of Minter Ellison which was 150 pages long and was presented by David Patterson. It was followed soon after by the submission of Bell Gully which was also 150-odd pages long. I was impressed with the professionalism that went into preparing those submissions. 
As the Minister of Revenue said this bill is a very large and technically complicated bill. As speakers have said the bill is over 800 pages long and it makes many amendments to various tax Acts. It makes extensive amendments to the Income Tax Act 2004 the Goods and Services Tax Act 1985 and the KiwiSaver Act 2006. 
In listening to this debate this evening the speech that most attracted my attention was the speech by Mr Nash. He talked about the reforming nature of the previous Labour Government. He talked about the Labour Government being a party of reform a party of tax reform. Mr Nash told us that the Labour Government had been aspirational transformational and bold. I find that very interesting. I would like to remind Mr Nash of recent Labour history and to reflect on the Labour Government of 1984-90. At that time there was a Labour Government that was indeed aspirational transformational and bold. It is quite interesting that one of the tax Acts that we are amending with this document—this tome—is the Goods and Services Tax Act. It would be interesting to explain to Mr Nash that when GST was introduced to New Zealand we halved the top rate of tax. In this country we used to have—in my lifetime 25-odd years ago—a punitive top tax rate of 66c. 
With the introduction of GST—Mr Deputy Speaker I can see you nodding—the tax rate was halved from 66c to 33c. At that time my father was the principal of Otahuhu College. I did his tax returns for him and two-thirds of the marginal dollars he earned as a school principal was paid to the Government—two-thirds! With the introduction of GST we halved that top rate of tax. We said to people like my father and hundreds of thousands of other New Zealanders that if they worked hard sought promotion and contributed to this country they would not be penalised. What happened when we dropped the top rate of tax from 66c to 33c and made other consequential adjustments to the tax rates? Did our tax take halve? No it did not; it stayed the same. This country earned as much from tax and income tax when the top rate was 33c as it did when it was 66c. Why was that? Because people who were paying 66c were not motivated to work. They were motivated to hide their income to suppress their income; they paid no tax if they were able to hide it. By applying a top tax rate of 33c the bold transformational aspirational Labour Government of the 1980s provided an incentive for people to work to earn income and not to cheat on their taxes. 
What did the previous Labour Government do? What did it do when it got into power? What did the aspirational transformational fifth Labour Government which Mr Nash referred to do? It increased the marginal rate of tax. It increased the top rate of 33c to 39c. It said to people that they would be punished. It was the “envy tax”. I find it very interesting that Mr Nash talked about the fact that when National came to power at the end of last year one of the first things it did was reduce that top rate of tax. I should add that it was reduced from 39c to 38c not to 33c or 34c—from 39c to a miserable 38c. 
Mr Nash talked about only the top third of taxpayers benefiting from those tax cuts. I think he talked about 70 percent of New Zealanders being on an income of below $40000 and he criticised the fact that a large proportion of people were earning less than $40000. Well I say that Mr Nash needs to look no further than his own party. Why do I say that? When I see Mr Nash next I intend to give him a copy of the book  
No Second Class Citizens  
which has been recently published by my colleague Sir Roger Douglas. If Mr Nash turns to page 70 he will see average Government spending per person and how those statistics have changed over the last 50 years. 
In 1984 when the fourth Labour Government came to power average Government spending per individual New Zealander was $12000. In 1996 average Government spending per person was $12000. It had not changed in those years between 1984 and 1996. Government expenditure per person held firm at $12000. Twelve years later—after 3 years of a Bolger administration and 9 years of a Dr Michael Cullen administration—Government spending has gone from $12000 per person to $18000 which is a 50 percent increase in real terms. That is $6000 per person and $15000 per household. The reason that 70 percent of New Zealanders are on incomes of less than $40000— 
Hon Darren Hughes 
: What book is that in? 
JOHN BOSCAWEN 
: I will give that member a copy. We have a second copy. We have one for Mr Nash and I am happy to give him one too. 
The reason that 70 percent of our population is earning less than $40000 is the massive increase in Government expenditure per person from $12000 to $18000—$15000 for an average household—in the space of 13 years. 
I come to Mr Norman’s comments. Mr Norman criticised this bill. He said we are debasing our own manufacturing industry and we are encouraging New Zealand manufacturers to move overseas. He said that we are incentivising New Zealand companies to set up and do business in China rather than manufacture in New Zealand. He talked about ideology. That is interesting because Mr Norman and the Green Party are proposing that we should set a Kyoto target of a 40 percent reduction in emissions from the 1990 level—a 40 percent reduction from the 1990 level—by 2020. That would be something like a two-thirds reduction from the current level. It has been calculated that that would add $3000 per household per annum to living costs. If anything would drive New Zealand manufacturers overseas to China that would be it. Do we hear the Chinese manufacturers offering to tax their industry? We do not. The Green Party and sadly a lot of other political parties in this Parliament would tax New Zealanders at a time when the scientific evidence shows that the world has actually cooled over the last 9 years. 
I say to Mr Nash and his aspirational transformational and bold Labour Party that he should go back to the roots of the 1984 Labour Government and promote tax cuts. He proudly talked about the two reductions in the corporate tax rate during the course of the previous Labour Government. It is a pity he did not refer to the fact that the top marginal tax rate for individuals went from 33c to 39c. I have to say that the response so far from National is a rather pathetic tax reduction of 1c. 
If we want to provide incentives for New Zealanders to work to get ahead and to be aspirational we need significant reform of our tax structure and of our tax rates. Thank you Mr Deputy Speaker. 
AMY ADAMS (National—Selwyn) 
: 
 It is my pleasure tonight to take a call on the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. It is not a small piece of work by anyone’s suggestion. One of the reasons that I am so pleased to take a call on the second reading of the bill is that as a member of the Finance and Expenditure Committee it means that it has finished its progress through the committee. Some of us were starting to wonder whether that would ever happen. 
The bill is an important and very complex piece of work. There is a reason that it is 800-odd pages now and I understand that it will grow a little more before it finishes its progress through the House with the Minister of Revenue having signalled a number of Supplementary Order Papers. The issues contained in the bill—and I thought I would depart from the last speaker and spend some time talking about the bill—touch on a broad number of sector areas and some quite complex issues. For the committee it was not a case of our simply getting our heads round one area of law and dealing with the submissions on it; we had to run through a number of very complex and very different taxation issues within the bill. 
 It has been mentioned already this evening but I too want to add my thanks to Craig Foss for his chairmanship of the select committee; to the other committee members; to our specialist advisers Therese Turner and David McLay who did a fantastic job and certainly made the process much easier for me and the other members of the committee; and to our advisers from the Inland Revenue Department who came in week after week—we became quite used to seeing them. As Mr Foss has already referred to given the breadth of the bill often a group the size of a rugby team would arrive. They were always very willing to respond to concerns that the committee had. For myself I can say that I certainly challenged them once or twice on a few points and I was very impressed with their willingness to work with the committee and our advisers to make sure we got the work as good as we could. Similarly the submitters put a lot of time and effort into talking to us on these issues and I think that only added to the quality of the bill. 
The bill although it deals with a number of important and quite separate issues works very hard to contribute to the overall goals of taxation law of certainty clarity consistency and fairness. We worked very hard to ensure that those overriding principles were met. On a number of occasions we raised with officials our concern at the lack of certainty about how certain phrases and new tests would be applied and I think the officials reached a fairly good compromise. The bill is now structured in terms of what information is immediately available and what can be made available through tax information bulletins and the like as processes develop. Obviously with the passage of time that will become even more certain. 
It has already been mentioned tonight that the key policy driver in the bill—given the name it is no surprise—is the reform of international tax law. Most of us would acknowledge that it has been long overdue. The principal component of the reform—to put it in my simple terms—is that we are getting rid of the old system of eight “grey-list” countries. If companies operated in those countries we basically said they were the same as us so we will treat them as tax-neutral. We have got rid of that system which was a blunt instrument. We have reduced the “grey list” down to one country Australia which is our nearest neighbour and our closest trading partner and has special status. What we look at now rather than the structure of the company is an active/passive test. We look at the business income of any controlled foreign company and we look at the nature of that income. If it is active income from genuine business operations in a domestic jurisdiction then it is exempt from New Zealand tax law. If it is passive—royalties dividends and the like—then it will be taxed here in the normal way. The exception is that there is a 5 percent threshold. If a controlled foreign company’s income is predominantly active but a small portion 5 percent or less is inactive then that inactive income can be chucked in the bucket and treated as exempt income. 
To follow on from the discussion that Mr Boscawen had in respect of Dr Norman’s comments I say quite the opposite from what Dr Norman said. Instead of the bill driving business offshore I think the officials have worked very hard to ensure that the framing of these laws will encourage New Zealand parent companies to stay onshore—that they will not be driven offshore because our tax laws give them a competitive disadvantage. I would argue that we worked to ensure that the bill would be conducive to business investment and conducive to our retaining companies in New Zealand. Certainly that was one of the touchstone principles we came back to in our consideration of the bill. The other was obviously to address maintenance of the revenue base because in these difficult times of falling revenue we had to be conscious of the bill’s impact on the revenue base. The officials and the Minister worked very hard on that. 
The other point of policy detail that I will talk about—because it is one of particular interest to me—is the associated persons tests within the bill. This is a complex area of law at any time and it is applied differently in different circumstances depending on the type of test that is being applied. There is no one-size-fits-all associated persons test within the Income Tax Act. In working through this issue with the help of particularly Therese Turner we were able to identify that although the advisers’ policy in the first draft of the bill was sound there were some areas of what we perceived to be unintended overreach. 
One example we had was of a son whose father had been living away from the family for some time. When that son grew up and had a company of his own he found that for tax purposes he was associated with his absent father’s new wife’s company which he had no knowledge of no awareness of and nothing to do with. This grown son found himself removed from for example the ability to claim the low-turnover trader provisions because the association with the wife’s company lumped him in with all sorts of companies. As soon as that was pointed out to us it became apparent to all that that certainly was not intended by those provisions. We had to work through that and as a result we made some very good changes to the associated persons rules. In particular we limited natural person associations to people whom one would reasonably be expected to know the existence of to ensure that children are not associated with their parents’ companies and the like. The rules of association between natural persons have been brought down considerably. 
We also spent quite a number of meetings looking at the tripartite test of association. This effectively sets up a provision whereby if one person is associated with another and a third person is also associated with that other then the first and the third persons are associated with each other. It is quite complex there are rules around it and I do not want to traverse all of those but once again although we understood the principle and the situations that the provision was intended to catch we had concerns. We spent a lot of time testing the provisions of that test to make sure that there were not situations where unintended consequences would arise. 
Similarly and Mr Foss referred to it in his speech a compelling submission pointed out that beneficiaries of a trust could have no idea that they had been made beneficiaries of that trust yet through no fault of their own they could be tainted by association with it. Not only had they no involvement with the trust they had absolutely no knowledge of it. In fact that issue had nothing to do with this bill; that was the case under existing tax law but this bill gave us the opportunity to address it. The work we have done here has actually improved the wider associated persons test beyond the scope of this bill and I am certainly very proud of the work we have done in that regard. 
I will also pick up on the point that Rahui Katene made in some depth about voluntary payroll giving. Ms Katene detailed it very well and I do not want to repeat what she said. But even in respect of those provisions we spent quite some time exploring the consequences. What if the employer company has gone into liquidation and those funds are still in trust—who owns them? What if the company has not passed them on? What if it has passed them on to the wrong entity? The committee tested those parameters as far as we were able given the limited time—which has already been talked about—to ensure that the legislation would hit the taxpayers in the best form we could get it. 
 I shall run through some of the other areas that the bill deals with. Life insurance has been significantly remodelled. That was overdue. The life insurance sector has changed significantly and this bill now brings it much more in line with the current realities of life insurance. Tax pooling which is something that I had not been familiar with before now is addressed in the bill. There are provisions relating to KiwiSaver on death GST on loyalty points and petroleum mining. The list is long and extensive. 
The point is that this bill tidies up a number of important areas of tax law that need to be tidied up. I believe that it is conducive to business in New Zealand and I believe that it is conducive to investment in New Zealand. In these difficult times New Zealand needs nothing more than that. I commend the bill to the House. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am pleased to rise in support of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill this evening as a member of the Finance and Expenditure Committee. I note the comments in opening from the Minister of Revenue Mr Dunne about the need in the future to keep tax bills more manageable and I endorse and applaud his comments on that. I also note in response to the comments of Mr Boscawen who has handed me a copy of Sir Roger’s latest tome— 
John Boscawen 
: A bloody good book! 
BRENDON BURNS 
: It is wonderful. It is 112 pages and I compare it with the tax bill we are considering: 824 pages to deal with some tax issues. Would it not be wonderful if life was so simple that we could solve it all in 112 pages? But here is the reality: the mother of all tax bills. That is what life is about. It is complex it is difficult it is hard and we have to have legislation like this to make sure that life can be lived in the 21st century. I am afraid that it is not possible for a 112-page book to summarise everything in life. Also on that point his answer is cutting tax to nothing and deregulating everything. Let us look at the recession we are in and at what has happened in the world. Greedy people who did not want to pay a cent in tax mismanaged the world’s economy and we are all paying the price for that today. 
I acknowledge the role of the chair of the Finance and Expenditure Committee Craig Foss in steering this mother of all tax bills through and colleagues on the Finance and Expenditure Committee. I also acknowledge the work of the Inland Revenue Department—Robin Oliver and others—and also our independent adviser Therese Turner. They gave us good advice. It was a big difficult complex piece of legislation and it is very pleasing to see it back in Parliament beyond the province of the Finance and Expenditure Committee. 
This bill began its life with its first reading in Parliament a year ago this week. Labour supported the bill. It was a Labour bill at the start. We supported it through the select committee process and back to Parliament tonight. The focus of the bill was on reform and on reducing tax costs for businesses. In fact it represented the first stage of the Labour Government’s review of our international tax rules. We were greatly advised throughout the process by consultation with business and its advisers. Most of the reforms were signalled in a series of consultative papers. That was a good process to follow. A lot of further detailed work was carried out. 
The bill is also a reminder to us of the Government’s failure in cutting the research and development tax credit and rolling back KiwiSaver incentives. The connection is that in the last few weeks the Minister of Finance has announced some changes to foreign investment law. Unfortunately those changes did not come before Parliament for scrutiny but it is his right to do that. I am no xenophobe and I do understand what foreign investment brings to an economy but I also have fears about what it can do to an economy. We as a nation at the moment have a current account deficit of $16 billion. That keeps us poor as a nation. Unfortunately about $13 billion of that current account deficit is due to the repatriation of foreign profits and other similar money flows. Our high dependence on foreign investment already is seeing our dollar stay high at about US65c and it is seeing our interest rates stay high by international comparison. What are we as New Zealanders to gain if we make it even easier for foreign investment to flow in to buy New Zealand assets and land? 
We should have kept the KiwiSaver scheme which was a start towards generating more savings. We are a nation of poor savers. We needed to keep that scheme in place but instead it went to fund the tax cuts that took effect on 1 April but 70 percent of New Zealanders were excluded from them. Seventy percent of New Zealanders failed to get a single dollar from those tax cuts because they were on low and moderate incomes and $1 in $3 of those tax cuts went to the super-wealthy. That is inappropriate. It is an appalling consequence of the National Government’s decision to abolish the research and development tax credit which would have assisted us in growing our economy and would have funded the balance of the tax cuts resulting from the abolition of the 2 percent employer contribution to the KiwiSaver scheme. 
I return to the bill before us now. The select committee does indeed consider it vital that tax law be clear and accessible for taxpayers. One has to ask the question when we are still left with an 824-page bill how clear and transparent our tax laws will actually be but that is the complexity of international tax requirements. That is the complexity of matters relating to life insurance and of other matters that this bill tackles. 
I wanted to comment most particularly on a couple of aspects of the bill in relation to the treatment of reimbursements and honoraria paid to volunteers; I am very pleased to see that those came through. I am especially pleased to see the introduction through this bill of a voluntary payroll giving system. I think that is imperative especially in these times. Charities more than most organisations are feeling the pinch of the recession. Enabling people to give from their wages from their salaries on a weekly fortnightly or monthly basis makes eminent sense. The bill will improve the cash flow of charities it will make it easier for people to give because they will not feel the pinch so much and the tax concession for that is available right away rather than people having to wait till they file a return at the end of the year. I think it is a commendable part of this bill. 
I also want to comment that this bill addresses changes in many areas right across the current tax law. It reforms our international tax rules by amongst other things introducing a tax exemption for foreign active income with controlled foreign companies and exempting most foreign dividends received by New Zealand companies from tax. This will allow New Zealand residents with active businesses in overseas markets to compete on an equal footing with their competitors. These are welcome moves. 
The bill also aligns life insurance taxation rules more closely with the actual profits of term life insurance business. It extends portfolio investment entity rules to life insurers’ savings products. It includes changes to the income tax rules for petroleum mining such as ring-fencing deductions for petroleum mining undertaken in a foreign country through a branch. It removes the distinction between onshore and offshore development and introduces a reserved depletion method for deductions. 
The bill is wide ranging. It will amend the Goods and Services Tax Act 1985 which has been referred to previously so that certain loyalty-programme operators can defer the imposition of GST until loyalty points are actually redeemed. The amendments to the Goods and Services Tax Act will allow certain exported foreign second-hand goods most notably metals which were not to be re-imported into New Zealand to be zero-rated if the exporter had claimed a second-hand goods deduction. The bill includes a whole host of remedial amendments. There are numerous changes proposed throughout it. I commend it to the House. 
DAVID BENNETT (National—Hamilton East) 
: 
 I will take just a short call on the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. Most of the points of this bill have been canvassed in depth by other speakers. There were some big issues that we had to face in regard to the active versus passive business tests and the definitions of associated persons and those issues took a lot of time in the meetings of the Finance and Expenditure Committee. 
I thank those officials who gave very detailed advice and worked through the examples with us. I also thank members of the committee from both sides who worked constructively to get a solution in regard to many of those issues. The bill has been a long time coming and taxation in this area is a work in progress. It needed to happen and this is another point in continuing the process that we are going through at the moment in regard to taxation reform. 
RAYMOND HUO (Labour) 
: 
 Samuel Johnson once said that great works are performed not by strength but by perseverance. My colleagues from the Finance and Expenditure Committee will agree with me that the Taxation (International Taxation Life Insurance and Remedial Matters) Bill which is undoubtedly a great work is being performed with both strength and perseverance. 
The bill was originally introduced on 2 July 2008 by the Labour-led Government. The proposals contained in the bill are significant and complex and they cover a wide range of taxation issues. Although the bill mainly addresses business tax issues it does cover a wider spectrum than that. As stated in the Finance and Expenditure Committee’s report the size of the bill and the depth and breadth of the material it covers have made our consideration of it more difficult than it might have been otherwise. I agree with what my colleagues said in our report. In future we would prefer to see such proposals introduced to the House as separate more manageable bills. I wish to join my colleagues in thanking the officials and independent specialist advisers for the significant role they played in our consideration of the bill. 
The bill provides for the reform of the international tax rules amongst other measures introducing a tax exemption for the foreign active income of controlled foreign companies and exempting most foreign dividends received by New Zealand companies from tax. This reform aims to allow New Zealand residents with active business in overseas markets to compete on an equal footing with their competitors. In other words to quote the previous Minister of Finance the Hon Dr Michael Cullen and the Minister of Revenue the Hon Peter Dunne when introducing this bill in July 2008 international tax rules for New Zealand - controlled foreign companies are being relaxed so that the active offshore income of such companies is exempt from New Zealand tax. The international tax reforms aim to make New Zealand companies more competitive by taxing them under a regime similar to that of overseas jurisdictions. 
The bill would align life insurance taxation rules more closely with the actual profits of term life insurance business and extend portfolio investment entity rules to life insurance savings products. It includes changes to the income tax rules for petroleum mining such as ring-fencing deductions for petroleum mining undertaken in a foreign country through a branch removing the distinction between onshore and offshore development. It also introduces a voluntary payroll giving scheme which would allow employees to make regular payroll donations from their pay and enjoy the relevant tax benefit immediately rather than at the end of the tax year. 
Other main issues and key amendments introduced in the bill include measures relating to application dates the definitions of associated persons general insurance and risk margins tax pooling rules and the GST treatment of transactions relating to emissions units etc. 
What also interests me is the underlying philosophy behind the bill which replaces the current legislation that was put in place in 1991-92. To some extent the important part of the active-passive distinction to quote the Hon Dr Michael Cullen is whether this country will have an outward-looking taxation system or an inward-looking one. Therefore the real issue is firstly whether we want New Zealand companies to internationalise or whether we believe we can make our living just by taking in each other’s washing for the foreseeable future. Secondly if companies succeed in either having some manufacturing capacity or investment offshore or having very substantial parts of their business dependent upon exporting so that the majority of their income comes from offshore activity then our current taxation system with its lack of an active exemption encourages those companies to move all their capacity offshore. 
What follows is a natural choice for us to make: a choice between an inward-looking mentality where we play a defensive role trying to keep what little we have and an outward-looking mentality where we would try to expand and develop our international influence connections and markets and retain the highest-quality and highest-value parts of our production and service within New Zealand. If we opt for the inward-looking “little New Zealand” policy we will eventually defeat ourselves. If we opt for an outward-looking “greater New Zealand” approach which as far as this bill is concerned requires an active exemption then there is a real prospect for us to build up an expanding economy and avoid the economy declining. 
On this particular point it is worth reiterating that as we are a small country with a small economy if we are to develop the outward-looking approach and expand our New Zealand economy we will need to be more diligent and smarter. Therefore innovations by way of research and development are one of the key factors. International evidence shows that well-designed research and development tax credits can have a positive impact on productivity growth. It is a concern that the main disparity between New Zealand and other OECD countries is in the low research and development spending from businesses which is the very area that was targeted by the research and development tax credits. To worsen the situation it is regrettable to say as my colleague Brendon Burns has just said that the research and development tax credits have been scrapped by the National-led Government. 
When this bill was introduced by sheer coincidence it came into the House for its first reading on the same day as the Committee stage of the New Zealand-China Free Trade Agreement Bill. As acknowledged by the then Minister of Trade the Hon Phil Goff who signed the historic free-trade agreement with China the international market place today is significantly different from that in the past and presents us with new challenges. Governments and businesses have to operate in a more complex competitive and uncertain global environment. The two bills in fact have a great deal of interrelationship in terms of their underlying philosophy of having an outward-looking growing New Zealand economy as opposed to an inward-looking gradually retreating and declining New Zealand. In similar vein countries are recognising that in a world where commercial trade and financial flows are globalised they cannot afford to become isolated. That is evidenced by the trend towards more bilateral and regional free-trade agreements. Countries in our region are becoming increasingly connected by a complex web of trading arrangements. 
This bill when first introduced represented the first stage of the previous Labour Government’s review of our international tax rules and it has been greatly influenced by extensive consultation with businesses and professionals. I commend the bill to the House. Thank you. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 I speak to the Taxation (International Taxation Life Insurance and Remedial Matters) Bill which is a rather long and complex bill. I also acknowledge the work that our chairperson Craig Foss did in chairing this bill through the Finance and Expenditure Committee. He did a great job and the parties came together well in putting together the various amendments to the original bill. A very good job was done of working through some very complex issues along the way. 
I also acknowledge our friends from the Inland Revenue Department our independent advisers and tax specialists and the various people who came together to provide advice on the bill. I think they did a great job and they did so under very trying circumstances and often under very strict time restrictions between the weeks that we met. So I salute those people and thank them for their advice. 
In summary I stand to support this bill because it will provide for the improvement of the tax legislation in this country. Thank you very much Mr Deputy Speaker. 
A party vote was called for on the question  
That the Taxation (International Taxation Life Insurance and Remedial Matters) Bill be now read a second time. 
Ayes 112 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 4; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Bill read a second time. 
The House adjourned at 10 p.m.