Volume 626 Week 92 - Tuesday 14 June 2005(continued on Wednesday 15 June 2005) 
Volume 626 Week 92 - Tuesday 14 June 2005(continued on Wednesday 15 June 2005) 
[Volume:626;Page:21327] 
Tuesday 14 June 2005 
( 
continued on Wednesday 15 June 2005 
) 
Debate on Crown Entities Public Organisations  and State Enterprises 
In Committee 
Debate resumed. 
Civil Aviation Authority ( 
continued 
)  
Land Transport Safety Authority of New Zealand ( 
continued 
)  
Maritime Safety Authority of New Zealand ( 
continued 
)  
Transfund New Zealand ( 
continued 
)  
Transit New Zealand ( 
continued 
)  
Transport Accident Investigation Commission ( 
continued 
)  
Dr WAYNE MAPP (National—North Shore) 
: 
Last night I was referring to a document issued by Transit New Zealand in August 2004 to every household in the Auckland region. It talked about investing half a billion dollars in the Auckland highways with more to come. There were 17 projects listed with start dates given. The only problem is that the document has proven to be false. All the projects planned to start in 2004 and we must bear in mind that that was only 12 weeks after the issue of that document did not happen. Of the projects that were to start in 2005 the majority did not happen. The Government wonders why Aucklanders—the people of North Shore the Employers and Manufacturers Association and the chamber of commerce—are completely disillusioned fed up and disgusted with this Government. It is that kind of propaganda that has done it. I say this to the Government: it has lost the trust of New Zealanders and it has lost the trust of New Zealanders because it has misled them. I seek leave to table a copy of the document from Transit New Zealand. 
Document not tabled. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 To quote the Leader of the Opposition all I can say after listening to that speech last night from the member and again this morning is “Baloney!” I heard Dr Mapp last night claim that the National Party had the North Shore busway ready to go in 1997. Have members ever in their lives heard such a big misrepresentation of the truth? No. That is because transport issues do not matter to members opposite. Where is National’s transport spokesperson this morning? Where is Maurice Williamson? Why is he not here praising the Government for the projects that are reported as having been built or under construction? 
The report talks about the central motorway junction in Auckland. What did the previous National Government do about that in 9 long years? It did nothing. It just looked at the bits of concrete sticking out of the ground which had been there for 20 years and did nothing. And it would do that again if it were ever allowed to be in Government again. 
Greenhithe in Auckland is under construction. Mercer to Long Swamp in the Waikato is under construction. Hewlett’s flyover in the Bay of Plenty is under construction. Mackay’s Crossing in Wellington is under construction. The inner-city bypass in Wellington is under construction. The Albany to Puhoi realignment B2 is under construction. Then it will be a toll road—something the National Party talked about but did nothing about in terms of legislation. We had to pass legislation one Christmas I remember to try to help Tauranga out. It was a special piece of legislation. 
What has this Government done? We have legislation that allows it to happen very simply with the Minister of Transport being convinced that it is a good project and ticking off a number of boxes that ask whether it will work financially whether the public supports it and whether there is an alternative road. All of that law has been passed. What did the National Government do? It did absolutely nothing. Did it allow for private-public partnerships in the law in 9 long years? It did nothing. But this Government has got on and done the real work. 
That is why in Auckland there is a “buildability” problem. That is why the construction industry is in Samoa trying to recruit labour. It is also off in South Africa and Zimbabwe trying to get civil engineers. It cannot actually keep up with the tendering process and at the moment a major project in Auckland—State Highway 20—is under way but other projects that follow it are having to get consortiums of New Zealand construction companies put together to be able to tender because not one single company is able to do it on its own. There is too much work and that is why the Australians are over here in consortiums actually tendering for New Zealand projects because there is so much work so much money that the industry cannot keep up. 
This report talks about that. It talks about the “buildability” problems—the labour shortages. It talks about the things the Government has done in terms of requiring 10-year plans so that everybody knows that there is a major piece of construction going on and that this Government is serious about fixing the issues. 
 The amount will be $18.9 billion over the next 10 years. What is National saying it will do? Last night we heard that a National Government would spend yet another $4.5 billion over that same period of time. How would that fix the problem? Labour is talking $18.9 billion over the next 10 years; National is talking $4.5 billion—and it is talking about having tolls. It is saying: “Oh no no. We’re going to give you a couple of bucks tax cut over here before Christmas in whatever year—who knows? But we’ll toll you so much that you won’t be able to afford to go on that road.” National would just tax people a different way. That is the age-old trick of the Tories over there. They do nothing but make the public pay for all the projects that this Government has the funds to do under its current regime. 
This is a great report. This is a report that one would never have found under a National Government because it has things in it that have actually been done. Construction is taking place all over the country. There are roadworks for half the distance between Auckland to Waikato. What happened under previous National Governments? Absolutely zip. They did nothing. They had a cost-benefit ratio system that made them think they could not do little improvements here or there because that might stop a project from going ahead. They said that anyway there was not enough money. 
When I became the Minister I was told: “You’ll build nothing in Auckland in your first 3 years because the National Government has done nothing to prepare for it and there isn’t the money in the kitty to pay for it. In fact in our first 3 years in Government both Puhinui and Grafton Gully were built. 
DEBORAH CODDINGTON (ACT) 
: 
 I would like to address the issue about Transit New Zealand too. Last night I heard the Minister of Transport say that he would love to have a system where there were no police on the side of the road collecting fines and that he would love our country to be one where people did not die on its roads. If he were really sincere about that then his Government would do something about terrible pieces of roads such as State Highway 2 and the road from Pokeno to Tirau—State Highway 27. It is known now that the four-lane passing lanes will not go ahead there. 
We will never get anywhere in this country while we continue down the path of having land transport politicised. It is totally politicised. For instance the president of the Labour Party sits on the board of Transit New Zealand—and what an embarrassment that has turned out to be for the party. Transit New Zealand is just one of Mike Williams’ appointments. He gets $17000 in fees from Transit New Zealand $19000 from the board of the Institute of Geological and Nuclear Sciences Ltd $21000 a year from the Railways Corporation and $28000 a year from Genesis Energy and he is on the Auckland Regional Transport Authority from which he gets another $25000. That is $107000. And it does not include the secret honorarium he gets for being president of the Labour Party. Not even Nick Venter has been able to find out how much that secret honorarium is. 
When this debate was last raised in the House Mike Williams faxed me and said that the figures I gave were wrong. I think I said the total was something like half a million dollars. His kids all asked for expensive Christmas presents as a result. Well if he gets upset every time someone raises how much he gets from the public purse he should come clean and say how much he gets. But as Jonathan Milne asked in that wonderful new publication the  
Herald on Sunday  
on Sunday what will Labour do now about its president? He went to a meeting 2 weeks ago in the offices of the Minister of Transport and the Minister of Finance where he embarrassed himself was extremely rude and brought to a halt the negotiations and then he went and leaked it to Brian Rudman of the  
New Zealand Herald 
. 
What was written about that meeting was wrong. What was being written about  
The Way Forward 
 in Auckland was wrong. That is the reason we will never get anything done. 
On 30 June Transfund and Transit New Zealand will be releasing their 10-year programme. There is going to be some serious embarrassment for this Government in that statement. For instance in this country we have roads that have proved to have a good benefit-cost ratio. That means they will deliver a very high rate of return to this country they will enhance economic growth and they will improve people’s lives. But they are not even going to appear on the 10-year programme. Why? Because it is not political. We will see roads in the South Island that do not have a good benefit-cost ratio and the building of which will be very difficult to justify but they will be there. Why? Because it is politically expedient in an election year to have them on the 10-year programme. 
We have Government funding issues. The Government says that everything is all right and that we do not have to worry about it—everything is great. Well it is not specifying starting and completion dates. As the honourable Dr Wayne Mapp pointed out the paper that he tabled which went to every household in Auckland at huge expense— 
Dr Wayne Mapp 
: Frankly can we believe it? 
DEBORAH CODDINGTON 
: As Dr Mapp says can we believe it? It is factually incorrect. It was proved at the select committee under questioning that there were incorrect statements in terms of what had and had not been started. I ask whether the Government does want to get serious about fixing the transport system in this country which we predicted 3 years ago would get worse and worse when the Land Transport Management Act was brought in. It brought in a whole lot of other considerations that have to be brought into account when Transit New Zealand and Transfund are considering new roading projects. 
And they are political. They are political to satisfy the Greens they are political to satisfy that vote and they are politicised to ensure that Ministers get back into Parliament when the election comes round again. We are just going back to the future. 
Hon PETE HODGSON (Minister of Transport) 
: 
 The member who has just resumed her seat Deborah Coddington has made not very many strong arguments about not much at all and I will not rebut them. But the member Wayne Mapp who spoke last night and again this morning—apparently he is the new National Party transport spokesperson because we have not heard from the other National Party transport spokesperson—made a series of allegations that are scurrilous that are outrageous and that need to be rebutted. It is my pleasure to stand up here and give that member a towelling. 
He stood up and said that Transit had put out a document that was incorrect. He said that Transit had put out a document that was a lie. He said that Transit had set out to mislead people. That is a scurrilous allegation and it is a wrong allegation and I intend to dismiss it. The reason I intend to dismiss it is that it cannot stand unchallenged. The member made a series of allegations about Transit that are simply wrong. 
There are 17 projects in the document he refers to. This is a document that 10 11 or 12 months ago was put around the suburbs of Auckland. It is a document that states: “Auckland at a glance” and it gives people an indication of what is going on in their city in the Transit area. Of the 17 projects 14 have been accurately described and I will come to the other three in a minute. The 14 projects include the Greenhithe deviation. The document states that its construction is in progress. The truth is its construction is in progress. It states in relation to the State Highway 18 upper harbour bridge and causeway duplication that its construction is in progress. The truth is its construction is in process. It states in relation to the State Highway 20 Puhinui exchange that its construction is complete. Its construction is complete. It states in relation to the State highway northern busway that construction started in November 2004. Construction started in November 2004. It states in relation to the State highway Grafton Gully stages I and II that construction is complete. And on and on it goes. All of those 14 descriptions are accurate. There is a really interesting story about how come this Government can get 14 projects running in Auckland at once and the member opposite cannot. 
 What about the other three? One of them is the Roskill extension which was delayed by a 1915 piece of legislation on volcanic cones that at the time this publication came out nobody knew about. The member certainly did not. That legislation from 1915 that was discovered required a change of tack for the Roskill extension. Has the Roskill extension tender been let? Yes. Has the Roskill extension tender pre-construction work begun? Yes. When will the Roskill construction work begin? It will begin as soon as we get through the winter period. That one project has been put back by a number of months because of a statute nobody knew about. Did Wayne Mapp advise the House of that? No he did not. Instead he said that the document was an entire set of inaccuracies. 
Two other projects need to be brought to the member’s attention. The first is the Hobsonville deviation. It says here that construction is due to start in 2005. It will not start in 2005 and the reason is the other project—the third project that the member did not mention—the Albany to Puhoi realignment B2 (ALPURT B2). The reason the member did not mention that project is it is going ahead ahead of time. The bulldozers have already begun work. The ALPURT B2 extension is down in this document as being at the stage of consultation. In that respect the document is misleading because the news turns out to be way better than was thought to be the case when it was written. The State Highway 20 Manukau deviation is on track; there are no problems with that at all. 
The problem is that the ALPURT B2 construction had to go ahead for the reason that when the Tories were in power the only thing they built in Auckland in 9 years was the Albany to Puhoi realignment B1. Do members know what they did with that? They stopped it halfway. They stopped it on a corner of a suburban part of Orewa. That is where that stretch of road ends to this day. They built a highway halfway to nowhere then lost power. That is why ALPURT B2 had to go ahead. 
But wait there is more. If one adds together the projects that were under way by National at the time of the change of Government and also includes out of generosity projects recently completed by National—of which there were none—one comes up with $130 million worth of expenditure. ALPURT B2 alone is more than twice that. If one adds all 17 projects that the member decided he would take a go at and the ones that have been recently completed—of which there are many such as the Grafton Gully central motorway junction stage I or the Puhinui interchange and on it goes—one does not come up with $130 million. One comes up with precisely 10 times that figure. 
So that member should not stand up in this Chamber and say that the Government is not getting Auckland moving again. This Government is addressing a very serious backlog created by the Government of the member who just resumed his seat. That is the truth of the matter. At the time of the change of Government $130 million worth of construction was underway. Today by precisely the same measurement the amount is exactly 10 times that in value. Let us be very clear about who created the problem in Auckland and let us be very clear about who is fixing it. 
A party vote was called for on the question  
That the reports of the Transport and Industrial Relations Committee on the 2003-04 financial reviews of the Civil Aviation Authority the Land Transport Safety Authority of New Zealand the Maritime Safety Authority of New Zealand Transfund New Zealand Transit New Zealand and the Transport Accident Investigation Commission be noted. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 47 
New Zealand National 27; New Zealand First 13; ACT New Zealand 7. 
Reports noted. 
Te Reo Whakapuaki Irirangi (Te Mangai Paho) 
Hon GEORGINA TE HEUHEU (National) 
: 
 For the clarification of anybody who might be listening we are here to review Te Mangai Paho which is the funding agency for mainly Maori Television and for the production of Maori programming shown on various broadcasting outlets in New Zealand. 
An update from the Maori Television Service in June 2005 highlighted an issue that I think the Minister needs to turn his attention to. It stated that issues and solutions for Maori Television include continuing to produce high-quality Maori programmes. While conducting its review members of the Maori Affairs Committee had some substantial discussions about just that issue. How do we monitor and come to make some judgments about what high-quality Maori programming is? The Maori Television Service obviously has that on its mind and hopefully Te Mangai Paho does as well. Up to 35 percent of the funding that Te Mangai Paho gets goes directly to the Maori Television Service. The Maori Affairs Committee suggested that emphasis be put on the way that funding contracts to broadcasters are managed and that further attention was required in terms of enhancing and documenting its policies and procedures. 
Of course we all remember that 2 or 3 years ago the Minister more than anybody was being given all that wrong and fatuous advice by his Te Mangai Paho executives. We had that whole debacle in this Chamber in 2001 and 2002. The Minister would stand up in this Chamber and not know what he was talking about basically because he was being supplied with incorrect information. Thanks to a good National Party loyalist Wira Gardiner we now see that Te Mangai Paho at least appears to have turned itself around. We hope that the chairman makes sure that everything is in place before he starts to think of leaving. 
One issue relates to the monitoring of funding provided to third parties. That is where the organisation started to fall off the rails 2 or 3 years ago. That is an issue the select committee thought was important. The Maori Television Service exists as a result of a perceived Government obligation to protect and promote te reo Maori. This Committee needs to know that that objective is being achieved. 
How will it be achieved? It will be achieved by making sure that the Maori Television Service has high-quality monitoring and review processes for the programming that is shown and that it has in place its own financial procedures and documentation in terms of funding. So I hope the Minister will turn his attention to that this year among a whole lot of other things—including of course his own department which sees itself as the great saviour of Maori people. I would suggest that the reverse is true: Maori people will save themselves. They do not need a handout organisation to help them achieve their potential. 
The other thing I want to mention is Maori radio. We saw in the estimates we looked at last week that a new initiative has been sought for an iwi radio upgrade. In a way given that iwi radio has become the mouthpiece of the new Maori Party I suppose the Minister has to be commended for the fact that iwi radio has achieved some funding. But again we ask whether Te Mangai Paho processes are the right means of funding Maori radio—whether its funding processes are robust and whether indeed Te Mangai Paho has made any decision about or done any thinking around whether there are too many iwi radio stations. A little bit of integration of iwi radio stations might see the funding go further. Hopefully these matters are in the Minister’s mind as well. 
Hon PAREKURA HOROMIA (Minister of Maori Affairs) 
: 
 I had hoped the Opposition spokesman on Maori affairs would come down and debate this issue. But certainly— 
Simon Power 
: I raise a point of order Madam Chairperson. It is quite contrary to the Standing Orders to refer to the absence of anybody from the Chamber and the Minister should know that. 
The CHAIRPERSON (Ann Hartley) 
: Yes the member is quite correct. Members should not refer to the absence of another member. 
Hon PAREKURA HOROMIA 
: I want to remind the member who spoke before me about the state of Te Mangai Paho when this Government came in. It was in a mess. It had no direction no vision and no mechanism for either governance or management. In 2003 under a whole lot of pressure we reviewed it. I am proud to say that through the efforts of the very able capable people who work with this Government the agency has sorted itself out. That is very clear. That member does not seem to like iwi radio stations. Well I know that most Maori around this country appreciate and spend a lot of time listening to the iwi radio stations. For 20 years and especially in the 9 years when National was last in Government nothing was done about strengthening restructuring or supporting those iwi radio stations. We have done that—even to our detriment at times. 
Let me talk about the Maori Television Service. The face we see there is the new face although it needs a bit of maturity. I want to tell the Committee what Te Mangai Paho has helped the Maori Television Service to do. The service will report a profit next week like other State-owned enterprises of $3 million. It will say quite clearly that it has repaid its loan 2 years before it was due. That shows good organisation and it has come about because of a whole lot of support from Te Mangai Paho. 
We talk about Maori not being able and about who should be supporting them. Ninety-one percent of Maori are in work. They are working—24000 of them in the modern skills field. And we will need them because this great broadcasting industry—especially its indigenous face and the indigenous activity that is going on through the Maori Television Service—needs people to deliver. We should remember that  
Whale Rider 
 was about the indigenous people. Having just been to the Wairoa Maori Film Festival I have seen a whole lot of talent and a whole lot of opportunity of which this Government is very very supportive. That person talked about indigenity. Certainly when I was at the Maori rugby game the other day when the Maori team cleaned up the British Lions the crowd’s first chant was the great chant of “Maoris! Maoris! Maoris!”. Then they went on to say: “Kiwis! Kiwis! Kiwis!”. Then they continually said: “Black! Black! Black!”. When there is a common thread around something that we all enjoy like Maori broadcasting then this nation will move forward a lot quicker. 
Let me tell members that a whole lot of the viewership of Maori television is non-Maori; it is Pakeha—those other people. They enjoy watching it. Why? Because it is one of the finest adaptions in relation to showing Kiwi-ness on the box. I look back in history and ask how much Maori was on mainstream TV. What was done was not too bad but there was very very little especially in Nelson. It is people like those in Nelson who really appreciate Maori television who watch the cooking programmes and who watch the language programmes. They love it. They have classes down there to follow on from the language programme. 
I point out that as a State-owned enterprise Te Mangai Paho has done very very well. Mr Brownlee and Dr Brash want to close down anything that has a connotation of Maoridom. It is disgraceful and it is shocking that they should even think that way. For once in this country we have programmes produced by Kiwis made by Maoris and watched by the whole nation. 
Report noted. 
New Zealand Lotteries Commission 
Report noted. 
Building Industry Authority 
Hon Dr NICK SMITH (National—Nelson) 
: 
 This financial review of the Building Industry Authority impacts on thousands and thousands of New Zealanders who have been grossly neglected by this Government in its response to the huge crisis in respect of leaky homes. I note that Damien O’Connor is in the chair. The first problem for homeowners is the way in which this important portfolio has been passed around the Cabinet table like a hot potato. Can members believe that in just 5 years there have been six different Ministers for Building Issues? It is little wonder that we have the scale of mess—with thousands of homeowners living in rotting and decaying homes with their health affected and struggling to try to find a solution—when Labour treats this issue with such disdain that it is passed from pillar to post. We have had Mark Burton—[ 
Interruption 
] Judith Tizard pipes up. Can Judith Tizard—who has hundreds of her constituents confronted with those awful problems—justify to me why we have had Mark Burton George Hawkins Lianne Dalziel Margaret Wilson John Tamihere Chris Carter and now Damien O’Connor on building issues? 
Then there is the matter of just how poorly the Government is managing the problem. We see in this report that $6 million is being spent on lawyers by this Government in order to fight the owners of leaky homes. Here are desperate people who need the Government’s help and assistance—but what is the Government’s answer? It will spend $6 million on Queen’s Counsels in order to fight them and in trying to pretend that the Building Industry Authority has done nothing wrong. What sort of insult is that to the intelligence of New Zealanders and of those poor families affected? 
Then we see that $100 million is being spent on the Weathertight Homes Resolution Service but not one dollar of that is to be spent on a single home needing to be fixed. Instead that $100 million the Government is spending on the weathertight homes bureaucracy is according to the Government to provide a quick and speedy resolution of the problem of rotting homes. Well is that not interesting? That is what the Government said 3 years ago. Three years later fewer than 10 percent of claims have been resolved. Does Damien O’Connor the Minister in the chair realise that with current progress the Weathertight Homes Resolution Service will take 20 years to process claims under that “fast cost-effective solution” the Government rammed through Parliament in 10 days? That is simply insulting and it is a tragedy for the families concerned. 
I want also to draw the Minister’s attention to something that is truly shocking. A poor old homeowner who had a rotting home that had been certified by an independent certifier wrote to the Building Industry Authority in 2004 the year under review and asked who the insurer was for the independent certifier. The authority wrote back and said that it could not tell the homeowner because the information was commercially sensitive. Now that is shocking! There is a Government that should be helping those families but it is putting up bureaucratic barriers to the extent of even refusing to name the insurer. What does that mean? It means that the homeowner is not able to take legal action to try to get his or her home fixed because the Government is hiding behind the excuse of commercial sensitivity in order to protect the insurance companies rather than the homeowner. I say that that is a farce. 
How can members opposite even pretend with that sort of debacle that they have any compassion for the families affected by leaky homes? I saw in the  
New Zealand Herald  
last week the glaringly smiling photo of Chris Carter and I simply said: “What a disgrace.” 
Hon DAMIEN O'CONNOR (Minister for Racing) 
: 
 That is one of the most outrageous speeches I have heard in this Chamber from a member who thinks that the market will deliver to everyone—will give a solution to everyone regardless— 
Hon Dr Nick Smith 
: I never said that. 
Hon DAMIEN O'CONNOR 
: Well that member and his party say that philosophically on just about every issue in relation to the economy. 
Hon Dr Nick Smith 
: Do not. 
Hon DAMIEN O'CONNOR 
: Yes they do. In fact they said that through the 1990s which is the very reason that this Government has had to step in and fix the big mess. Indeed I accept the member’s point that it is a disastrous situation for a young family that has bought a home in good faith and discovered that it is not just a leaky home but that they have a truly faulty undervalued—or overvalued—disaster on their hands. How has that occurred? Many of those homes were built while Mr Smith was in Government. 
Hon Dr Nick Smith 
: This was built in 2001. 
Hon DAMIEN O'CONNOR 
: I tell the member that the regulations that governed the system right through the 1990s were set up by his Government on the basis that the market would deliver—that homeowners should know what they were buying: “let the buyer beware”. The problem was that that Government had insufficient safeguards to protect people who bought homes in good faith. That is why this Government has had to step in to what is a very significant issue particularly in the Auckland area. 
Hon Dr Nick Smith 
: It’s not working. 
Hon DAMIEN O'CONNOR 
: It is working. We are working through the issue very very carefully. We now have in place some regulations that govern the kinds of timber to be used in the process. We have to go through a very complex commercial situation to try to unravel a mess. The mess was laid down by the same blind ideology that that member and his party will take into the future— 
Hon Dr Nick Smith 
: George Hawkins! 
Hon DAMIEN O'CONNOR 
: It is not. I applaud the efforts of the Ministers in managing this difficult process. This Government has grappled with the issues and has moved ahead and set up the new Department of Building and Housing which will be responsible for all these issues. That member said: “Six different Ministers for building issues.” Well the fact is we will now have one Minister overseeing the Department of Building and Housing who will oversee all these responsibilities and issues. That has not occurred before and it is the very reason that this situation has occurred. 
Responsibility has been in a whole lot of different areas of Government and commercial law and the smart wise boys in the building industry have ripped people off particularly in the Auckland area because the laws laid down by the previous National Government based on the blind ideology that the market would deliver to everyone were insufficient to protect those people into the future. So we have set up the Department of Building and Housing. There will be a Minister responsible. We have tightened regulations and improved the standards and the types of timber that can be used. I have every confidence that while not offering a perfect solution—I do not think any honest Government would say that it could—it is a huge step forward to protect the consumers in this country and the people who buy homes in good faith. 
If we ever—God help us—see a National Government on the Treasury benches again this country can be assured that we will be back in the same commercial situation that would allow leaky homes and rorts to occur right throughout the economy because the National Party believes the market will deliver to everyone. Well I say to Nick Smith and the National Party that they should wake up because that does not work. This Government has had to step into the issues in the building industry take stock grapple with a difficult issue change the whole structure in Government set up a new Department of Building and Housing and do the things that are necessary to move this situation forward. I am happy to say that this Government has taken huge steps to make progress and I am confident that we will move forward in the same way. 
BRENT CATCHPOLE (NZ First) 
: 
 I have just been listening to the Minister doing exactly what this Government has always done and it appears what it will continue to do—blame everybody but the real part of the industry that brought this whole debacle into being which is the Building Industry Authority. When will a Minister acknowledge that the authority had everything to do with this particular problem? We saw in the Weathertight Homes Resolution Service report that the Department of Building and Housing is looking at acceptable standards and that the new standards will adopt internationally recognised best practices for weathertightness. That is great! That would make me feel great and full of confidence if it were not for the fact that the same people who were in the Building Industry Authority are doing this. 
The authority adopted new standards in 1995 and 1998 which led to the introduction of kiln-dried timber and monolithic cladding the combination of which was catastrophic. Did the authority carry out any tests on those products to make sure that they were compatible? No it just accepted the industry and manufacturers’ warranties and specifications as proof that the products were OK. Did the authority listen to the industry’s concerns? No it just totally ignored them and carried on with the whole process. It totally ignored the industry’s concerns right throughout. Did the authority act to rectify its mistakes when the problem became obvious to everybody else except the authority and the Minister who was in charge of the authority at the time? No it did not. The authority did nothing. In fact it stuck its head in the sand and totally ignored and denied that anything was happening—and the rotting homes problem continued for years on end. 
 It was interesting to hear Clayton Cosgrove in the House yesterday say that Labour and he had known for 10 years that this problem was developing. That is an admission that the Government knew about the problem and the Minister knew about the problem for at least 10 years before they acknowledged it. Clayton Cosgrove admitted that in this House yesterday. If members look at his  
Hansard 
 they will see that he admitted that. So this Government had known about these problems all along. 
This Government set up the Department of Building and Housing which absorbed the Building Industry Authority. The authority created this environmental economic and health problem of monumental proportions yet that same organisation—the department—is being protected and shielded by this Government. The Government has put up $4.5 million to protect the department from any legal— 
Hon Dr Nick Smith 
: No $6 million. 
BRENT CATCHPOLE 
: It is now $6 million is it? 
Dail Jones 
: What does New Zealand First think? 
BRENT CATCHPOLE 
: New Zealand First thinks it is an absolute disgrace and we want the Department of Building and Housing to be reviewed and the Weathertight Homes Resolution Service to be reviewed and reformed because it is not providing the service that it was meant to or that everybody expected of it particularly in terms of the department’s treatment of it. The Weathertight Homes Resolution Service was the one way that homeowners had of achieving a successful resolution but the department refuses to take part in the process. The conditions were set by the Department of Building and Housing yet it holds all the ace cards. Firstly it refused to participate in the Government’s Weathertight Homes Resolution Service which was set up to be a speedy flexible and cost-effective resolution for those homeowners. Secondly it uses every effort to remove itself from the legal process. As well the Crown Law Office has stated that it will not pay a cent to anyone undergoing mediation because it will carry this issue right on through to every appeal process that this country has available to it. 
The Department and the Government have no intention of looking after the people of New Zealand who have that problem. It is a disgrace. 
PAUL ADAMS (United Future) 
: 
 I believe that this issue—this leaky building scenario and the department we are looking at—is probably one of the most serious issues that the country is facing at the moment. I have seen Government members stand up time and time again in this debate and proclaim that the Government is showing leadership. Well where is the leadership on this issue? 
The unfortunate part with the leaky homes situation is that the time bomb is ticking. The Government has a responsibility and it is even classified here—the cost of litigation. The report states that the authority is one of a number of defendants in law suits. So the Government has a responsibility to look at this issue. But the problem that people with a leaky home have is that as every day goes past the situation gets worse. We have families living in Auckland and no doubt in other parts of the country who are living in homes that would now be dangerous. I have heard of people who have walked into their living room and a hole in the floor has just opened up and the floor has collapsed because it has been absolutely rotten. Young children have gone out on to a terrace and it has collapsed. 
A Government that shows leadership on this issue needs to pick up the responsibility. Yes the issues of resolving this problem are no doubt long and complex. But there is a very simple solution to this. The Government immediately needs to make available to people an interest-free loan so that the homes can immediately begin to be rectified and then the process and the discussion with councils can take place on who is responsible for what. Do not forget that we have said that new standards have been put in place. Well let me assure members that the standards as good as they may be are absolutely as useless as the previous standards if the inspections are not done and the new regulations are not checked. 
As a qualified carpenter and joiner I assure members that the majority of the problems in the leaky homes situation are not because of the materials but because of the standard of workmanship put into those homes. Any timber in a home will eventually rot if water is flowing through it. Therefore when there are no satisfactory flashings around windows and doors to prevent water from flowing into a home—[ 
Interruption 
] Dail Jones can bleat away as a lawyer. They are the ones who are responsible for making all these laws and regulations that are put into place. But when the rubber hits the road the bottom line is that people have to rectify their homes. Rules and regulations will never make a home watertight. There has to be good workmanship as well. 
United Future believes that the Government has a responsibility to begin fixing these homes immediately. A time bomb will be going off. The longer this problem is left the more expensive the houses will be to repair. Many families bought their homes in good faith. Councils or the correct authorities had checked them. They have issued codes of compliance yet in many cases those homes and houses did not comply with the very regulations they were supposed to be built under. 
I believe that watertightness is one of the most significant issues we need to deal with and it is not the time right now to apportion blame. It is time right now to find a satisfactory method whereby people who have problems with their homes can start to rectify the defects and get them fixed and under way. Yes there is then a process to follow on in finding who is responsible and where the money will come from. But from my perspective if the Government is serious about getting New Zealanders into home ownership if it is serious about the social consequences of people having a good home to live in then it must deal with this most significant issue—this watertightness of homes—immediately. The Government should provide a pathway for those New Zealanders instead of delegating responsibility and shifting the blame here and there which really is not helping the very people who are crying out for help. 
Those people have stretched themselves to buy their homes and now they are being told they will have litigation cases to attend to and they will have to go to court. Where will they get the money from? In many cases it may cost them $60000 or $70000 to go to court to get a decision to shift the blame or a portion of blame whereas it may cost only $50000 or $60000 to actually repair their house. Who is to say that they will win their court case and even then they still will not have a repaired home? We need to make sure that the work will be done. I encourage the Government and other parties to get together and say that we need to get finance available to those people so that they can begin the repair process. 
DAIL JONES (NZ First) 
: 
 New Zealand First regards this issue of weathertight homes so seriously that out of the four calls we are entitled to in this debate of 3 hours we are taking two on this issue. This is the most important issue facing Auckland at the moment and other areas as well. In my view it is more important to Auckland than the transport situation which has greatly improved in recent times. This is a terribly terribly serious situation. Of course we have just heard from a United Future member who said that he does not agree with the Government on this particular issue but he will vote with the Government when it comes to a vote because his party is supporting the Government in supply. So there is a bit of a double standard taking place there for United Future. 
This issue has now reached a situation whereby a court case in Auckland today is so complicated that there are be two plaintiffs and 27 defendants or third parties in the one set of proceedings and that is excluding the local authority. There can be 29 parties in one proceeding and that is an utter disgrace. It is as if families are living in devastation akin to a tsunami. Now if a tsunami had been declared in Auckland this Government would have stepped in and done something. But this Government is failing to do anything at all. It is all very well setting up a committee but that is not what really matters. This problem goes back to the early 1990s when Carter Holt Harvey conned the Building Industry Authority into approving non-boric treated timber generally for timber framing in particular for exterior framing and bottom plates. The authority should have known that inevitably defective or inadequate workmanship would allow moisture through monolithic cladding and cause rot. 
I disagree entirely with the United Future member. If there is a bad set of specifications and a bad set of materials no good workman can fix the problem because it is intrinsically defective. That is the problem United Future and this Government cannot understand. The National Government was warned of the problem. The Labour Government was warned of the problem. Indeed George Hawkins was written to about the problem but as usual he took no responsibility. He did not even bother to read the letter which indicated there would be a problem. 
Now we have these extensive lengthy court proceedings that will go on forever. The time surely has come when we as members of Parliament must accept responsibility and I make that point in particular to Russell Fairbrother and the Minister who tried to make an effort in his speech. New Zealand First says we all have to accept responsibility. I was not here in 1991 or whenever but even those who were here surely must accept responsibility. We must all accept responsibility. We cannot have a situation where Prendos says it is about $10 billion to fix and someone else says it is about $5 billion. The people concerned are living a nightmare day and night and have been for years and years. 
Section 91 of the Building Act which covers the Building Industry Authority makes it clear that it was the Building Industry Authority’s problem. Who is behind the Building Industry Authority? Inevitably it is this Parliament. New Zealand First made the point in this House in 2002 that everyone must get a proper report and get a clear assessment of the loss and the damage—which must be known by now—and that the Government must consider footing the bill. But the problem will never be finalised because of course the problem can occur in cases that we do not even know about today. Really this Parliament has to say that it is the Building Industry Authority’s problem that Parliament is behind the authority and we must accept that. 
Lawyers are confidently predicting that at least in relation to the untreated timber issue the Court of Appeal and the Supreme Court will hold that the Building Act did impose a duty of care and negligence in respect of the approval of non-boric treated timber and that ultimately the courts will hold the Building Industry Authority negligent and in breach of that duty of care. That is going to happen in the Supreme Court one day. I say to the Government why wait for 5 or 10 years? Why put up money for lawyers to keep defending these proceedings and delaying the whole thing? This debate today is about the $6 million this Government has put up to defend all these cases. That is all we are debating today. Six million bucks is being paid to Government lawyers but of course what about the lawyers for the other side? As I say in this case 29 parties are involved excluding the local authorities. [ 
Interruption 
] Mr Fairbrother can laugh and joke about it. It is a big issue in Auckland; it may not be an issue in Napier. This is a big issue for Aucklanders and New Zealand First says that Parliament has to accept that it is an issue and that we have to front the costs. 
RUSSELL FAIRBROTHER (Labour—Napier) 
: 
 It is correct that the old Building Industry Authority should share some responsibility but not all the responsibility for the weathertightness issue. The speakers before me have neglected to observe that under the Building Act 2004 the Building Industry Authority became disestablished as a stand-alone authority and was brought under the new Department of Building and Housing. That makes clear of course a line of authority and that line of authority is important as we discuss the current Building Industry Authority and the situation of weathertightness. And it is apposite not to leave out the cry for tax cuts because the old Building Industry Authority represented the policy of “fewer taxes let the market decide let anarchy rule let the consumer suffer and let the devil take the hindmost”. 
Those who bothered to listen to the submissions during the weathertightness inquiry and those who bothered to read the careful report of the Government Administration Committee on that inquiry which took place a year or two ago and which gave rise to the Building Act 2004 and to the re-establishment of the Building Industry Authority as part of the Department of Building and Housing would have discovered that in the mesh of responsibilities under the 1991 Act the ultimate responsibility for the working of that Act fell not on the Building Industry Authority—which was an advisory body not an enforcement body—but on the territorial authorities. I recall that was in section 28 of the 1991 Act. Territorial authorities had reposed in them the enforcement responsibilities—that is they were the co-parent in the old Building Act—for establishing a safe regime for building houses and homes for people in this country. 
What we have in the anarchy of the marketplace which is controlled by tax cuts is a situation whereby everybody looks after themselves and tries to evade responsibilities. Of course it is easy to sheet responsibility home to the Government today for the failure of Governments over 14 years before this Government addressed the issue. It is easy for people to say they will point the finger at this Government. 
 But let us go back to the old Building Act to see what that structure was and how it failed. It failed dismally and many good citizens are paying the price today of that failure. However let us not spread alarm by blaming the materials and the building industry or by making people lose confidence in the houses they presently have and in the houses that are being constructed. The number of homes that failed the test of weathertightness is relatively small compared with the number of houses that were built in the period. Sure the failures are spectacular and the losses for individuals are huge but there are many competent builders out there who did a good job. 
Of course the competency of builders was hindered by another tax-cut measure: that of abolishing the apprenticeship scheme. In the anarchy that resulted from that— 
Hon Dr Nick Smith 
: It was never abolished. Absolute rubbish! 
RUSSELL FAIRBROTHER 
: Even Nick Smith could have become a builder. All he would have needed to set himself up as a builder was a ute a dog and a radio. But if people do not have the skills they cannot interpret the plans tell the designer where the plans are defective or know which materials should be used for internal or dry spaces. They do not have the skills to know which materials should not be used where they will get wet. 
The problems in this whole scenario are those of the abandonment of responsibility and of leaving it to the imperial politically correct social engineering thing called “the marketplace”. Those who bang on about social engineering forget that the ultimate weapon of social engineering is tax cuts. 
A party vote was called for on the question  
That the report of the Government Administration Committee on the 2003/04 financial review of the Building Industry Authority be noted. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Report noted. 
The CHAIRPERSON (Ann Hartley) 
: The 3 hours for the debate on the performance of Crown entities public organisations and State enterprises has expired. I shall report this debate to the House. 
Land Transport Amendment Bill 
Second Reading 
Debate resumed from 10 May. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 Let me say— 
Clayton Cosgrove 
: Don’t use it. 
PETER BROWN 
: Members over there are telling me not to use the 4 minutes 30 seconds I have left to speak. But between my last contribution and this one the Government has seen fit—and it is right and proper that it has—to listen to New Zealand First and has produced a Supplementary Order Paper that will in fact ease the burden of some taxi-drivers who have in the distant past been guilty of some crime. I am told in the information the Government has sent me—and it has been very cooperative which might please Clayton Cosgrove; it has sent me quite a lot of information—that this legislation could affect 600 current taxi-drivers or people with passenger licences of which 200 will get the right of appeal. We think that is fair. I point out to Government members that if they want justice in this country and I am sure they do then it has to be embraced with fairness. 
But an area that I do not think the Government has yet taken on board in terms of this bill—and I emphasise that New Zealand First is going to support the bill—is one that we are concerned about. It is the courtesy buses that are run by clubs. The Transport and Industrial Relations Committee I recall was informed that clubs seek donations to run these buses but I have since found out that some of the major clubs in this country would not be able to provide this service on the basis of donations alone and therefore have a minimum charge. From what I can gather the clubs provide a very very good service. The courtesy buses pick up their clients at their homes charge them something like $2 or $3 and bring them to their clubs. The people enjoy their evenings in the clubs then for another $2 or $3 they are taken home. 
This bill will make that illegal because it provides only for courtesy buses run on the basis of donations. The manager of the Cosmopolitan Club in Mount Maunganui which I believe is one of the largest clubs in New Zealand told me that the service could well be in jeopardy if he is not allowed to charge a fee albeit a very modest one. I understand that many other clubs are also in the same circumstances. I spoke with the Minister of Transport on this and he asked me to get some letters from the clubs. 
In very short order I have had this amount of letters from clubs which illustrates the depth of concern. They come from all over the place. 
Obviously there is one from the Cosmopolitan Club in Mount Maunganui. I have a couple from cosmopolitan clubs. I have one from the Alexandra District Club in the South Island—the message has got around pretty well. I have other letters from Matamata from the Petone Workingmans Club the Napier Returned Services Association and the Whangarei Returned Services Association. So this is a widespread problem. If we do not allow these clubs to put on a minimal charge—if the Supplementary Order Paper does not come into being when the bill goes through the Committee stage—there is a real risk that this service will disappear or it will be run illegally. 
I can see that some Government members are listening—the Minister for Transport Safety is listening. I ask honourable members whether that is what we want. Should we not be facing reality what is happening out there in the real world? Should the laws not reflect what is happening as long as it is legal? We are turning a perfectly legal sound operating activity into an illegal activity. The argument will be that those people should get passenger licences. That is not always possible or practical. 
DEBORAH CODDINGTON (ACT) 
: 
 I apologise to the House but in my haste this morning I grabbed the wrong glasses and I am visually impaired this morning. We support this legislation. To those people who are listening to the debate this morning it may be of some comfort to know that to me this was a bill that showed how select committees and Parliament should work in terms of the way the members of the Transport and Industrial Relations Committee put aside political point-scoring and worked together to achieve a result that most people supported and were happy with. The bill dealt with some very serious issues too. It dealt with a number of things as the commentary sets out. The serious issue for me especially was transport service licensing. This was known as the legislation that was going to clean up the taxi industry. 
When the legislation first came to the select committee many of us did not think it was tough enough on the taxi industry in two areas. One area was the signage for taxis and the other concerned the drivers of taxis and buses who had convictions for serious offences—in particular sexual offences. There is one such case before the courts at the moment. When the bill came to the select committee it caught only those people who wanted to go into the taxi industry and who therefore would be applying for a licence. Lianne Dalziel from Labour and I in particular felt that that was not strong enough and that for the taxi industry to enjoy a good reputation overall we needed to clean out the people already in the industry who have a serious conviction. I stress here that the bar is very high. We have made the provision retrospective but the bar is still quite high. We are not prohibiting people who have a minor conviction from driving a taxi or a bus. From memory—and as I say I cannot read the bill properly at the moment but my glasses are on their way—it relates to people who have been convicted of a crime that carries a sentence of 7 years’ imprisonment as a minimum. People do not have to be sentenced to that but the offence carries that sentence. One has to be convicted of quite a serious crime to receive a sentence like that. 
It was very disappointing that the member from the Green Party felt that that was too hard that it went back too far that people could have something dragged up from their past and that people may have rehabilitated themselves and could drive a taxi again. I have nothing against rehabilitation but people who get in a taxi are entitled to know that the person driving that taxi has been cleared and that it is safe. I have heard the Taxi Proprietors Federation pulled up about this issue in interviews and the head of that federation has been asked why the federation did not clean out the industry and why it granted licences to those drivers. Of course the federation does not control that; it is not the gatekeeper. The Land Transport Safety Authority as it was then was the gatekeeper for people getting a licence to drive a taxi. From replies to written questions that I have put to the Minister I have found the Land Transport Safety Authority did not have a list of all the people granted a licence to drive a taxi who had a conviction for a sexual offence. 
Hopefully this legislation will go some way towards improving the reputation of the taxi industry. There are some very good taxi-drivers who take pride in their profession. Their reputations are being brought down all the time by people going into the industry who have no knowledge of—yes I will say it—New Zealand culture. Just because a woman who gets into a cab may have had too much to drink or may be wearing revealing clothing that does not mean she is asking to be sexually abused or sexually molested. That is not an excuse any more than we would say that a man who gets into a taxi wearing a Hugo Boss suit with a wallet bulging in his back pocket is asking to be robbed. I do not care how much women who get into taxis have had to drink. That is the reason they get a taxi—to get safely home. They do not get into a taxi to be forced to commit indecencies on the taxi-driver. 
The other issue was that of signage. The ACT party disagreed with the National Party over that. We believe that signage is a safety issue. I can understand exactly how people feel when they look along a cab rank and cannot distinguish one cab from another because in Wellington the cabs are all white and they all have yellow and black signage. If like me people only use Wellington Combined Taxis because they know those taxis are safe and reliable but they have grabbed a cab got into it and started on their way before they realise the cab does not belong to the taxi company they rely on but to another company that is passing off and trading on the good reputation of Wellington Combined Taxis by copying its signage for me that is a safety issue. Yes there is competition and commercial legislation that deals with that but as the industry owners who appeared before the select committee said to us it is very expensive and time consuming for them to take a case to the Commerce Commission under the Fair Trading Act. They may win it but so what? It is very difficult for them to enforce a decision once a taxi company has copied all the signage. So those are the two main issues that we dealt with. 
We also dealt with the issue of whether the drivers of courtesy vehicles should be subject to the same stringent barriers as apply to those who drive for remuneration or reward. The report back to the House excludes them from the legislation because they provide an important service in terms of getting people home safely from clubs or wherever they are and including them would be too difficult and punitive and would disadvantage a lot of the people who rely on courtesy vehicles to get around. However I do hope that when this legislation is passed—and it will be passed under urgency—the people who operate courtesy vehicles do not just sit back and heave a sigh of relief that they have been excluded from the legislation. As we said in the select committee we would encourage the providers of courtesy vehicles to develop in-house policies to screen their drivers. I cannot emphasise that enough. Whether they should be included in the legislation has been considered by Parliament. The providers of courtesy vehicles should be on notice that although they have been excluded from the legislation this time if they do not voluntarily set up in-house practices and codes to screen their drivers and make sure they are safe then they will run the risk of being regulated by Parliament. It is not too hard for them to do that. There are very good organisations like Safe Network in Auckland run by John McCarthy which deals with trying to rehabilitate and run programmes for recidivist sex offenders. He has been there long enough to recognise the signs of potential recidivism and he is more than happy to provide guidelines for organisations that may run courtesy vehicles for kids’ sports teams for Cubs and Brownies and for all those sorts of organisations. 
I am proud that this legislation will be passed while I am still in the House and I look forward to it having a positive effect especially on the taxi industry. 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future which will also support the Land Transport Amendment Bill. I also was able to sit at various meetings of the Transport and Industrial Relations Committee as it was considering the bill under the able chairmanship of Mark Gosche. It was pleasing as other members have already said that there was unity across all the parties that the issues we were dealing with in the legislation were important. It was great to see the cooperation as the members discussed rationally issues that were sometimes fairly hot and contentious. 
One of the first things to be touched on was the provisions with regard to drink-driving—the “three strikes and you’re out” approach. First-time offenders face just the current court-imposed penalties but the legislation recognises the challenges we face with drunken drivers on the road. 
It is ironic that we want to get drunk drivers off the road and we are also dealing with the taxi industry. Taxis are often the very method used by people who have the common sense to realise that they have had a little bit too much to drink. As Deborah Coddington said that especially applies to young ladies. We are putting into place measures that mean that hopefully the taxi company will be interested only in taking them from their point of pickup to their home. Unfortunately even recently we have seen examples again on our roads where the taxi industry has failed in its choice of drivers and there has been inappropriate behaviour from some taxi-drivers. This legislation will go a long way—hopefully all the way—to rectify those problems. At one stage the select committee looked at putting a blanket ban on drivers who had serious convictions but I see the bill has been amended so that in certain cases there will be a right of appeal for those with minor convictions. I think that is fair. We have to accept that after a period of 10 years some people have definitely turned their lives round. So there will be a way that they can appeal if they have behaved well over a long period of years. 
I know that the disabilities industry welcomes the recommendation to put Braille identification in taxis for blind people. Of course as Deborah Coddington said one cannot necessarily pick up from the colours of the car which taxi company the car one is hopping into belongs to. That is even worse for blind people; they have no idea what company it is. Now all the companies will have to have Braille identification and blind people will be able to pick up which taxi company they are with the name of the driver and what the cab number is. I think that is a step forward. It is definitely a progressive step indeed. 
Another part of the legislation that has been altered is that police are now able to serve at the roadside a notice of licence suspension. I had thought they were always able to do so and was surprised to learn that they could not. Previously they had to try to catch people at home if their demerit points had got over 100; they had to find those people who had often moved flats or were not at home. But now if someone is picked up on the road for any offence—it may just be that the brake lights are not working—and the police discover that the person has exceeded 100 demerit points they will be able to serve a notice of licence suspension on the roadside and that driver will be taken off the road. 
 United Future raised the issue of excessively noisy vehicles. That is a particular problem in some of our tourism spots. For example in Larry Baldock’s area Tauranga there is a problem with people who in the later hours of night when tourists who have arrived in the country are trying to sleep use excessively noisy vehicles. It may not necessarily be the vehicle itself that is noisy; maybe the noise is from the tyres the stereo or whatever. But people are being kept awake at night and tourists are in some cases avoiding certain spots because of the noise level. I welcome discussion in the Committee stage about demerit points now being able to be issued to people who offend in such cases. 
Another point that has been discussed relates to the passenger service licence for courtesy buses. That is an interesting issue to talk through. Yes service industries use courtesy buses—we think of RSAs and those types of institutions that have courtesy vehicles that take people home or pick them up to bring them to the club for a few drinks—but it is more wide ranging than that. Sports clubs use them. There are groups that care for children after school that have courtesy vehicles to pick up children and bring them to after-school care clubs or to places where they can do their homework etc. They are providing a service. 
Hon Maurice Williamson 
: Pick it up you’re losing the audience. 
PAUL ADAMS 
: I am sorry. Maurice Williamson is really wanting to wind everything up. 
Hon Maurice Williamson 
: Get a bit of excitement. 
PAUL ADAMS 
: I ask Mr Williamson how we can be excited about courtesy buses. These sorts of things need to be worked through. At the moment as Deborah Coddington said such groups will be exempted. 
I also welcome the improvement—and I say to Maurice Williamson that I think it is the major one—to the logbook system. I think logbooks are essential; they have done a lot to bring safety to the industry. Now as we move into the electronic age we find that a lot of the more modern taxi companies run electronic logbooks that cannot be fiddled like a manual logbook can yet drivers have had to run the two in conjunction with each other. Now we have released the courier industry in relation to lighter vehicles from having to have a logbook. That will stop a lot of paperwork and effort. It will be interesting to see whether the industry handles that responsibly or whether we run into challenges with an industry that has been given the freedom to run without logbooks. Only time will tell. 
United Future supports this legislation and I have no doubt that my colleague Larry Baldock who is our transport spokesperson will add additional stuff as we go into the Committee stage. 
KEITH LOCKE (Green) 
: 
 The Green Party is supporting this bill. It makes a lot of good amendments to the land transport regulations. The issue of taxi-drivers has come up in the debate so far and it did exercise the Transport and Industrial Relations Committee. Members will note from the commentary on the bill that although the Green Party supports improved safety for taxi passengers in terms of preventing unsuitable people from holding licences that allow them to carry passengers we did criticise the permanent character of the exclusion of certain people who have committed serious offences. That view is in line with the Green Party approach that we cannot hold somebody’s transgressions against them forever. 
We are in favour of rehabilitation. That is the essence of the clean slate legislation that was initiated by my Green colleague Nandor Tanczos and then became a Government bill under the name of Phil Goff and passed through Parliament. The concept behind that legislation is that we do not punish people forever. It is true that the clean slate legislation is about less serious offences—the concept is that after 7 years a minor conviction can be scrubbed from a person’s record instead of it affecting his or her whole life. In terms of serious offences our general approach to rehabilitation is that as much as possible people should be given chances in life to really make amends contribute to society and have a fulfilling life even if they have done time for committing very serious crimes. We should not hold it against them forever. 
The Greens propose that there be a discretion to allow the Director of Land Transport to issue a passenger endorsement to someone who has committed a serious crime according to the list provided in the bill if the director is satisfied that there is no risk to public safety now or in the foreseeable future. That would be a very high test but it would mean that the offence was not held against the person forever. Not to do that would in some ways elevate taxi-driving above some other professions in which there is danger such as the sensitive area of early childhood education. We should not have a totally forever prescriptive sort of approach to the exclusion of people from that particular profession. Sure the offences listed in the bill are serious—attempt to murder conspiracy to murder wounding with intent causing grievous bodily harm aggravated wounding or injury kidnapping aggravated robbery firearms offences etc. 
It is true that there should be an exclusion for such people but the Greens are saying that years later when such people have rehabilitated themselves—and a number of people in our society who have committed murders or done very serious things have later contributed in a very effective way to our society—there has to be room for discretion. The Green Party will support giving the director a discretion in that respect. 
MARK PECK (Labour—Invercargill) 
: 
 I am pleased to take a call in this debate and to congratulate the Transport and Industrial Relations Committee on some extremely good work in bringing this bill back to the House. 
I want to comment briefly on the taxi-driver issue. A whole bunch of issues around taxi-drivers cause concern. Recently I was in Auckland to do a couple of things and I caught a cab off the rank to get back to where I was staying. As I hopped in the driver said: “This is my second day.” and I suddenly realised that I would have enormous difficulty getting anywhere much less to my destination. Indeed it proved to be that way. I had to tell the driver where I was going and I was more confused than she was. I despair at what the Parliamentary Service has to pay out in taxi chits on occasions like that. It took us an extraordinary amount of time to get from the centre of Auckland out to Mount Wellington. I shuddered—I nearly wrote out two taxi chits I was so embarrassed about the size of the amount to get back from the city. [ 
Interruption 
] I must say that that crossed my mind. 
I note that Peter Brown has made some good comments this morning about work that has been done in the interim since the commencement of this debate. I do think it is right that we take a strong line on who can and who cannot be a taxi-driver particularly in relation to violent sexual offenders. There is one cab company in this city that I simply will not use. There is a history of reasons why I will not use that cab company. It goes back a long way to a time when the company treated a rape complaint frivolously. I simply will not use that company at all. Indeed if the company I do use suggests to me that it will send a cab from another company I tell it not to bother. Even to this day I would rather walk than use a company that took a complaint of that sort frivolously. 
These are not frivolous issues and it is good to see that they are now being tidied up in this bill. It is good legislation. I am delighted to see that we have perhaps managed to sort out an issue that concerned New Zealand First. So there will be rather widespread support for this bill and I am just sorry for Maurice Williamson that his radio audience is no longer listening. 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 I am very happy to take a call on the Land Transport Amendment Bill on its report back from the Transport and Industrial Relations Committee because in the case of this legislation the select committee worked exceedingly well. There was pretty much broad agreement on the objectives that needed to be achieved. Obviously there was some niggling about little bits and pieces of detail and I want to get off my chest one of my niggles. This has more to do with the officials than with the Government. It relates to the fact that when the photo driver’s licence first came in I wanted it to include—and I thought that as the then Minister I should have had at least some say—a field to show when one had first obtained a licence. In my case it was when I turned 15 back in— 
Darren Hughes 
: 1945. 
Hon MAURICE WILLIAMSON 
: No it was before the First World War as Darren Hughes will remember. I wanted to have that date on my licence and the officials said no. They told me that the licences were to comply with a European Union standard layout with the flag and the fields in certain areas and in a certain order. I remember having quite an argument about that. I was finally beaten into submission because officials always ruled the roost when I was around. [ 
Interruption 
] All right—sometimes. The officials said that we had to stick with the layout so that when one went to a European Union country or elsewhere one would be carrying a licence in a standard format. 
I am just staggered to learn that the advice to the Government has now changed. I think that is good. I am delighted that the licence is changing and I think that will be great. I have a question for the Minister for Transport Safety. When we get another licence after this legislation comes in will the new licences go back to showing the date when one obtained one’s original licence or will they show the date when one first obtained a photo driver’s licence? I do not know whether the database now records that I first got my driver’s licence in 1966. That is a really important point because I would like my licence to show the date as 1966 and that I have been driving for that length of time. 
I am pleased that the committee dealt with some quite central issues in this legislation. I am happy to say that one of those issues—I know it is of serious concern to people like Deborah Coddington and it should be of serious concern to everybody in this House—concerns the people who drive our passenger service vehicles mainly taxis. I am not so strident about the requirements for those who drive a big bus because unless it is very late at night and on a very long thin sparse route where there may be only one passenger a bus driver has a lot less ability than a taxi-driver to do dreadful things to the passengers. In a taxi there is quite often especially late at night in a lot of parts of the city a one-on-one relationship. I think the passenger has an absolute right to know that the person who holds a P endorsement and is driving the taxi meets a number of qualifications. Passengers have a right to know that the person is a good and safe driver has knowledge of the area and will not try to go from the city out to Mount Wellington via Albany—as happened to Mark Peck—and more important than any of that does not have serious past convictions. 
I am prepared to be really hard-nosed on this issue. I am happy that the committee has reported back that as one of its changes to the bill this measure will affect not only people who apply for a P licence from now on but also people who may even be in the industry right now. I am sorry if those people get upset about that. I do not actually care whether they do. Anyone who has been convicted of murder of a serious sexual offence or of a serious violent offence even if it was 20 years ago should get another job. Those people should go and drive a truck a bulldozer a carrier or a grader. I am sorry but if they have been convicted of an offence like that the taxi industry is the one industry I do not think they should be in—on a one-to-one basis with a female passenger late at night—even if they have had a clean slate for a while. That may be punitive to one or two taxi drivers who like Steve Maharey have led a life of blameless excellence for the last 20 years and would like to stay in the industry. I am sorry but if this legislation picks on two people that is bad luck. Hard cases make bad law. This legislation is the way to go. 
It is not as though we have a shortage of taxi drivers. It is not as though we are saying that if we exclude the murderers and rapists no one will be left to drive taxis—quite the opposite of that. If anything in Auckland we have a most serious abundance of people driving taxis. We have Russian brain surgeons who have come to New Zealand and are taxi drivers. I have to say to the credit of the Government that that is better than it would be if it were the other way round—Russian taxi drivers coming here and being brain surgeons. Yes it is better than that. [ 
Interruption 
] Mr Duynhoven is referring to my earlier question. The issue of the date of the licence is fixed in the bill but will the date shown be the date when one obtained one’s original licence? 
Hon Harry Duynhoven 
: Yes. 
Hon MAURICE WILLIAMSON 
: Good there we are. The Minister for Transport Safety has earned his morning’s pay already by giving me an answer to that. I am happy to say that I do not want serious offenders of the nature of those on the list to drive taxis. I am pleased that the bill not only excludes such people from coming into the industry but also applies to those who are already in it. 
There is a lot of detail in the bill but I want to talk about just a couple more things. The first is the issue of the chain of responsibility. I am happy to see that the legislation will be amended to allow for measures whereby in let us say a trucking operation instead of pinging just the driver who may have committed an overweight offence or an unsafe driving offence— 
Clayton Cosgrove 
: It’s like Rodney. 
Hon MAURICE WILLIAMSON 
: No no. Mr Cosgrove thinks that “overweight” applies to the driver himself personally. I am talking about the vehicle that is being driven. It is a shame that Mr Cosgrove does not keep up with these things as he should. In the past drivers would get pinged for things that they were literally squeezed into doing. 
When I was at university I used to drive for Refrigerated Freight Lines a frozen pea and frozen bean trucking company. The company told us when we came out of Napier at a certain time of the night that we had to be at the bulk frozen stores in Auckland by 7 a.m. We would say that we simply could not do that without speeding. The bosses used to say that that did not matter and that if we were caught speeding they would pay the fines. They told us that we had to just do it so we did. All the drivers broke the speed limit and I ended up being pulled over a number of times. I just gave my name the name of my company and so on and off I went. The fines were all paid. Fortunately there were no demerit points around in those days. 
Simon Power 
: Those were the days. 
Hon MAURICE WILLIAMSON 
: Those were the days. The company had to do things in that way. I kept thinking that it was a bit unfair that I was copping it. [ 
Interruption 
] There were not demerit points. 
Hon Harry Duynhoven 
: Who did that? 
Hon MAURICE WILLIAMSON 
: Demerit points came in under National. Yes I think demerit points are good; I am not arguing against them. One of the drivers—and I will not name him—racked up 18 speeding tickets within 12 months but that did not matter because Refrigerated Freight Lines picked up the tab and paid the speeding tickets and so on. 
This bill brings in what is called the chain of responsibility. It states that if a company makes a driver carry an unsafe load if a direction comes from the boss that a driver is to take a container even though it is known to be overweight or if a direction is given that a driver is to drive at a speed that exceeds the speed limit it is now possible to extend the chain of responsibility to include all appropriate transport offences where a third party has influence over the transport task. We have done that. I know that was done at the request of the Road Transport Forum. The chief executive officer of the Road Transport Forum Tony Friedlander gives our committee a lot of very very good advice. We are very lucky to have the services of those people. I look forward to dealing with some of the issues regarding this matter in the Committee stage. 
I want now to pick up on my next little niggle. I want members to think about this because it is not a big political issue and I would hope that Government members may be prepared to support a slight amendment to the bill. It is to do with the little moped Go-Ped motorised scooters. My little kids have graduated to a nice little electric scooter from the little scooter they used to stand on and use their own foot to push themselves along with. I have worked it out that the little electric motor on the scooter is 350 watts. This legislation will cover say someone who gets on one of those little scooters which little kids can flick around on in parks. We are providing in this legislation that the director of Land Transport New Zealand—and I really shudder at the thought of the power that could go to his head on this—is able to allow those vehicles to be exempt or not exempt. I suggest a more realistic level—and National members put it in our minority report—of say 600 watts which would cover nearly everything. In case anyone is interested there is a table in the bill. I will cover this issue in more detail when we get into the Committee stage on the bill. 
DARREN HUGHES (Labour—Otaki) 
: 
 I am pleased to take a call in support of the second reading of the Land Transport Amendment Bill. When I read through the report I thought the members of the Transport and Industrial Relations Committee had done a great job on a whole range of different areas that a number of members will have had raised with them in their constituency clinics. 
A number of people have come to see me about chartered clubs like the “cossie club” the RSA and the workingmen’s club which run a courtesy vehicle normally on Friday and Saturday nights to take members home. There has been some issue—[ 
Interruption 
] Never this member! There has been some issue around whether there could be a fee for that service and whether a courtesy coach should be included as a passenger transport service. Of course if that were the case that would mean that the drivers were required to comply with a whole lot of extra regulation. I am very pleased that the select committee has provided for the exclusion of those courtesy vehicles from the passenger transport service definition provided that the service is not done on a hire or reward basis. If members of the club just make a donation for the use of the van it will be excluded from the official definition. I think that will make things a lot easier for those chartered clubs which do a lot of work in our communities and provide a very good service for their members. 
In addition to all the other very good features of the bill I particularly wanted to highlight that one because I have had representations from clubs in the Otaki electorate. I am very happy to be able to support that provision of the bill. 
PANSY WONG (National) 
: 
 I am really glad to have the opportunity to participate in the second reading of the Land Transport Amendment Bill. I understand that the National Party is supportive of the bill. 
I challenge the self-proclaimed hard-working Minister for Transport Safety Harry Duynhoven to take into account my proposed amendments during the Committee stage that will further improve the objective of the bill. This bill’s purpose is meant to be to “promote and enhance provisions in that transport legislation relating to safe road user behaviour” and also to “improve and enhance the enforcement provisions of that transport legislation.” 
As I have previously raised in Parliament in 2003 a group of Chinese New Zealanders who were driving instructors raised a whole series of concerns with regard to other driving instructors with or without licences and their practices. I see that after 2 years one of those concerns has been taken up in this legislation. But there are other concerns that I would like to take this opportunity to raise so that we can consider amendments during the Committee stage. 
Amongst the concerns raised by those driving instructors was one about driving instructors who are allowed to teach driving in exchange for reward or money currently having to have an I endorsement licence. I am assured that this legislation includes an offence provision which was previously for some reason omitted from the Land Transport Act 1998. But the bill does not require that those I licences be displayed. So there is no way for an enforcement officer to check whether a person is entitled to teach in exchange for monetary reward. So I will move an amendment and I hope that all parties see fit to support it at the Committee stage. 
I will move another amendment relating to people who are allowed to teach in exchange for monetary reward. I would like to think they are currently New Zealand citizens or holders of permanent residence visas. I allude to the fact that overseas students can obtain an I endorsement in order to teach others to drive. I do not think that is safe. For me it is important that people who teach others in a commercial manner should at least have been resident in New Zealand for a considerable period of time. Those people should understand the road conditions and the safety measures that go with that. 
I also want to raise concerns which I have written to the Minister about in terms of the lack of monitoring of some of the outrageous advertisements that say learners can choose their own testing officer. The Minister has written to me and assured me that Land Transport New Zealand has now taken the issue seriously and will monitor those advertisements. But I hasten to point out that the  
Mandarin Times 
 a Chinese newspaper dated 10 June—last Friday—included a driving school’s advertisement that said learners could choose their own testing officer the testing route and also to have weekend testing. In response to my query the Minister stated that the special test to be carried out on weekends is meant to facilitate a group of people who seek their licence at the same time. If that is the case why are there at least eight advertisements on the same day in which every one of those driving schools or instructors offers people the option of sitting the driving test at weekends? I imagine that people want to sit it at the weekend because the traffic tends to be slightly lighter then but that is no way to improve driving safety on New Zealand roads. 
The other concern raised with me by some of the driving instructors was about the 6-month minimum requirement before the holder of a learner’s licence can convert it to a full licence. I would like the Minister later on to share with us whether there is actually discretion for a testing officer to grant dispensations for migrants in some situations. If migrants have had a long period of driving experience in their home countries and can demonstrate once they have passed the written test that they are capable drivers can they then convert a learner’s licence into a full licence? On some occasions migrants who have had sufficient driving experience find it inconvenient to have to wait 6 months. That may lead to their resorting to acquiring a licence without sitting the practical test which they are not allowed to sit. We should discuss that issue. 
All in all given that the bill’s purpose is to promote and enhance enforcement provisions I have been wondering what Land Transport New Zealand has done with regard to the latest sentencing handed out to a driver’s licence testing officer. He got only 280 hours’ community service for selling about 100 fake licences—genuine licences in one sense but fake in the sense that the people who had acquired those licences had never sat the practical driving test. I want to know whether Land Transport New Zealand is serious about enforcing safety on roads. Is the authority appealing the sentence? Is it working with the police to appeal that light sentence handed out to a driver’s licence testing officer who accepted $50 in exchange for granting a licence to people who had not sat the test? I want to know whether the Minister is serious about making sure that the people who paid to get those licences have their licences revoked. It is no laughing matter even though Labour members may find it funny. Over 100 people might be driving on our roads without properly passing the driving test— 
Jim Peters 
: Only 100? 
PANSY WONG 
: —well it could be more—endangering their own lives and other people’s lives. I challenge Labour members to stop laughing and get serious about ensuring safety on New Zealand roads. 
I am looking forward to the Minister taking a call in the Committee stage to assure New Zealanders that corrupt officers will be pursued and that Land Transport New Zealand will appeal the sentence of 280 hours of community service that was dished out to an officer who had received bribes in exchange for handing out licences to people who had not passed the driving test. 
Today we are debating the Land Transport Amendment Bill which is supposed to strengthen the enforcement capacity of Land Transport New Zealand and I want to know whether the Minister will ensure that the provisions are tough enough and whether there are the resources and the will for Land Transport New Zealand to enforce the provisions. I am looking forward to the Minister’s support for the amendments I will propose in the Committee stage and I also want an answer as to what further action the Minister will take with regard to the recent sentencing of the officer found guilty of accepting bribes to issue licences. 
Bill read a second time. 
Instruction to Committee 
Hon HARRY DUYNHOVEN (Minister for Transport Safety) 
: I move  
That it be an instruction to the Committee of the whole House on the Land Transport Amendment Bill that it take the bill part by part. 
Motion agreed to. 
In Committee 
Part 1 Preliminary provision 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 On some of the parts of this bill it will be a little bit difficult for us to get an exceedingly strong debate going on because they are pretty mundane and run of the mill. But they are worthwhile. Part 1 has only one clause—clause 3 “Purpose”. I guess that every bill has to have a purpose and if we are to stick to the very— 
Clayton Cosgrove 
: You’re having us on. 
Hon MAURICE WILLIAMSON 
: No. Clayton Cosgrove needs to learn a lot about how legislation works and one of the things that legislation should always have is a purpose. The purpose of this bill is to “promote and enhance provisions in that transport legislation relating to safe road user behaviour and vehicle safety;”. I would doubt that there would be a member in the Chamber who did not believe that that was an ongoing quest for us and for years to come I am sure this Parliament will be looking at ways of improving them. 
One of the ways in which change will occur over the years is in the technology used to record where vehicles travel and what they do. Already in the heavy traffic fleet a number of big trucks are recorded on the Global Positioning System. I imagine that paper logbooks will one day be an anachronism and we will simply have everything on a Wi-Fi network running back to a base with Land Transport New Zealand being able to look at any one truck at any one time and with police enforcement officers being able to bring that truck up on their screens as they follow behind it etc. 
Paragraph (b) of clause 3(1) states that another aim is to “improve and enhance the enforcement provisions” of the land transport legislation. It is that provision that I am starting to get a bit nervous about. I say to members of the Government that there has been a distinct shift in the mood out there in the community with regard to enforcement. Let me talk about the commercial vehicle investigation units of the police. I think everybody who is interested in safe operations wants those bodies to work in a collaborative and cooperative way with representatives of the heavy vehicle industry to ensure that heavy vehicles operate in a safe way—just as say in the civil aviation branch people work with the industry to assist it and try to promote a safety culture. We will never actually get a safety culture if we do it only by punitive measures; we have to try to work in a collaborative and cooperative way. 
But I tell the Minister for Transport Safety today that the more and more times I go out and talk with operators of heavy vehicles around the country the more and more anger I hear being expressed. The commercial vehicle investigation units have turned into a far more punitive “ping ’em lock ’em up throw away the key deal to them” regime even on some of the trivial logbook technicality issues and they are putting unbelievably punitive fines in place. Instead of those units having the effect of as clause 3 states improving and enhancing the enforcement provisions of the transport legislation instead of their achieving the aim of safe road-user behaviour and better vehicle safety they are getting almost a negative reaction from the industry—“If that’s how we are going to be treated then we’re going to pull down the shutters ‘go to the mattresses’ ”—to use an expression from  
The Godfather 
—“and go to war with some of these things.” I do not think that is helpful. I hope the Minister takes that on board. 
At the committee the other day I raised an example of a fairly large crane operator in Tauranga Todd and Pollock Crane Hire and Haulage. I know that the owners do not mind my mentioning it; I think they are pretty responsible operators and it is a good company. One of their cranes happened to go from their location to a building site less than 5 kilometres away. The driver forgot to remove the counterweight which is supposed to travel on a separate truck and that meant that the crane was 380 kilos overweight. There was a 400-kilo fuel tank on board so if the crane had had a nearly empty fuel tank it would have been within the limits. The fine was $35000. The crane has been off the road pink-stickered for 2 months and has been unable to generate revenue. Quite properly the owners of that company are angry. Yes they know they made a mistake and yes they would be happy to pay the $800 fine for the crane being overweight because it should not have been. Yes they want to cooperate. They would rather the commercial vehicle investigation unit guys came in sat down and worked with the drivers to try to make them understand the rules. 
But I am saddened to say that this legislation does not do very much in the area of trying to promote people working together cooperatively to as clause 3(1)(b) states “improve and advance the enforcement provisions”. Well enforcement will not work unless it is the final area of use. We should ping the bad operators and the best thing which I have heard suggested many times is to get a risk rating system up and running. I know that Land Transport New Zealand applied for it in the Budget and was turned down. Treasury declined it. But let me say to the Minister that we cannot treat all the operators the same because there are some really good ones some average ones and some bad ones. 
DEBORAH CODDINGTON (ACT) 
: 
 I want to address Part 1 “Preliminary provision” and as I have said ACT supports the bill. Part 1 deals with the bill’s purpose. I want to address an interesting issue that arises. Clause 3(2)(h) states one of the purposes of this bill is: “ensuring that a person whose conduct contributes to an operator’s or driver’s failure to comply with his or her duties under this Act is held accountable for that conduct;”. That deals with the chain of responsibility in terms of breaching the law. Later on we will be looking at Part 2 in which clause 33A inserts new Part 6C into the Land Transport Act. Part 6C follows on from the offences relating mainly to logbooks truck-drivers etc. It was brought in because the people involved with this legislation believed that truck-drivers cannot be held to be solely responsible for breaching the law and that their employers were urging them to work longer hours not to take enough rest time or indeed to break the speed limit. Part 6C includes new section 79T which deals with someone who commits an offence being subject “to a fine not exceeding $25000 who by act or omission directly or indirectly causes or requires a driver to—” break the speed limit. 
What we will actually see in August will be very interesting. Will this legislation apply to cases that come to court where the speed limit has been broken and drivers have been urged to do so because they were for instance hurrying to get to a rugby match—or hurrying to get the passenger in the back of the car who was working on papers to a rugby match when that passenger actually came out later and said she would rather be reading a book anyway? Well we all know whom I am talking about. I am talking about the Prime Minister. Of course the Prime Minister will not appear as a witness in that court case. 
Phil Heatley 
: Why isn’t she? 
DEBORAH CODDINGTON 
: Exactly—why is she not appearing? Why is the Prime Minister not appearing as a witness in that court case? With that new section being inserted and with the purpose of this bill being to bring into the legislation the chain of responsibility it raises the question of whether the law applies to everybody who knowingly or unknowingly causes someone to break the speed limit. Will that law apply to everyone or is a Prime Minister—or indeed a member of Parliament if that should come up—above the law? I think that is a very important matter to address in the debate at this Committee stage. 
As far as I am concerned I believe we did not have to have that measure in the bill because I believe that people are responsible for their own actions and should be held accountable for them. They cannot say that someone else made them break the law. Human beings have the power of free will. Unlike animals they can think for themselves. They do have choices. People cannot speed fill out their logbooks incorrectly or drive when they have already been driving too long and should have taken a rest and then say that their employers made them do it. They cannot speed and say that someone else made them do it. But if we are to hold passengers accountable under the law for causing someone to break the speed limit—and we have heard that the Prime Minister did urge the drivers on in that speeding cavalcade to break the law and to as my colleague Stephen Franks said “speed through the countryside scattering peasants by the wayside like some dictator in a Third World country”—and if we are to bring this sort of legislation into this Parliament then we have to make sure that when people are reportedly subject to that legislation and have done things that the public believe could bring them under this provision justice is not only done but is seen to be done. 
I think that that is a very interesting issue which should be looked at in the debate at this Committee stage. 
Dr WAYNE MAPP (National—North Shore) 
: 
 One of the interesting things to be taken from the previous speaker’s comments is that the prosecution has apparently said that it will not be calling the Prime Minister. What we have not heard is whether any of those who are defendants will be seeking to call the Prime Minister because it is certainly my understanding—and it has been noted by others—that they might find it very beneficial for their cases to do precisely that. So I suspect that we actually have not heard the end of that matter. It would certainly raise the question of what the Prime Minister said. What she did not say was whether people were acting at least in some way as a result of things that she might have said. 
The CHAIRPERSON (Ann Hartley) 
: The member needs to come back to the purpose of the bill. 
Dr WAYNE MAPP 
: So that would be a very interesting point that will come out I might add of Part 1 which contains clause 3(2)(h) concerning the accountability of people who give instructions. So although the Chair may be saying to come back to the bill it is precisely why that issue is directly relevant. 
One of the other issues I wish to deal with is a matter that will come up in one of the other provisions which is referred to as “low-speed vehicle technology”. 
Darren Hughes 
: That’s in Part 2. 
Dr WAYNE MAPP 
: One would think that the Government would know that surely by definition when we have clause 3 “Purpose” in Part 1 everything else in the bill has to be related to the purpose of the bill. So quite clearly anything to do with the licensing of vehicles is covered by Part 1 of the bill. In fact if it is not covered in Part 1 by definition it cannot be covered in subsequent parts because it will not be fulfilling the purpose of the bill.  
 I want the Committee to have a brief discussion mostly about vehicle technology and will raise that later on. I just want to put this question to the Minister. I do not expect him to address it now but I imagine he will later. We have given the Director of Land Transport discretion to exempt certain low-speed vehicles from the definition “motor vehicle” if they have a maximum power output between 300 and 600 watts. Most electric power - assisted bicycles are between 300 and 600 watts as opposed to being less than 300 watts. 
I have a question that I will raise with the Minister when we get to Part 2 and I will ask him to take advice from his officials. In essence what are the rules that the director will apply? It seems to me that too much discretion has been given to the director. Frankly vehicles—or power-assisted bicycles as we describe them now—with a power output between 300 and 600 watts should by and large be subject to blanket approval. It should be the exception rather than the rule that they not be approved because the whole intent of those provisions is to allow such approval. So I appreciate that the Minister will not address that matter directly now but will address it later. 
The other provisions in Part 1 relate particularly to the regulation of drivers convicted of serious criminal offences particularly those driving taxis. Having read the Supplementary Order Paper I do have some serious questions that I will be raising later about new section 29B “Passenger endorsement may be reinstated in certain cases”. It seems to me that the way that is drafted currently is too open. 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
PANSY WONG (National) 
: 
 I would have thought that the junior Labour whip would show a bit more interest in promoting road safety instead of trying to shut down the debate. I am very supportive of the objective of Part 1 which is to improve and enhance the enforcement provisions in the transport legislation. I am very interested in urging the Minister to take a call to reassure the New Zealand public that Land Transport New Zealand will exercise the provisions of the legislation. 
In my second reading speech I spoke about my concerns. Indeed many people talk to me about the slow process of investigating the conduct of other officers and driving instructors in that sector. We want to know how often an internal audit or an independent audit has been carried out. The public would not have confidence in enforcement of legislation if they perceive that Land Transport New Zealand would not take complaints seriously or if the sentence handed out to a testing officer who sold drivers licences was only 280 hours community service. That tarnishes New Zealand’s reputation as a country that does not stand for corrupt practices. 
I want to know what Land Transport New Zealand is doing in terms of working with the police or the Crown prosecutor. Are they working to review the light sentence that has been handed out? I understand that an investigation is under way in the same area about the conduct of testing officers or driving instructors. I think the Minister should take a call to reassure us after the House has spent time and resources to pass legislation that the enforcement agent will actually carry out the law and to assure parliamentarians such as myself that it is serious in enforcing this legislation. Otherwise why are we sitting here under urgency passing this legislation? Is it just to make politicians feel good? 
Hon Harry Duynhoven 
: The member knows that it’s not like that. 
PANSY WONG 
: The signs are good. The Minister seems to be ready to leap to his feet to assure us but I am not too sure why the Minister says he cannot. The Minister is paid to say he can instead of screaming from his seat that he cannot. I am not sure what the Minister can do. All we want is for the Minister to give us an assurance that the provisions in this Land Transport Amendment Bill will be taken seriously by Land Transport New Zealand because its past history of responding to complaints from the public has been very slow in coming forth. 
So I tell the Minister that we will be on this case. I have amendments for the Committee stage and I hope the Minister will take to them kindly. The signs are that other political parties would be supportive of my amendments which I will go into more detail during Part 2. So for me as my very learned colleague the Hon Maurice Williamson says who can argue against the purpose of promoting and enhancing road safety as well as enhancing the enforcement provisions? Surely the testing of that is in the actual implementation and the public’s perception that Land Transport New Zealand is responsive to complaints is diligent in carrying out independent audits and is perceived to be transparent and even-handed in its handling of the legislation. 
Dr ASHRAF CHOUDHARY (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
New Zealand Labour 51; Green Party 8; United Future 8; Progressive 2. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
Part 2 Amendments to principal Act 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 I guess the difficulty we strike now as a Committee is that this is a piece of legislation with lots and lots of bits in it. It has been cleverly constructed by the Minister so that it has Part 1 which has one clause called “Purpose” and then we go to Part 2 and that part by my calculations has something like—let me get this right—87 clauses and a lot of detail. I want to put in a reserve bid right from the outset that this is obviously where the rubber meets the road where the hook meets the load on the crane and where we need to start getting into some of the specifics. 
As I said in my second reading speech a lot of the bill is just tidying things up. It is to cope with some offences that have not been dealt with properly in the past and it will do some log-book process tidying up. The two big ones that I am happy about before I talk about a couple of the niggles in this part are by far the prohibition of people with a conviction entering the taxi industry or the P licence holder—people who have a conviction for a murder a serious sexual offence or a serious violent offence; we would like to exclude them even if they are in the industry right now. 
I know that the Minister has put forward Supplementary Order Paper 375 but in our view it misses the mark. I think that it will grant the right for people to appeal and the right for the director of Land Transport New Zealand—and I know that a number of speakers on our side in particular Dr Mapp is more versed in the law and will pick that up—but my view is that I am prepared to be hard and fast on it. If we were desperately short of taxi drivers I would suggest that we would have to find a way to accommodate them. But I have to say that convictions for murder serious sexual offences or serious violent offences are not just ordinary things. It is not just that a person has had a couple of small burglary convictions in his past when he was a young bloke with a few tattoos and so on. They are dreadfully serious events. 
My view on those people is: “Sorry get another job. Go and drive a bus.”—because there are lots of people on a bus so the one-to-one thing is not quite the same; or more important: “Go and drive a tractor a bulldozer or a truck or get into the construction industry. It is simply not acceptable that you were convicted for that and then for you to say that it was a while ago.” The 10 years that is currently proposed in the Supplementary Order Paper is not good enough either. 
Hon Mark Gosche 
: It’s not for murder. 
Hon MAURICE WILLIAMSON 
: No the 10 years does apply to other offences that I do not accept. Therefore I have to give notice that the National Party will certainly be voting against the Supplementary Order Paper but we will support the rest of the legislation. 
Hon Mark Gosche 
: You rely on that legal advice from him? 
Hon MAURICE WILLIAMSON 
: Dr Mapp is a doctor of law. I tell the member that I am happy to put him against that party’s legal brain any day of the week. 
Let us get back to things like chain of responsibility. The Minister in the chair now is different from the Minister who was here before and I shall repeat a few of the things I mentioned before about this. The chain of responsibility in this bill is a good move. For too long it had been possible for some dodgy operators at the company management and ownership end to embark on practices that were unsafe or were skirting their responsibilities for weight loads under the truck licences that operators had. Then when the poor old driver who was the very sort of person of last resort on the side of the road got caught he or she would be the one getting pinged getting the fines and the demerit points. 
The Road Transport Forum made a very good submission—Tony Friedlander’s team came along to the select committee and said they would like the chain of responsibility extended to include all appropriate transport offences where a third party has influence over the transport task. I am pleased to say that those changes look to be in the bill and look to be suitable. They cover not just things like speeding offences but weight limits load security and a range of other issues. 
When it gets down to the trivial I have an issue to discuss with the Minister and I hope he will think about letting the Government at least have a bit of leeway on one amendment I want to put up and that is to do with the little tiddlers—the Go-Peds and the mopeds. As everyone will know there is now a stunning level of little vehicles that mainly kids and some teenagers get around in. If one goes to the beach one will see them with those little devices. The problem is that under the old Transport Act most of them were considered to be a motor vehicle; people had to get a licence and a number plate pay for registration and all of that. It was truly ridiculous. 
However the attempt to exempt the more trivial of these has missed the mark. I showed the select committee some photos of my little 7-year-old twins driving an electric scooter at the beach. It is not an unsafe vehicle. It is not one likely to be involved in accidents on the road because they use it on little trailways and paths. It has a little 350-watt electric engine and unfortunately that will still get caught up in the bureaucracy of the director of Land Transport New Zealand making decisions on it and so on. 
In relation to the minority report I have to say that the National Party tried to be as cooperative as it could on this as always. As members will see in the commentary on page 9 of the report at the bottom New Zealand National believes that 600 watts would be a more realistic cut-off point. I agree that if we get into the really big powerful engines on some of the mopeds and Go-Peds—and there are now look-alike chopper bikes out there with much bigger engines—that would be foolish. But for a whole lot of the more kids’-end toys I would like to see changes. 
I look forward to taking more calls later on after other colleagues especially Dr Mapp and his legal mind on this stuff about penalties. However I do not want bad eggs driving taxis under any circumstances. 
DEBORAH CODDINGTON (ACT) 
: 
 I shall talk about two things that are of concern to me. One is Supplementary Order Paper 375 in the name of the Hon Pete Hodgson the Minister of Transport. I agree with the last speaker the Hon Maurice Williamson that the Supplementary Order Paper almost overturns all the good work we have done in terms of cleaning out the taxi industry. We actually agreed in the Transport and Industrial Relations Committee—the Labour members agreed to this too—that if one was out one was out. With this Supplementary Order Paper a person can apply to be reinstated by the Director of Land Transport if that person’s offence was committed more than 10 years ago and he or she has not reoffended in the 10 years leading up to the time of the application. 
Ten years is a very short time for those offences. We are dealing with a very high bar. The offences are crimes like murder or a sexual offence. 
Lianne Dalziel 
: Murder is not included. 
DEBORAH CODDINGTON 
: I am not talking about the Supplementary Order Paper at the moment. I am talking about the actual bill as it stands and what we agreed to. If a person’s licence has lapsed for 10 years as it reads here— 
Lianne Dalziel 
: You can’t include murder. 
DEBORAH CODDINGTON 
: I know that. The member should let me finish. The member should listen for a moment. Instead of getting so excited she should just settle down. In relation to the specified offences as Maurice Williamson said if it is a sexual offence and a person got only 3 years or 2 years in jail or did not even go to jail it is still a sexual offence. The passengers who hire a cab or who hire someone as a bus driver have the right to know that that person does not have a conviction for such an offence. I do not care whether it happened 15 or 20 years ago. As Maurice Williamson said people with such convictions should go and drive a bulldozer but they should not drive something where they come into contact with passengers. 
So we will not be supporting Supplementary Order Paper 375. It is actually the wrong way round. What we discussed in the select committee was that if someone with a conviction thought he or she was a fit able and proper person to be a taxi-driver but had had his or her P-class licence application turned down that person could go to the High Court for a review of that decision. This Supplementary Order Paper has turned that on its head. Instead of the burden of proof being on the applicant—the would-be driver—that person can now go to the High Court if the director turns down his or her application to be reinstated. That is not the way that we discussed it in the select committee. The provision is far too easy. We should look at the past record of the director of the then Land Transport Safety Authority. By that I mean that when I asked the former Minister of Transport Paul Swain in 2003 how many of the then current taxi drivers had convictions for sex offences I was advised by the Land Transport Safety Authority that it did not maintain a database of all taxi-drivers with criminal convictions nor had it done so in the past. What sort of a gatekeeper is that? Now we are turning the measure back on its head with the amendment to insert new section 29B on Supplementary Order Paper 375 which basically will almost take us back to the days when the authority had no clue about what was happening. 
 The other good point Maurice Williamson made was that Part 2 and the schedules make up the rest of the bill. However small parties like ACT get 10 minutes if lucky and 5 minutes if unlucky to debate this major legislation. 
I note especially new Part 6C “Offences relating to chain of responsibility”. It provides that a passenger can be held criminally liable or responsible in terms of the driver breaking the law if the passenger knew or suspected the law was being broken. I have already mentioned a court case due to come before the court in August involving a motorcade. I think five people have been charged. Two police officers who were passengers are accused of being parties to the offence. It is very difficult to understand why two police officers who were passengers are being prosecuted because it is suspected they knew the law was being broken yet the Prime Minister who heads up the highest court in the land did not know that. 
PHIL HEATLEY (National—Whangarei) 
: 
 I would like to continue on from where Deborah Coddington left off and to talk about new Part 6C “Offences relating to chain of responsibility”. Labour members may like to wake up or put down their newspapers and to flick through the bill. New section 79T “Offence to cause or require driver to breach speed limits maximum work time or rest time requirements” states: “Every person commits an offence and is liable on conviction to a fine not exceeding $25000 who by act or omission directly or indirectly causes or requires a driver to—(a) exceed any applicable speed limit if that—(i) person knew or should have known that the speed limit would be or would likely be exceeded; and (ii) driver is a driver to whom … applies;”. I could easily slot other words into that provision—such as “the Prime Minister … directly or indirectly causes or requires a driver to—(a) exceed any applicable speed limit if that—(i) Prime Minister knew or should have known that the speed limit would be or would likely be exceeded;”. 
I simply say that whether it is a young 17-year-old exceeding the speed limit in Clayton Cosgrove’s electorate—because he certainly does not have that issue under control—whether it is a 75-year-old exceeding the speed limit in Ponsonby or whether it is a Prime Minister exceeding the speed limit over 200 kilometres of road in the South Island the rules should remain the same. We say that no one in this country—unless the Labour members concede it is a corrupt country—should be above the law. National is asking questions in this Parliament as people are asking questions in their homes throughout the country about whether the Prime Minister should be accountable to the law just like everyone else. I am not saying she is guilty or not guilty but she should show up in court and give evidence on that matter just as every other New Zealander would young or old and South Islander or North Islander. 
New section 79T inserted by clause 33A is specifically about passengers who would encourage or at least not discourage “directly or indirectly” a driver to speed. There is shame in the Labour Party camp about the motorcade issue because the Prime Minister was in a hurry over 10 or 50 or 200 kilometres I think of road in the South Island that the motorcade screamed over in order to attend important affairs of State—I have forgotten whom the All Blacks were playing that day! The motorcade was rushing through South Island towns in order to attend important affairs of State. The Prime Minister we understand allegedly— 
Deborah Coddington 
: They were playing the Wallabies. 
PHIL HEATLEY 
: The All Blacks were playing the Wallabies that day. The Prime Minister encouraged her driver to go over 140 kilometres an hour—that is our understanding of it. This bill addresses that sort of issue and I hope members on the Government side of the Chamber will take a call in defence of the Prime Minister to explain to us why she is not giving evidence in court voluntarily. Why is that the case when this bill highlights that particular matter? 
I would now like to touch on the issues that Maurice Williamson put forward to the Committee some minutes ago regarding the offence history of taxi-drivers or others who wish to drive people to various destinations around our cities or countryside. I find it appalling as does Deborah Coddington that those in the taxi industry who are supposed to be acting as “gatekeepers”—monitoring drivers—have no idea of the offences taxi-drivers may have committed before they took up the role of taxi-driver. The industry has never asked drivers about the offences they have committed or been convicted of and does not appear to care whether drivers have committed or been convicted of offences. Certainly the industry has no record of whether drivers have committed or been convicted of offences. Of course serious violent or sexual offences should be known within the companies in the taxi industry simply because no one would like to think that his or her mother grandmother daughter or sister was being taken at 12 midnight on a Saturday night around seedy parts of Auckland by such drivers. There should be restrictions on that. 
I appreciate that Supplementary Order Paper 375 in the name of the Hon Pete Hodgson specifically excludes some violent and sexual offences but other offences are not excluded. All we ask is that there be some transparency in the employment of taxi-drivers around our cities and countryside so that people are kept safe. People put tremendous trust in the people who drive them around. My understanding of criminal activities and I have heard this on a number of occasions from police specialists is that if anyone is ever approached—akiddie a woman or anybody—by someone in a motor vehicle who wants that person to get into the car and who tries to make the person do so either forcibly or otherwise the best opportunity for escape is before the person gets in the car. Once people get into a motor vehicle they are effectively captured and it is very difficult to escape. We willingly get into taxis—we pay to get into taxis—and we are in effect caught up in that taxi for as long as the driver would have us in there. If the driver is a criminal has criminal offences or has further criminal intent it is a very dangerous position to be in indeed. We challenge the Minister on his lax laws and softening of the legislation whereby we are not able to monitor or gate-keep as Deborah Coddington said those taxi-drivers and would-be taxi-drivers who have those sorts of previous convictions. 
 It is interesting to think that taxi-drivers have a 10-year time frame—that somehow it is safe for people who have not offended for 10 years to drive New Zealand women around the streets of Auckland in the dark hours of the early morning. But those people might have been in jail for the whole of those 10 years in which case they could not have offended over that time. 
Hon Maurice Williamson 
: That doesn’t stop them. 
PHIL HEATLEY 
: That is true. Under the current prison system as we have seen throughout New Zealand people can still deal drugs while they are in the prison system they can still be involved in illicit sex while in the prison system and on it goes. But the reality is that people may not have had a conviction for the last 10 years because they have been inside the slammer. I am interested to know whether Mark Gosche will promote taxi companies driving up to prisons and saying to prisoners about to be released: “Jump aboard. You’re entering society. Here’s your job. Here’s a licence for 6 months. You go and drive the good people of Auckland around Manurewa for the next 6 months. You haven’t had any conviction in the last decade because we’ve kept you locked up. Granted you did have a sentence of 30 years and we’ve let you out in 10 but the reality is that you haven’t had an offence in the last 10 years so you’re a safe person.” 
We think that is absolutely absurd. There is enough concern in the taxi and cab industry as it is at the moment with all sorts of people from around the world driving cabs such as brain surgeons from Russia and dentists from Lithuania. All sorts of people are driving people up and down the wrong streets in Auckland Wellington and Christchurch and the last thing we need is for criminals and those who carry convictions to drive our people around as well. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 There is an old saying that “a little bit of knowledge is a dangerous thing” and the member who has just resumed his seat has illustrated that absolutely 100 percent. I shall explain the taxi-driving conviction clause for want of a better term. 
Clayton Cosgrove 
: Just take it slowly for him. Use small words. 
PETER BROWN 
: I will speak slowly and use small words because I am only a simple sailor myself. This bill puts anybody convicted of these crimes out. Those who are convicted and who have never been a taxi-driver will never get the chance—they are out totally 100 percent. This bill also puts out those people who are currently driving taxis and who in earlier years have been convicted of these offences—totally out. Those who have been convicted of murder and serious sexual offences are out 100 percent forever. But the other people are granted a right of appeal. They are to some degree granted an element of fairness. 
New Zealand First does not want those people driving taxis at all but we do not believe that we are the people who should be removing justice from those people—neither is Maurice Williamson nor Wayne Mapp. In the first instance we think that the director is in a much better position to do so and in the second instance it should be the High Court. We think that is a reasonable approach. I caution members before they embark on a wordy journey that saying that we are letting murderers rapists and goodness knows who drive our taxis with impunity will send a signal of alarm throughout the country. Those people are definitely excluded and I am glad to see that National members have suddenly recognised that. 
I want to speak briefly about courtesy coaches because this matter is of some concern. I have just spoken to the Minister and the officials on the issue. A number of clubs in this country run courtesy buses and they charge a fee. Some charge it by donation but some have a set fee. Some give guidance about what sort of donation a person should make but others charge a set fee. This bill will make the practice of charging a specific set fee illegal. In many instances clubs have told me that they will remove their courtesy coaches. But thankfully I now know after having spoken with the Minister and the officials that these provisions will not come into force for some time and therefore clubs will have time to make representations to the Government or whoever to have their case listened to. 
A number of clubs have courtesy coaches including Napier RSA Kawerau Cosmopolitan Club Stokes Valley Cosmopolitan Club Levin Cosmopolitan Club Alexandra District Club Whangarei RSA Wanganui RSA Waitomo Club Petone Working Men’s Club Onehunga Workingmen’s Club Matamata Club Wairoa Club Mount Maunganui RSA Tauranga RSA Waihi Beach Memorial RSA the Mt Maunganui Cosmopolitan Club and last but not least the Otaki Memorial RSA. The member for Otaki said that the Otaki Memorial RSA was not concerned about this legislation but it is. I have a letter written by the club to the Minister and copied to me. I am told that 350 of these clubs exist in the country and as they have 220000 voting members they are a voice to be listened to. Having spoken to the Minister and the officials I am encouraged to believe that in the fullness of time their concerns will be identified and amended. 
I emphasise that many of these clubs tell me that there is no competing taxi service at closing time and during the hours of darkness and they want the ability to charge a modest fee to drop people off at their homes. One club I spoke with reminded me very strenuously that if Parliament removes this service then it will be putting more drunks on the road. That sits very uncomfortably with New Zealand First. We want to get drunks off the road but we do not want to destroy their liberty to go to their clubs and if a courtesy service can be arranged managed and administered in a reasonable manner with a modest fee attached then New Zealand First is all for it. But after talking to the Minister and the officials I understand the complications and I respect their view. 
Hon PETE HODGSON (Minister of Transport) 
: 
 I stand to take a brief call to respond to my colleague from New Zealand First Peter Brown to thank him for his quite careful remarks but also because it is on the record to correct him on one of his remarks if I may. The member said this legislation makes charging a fee illegal and I just want the Committee to be very clear that it already is. That is already the case. This law makes things no worse. What it does do is to provide a regulatory framework by which we can progressively make things better. As society changes as attitudes towards drink-driving tighten up as good RSAs and other service organisations around the country seek to take responsibility for their club membership and as that becomes a more and more expensive thing for them to do and therefore their desire to charge becomes greater so too must the regulation keep up. That is why the passage of this legislation matters. We can then have the development of the regulatory framework to keep it abreast of the changing needs of society. I thank the member for his remarks and correct him on just one of them. This bill does not make anything worse. It does the opposite. It lays the framework to make things progressively more flexible and more responsive to the needs of society. 
LARRY BALDOCK (United Future) 
: 
 I would like to take a call to address the Minister of Transport’s amendment on his Supplementary Order Paper to Part 5 of the schedule. It deals with the problem of people who operate a vehicle that creates excessive noise. I welcome the Minister’s cooperation on this and thank him for it. The amendment proposes to add 10 demerit points to that offence. 
Before I became a member of Parliament I was a member of the city council in Tauranga. At the time we had a particular problem in one of our best tourism areas along the main beach where there is a lot of high-rise apartment-style accommodation. For many years we have suffered the problem of young people coming to town in their cars and thinking it is fun to go round and round in a circle making a noise. Sometimes this happens at 2 in the morning making life miserable for both residents and visitors. In fact I quite frequently see in the newspaper letters to the editor from people who had come for a nice relaxing holiday but have gone away very disappointed. They write to the newspaper that they will never come back because their sleep was destroyed because of this nuisance. 
Early on in my term in Parliament United Future saw the opportunity to give assistance to pass the boy racer legislation so that the police have more powers to deal with this issue particularly where the drivers are doing doughnuts and other dangerous things. 
Hon Maurice Williamson 
: Has it made a difference? 
LARRY BALDOCK 
: It has made a difference in regard to that activity but it has not addressed the issue of those who simply want to make a nuisance of themselves. People can do that regardless of whether they have a modified muffler on their car. They can use just a standard car and simply rev the engine at 2 o’clock in the morning and they will wake people up. They can use their car stereo and be a nuisance. When I spoke to police in the area about what suggestions they might have to deal with it they said they wanted to be able to take the keys off the drivers right there on the spot so that they could immobilise the vehicle for the evening—the drivers could come back the next day and get the keys—and that would be the end of the problem for that night. That would soon send a message to those causing the disturbance that it will not be tolerated. 
Unfortunately it seems that step is a little bit too draconian in some people’s minds so we have arrived at the compromise of putting on demerit points. I think that is a reasonable compromise. We will have to monitor how it goes over the next year but at least it is better than simply issuing tickets to those young people because they seem to take no regard of them at all. In fact some of them have a glovebox full of tickets. They do not pay them or else they go home and somebody else digs deep into his or her pocket and pays for those tickets which I cannot really understand. The effect is that those young people have disregard for the law. I hope this amendment to add 10 demerit points will send a very clear signal to those young people. We love young people. We think that stage of life is a great time. Sometimes young people do crazy things and sometimes they do not have regard for other people around them. We do not want to be too severe but we do want to send a message that that sort of behaviour will not be tolerated. 
Not only is it affecting the residents of the area; it is also hurting the economy because great investments have been made in providing facilities for visitors. We value tourism in New Zealand and we have increasing numbers of tourists every year. It is not a problem just in the Mount Maunganui and Tauranga area; other very popular tourism sites around the country are at risk from that kind of behaviour. I am sure that visitors from overseas go away wondering why on earth we tolerate that behaviour. So I welcome this amendment. Hopefully with the addition of 10 demerit points if people are caught once twice or three times they will realise they are very close to having their licence taken off them and they will find some other useful activity in which to engage in the wee hours of the morning particularly at the weekends which is when this kind of activity occurs. 
Of course the problem will be addressed only if the police are adequately resourced so that they can go out at night and catch those engaging in this activity. We certainly hope that as this new law comes into force the police will take the initiative to undertake some campaigns during weekends so that the message is sent very clearly early on in the piece to young people that they cannot continue that activity and drive everybody nuts. I hope the people of Tauranga and Mount Maunganui will finally get some relief and be able to have a good night’s sleep. One of the most important things we can have in life is a good night’s sleep and I hope that will be the case. 
PANSY WONG (National) 
: 
 I have proposed two amendments to Part 2 that I would like to explain to the Committee in detail to enable members of the other political parties including the Minister in the chair the Hon Pete Hodgson to consider them. I look forward to the Minister’s comments—hopefully they will be positive. I learnt from the Hon Harry Duynhoven that in relation to individuals who teach learner-drivers for monetary consideration the offence of not having the “I” endorsement was previously omitted from legislation. Apparently that offence has been reinstated in this Land Transport Amendment Bill— and I welcome that—to make it clear that any individual who teaches learner-drivers for monetary consideration should obtain an “I” endorsement. 
But what this legislation has not taken into consideration is how we can inform the public that people who want to learn to drive properly from a licensed driving instructor are getting that service. The Minister in his letter to me said that they would advertise in newspapers etc. I think that a very smart move would be for an instructor who is properly authorised to do it for commercial purposes to display the “I” endorsement on the vehicle in which he or she teaches students just like taxis do. Nowadays when we get into a taxi we know the name of the taxi-driver which enables individuals to lodge a complaint or make inquiries. It also reminds the driving instructors that they have to have the “I” endorsement in order to carry out those commercial activities. 
My second amendment proposes that the driving instructors who can obtain the “I” endorsement should be New Zealand citizens or holders of a permanent residence visa. That is to avoid visitors or people holding student permits teaching others for commercial gain. I do not believe that teaching others to drive on New Zealand roads can be entrusted to persons who have spent a short time in New Zealand. Even though they may be experienced drivers in their home country we have our own rules. 
If we look at the United States or China we have the right-hand versus the left-hand driving habit. Also New Zealand has a unique set of road conditions particularly on the open road. So I believe that the “I” endorsement driving permit should be limited to New Zealand citizens or people who are permanent resident visa-holders. I hope the Minister can take a call to indicate whether he is in favour of those changes to enhance road safety for New Zealand society. 
I continue to bring up the theme of this legislation being about enhancing the enforcement regime. Just now my colleague Phil Heatley who is a very robust debater raised a very good question. He asked whether the Prime Minister the Rt Hon Helen Clark should be seen to be above the law. This legislation should send a stern signal and say that no matter who if legislation to enhance road safety in New Zealand is infringed that person should front up to the court to answer or defend the charges otherwise we are making a mockery of having one standard of rule for all. It would be one standard for the Prime Minister and one standard for the rest of New Zealand’s citizens which I do not think would be a desirable outcome of this legislation. The enforcement provision is one that National members want to see being properly enforced. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I wish to talk on Supplementary Order Paper 375 and to refer members to the commentary in the bill itself. There was concern about whether there ought to be some form of—and I noted this specifically—appeal provision for those who had been convicted of offences prior to the enactment of the legislation. The concern did not exist in relation to those who would be convicted post the enactment of the legislation. That relevant part of the commentary concludes: “All members of the committee recommend that further consideration be given to this matter.” 
The first point to note is that it was intended to be an appeal. That normally involves or envisages going to either the District Court or the High Court—that kind of gravity if you will. So even the process itself is intended quite specifically to be something of a deterrent. What does the Government’s Supplementary Order Paper have instead? All a person has to do is apply to the Director of Land Transport which is a relatively simple straightforward procedure thus having a low threshold. 
I note that it relates to convictions more than 10 years prior to the enactment of the legislation—at least that point was correctly noted—and secondly the person must have no convictions for offences punishable within the last 10 years. 
Let us say this legislation will come into effect on 1 July this year. Essentially it applies to anyone with offences prior to July 1995. As has been noted those offences do not include murder or serious sexual offences but they do include some very serious offences indeed. 
Phil Heatley 
: What are they? 
Dr WAYNE MAPP 
: They include aggravated assault and a whole series of very serious offences. That is our particular concern. They include attempt to murder conspiracy to murder and—which is probably much more common—causing grievous bodily harm by injury and aggravated wounding and injury; in other words the classic “GBH” as it was known. Those are offences for which a person invariably gets a sentence of imprisonment. So they are very serious yet we are saying that such a person ought to be able to go through a relatively straightforward procedure which is to apply to the Director of Land Transport and get a passenger endorsement to drive a taxi or indeed a bus. 
We say that there are two problems. The first problem is that the process is to go to the director as opposed to for instance applying to the District Court as being an appropriate venue. That would have been a much higher threshold and the rules could have been more properly prescribed. That is the first flaw. 
The second flaw is the 10-year period. It will hardly escape the notice of members that the clean-slate legislation also has a 10-year period. Surely we would want to draw a pretty significant distinction between wiping genuinely minor offences where there have been no further offences committed in the last 10 years and these kinds of offences. A 20-year period might have been more appropriate because as Mr Heatley quite rightly pointed out in reality a large chunk of that 10 years will have been inside a jail. I am absolutely sure that the public should not have to be driven in a taxi by someone who has spent maybe 7 of the last 10 years—say 1995 to 2002—in jail. 
There are two flaws. The first flaw is the application to the director and the second flaw is the 10 years. I believe that the Government has taken excessive licence from the views of the select committee. Yes there was a problem and I was one of those who said the Government needed to look at this issue. I assumed I must say that the Government would be thinking of an appeal to a court in order to deliberately raise the threshold so it would not be easy to get. What has been done instead is that people apply to the director and then if the director turns the case down there can be an appeal to the High Court. There is a double threshold. It is quite clearly intended that the first level of application will be lower and easier. Do we truly want to say to people who have committed serious offences and who may have been in jail for 7 years that they can simply apply to the director to get a passenger endorsement? Is that what the Government is seriously saying to the public of New Zealand? Apparently it is. It says people should just write a brief letter—that will do and they will get their passenger endorsement. It does not matter whether they have thrown acid or been convicted of grievous bodily harm and things of that nature. So we cannot support this Supplementary Order Paper in the way it has been drafted. 
If there had been a different threshold—say an application to the District Court with full evidence given either way—that might have been quite a different situation. It would have been clear on the face of it that the threshold—[ 
Interruption 
] No the first application is to the director. Only if the director refuses does one then go to the High Court. It is amazing is it not? A member of the select committee who is a lawyer has apparently not even read the Supplementary Order Paper because she thinks the way to do this is to go to the High Court. I say to that member that the High Court issue arises only if the director turns the case down. I say to the Minister that I do not believe that this Supplementary Order Paper meets the kinds of circumstances that members on this side of the Chamber envisaged by the specific reference to the concept of appeal. An application to the director is simply not an appeal. It is just that—an application. That is the first issue I wanted to deal with. 
The second issue is one that was dealt with but I bring it up again. It is the rules about vehicles between 300 watts and 600 watts which are mentioned in the commentary and in clauses 4 and 68A. We say that the Government has got this one wrong. Frankly we believe that there should be general approval for vehicles—basically bicycles—up to 600 watts and then nothing further. I believe that this issue will have to be revisited by the Government. Part 2 is very long. It runs from page 7 of the bill to page 99. Virtually the entire bill is contained within that part and I hope that we will have proper opportunities to consider all the issues. 
I suggest to the Minister that the provisions in relation to the definition of “vehicle” contained in clause 4 and the further provisions clause 68A on that very question are flawed. There is an absolute exemption for vehicles under 300 watts. That is fair enough. Then the director has discretion for vehicles between 300 and 600 watts and that is inadequate 
LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I move  
That the question be now put 
. 
DEBORAH CODDINGTON (ACT) 
: 
 Thank you Madam Chairperson for giving me that call because I would really like the Minister Pete Hodgson to take a call to explain this Supplementary Order Paper to us. There is another flaw in addition to the two that Wayne Mapp pointed out. I too am unhappy with the Director of Land Transport having the sole power to reinstate licences to those who already have convictions. I think it should go to the High Court first. 
Secondly I would really like the Minister to explain something about reinstatement. A licence cannot be reinstated if people have been convicted of a serious offence under section 29A(2)(a) or (b)—inserted by clause 13—which relate to murder or a sexual crime punishable by 7 years’ or more imprisonment. However if we look at section 29A(2)(d) inserted by clause 13 we see that it states: “an offence committed outside New Zealand that if committed in New Zealand would constitute an offence specified in paragraphs (a) to (c).” But when I look at the Supplementary Order Paper it does not seem to me—and I am not a lawyer—to include paragraph (d). Do we have an anomaly whereby if a person is convicted of murder or a serious sexual crime outside New Zealand he or she is not subject to the same barrier as those who were convicted of it inside New Zealand? In other words could a person slip through because it was a historical conviction and therefore the person would not have to apply or is it the other way round? I do not know. That is why I am asking the Minister to explain. For me committing a serious sexual offence with say a little girl in Thailand is just as bad as committing it with a little girl in New Zealand and it should be treated exactly the same. 
I know—and we discussed it at the Transport and Industrial Relations Committee—that with a lot of immigrants these days especially refugees it is very difficult to find out exactly what criminal history they have or whether they have one because we are dealing with different jurisdictions. The committee talked about that. But where possible I think the same laws should apply. If we are bringing in a law that totally prohibits—no ifs no buts no right of appeal—New Zealand people convicted under New Zealand legislation of murder or a serious sexual crime from going into the taxi industry or from getting back into it then I think we should apply that same legislation to those who have been convicted of comparable crimes in another jurisdiction when we know and can find out about those crimes. Let us face it: if people have been convicted of such crimes whether or not they are taxi-drivers they should not be in this country. It is a privilege to live in New Zealand not a right—but that is another debate and not one that relates to this legislation. 
So I ask the Minister to take a call to explain this Supplementary Order Paper. It is very important. The select committee members worked together very hard to arrive at a situation we could all be happy with. We will probably have a situation whereby people can go to the Director of Land Transport and if they are turned down they can go to the High Court but let us at least have a situation whereby the same rules apply to everyone whether he or she was convicted in New Zealand or overseas. 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
LARRY BALDOCK (United Future) 
: 
 Thank you Madam Chairperson for giving me the chance to raise another matter about Part 2. It relates to clause 15 and the issue of work time and logbooks. I was approached by a very nice couple in Tauranga—I am sorry to raise matters relating to Tauranga all the time but somebody in this Chamber has to raise the concerns of the good people of Tauranga. That nice couple operate a dial-a-driver business as a part-time operation. The husband works full time and the wife works part time because they see their priority as making a living that is sufficient to enable them to raise their family. They want the mother to be able to stay home in the afternoons so that she is there when the children come home from school and I think that that is laudable. They are concerned that this legislation will affect their business. I appreciate the discussion I have been able to have with the Minister and the officials to see whether the situation could be resolved but they have informed me that it is not possible in this legislation to find a way to exempt that couple. I have been informed that there is some hope because this legislation will not take effect for a year. There will be another process of submissions before the rules come into force so we may be able to find a way forward for the couple in that time. 
In this debate I simply want to put on record what the couple’s concern is so that we will remember that we need to work through this issue in the year ahead. The couple work as I said but they come home in the evening. The husband goes to bed. It is probably best for me to read from his submission to the Transport and Industrial Relations Committee so that the issue will be nice and clear for everybody. The husband wrote that he arrives home shortly after 5 o’clock eats his dinner and then goes to bed for approximately 4 to 5 hours of rest. He is then ready for when at around 10.30 the couple start to get calls from people who wish to be driven home because they have had a little too much to drink. Since the overarching concern of this bill is safety I think it is important that we keep services like that operating so that people can find a way to get home if they have had too much to drink. So at around 10.30 the phone may go and the couple may begin to respond to some calls. They do not take calls after midnight during the week but on Saturday night—their busiest night—they go through until 3 in the morning. They are taking care not to overwork and make themselves too tired. They do not drive long distances when they pick people up and drive them home. They believe that they are operating in a very safe manner. 
The problem is that the legislation in establishing the 13-hour period in which a person can continue to work will affect them. It will not take into account the fact that although the husband works during the day he comes home and has several hours of very good sleep is probably as alert as anybody else and can provide the service. He wrote: “We understand the concerns regarding driver fatigue and accidents that are related to this but feel that dial-a-driver services in smaller centres do not pose a threat to our clients in this regard.” I agree with him. Just how many accidents can be attributed to safe drivers who are getting drunk clients home? There is no evidence that there is a problem. I think that someone who has worked driving for 13 hours will be far more tired than that gentleman who has worked an 8-hour day gone home had a sleep and then gone out to work again for a few hours in the night accompanied by his wife and sometimes apparently by the children who the couple say enjoy being involved as a family in the business. I think we should applaud a family that is committed to working together like that in order to provide an income so that they can meet their needs. 
The husband wrote: “It seems ridiculous to me that a man can drive a truck for 11 hours out of 13 in a day and then go out and drive as many hours as he likes in his private vehicle and there isn’t a law against that.” His comment makes pretty good sense really. He also makes the point that it is not fair to judge all people as needing the same amount of sleep each night. He wrote that many people exist quite happily on only 5 to 6 hours of sleep in a 24-hour period and I am sure that all members in this Chamber would have to agree with him. The husband wrote: “Both myself and my wife are people who do not need 8 hours every night and manage very well on the regime that we have put in place. We do not drive great distances here in Tauranga. Probably the furthest area we have transported clients home to is Te Puke which is only 26 kilometres from central Tauranga. Our driving is start-stop stuff along streets we have got to know very well and we are always careful to keep to the speed limits and take no risks.” 
I want to put on the record of Parliament that there is something that has not been resolved through this legislation. I support the legislation for trying to improve safety but we do not want to exclude the small dial-a-driver businesses which I believe exist not only in Tauranga but in other areas from operating. It is in the best interests of the safety of all of us that people who have been drinking can find a way to get home. Sometimes taxi companies will provide that service but when taxis are very busy they prefer to take one person home and not to tie up two drivers. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I want to speak about the two amendments put forward by National Party members. 
The first is in the name of Pansy Wong. It seems to me to make quite a degree of sense. She states: “Driving instructors who teach driving for hire or reward must display the I endorsement in a visible manner during driving courses.” I would have thought that was a pretty sound sort of requirement in legislation—that a driving instructor displays the endorsement in a visible manner so that when one gets in the instructor’s car one knows that he or she is the genuine article so to speak. The amendment goes on: “Driving instructors who teach driving for hire or reward with an I endorsement must be New Zealand citizens or permanent residents.” I cannot read her last words to be honest but that requirement too makes sense. Should our driving instructors not have learnt their trade in this country? 
Dr Wayne Mapp 
: It seems sensible. 
PETER BROWN 
: It seems quite sensible to me and it seems to be an oversight that the legislation does not recognise this sort of thing. So I think I can say that New Zealand First will support Pansy Wong’s amendment. We believe that driving instructors should advertise who they are how they are qualified etc. and we believe that they should have learnt their trade in this country and be fully au fait with our rules. Some of our rules are slightly different from rules elsewhere. One example is the right-hand turn rule which came in 20-odd years ago; I am sure it was devised by panel beaters! I thought the Hon Mark Gosche was going to look at that rule a year or so back with a view to amending it because in some areas it causes a lot of confusion. I think it is important that driving instructors are permanent residents or New Zealand citizens. We will support that. 
The Hon Maurice Williamson has put forward another amendment that we believe has quite a lot of merit. Its purpose is to combine in relation to appendix 2 of the commentary vehicles with a power output of less than 300 watts and vehicles with a power output of between 300 watts and 600 watts. The Transport and Industrial Relations Committee has just looked at this matter pretty carefully. I thought we did a pretty darn good job on it but Maurice Williamson made some valid points a few moments ago. He pointed out that a vehicle with a power output of between 300 watts and 600 watts may be determined by the director not to be a motor vehicle. That seems to add possibly an awful lot of unnecessary bureaucracy on to the director. There is a little picture of the type of vehicle; it helps us on this side of the House immensely. 
Phil Heatley 
: Ha ha! 
PETER BROWN 
: The member laughs but it does make things very clear. They are very straightforward-looking vehicles and all the other requirements—driver requirements and vehicle requirements—have to be adhered to. So we think the Hon Maurice Williamson on this occasion has got it spot on and we will support the amendment in his name. 
On the issue just raised by Larry Baldock I wonder whether he is actually serious. Is the member suggesting that it will be compulsory for a fellow to go home after doing his 8 hours and have a 5-hour sleep? For all we know he could go and play football. We need to have some rules and regulations governing driving on a commercial basis for income. I think the bill pretty well has it right. I accept the anomaly—I myself am aware of it—that a truck-driver after driving a truck for 11 hours can then go and drive his car from here to the other end of New Zealand if he so wishes. That is a loophole that we may have to look at in the fullness of time. But when it comes to commercial driving it is only right and proper to have some restrictions. 
I think this bill goes a long way towards addressing some of the concerns and certainly the concerns around logbooks. Some drivers and company managers have told me how drivers have been fined excessively for very minor logbook offences. This bill takes care of that. 
The question was put that the following amendment in the name of Pansy Wong to Part 2 be agreed to: 
to insert the following new clause 10A: 
10ANew Section 26A inserted 
26ADisplay 
(1)driving instructors who teach driving for hire or reward must display “I” endorsement in a visible manner during driving courses. 
(2)driving instructors who teach driving for hire or reward with “I” endorsement must be New Zealand citizens or permanent resident visa holders. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Noes 68 
New Zealand Labour 51; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Maurice Williamson to clause 68A(2) be agreed to: 
to omit from subsection (2) of section 168A the expression “300 W” and substitute the expression “600 W”. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Noes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 375 in the name of the Hon Pete Hodgson to Part 2 and the following amendments in his name to clause 85 be agreed to: 
to omit from subclause (3) the words “Sections 4(a) to (d) 5(6)(a) 7 8(3) and (4) 9 12 to 14 18 to 23 24(2)(a) to (c) 26(3) 29 32 to 39” and substitute the words “Sections 4 to 46”; and 
to omit subclause (4). 
A party vote was called for on the question  
That the amendments be agreed to 
. 
Ayes 84 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 36 
New Zealand National 27; ACT New Zealand 9. 
Amendments agreed to. 
Schedule 
The question was put that the amendments set out on Supplementary Order Paper 375 in the name of the Hon Pete Hodgson to the schedule be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 84 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 36 
New Zealand National 27; ACT New Zealand 9. 
Amendments agreed to and schedule as amended agreed to. 
Clauses 1 and 2 
Dr WAYNE MAPP (National—North Shore) 
: 
 I rise to speak to clauses 1 and 2 the title and commencement. The interesting part here is the commencement date itself. Under clause 2 there is a complex formula of which provisions come into force at which times. For instance the legislation as a whole comes into force on 16 January 2006 which is basically 6 months from now but certain parts of it can come into force on an earlier date. I ask the Minister of Transport why the special rules that we have now introduced relating to taxi-drivers which are covered by clause 13 have to wait until 16 January to come into force instead of coming into force at the time of the royal assent. That was the original proposal but now it seems as I read this that clause 13 will come into force on 16 January 2006. It may be that it is intended by Order in Council to bring that portion into force at a different date possibly an earlier date. I would like some assurance from the Minister that that would be the case. 
For the moment he has effectively created a loophole whereby those who have been convicted of serious offences would be able to continue driving over the following 6 months. I would have thought that on legislation of this nature when the rules on this kind of issue are being changed particularly with the very loose appeal procedure that is now being approved—well it is actually not an appeal procedure really; one just has to apply to the director and that will suffice—the public are exposed to unnecessary risk. This Parliament based on the submissions that its committee received wants to give a very clear signal that passengers in taxis in particular deserve special protection. Parliament has established what is overall apart from that review procedure a rigorous test an exemplary test even whereby persons guilty of various serious offences ought not to be able to drive taxis. But as I read the legislation that does not come into force for another 6 months and I have to ask why we would do that. Why would we allow someone convicted literally of murder or of various serious sexual offences to continue to drive over the next 6 months and potentially place people at risk? As a Parliament we are saying that that is not possible and that those people ought to have their licences removed. Presumably that means now not 6 months from now. So I want some form of explanation as to why—and maybe I have misread clause 2 because it is relatively complexly constructed—that is not the case. I would be pleased if the Minister could give a direction on it. 
Other parts of the legislation I understand have implementation processes involved in them and new rules—logbook requirements etc.—have to be developed. One would expect that to take some period of time. After all it is not simply a question of people changing patterns; they also have to complete new logbooks essentially to comply with the legislation for the future and clearly people need time to produce those logbooks and so on and so forth. This is an area in which Parliament says upon balancing public safety and the interests of the drivers public safety takes priority. I believe if we are saying that as strictly and as seriously as we are—and it is a substantial test; I recognise that—then that part of the legislation ought to come into force at the time of the royal assent or as soon as possible thereafter. I would appreciate an explanation from the Minister on that point. 
Clause 1 agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 375 in the name of the Hon Pete Hodgson to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 84 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 36 
New Zealand National 27; ACT New Zealand 9. 
Amendments agreed to and clause 2 as amended agreed to. 
Third Reading 
Hon PETE HODGSON (Minister of Transport) 
: 
 I move  
That the Land Transport Amendment Bill be now read a third time 
. I thank members for their work on this bill. The examination it has been given and the amendments made have improved it considerably. The bill is a result of a series of reviews and it is intended to improve the safety and security of road users in line with the New Zealand Transport Strategy. It also remedies a number of problems in the legislative framework regarding the responsibilities of road users traffic offences and penalties and the driver-licensing system. 
Its main features and significant amendments include a requirement to surrender superseded driver licences in response to police and hospitality industry concerns that superseded learner and restricted licences are being used to assist minors to gain entry to licensed establishments. This bill contains amendments to transport operator licensing in line with the 2001 review. They aim to simplify and clarify licensing requirements and to reduce compliance costs for transport operators. 
The bill also includes measures to improve commercial driver standards through the Ministry Rules Programme. Those include enhanced accountability for taxi organisations and strengthened offence and penalty provisions. It now also requires taxi service licence holders and drivers to provide company details in Braille inside taxis. That step should enhance the security of visually impaired taxi passengers. 
The bill prohibits persons convicted of serious violent and sexual offences from being a passenger service driver. That will address the risk to public safety from having those with such convictions in a one-on-one situation with passengers. The Transport and Industrial Relations Committee extended the scope of the provision in order to cover offences committed prior to the commencement of the bill which means that the provision will apply to existing passenger service drivers with convictions for serious violent and sexual offences. 
The House has further amended the provision following concerns raised by the select committee to allow some individuals convicted of certain listed offences—but not murder or sexual offences—to apply to have their passenger endorsements reinstated in extremely limited circumstances. The circumstances apply when the conviction is more than 10 years old and when the applicant has not been convicted of an imprisonable offence in the previous 10 years. I consider that that approach appropriately balances the ability of those posing no risk to the safety of the public to maintain their passenger endorsements with the legitimate personal security concerns of the users of passenger services. 
The bill clarifies that home community support workers who occasionally give rides to their clients—to help them with shopping for example—do not require passenger service licences. It was originally intended that that matter be clarified via the forthcoming operator licensing rule. However I accept that considerable uncertainty has arisen in the home-based care sector as to whether licensing is required and so that issue should be rectified quickly. 
In addition operators of courtesy coach services have raised concerns that the bill will affect the service they provide. I can assure them that the bill does not require courtesy services to be licensed where the payment of a fare is not a condition of carriage. However there will be an opportunity in the upcoming months for organisations to comment further on the passenger licensing provisions during the development of the operator licensing rule. I will ensure that those organisations that have contacted me on that matter are kept informed about the submission process. 
Work is also under way to extend the current exemption to passenger service licensing for car-pooling arrangements to include initiatives such as the Rideshare programme currently being developed in Auckland along with other social informal or not-for-profit activities. It has never been this Government’s intention to capture those arrangements in the licensing regime; clarification would therefore be useful and I will seek to implement those exemptions by regulation as soon as practicable. 
Following consultation and a review the bill retains prescribed driving-hours and logbooks for commercial drivers. The select committee has placed key limits on the allowable hours in the primary Act. That gives due emphasis to the importance of managing fatigue within the transport industry. The bill also simplifies the driving-hours and logbook system and introduces a new simpler definition of work time. Additionally it introduces a new “chain of responsibility” offence to ensure that employers and other industry participants are held accountable if they knowingly allow or cause driving-hour breaches. It also covers offences for load security overloading and speeding where commercial vehicles are involved. Those are positive measures which by making the likes of consignees and consignors equally liable where they have knowingly contributed to an offence will help improve the safety of commercial transport services. 
The bill contains a number of common-sense amendments to remedy several defects in transport legislation. Those include empowering police to serve a notice of licence suspension at the roadside on a driver with more than 100 demerit points where the director has been unable to serve the notice. They also include ensuring that driving offences involving injury or death apply both on and off a road and updating the definition of “motor vehicle” to exclude vehicles powered by very small motors. The maximum power output for low-powered vehicles has been increased to 300 watts or higher for specified classes of vehicles such as electrical bicycles. 
During the debate on this bill the United Future party raised the issue of excessively noisy vehicles. As a consequence of discussions with them and with the Greens the bill now strengthens the sanctions and tools available to enforcement officers to deal with excessively noisy vehicles. It does that by assigning 10 demerit points for vehicle noise offences and by increasing fines. This bill contains a large number of positive changes to the legislative framework underpinning land transport safety. Not only will it improve safety and help save lives but it will also reduce unnecessary complication and business compliance costs. I commend it to the House. 
Dr WAYNE MAPP (National—North Shore) 
: 
 National supports this bill. We recognise as the Minister has indicated that much of it covers improvements to the existing legislation and enhancing it. I note in this third reading that the Transport and Industrial Relations Committee members worked very constructively together to enhance the legislation. The rules in many parts are detailed technical and naturally intended to attract the interests of only those people who are most directly affected in the transport industry. So I note the rules around logbooks etc. and the details around the limited licence powers of traffic officers and the like. Some specific things did not get covered in earlier debates including some of the rules around goods and services vehicles—in particular the sizes of those vehicles. That area of the law has actually been made somewhat more liberal and we recognise the value of that in terms of the practicality of operating modern New Zealand businesses. 
There are of course some issues that the select committee and indeed the preceding debate have focused on—and quite properly so. The changes are substantial and rest particularly around the P1 endorsement—that is the endorsement for taxi-drivers bus drivers drivers of courtesy vehicles—and electric bikes. I want to turn to the issue of that P1 endorsement for taxi-drivers. The select committee in some respects largely on its own initiative—and I note at this point the contribution of Deborah Coddington; it was she who really raised the issue at the select committee and the committee to a person saw the importance of the issue she was raising—recommended a major change to the legislation so that people in the industry at present who have very serious convictions ought not to be allowed to hold a P1 endorsement. We felt that passengers in taxis are in a uniquely vulnerable situation particularly late at night and particularly if they are young women. So the people who are carrying those people ought to satisfy rigorous tests. 
In essence we have proposed that anyone who is henceforth convicted—or more particularly who has previously been convicted—of murder of a serious sexual offence or of other serious offences such as aggravated assault and the like should not be able to hold a licence. On further consideration we did consider that there should be a very limited appeal. The National Party believes that the Government has gone too far in essentially giving discretion on appeals to the director rather than to the court system. If the proposals put forward by the Minister had referred for instance to a District Court considering that issue they would have almost certainly received our support but we consider that giving that power to the director has softened the requirement excessively. 
The courtesy vehicle issue vexed the select committee. We have come up with some minor modifications to the existing rules. I am not sure that we ever got that one completely right and no doubt it is something that could be revisited further. 
I want to comment on the issue of electric bikes and then by extension on some of the issues that I think this country will have to look at in the future. We believe that the number of electric bikes being used is likely to increase for a whole variety of reasons. More cycleways are being constructed and by and large they have support within local communities. Almost certainly that will lead to a greater increase in the numbers of bicycles that have electrical assistance to propel them and we believe that a more liberal approach is necessary. It is quite common now for those bikes to have motors of 600 watts. That will become increasingly common in the industry and we believed a blanket exemption up to that level was appropriate. The Minister has said that the director should have the discretion to rule on exemptions for vehicles with motors of between 300 watts and 600 watts and maybe that is something that will need to be revisited further. 
I want to close on this particular point: I believe that as a nation we will have to consider more seriously the issue of vehicle emissions. I think that there is a real question as to whether we are taking a rigorous enough approach to that issue. Certainly much of the New Zealand passenger fleet consists of imported vehicles many of which were quite old at the time of being first imported. I wonder whether we will have to look more rigorously at putting an age limitation on the first importation of those vehicles plus take a more rigorous approach to the emission levels of those vehicles generally. In a whole variety of ways this country is concerned about global warming. There are different approaches to that issue. The Government’s approach is very much— 
Phil Heatley 
: Taxes. 
Dr WAYNE MAPP 
: —taxes as my colleague has quite rightly put it. National is opposed to a carbon tax but nevertheless we recognise the seriousness of the issue. I note that last week President Bush also noted the significance of the issue. I believe that in due course the United States will become a party not to Kyoto but to a subsequent convention. Rather than taking a punitive tax approach—which is always the fond approach of the socialist; the European way if you will—the approach of the United States is to provide incentives for new technology. I guess it is an issue of whether one thinks an incentive or a tax is more appropriate. We know what the Government thinks. It thinks the tax or the punitive approach—the cost-plus mentality approach—is the right way. I believe that in time that will be shown to be an unwise decision. 
Nevertheless I think there is concern that we should have a more efficient vehicle fleet. I have only to think of the work done by the Toyota and Honda motor companies on their hybrid technology vehicles. I imagine that over the next few years the United States will be incentivising that kind of technology. President Bush has already indicated that is the pathway the United States will take and I believe that a future agreement post-Kyoto will have a much greater focus on incentives rather than on punitive taxes. The outcome of course is intended to be the same: to reduce the effect of global warming. 
Hon Pete Hodgson 
: This is about land transport. 
Dr WAYNE MAPP 
: I say this to the Minister who has responsibilities in this area. I believe that when this issue is reviewed further—and it will have to be—the pathway of Kyoto and of taxation will be seen essentially as a flawed approach. Nevertheless the matter will have to be dealt with and I believe that the way of the future will be technological innovation. That will be driven more through an incentivisation process than through punitive taxes. I believe that one of the things we will have to look at is the age of our vehicle fleet and the rules around the importation of motor vehicles particularly their age at the time of their first importation. It is noteworthy that Toyota and Honda have said that importing vehicles that are already 8 or 10 years old means that New Zealand misses out fundamentally on newer technology. 
If that issue was looked at more thoroughly by the Government and Crown agencies—the Energy Efficiency and Conservation Authority for instance should be looking at that issue more intensively—we may come up with a more rational approach to that particular issue. That is not to suggest that we would not have second-hand imports; clearly they are a feature of New Zealand’s way of life if you will and we do get substantial technological advantages as a consequence of importing them. But that does not mean to say that the alternative is essentially to have open slather on importing any vehicle no matter how old it is. So I suggest that as we look at the issues that this bill raises we see we will have to think more creatively and more imaginatively in order to deal with the issue of global warming. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I am very pleased to see this legislation finally reach this point. It is good law. It deals with some very serious issues. It makes sure that our punishments for those who drink and drive and those who speed at the upper end of the scale are much harsher so that we actually deal with the repeat offenders and with those who are going extremely fast in a less tolerant way than the law currently allows. 
We also deal with some quite small but significant issues in the bill. Some are very important particularly to those who drive for a living. We are allowing people who are currently disqualified from driving say buses to have the chance to go for a limited licence if they have not offended while driving their buses. We know that there is a shortage of truck drivers and bus drivers in this country so some of these minor changes actually help people. People might not be able to continue to drive a passenger service vehicle but they can drive a truck. At the moment they are prohibited from doing both and that does not make sense. 
Visually impaired and blind people who are great users of taxis for obvious reasons will benefit from a small but significant change. The bill will put Braille signs in taxis for their safety so they can identify who has been driving them which company etc. Surprisingly the National Party opposed the provision that has just made the law on taxi signage safer simpler and better. The National Party’s position is to make it harder and much more expensive. National members say that the taxi companies should go through the courts and use competition law to do that which shows people that they have no understanding of small businesses and the costs that apply to them. 
Changes to liability through the chain of responsibility say that one cannot design a contract that actually makes the driver break the law. One cannot overload and do the things that are being done out there at the moment and get away with it. The Road Transport Forum asked for that change and the Transport and Industrial Relations Committee and the Government are very pleased to be able to deliver it. 
We have also taken some regulation away from the smaller end of the industry—the courier driver type of operations. The law is much simpler now with lower compliance costs. It is a sensible law and I support it fully. 
Sitting suspended from 1 p.m. to 2 p.m. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 Let me first apologise to those people who have just tuned into their radio at 2 o’clock—expecting Parliament to be sitting—to hear the Rt Hon Winston Peters take on the Government again and embarrass it even further. Unfortunately that will not happen. The Government has given up the ghost. It has put the House into urgency. So the Rt Hon Winston Peters has been denied his opportunity to ask this Government some penetrating questions. 
We are debating the third reading of the Land Transport Amendment Bill and it is a bill that New Zealand First supports. That is not to say that the Government’s bill is 100 percent correct but it is pretty close. 
Darren Hughes 
: 99 percent? 
PETER BROWN 
: Maybe not 99 percent but pretty close. There are three aspects of this bill that I would like to touch on. The first is the simplified logbook regime for commercial truck-drivers. It is long awaited and long overdue. Truck-drivers are not the brains of New Zealand and in saying that I am not putting them down. They are average guys who drive trucks for a living and by and large drive them very very well. But I have seen some entries in logbooks that have allegedly resulted in drivers being charged with a crime. The one that comes to mind is a truck-driver who signed off at Wanganui one evening and said that he had off-loaded his truck at the depot at Wanganui. The following morning at 6 o’clock or half-past 6 he signed on again at the depot “loading” but he did not put “Wanganui”. Apparently he was fined in excess of $300 and suspended for a period of time. He was a family man with a couple of children and but for the goodness of his employer he would have lost quite a lot of money. That sort of regime seems ludicrous to New Zealand First. So we are very very pleased that this Land Transport Amendment Bill simplifies the logbook regime for truck-drivers. It is easier for them to fill in the details and easier for the police to identify any problems. 
This country depends on trucking. Frankly we do not have enough trucks. When the logging comes back on stream as it will in a year or so we will be in dire need of more truck-drivers; if not by the thousands certainly by the hundreds. They are the backbone of society. There is not much that we purchase from retail stores that is not delivered by truck. Indeed much of the cargo that comes and goes through our ports is handled by trucks. Some people say: “Put it on the rail.” but railways are not as flexible as trucking when it comes to small parcels of cargo. Rail is OK and is very good when moving goods from depot to depot but when it comes to small parcels and small container loads—two or three containers or two or three truckloads—trucks are in their element. 
New Zealand is a nation of small exporters as well as large exporters and trucks have a role to play. Trucking people are entitled to a straightforward regime and in our view this simplified logbook will achieve that. I only hope the commercial vehicle inspection unit of the police takes on board what is being done today and adopts a more cooperative attitude with the trucking people than it has done in the past. 
The second area of concern is the contentious issue of passenger endorsements on licences for taxi drivers and bus drivers. New Zealand First totally supports the concept that a person who is guilty of murder or other serious crimes as listed in the bill should not be driving a taxi or a bus. We absolutely support the notion that people who have that sort of past should be prohibited from driving taxis or buses. But somewhat regrettably several hundred of our taxi-drivers—if we believe the figures given to us—are guilty of some sort of heinous crime. At one point the Transport and Industrial Relations Committee simply wanted to say “out” meaning “out out” with those people. But in its wisdom the Government has listened and said that although it is not prepared to accept those people if they have an established track record of driving competently and have caused no problems to the public the bill provides the right of an appeal for some of them—not people who have been guilty of murder rape or sexual offences—but none the less those who have been guilty of some serious offences. 
The Supplementary Order Paper that accompanies this bill provides a means for reinstatement of passenger endorsement for people who have not reoffended in the last 10 years so have a clean record for that period. Some of them might well have been rehabilitated to such a degree that they own the taxicab or own the business. It would be most unfair to say that we are prohibiting them from driving forever without any right of appeal. This bill stops them from driving but it gives them the right of appeal to the Director of Land Transport or subsequently to the High Court. 
New Zealand First prides itself on being the law and order party in this Parliament. We would if we were honest want those people totally excluded from driving taxis or buses. But if we want law and order in the country we have to have justice and justice is dependent on giving everyone a fair hearing. As much as I dislike defending the right of people who are guilty of some awful crimes to have a fair hearing if we want law and order we must have justice. Those people are entitled to a hearing and a legitimate hearing at that. So New Zealand First supports the Supplementary Order Paper just as it supports the bill. 
Our third concern is courtesy vans operated by clubs. I am quite relieved after talking to the Minister and his officials and hearing the Minister’s comments in the House that the Government is taking an objective view on this issue. I am told there are 350 licensed clubs in this country with 220000 voting members. The clubs probably have other associated members who cannot vote. It is common practice for the clubs to run a courtesy bus although it is illegal for them to charge a fee. They are meant to seek donations but currently many of them charge a fee. Frankly the Parliament must face up to the reality of what is happening in the outside world. I am told by the Minister and his officials that because this bill will not come into force until January next year there is a time frame available. I was encouraged by the Minister’s comments that the Government would be listening to submissions from those clubs or people associated with those clubs in a very positive manner and that he was hopeful of addressing the concern under what he termed “operating licence rules”. I think I have that correct. This is a good bill and 90 percent correct— 
Darren Hughes 
: 99 percent— 
PETER BROWN 
: That 99 percent must be a record for this Government. So New Zealand First supports the passage of this bill. 
DEBORAH CODDINGTON (ACT) 
: 
 I want to speak briefly in the third reading of this bill. It is probably the last piece of legislation that I will see all the way through this House and I take the opportunity to thank the chairman of the select committee Mark Gosche who knew what was dear to my heart in this legislation—that is cleaning up the taxi industry by not allowing those who have convictions for serious sexual abuse crimes to hold a P endorsement on their licence and be able to drive taxis or buses. As a member of a small party who is on two select committees and spokesperson for 10 portfolios it was difficult for me to be at every single select committee meeting. The chairman went out of his way to make sure that when I was there we discussed clauses that related to those offences and I do appreciate that. As I said before it was a good—[ 
Interruption 
] If those members would just listen for a moment they would hear that there is no need for them to interject. This legislation is a good example of people working together in a select committee to achieve the required result. I think this legislation does actually make New Zealand in some small way a better place. 
We are cleaning up the taxi industry. We need to clean up the taxi industry. For a while there were a lot of calls that it needed to be totally regulated again. This legislation steers a way between those two opposites if one likes. There is no need to go back to total regulation of the taxi industry. We do not want to go back to the days when women came out of a restaurant at 11 o’clock at night and there was not a taxi in sight. The industry was so tightly controlled and so expensive to get into that there was never a taxi when one really needed one. That did not make for safe cities. There is still some merit to the argument put forward by people who have been in the taxi industry for quite a long time that perhaps we should look at devolving the control of the taxi industry back to local authorities or local communities. They have an interest in keeping a good taxi industry in their town or city because it is a reflection on the state of their town or city. They could take some pride in having a good fleet of taxis good drivers and all that sort of thing. It is more a matter of self-interest for them. This bill does not deal with that but maybe it will be dealt with in the future. 
One of the things that I am particularly pleased got through is the provision to make the ban on those with serious convictions retrospective; it will apply to those already in the industry. It is a very high bar; sexual crimes subject to a sentence of 7 years’ jail or more murder and a number of other crimes fall into that category. But we did discuss and get the officials to work out whether we could make it retrospective. We all agreed and there was cross-party support with Lianne Dalziel Lynne Pillay Maurice Williamson and myself in particular agreeing that it was just not good enough to allow these people to drive in these situations—even to drive a bus. Maurice Williamson raised the point that perhaps the case of a bus driver is not quite so bad because a lot of passengers are on board so it is harder to commit a crime. That is not the only point. I believe that people who pay for a service—and we are talking about paying passengers here—have a right to know that the person who is driving and in charge of that service is a fit and proper person. By a fit and proper person we mean that that person has not been convicted of any serious crime. It is not just about whether we give them the opportunity to commit those crimes again; it is about the safety of communities and the perception of being safe. 
That is why I agreed that we needed to look at the issue of being fair to those who have been rehabilitated—that they should have a right of appeal to the High Court when their application to renew their licence is turned down. We now have seen that come in on a Supplementary Order Paper slightly differently. Unlike the Minister I do not have a huge amount of faith in the Director of Land Transport in terms of his using his discretion to decide whether those people are fit and proper persons especially when their crimes were committed overseas. However we shall have to see. 
The thing I do take issue with is the 10-year barrier. Peter Brown thinks 10 years is enough—what if for instance the taxi-driver has been rehabilitated enough to own his or her own business? Hundreds of sex offenders and murderers own their own business. Owning one’s own business does not make one a safe person by any stretch of the imagination. Kidnapping a child is one of the crimes that under this legislation would bar a person from getting a taxi licence but under Supplementary Order Paper 375 one would have a right of appeal—one would not be barred automatically. Say a person kidnapped a 6-year-old girl was convicted for that and did his or her time and that was 10½ years ago. That little girl would now be 16½ years. She gets into a cab and sees that the man who kidnapped her 10 years ago is driving the cab. Ten years ago is nothing to that person. In that person’s life it is nothing. 
Another crime that comes under the category of appeal is attempted murder. For murder a person is automatically barred but for attempted murder a person is not. The intent is still the same; it is just that the person did not succeed. He or she did not kill the person; he or she attempted to murder the person intended to murder him or her. To me 10 years back is not enough. What if a person was the subject of a murder attempt when he or she was 40 years old and 10 years later jumps on a bus hands over the fare and sees that the driver is the person who attempted to murder him or her 10 11 12 years ago? Those people should not have such a low barrier to the right of appeal. I still think they should go back to the High Court to fight it out there. If they were genuinely rehabilitated and genuinely believed that they had a right to be in a position of trust then they would put their money where their mouth is and fork out the amount of money needed to appeal to the High Court. They would not take such an appeal lightly. I am not saying that people do not become rehabilitated; they do. But there are plenty of other jobs—and other driving jobs—that they can do. 
In closing another thing that the bill does not address but that needs to be addressed in terms of taxi-drivers is stopping Work and Income New Zealand from using taxpayers’ money to set immigrants up with cars and licences—providing translators when they sit exams and putting signs on its walls telling them that they can get jobs as taxi-drivers. As someone said recently when one comes out of the Auckland airport one could be excused for thinking one was in downtown Delhi or somewhere like that. We have more than enough taxi-drivers. We do not need to spend taxpayers’ money putting immigrants into taxis. 
Hon Rick Barker 
: So they don’t deserve a job? 
DEBORAH CODDINGTON 
: Of course they deserve a job. 
Hon Rick Barker 
: They don’t deserve a job? 
DEBORAH CODDINGTON 
: The Minister says they do not deserve a job. He might think they do not deserve a job. I ask him whose money is getting them into a job. It is taxpayers’ money; money is being taken off the taxpayers to get them into a job. 
Hon Rick Barker 
: So are we going to spend money on white people getting a job? 
DEBORAH CODDINGTON 
: We only take brown immigrants do we? I thought we took immigrants from all over the world. The Minister does not want brown immigrants getting into jobs. Well that is very interesting from that Minister. 
In conclusion I am just pleased to be able to support this legislation. Although it will not be the silver bullet for the taxi industry or the transport industry it goes a long way and the ACT party will be voting for it. 
MIKE WARD (Green) 
: 
 I endorse the comments of Deborah Coddington about the cooperative nature of the process. In fact it is interesting to hear the sort of barracking across the House. The select committee was much more peaceful than that. We support the Land Transport Amendment Bill. It contains a range of common-sense measures and is the outcome of numerous submissions and substantial consultation and deliberation. However the Greens felt obliged to include a minority report on the bill. It reported back over the decision of the committee to make passenger licence “fit and proper person” provisions retrospective without minimum sentence or appeal provisions. As originally written the bill made provision for the opportunity to exempt individuals sentenced to less than 2 years in prison and it was not proposed that the provisions be retrospective. 
 Because of several well-publicised incidents of individuals with serious convictions gaining a P endorsement on a licence and subsequently committing an offence against a passenger the committee decided the provisions should be retrospective. The committee considered the possibility of appeal but apart from myself and latterly Peter Brown it was not satisfied that the conditions for appeal as presented by the officials were sufficiently robust to protect passengers from the possibility of finding themselves in a taxicab with a rapist or murderer. So rather than run the risk of letting anyone through it was decided to remove the possibility by removing all. 
Deborah Coddington asked whether the time period of 10 years without conviction was long enough if for example the person’s last conviction was more than 10 years ago. She wondered about people who had been convicted of kidnapping or rape but we must remember that in addition to the 10-year requirement the director has to be convinced the person is unlikely to offend again. I would have thought that a person convicted of a serious sexual offence or kidnapping would be unlikely to pass the barrier. I agree with the intent of the provision and since the “fit and proper person” test may not on occasions have been applied robustly enough in the past there may be a case for re-examining drivers with previous serious convictions. However the prospect of depriving persons of their livelihood long after conviction and quite possibly for an offence at the minor end of the scale and removing the minimum sentence provisions for an offence for which the person has already been punished and which the community may well have known about and forgiven long-ago is in my opinion unfair and would likely result in a serious injustice without any improvement in passenger safety. The Greens are pleased that the Supplementary Order Paper reinstates the minimum sentences and provides for a right of appeal. 
I have a query about new section 29B(1) inserted by clause 13: “A person whose passenger endorsement is deemed to be expired and of no effect under section 29A(1A) may apply to the Director to have that passenger endorsement reinstated if—(a) the person has not been convicted of an offence specified in section …;”. Then follows the word “and” and I wonder whether it should be “or”. Because paragraph (b) states: “the person’s last conviction for a specified serious offence occurred more than 10 years before the commencement of this section; and”. It seems to me it should be “or”. Perhaps I have read it wrongly but people might want to think about that. 
When I drew attention to the matter originally one party put out a press release saying the Greens were soft on crime and wanted rapists and murderers to be driving taxis. Of course that is nonsense. People convicted of serious offences should not be driving taxis but this provision is for those at the lower end of offending. The Supplementary Order Paper provides that the director may reinstate a passenger endorsement if he or she is convinced that the applicant poses no risk to the community. 
The point was made that even schoolteachers and early childhood workers are not subject to such conditions. It is not difficult to imagine an incensed public dumping on Parliament at the prospect of losing their taxi-driver perhaps the only taxi-driver in a small rural community because of a 30-year-old scrap an only offence by that person committed in his or her youth. That is the kind of situation that no doubt some members in the House might have found themselves in had they not been lucky. I can think of times in the past when I have been beaten up by people and not inflicted any great injury on anybody but it is possible that I could have found myself in such a situation. 
I know that most members of the committee shared my concerns about the possibility of an injustice and were motivated by a concern for the safety of passengers. I hope they are satisfied that the amendments made will not endanger passengers. 
I wish to speak briefly about the provision for licensing small motorised personal transport devices—namely mopeds scooters skateboards recumbents etc. The rationale for exempting these vehicles is that if the motor is such that they pose no more threat than someone on a bicycle then what justification can there be for treating them differently? The bill has a little wriggle-room to provide the director with the opportunity to consider new and innovative devices that might pose a minimal risk for inclusion in the list of devices not requiring licensing. I think that is an interesting aspect and with the need for more innovative means of transport it opens up the opportunity for some of those more innovative means of transport. The Greens will be supporting the bill. 
PAUL ADAMS (United Future) 
: 
 United Future is also supporting the bill. I think one of its strongest points is the restrictions on the taxi industry. I want to pick up on what Deborah Coddington was saying about offenders. I was thinking about that over the lunch break and definitely there are certain areas of transgression that prevent people from having a second chance and being in the situation of being a taxi-driver—such as sexual sins. When we think about the 10-year time period in respect of past convictions we do not know what might trigger somebody in a certain situation. We are talking about the taxi industry about the one-on-one situation between a taxi-driver and a female or male passenger. Therefore the amendment is a welcome addition to enable people to feel safe when travelling in taxis. 
I sat on the Transport and Industrial Relations Committee for part of the process and it was great to see the various parties in Parliament working well together on this legislation. It was refreshing and Mark Gosche did a tremendous job of chairing the committee and picking up on everybody’s viewpoint. 
I want to touch on the amendment that United Future has had put in the bill with regard to noisy vehicles. We had actually pushed for the ability to have a noisy vehicle immobilised. The noise is made in the late hours of the night and causes a nuisance. It is a problem throughout most of the major cities in the country. However noise in itself is an interesting scenario. In transport one of the things that has concerned me is that we have regulations that car exhaust systems must be no noisier than they were when originally manufactured. That requirement is causing major challenges to the secondary exhaust market. I fail to see how we can have a requirement that an exhaust be no noisier than when it was originally manufactured. Surely we must have the simplicity of putting in a maximum decibel level that an exhaust noise can be. My suggestion would be 100 decibels. To give members some idea of what 100 decibels is I tell them that a Stagecoach bus accelerating away from traffic lights reaches 123 decibels. I myself have checked it with a meter and 100 decibels is not an unreasonable amount. 
There are two types of citizens when it comes to noise. Firstly there are people I refer to as “CAVE” people—“Citizens Against Virtually Everything”—and secondly there are the enthusiasts like myself who just want a nice crisp-sounding exhaust note on their motor vehicle. “CAVE” people are the sort who live around the Western Springs Stadium in Auckland. They move into an area that has the magnificent sound of speedway racing which has been going on there for decades and then they begin to complain about the noise. 
Getting back to the amendment that United Future wanted I think it is of serious concern especially to the tourism industry when people in cars cause undue noise at night-time in resorts such as Tauranga and keep people awake. We need to look seriously at how we will address the problem in that area but I say let us not go overboard and take that nice crisp exhaust note off all cars. 
I am also pleased to see that the issue of a P licence—for passenger servicing—for drivers of courtesy vehicles has been looked at. We have to face up to the fact—and provide for it in legislation—that certain service industries are doing road safety a favour in driving people home. Sometimes it becomes a fine balance in the law as to what we are going to do about that. 
But overall the bill is good legislation. I believe that it will go a long way to cleaning up a lot of areas. We welcome the changes to the logbook requirements. We think that is a step in the right direction. We acknowledge that more and more of this type of tracking will be done electronically and that is great. Probably there will not be a problem with speeding trucks in the long term because all of them will be tracked by the Global Positioning System and the police will be able to see what speeds they are travelling at in various sectors. In the end that will bring greater road safety which I think everybody here is looking forward to. So United Future is happy to support the legislation. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I take this opportunity to take a short call in support of the bill and also to acknowledge the comments made by previous speakers. I was a member of the Transport and Industrial Relations Committee and quite agree with Paul Adams that Mark Gosche did a great job chairing that committee. We made some very progressive decisions to make this bill very sensible and workable in order to improve safety and security for all road users in New Zealand. I also acknowledge the people who made a submission on courtesy vehicles. We were able to make some really common-sense decisions about the use of courtesy vehicles making sure that the good work being done in that area is not impeded but that safety is ensured. I will not take any more time. I am proud of this bill and I commend it to the House. 
PANSY WONG (National) 
: 
 I notice from the timetable that this bill’s passage through the House is being completed on almost the anniversary date of its introduction to Parliament. The bill was introduced in June 2004 so on the anniversary date of its introduction it is quite pleasing to see parties on all sides of the House supporting it. 
I want to raise an issue that I think the National Party and ACT also raised in terms of whether individuals who have committed serious sexual and other offences in the past can after a 10-year period without further conviction be a taxi-driver. We are hopeful that the rigid enforcement of this provision will see a real improvement. I notice that in the last few years particularly since the promotional campaign against drink-driving has been run the use of taxis has hugely increased especially at weekends. Security in terms of the type of individual who is allowed to drive taxis is therefore important. 
However from a personal point of view I am disappointed that Labour and United Future did not see fit to support the two amendments I proposed during the Committee stage. I took one issue just to demonstrate how difficult it was and how slow it can be at times to introduce measures to improve safety on roads. For example I learnt that the 1999 Land Transport (Drivers Licensing) Rule requires that a driving instructor who teaches driving for reward hold the I—driving instructor—endorsement licence. The rule also requires the instructor to have the appropriate class of licence for the vehicle that the learner is being taught to drive. That is all very well but unfortunately the offence provision for providing unlicensed driving instruction for reward was omitted from the Land Transport Act 1998. That has been picked up only in this current legislation. For an offence to be omitted for 7 years before it can be put right has saddened me. 
I am also saddened that those two parties did not see fit to accept the two amendments I proposed that would strengthen safety provisions. Currently individuals who give lessons for monetary reward have to hold an I endorsement licence yet the public has no transparent or quick way to learn whether they do; neither is an enforcement agent able to verify readily whether driving instructors do hold an I endorsement licence. My amendment was simply that it should be displayed in the vehicle when driving lessons are being conducted. When we think about it we require taxi-drivers to display their names and identification as a reference point for concerned enforcement agents passengers or in this case students. I was very disappointed that Labour and United Future did not see fit to incorporate that amendment. I hate to think it will take another 7 years for a sensible amendment like that to be accepted. 
I also proposed a further amendment that driving instructors who teach for monetary reward should be limited to New Zealand citizens or permanent resident visa holders. If we are concerned about safety on roads then I think that the people who are qualified to teach for monetary gain should at least be very familiar with New Zealand road conditions and New Zealanders’ driving habits and with legislation and regulations surrounding that. So I was extremely disappointed once again that Labour and United Future did not see fit to endorse that amendment. Just now in the courts a driver’s-licence testing officer has been handed down a sentence of 280 hours’ community service for selling licences to individuals who did not seek to be tested and another driving instructor who offered to sell licences is now facing sentence. 
I am watching with interest to see whether there is one standard of law in New Zealand. I expressed concern that the sentence of 280 hours of community service did not send people a serious enough message about not accepting bribes. I think it is very sad that in New Zealand where we pride ourselves on not tolerating corruption or bribery the sentence does not in my mind reflect the serious nature of the offence. After all these individuals did not pass driving tests and are allowed to drive on New Zealand roads. They are endangering not just their own lives but also those of pedestrians and other drivers on the roads. 
So I hope Land Transport New Zealand will take this issue seriously because history shows that it does not respond effectively and efficiently to complaints about driving instructors. Proper investigation seems to be very slow in coming and there is a reluctance to take action. This morning in my second reading speech I read out the advertisements of driving schools or of individual driving instructors which offer individuals a choice of testing officer a choice of sitting the test on weekends and a choice of the route of their test. I have been assured by the Minister for Transport Safety the Hon Harry Duynhoven that Land Transport New Zealand is undertaking to monitor these types of advertisements. However these advertisements continue to appear in newspapers. The ones I quoted are dated 10 June which is last Friday. 
 Overseas students shared their astonishment at this. They said that in their home countries blatantly fraudulent advertisements like that are not allowed in newspapers and that they are more likely to be displayed on lamp posts etc. I urge the Minister to monitor Land Transport New Zealand to ensure that these types of complaints are taken seriously. I think that in New Zealand we should not tolerate publications that contain advertisements of a fraudulent nature as they indicate that bribery and corruption are taking place. 
Although National supports this legislation I am extremely disappointed that Labour and United Future have not endorsed the two amendments I proposed. I can only live in hope that Land Transport New Zealand will start to take those complaints seriously. 
Hon RICK BARKER (Minister for Courts) 
: 
 I rise to support the Land Transport Amendment Bill and to say that it is excellent legislation whose introduction was also supported by United Future the Greens and of course our coalition partner the Progressive Party. The bill enhances the safety aspects of transport legislation. It improves the law concerning the responsibility of road users. It is tough on serious offences particularly those in relation to alcohol and speed. It enhances the power to take effective action against repeat drunk-drivers. It also offers security to the travelling public in that those people who have convictions for serious violent and sexual offences will be prohibited from being a taxi-driver. This is good legislation and I am pleased to see that it has the almost unanimous support of the House. 
Bill read a third time. 
Tariff (New Zealand - Thailand Closer Economic Partnership) Bill 
Second Reading 
Hon JIM SUTTON (Minister for Trade Negotiations) 
: 
 I move  
That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a second time 
. I thank the Foreign Affairs Defence and Trade Committee for its work on this bill. I note that the committee recommends by majority that the bill be passed with no amendments. The committee also noted in its report that it had previously examined the full national-interest analysis of the agreement and on that occasion the majority also supported the agreement. 
The bill amends New Zealand’s domestic legislation to enable New Zealand to become party to the New Zealand - Thailand Closer Economic Partnership Agreement thereby allowing the agreement to come into force once Thailand has also completed its domestic implementation processes. The agreement provides for all tariffs applying to goods of New Zealand or Thai origin traded between the two countries to be either eliminated immediately or phased out over a scheduled period. Most New Zealand imports from Thailand already enter duty-free under New Zealand’s existing tariff policy. The agreement provides for the remaining tariffs to reduce to zero variously on 1 July 2005 1 January 2008 1 January 2010 or January 2015. 
The agreement also provides for the use of bilateral transitional safeguards by both Thailand and New Zealand. These allow either party to address situations of serious injury or the threat of serious injury to domestic industries caused by increased imports due to tariff reductions or removal under the agreement. Part 2 provides such a mechanism by creating a new regime under the Tariff Act. This regime establishes the right for a New Zealand industry or company that considers it is suffering serious injury as a result of a surge in competing imports from Thailand to ask the Chief Executive of the Ministry of Economic Development to initiate a safeguards investigation and revert to a higher tariff level for a certain period. 
The committee addressed several issues that were specific to the content of the bill in particular. The committee considered the consistency of the bilateral safeguard mechanism with World Trade Organization rules. The committee was advised in this regard that the bilateral safeguard mechanism is fully consistent with World Trade Organization rules. The similar strict standards that are currently applied under New Zealand’s global safeguards regime and that are based on World Trade Organization rules also underpin this bilateral safeguard mechanism. 
During the first reading some members raised the issue of new food-testing regulations being proposed in Thailand and the potential effect of those regulations on New Zealand exporters. Although this issue is not directly related to the content of the bill before us and is not part of the closer economic partnership agreement I would like to take the time to confirm to the House that progress is being made towards resolving this important issue. Since the regulation was first notified late last year New Zealand along with Australia and the United States has successfully argued for a delay in implementation to allow time for our trade concerns to be taken into account. When I met the Thai Ministers of agriculture and commerce at the time of the signing of the agreement they gave a commitment to work with New Zealand on recognition of New Zealand’s food safety systems in the application of the proposed Thai regulation. New Zealand’s formal application for recognition of our system has been lodged with the Thai authorities. The New Zealand - Thailand closer economic partnership provides a new avenue to help progress this issue. A special meeting of the bilateral Committee on Sanitary and Phytosanitary Measures will be held in Thailand on 23 June so that relevant experts can put New Zealand’s case directly to the Thai authorities. That opportunity would not have been available before the agreement was negotiated. 
I should note in response to a point raised during the first reading that under the agreement’s rules of origin only goods of genuine Thai origin will benefit from the New Zealand tariff reductions. Those rules mean that Thailand will not be a back door for preferential entry of goods from other countries. 
At the select committee despite the opportunity to do so no serious evidence was presented to counter the Government assessment that the agreement will not have an adverse overall impact on New Zealand producers. The adjustment effects arising from the removal of New Zealand tariffs on goods imported from Thailand under the agreement are expected to be negligible. First some 65 percent of imports from Thailand already enter duty-free. Second the phase-out arrangements for New Zealand’s more sensitive sectors are very gradual. For sensitive products with a lower tariff such as whiteware existing tariffs will effectively be maintained at current levels before being removed in 2010. Finally adjustment assistance has been made available in the context of New Zealand’s unilateral tariff reductions to help the textiles clothing footwear and carpet sectors build skills and global competitiveness. 
Although the adjustment effects in New Zealand will be limited the opportunities being created for New Zealand exporters in the Thai market are significant. Thailand is a heavily protected market. Tariffs are levied on virtually all imports from New Zealand—many are in the 20 percent to 40 percent range. Under the agreement Thailand will eliminate tariffs immediately on over half of New Zealand’s current exports including most current manufactured exports and progressively phase out the remainder. 
In broader terms this agreement offers the most far-reaching bilateral market opening for New Zealand since CER. As noted in the select committee report the bill will deliver real benefits to many New Zealand industries and will open up opportunities for New Zealand to develop the trading relationship with Thailand to its full potential. I commend the bill to the House. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 That was the Minister for Trade Negotiations who has just announced one of the most wimpish actions I have ever heard of as an election sop to apple growers in this country. After years of discussions with the Australians over access for apples that Minister has said—wow—that the Labour Government will have more discussions at the World Trade Organization. The Minister knows that those sorts of things never resolve intractable disputes like this and he should explain to the House why he is not taking dispute resolution action—something with a bit of guts in it—for our apple exporters. 
I come back to the bill. This is the third trade agreement that this country is passing legislation to implement. The first one was CER with Australia which was negotiated by a National Government. It remains—despite the fact that it was negotiated in 1982 more than 20 years ago—one of the world’s highest-quality trade agreements. The second one was the free-trade agreement—or closer economic partnership as this Government calls them—with Singapore. That was largely negotiated as well by the last National Government. In fact I signed the heads of agreement on that one prior to the election in 1999. That is also a very high-quality trade agreement. 
This is the first trade agreement New Zealand seeks to implement that has been negotiated by a Labour Government. It is a low-quality agreement. It is the first one negotiated by any Labour Government and it is a poor-quality agreement. We will support it because it is better than nothing. We made it clear in the debate on the first reading that we will support it because it is better than not having an agreement but it is a poor-quality agreement. Of this country’s GDP 68 percent comprises services businesses and this agreement does nothing to gain access for our services. This agreement does nothing to gain 68 percent of our economy—service industry providers—access to the Thai economy. All it does is say that in 3 years’ time a services negotiation will be initiated. That is not good enough. 
The second problem we have with the agreement is that despite the fact that the Government says its policy is not to have laws that give more favourable treatment to Maori the agreement has in it a reservation allowing it to provide “more favourable treatment to Maori” and National opposes that. I am not allowed to use the word “hypocrisy” but I do not know how a Government can claim a policy of not having more favourable treatment for Maori and then in an agreement like this have the exact words “more favourable treatment to Maori”. 
Our third concern is that under this legislation tariffs here in New Zealand will not be phased out in total for Thai imports into the country until 2015. The reason why that is a problem is that the Minister for Trade Negotiations the Hon Jim Sutton who is meant to be one of the leading trade Ministers in APEC has brought into this House legislation that in its effect will breach New Zealand’s commitments to APEC. The APEC Bogor goals that New Zealand has been signed up to for years require us to remove all impediments to free trade by 2010. That is what we signed up to. Labour has never officially resiled from that. If the member for Otaki—who is about to lose his seat because National has a far better candidate than the little feller the fifth-former from Otaki Darren Hughes—thinks Labour has officially resiled from the Bogor goals of APEC he should tell us when that was so that we know that the Government has done so. If the Government has not resiled from the Bogor goals why does this agreement extend beyond those goals? Why does it make a mockery of New Zealand’s commitment to APEC? That is the third reason why we consider this to be such a low-quality agreement. 
Specifically at the select committee—incidentally how long did the select committee have to consider this bill? 
Dail Jones 
: 13 working-days. 
Dr the Hon LOCKWOOD SMITH 
: The select committee had 13 working-days to consider the bill. One meeting was available and half an hour was set aside for the third trade agreement New Zealand has ever entered into. According to my notes it was on 2 June that the select committee very briefly looked at this legislation. It is too important for such brief examination. 
What National questioned extensively was Part 2. Part 2 puts into New Zealand law for the first time transitional safeguard measures in a free-trade agreement. The Minister for Trade Negotiations has already acknowledged that in his second reading debate contribution. It is a serious move for New Zealand for the first time to put into our law transitional safeguard measures. Those measures by their very nature are complex international trade law measures. I will come back to that. The bit that I wanted to make sure National clarified at the select committee was that some concerns were being expressed by people who are reasonably knowledgable about international trade issues as to whether the measures in this legislation were totally consistent with our obligations under the General Agreement on Tariffs and Trade particularly article 24 of that agreement. Clause 8 of article 24 caused the most concern to observers of New Zealand’s trade measures. But the officials at the select committee of whom a number are present in the House right now gave the committee an unequivocal assurance that the specific provisions in Part 2 of the bill that implement the transitional safeguard measures are totally consistent with the requirements of GATT particularly article 24. National members accepted the advice of officials but we make it very clear that we do have some lingering concerns and we are accepting that advice only because the officials were so unequivocal that the provisions were consistent with GATT. 
Let me come back to the fundamental problem with safeguard provisions. Clause 7 inserts new sections 15A to 15H into the principal Act. New section 15B states: “(1) The chief executive may undertake a transitional safeguard investigation to ascertain whether goods that have been subject to tariff reduction or removal after entry into force of the free trade agreement—(a) are being imported in increased quantities …”—and I thought trade agreements were meant to result in increased quantities of items being imported and exported—“and (b) are causing or threatening to cause serious injury”. Members of the House can understand why this is complex law. How does one establish whether something that is being imported in increased quantities is threatening to cause injury to an industry? 
New Zealand has been on the receiving end of punishment from this kind of safeguard provision. Members will have short memories if they do not remember the US lamb tariffs. The US argued that increased export of New Zealand lamb to the United States was injuring or threatening to injure its industry and it imposed tariffs on us. It is complex law. When it is used against New Zealand it can be very damaging. This House should think seriously about the provisions in Part 2. The worst feature is that Thailand reserves the right to impose transitional safeguard measures against our agricultural exports to Thailand. If this agreement is worth anything they should increase under this agreement and therefore we automatically risk safeguard measures being taken against us. 
I think the House should look very carefully at Part 2. During the Committee stage National will examine it in some detail because I can just see all the actions and investigations being taken to implement safeguard measures to the disadvantage of trade between our two countries. 
CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I have said a number of times about that member—and I think it is true today—that he makes very angry and sour speeches. I can recall before I became a member but when I worked in this place when international trade issues were generally—on both sides actually regardless of who was in Opposition and who was in Government—treated in a non-partisan way. I have to say that that was a slightly over-the-top sour speech. I suppose it is no wonder given that it was made by a member who will soon become the former trade spokesperson for the National Party when a certain individual Mr Tim Groser enters this place on the Opposition benches. 
We are looking at the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill 2005. If we look at it in the context of this Government’s track record we note that it is interesting that this Government has a superb track record in negotiating deals to the benefit of this country. [ 
Interruption 
] Hold on! Help is on the way. I am coming to it—taihoa. It seems that somebody over there—Mr Carter—is having a bad hair day. This Thailand agreement is projected to be worth hundreds of millions of dollars to this country. I would have thought that that would be a non-partisan unarguable issue for both sides of the House. 
Let us look at this Government’s track record in respect of trade and let us look at the Singapore agreement that has been implemented. I was reliably advised before I came into this place that the then National Government spent an inordinate amount of time negotiating an agreement with Singapore. That is fair enough—good stuff. But I am advised that in reality all the goods involved in that agreement were free of tariffs anyway apart from I am told beer. Beer was the only sticking point that National—[ 
Interruption 
] 
Hon Mark Burton 
: I raise a point of order Madam Speaker. The member opposite made a very unparliamentary comment and he should withdraw and apologise. 
Madam SPEAKER 
: I apologise. I was sneezing at the time and missed it so would the member please withdraw and apologise. 
Dr the Hon Lockwood Smith 
: I withdraw and apologise. I raise a point of order Madam Speaker. It is very difficult in this Parliament to encourage members to tell the truth to the House. I know that you will say that there are mechanisms for doing it and that it is not a point of order to raise this but I have just demonstrated the dilemma. It will go into the record of the House that Mr Cosgrove said that National took a long time to negotiate the closer economic partnership agreement with Singapore. In fact the record will show that it was done in record time—it was done in just a few months. That is the dilemma. When members are careless with the truth there is no way—unless we go through all the rigmarole of personal statements—to bring them back. 
Madam SPEAKER 
: The member is right; that was not a point of order. But perhaps it is a matter that the next speaker for National could clarify for the record. I remind members to stick to the bill. 
CLAYTON COSGROVE 
: I am obliged that you were sneezing Madam Speaker and not yawning during my speech. 
I come back to the bill and the track record of this Government. The point I was making in respect of Singapore is that I am advised that beer was the only product that could not enter Singapore duty-free. National got hung up and stuck on that—and it took this Government to complete that deal which we have done. We have also entered into the Trans-Pacific Strategic Economic Partnership Agreement negotiations between Chile Singapore Brunei and ourselves. We are in negotiations now with China Malaysia and the whole of ASEAN. So I would have thought that if we rack up the report card between Labour and National in respect of our history in trade negotiations we beat them hands down. I invite the next speaker for the National Party in addressing this bill to point to National’s achievements in respect of trade negotiations in 9 long years of Government. If we go back from there we hit my predecessor Mike Moore. His track record in the 1980s stands for itself in respect of trade. 
What does the New Zealand - Thailand agreement do? It opens up yet again hundreds of millions of dollars worth of business opportunities for our people and our businesses. I say to the National members that I would have thought they would agree that this agreement is something we can celebrate. I would have thought they could get beyond politics and not have a sour derogatory and very negative attitude. I think that our diplomatic people who are beyond politics most New Zealanders and most New Zealand businesses are gratified for any sort of free-trade agreement whichever party it comes from because they want to grow their businesses and they want further opportunities. The deal with Thailand will give them those further opportunities. 
It is a little bit rich for National members to stand up and bag an agreement when they belong to a party whose history is one of incompetence and the incompletion of international free-trade agreements. The member mentioned the issue of apples. I recall that National was in Government for nigh on a decade and the question is: what did it do? Well those members have seen some action from us on that issue. I invite National members to revisit their track record in respect of trade negotiations. I am told that the member who spoke before was great at turning up at meetings. Whether he ever got to the green room I do not know. We know that now he will not for two reasons: first he is in Opposition; and second Mr Groser will have his job—and I wonder why Don Brash stabbed the member in the back. 
I ask the member and the next speaker from the National Party to show a little faith and a little bipartisanship and to celebrate what is for New Zealand business for New Zealand jobs and for Kiwis rich and poor old and young and in work and out of work a great opportunity to take advantage of yet another huge market in Asia—a huge market in the world—where we can push our products and services first and earn money for this country. It is a good agreement. I commend the Minister for his work. Let us just get on with it. 
DAIL JONES (NZ First) 
: 
 The speech made by the Hon Dr Lockwood Smith was excellent. He was highly critical of the bill. New Zealand First is opposed to the bill and Dr Smith reinforced New Zealand First’s view that we should oppose it. I do not think the member said anything in favour of it. He was highly critical of it and gave good reasons why we should not support it and I endorse everything he had to say. He has confirmed New Zealand First’s view that we should oppose this legislation. 
I should perhaps mention in passing seeing as the previous two speakers have referred to it the issue of apples. I raise with the Minister for Trade Negotiations Jim Sutton that the answer he gave me in the House yesterday was not consistent with the facts in so far as apple leaders are concerned. He gave a clear indication to the House that all the apple leaders supported this dispute with Australia going to the subcommittee. My understanding is that that is not the case. They want this dispute on apples to go to the disputes committee. In due course this matter will be taken further in the appropriate way unless the Minister reconsiders quite promptly the statement he made to the House yesterday. 
New Zealand First is concerned in terms of this legislation about the workers of New Zealand. Today we have not heard Labour members mention workers at all because they really do not care about them. Clayton Cosgrove gave an apology of a speech that was really based on an attack on Dr Lockwood Smith and offered nothing positive. Mr Cosgrove gave the impression that he was concerned about the delay in bringing a new brand of beer into New Zealand. Perhaps he wished to try it and was concerned that it was not getting here fast enough so as soon as he came into Government he allowed it to come into New Zealand so he could give it a try. That seemed to be the basis of his whole speech. Surely Labour members can do better than that. 
But let us talk about workers. I read in the national interest analysis in reference for a change to the disadvantages—the officials quite properly set out advantages and disadvantages—the statement: “The clothing footwear and carpet sector where the highest tariffs of 17-19 percent prevail has traditionally been the most sensitive to tariff reductions. Concerns in relation to imports from Thailand were also raised in respect of whiteware plasterboard steel and certain textiles.” New Zealand First is concerned about the future of New Zealand’s clothing industry footwear industry carpet sector and whiteware plasterboard steel and textile industries. For the reasons outlined in our minority view which were confirmed I believe by Lockwood Smith we are opposed to this legislation. I think the words used by Dr Smith were that this is a poor-quality deal and it is a very minor one in so far as New Zealand trade relations and import and export trade are concerned. In New Zealand First’s view we should not be setting an example as being anti - New Zealand workers so soon in any trade negotiations. 
 I have looked at the December 2004 statistics on New Zealand exports to Thailand and imports from Thailand. The top 20 exports to Thailand in 2004 were worth $297 million. Of that almost $255 million came from dairy products and suchlike. That is to be commended as is the fact that we are moving into the baby food area. Asian people—and I was born and brought up in Asia and came here when I was 15—do not eat or drink dairy products. Dairy food is alien to them in general. It is excellent that our exporters are targeting the baby food market so that those consumers can literally grow into it and the market can constantly grow. 
Regarding our imports from Thailand I know now why the Labour Government wants to support this legislation. We know that Labour does not care about the workers any more. In the reign of Louis XVI Marie Antoinette said of the starving workers words to this effect: “Don’t worry about them; if they can’t eat bread give them cake.” I see from the trade statistics that we are importing $21 million worth of caviar from Thailand. It seems to me that the Labour Government’s new saying to the workers might be: “If you can’t get a beer or a decent meal eat caviar; we’ll get it for you from Thailand.” That is the way things seem to be working. The Labour Government does not care about New Zealand workers at all any more. It can buy off a certain group of people with benefits and suchlike. Whether in relation to a trade deal or in any other area the Labour Party does not seem to have any regard for workers at all. The things that are coming in from Thailand at the moment include $121 million worth of trucks and vans air-conditioning machines and suchlike. A lot of those things come in duty-free already. 
Dr Lockwood Smith from National said that this was a poor-quality agreement. One does wonder why we are spending so much time on something like this. Why did we bother to get into a deal with Thailand at all bearing in mind that some things like services are not covered at all that so many parts of the agreement do not start until 2015 and that some start dates are even extended to 2025? 
I want to take up the point raised by Dr Lockwood Smith as to why we must bring a reference to the Treaty of Waitangi into this bill. Why does article 15.8 of the agreement reserve the right for New Zealand to adopt “measures it deems necessary to afford more favourable treatment to Maori … including in fulfilment of its obligations under the Treaty of Waitangi.”? What is this fetish on the part of the Labour Government and its supporters that when we get into trade deals with places like Thailand and Singapore we must somehow bring in our obligations under the Treaty of Waitangi? Are our importers supposed to take this into account when they are dealing with Thai people? Is that why caviar exports from Thailand will increase—because sturgeon was not fished by Maori people in days gone by? 
Other aspects of this bill should of course be borne in mind. New Zealand First has been very concerned about the constant arrogant attitude of the Labour Government. The Prime Minister signed this agreement before the Foreign Affairs Defence and Trade Committee had finalised its deliberations on the national interest analysis and certainly before the passing of this bill. We have a bill before us by which Parliament is to ratify the agreement but the Prime Minister has already signed the agreement—weeks ago in Thailand. What is the point of coming here if that is the arrogant attitude Prime Minister Helen Clark constantly adopts towards New Zealand? She does not really care about this Parliament. She does not care about what happens here whether it is a matter of social engineering legislation or of any other type of legislation. This agreement with Thailand has already been signed. The Prime Minister had a grand TV opportunity. How the Prime Minister loves her television opportunities! She has breached the  
Cabinet Manual 
 as well. In New Zealand First’s view the Labour Government has breached the  
Cabinet Manual 
 because this matter was considered by the select committee for only 13 working days not 15 working days. The Government’s whole attitude to this legislation has been cavalier and arrogant. It shows absolutely no regard for this Parliament whatsoever. 
I take Dr Lockwood Smith’s point on the service industries. That is an excellent reason why we should not pass this bill bearing in mind New Zealand’s achievements in this area. The national interest analysis notes some of the disadvantages to New Zealand in entering a closer economic partnership with Thailand. On page 22 is an unusual insertion: “The broader negotiation involved New Zealand meeting some specific Thai interests such as in the area of temporary employment for specialist Thai chefs and potentially traditional Thai massage therapists. The access for specialist Thai chefs to work temporarily in New Zealand subject to certain conditions is not however expected to displace New Zealand workers. Care will be taken to ensure the integrity of any system for temporary employment access ultimately offered for traditional Thai massage therapists.” If we look around Auckland Wellington or wherever we very soon find out just what a traditional Thai massage therapist is. [ 
Interruption 
] He is not in my party. 
I just say that this is a very unusual piece of legislation. It is a poor-quality bill and New Zealand First will not support it. 
KEITH LOCKE (Green) 
: 
 I rise on behalf of the Green Party to say that we will oppose this bill and we presented a minority report on the bill to the Foreign Affairs Defence and Trade Committee. Although this bill has some good features and the agreement will bring some advantages particularly for New Zealand agriculture in terms of promoting and selling agricultural products in Thailand they are outweighed by the disadvantages for the people of Thailand both workers and farmers for workers in New Zealand and for our manufacturing industry which will be undermined by this bill and by the agreement on which it is based. 
I want to go through some of the disadvantages. Firstly will the agreement help Thai workers? The proponents of this agreement and agreements like it say that such an agreement will help the people of the country we are signing it with. They say that it will help these people develop. It is true that Thailand has developed and that it is not the poorest country although the Oxfam analysis that was submitted to the select committee on the closer economic partnership agreement shows a great difference between rich and poor and between the rural and urban sectors in Thailand. Wages are very low much lower than New Zealand wages. 
The New Zealand Council of Trade Unions put out a statement a few months back warning of the risks of trade deals such as this. It referred to the Thai agreement then in preparation. While it noted that the agreement included a process to enable unions to take up complaints about breaches of labour rights in Thailand—which was it said an improvement on the closer economic partnership agreement with Singapore which made no reference to labour issues—it still felt that the agreement fell far short of an enforceable and meaningful process to address breaches of core labour conventions such as the use of child labour and forced labour discrimination and the suppression of union rights. 
The Council of Trade Unions referred to a 2003 study of Thailand conducted by the International Confederation of Free Trade Unions that reported on forced labour sweatshops the exploitation of illegal migrant workers—including workers involved in the production of clothing for export—and forced prostitution including national and international trafficking in women and girls. Added to that Thailand has not signed and implemented all the core ILO conventions. So there is a serious problem as to whether the workers of Thailand will really benefit from this agreement. 
 The Greens argue that richer nations such as ours have a certain duty to say that if we are going to have trade agreements with other countries we would have to seriously discuss questions like labour standards and the effect of the trade agreements on communities and would try to use negotiations to improve a situation for the workers of that country—in this case Thailand. That has not been done. There are as the New Zealand Council of Trade Unions said some improvements over the Singapore agreement in the general text of the treaty but there is nothing at all in the bill itself that will try to make Thailand adherent of labour standards ILO conventions etc. In fact during the Committee stage the Green Party will put forward a number of amendments to try to at least get such provisions in the bill before us today. 
It is not just the question of Thai workers either. There was a very interesting submission from Oxfam New Zealand which I referred to previously to the select committee on the New Zealand - Thailand Closer Economic Partnership Treaty. As I said at the beginning there are some advantages for New Zealand in the promotion of dairy exports but the Oxfam submission actually had a section on dairy farmers in Thailand which I found quite interesting. Oxfam of course is looking at the interests of poorer countries and often people in the rural sector in particular. Oxfam said there is a potentially vulnerable sector in Thailand which is dairy on which 60000 Thai farmers and their families are directly dependent. 
Oxfam referred to an Australian study by the Department of Foreign Affairs and Trade in Australia and it quoted a bit from that department: “As for the dairy sector subsequent intense competition under the terms of an FTA would marginalise Thai dairy farmers and thus adversely affect employment.” That is what the Australian Department of Foreign Affairs and Trade thinks as they approach fair trade negotiations. They said that perhaps the growing world demand for milk solids might mitigate this and that it was possible that if countries like Australia and New Zealand help Thai farmers improve their dairy industry it would reduce that problem for Thai dairy farmers. They also said that that does not seem to be the case in Thailand because the Australian Department of Foreign Affairs and Trade talks about a new Nestlé plant in Thailand for canned milk which will be supplied by Australian imports. 
I think we have to look at that if we are to make our trade policy consistent with our aid policy which is what Oxfam is trying to do. We have to assist small-scale dairy farmers in Thailand alongside developing our own markets there. Oxfam said that the approach of helping Thai farmers should precede any threat to their current livelihoods from import liberalisation. Oxfam was also concerned about making sure Thailand fully implements ILO core conventions particularly in the light of serious breaches of workers’ rights and safety most notably in the case of factory fires. That is illustrative of problems for the Thai people flowing from this agreement in the bill we are discussing today. 
For New Zealand workers there could be significant job losses particularly in the textile and clothing sector where if there are no tariffs at all Thai products could compete very well with their very low wages. That would also undermine our manufacturing industry. It is true there is a transitional provision in the bill. It is not spelt out in terms of years in the bill but if one refers back to the original treaty one can see that this transitional period is for a maximum of 3 years. That is not very long to protect New Zealand workers from the competition of very low-paid Thai workers. So that is not sufficient. 
In closing I reinforce what Dail Jones said which is that it is strange that the select committee was discussing—and in the end approving—this bill after the agreement had actually been signed. I think that shows the need for a provision that came before the House a year or 2 ago when I put forward the International Treaties Bill which required that Parliament should approve international treaties. Parliament should not just be at the end of the process and its consideration is actually being treated as irrelevant by the Government of the day. We need a proper process there. The Green Party is also concerned that services are not included in this agreement yet although there will be negotiations on services. We are concerned that there will be an undermining of our services and of our control of our own services be it health education or Government services if we give to businesspeople in countries like Thailand free entry to our market in that respect. We are very concerned and I think that in total the bill is not one that the Green Party can support. 
Hon KEN SHIRLEY (ACT) 
: 
 The ACT party supports the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill and will be voting for it. We recognise that trade is the lifeblood of the New Zealand economy. I acknowledge the good work that Minister Jim Sutton and his officials have done. 
We believe that trade should be a non-partisan issue. It is in the interests of the New Zealand economy as a whole to promote freer trade in a global sense. Obviously like others we would prefer to see multilateral trade agreements. There are serious advantages that multilateral trade agreements have over bilateral agreements. They are fairer in a global sense. If we think about the work—the glacially slow work—made at the Tokyo round followed by at the Uruguay round and now at the current Doha round it is a disappointment for a country like New Zealand to have the agreements stalled but we keep plugging away. Successive Ministers in successive Governments of all persuasions have been consistently promoting New Zealand’s interests at international fora in getting and working for freer trade. Overwhelmingly it is in our enlightened self-interest to do so. 
One of the problems with bilateral trade is that the more powerful nation actually has advantages over the least powerful nation. But it is all progress along the way. This particular agreement with Thailand is not perfect. Other speakers have commented that it has limitations. All trade agreements always will have limitations. But each step is a step towards freer and more open comparative trade. That is why it is certainly in New Zealand’s interests to advocate for freer trade based on comparative advantage and it is for that reason that we have to accept that although we may have an advantage overall there will be adjustments. Some of the adjustments may carry some pain. Certainly if we have areas of quite high protection or relatively high protection—perhaps in clothing and textiles—then we do not have the comparative advantage so yes we may lose some jobs in that sector. But New Zealand First and the Greens have to understand the point that to the extent that the overall New Zealand economy will be stronger other jobs and opportunities will open up that will more than compensate for that. One of the great advantages of trade is that both parties benefit and the collective benefit actually creates greater prosperity not just for the countries involved but for the world at large. A rising tide lifts all boats and that is what freer trade can do. 
The other thing to note of course—and I think I mentioned it at an earlier stage in this debate—is that throughout history no two openly democratic nations that have traded with each other have ever gone to war. I put out the challenge to members to name two openly democratic countries that have traded together that have ever gone to war. One of the best ways of building global securities is actually to open up for trade but the xenophobic arguments from the Greens and New Zealand First are the very arguments that create instabilities and problems in an international sense. 
In the big-picture view I think that one of the greatest obscenities in the world is the way that wealthy nations in Europe and North America insist on free trade in areas where they have comparative advantages based on high-tech goods and the like yet deny developing countries the same opportunity—in fact engage in massive subsidisation and tariff protection against the developing Third World. It just so happens that although New Zealand is not characterised as a Third World nation structurally our economy is more representative of being so with our heavy dependence upon agricultural goods. So it is true that we would benefit but so would some of those poverty-stricken nations of Africa and the like. That is why I take exception to the Greens’ argument that says: “Oh no no. We should give these countries more aid.” and then they come to this House and vote against opening up with trade. 
There is no better way to assist people to lift their standards of living and to gain prosperity than to trade with them. I find it an incredible hypocrisy and contradiction to promote more aid on the one hand but to deny the opening up of trade on the other hand. Yes by our standards some of those countries may well operate sweatshops and employment conditions may be a lot harsher than we would accept but the way to lift those conditions is to open up trade and with growing prosperity those other social standards and the like will rise with it. That has been the experience throughout the ages in all economies. Not to do that is to consign those nations to continuing poverty and everyone effectively is the loser. 
So without hesitation ACT certainly supports this bill. We acknowledge its shortcomings such as the lack of a proper breakthrough in services; I understand that the Thais have agreed only to initiate negotiations in 3 years’ time. I am constantly confused by the Labour Government’s race-based laws if you like. Here we have it again with favourable treatment for Maori. That should not be necessary. All New Zealanders should stand alone. Ethnicity has nothing whatsoever to do with it. Of course we know that this Labour Government did a similar thing when Maori corporations were given a lower taxation rate. We are actually glad they have a lower tax rate but we would like everyone to have a lower tax rate. We are not against Maori corporations having a tax rate of 19c in the dollar; we believe everyone should have a lower tax rate and there should not be differentiation based on race. To put that into an international trade agreement as we have here is certainly in the eyes of ACT party members a very very strange thing to do. 
Another good area concerns timber. Although we might be affected by clothing carpets and textiles Thailand is potentially a very significant market for New Zealand’s timber particularly sawn timber and other products. I understand that we face some very high tariffs there of 20 to 30 percent or thereabouts. The Minister could perhaps clarify that. This agreement and the conditions the bill creates will certainly be a major breakthrough and favoured by many sectors of the New Zealand economy. 
In conclusion I reiterate that the ACT party will support the bill. We think that it is a quite small step in trade liberalisation but all such steps are supported by the ACT party. 
Hon PETER DUNNE (Leader—United Future) 
: 
 Firstly as the chair of the Foreign Affairs Defence and Trade Committee I acknowledge the constructive way in which the committee’s members—although it may not have been all that obvious from the debate this afternoon—participated in the discussions in the committee both on the national interest analysis of the agreement and on this bill. I also acknowledge the support and advice we received from the officials who advised the committee throughout that process. That advice was most appreciated. It led I think to a constructive understanding of the issues and to a report on both the national interest analysis and the bill which is balanced and reasonable in the circumstances. 
The starting point I want to take with regard to this legislation is the picking up of some of the points ironically from the previous speaker. In today’s international environment multilateralism is clearly an opportunity and an option we wish to pursue. But the glacial pace of international trade reform and some of the political difficulties associated with that have led increasingly to nations seeking bilateral agreements particularly within their regional sphere of influence. I think that that is part of a national self-interest and it is no coincidence that in recent years under Governments led by both Labour and National New Zealand has sought to develop closer economic partnership arrangements with Singapore China the ASEAN states and the countries in the Pacific Three Closer Economic Partnership agreement the Thailand agreement and so on. That is part of our way of ensuring not only the spread of international free trade and the opportunity that goes with that but also the greatest possible opportunity for the people of New Zealand for our manufacturers and our exporters to have the chance to sell their wares in other markets. 
One of the lessons we have learnt over many many years as fortress mentalities and nation States have broken down and as national boundaries have evaporated is that to get the advantage of a deal for us we have to be prepared to make a deal with someone else. That is really at the heart of these types of free-trade agreements. There will be situations where we might quibble about whether the advantage to us is as pure and neat as we might wish but in reality it will always be a compromise—put crudely what we can get away with and how little we have to give up in order to get away with it. That is the tension inherent in all these negotiations. 
New Zealand has to remember a few things as well. We are a very small country isolated and at the end of the world’s trade routes. We will be more price-takers than price-makers. Although we have some natural advantages we have some huge disadvantages that we can do very little about. Consequently in all these negotiations from the time that Ministers of overseas trade—from Jack Marshall onwards—made their annual trudge to Europe over dairy and sheep meat access in the lead-up to the British entry to the European Economic Community right through to the present the New Zealand position has always been to ask how we can advance that New Zealand sense of self-interest; how we make sure that in the global scene the New Zealand case has some recognition. I think that tribute must be paid without exception to our trade Ministers over the years for their patience for their endurance and on the whole for the success they have achieved on behalf of our country in terms of furthering the opportunity for “New Zealand Incorporated”. 
The world changed vastly when the Europeans decided in the 1950s—and I pick up the point about peace and harmony made by Mr Shirley—that their future would be secured if they stopped fighting each other and started trading with each other. The flow-on effect of that meant that that cosy situation we once enjoyed—where it was a simple exercise of growing the lambs shearing the wool putting the meat produce into muslin cloth refrigerating it on a ship to Britain and getting the cheque back sometime later—had gone forever. We had to become more dynamic; we had to become more innovative. The whole march of progress towards free-trade agreements that this country has entered into from CER onwards has really been about securing opportunity and a future for this country. Therefore I get very angry with those who start to take a myopic view which says on the one hand: “Let’s bring back Fortress New Zealand. Let’s throw out the barriers and pretend that the rest of the world doesn’t exist.” and on the other hand: “Let’s be so preoccupied about the conditions in other countries that we forget about the opportunities in our own country.” That is at the heart of this agreement. 
The bill is actually a very narrow one. It deals with the implementation of some of the tariff provisions related to this particular agreement. It has an unusual feature in Part 2 but as we were advised at the select committee that has occurred as much because of the insistence of the Thais in putting something similar into the agreement at their end as because of the result of New Zealand pressure. There are some useful steps in that and it is fair to report that after committee members had teased out those issues with the officials we were satisfied that those provisions not only were consistent with out GATT obligations but also were likely to deliver “real benefits to many New Zealand industries and will open up opportunities for New Zealand to develop the trading relationship with Thailand to its full potential”. 
 That is the heart of this issue. That is what this bill is about. It is what this agreement is about and it is what the whole history in recent years of trying to develop closer economic partnerships with other nations in our part of the world has been about. As I have said I applaud the initiative and the energy of successive trade Ministers in bringing that about. I am pleased to say on behalf of United Future that as a consequence of those measures we support this legislation enthusiastically and wholeheartedly and we support the process that is seeing opportunity brought to New Zealanders because of a willingness on a bipartisan and increasingly a multipartisan basis to embrace the notion of free trade and the notion of these types of partnership arrangements with the countries with which we have the closest contact. 
Hon DAVID CUNLIFFE (Minister of Communications) 
: 
 I would like to thank the member who has just resumed his seat and to acknowledge the previous speaker the Hon Ken Shirley for what I thought was a useful intervention as well. The Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is a fairly technical bill that reads into law the changes to the tariffs schedule brought about by the New Zealand - Thailand Closer Economic Partnership Agreement. 
The debate is an opportunity to note the high level of bipartisan support for this type of trade agreement which is relatively widely held in this House—perhaps for the listeners unusually so. There is broad consensus in the House that multilateral trade reform is always the “first best” option when one is a small remote country reliant upon good transparent rules regarding international trade law for one’s prosperity. Successive Governments have done their best to further that agenda with success that indicates that New Zealand’s diplomatic service and trade diplomats in particular punch above their weight. It is also recognised that in these difficult days it takes some time to bring fruition to a multilateral agreement. For that reason complementary regional and bilateral agreements have a role to play of which this is one. 
I would like to address the objection brought about by the Green Party because it is a fundamental one in any debate on international trade. It is answered by the theory of comparative advantage—that is even if a country is the weaker player in every industry it is still better off by trading so that it exports what it is relatively good at producing and imports what it is relatively poor at producing. I find myself in strong agreement with Ken Shirley on the point that it is obscene that various developed countries—and probably the European Union is the most notable—protect themselves from low-cost imports from the Third World. The benefit to those protectionist countries is far greater than the benefit from the aid that flows south to the developing world. That is a sad truth and it is one that successive New Zealand Governments have worked to overcome. So that is all I think relatively bipartisan across this House and I acknowledge the work that the former Minister for International Trade Dr the Hon Lockwood Smith has also done. That work was carried on in great spirit by the Hon Jim Sutton and it was recognised by the Foreign Affairs Defence and Trade Committee. 
But there are some differences between the two sides of this House. There is a tendency on the right to believe that simple market opening will deliver the kinds of gains that New Zealand needs to be a prosperous economy in the 21st century. On that point this side differs. We say that market opening is a necessary condition but it is not a sufficient condition. It must be balanced by active development of the capability of our exporters to deliver the goods—in other words to drive through the opening that has been created and to form the kinds of partnerships with our overseas partners that will derive value back to New Zealand. That is a new agenda. It is required that we have the statistical capability to measure it that the national interest analysis follows it and that we have the support through New Zealand Trade and Enterprise and others to implement it. This debate is about reading into law the tariff preferences created by this agreement. This is a good bill and I urge its adoption. 
JOHN CARTER (National—Northland) 
: 
 I am just getting over a dose of if not the flu certainly a heavy cold but one of the things we can smell is the stench of the dying decaying Labour Government can we not? One can smell it in the House. I went through it in 1999 when it happened with the National Government. People could smell the decay around us. Well it has been transplanted across to the Government members. 
Hon Trevor Mallard 
: Where’s that Don Brash—has he gone for his afternoon sleep? 
JOHN CARTER 
: The member who just resumed his seat is an absolute example of that—along with the Minister of Education whom I will talk about shortly in the context of this bill. He told us that he would fix all those things about having special preference for Maori and what has he done? He has done absolutely nothing. He told the country that he would fix it up. He said: “We’ll fix it. We’ll make sure it’s all even and all fair and that there’s no preference given.” What do we have in this agreement? We have special preference for Maori. 
Hon Trevor Mallard 
: No. 
JOHN CARTER 
: Oh the Minister says “No”. I will quote him shortly. 
Hon Trevor Mallard 
: Read it. 
JOHN CARTER 
: I will. Let me just read something out: “It concerns me that article 15.8 reserves the right for New Zealand to adopt measures it ‘deems necessary to accord more favourable treatment to Maori …’.” It is in the agreement. The Minister should go and look. The Minister who has the race relations portfolio does not even know that that is in there. How disgraceful is that? 
First of all I want to talk about the positive sides to this agreement because there are some and I do want to congratulate the Minister for Trade Negotiations on making at least some gains. He is to be commended for that as are as has been said in this House previous Ministers who have done so. 
Hon Trevor Mallard 
: You’re too kind. 
JOHN CARTER 
: Well I do not think I could ever be said to be too kind but at least I am a reasonable person who will acknowledge that at least this agreement is a step forward. It is good to have trade agreements; there is no question about that. The National Party supports that concept absolutely and of course it supports this agreement apart from the fact that we have concerns about some parts of it. It is worth noting that currently only 4 percent of the goods that we export to Thailand are duty-free and on 1 July after this agreement takes effect 52 percent will be duty-free immediately. That is of huge value to our industries. 
The problem is that some of the qualifications in the agreement cause us concern. The first thing is the qualification that goods be free of chemicals which the Minister actually referred to in his address. That is a worry because growers in New Zealand will have to certify—we assume that this will happen; negotiations are still going on—that the goods being exported are free of chemicals. There is nothing wrong with doing that other than that the cost of gaining the certification is quite likely to be more than the cost of the tariffs that are currently imposed. So the growers themselves may not actually end up receiving any financial benefit out of this agreement at all. We will wait and see. 
But the second thing that worries me about this particular part of the agreement is that it has to be negotiated. Regarding the cost of negotiating and the time delays—although the Minister has tried to assure the House that it will happen rather rapidly—I have to say that the track record is not flash. If we look for example at the negotiations between New Zealand and Australia around apples we see that they certainly have not been rapid at all. Indeed in the last 6 years there has been no progress at all with regard to that matter. All that has happened is recently the Minister finally decided that we will refer the dispute between Australia and New Zealand over apples to the Committee on Sanitary and Phytosanitary Measures for discussions. Well what does that mean? Absolutely nothing! Why does the Government not take the bull by the horns as National did on lamb tariffs when we were in Government and take the matter to the World Trade Organization to get it sorted out? The disputes process is there; let us just get it done. It worries me that if that is the track record of this Government in regard to trying to settle disputes what will happen when we are in the middle of negotiations on issues that this bill provides? I suggest that there will be delays and complications and as a consequence there will be significant costs to our growers. 
 One of the previous speakers from Labour talked about its track record in negotiating trade agreements. Well the only one that Labour has had any involvement with as a Government apart from this one was the Singapore agreement and all it had to do was sign the final piece of paper. To be fair the previous member who spoke acknowledged the work that had been done by my colleague Lockwood Smith in regard to the Singapore agreement. That work was all done under the National Government. Yet a previous Labour speaker—I think it was the member for Waimakariri whose name I cannot recall at the moment— 
Hon Member 
: Cosgrove. 
JOHN CARTER 
: Clayton Cosgrove claimed that Labour had a fine track record. Well actually when one looks at it one sees that the equivalent of Labour’s track record is a flat tyre on a vehicle that is broken down. That is about as good as it gets. 
This agreement is Labour’s first attempt and there are lots of qualifications in it. I say to the House that we need to be concerned about some of the conditions in this legislation that may well put different sorts of tariffs on our exporters. It is unfortunate that we have any qualifications at all. At least the Singapore agreement was clean done and end of story; it was just a straight trade agreement. CER was the same sort of thing. This agreement is a case of “Yes we can do it but with all sorts of ifs and buts.” and that is most unfortunate. 
I want to talk about the one part that does concern me as I said I would and I hope the Minister in charge is listening. It is the issue that appears in article 15.8. Why in the world do we have to have in a trade agreement an article that states that New Zealand reserves the right to adopt “measures it deems necessary to accord more favourable treatment to Maori … including in fulfilment of its obligations under the Treaty of Waitangi.”? I ask Parliament why that clause is in an international trade agreement. It mystifies me. I asked that question during the first reading and no one was able to give me a reasonable answer. 
I wondered whether it is because some of the fruit that Maori grow is different but I do not think it is. I do not think the apples that Maori grow are different colours from other apples. I would not have thought so. I am sure the apples are the same varieties and the same colours as the apples that non-Maori grow and export to Thailand. I am sure they are the same so why would Maori need preferential treatment? I cannot think why. Maybe the cherries are different. Maybe the blush is a different colour or something. I do not know why. But it really mystifies me as to what the advantages are to this country and to the Maori people in having that clause in the legislation. The Thai people I am sure do not know what the Treaty of Waitangi is. I doubt whether they have ever heard of it actually—well one or two of them will have heard of it now because it is in this agreement. It is a real mystery. 
This Government 12 months or so ago gave this country an absolute assurance that there would be no more preferential treatment and that all those kinds of clauses would go. Trevor Mallard the Minister in charge of that said: “Forget about it. You don’t need to worry about it. This Government’s got it under control.” and here we are signing an international agreement that puts it back under the spotlight. Quite honestly the Government needs to explain—and I hope the Minister in charge of the bill will do so during the course of the Committee stage—why that particular provision has to be in this sort of legislation and in these sorts of agreements. It actually does this country no good in my view. 
National members look forward to the debate in the Committee stage and we will explore some of these clauses more closely during that debate. 
Hon DAVID BENSON-POPE (Minister of Fisheries) 
: 
 I am pleased to rise in support of this bill. 
A party vote was called for on the question  
That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a second time. 
Ayes 96 
New Zealand Labour 51; New Zealand National 27; ACT New Zealand 8; United Future 8; Progressive 2. 
Noes 23 
New Zealand First 13; Green Party 9; Maori Party 1. 
Bill read a second time. 
Instruction to Committee 
Hon JIM SUTTON (Minister for Trade Negotiations) 
: 
 I move  
That it be an instruction to the Committee of the whole House on the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill that it take the bill part by part. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 69 
New Zealand Labour 51; ACT New Zealand 8; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; Green Party 9. 
Motion agreed to. 
In Committee 
Part 1 Implementation of preferential tariffs under New Zealand - Thailand Closer Economic Partnership Agreement 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Part 1 of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is the part that actually implements the negotiated preferential tariff schedule if one likes for Thai products coming into New Zealand. It is an essential part of this bill. Our law does have to be amended to enable that negotiated tariff agreement to be put into it. So I make it very clear that National is totally supportive of Part 1 because it is absolutely essential to implement that agreement. Having said that—that we are totally supportive of it—I think it is important we understand the pluses and minuses that Part 1 will make available for New Zealand. 
I will deal with the pluses first. Although this bill does not cover exactly what happens for our products in Thailand—a similar piece of legislation to this will do that in Thailand—it is important to realise that the laws that implement negotiated tariffs have a big impact. For example for New Zealand exporters to Thailand 52 percent of our exports will be duty-free as soon as this agreement is given effect to and as soon as legislation similar to Part 1 of this bill is passed in Thailand compared with 4 percent now. That is a big plus. That is why National is so supportive of trade liberalising legislation. There are big pluses like that for our horticultural exporters most of whom face 30 to 40 percent tariffs—people such as kiwifruit exporters. Those tariffs will be eliminated and that is very important for our industry. 
I would ask the Minister—if he could explain this under this part because I cannot see where else in the bill we can really address this—to explain a little more about where we have got to in terms of making sure our horticultural exporters do get meaningful access to Thailand. The reason that has become an issue is that Thailand brought in a new provision reasonably recently that requires people to certify that horticultural products are free of I think three particular chemicals. The costs of the testing for those chemicals and the costs of the certification for that may well match if not exceed the tariff reductions that are being achieved. I realise that I am running a bit of a risk in asking this question but I see this part as being the only part where the Minister could elaborate on that matter a little further. 
The Minister said in his second reading speech—if I heard him correctly—that Thailand had agreed to defer those requirements for a period of time. I would appreciate the Minister making it more clear exactly how long that period is and exactly what has been done to make sure a process is put in place to have those requirements ultimately removed. Obviously this agreement and the legislation we seek to pass right now is really nullified in large part if those kinds of non-tariff barriers—I mean it is exactly that kind of non-tariff barrier that has kept our apples out of Australia. We want to make sure that as we pass this legislation we will not be caught up in similar non-tariff barriers in Thailand. It would be helpful if the Minister could just enlarge upon what he said during the second reading phase. I accept that you Mr Chairman could rule that he cannot do that but I do not see another part of this bill where he could do so. I think the Minister’s advice on that issue would be very helpful for members in understanding the full implications of this legislation. 
I have already pointed out that although we totally support Part 1 I do have a concern that the schedule of tariff reductions that we will be implementing with this legislation takes New Zealand beyond its 2010 commitment under APEC. That is a huge shame. I disagree with Peter Dunne. Peter Dunne said in his second reading speech that in these trade negotiations we should try to get away with what we can and find out what we have to give up in order to get what we want. It is not like that. I have done a lot of trade negotiation work. In fact we ought to be saying that we do not want to have any of that stuff around the New Zealand economy anyhow. It is all bad for us. Unilateral trade tariff elimination makes a lot of sense. In a lot of the trade tariff negotiation work I have done in the past a lot of effort has gone into helping other countries to understand how maintaining those barriers is actually an impediment to their own economies. They actually suffer from maintaining those barriers. I do not think that old-style trading is a great way to proceed in negotiations. 
JOHN CARTER (National—Northland) 
: 
 I follow my colleague Lockwood Smith and I am sure that Mr Jones will get a call very shortly. I raise this issue in relation to Part 1 and again it is in a similar vein to that stated by my colleague Lockwood Smith and relates to the wording that appears in the agreement. I assume that the wording applies for goods both coming in and going out of New Zealand in regard to the issue under article 15.8 of the agreement relating to the Treaty of Waitangi where it states it deems necessary to accord more favourable treatment to Maori including the fulfilment of its obligations under the Treaty of Waitangi. 
I draw the Committee’s attention to a speech made by Mr Trevor Mallard as Coordinating Minister Race Relations at Victoria University in July last year when he said as the Minister in that capacity that Maori have no extra rights or privileges under the treaty or in the policy of the New Zealand Government. I ask the Minister in the chair Mr Sutton whether he can explain that statement made by the Minister in charge of race relations Mr Mallard. He and Prime Minister gave an assurance to this House that there would be one law for all. Yet the Minister might explain why that clause is in the agreement that gives favourable treatment to Maori including the fulfilment of obligations under the Treaty of Waitangi whatever that means. 
Perhaps the Minister might like to explain to the Parliament how it actually affects goods coming from Thailand into New Zealand. I would be very pleased if the Minister could explain to us what sort of impact that wording in the agreement would have on someone from Thailand who is making some Thai product and then runs up against the favourable treatment for Maori when it comes across our wharves. I wonder what impact that will have on that person’s ability to be able to trade fairly and freely with all New Zealanders. The Minister might like to take a call to explain why he and the Government—Helen Clark Trevor Mallard and Jim Sutton—believe that it is important that that sort of clause is in an international trade agreement. 
For the life of me I fail to see that it will make one iota of difference between us trading with Thailand and Thailand trading with us. I would be very pleased if the Minister could take a call to perhaps enlighten us and in particular enlighten me so that I can explain to the people of Northland why the Government felt that in this particular case it had to abandon its policy of one law for all—if it has that policy and actually I do not think that it does—and put that in this agreement. It will be interesting to know why. 
My colleague Lockwood Smith also raised some other interesting aspects of the legislation and of the agreement. Of course they are issues we raised in the first and second readings and I do hope that the Minister will take a call to explain to us those issues that will be of worry around the matter of negotiation—particularly the issue as my colleague Lockwood Smith has said around the matter of chemicals etc. It is very important that we have a good understanding in this debate so that when we are asked by the rural sector that we represent we can explain to it what impact that will have. I am concerned as my colleagues are that it may well impinge on its ability to have a full and free trade between Thailand and New Zealand. We certainly do not want that to be an outcome of this agreement. 
DAIL JONES (NZ First) 
: 
 The previous speaker from the National Party John Carter raised the question that I had raised earlier about the insertion of the Treaty of Waitangi into this legislation. It was almost a speech I thought in opposition to the bill and I support everything he said. For the reasons given by him New Zealand First is opposing the bill. 
Next week the Rt Hon Winston Peters on behalf of New Zealand First will be making a speech about matters relating to the Treaty of Waitangi and I do not intend to take that aspect any further today at this stage. 
The point has been raised about horticulture. In the New Zealand First minority report attached to the partnership agreement we made the point that we were concerned about the submission from the New Zealand Horticulture Export Authority which indicated to the committee and I quote: “However new residue testing requirements proposed by the Thai government have the potential to significantly reduce the benefits from the agreement. These requirements are viewed by both the New Zealand export industry and Thai fruit and vegetable importers as a non-tariff trade barrier focused on reducing imports of Chinese fruit and vegetables. We are working with the Ministry of Foreign Affairs and Trade to address this issue …”. That is the Horticulture Export Authority’s submission. 
I note that horticultural exports do not feature prominently in our exports to Thailand. The list I mentioned earlier on of New Zealand’s exports to Thailand which lists 20 products does not show horticultural exports at all. At the No. 20 level are exports worth $3 million so I assume that any horticultural exports must be worth less than that. But clearly they are in grave danger because of the trade agreement entered into between Thailand and China. In terms of that of course Chinese goods are allowed into Thailand. Since October 2003 Thailand has provided duty-free access for horticultural items from China as part of an early harvest package ahead of their full free-trade agreement negotiations. It seems that the Thai people are willing to enter into an agreement on the one hand but on the other hand start to put up barriers even with the Chinese. We are going to be caught up in their barrier with the Chinese; it obviously will affect us as well. It makes one question the worth of an agreement of that kind. 
Much has been made of the reduction in tariffs but we must look at what the existing tariffs are. I gave a couple of examples in New Zealand First’s minority report. Infant milk food formula was worth $34.9 million in 2003; the tariff goes down from 5 percent to zero not from 17 and 18 percent as suggested elsewhere. Wood pulp was worth $5 million; the change in tariff is from 1 percent to zero so that is not much of a drop. For what is a fairly small market as Dr Lockwood Smith said this is a poor-quality agreement overall. 
The services area is the one of vital importance to New Zealand and we know that it has not been allowed to be implemented. But the other way round it does seem to be working. I ask the Minister to explain why so many specialist Thai chefs and traditional Thai massage therapists are being allowed into New Zealand. Do they ever go back to Thailand? Why must we keep on bringing them in? What happens to them? How long do they stay here? Can we not at some stage train New Zealanders to cook Thai food? Indeed I had a very nice Thai chicken curry in a place just outside the building here at lunchtime. Surely we can cope with making a nice Thai meal after all these years. Why should New Zealanders lose out on jobs? Why must we always have Thai chefs? What is the need for traditional Thai massage therapy in New Zealand? Were we not able to survive and cope without traditional Thai massage therapy? Why do we need these types of people in New Zealand? Why not train New Zealanders so that they can get these jobs rather than our bringing in Thai people all the time to do them? 
Can a Labour Minister explain why the clothing footwear and carpet sectors and whiteware plasterboard steel and certain textiles must be placed at risk because of an agreement entered into by him? 
This is a sad day for the workers of New Zealand and I am wearing my red tie just for them today. Obviously no Labour Party member has worn a tie of that colour today. 
Hon JIM SUTTON (Minister for Trade Negotiations) 
: 
 A number of questions have been raised. I will deal first with the question raised by Dr the Hon Lockwood Smith which was also raised I think by Dail Jones. Those members asked where we have got to on the issue of the Thai sanitary and phytosanitary provisions announced recently. Even though the issue is not really strictly speaking dealt with in this bill the question was not ruled out of order before so I guess the answer will not be either. I can say that the proposed new Thai regulation known as regulation 11 would if fully implemented impose a new testing and certification regime on a range of 16 food products including many of interest to New Zealand. In respect of implementation it will apply to all countries exporting to Thailand. Implementation is now scheduled for 30 June. 
Since the proposed regulation was first notified late last year New Zealand has expressed its opposition to it in a number of ways directly to the Thai authorities in Bangkok and in the World Trade Organization Committee on Sanitary and Phytosanitary Measures in Geneva. During the week of the signing of the Thai closer economic partnership in Bangkok which was on 18 April there were meetings between myself and the Thai Minister of agriculture and one also with the Thai Minister of Commerce and a meeting between the respective Prime Ministers. That has resulted in an undertaking from both Thai Ministers to work with New Zealand towards recognition of New Zealand’s systems as being equivalent to Thai systems for the application of regulation 11—in other words for Thailand to accept our inspection and certification of goods exported from New Zealand. 
There is I must say preferential access for New Zealand fruit and vegetables into Thailand and that is a special benefit for New Zealand under the closer economic partnership. New Zealand is therefore in a position of advantage ahead of other suppliers to Thailand whatever the outcome on the proposed new testing regulation. China which already has a closer economic partnership with Thailand has a similar advantage to New Zealand but is in the Northern Hemisphere so it does not have the out-of-season advantage that we have. I think the fact that our officials now have a meeting with the Thai authorities on 23 June demonstrates that the bilateral sanitary and phytosanitary committee that has been set up for this sort of eventuality looks as though it will be able to do its job. So we are hoping for a happy outcome in that respect. 
I would like to thank Dr the Hon Lockwood Smith for his support for Part 1 and for the tariff reductions. However I cannot support his criticism of the Hon Peter Dunne’s remark about the negotiating realities—that agreements like this always involve compromise. I think there can be no doubt that that is so. The National Party spokesman should understand negotiating realities. After all he had the experience—in fact this was the sole success of his 9 years I think as trade Minister—of agreeing to commence negotiations with Singapore with whom New Zealand already had duty-free access for all goods except beer. Now despite that those negotiations were stuck. They were going nowhere at the change of Government. We have got there. I suppose Dr Smith would consider the highlight of his trade negotiations career to be his attendance at the Seattle conference which is a bit like a British general believing the highlight of his military career was attendance at the Dunkirk evacuation. It was really however one dresses it up retrospectively an unmistakable defeat and failure. 
John Carter raised the issue of the Treaty of Waitangi clause. That clause preserves the right of any Government of New Zealand to implement policies of its choice in relation to Maori and to fulfil treaty obligations without being obliged to offer equivalent treatment to overseas entities provided that of course the New Zealand policies do not act as a disguised restriction on trade or investment. To leave that clause out as National advocates would be to commit New Zealand taxpayers to provide the same benefits to any overseas company investing in New Zealand that it may provide by way of assistance to Maori iwi hapu or whanau. So all I can say is that National so hates the indigenous people of New Zealand that it would condemn New Zealand taxpayers to paying extra taxes forever to overseas investors in order to leave any reference to the Treaty of Waitangi out of any future trade agreement. That is notwithstanding the fact that National put an almost identical clause in trade agreements—into the General Agreement on Trade in Services which is part of the World Trade Organization treaties. It was an almost identical clause which of course National cribbed from one of the many countries that also have clauses to protect the interests of their indigenous people in such treaties. So I do not think we need to worry about that matter. 
The member Dail Jones asked why we are allowing trained Thai chefs and massage therapists to come to New Zealand to ply their professions. Well I say to him that firstly a good Thai therapeutic massage probably would not do him any harm and a good Thai meal cooked by a professionally trained Thai chef would not do any of us any harm. This agreement introduces to Thailand through its support of those iconic Thai crafts the concept of trade liberalisation in services. 
Dail Jones 
: Who wrote that? 
Hon JIM SUTTON 
: I can reassure the member that if any New Zealanders want to train as Thai massage therapists or as Thai chefs then I am sure that can be arranged. They can go to Thailand and sign up for a course although those courses are not to be taken lightly. The member would need to commit himself to extended concentration and hard work which is probably something he has not had to do very much of in recent years. 
I think that that addresses the serious questions that have been raised so far. 
KEITH LOCKE (Green) 
: 
 The Green Party has an amendment to clause 4 to insert after the words “being the produce or manufacture of Thailand” the words “whose product processing complies with core International Labour Organisation Conventions”. If we look at the treaty upon which this bill is based and that it is supposed to implement we see references to ILO conventions. Associated with the treaty are arrangements between Thailand and New Zealand on labour and the environment. The problem is that although the words that both New Zealand and the Kingdom of Thailand are to sign up to are very nice there is no actual implementation other than that if we have a disagreement we have another talk then another committee then another talk. There is no actual implementation which is why the statement from the Council of Trade Unions that I mentioned before stated that it was not an enforceable or meaningful process to address breaches of core ILO conventions. I think that is the case and it is the reason why we should put in the bill that we reserve the right if the tariff is to be lifted or if a preferential tariff is to be applied that Thailand at least has to meet those core ILO standards. 
There is a problem. Thailand signed up to the ILO Declaration on Fundamental Principles and Rights at Work and its follow-up and it is true that there is at least one ILO convention that Thailand has signed up to—the ILO Convention 138 Concerning the Minimum Age for Admission to Employment relating to not using child labour but in wandering around the sweatshops in Bangkok one will see that people do not exactly adhere to that convention. There is quite a bit of corruption in Thailand and Government officials do not actually implement ILO conventions. Then there are some other ILO conventions like the right to collective bargaining that I understand Thailand has not signed up to. There is a very low rate of unionisation in Thailand partly because of that and partly because union organisers in some factories in Thailand may not last very long on the job; they are just put out of the door. Sometimes there are just what are called “disappearances”: people just disappear and the authorities do not do much about it if one goes to them. In fact the authorities are sometimes tied up with the people who are exploiting the workers and they are keeping the unions out or are employing child labour. That is the reality. 
Even Nike a company that has a big international reputation to protect in terms of its production of footwear subcontracted out to an Austrian-owned firm in Bangkok to produce its shoes but even there union organisers were pushed from the jobs. Demonstrations took place in Thailand and I think there was even one in New Zealand supporting the workers. However the workers did not really get anywhere because in Thailand there are no real enforcement provisions for labour laws. So the least we could do is to put in our legislation the amendments such as those that the Green Party has proposed. That would at least give us control over the situation. One of the Labour members talked about the theory of comparative advantage in trade— 
Dail Jones 
: David Cunliffe. 
KEITH LOCKE 
: Yes it was David Cunliffe. He is one of the ideologues of free trade on that side of the Chamber with the theory that somehow there is this law of comparative advantage that there are some things people in each country are good at that they will export nicely and that Thailand will develop nicely as an economy because of that. But it does not take into account the reality that in Thailand the minimum wage is NZ$0.77 an hour. So it is not a question of what New Zealand workers are good at and what Thai workers are good at; New Zealand workers are quite good at textile manufacture but they are out-competed. 
Dr RICHARD WORTH (National—Epsom) 
: 
 National supports the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill. But for those who have been listening to the debate there are reservations to be entered in respect of the treaty itself. 
I start by recording my disappointment that the Minister who has a particular responsibility for this bill Minister Sutton has used speaking time in this Chamber to launch petty and personal attacks on National members. In doing that he damages his reputation in the trade area. 
I want to pick up two points that I think are relevant and significant in the context of the debate on this part. The first has been identified by others and it is that in the trade treaty itself article 15.8 reads in part: “nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement including in fulfilment of its obligations under the Treaty of Waitangi.” 
We should not I would say be including in trade treaties such affirmative action provisions. I am not blaming the Minister for that. He may have some responsibility but it is a comment more directed at the trade negotiation team who should surely have thought more carefully about the appropriateness of including such provisions. That is the first thing. 
The second comment is that an aspect of merit in the trade treaty is the dispute resolution provisions. There is a detailed code broadly patterned on what we saw in the New Zealand - Singapore agreement. It stands in very marked contrast to what is in our Australia and New Zealand Closer Economic Relations Trade Agreement where the only obligation is an obligation of “consultation”. As others have pointed out in a wider context we have running-sore disputes with Australia that remain unresolved. The apples dispute is the classic illustration of that going right back to 1922 I think when it started. 
It is also appropriate to reflect on the incredible acceleration in the world trade community of the growth in bilateral and regional treaties. As I understand it a count by the OECD’s trade directorate quite recently identified 142 bilateral and regional agreements a third of them concluded in the past 3 years. At the point that the count was done another seven awaited ratification and the OECD indicated that another 50 were planned of which more than 30 involved countries in Asia. 
So we have these regional initiatives going on these World Trade Organization initiatives and they are buttressed by bilateral initiatives. The Minister has made specific comment on this. I note that he said in a speech to the Singapore Institute of Policy Studies on 27 November 2001: “The WTO provides the broad framework of rules for international trade and a forum for pursuing trade liberalisation at a global level. But high-quality CEPs deepen economic interaction. When they are based as New Zealand’s are on the multilateral framework they can also provide guidance on the direction in which the multilateral rules should evolve.” 
Well the argument is—and National has advanced this argument—that this is not for reasons we have indicated a high-quality closer economic partnership more is the shame. But perhaps the hope is that with a change of Government in September the skills that National can bring to the table with a negotiation team from the ministry will add to the depth of this agreement. 
I have spoken primarily about clause 3 and I now make a final comment on clause 4 because clause 4 provides for the preferential tariffs conferred by the agreement to be implemented for Thailand by providing for such preferential rates of duty to be included in the preferential tariff column of the tariff for application to goods produced or manufactured in Thailand. 
JOHN CARTER (National—Northland) 
: 
 I want to pick up— 
Clayton Cosgrove 
: A bad hair day! 
JOHN CARTER 
: Well at least I have not had to have a transplant as that member has—and neither am I likely to have one. The only transplant will be when that member and his colleagues are shifted out of here. 
Dr the Hon Lockwood Smith 
: Yes to this side of the Chamber. 
JOHN CARTER 
: It will not be just to this side of the Chamber it will be right out of the House. [ 
Interruption 
] That fellow from Otaki “Deacon Humes” or something is gone. When he has been around for as long as I have he will not have red hair at all. 
However I will get back to the bill. I was interested in the Minister’s reply when he read out the part about our obligations under the Treaty of Waitangi. I listened to his response with interest. He gave the impression from the bits he read out that the wording we had used was not accurate. However I have checked and it was absolutely accurate. It was as it was read out. The Minister said that we had to include that provision because we have a responsibility to fulfil our obligations under the Treaty of Waitangi. The first question I want the Minister in the chair the Hon Jim Sutton to answer is: what does that mean? What are our obligations under the Treaty of Waitangi? 
What worries me is that by putting in the supposed preferential treatment for Maori it is saying that Maori are not as good as the rest of New Zealanders. I absolutely reject that. What the Minister is saying to me is that my oldest granddaughter who has Maori blood in her is not as good as my second grandchild who has no Maori blood in her. I reject that absolutely. They are both equal New Zealanders. They are both fine New Zealanders. When they grow up they will make a contribution to this country not because one is Maori and one is not but because they are New Zealanders who have the opportunity to be New Zealanders and make a contribution regardless of their race. That is how it should be. They absolutely will get out there and both will be proud of each other. They love each other and enjoy each other’s company. They do not care what their bloodlines are other than that they are Carters and proud of it. They are proud New Zealanders but this Minister is saying to one of them that she is not as good as the other. I reject that. 
I reject that on behalf of all the Maori people in Northland whom I represent. They are just as good as the rest of the people I represent in Northland. They do not want a handout from the likes of Helen Clark and Jim Sutton. They are not interested actually. Certainly some of them want some assistance from time to time but they do not want someone who is condescending and who says to them: “Well you poor person because of your race we have to come along and give you a hand because we are whiteys and are superior.” We do not need that sort of attitude in this country thank you very much. The people of Northland stand shoulder to shoulder regardless of their race and get on with their lives. All they want is a fair break. They do not want some Government telling them that part of them is lesser than the other because it is not. I say to the Minister: take this clause out of the agreement; it is an insult. It is an insult to the Maori and non-Maori people of this country and it is an insult to the people of Thailand who do not even understand it. 
Darren Hughes 
: Hone knows all about insults! 
JOHN CARTER 
: Members opposite can chuck brickbats I do not care because I know I am right. I remember when last debating this issue that that fellow over there with the red hair whose name I cannot remember said to me: “Say that up in Northland.” I challenged him to come up and have a debate. Has he been up? Not on your nelly! He knows that he would get run out. He does not even know where Northland is but he knows he would get run out. I would take on him or anybody on a stage anywhere on this issue in Northland or anywhere in New Zealand and clean him out. Everybody in New Zealand is equal and everybody can make a contribution and that is how it should be. 
MOANA MACKEY (Labour) 
: 
 I move  
That the question be now put 
. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I had wanted to take a call following the contribution from the Minister in the chair the Hon Jim Sutton just a few minutes ago. What concerned me was that the Minister appeared to seek to misrepresent to the Committee what the Thai trade agreement stated. What he read out in response to the challenges around the article relating to the Treaty of Waitangi was a very selected part of that article in the agreement. I was so concerned that I sent back to my office for a copy of the agreement because I thought that what the Minister said to the Committee must be right and that I must be wrong in what I had alleged the agreement contained. I now have a copy of the agreement right here with me and what it states is somewhat different from what Mr Sutton read out. 
I want to quote the agreement absolutely. It concludes with this statement: “Nothing in this agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this agreement including in fulfilment of its obligations under the Treaty of Waitangi.” I think we have a right to know what on earth that means. What the Minister read out to the Committee just a few minutes ago was not that part of the article at all. What does it mean? In relation to Part 1 does the Minister intend that on items relating to Maori business and Maori trade the Government reserves the right to impose more favourable tariffs for Maori businesses? I think the Minister should tell the Committee exactly what that means. 
What are the Government’s obligations under the Treaty of Waitangi in respect of trade agreements? The Minister said to the Committee a moment ago that without this clause it would have to extend to Thai business people or to Thai businesses or investors the same rights as any Maori person. What about any other New Zealander? Whatever is required to protect the interests of New Zealand ought to apply to all New Zealanders. That is the bit we are trying to get at. The Minister in the chair Jim Sutton should explain to the Committee exactly what he intends to do with this article. What he quoted to the Committee a moment ago was a very partial representation of the article. The bit we are really concerned about is the bit I read out which is the entire second half. No words at all were left out. We want to know exactly what it means because we do not know what this Government believes its obligations are in respect of the Treaty of Waitangi in trade matters with regard to this legislation including Part 1. What is it that the Minister may be seeking to do with this clause in relation to Part 1? If it is not Part 1 is it Part 2? Is it that in fact safeguard measures will be imposed? I think the Minister should make clear exactly what is in his mind because he agreed to this agreement. 
New Zealanders have a right to know what the Government means when it says it reserves the right to accord more favourable treatment to Maori. All New Zealanders have every right to feel insulted by that. Maori have every right because they are not inferior and do not need more favourable treatment. I know that the Minister will say National did that previously. I accept that. I say we were wrong. It is no use going back to that. I say National made a mistake in including that kind of clause in the General Agreement on Trade in Services. I absolutely accept that. 
Hon Jim Sutton 
: You’re wrong now. 
Dr the Hon LOCKWOOD SMITH 
: If the Minister is saying we were right then but are wrong now I want him to explain to the Committee exactly what “more favourable treatment” he intends Maori should have and exactly what this Government sees are its obligations under the treaty. At Victoria University in July last year his colleague Trevor Mallard said that Maori have no extra rights or privileges under the treaty or in the policy of the New Zealand Government. Who is right—Trevor Mallard the Coordinating Minister Race Relations or Jim Sutton Minister for Trade Negotiations? They cannot both be right because this agreement reserves the right to confer more favourable treatment but Trevor Mallard says that that is contrary to Government policy. We want to know who is right. 
Hon JIM SUTTON (Minister for Trade Negotiations) 
: 
 I will deal with Dr the Hon Lockwood Smith’s question first. The answer is that my colleague and I are both right and he is wrong. I want to address the serious issue that Keith Locke raised on behalf of the Green Party. He wants us to pass an amendment that would force Thailand to comply with all the ILO core conventions on labour. I point out to the member that even we ourselves do not adhere to all the ILO core conventions here in New Zealand. The member is not attempting to address that. It is quite obvious that what the member is trying to do is to use the ILO conventions as a pretext for protectionism. He is just flat-out anti-trade. He does not want it allowed unless everybody meets a completely unattainable standard of compliance with conventions that we have not even signed up to. I think the member ought to consider the situation again and ask whether it is what he really wants. Does he want us all to be self-sufficient peasants who do not trade anything internationally? Does he seriously think New Zealanders could eat 20 times as much dairy product as we eat now in order to keep it revolving in the economy without exporting any of it? 
Richard Worth asked whether this is a high-quality agreement. The answer is that it certainly is a high-quality agreement. It is completely comprehensive in respect of goods. All goods will go to a zero tariff either straight away or over an agreed period of years. So that puts this agreement amongst the top 1 percent of bilateral trade agreements in the world. What is more we have a commitment to undertake a negotiation on trade in services within 3 years. Anybody who pretends to have any understanding of international trade and who does not understand why this agreement was done instead of trying to force Thailand to negotiate now ahead of its negotiations with much larger APEC trading partners does not have the wit to get involved in the game himself or herself. I am absolutely astonished that any member in this House needs to have it explained to him or her why we have taken this opportunity to defend our position in the Thai market for our goods and to achieve advantage over most of Thailand’s trading partners while we had the chance to do so now rather than waiting until we could have a perfect agreement with free trade in all goods and services. I can advise the member that there would likely be a very long wait for that. 
DAIL JONES (NZ First) 
: 
 The National Party members keep on making the speech about the reference to the Treaty of Waitangi in this agreement so I look forward to the National Party opposing the legislation as New Zealand First is doing. That is clear New Zealand First policy. I am pleased the National Party is supporting New Zealand First policy and I hope it will take that to the final conclusion and vote against the bill. I am reminded of the famous expression of the Rt Hon Winston Peters: “You can steal my horse but you’ve got to be able to ride it out of town.” National Party members are trying to steal our horse in saying that they oppose the reference to the principles of the Treaty of Waitangi. Now they have to ride it out of town as well by voting against the bill. Can they do that? I do not think they can. 
LESLEY SOPER (Labour) 
: 
 I move  
That the question be now put 
. 
JOHN CARTER (National—Northland) 
: 
 I am interested in the response of the Minister in the chair Jim Sutton. He made a very fleeting response to the comments made by my colleague Lockwood Smith by myself and by others in reference to the issue of the treaty article in the legislation. I make one comment to Mr Dail Jones who talked about riding horses. I suspect that it is a while since he has ridden a horse and I doubt whether he could ride one out of town. He talks about being consistent. Well we have already said we support trade agreements so we will support this trade agreement. There are parts of it that we do not like—one that we have referred to is article 15.8 of the treaty and we will make sure that we keep talking about that. We want New Zealanders to know the inconsistencies that there are with this Government. 
But I say to the member who talked about getting on a horse and then riding it out of town that the way one does that of course is by becoming the Government after the next election which we are looking to do. When we are the Government we will take this horse with regard to the treaty stuff right out of town. It will be addressed at that time. We have made it very clear that those sorts of things will not appear. My colleague Lockwood Smith quite openly said that we made a mistake during the 1990s by including these sorts of clauses in agreements. [ 
Interruption 
] That is right but what the Labour Government does not like to hear is our admitting that we made a mistake. 
There is nothing wrong with that. People respect people when they stand up and say they did something but it was not right—that they got it wrong and they will address it. That is the problem with this Government. It is not prepared to stand up and say that it has made a mistake. It is not prepared to stand up and say that it has got this wrong. 
The Minister Jim Sutton tried to say that both he and his colleague Trevor Mallard were right and that my colleague Lockwood Smith was wrong. Well I ask the public to match this. I will read out article 15(8) of the agreement again for their edification: “… measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement including in fulfilment of its obligations under the Treaty of Waitangi.” The important part of that statement is “more favourable treatment to Maori”. Let us remember that this is the Minister Jim Sutton’s agreement. At the same time the Minister Trevor Mallard is saying that there are no extra rights or privileges under the treaty or in the policy of the New Zealand Government for Maori. So how can Mr Sutton say that both he and Mr Mallard are right when there is absolute inconsistency between what they are talking about? 
First of all they should stand up and say they have got it wrong. Secondly they should then stand up and tell us why they are suggesting that Maori in this country need special rights and assistance. As I said my two granddaughters—one of Maori descent and one not—are equal and and are both fine New Zealanders who will make a great contribution to this country. One sure is not inferior to the other and neither are the people of Northland and the Maori of New Zealand. They are fine New Zealanders. Certainly like other people in this country some amongst them need help and assistance. National will be right there to give that assistance but we will not be condescending and we certainly will not entrap them into a welfare life that ends up binding them forever to the breast of the State. 
We oppose that. That is not what we intend to do unlike this Government which makes such silly statements that are meaningless and that no one can explain. When the Minister Jim Sutton gets up and says that we have to do that to honour our obligations to the Treaty of Waitangi and when members of all the Opposition parties have asked time and time again for the Minister or anyone in the Government—Prime Minister Helen Clark or Deputy Prime Minister Michael Cullen—to explain what it means they cannot do it. We do not need silly stuff in the legislation. 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 61 
New Zealand Labour 51; United Future 8; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Green Party 8. 
Motion agreed to. 
The question was put that the following amendment in the name of Keith Locke to clause 4 be agreed to: 
to insert in subparagraph (i) of section 7(1)(h) after the words “being the produce or manufacture of Thailand” the words “whose product processing complies with core International Labour Organisation Conventions”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 8 
Green Party 8. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 97 
New Zealand Labour 51; New Zealand National 27; ACT New Zealand 9; United Future 8; Progressive 2. 
Noes 22 
New Zealand First 13; Green Party 8; Maori Party 1. 
Part 1 agreed to. 
Part 2 Application of transitional safeguard measures and provisional safeguard measures  
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Part 2 of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is the part that introduces a whole range of transitional safeguard measures. As I mentioned at the second reading this is the first time that such provisions have been entered into New Zealand law in a bill like this. I would really like the Minister for Trade Negotiations to tell the Committee why he and the Government have found this necessary. It will invariably invite a whole new bureaucracy and a rush of bureaucratic procedures. 
Let us look carefully at some of the provisions in Part 2. Let us take for example new section 15F(1)—inserted by clause 7—which enables the Minister to decide to apply a transitional safeguard measure. It states: “The Minister may decide to apply a transitional safeguard measure …” which will be higher tariffs or higher duties for a certain product when there has been an increase in the quantity of that product coming into the country and—I accept that there is an “and”; that an increase in the quantity coming into the country would not be a sufficient reason on its own—it could threaten to cause serious injury. I invite members to really think about that. If this trade agreement is worth the paper it is written on it should result in much-increased trade between New Zealand and Thailand. There will be if it works a big increase in Thai products coming into New Zealand. Some sectors may say that a big increase in products like theirs coming here poses the threat of injury to their industry and off we go. Those sectors will be able to apply to the chief executive of Trade and Enterprise and there will be a whole process of initiating an investigation to establish whether there has been such an increase and whether it does pose a risk of threatening to cause serious injury. 
We have seen this sort of stuff at work around the world. We know that it invites action and litigation. Obviously if for argument’s sake manufacturers in New Zealand are producing some kind of product and they see an increase in imports of it we will get into trouble. The part even tries to define what “like goods” are. One can seek an investigation into a transitional safeguard measure if a “like good” has been imported into New Zealand in increased quantities. We can see the kind of bureaucratic process that this sort of legislation invites. 
New Zealand has never required it before. The Minister could probably say we have not had a bilateral trade agreement with an economy quite like Thailand’s before. I accept that. But why do we want to bring into our legislation this kind of provision? The Minister should be honest with the Committee. First did New Zealand want it or did Thailand want it? Is it in fact just because New Zealand buckled to what Thailand wanted that we are putting this whole bureaucratic process into our law? It is so woolly. We know that the United States has safeguard measures; its procedures invite applications for consideration of safeguard measures and we know the problems that cause the United States Government. Do we want this kind of thing in our New Zealand law? 
There are other issues that I hope my colleagues will also ask the Minister about. Will the safeguard provisions in Part 2 be applied differently to Maori and non-Maori businesses? As our agreement with Thailand reserves the right for us to apply to treat Maori more favourably under the agreement could we see Maori applying for transitional safeguard measures—because Part 2 would enable them to apply for transitional safeguard measures—that non-Maori would not get? The agreement provides for more favourable treatment for Maori. If what I am saying is not correct and not possible the Minister should make that very clear. He should make it unequivocally clear that it would be impossible under the safeguard provisions in Part 2 for Maori to claim using article 15.8 of the agreement special safeguard measures that non-Maori could not achieve. 
JOHN CARTER (National—Northland) 
: 
 I want to follow up the issue my friend and colleague Lockwood Smith has drawn to the Committee’s attention in regard to Part 2. In particular the Committee needs to look at new section 15F(1) inserted by clause 7 which states: “The Minister may decide to apply a transitional safeguard measure if he or she makes a determination as a result of an investigation by the chief executive … that goods … (b) are causing or threatening to cause serious injury to an industry producing a like or directly competitive good.” That really needs to be given a thorough interpretation. I wonder what it means exactly. I would be interested to hear the Minister comment on that aspect of this part if he would be so kind. 
Under New Zealand regulations—occupational safety and health for example—and the laws of the politically correct system under which we work we now have such stringent rules that we restrict the public and our industries from doing all sorts of things in a way that is not thought of in other countries. I wonder whether that section means that we are taking the opportunity to put up trade barriers against the spirit of a trade agreement. Is this some sort of backyard deal that allows us to worm our way out of our obligations? If we are signing a free-trade agreement with another country then there has to be free trade. 
Hon David Cunliffe 
: What a sad speech. 
JOHN CARTER 
: That member will be sad when he is not back in Parliament after the next election so if I were him I would not worry about being sad now. If I were that member I would be happy to be taking calls because they will be amongst his last—which will be a blessing to Parliament. 
I ask the Minister what new section 15F(1) actually means. A free-trade agreement on my understanding of the situation means free trade. I know that people like Keith Locke do not agree with that. That is fair enough; he states his case. But the point is that signing up to a free-trade agreement means that we can put our goods into a country and it can put its goods into ours. We should not need barriers because of different rules and regulations within the countries yet surely that is exactly what that section states. I think that issue is absolutely important and I look forward to the Minister explaining to us what that section means. 
I want to go back to an issue I have raised already on which the Minister has not satisfied me and certainly I believe will not have satisfied any of the listeners to this debate. It is the issue around the Treaty of Waitangi. Again I ask the Minister to tell the industries involved—because they are the ones that are directly affected—what the agreement means in referring to the fulfilment of our “obligations under the Treaty of Waitangi”. What does that mean with regard to this trade agreement? I do not understand; I do not know what it means. That phrase is just parrot words unless we have some understanding of what those obligations are. I know that the Minister like his fellow Ministers when they are asked questions will ignore that question which is unfortunate. But if he is going to ignore it why was that phrase put in the agreement at all? Some bureaucrat at some stage will be asked a question about it and he or she will then be obliged to spend hours and hours on trying to figure out what it means—because the agreement states that someone will have to. It is likely that that person will get it wrong or after doing hours of research he or she will not be able to find the answer either. 
It is a serious matter when we have legislation and treaty articles that refer to things that are not defined and that people cannot understand. Quite honestly they end up being meaningless. Particularly in trade agreements that we arrange with other countries we should know what absolutely every word in a treaty means and know what impact an agreement has on our country and on the country with which we are making it. In this case the Thai people have every right to be able to understand the phrase. In fact it amazes me that they have not asked for an explanation. 
Hon JIM SUTTON (Minister for Trade Negotiations) 
: 
 The member John Carter has asked why we have agreed to a bilateral transitional safeguard mechanism. I point out to him that for the mechanism to apply increased imports must result in serious injury or threat of serious injury which is a very significant and relatively strict test. It is not expected that there will be recourse to this provision often if ever. It is a safety net. It was agreed reciprocally. Thailand did press for this provision and New Zealand agreed to it in the context of an overall deal that met New Zealand’s interests. 
I remind the member that under this agreement New Zealand attains over an agreed period of years completely tariff-free entry for amongst other goods our dairy products into the Thai market. If the member believes that the Thais would have agreed to that without putting in place this relatively modest safeguard against what a lot of Thai producers clearly fear will be an absolute torrent of New Zealand product that will destroy their market overnight then the member is dreaming. He is dreaming of a perfect world where he is the Minister and everybody around the world agrees with him. He will have a long wait for that. 
Opposition members have gone on again about the Treaty of Waitangi and what that clause requires the New Zealand Government or the Thai Government to do. They have suggested that the Thai Government would be forced to give preferential access or preferential exemption to products from Maori businesses when it came to applying the safeguard measure. [ 
Interruption 
] The member did indeed suggest that and it is no good his claiming now that he did not. All I can say is that that is a ludicrous suggestion. I point out to him that the Treaty of Waitangi clause does not require the New Zealand Government to favour Maori but it does mean that if we do something for Maori—such as assisting Maori language broadcasting—we do not have to do it for Thailand. Does the member want to commit the New Zealand taxpayer to pay subsidies for the production of Thai language TV broadcasting in New Zealand? Will those members say yes or no? Do they know what they are talking about? No they do not. 
DAIL JONES (NZ First) 
: 
 I was not going to take a call but the Minister for Trade Negotiations has provoked me now. Is the Minister really saying that this agreement will allow the Maori language to be broadcast in Thailand that the Maori people of New Zealand will be given a great advantage in their language being broadcast there and that is what he is aiming at? What a load of nonsense if that is what he is saying. He actually does not know just what he is saying. That is the point of the matter. 
The second point regards one being able to take action if one feels that Thai goods are flooding into New Zealand contrary to one’s wishes or vice versa with Thailand. That clause is really a lawyer’s dream because so many cases will be commenced under it. If something like that is allowed to happen it will happen and lawyers will just love it. Can members imagine a smaller New Zealand trader trying to compete against someone importing from overseas and wiping out that New Zealand businessman? The small New Zealand business—and remember 97 percent of New Zealand businesses are in that small to medium sized enterprise category—would not be able to compete with wealthy Thai exporters who want to destroy the New Zealand market and to set up something for themselves in terms of getting money from overseas. That is another reason for opposing this agreement. 
We should not look at this agreement as if it is the answer to all New Zealand’s worries. In the year ended December 2004 our exports to Thailand totalled $364 million. If we had to rely on that we would not be going very far at all. However our imports totalled $659 million. I can see this agreement being rather like the Singapore one where the Singaporeans are doing better and better relative to New Zealand. The Thais have gone into this agreement for only one reason: they have pulled the wool over the Minister’s eyes and over Helen Clark’s eyes. The Thais are going to do very well out of this agreement to the detriment of New Zealand workers and suchlike. 
Hon David Cunliffe 
: Is the member supporting the bill? 
DAIL JONES 
: David Cunliffe does not care two hoots about it; he is too busy with his comparative something or other theory. However people like Keith Locke I must say and New Zealand First members have their feet on the ground and are concerned about the real workers of New Zealand. 
KEITH LOCKE (Green) 
: 
 It is a little step forward that the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill includes the transitional safeguard measures. Although as the Minister for Trade Negotiations has just said it was not the initiative of the New Zealand Government to put those in; it was the initiative of the Thai Government. Perhaps the New Zealand Government even beat them back a bit if as the Minister says the Thai farmers are worried about a flood of dairy products. As I pointed out earlier Oxfam New Zealand in its submission on the treaty to the select committee talked about the problems of Thai dairy farmers and also quoted from a document of the Australian Department of Foreign Affairs and Trade that made a similar point. But surely whether it is protecting Thai farmers against New Zealand products or protecting New Zealand manufacturers and workers against Thai products this is a very limited arrangement on two levels. 
The Minister has said that the measure has to meet a very high test of serious injury to an industry. There is some good phraseology used elsewhere. A detrimental impact in relation to increased importation of goods is an “actual decline in output sales market share profits productivity employment and utilisation of production capacity;” or some threat to cause “serious injury to an industry producing a like or directly competitive good.” It is good that the provision is there but when one reads the fine print elsewhere one finds that that provision lasts for only a maximum of 2 years following the elimination of the tariff on the product concerned. So it might help New Zealand workers or Thai farmers for that little period of 2 years but beyond that we could be in serious difficulty. 
The Green Party has three amendments to clause 7. They are of the same theme as my amendments to Part 1 which was to insert into the clauses a little bit extra on labour standards and the environment. Under clause 7 if my amendment is passed there would be a paragraph (1)(c) in new section 15B that would include in the transitional measures products that “are being produced without acceptable labour standards or in ways which detrimentally affect communities or the environment.” Also my amendment would insert subparagraphs (i) to (iii) into new section 15D(d) to bring into account “(i) the extent to which the imports have been made by forced labour child labour or women who are paid less than men for the same work; or (ii) the extent to which the imports have been made in unsafe and sub-standard working conditions; or (iii) the extent to which the imports have been made without reasonable environmental standards”. My amendment to insert paragraph (1)(c) into new section 15F would take into account exclusions on items that “are causing or threatening to cause harm to Thailand because they are being produced without acceptable labor standards or in ways which detrimentally affect communities or the environment.” 
Those amendments would provide a lot of protection for the rights of people in Thailand particularly working people in terms of labour standards and in the broader community in terms of environmental effects and effects on communities. I think there is good reason to be concerned there. If members follow events in Thailand they will see that the Government does not protect the environment very well in terms of the expansion of industry. At least those amendments would allow New Zealand if there is a big outcry from the Thai community and non-governmental organisations that they are not being properly protected under this agreement to exclude the products that are producing that damaging effect on the Thai people. 
So I hope members will support those amendments. They do strengthen the clause. As I said it is good that the transitional safeguards are there but they are very wishy-washy and weak. 
BERNIE OGILVY (United Future) 
: 
 I have just become aware that on the closure motion I wrongly voted nine votes on behalf of United Future. It should have been eight. I seek leave to correct that. 
The CHAIRPERSON (Ann Hartley) 
: Leave is sought to correct that. Is there any objection? There is not. 
Dr RICHARD WORTH (National—Epsom) 
: 
 I would like to ask the Minister a question on something that is far from clear to me in Part 2 and express the hope that he will provide a response. We are of course talking about the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill which National supports with reservations. Part 2 is concerned with the application of transitional safeguard measures and provisional safeguard measures. There is a brief explanation in the explanatory note of the bill as to what all this is about. The note states: “The Agreement provides for the use of bilateral transitional safeguards by both Thailand and New Zealand. These allow either party to address situations of serious injury to domestic industries caused by increased imports due to tariff reductions or removal under the Agreement by reverting to higher tariffs for a certain period.” 
The actual part inserts new sections into the principal Act. There are interpretation sections and a code that involves investigative procedures: matters to be taken into account by the investigator who is the chief executive; publication of investigation results; and provisions dealing with transitional safeguard measures and also provisional transitional safeguard measures. 
I question the Minister about why this particular part is necessary and why it is not possible simply to rely on the current provisions in the World Trade Organization agreements. Of course it is the essence of the World Trade Organization regime that binding tariffs are key to the smooth flow of trade in goods but there are exceptions as I am sure the Minister is aware. Three of those exceptions that are well-known would be actions taken against dumping or selling at an unfairly low price; subsidies and special countervailing duties to offset the subsidies; and—the third is what we are on about here—emergency measures to limit imports temporarily designed to safeguard domestic industries. 
The rules around safeguards in the World Trade Organization context are well known. A member may restrict imports of a product temporarily—take safeguard action—if its domestic industry is injured or threatened with an injury caused by a surge in imports. The injury has to be serious. Well that is what this part is all about also. The safeguard measures were always available under GATT’s article 19. They might not have been frequently used in those days; indeed I understand that some Governments preferred to protect their domestic industries through grey-area measures using bilateral negotiations outside GATT’s auspices. They would persuade exporting countries to restrain exports voluntarily or to agree to other means of sharing markets. 
It also seems to be the case that what Part 2 is seeking to catch is wholly consistent with the safeguards regime in the World Trade Organization because we are talking about import surges justifying safeguard action and that can be either a real increase in imports—an absolute increase as it is called in the trade—or an increase in the imports’ share of a shrinking market even if the import quantity has not increased. That is the so-called relative increase. 
As I look through the safeguard provisions in the World Trade Organization agreement I cannot see why the Government is getting itself involved—as it is in this bill—with Part 2 issues. I am not a member of the Foreign Affairs Defence and Trade Committee but I do not believe that that issue was fully considered by the committee. The only comment I can see about that issue in the recommendations of the committee when it reported to Parliament is this one line: “We are advised that the inclusion of these provisions is fully consistent with our GATT obligations.” 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I hope the Minister will answer those very learned questions from my good colleague Richard Worth because they cover important issues. I would like to come back to the Minister’s response a few minutes ago to questions put to him. I am really troubled by the rave he gave in response to the questions raised about the Treaty of Waitangi and the article about the treaty in the agreement and how they apply to the part of the bill we are debating right now. The Minister gave the impression in that rant that that provision will somehow avoid giving to Thai people an advantage that Maori may have in New Zealand. I want to make it very clear to the Minister that that is not what this part is about and I want to go over the words very carefully with the Minister. Article 15.8 in the agreement states: “… nothing in this Agreement shall preclude the adoption by New Zealand”—it is nothing to do with Thailand; this is adoption by New Zealand—“of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement …”. So it is a matter of what New Zealand deems necessary and clearly the transitional provisions are covered by that agreement. 
I want the Minister to tell the House what he and this Government intend to do or are contemplating doing whereby they intend to deliver more favourable treatment to Maori that is not relative to people in businesses in Thailand but is relative to other New Zealand businesses. That is the issue and that issue concerns New Zealanders. All New Zealand businesses should be treated in the same way under this agreement and under this legislation but article 15.8 provides for the Government somehow to give more favourable treatment to Maori relative to non-Maori New Zealanders and non-Maori New Zealand businesses. That is what the wording states: “… in respect of matters covered by this Agreement …”—that is trade matters. Then it goes on to state: “… including in fulfilment of its obligations under the Treaty of Waitangi.” I want the Minister to tell the Committee what bits of the Treaty of Waitangi confer more favourable treatment on Maori in trade matters relative to other New Zealanders. That article is nothing to do with people in Thailand; it covers a domestic matter. What does the Government have in mind? What will it confer on Maori that confers more favourable treatment on them relative to other New Zealanders? And where in the Treaty of Waitangi does it state that that should happen? 
I understand that the articles of the Treaty of Waitangi provide for all New Zealanders to be given the same rights so what does the Government see in the Treaty of Waitangi that may require it in its view to deliver more favourable treatment to Maori? This provision in this agreement means that the Government can do that—it can deliver more favourable treatment for Maori relative to other New Zealanders and not breach this agreement. Now that is what concerns a whole lot of New Zealanders. Sure we have done that sort of thing in the past but I thought that the Coordinating Minister Race Relations said that the Government’s policy of doing that was finished. Maori have no extra rights to quote Trevor Mallard in July last year when of course that was a big issue following the Orewa I Speech by National’s leader Don Brash. We know what this Labour Government is like. Its members will say anything when they come under pressure—especially Trevor Mallard who could not give a damn what he says; he will say anything. So in July last year following Don Brash’s Orewa I speech Trevor Mallard said that Maori had no extra rights or privileges under the treaty or in the policy of the New Zealand Government. Then just a few weeks later what do we see? The Government has put into an international treaty a provision that shows it intends to reserve the right “… to accord more favourable treatment to Maori in respect of matters covered by this Agreement …”. 
All I want the Minister to do is to tell us what is in his mind. What kind of more favourable treatment does he have in mind that Maori need? Maybe then the people of New Zealand could understand. And what obligations under the Treaty of Waitangi make him feel that Maori somehow should be accorded more favourable treatment than non-Maori? When we read the Treaty of Waitangi we do not see where it states that Maori should be accorded more favourable treatment. That is not a big ask I tell the Minister. I do not think that it is a big ask. What does that article mean? That is all we are after. Actually we want to know also what the Minister means when he says he reserves the right— 
MOANA MACKEY (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 61 
New Zealand Labour 51; United Future 8; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Green Party 8. 
Motion agreed to. 
The question was put that the following amendment in the name of Keith Locke to clause 7 be agreed to: 
to add to subsection (1) of section 15B the following new paragraph: 
(c)are being produced without acceptable labour standards or in ways which detrimentally affect communities or the environment. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 8 
Green Party 8. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Keith Locke to clause 7 be agreed to: 
to add to paragraph (d) of section 15D after the word “obligations” the words “such as but not limited to—” and the following new subparagraphs: 
(i)the extent to which the imports have been made by forced labour child labour or women who are paid less than men for the same work; or 
(ii)the extent to which the imports have been made in unsafe and substandard working conditions; or 
(iii)the extent to which the imports have been made without reasonable environmental standards. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 8 
Green Party 8. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Keith Locke to clause 7 be agreed to: 
to add to subsection (1) of section 15F the following new paragraph: 
(c)are causing or threatening to cause harm to Thailand because they are being produced without acceptable labour standards or in ways which detrimentally affect communities or the environment. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 8 
Green Party 8. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I raise a point of order Madam Chairperson. I seek your guidance as to how you are assessing acceptance of closure motions in this debate because we are obviously not allowed to raise a point of order when you accept the closure. Could you give us guidance as to whether it is based simply on the time involved in the debate or on your consideration as to whether serious questions are being answered because I think the public has a right to have questions answered. 
An example of the seriousness of what I am raising is that a few minutes ago my colleague Richard Worth asked for the first time in the debate a question about a very serious issue relating to the consideration of the World Trade Organization’s provisions for safe transitional safeguards compared with those in this legislation. The Minister chose not to answer a question on a very serious issue yet you accepted the closure motion prior to that question being answered and before the issue could be pursued by other speakers. I would appreciate your guidance. Do you give any consideration to that kind of thing or is it purely a matter of the amount of time you consider has been spent on the debate? 
The CHAIRPERSON (Ann Hartley) 
: I assure the member that the time does not come into it. The matter is one for the Chairperson alone and I make my judgment according to the debate. 
Clauses 1 and 2 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Madam Chair I think it is time this Parliament had some decent answers from the Minister for Trade Negotiations. As I have just raised a moment ago you accepted the closure motion and the Minister had not given answers to serious questions. My colleague Richard Worth raised the question of why it is necessary to duplicate in a slightly different way the transitional safeguard provisions of World Trade Organization agreements. They have been used by various countries. World Trade Organization agreements supersede bilateral agreements. They apply automatically anyhow. Why was it necessary to introduce them into our law? Even Dail Jones from New Zealand First who is a lawyer pointed out that the provisions in Part 2 of this bill are a lawyer’s dream because of the kind of wording involved. We got no answers from the Minister on that issue. 
So Madam Chair we want some answers out of this Government as we now debate clauses 1 and 2—a general debate covering the whole bill. Madam Chair you cannot get away with it as easily as that because I have also asked very specific questions— 
The CHAIRPERSON (Ann Hartley) 
: The member will not bring the Chairperson into the debate. 
Dr the Hon LOCKWOOD SMITH 
: I apologise—I did not realise that I was. But if you tell me I am— 
The CHAIRPERSON (Ann Hartley) 
: The member clearly said “you” to me. 
Simon Power 
: I raise a point of order Madam Chairperson. I appreciate that members should not be bringing you into the debate by referring to you directly as they make their contributions. On behalf of the Opposition all I would ask is this. I have sat in this Chamber for many hours during this urgency period. A raft of members have brought you into the debate at one time or another. During the time that I have been in the Chamber none of those members have been pulled up for that. Dr Smith is one of the most experienced members of Parliament in this Chamber and all I would ask you—[ 
Interruption 
] Well you can sigh Madam Chairperson but all I would ask is that the same rule is applied to all members of Parliament. Given that you have stated that matter I will now be listening for any member bringing you into the debate and raising points of order accordingly. 
The CHAIRPERSON (Ann Hartley) 
: I thank that member for his comments. The member did bring me into the debate most inappropriately and also contested a ruling. I would certainly warn members not to do that. I take the member’s point. 
Dr the Hon LOCKWOOD SMITH 
: I raise a point of order Madam Chairperson. I would appreciate your making it clear to me how I contested your ruling. I made it very clear that I could not do that—that your acceptance of a closure motion was something that could not be contested. I sought your advice as to what guided your judgment which I believe we are entitled to do because this is a parliamentary democracy not a dictatorship. 
The CHAIRPERSON (Ann Hartley) 
: Please continue. I have given my ruling. 
Dr the Hon LOCKWOOD SMITH 
: Let me come back to the bill that we are debating. We expect some answers from the Minister because there are important issues. I have mentioned those raised by my colleague Richard Worth in respect of Part 2 and I want the Minister to cover the issue around the Treaty of Waitangi. We know that it embarrasses the Government. We know that it is contrary to what Trevor Mallard told the people of New Zealand. We know what Trevor Mallard told the people of New Zealand after the public had made it so clear following Don Brash’s Orewa I speech that they did not like the Treaty of Waitangi being used in a way that would confer preferential treatment on Maori. The public of New Zealand made it very clear that they wanted all New Zealanders treated the same before the law. 
I want the Minister to tell us where the clauses in this bill give effect to what he has agreed. He signed article 15.8 which states specifically: “… nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement …” and obviously covered by this bill which gives effect to the agreement. I ask the Minister what that means. So far the Minister’s explanations to this Committee have made no sense at all because the issue is more favourable in respect of other New Zealanders. What does the Government have in mind in terms of intending to confer more favourable treatment on Maori compared with other New Zealanders? If there are issues in this agreement and in this legislation to stop Thai investors being given some advantage that is fine. But that should apply to all New Zealanders. I want to know from the Minister and I think New Zealanders want to know from the Minister what that means. What does the Government have in mind given that Trevor Mallard said that Maori have no extra rights or privileges under the treaty or in the policy of the Government? What does that mean when the Minister has signed an agreement and the Government has signed an agreement that reserves the right to implement measures they deem “necessary to accord more favourable treatment to Maori”? 
I think the people of New Zealand deserve a response to that—the Minister’s attempts so far have been more to fudge the matter than to clarify precisely what the Government has in mind and precisely which obligation under the treaty it feels is involved here—because then the matter would be put to rest. 
DAIL JONES (NZ First) 
: 
 We are looking at clauses 1 and 2 and I want to comment on clause 2. On the face of it clause 2 “Commencement” states: “This Act comes into force on 1 July 2005.” All New Zealanders know that Helen Clark was in Thailand some weeks ago signing this agreement with the Thai people without any regard for the New Zealand Parliament. She took another photo opportunity on that occasion as she loves doing that showed her signing the agreement on behalf of New Zealand and binding New Zealand to an agreement with Thailand. Of course the Thai people were doing the same not fully realising just what the protocols are in New Zealand for this type of agreement. 
When we were in the Foreign Affairs Defence and Trade Committee considering the agreement itself we were very very concerned. In the short space of time that was made available to us and almost on the day in question when we were looking at it and despite the Cabinet recommendation that 15 working-days should elapse before the select committee had to report back to Parliament and that the Government should take no action within that 15 days to bind New Zealand and when only 13 working-days appeared to have passed—despite all that there was Helen Clark signing this agreement in Thailand in breach of all the protocols that New Zealanders expect her to honour in terms of Cabinet agreements. 
That was just another example of the arrogance of this Labour Government. It does not care about the people of New Zealand’s wishes is not concerned about Cabinet protocols and is not concerned about this Parliament. Its Prime Minister goes racing off and signs agreements and binds the people of New Zealand. 
The bill states that this agreement should come into effect on 1 July 2005. That is not what the people of New Zealand think. They saw Helen Clark signing the agreement and as far as the people of New Zealand are concerned they believe that it is already in existence—otherwise why did Helen Clark have yet another photo opportunity? She went over to Thailand signed this agreement and wasted the taxpayers’ money—or was she wasting the taxpayers’ money? Because this bill states “1 July 2005” yet there was Helen Clark before 1 July 2005 signing the agreement in Thailand. Which one is it to be? 
Clearly there is total arrogance on the part of the Prime Minister Helen Clark in so far as having any regard for the people of New Zealand and any regard for Parliament. The select committee procedure was just an absolute whitewash and a waste of time because the Government had clearly made up its mind and signed the agreement. Even this debate in the House is an utter waste of time because the Government has made up its mind. Helen Clark has been over in Thailand and signed the agreement. We are totally being used in this Parliament and in this country for the benefit of Helen Clark and yet another photo opportunity. No wonder New Zealand First opposes this bill! 
KEITH LOCKE (Green) 
: 
 The Green Party has an amendment under this part to clause 2 to extend the date when this legislation will come into force from July 2005 to July 2010. I think that the Government may actually support this amendment and I will just explain why that is—and the National Party members will be interested in this. Clearly there is a bit of a misunderstanding in the National Party ranks about the Treaty of Waitangi and our commitment as a nation to it and about the need for clauses in agreements and legislation referring to the Treaty of Waitangi. The National Party has referred to the article that allows more favourable treatment of Maori in respect of matters covered by this agreement—that is article 15.8 in the original treaty. In view of the misunderstanding in National’s ranks if we extend the implementation date out for 5 years and the National Party members have a bit more education and perhaps talk to a few Maori by July 2010 they may understand things a bit better and there may be more agreement in the Committee on this bill. It may also be the case that if we extend the start date out to 2010 members on the Labour side of the Chamber may think a bit more about the implications of this bill in the meantime and think that perhaps they should not go ahead with its basic provisions. 
An extension to the implementation date would also give a little more time for New Zealand industries Thai industries and the agricultural industries to adapt. I talked earlier on about the danger to the Thais in terms of their dairy industry. Perhaps in 5 years Thailand could with New Zealand’s assistance make its dairy industry a bit more efficient and there could be a win-win situation whereby our dairy products would not then undermine the Thai industry but would be on top of Thailand’s dairy industry and put dairy products into a richer society. Thailand would have grown a bit richer in those 5 years we would be selling more dairy products and everyone would be happy. We would not then get that rebellion from Thai farmers. So extending the start date could help us there. 
Also it may help in terms of the evolution of the international debate on free-trade agreements like this and of people coming to understand the strengths and weaknesses in such agreements and understanding what should be put in and what should not. At the moment this sort of blanket free-trade agreement does undermine certain sectors in both the countries involved. It actually hurts particularly the poor people in both countries. In this agreement the poor people in Thailand are affected because they are kept in poor conditions with low wage rates. We are not helping them at all because we are not putting clauses into this agreement that will help to protect them. The working people in New Zealand—those in the clothing industry in particular—will also be subject to unfair competition because of the much lower wages in Thailand. 
Lockwood Smith has been asking how the Treaty of Waitangi clause will affect trade with Thailand. I think you have to look a bit beyond this bill because he is talking about the agreement— 
Simon Power 
: I raise a point of order Madam Chairperson. I am sorry to interrupt the member but I believe he was bringing you into the debate Madam Chairperson and was not pulled up for it. 
KEITH LOCKE 
: I am sorry; I apologise if I did that. I do not recall doing so. I was saying that if Lockwood Smith looks at article 15.8 in the original treaty he will see it may apply not just to the tariffs that are contained in this bill but also to the investment provision and also potentially to any subsequent agreement on services. That could relate very directly to Maori in terms of some of their educational institutes and the special relationships we have in terms of fishing agreements land agreements and things like that. There may be special provision for Maori—and rightfully so in terms of settling past grievances—that means in terms of the competitive situation we would not allow full competition from non-Maori institutions in New Zealand. 
LESLEY SOPER (Labour) 
: 
 I move  
That the question be now put 
. 
Dr RICHARD WORTH (National—Epsom) 
: 
 That is absolutely shameful but it exemplifies what has characterised this debate through the stubborn refusal of the Minister to answer reasonable questions put to him. There is a strange phrase for those who may be listening to this debate that finds its way into the jargon of Parliament and that is to talk about “strangers in the House”. Those are people who are not members of Parliament but are in the debating chamber. To the right of the Speaker’s chair are six or seven high-ranking and powerful officials from the Ministry of Foreign Affairs and Trade. They know the answers to the questions we have been asking the Minister. The Minister is determined to remain mute and not respond. He has offered three explanations some conflicting on one of the issues relating to the Treaty of Waitangi but he has not dealt directly with the questions that have been asked. He has not dealt with this other issue relating to the need for Part 2. 
I come to the particular part we are concerned with and that is the question of the commencement date for this legislation. The answer is very simple of course: because that is the date that this particular trade treaty comes into force. It was signed in April. The plan is for it to come into force on 1 July. That is why we are in urgency. Certainly it was a great and worthwhile—and I mean that—plan to embark on a bilateral trade treaty with Thailand. I think legitimately the public and I hope the negotiators saw the substantial benefits that might flow from a treaty. Those aspirations have been significantly eroded by limitations in the treaty that have been the subject of comment by others. 
But I would say that this closer economic partnership marks the beginning of a new era in which New Zealand and Thailand will work together and build on their long-established relationship. I would also say that the closer economic partnership is a building block for inter-regional trade with other ASEAN countries. So it has strategic as well as economic significance. Traditionally New Zealand’s main exports to Thailand have been commodities while Thai exports to New Zealand have been motor vehicles air conditioning and machinery. So New Zealanders are not really aware of the sophistication of the Thai market and conversely Thais have not seen New Zealand’s capabilities in business innovation and cutting-edge technology. 
I believe that Thailand and its neighbours are a key export market for New Zealand companies. Certainly with incomes rising in Thailand a growing middle class economic growth being steady and brand-conscious consumers all looks good in the context of the long-term potential of this market. There is huge scope for example in areas such as cooperation in automotive components. As others have said Thailand is the Detroit of the East. 
I urge the Minister to respond to legitimate questions that National has raised in the context of this debate. Why is there a need to be evasive? Why is there a need to hesitate and not furnish answers? Why must the Minister—as he has done—persist in this debate with cheap and sniping attacks on National members? We deserve better than that. In this critical area— 
Hon David Cunliffe 
: He’s one of the most expensive Ministers we have got. 
Dr RICHARD WORTH 
: There is nothing cheap about this Minister an intervener says from across the way. Well the Minister has an opportunity to show what he is made of and I hope that he does because we are entitled to answers. 
MOANA MACKEY (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 61 
New Zealand Labour 51; United Future 8; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Green Party 8. 
Motion agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 97 
New Zealand Labour 51; New Zealand National 27; ACT New Zealand 9; United Future 8; Progressive 2. 
Noes 21 
New Zealand First 13; Green Party 8. 
Clause 1 agreed to. 
The question was put that the following amendment in the name of Keith Locke to clause 2 be agreed to: 
to omit the term “2005” and sustitute the term “2010”. 
A party vote  was called for on the question  
That the amendment be agreed to. 
Ayes 8 
Green Party 8. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 97 
New Zealand Labour 51; New Zealand National 27; ACT New Zealand 9; United Future 8; Progressive 2. 
Noes 22 
New Zealand First 13; Green Party 8; Maori Party 1. 
Clause 2 agreed to. 
Third Reading 
Hon JIM SUTTON (Minister for Trade Negotiations) 
: 
 I move  
That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a third time 
. The bill allows the agreement negotiated between Thailand and New Zealand for a closer economic partnership to come into force once Thailand has also completed its domestic implementation process. The agreement provides for all tariffs applying goods of New Zealand or Thai origin traded between the two countries to be either eliminated immediately or phased out over a schedule period. 
Sitting suspended from 6 p.m. to 7 p.m. 
Hon JIM SUTTON 
: As well as providing for all tariffs applying to goods traded between the two countries to be eliminated the agreement provides for the early commencement of negotiation to liberalise trade in services. The agreement also provides for the use of bilateral transitional safeguards by both New Zealand and Thailand. Members opposite seem to have difficulty in understanding that concept. I am not sure what it was that they could not understand but I will just point out to them that the bilateral transitional safeguards under the closer economic partnership simply allow New Zealand to raise tariffs on Thai goods back to the level applying to imports from other countries in the event of serious injury or threat of serious injury because of a sudden and dramatic surge in imports. 
The World Trade Organization global safeguards apply generally to imports from all countries and can raise tariff rates above the World Trade Organization bound rates if a World Trade Organization safeguard is applied. I think that explains the relationship between the two. 
Clearly most members who have participated in the debate like most New Zealanders recognise the value of freer and fairer trade and have supported this bill accordingly. The National Party members have spent most of their debating time raging against the presence of a Treaty of Waitangi carve-out article in the bill an article that is identical in effect to the one they had proposed in the Singapore - New Zealand closer economic partnership and one that they cheerfully agreed to put in New Zealand’s treaty binding us to the General Agreement on Trade in Services of the World Trade Organization. However they seem to get particularly exercised by this article. Their necks turn red before our very eyes as they rage against it. 
The meaning of the article that they have trouble understanding is I suggest plain on the face of it. The Government has no particular plans for more favourable treatment of Maori but given the historical injustices perpetrated by the Crown on Maori in breach of the treaty over the years we deem it equitable not to preclude some favourable treatment by way of redress if this seems necessary to the Government of the day at some time in the future. National members may shout until their necks turn red but Labour believes in justice. 
I thank everybody in the House and in particular the members of the Foreign Affairs Defence and Trade Committee for their attention to this important legislation. I would also like to thank the officials who were involved in the negotiation of the agreement especially the team leader Rachel Fry and the members of the public and private sectors who provided invaluable input into the process. They can all be proud of their special efforts and their achievement. 
The agreement opens up substantial opportunities for exporters both immediately and over the longer term and will enable New Zealand’s trading relationship with Thailand to achieve its full potential. Moreover the closer economic partnership will serve as a springboard for developing aspects of the New Zealand - Thai relationship beyond the economic domain. The conclusion of the agreement has already provided the impetus to introduce a working holiday scheme with Thailand and it creates a platform for greater cooperation in areas such as tourism education cultural links and scientific exchange. Beyond this the agreement with Thailand has added impetus to the pursuit of New Zealand’s wider trade strategy objectives in South-east Asia with negotiations now under way on free-trade agreements with Malaysia and indeed the entire ASEAN membership. I commend the bill to the House. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In speaking to the third reading of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill I want to reflect on what took place in the Committee stage. The Committee did canvass a number of issues in relation to this legislation which I make clear from the outset National supports—not because we think it is a great piece of legislation or because we think the Thai trade agreement is a great agreement but because we believe that any trade liberalisation is positive for New Zealand and is worthy of support. I congratulate the Government on making some progress in trade negotiations and I congratulate the Minister for Trade Negotiations on having made some progress on trade negotiations. 
But having said that I am troubled by the quality of the agreement which this legislation implements here in New Zealand. I think any reasonably objective examination of it would show that on balance it is worth doing but there are quality issues. New Zealand up until now has set very high standards in our bilateral work. During the second reading debate I mentioned that CER was a very high-standard agreement. Our Singapore agreement is a high-standard agreement. I accept that the Singapore agreement was probably easier to negotiate although services with Singapore were not easy to deal with I think it is fair to say—but they are included. 
Of course one of the troubles with this agreement is that services are not included and services make up over two-thirds of our economy. It is a serious concern that they are not included. OK the Minister says that negotiations on that are to commence within 3 years. At least that is something and services are not left out altogether but it sets a poor precedent when agreements go ahead with bits having been left behind for a period of time. I guess the Government was getting a bit desperate. It had failed with the Hong Kong free-trade agreement. That one had been initiated a long time ago and the Government had failed on it. The Government had no runs on the board in respect of bilateral trade agreements at all so I guess it wanted to get this one in the bag regardless of the quality. 
There is a second concern about quality and that is the extension of New Zealand’s undertakings beyond our APEC goals. OK I accept that the Minister could not necessarily have negotiated with Thailand to phase out its tariffs earlier than the date it has agreed to do that—2025 from memory. But that is no reason for New Zealand not to agree to phase out our tariffs sooner. People are starting to learn a lot about trade. I have heard speeches this afternoon from members pointing out how important trade is to maintaining and enhancing peace and security in the world. I think I heard a member talking about trade lifting the tide and raising the living standards of all people in the nations that are trading. What I have not heard members of this Parliament begin to understand is that for us to remove barriers to trade with us for us not necessarily to have as long a phase-out time as other countries is to our advantage. It actually would have made sense to phase out New Zealand’s tariffs by 2010—our APEC goal commitment—because that would be good for New Zealand and the New Zealand economy. Why did the Government agree to phase out our tariffs on goods from Thailand by 2015? That hurts our economy. All the research is so clear: the countries that open up their economies first will be in the strongest position in this globalising world. Here this Government has chosen to maintain a long phase-out of our own tariffs and that is a reflection of poor quality and confused thinking. 
Hon David Cunliffe 
: Why does nobody do that in the real world? 
Dr the Hon LOCKWOOD SMITH 
: In fact quite a few successful economies have—Hong Kong for one. Singapore did not maintain tariffs around its goods. New Zealand of course legislated to phase out tariffs and Labour actually repealed that legislation and New Zealand’s economy will suffer because of that. The economies that are the first to open their markets are the economies that become the strongest in a globalising world. That is clear if the member would only open his eyes to see. 
We raised a number of questions and in fairness I must say that the Minister did start to answer those questions. But then I guess the questions got a wee bit harder and the Minister the Hon Jim Sutton got a bit petulant started to throw his toys out of the cot and refused to answer any more questions. Jim Sutton is not a bad bloke I guess. He used to be a good guy till Labour wrecked him. He certainly stopped answering questions. He became a bit more petulant and threw his toys out of the cot. These are the serious issues that we asked questions about and never got answers to. 
The first question was about the transitional safeguard measures. For the first time New Zealand is implementing specific transitional safeguard measures in our law. Sure we are party to the transitional safeguard measures involved in our World Trade Organization agreements but good questions were asked. Why legislate for this when we are already covered by the transitional safeguard measures of the World Trade Organization? It makes more sense for Thailand to want to put crazy restrictions into its law but why do we follow suit? Why do we not stick to the World Trade Organization provisions? Why are we putting into our law the set of measures in Part 2 of this bill? I think it was Dail Jones from New Zealand First who said that they will be a lawyer’s dream. 
One does not need to be much of a lawyer to realise that once one reads that the bill talks about a threat of injury and an increase in the volume of imports. I think the Minister in his third reading contribution talked about a rush of imports or a huge increase in imports. The legislation does not state that. It refers just to an increase either in real terms or in relative terms. Once we have those kinds of words in our law once we have words such as “like goods” lawyers will have a field day. It does not have to be an increase in imports of one’s own product; it just has to be an increase in imports of like products—and this legislation tries to define what like products are. 
Why put this sort of stuff in our law when there already are safeguard provisions in the World Trade Organization agreements which have some precedents around them? These provisions are a bit different a bit new in our law and I predict we will see a new industry emerge that challenges imports under these transitional safeguard provisions. If this agreement works—and we hope it will—imports from Thailand will increase. That is what we want. We want an increase in our exports to Thailand. So I think it was short-sighted of the Government to put those transitional safeguard measures into our law and it is sad that the Minister did not have the heart to respond to the very good questions from my colleague Richard Worth in relation to why we should do that when the World Trade Organization already has similar provisions that would be quite adequate for New Zealand. 
The last question on a serious issue that we raised with the Minister was why have in this agreement an article that states: “… nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement including in fulfilment of its obligations under the Treaty of Waitangi.” We asked the Minister—which I think was perfectly fair as this is now to be part of our law—what that meant. The Minister refused to answer. He got up and raved on but clearly did not answer. In fact he misquoted the article and sought to downplay it through misquoting it. The article clearly states that the Government intends to be able to accord more favourable treatment to Maori. 
New Zealanders find that objectionable. That was very clear following Don Brash’s Orewa speech last year. Trevor Mallard promised after that speech that Labour’s policy had changed that in future it would not accord more favourable treatment to Maori. Clearly Labour will say anything it if thinks it will help it in the polls. That is quite clear. The polls were running against Labour last year on these treaty issues so Helen Clark appointed Trevor Mallard as the Coordinating Minister Race Relations to quieten everything down. He made a public statement at Victoria University that Maori have no extra rights or privileges under the treaty or in the policy of the New Zealand Government and within weeks—in fact at the very same time—he knew or should have known that the Government was incorporating into a treaty with Thailand a provision that does exactly that; a provision that does accord more favourable treatment to Maori. 
National members object to that although we do support the bill in its overall impact. 
LUAMANUVAO WINNIE LABAN (Labour—Mana) 
: 
 Kia ora talofa lava sawasdee and warm Pacific greetings. I have much pleasure indeed in standing to speak during the third reading of this very very historic legislation the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill of 2005. I want to thank especially the honourable Minister for Trade Negotiations Jim Sutton and also the officials from the Ministry of Foreign Affairs and Trade who have worked tirelessly in negotiating this special agreement between the peoples of Thailand and of New Zealand. It does indeed represent a significant economic and strategic opportunity for New Zealand. It not only opens up more opportunities for New Zealand businesses but is also an important step towards improving our trading environment in the region and worldwide. 
I want to respond to a couple of issues. One raised by some members on the Foreign Affairs Defence and Trade Committee was the Treaty of Waitangi. The relevant provision in this closer economic partnership does not have any impact on the nature of the Government’s policy in relation to Maori. It is not uncommon in international trade agreements for countries to reserve the right to accord more favourable treatment to indigenous peoples or ethnic minorities. In fact back in 1994 New Zealand recorded a reservation in its schedule of commitments under the General Agreement on Trade in Services (GATS). That provided for more favourable treatment to be accorded to any Maori person or organisation but Australia Canada Malaysia the United States and France—on behalf of New Caledonia—have all included some form of indigenous reservation in their GATS schedules. 
I also want to respond to my colleague from New Zealand First in terms of the impact of the closer economic partnership on jobs. Although a lot of allegations about job losses are made by a lot of people who are essentially opposed to free-trade agreements there is no evidence to substantiate those allegations. The impact of opening up the New Zealand market to imports from Thailand is expected to be very muted. It is not expected that tariff reduction and removal on imports from Thailand will have a direct impact on employment. 
On the other side of the ledger a good number of export-focused industries have welcomed the outcome of the closer economic partnership and the opportunities it opens up for developing trade with Thailand. At this point in time I want to point out the benefits and how New Zealand will gain from this agreement. I will give some examples of the sectors that will benefit from the complete elimination of tariffs from 1 July this year. There will not be annual duty payments of about NZ$3 million on current levels of infant milk-food products. New opportunities will be opened up for the export of avocados cherries persimmons and kiwifruit as a result of the removal of the 30 to 40 percent tariffs on those products. The removal of the 40 percent tariff on carrots will allow New Zealand exporters to regain the NZ$2.5 million market lost to China. A large number of manufactured exports will see their tariffs completely eliminated including the 15 percent tariff on gas pumps the 5 to 10 percent tariffs on plastic moulding equipment and the 15 percent tariff on radio parts. 
I refer now to a letter that the New Zealand Horticulture Export Authority wrote to the Foreign Affairs Defence and Trade Committee urging it to support this special partnership agreement. The authority stated: “New Zealand fruit and vegetable exports have dropped from almost $13 million in 2002-03 to $7 million in 2003-04. This is the direct result of the free-trade agreement signed between Thailand and China coming into effect on 1 October 2003 providing tariff-free access for all fruit and vegetables. The New Zealand - Thailand CEP will reduce tariffs on a range of products from 40 percent to 0 from 1 July 2005 allowing New Zealand exporters to compete on a level footing with Chinese suppliers.” The authority stated in the last paragraph of its letter: “Thailand particularly Bangkok is a dynamic and rapidly growing economy. This positions the New Zealand horticultural industry extremely well to take advantage of growing demand and affluence. The New Zealand horticultural industry looks forward to the passing of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill which will deliver real benefits to our growers and exporters.” 
It is indeed a pleasure to stand to support the bill. I thank all those involved including the chair of the select committee the Hon Peter Dunne my colleague the Hon Lockwood Smith our other National colleagues who have supported the passage of this bill the Hon Matt Robson from the Progressives and also my Labour colleagues. I also thank New Zealand First and the Greens for not supporting us. Other than that this is a great day for New Zealand and I thank you. 
DAIL JONES (NZ First) 
: 
 The first thing I should do is indicate the nature of the trade between Thailand and New Zealand based on Statistics New Zealand external trade statistics for New Zealand exports to Thailand in the December years—say December 2004 and also December 2002 and December 2003. The astonishing thing is that I have to disagree with the preceding speaker. She has misinformed the House based on the letter she received from the Horticulture Export Authority. I look at the reference I have to horticultural exports. The member said that they totalled $7 million last year. The member has the letter but I have the statistics. The statistics do not confirm what is in the letter. The letter is seemingly untrue and that member a Government member has not bothered to check the facts. She must not repeat things that are told to her assuming they are true. 
According to these—[ 
Interruption 
] The member should not look at me like that. These are the statistics and I will read them out. If we look at the top 20 subtotal for exports to Thailand there is not one dollar for horticulture and the statistics go down to $3 million. There is not one dollar of horticultural export goods mentioned there. These statistics are for the top 20 exports. We have milk-powder extract buttermilk butter timber fish raw hides frozen beef air vacuum pumps—$3.3 million for those—and $3 million for iron or non-alloy steel flat-rolled products. There is nothing for horticultural products. 
So if the member is going to quote statistics she has to get them right. She has to check what she is quoting. Just because somebody has told her something that does not mean that it is true. That is the basic rule of politics. She has been caught short badly. I read that letter and I thought I would check the figures. That letter was wrong. If it is right I will look forward to discussing it with the authority. I would like to see members of the authority tomorrow because these statistics must be right surely. This document has been given to me by the Parliamentary Library. It is quite clearly entitled “Statistics New Zealand external trade statistics 2004 2003” and there is a reference to 2002. It is as simple as that. So the previous speaker has mud all over her face. 
Of course this bill is also about horticulture. While we are on that topic I will make just one more point. Why did the member not quote this from the Horticulture Export Authority? The authority told the select committee considering the bill: “However new residue testing requirements proposed by the Thai Government have the potential to significantly reduce the benefits from the agreement. These requirements are viewed by both the New Zealand export industry and Thai fruit and vegetable importers as a non-tariff trade barrier focused on reducing imports of Chinese fruit and vegetables. We are working with the Ministry of Foreign Affairs and Trade to address this issue.” 
The barriers they are putting up against China affect New Zealand as well so the amount of fruit exported to Thailand from New Zealand will be virtually nil. I have those two documents here and the member can comment on them. I am prepared to table them to make them available to anybody. Clearly it is all very well for the Minister to parrot something and for this other Labour member to parrot something but parrots are only parrots. We have to think for ourselves sometimes and that is what we do in New Zealand First. 
We care about the workers of New Zealand. The National Party wants more and more imports into New Zealand and their members support this bill. The Labour Party gets its facts wrong and its members stand there and say how wonderful this legislation is. There are more and more imports into New Zealand and more jobs are being lost for workers in Porirua. 
What about the workers in Porirua? They will suffer as a result of this legislation. New Zealand First made that clear. Once again we quoted from the information in the report which was supplied by the officials. The national interest analysis on page 21 has the following statement and refers to the New Zealand First minority view on the agreement: “The clothing footwear and carpet sector where the highest tariff of 17.9 percent prevails has traditionally seen the most sensitive tariff reductions. Concern in relation to imports from Thailand was also raised in respect of whiteware plasterboard steel and certain textiles.” 
New Zealand First is concerned about workers in those industries some of whom I am sure are in the Porirua and Wellington areas. The previous speaker who represents an area of Wellington seems to have no regard for them whatsoever. I can say that New Zealand First does have concern for those workers. 
It is interesting to read about the imports from Thailand and I mentioned this in the Committee stage. One of the imports is caviar—$21 million of caviar is imported from Thailand. I can just imagine all the Chardonnay-sipping Labour socialists now will be adding Thailand caviar to their lovely lattes and coffees when they are in Ponsonby Grafton Parnell and wherever else one goes in Auckland to enjoy a Saturday latte. Now they will have a touch of caviar probably on their French-imported biscuits. That is what the Labour Party has to offer to the workers. If they cannot have bread they can have some caviar—imported especially from Thailand. 
What a state this Labour Party is in today. No one in this Labour Party has shown any concern for the workers of New Zealand. New Zealand First has been concerned and the Greens have shown some concern although they seem to be almost as concerned about the workers in Thailand as they are about the workers in New Zealand. 
National Party members made some very good speeches on this bill. I had regarded them as being in opposition to the legislation. I commend Dr Lockwood Smith for his speeches. They were all in opposition to the legislation. He has admitted that it is a poor-quality agreement. I think he is just going on the basis that any trade agreement is a good trade agreement it does not matter what the quality is. As far as New Zealand First is concerned it has to be a good-quality agreement and the prime requirement is the welfare of the workers of New Zealand. 
What does this agreement offer New Zealand in that very important area of services? This agreement does not include services and that is despite services contributing 68 percent of New Zealand’s GDP. This agreement provides for negotiation to be only initiated within the next 3 years. Initiated negotiations do not necessarily end in completed negotiations. They begin in 3 years’ time and how long will they go on for? We are talking about services being 68 percent of our GDP and they are not even included in this agreement. 
Dr Lockwood Smith said that it set a bad precedent. It sets a terribly bad precedent. One can imagine that if we are going into a deal with China and they see what we have agreed to in this agreement well the Chinese will have read every last word of it and they will be going for the same sort of deal. They will not want to give us services because they will say: “Well you agreed to do that deal with Thailand so why should you not do it with us as well?”. It is an appalling agreement in that respect also. 
As far as services are concerned it seems to be a bit of a one-way street. As the reports from the officials pointed out it seems we make provisions for Thai chefs and Thai female massagers to come to New Zealand. 
Hon Dover Samuels 
: Really? 
DAIL JONES 
: That is true yes. 
Hon Dover Samuels 
: The member seems to know all about them. 
DAIL JONES 
: I do. I had to read it a few times. I cannot pronounce it—there are too many “ths” and I lose track of it so I have abbreviated it a little I have to confess. Dover Samuels looks up. Yes there is a special provision for Thai chefs and Thai female massagers. What sort of an agreement is that? I asked the Minister in the chair Mr Sutton when these people actually go back because they seem to be here temporarily. I never got any answer from the Minister. He was too flabbergasted himself to think about it. Although I think I did get an answer about how wonderful it would be for me to have a Thai female massage. What sort of an answer is that? We in New Zealand First want to know how long these people are going to stay in New Zealand what they are going to do here and why New Zealanders cannot do those jobs. New Zealanders should get those jobs first. Surely after all these years of links with Thailand we should have people capable of doing massages and knocking up a nice Thai curry for us all without having to go to Thailand or having a Thai chef to do it. 
 Finally I just make the point that the bill is a travesty as far as parliamentary process is concerned. The Prime Minister in her arrogant way and ready to get any sort of photo opportunity had already signed this agreement. We saw her and the Thai people signing it yet here we are wasting our time in Parliament pretending to approve an agreement that the Labour Government has already signed. That is an arrogant attitude. I draw the attention of the member concerned to the submissions on the agreement which are not necessarily the submissions on the bill. She clearly has not read the submission of the New Zealand Horticulture Export Authority. I have read the letter that she has given. I checked the facts in it about trade and they are wrong. 
I seek the leave of the House to table the extract from Statistics New Zealand’s external trade statistics showing New Zealand exports to Thailand in December of the years 2002 2003 and 2004 and imports from Thailand which make no reference to horticultural products being $7 million. 
Document by leave laid on the Table of the House. 
LUAMANUVAO WINNIE LABAN (Labour—Mana) 
: 
 I seek leave to table the letter from the New Zealand Horticulture Export Authority the chief executive of the New Zealand Fruitgrowers Association and the New Zealand Vegetable and Potato Growers Federation to the Foreign Affairs Defence and Trade Committee to support the New Zealand - Thailand closer economic partnership agreement. 
Document by leave laid on the Table of the House. 
KEITH LOCKE (Green) 
: 
 The Greens will oppose the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill because although there are some advantages for New Zealand exporters—fruit and vegetable exporters have been referred to—overall it will be a disadvantage to a good many people both in Thailand and in New Zealand. Workers in both countries will not be the beneficiaries. In my earlier contributions I talked about the disadvantages that Thai workers face at the present time with very low wages with international labour standards not applying and with very poor conditions in the factories they work in. They actually want our assistance. Thai workers have been out here campaigning against this agreement because what they want are agreements that have attached to them some advantage for them in terms of better wages better conditions and more adherence by their Government to international labour standards. 
Just last week I received an email from a New Zealand unionist a friend of mine in Thailand. He was visiting various unions there and he said: “Yesterday I met again the president of an electronics factory union. He also works in the factory. They have problems including how hot the factory gets. However he was telling me about the number of relatively young people who are dying as a result of chemicals at work. One worker was just 27 years old. She had breathed in solder fumes continuously for 5 years. Another young woman 32 years old agreed to give a newspaper interview about her work-related fatal illness but died 2 days later on the day she was to be interviewed. Two of the women workers I have met on the last three visits seem to be suffering from some effects of chemicals at their work.” 
Then he goes on to say that another major in the factory is subcontracting. One of the subcontracting companies in the factory again did not pay its employees on time. As a result the workers have to pay an extra 50 baht a day in rent until they pay their due rent. He says: “I am wondering about the Thailand NZFDA and how we can work closer with Thai workers on issues like chemical poisoning and subcontracting.” So there are contacts between New Zealand workers and Thai workers to try to get mutual benefits for both. This free-trade agreement and the legislation we are discussing today do not really advance that. In fact if we work in such a way with these agreements so as to increase the wages and conditions of Thai workers that helps us because it reduces the wage gap in production both in Thailand and in New Zealand so there is less likelihood of the very low wages in Thailand undermining the exports of New Zealand manufacturers or undermining the production of New Zealand manufactures here which could accompany goods produced by cheap labour flooding into New Zealand. 
We have to realise that we should not take an ideological approach to trade and say that all free trade is good and it will all come out right at the end or as one speaker said today that somehow it raises the level of us all. In fact that is not true. Industries are undermined and destroyed by free trade. The Greens do not say that we have to be totally self-sufficient or that we have the complete full range of manufacturing that we once had but we do not want to undermine all our manufacturing by competing with very low-wage economies. As I quoted earlier from Oxfam there is a potential for New Zealand trade in dairy products to Thailand to undermine the Thai dairy industry whereas if we build in transitions where we help increase the efficiency of the Thai dairy industry at the same time as we are easing in imports then it is a win-win situation. There is a growing market in Thailand as other speakers have said and it can accommodate efficient Thai dairy production while not destroying those farmers as well as exports from New Zealand. That is what we should be working towards. 
Sometimes these free-trade agreements are surrounded by myths. That applies not only to the agreement we are implementing in legislation here today but also to the free-trade agreement with China that is in the pipeline. One of the myths is that New Zealand will keep its manufacturing industry because we will move out of mass production of manufactured items and into high-level high-value-added quality goods. That myth has been in New Zealand society for some time. I remember many years ago when the Japanese were just starting to pick up their industrialisation New Zealanders used to say: “Oh these cheap Japanese goods—they’re no good. They’re not really a threat to us.” and put them down as low quality etc. There is a bit of that myth around in relation to the newly emerging economies of east Asia be it China or be it Thailand that somehow they are producing in a mass way and we can compete with quality goods. In fact if one does not have a proper manufacturing base one does not get the quality at the top end. 
One has to realise that countries the size of Thailand and particularly China have both. They have the mass production and they have a very strong and growing quality-research end a high-tech end that will compete directly with us on all levels of manufacturing. If we destroy our manufacturing base or limit it so much that we do not have the skills in the economy be it in clothing or other forms of manufacturing we will not be able to compete at any end of the market. Even our fashion designers are finding that at the moment. They look around for really skilled people to sew up their garments and they are finding a shortage because of the collapse of the clothing industry in New Zealand which this bill we are discussing here today will increase. It is the same in other forms of manufacturing as well be it metallurgy or whatever. We need the tradespeople and the designers to be able to produce for the domestic economy and compete in the international economy. To use an analogy with the rugby game that is going on tonight one does not get a quality team be it the Wellington Lions or be it the All Blacks if one does not have a big playing base. The quality comes out of that big base. We have to take note of that if we want to protect our own manufacturing here. 
The Greens tried to improve this bill with amendments to make any transitional agreements subject to ILO standards but we failed. I think we have to remember that this bill is the first of a range of bills that may come in to cover the other aspects of that agreement in relation to investment and later to services if that gets agreed to. We have a problem in New Zealand at the moment with quite a foreign takeover of our industries and land and we do not want to increase that through these free-trade and investment agreements that make us even more like foreigners in our own country in the sense of our ownership of infrastructure industry and agricultural land. Labour should be a little bit ashamed about this. Traditionally Labour has had a close association with the trade union movement but that association is loosening now because Labour is not taking note in terms of this bill of the criticisms made by the Council of Trade Unions of the free-trade agreement and what has come out of it. Unfortunately Labour is adopting more and more this ideology that free trade is everything and that we should just pursue it wholesale without taking into account the interests of New Zealand workers. 
Hon KEN SHIRLEY (ACT) 
: 
 ACT will certainly be supporting this bill. We are the champions of free trade. We recognise the benefits that come from freer trade in the international community. In fact my colleague Kenneth Wang New Zealand’s newest member of Parliament was just saying to me that those Green Party people are mad. That is what he said. He said that because the Greens believe that New Zealand can just lock itself in a cocoon—the “fortress New Zealand” approach—when at the end of the day New Zealand is perhaps as a percentage of GDP more dependent on trade than just about any other economy in the world. If we accept the basic fact that New Zealand is dependent on trade then we can see that it is certainly in our overwhelming interest to be the champion of free trade and to look at breaking down barriers wherever we can. 
The harsh reality is that trade liberalisation is progressing at glacially slow speeds. We had the Tokyo round in the 1960s and 1970s followed by the Uruguay round which slowly crawled on. We had the Cairns group trying to promote agriculture right through that era. We now have the Doha round. It is frustrating. I commend trade Ministers from successive Governments because I think that trade is non-partisan. We as a Parliament should be supporting our trade Ministers whatever Government they are from. Some say that those Ministers are just swanning off around the world and having meetings every other week in some other place. It is actually a hard slog. I know that. Any gains we make are made very slowly. Right from Jack Marshall’s time onwards through successive Governments we have had good trade Ministers who have worked in New Zealand’s interests. 
It is overwhelmingly in our interest to get comprehensive liberalisation of trade because we have been disadvantaged proportionately very highly. The Rogernomics Government of the 1980s transformed the New Zealand economy. I was very proud to be a member of that Government. Most people in the ACT party relate to those reforms—the current Labour Government of course denies them—and those reforms are the reason for the prosperous situation this country is in today. That is the reality. The Government of the time broke down those barriers and took the hard yards back in the latter part of the 1980s and that continued in the early 1990s under Ruth Richardson until Jim Bolger sacked her. That is when the hard yards were done. That is when we took the bold decisions to take away our subsidies and to start taking away our tariff protections and to the extent that for a long period we as a nation led the world we are in a stronger position. We are in a stronger position because we have already taken away many of our trade barriers and therefore we are poised to gain proportionately more than most by getting breakthroughs in agreements. 
I understand that the tariff against our sawn timber going into Thailand is up in the 15 to 20 percent range. Officials could probably confirm that. That is a very serious obstacle to the profitability of our very important forest industry. Yes we may lose in footwear clothing and textiles because in those instances Thailand has the comparative advantage. But that is the beauty of freer trade. Both economies will be better off. Both peoples in both nations will be more prosperous. Overall the global benefits and prosperity that come from freer trade are overwhelming. That is what the Green Party and I regret to say the xenophobic New Zealand First Party simply do not understand. They do not get it. They believe in “fortress New Zealand”. They like to stoke prejudice and say that people will lose their jobs to foreigners. What utter nonsense! The benefits for New Zealand in freer trade are overwhelming because freer trade is based on comparative advantage. That is Economics 101. Therefore the ACT party is very enthusiastic in supporting freer trade. 
However I have to say that regrettably this agreement which has been signed does have some serious shortcomings and deficiencies. Unfortunately the current socialist Labour Government has imported into it all sorts of extraneous and strange concepts that actually debase the value of it—like the fact that we will have more favourable treatment for Maori. That is PC socialist nonsense—absolute nonsense. That provision is a foolish addition to this free-trade agreement. I am sure that the officials did not recommend it. It was a straight policy decision from this Labour Government—this misguided Labour Government in this instance—and I actually feel sorry for our Minister for Trade Negotiations Jim Sutton for having to tolerate that sort of pollution of what could have been a much more robust and sensible negotiated position. 
I am sure that the Minister did not support the insertion of that silly provision. What are we actually saying here? Is there something special about Maori apples? If we want to put apples into the Thailand market are we saying that if they are grown by Maori there is something special about them? What absolute nonsense—what absolute patronising pap! Who on earth thought up that provision other than perhaps some Maori militant who is going for separate sovereignty or something and sees this as part of the leverage towards that. There is no place for that sort of nonsense in international trade agreements. We would certainly oppose it if another nation tried to impose those sorts of provisions so why on earth did this Labour Government succumb to that sort of nonsense? I bet that the young member for Otaki Darren Hughes did not support that proposal. He is a rational young man from what I have seen of him. I do not know who in that Labour Government carried the day and imposed that sort of nonsense on a trade agreement. 
I have to say to the House that although the ACT party champions free trade and although we have indicated our support and will be voting for this bill that provision almost swung it for us. We find it totally objectionable that stuff like this—like the principles of the Treaty of Waitangi—continues to be perpetrated in legislation and ACT consistently votes against them. The “Winston First” party members always oppose them verbally. They go out to public meetings and say that they are opposed to bills that refer to the principles of the treaty but every time it comes to a vote in Parliament they vote for them. The ACT party walks the talk and it was on that basis that we were almost spun out of voting for this bill. It is a particularly foolish provision to have in this negotiated free-trade agreement. 
I note that there are rules of origin and we have been given some assurance that they will not be exploited. We take that on trust. We also note with disappointment that services are not provided for in this agreement. I understand that the only commitment Thailand has made is to initiate negotiations in 3 years’ time. Of course that is pretty meaningless; we appreciate that. But that is the nature of these trade agreements. The big picture is that we have taken a step. We have a commitment between two nations to move forward with a bilateral agreement. We would far rather have a multilateral agreement. Multilateral trade agreements are far preferable but because of the sluggish progress made under the Doha round—and it will always be so I fear. In the meantime we have all these bilateral agreements between nations. It is only when one gets to a collective point at which a sufficient number of these bilateral agreements exist that one gets a culture globally to swing in behind the multilateral agreement. That is the reality. So the ACT party will support the bill but again I must stress that we express our serious disappointment with these foolish extraneous clip-ons that the Labour Government for politically correct reasons has put in the agreement. They do not belong in it they are foolish and they are perverse. 
JOHN CARTER (National—Northland) 
: 
 As I look around the House tonight I see the member who has just resumed his seat Ken Shirley and the member who spoke a little earlier Dail Jones. I can see no one else who has actually experienced what is it like to be part of Government that is about to lose an election. Those who have been through that like Ken Shirley Dail Jones and myself know what the smell is like. They know the feeling. They sit there and they look. They smell the stench. They feel the decay. They understand what a party on its way out feels like. That is what we are seeing— 
Hon Ruth Dyson 
: Have you got only one speech? 
JOHN CARTER 
: Ruth Dyson has asked me whether I have only one speech. Quite honestly at the moment it is the only one I feel like giving and it is glad tidings for New Zealand. At last it looks as if this lot is on its way out. The point I am making is that members sit there emitting hope thinking they may be able to hang on and not looking at reality. I look at things like this legislation and I look at the headline: “Labour backs ‘sorry’ envoy” and I see that it has happened again has it not? This is what happens when a Government is going out of power. The stories are bad. The Government brings legislation through because it worries that it will not get another chance to do some of the socialist things it wants to do as a socialist Government. 
We have had the first reading debate the second reading debate and today the Committee stage of this bill. We have pushed this bill through under urgency. It is an important bill because it organises free-trade relations between our country and another. But underlying it are all the things this Government was asked to tell us about but could not or would not—one or the other. Those of us who have been around for a while know why. It is because one gets to the stage when one is too tired to respond. It is such a big effort to bring legislation of this nature forward that when the Opposition starts asking deep questions such as why there are exceptions in the legislation and why there are clauses in it that refer to the Treaty of Waitangi—we want to know that means what the implications are and what the words “obligations under the Treaty of Waitangi” mean—the Government cannot answer them. We know that it has spent all its energy on getting the legislation into the House and that it is beyond its ability to explain its reasons any more. That is why someone with a few years’ experience in this place can smell the decay and the stench. One can smell the rotting carcass of a Government on its way out of office. 
This is a great day. Here we are debating the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill which is an important piece of legislation. The Labour Government after 6 long years—far longer than 9 years under National—has finally given us something positive. I must say that I commend the officials who have worked hard to make this happen. Good on them. I commend their Minister for the work he has done because undoubtedly lots of hard work has been done. But unfortunately there are so many qualifications around the agreement that it is limited at this stage. But that is OK because at least we have a foundation so that the incoming Government can fix it up and that can be done too. 
I want to focus on two issues tonight. The first is the fact that we have all these exceptions—all these issues that really matter. The fact is that all the qualifications around the agreement will cause lots of complications. Mark my words—as previous speakers have said there are issues that will cause us problems as we develop this agreement. In fact one of my colleagues said to me earlier as other speakers have said that it is a lawyer’s dream. [ 
Interruption 
] Yes well one of them was unkind enough to say that there is some good in it because it will help the lawyers but of course that is not the intention. The agreement is intended to help the country and it will. But sadly it will cause some legal complications on the way through. The second important issue is the fact that this Government is still trying to tell the nation—as in the speech made by Mr Mallard in the middle of last year—that there are no preferences for Maori under the Labour Government any more. Yet in this bill we have a clause that gives preferential treatment to Maori. In my view that is an absolute insult. 
Jill Pettis 
: When are you going to mention the whanau? 
JOHN CARTER 
: I do not need to. I seriously do not need to. The fact that this clause is in the bill says enough. It says that this Government has not moved away from patronising the Maori people of this country. The Government is saying that the Maori are not as good as the rest of New Zealanders whereas people like me who represent a good number of Maori people know that they are just as good and make as big a contribution to this nation as any other New Zealanders. And they do so because they are New Zealanders not because of their race. That is the issue that Labour unfortunately cannot get its mind around. It is not a matter of race; it is a matter of contribution. It is a matter of doing what is right because one is a New Zealander and the people of Northland Maori and non-Maori do. 
I am proud to represent the people of Northland. I am proud that those people if they were in this House today would support my saying these words regardless of their race. They are Northlanders and they are New Zealanders. They want to see this nation go ahead and they do not need clauses in legislation that give special preferences to anybody. They are not those sorts of people. They are here for New Zealanders. They do accept that there are some in our society who need assistance from time to time and who for some reason have not done as well as others and need some support. They understand that the incoming National Government will give those people that support. What they cannot accept is the fact that they currently have a Government that thinks it can condescend to Maori and give them a special preference when they do not need it. That is one of the reasons—one of the many reasons—why this Government has suddenly acquired the smell of an outgoing Government. It suddenly has that aroma—one that it cannot wash off. Members can put on as much under-arm deodorant aftershave and spray as they like but the aroma does not go away. Ken Shirley knows that; he has been there. Dail Jones knows that; he has been there. I have too and however much one washes it does not disappear. When members are on their way out they are on their way out. We support this bill but we do so with some qualifications. 
A party vote was called for on the question  
That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a third time. 
Ayes 94 
New Zealand Labour 51; New Zealand National 24; ACT New Zealand 9; United Future 8; Progressive 2. 
Noes 22 
New Zealand First 13; Green Party 8; Maori Party 1. 
Bill read a third time. 
Taxation (Base Maintenance  and Miscellaneous Provisions) Bill 
Second Reading 
Hon DAVID CUNLIFFE (Associate Minister of Revenue) 
 on behalf of the 
 Minister of Revenue 
: I move  
That the Taxation (Base Maintenance and Miscellaneous Provisions) Bill be now read a second time 
. The Finance and Expenditure Committee has considered the bill and recommended a number of amendments to the proposed legislation. 
The main feature of the bill of course is legislation to ensure that foreign-owned banks operating in New Zealand pay sufficient tax on their New Zealand income. The legislation proposed in the bill is a response to the fact that foreign-owned banks operating here appear to be relying excessively on debt funding their New Zealand businesses and their offshore investments. They can therefore use interest deductions arising from this excessive level of debt to reduce the proportion of their income that is subject to tax in New Zealand. One way of doing this is to use cross-border financing arrangements which are generally funded by debt to generate income that is effectively not subject to tax in New Zealand. 
Banks can also substitute debt for equity in financing their New Zealand business which can result in a New Zealand business being thinly capitalised relative to the worldwide business. The bill therefore introduces thin capitalisation rules that ensure that the income of banks cannot be sheltered by interest deductions arising from excessive debt. Banks will not have access to interest deductions if they do not hold a level of equity equivalent to 4 percent of their New Zealand banking assets weighted for risk. They must also have enough capital in New Zealand on which no interest is deductible to fully fund their overseas investments. Supplementary Order Paper 337 which was released after the bill’s introduction further strengthens the proposed legislation and ensures that it operates as intended. 
The committee has recommended several changes to ensure that the legislation once enacted is fully effective. A major group of recommended changes relates to the measurement of equity that supports a New Zealand banking business that has a foreign owner. In particular the committee has recommended changes to make it clearer what should and should not be counted in the equity calculation and which assets can and cannot be debt funded. The Supplementary Order Paper allows regulations to be made by Order in Council should the definition of “equity” prove to be unclear at any point in the future. The committee has recommended that this power be narrowed and limited to situations where there is a need for clarity about whether a particular instrument is considered to be a debt or equity instrument. I am confident that the changes will improve the operation of the new thin capitalisation rules. The Government intends to monitor closely the operation of the new rules to ensure that they are well understood and operating as intended. 
The bill also introduces statutory privilege or a right not to disclose certain documents to confidential tax advice that is given by advisers such as chartered accountants. That right is similar to legal professional privilege although it is subject to a number of exclusions. The change has been welcomed by tax professionals. As introduced the bill required tax advisers to provide a statutory declaration of information contained in a privileged document. However the committee believes that such a requirement for all circumstances would impose unnecessary compliance costs on those seeking to claim privilege and that a statutory declaration should be required only as a last resort. Therefore it is recommended that a process is introduced that would see the Inland Revenue Department requesting a statutory declaration only when necessary to an investigation. 
The other main change the committee has recommended to the privilege legislation is to widen the definition of “tax adviser” so that it is not limited just to advisers who have a significant function of giving tax advice as long as they are members of an approved organisation such as the Institute of Chartered Accountants of New Zealand that does so. The committee has recommended a number of other technical amendments to the privilege legislation that will also help it to operate more effectively. 
The bill introduces several business-friendly amendments. They include clarification of the income tax rules on transfers of assets and liabilities to beneficiaries when a taxpayer dies which is a reform that is long overdue. They include a number of technical changes to the tax depreciation rules to ensure their operation and reduce compliance costs. The ambit of the changes extends from the treatment of patents in plant variety rights through to deductibility for losses on buildings. They include expansion and clarification of the rules on tax deductibility for business environmental expenditure such as the cost of preventing remedying or mitigating the discharge of contaminants. The changes allow environmental costs like other business costs to be taken into account for tax purposes. The changes include the introduction of a 6-year tax exemption on income from non-resident drilling rigs and seismic ships involved in the exploration of petroleum in New Zealand as part of a package of measures to boost gas exploration. The committee has considered those and other amendments in the bill and has made a number of helpful recommendations to ensure the smooth operation and effectiveness of the proposed legislation. 
At some point before the bill proceeds to the Committee of the whole House I will release two Supplementary Order Papers: one to ensure that the draft legislation better reflects the recommendations of the Finance and Expenditure Committee in a number of areas and the other to split the bill into two in anticipation of passage. I thank the committee for its thoughtful consideration of this highly technical bill and I recommend it to the House. 
PANSY WONG (National) 
: 
 National supports the Taxation (Base Maintenance and Miscellaneous Provisions) Bill but let us reflect on the raft of taxation legislation that has been coming before the House in the last 3 to 4 years. In 2004 the House passed the Income Tax Act 2004 which is over 1000 pages long. That Act tried to tidy up and combine all the amendments. Since then a lot of taxation legislation has come before the House. Last week we saw another one the Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill go to the Finance and Expenditure Committee for consideration. The issue that I want to bring up is the raft of taxation legislation that has come before the House. Some pieces of legislation are unavoidable; we have a lot of understanding for the ongoing tactics by some corporations to minimise taxation. But one can argue that others would be avoidable if we did not have such a complicated tax regime. 
 That tax regime is further compromised because the Labour Government is continuing to use it also for targeting activities or for influencing behaviour. Every time that is done we find that tax legislation becomes even more complicated. 
Let me demonstrate by saying that it is well known that Government MPs and Cabinet Ministers are always standing up and saying that Labour is intending to reduce compliance costs—which include taxation—in its legislation. But the truth is if we look at the estimates we see that the Inland Revenue Department is telling us it has put aside $3.25 million to set up a unit in order to familiarise small to medium sized enterprises with their tax obligations and educate them so that they understand them. 
Tonight we are debating legislation that once again runs to 170 pages which is why that special unit will have to be set up in order to familiarise and educate those small to medium sized enterprises; that to me is not simplifying compliance tax. 
The other complication the Labour Government is introducing is an increase in the Inland Revenue Department’s workload in terms of delivering social welfare issues. For example $66 million has been set aside for the Working for Families package so the more the Inland Revenue Department’s workload has been diverted to purposes other than the collection of tax the more complications we have in terms of debating taxation legislation. 
To demonstrate that once again in the estimates of the Inland Revenue Department we find that it has allocated $117 million for information dissemination etc. The assessment of tax on the other hand is allocated $66 million which in itself tells us that something is not going very right for the Inland Revenue Department which is set up to collect tax supposedly to finance necessary Government expenditure. 
One of the most controversial or high-profile issues contained in this Taxation (Base Maintenance and Miscellaneous Provisions) Bill relates to what we call the thin capitalisation rules which are meant to close the loophole of foreign-owned banks that claim excessive interest expenditure. We support that. 
I also ask the House to reflect on the fact that on one hand our Inland Revenue Department says that it wants to close loopholes and that it does not want foreign-owned banks to take advantage of our taxation legislation—indeed one of the Inland Revenue Department’s objectives is to enhance and promote compliance with our taxation law—but I cannot help reflecting on the other hand that our State-owned enterprise Transpower has apparently entered into a financial transaction about which today the Hon Michael Cullen has not seen fit to share information with us in terms of whether that transaction really does not cost New Zealand taxpayers. 
There is an ethical issue involved; we are passing legislation today to ensure that foreign-owned banks do not take advantage of loopholes in our tax legislation so one has to ask what sort of example our State-owned enterprise is setting in its undertaking. I actually asked the Inland Revenue Department whether it conveyed the message of tax compliance to State-owned enterprises to ensure they do not enter deals that could be seen to be taking advantage of tax loopholes both here and internationally. Quite interestingly the answer I got back from the Inland Revenue Department was that it treats State-owned enterprises in the same way it treats any other corporate taxpayer and the department always tries to encourage self-compliance with legal requirements and provides assistance to do so. 
I asked about the types of deals but the Inland Revenue Department in talking about the types of investments State-owned enterprises would make said that that was not a matter for the department—correctly so. Those enterprises are responsible to the guidance set by shareholding Ministers. But the Inland Revenue Department continued to say that any encouragement or guidance regarding tax compliance directed specifically at State-owned enterprises has to come from shareholding Ministers. 
It is interesting that the Inland Revenue Department then went on to say that it was aware that such guidance had in fact been provided. So I am really looking forward to seeing during the Committee stage whether the Minister will disclose to us so that we can see whether we are adopting one law for all and whether all State-owned enterprises in return are also observing or complying with legislation in the spirit of paying their fair share of taxation. We are looking forward to asking those specific questions during the Committee stage. 
As I mentioned National is supportive of this bill and we welcome some specific provisions. But in saying that we also say that every time we look at the provisions even the provisions we support we find that the compliance for the tax provision is complicated. The National Party has promised ultimately that it will cut the company tax rate and also personal tax rates because that is the only way to achieve more simplified taxation legislation. 
When company and personal tax rates are set at high levels there is so much incentive for tax advisers individuals and companies to spend a lot of their energy in engaging in tax arrangements. I remember being an accountant myself that in the late 1990s my accounting colleagues told me that they were actually spending more time in doing management consultancy and in helping companies to grow but ever since the Labour Government put up the personal tax rate a whole raft of tax advisers and consultants have come into play and tax compliance has become complicated—[ 
Interruption 
]—as the Labour member yelled out—which is why we have been constantly brought back into this House to debate tax legislation. I think that any Government that wants its private sector and others to concentrate on expanding their businesses should bring taxation down. 
Hon HARRY DUYNHOVEN (Minister for Transport Safety) 
: 
 I am a little surprised to be invited to join in this debate but it is actually one that is very important to the oil and gas exploration industry. It contains a very significant change which is that the Finance and Expenditure Committee has agreed with a proposition in the bill to provide tax exemptions applicable for 6 years for income earned by non-resident rig operators from the drilling of wells in order to explore and develop offshore petroleum fields in New Zealand. It also provides an exemption for income earned by non-residents from ships providing seismic survey readings in order to identify petroleum in New Zealand. 
Both of those initiatives are very important particularly in my second portfolio as Associate Minister of Energy where I am responsible for the Crown minerals section of the Ministry of Economic Development which deals with mines and of course petroleum exploration. Those two measures contained in this bill will make I believe a not insignificant difference to the industry and will be very much welcomed. The bill certainly allows for the shall we say mobilisation costs in New Zealand which are quite large because of our distance from the main oil drilling centres of the world to be offset at least to a degree in the costs factored in by the companies when deciding where to invest their money and where to send their seismic ships or offshore drilling rig equipment. Whether the drilling is submersible or semi-submersible the mobilisation costs drilling rigs etc. are very expensive. So I think that is a not insignificant measure in this bill. 
I want to take only a short call but I do want to respond very briefly to my colleague on the Opposition side of the House who preceded me. I think New Zealanders are getting just a little tired of the tired old mantra from the right wing of New Zealand politics which keeps talking about New Zealand’s high-tax regime. That is simply a nonsense. When we consider most of the countries that we like to compare ourselves with we find the tax burden on the New Zealand taxpayer is lower than it is on taxpayers in virtually all of them. In fact if we consider the entire OECD I think it would be fair to say that if we take into account all the taxes including such things as the health taxes superannuation payments and all the other things that people stack on top—even such simple things as the registration costs for one’s motor vehicle—we would find that there is one country in the OECD that has generally lower daily costs by way of tax than New Zealand. I think there may be a couple of countries in that situation but Mexico is the one that springs to mind and to be really honest I do not hear a lot of New Zealanders talk about rushing to take their businesses off and establish them in Mexico. 
What I do hear is that a lot of people are very keen to find out how we are so efficient in the running of some of our public institutions. 
Pansy Wong 
: Oh ha ha! 
Hon HARRY DUYNHOVEN 
: I tell the member—and she can laugh and jump up and down if she likes—to look at some of our public institutions. Recently I was talking to a new immigrant to New Zealand a doctor who has been here for several years now. He has worked in the health systems in many of the countries that we like to consider to be more advanced than us including the Netherlands I have to say. He said to me that New Zealand’s health system is the best one he has worked in and that it provides the best outcome for the money provided. That gentleman has worked in several countries at a very high level in the health system. Now what does that have to do with taxation? It is taxation that provides for all those things yet we have seen significant development in this country over the years. Ms Wong can jump up and down all she likes but she is not providing me with the facts and figures that state other countries are doing significantly better than us. 
I just wanted to take a short call on this bill but I am sure the measures taken in it for the oil and gas industry will provide a very good dividend for New Zealand. 
CRAIG McNAIR (NZ First) 
: 
 Like the member Harry Duynhoven I was surprised to see another Labour MP apart from the Associate Minister of Revenue—and a Minister normally takes the initial call—get to speak on a bill such as this. 
I want to make just one other point before I get specifically on to the bill. The National member Pansy Wong talked in her speech earlier about the small-company tax unit this Government is setting up. Well that is not the only such unit this Government has started to set up. Obviously in the last couple of weeks we have just seen the Government set up after pressure from New Zealand First a small Immigration Service unit as well. The Government is into setting up small units. 
Pansy Wong 
: That’s not tax. 
CRAIG McNAIR 
: Obviously as Pansy Wong has said that is not exactly about tax. 
Pansy Wong 
: It is. 
CRAIG McNAIR 
: Well it is I guess. 
Pansy Wong 
: It’s funded by tax. 
CRAIG McNAIR 
: Yes that is right—it is funded by tax. The commentary on the bill states: “The bill introduces new thin capitalisation rules to prevent foreign-owned registered banks operating in New Zealand from accessing interest deductions if their capital in New Zealand is insufficient to support their operations in this country and their offshore investments made through New Zealand.” It also states: “Banks also use cross-border financing arrangements funded by debt to generate income that is not subject to New Zealand tax.” and that is a very worrying thing. It continues: “The banks then claim a deduction for the interest expenses on the resulting debt which reduces their New Zealand tax liability.” 
Last night the Hon Bill English former leader of the National Party former Minister of Finance former Minister of Health and National’s current spokesperson on education made a very interesting admission. He said that National had taken the people for granted and that Labour has too. That is what that member said last night in the debate on the performance and current operations of Crown entities public organisations and State enterprises. I believe that that was a very honest admission. The member was being honest with us and I think it is a very relevant comment in relation to this very bill that we are talking about tonight the Taxation (Base Maintenance and Miscellaneous Provisions) Bill. 
The reason why I believe that it is a very relevant comment is that for the last 7 or 8 years or even longer than that New Zealand First has been highlighting this issue to successive Labour and National Governments. Month in month out and year in year out in this Chamber and at the Finance and Expenditure Committee our leader the Rt Hon Winston Peters and others in New Zealand First have highlighted this issue with the Government of the day. The question I ask is why nothing was done about this issue for such a long period of time. New Zealand First quite openly supports this bill and I want to restate that support tonight because the bill is a step in the right direction. It provides something that we have been highlighting for the last 7 or 8 years or maybe even longer. 
It is actually quite interesting that we are only 3 months out I think from an election— 
Hon Richard Prebble 
: Oh I don’t know we might be a month out. 
CRAIG McNAIR 
: We might be a month out—say a maximum of 3 months—out from an election and this Government feels all of a sudden the need to pass this bill under urgency. As I said for years and years New Zealand First has highlighted and raised this issue with the Government. The Rt Hon Winston Peters started raising these kinds of issues right back at the time of the wine-box inquiry and we have been constantly raising them ever since and nothing has been done about it. We come to 2005 and a maximum of 3 months or maybe a month or 2 months out from the election all of a sudden the Government feels the need to pass this bill through the House under urgency. I think it is quite telling and also very interesting that the Government is doing this at such a time. 
I said earlier that this bill introduces new thin capitalisation rules and other measures to stop banks from avoiding tax basically—if people want to interpret what I said earlier and make it pretty simple. To cut a long story short this bill is introducing these rules to stop the banks from avoiding and wriggling out of their taxes. I think it is quite shameful when we look at this bill and at what I was highlighting earlier on about National admitting that it had taken people for granted and saying that Labour has too. I think this is a very significant bill to highlight that fact. During Labour’s last reign in Government back in the 1980s it sold Postbank for $678 million—over 20 years ago—and sold the Rural Bank for $687 million and in the 1990s National sold Housing Corporation mortgages for $2.4 billion. Then we had the shameful shameful sale of the Bank of New Zealand which we all know came back to bite this country badly and the country had to bail the bank out. 
 I think it gets even more shameful and scary when one looks at how much banks have earned over the many years since the successive Labour and National Governments opened up the banking industry to foreign-owned enterprises in the way that they did and when one considers the way that some of these foreign-owned banks have treated the public of New Zealand—the taxpayers of New Zealand. They have treated them with no respect whatsoever by trying to wriggle out of the tax rules that are in place and that is why we are speaking on this bill tonight. The ANZ National Bank had an after-tax profit of $680 million in 2004 and $713 million in 2003 and Westpac had an after-tax profit of $617 million in 2004 and $462 million in 2003—gone straight out of New Zealand. The Bank of New Zealand which is the saddest one of all I think considering its history had an after-tax profit of $471 million in 2004 and $548 million in 2003. The ASB had an after-tax profit of $316 million in 2004 and $278 million in 2003. The combined profit for all 16 registered banks was up 8.8 percent to $2.6 billion. The most worrying thing out of all of this is that the total assets among the main banks have increased 5.4 percent to $188.3 billion led by ASB’s $5.5 billion increase. Westpac’s was $2.6 billion and the Bank of New Zealand’s was $1.7 billion which as I stated earlier is one of the saddest stories I believe in our New Zealand economic history. 
I just want to read to members the  
Dominion Post 
 article of 12 May in the “BusinessDay” 
section: “Intense competition and a damaging shift by home owners into fixed-term loans have not stopped banks ramping up profits to a record $2.08 billion in 2004. Profits for the main banks were up $91 million or 4.6 per cent on 2003”. Then one hears all these stories of these banks making billions of dollars since they were sold to foreign-owned enterprises and one sees other stories. 
Hon RICHARD PREBBLE (ACT) 
: 
 I rise on behalf of the ACT party to speak to the Taxation (Base Maintenance and Miscellaneous Provisions) Bill which is a bill typical of tax bills that Governments have been introducing into the New Zealand Parliament I guess most years. It is full of very complicated technical amendments to meet what are seen as various anomalies and loopholes in the tax system. 
Before I turn my attention to that let me just immediately respond to what I think were some fairly ludicrous remarks from the New Zealand First Party. If one had listened to the New Zealand First member one would have heard him say that what is appalling and a matter of great concern is that banks in New Zealand are profitable. So I guess New Zealand First’s position is that it would be wonderful if New Zealand banks were making no money were unsound and the value of their assets—the last speaker was concerned that it had gone up—were falling. 
Hon Harry Duynhoven 
: We were there once. 
Hon RICHARD PREBBLE 
: That appears to be the last speaker’s position. I just say to the honourable member that as Mr Duynhoven has said that situation has actually happened in New Zealand. What happened? When banks fail the effects have been disastrous. I still remember the effect of DFC failing—a tiny bank and financial institution in this country. Did it have huge implications? Yes it did and innocent New Zealanders whose only fault was that they were dealing with the DFC found themselves wiped out. But New Zealand First would have us believe that that somehow is a better situation. Well that is absurd. 
It also needs to be said because there have been certain remarks made about banks although not so much by the honourable member—remarks generally about this legislation—that those banks in New Zealand that have taken advantage of some clever management of their assets and have taken various steps have actually done nothing illegal. Indeed it became clear and officials admitted it in front of the Finance and Expenditure Committee that the banks had actually been to the Inland Revenue Department and received approval for those arrangements. It has never been regarded as in any way illegal or immoral for a taxpayer to seek to minimise the amount of tax that he or she pays. Although that New Zealand First member may be fairly silly and immature in his views on banking I guarantee that he actually does not pay any more tax than he needs to—unless he is even sillier than I think. If he personally sees nothing wrong with his minimising his tax there is actually nothing wrong with the banks in New Zealand doing that. 
Indeed I might even go further. One could argue that a strong banking sector is so important for a nation that we ought to be a little bit careful before we go pursuing it hard for income tax. When we actually look at what the banks have been doing in the last decade we see they have been able to collect a large amount of money from overseas investors and lend it to New Zealanders because we have not been saving enough. Again I hear people complain about that. Well they should think about the alternative. Are they really saying they do not want our banks to lend on mortgages and the like in the way that they have done? 
Having said that let me now turn to the bill itself. The ACT party will not vote against the bill and the reason is that most of these measures actually have been consulted on widely with the accounting profession which sort of acts as the informal collector of tax for the Inland Revenue Department in New Zealand. They have been consulted on with the various organisations that are involved and there is grudging support within the community for the measures because they are needed for the integrity of the tax system. 
Having said that and having also said that for that reason ACT will not vote against the bill I say we are actually opposed to this type of tax legislation because some of the measures contained in this bill are police-State powers. The Inland Revenue Department is given huge powers under this bill and it is given those powers because it is quite impossible to collect the amount of tax that the New Zealand Government demands without these sorts of measures. If these measures were appearing in any other legislation except tax legislation the whole House—even the Greens; well maybe not; they tell me that they are so unworried about this sort of tax bill that they are not even going to debate it; perhaps I should not speak on behalf of the Greens—every other political party except the Greens would be outraged. They would be outraged at measures being put before the House that stated that civil servants were entitled to go into one’s bank accounts entitled to order one to produce documents entitled to make declarations as to how much tax one has to pay—and unless one can prove to the contrary one has to pay it—and also entitled to make arbitrary statements about how one’s income should be dealt with when in fact that may not have been what one had intended. 
One of the reasons that tax laws are getting more complicated is that we are in a global economy. Indeed the banking system falls a bit into that—these debt deals were done internationally. So the New Zealand Inland Revenue Department to try to protect the tax base is finding itself having to pass very complicated laws in order to try to pursue people’s income around the world. I think that is an exercise in futility; that in fact the Government will fail. The Government will be able to collect the money from—if I can put it like this—the little people. It will be able to collect tax from those who pay wages and salaries because the Inland Revenue Department can pursue such people. But if one has real money then one has the ability to determine when one earned it. One of the problems the Inland Revenue Department has is that it is very difficult when one talks about a large sum of money to decide whether it is capital or income and—if people have the ability to move the money around the world—when people actually earned it. The Government will never succeed and what we will have is more and more legislation like this. This is 170 pages of tax legislation with police-State type of measures. 
It is time that we actually looked at some alternatives. Mr Duynhoven mentioned a number of European nations and their tax systems but what he failed to mention was the spectacular success that the Eastern European nations that have just joined the European Union have had by simplifying their tax systems and adopting what are very low flat rates of tax—down to 16c. Of course if we were to adopt a very low rate of flat tax down to 15c—[ 
Interruption 
] The member who claims to be an inland revenue Minister should start reading some of the literature. He would discover that nations that have done that—and I went to a lecture in this city by a leading tax professor who was giving data on what had happened in those Eastern European nations—have maintained their tax revenue. It has worked spectacularly well. They do not need to have junior Ministers passing legislation of the kind that the Nazis used to pass—and I am not suggesting that the member is a Nazi. 
This is a police State. These are police-State measures. People’s basic liberties are taken away in this measure. Our House as one can tell by the numbers will blindly pass the bill when the real solution is to go to a low flat rate of tax and restore our liberties. 
GORDON COPELAND (United Future) 
: 
 That was an amazing speech particularly the latter part from a member of the House whose party has decided to vote for the bill. I just found the logic quite astonishing. 
United Future will vote in favour of this bill. It does three major things. It sets in place new rules for the taxation of banks as has been mentioned; it brings in a variety of tax-rule changes that have the effect of either reducing the quantum of tax paid by a business or reducing the cost of tax compliance and those are two things that United Future strongly supports; and lastly it establishes tax adviser privilege to protect tax advice given by professional tax advisers along similar lines to the privilege that has traditionally been extended to lawyers. 
I am one of two members in this House who is a chartered accountant—the other one being Pansy Wong who spoke earlier—and I am pleased indeed to see that these changes are being made. It is really if one likes a kind of injustice that lawyers on the one hand and chartered accountants on the other hand are probably giving equivalent tax advice to their clients and the lawyers are being protected by privilege but the chartered accountants have not been and it is good to see a level playing field established in that regard. 
I shall make a couple of comments on those matters and the first one is to talk about the taxation of the banks. I agree entirely with the Hon Richard Prebble that profit is the lifeblood of businesses and banks are no exception. Therefore it is good and healthy that they make profits. That is how they become successful and provide good services to their customers. 
I also agree with him that there is nothing immoral or illegal about any taxpayer taking action within the law to minimise his or her tax bill. Where I guess I probably differ from Mr Prebble though is in his conclusion in saying that the banks had not used illegal means to avoid tax because as is well known through the media there is a big dispute involving hundreds of millions of dollars between the Inland Revenue Department and the banks that is yet to be determined by the courts. It will be the courts and they alone when they have heard all the evidence that will make a decision at the right time as to whether retrospective tax is owed. But these rules clearly set out the position for the future. 
In my days as a chief financial officer for a large corporation I was also expected to minimise the tax paid by the company and I did that—within the law I might add. But in my role as a parliamentarian—now a gamekeeper rather than a poacher—I do like to remind myself when I am looking at these sorts of issues that for example a nurse working long hours in the intensive care ward in Wellington Hospital or any other hospital in New Zealand pays his or her fair whack of tax. They do that as Richard Prebble has pointed out because it is taken off them before they get it through PAYE. Therefore it is a matter of fundamental fairness that all New Zealand taxpayers should obey the law and pay their fair share of tax and I do not think that that is asking too much of the banks. 
That is essentially all this bill is doing. It is saying: “Look guys sorry you had a go at this but we’re closing it off; we’re changing the law so that in future you will just pay your fair share.” We are not asking them to pay more than their fair share or less than their fair share—but just the right amount. I think that that is a completely worthy goal. 
The other thing I would like to touch on briefly is the part of the bill that deals with losses on buildings. This law change is designed to allow companies to deduct the residual book value of buildings on their books for tax purposes when buildings are destroyed through natural causes. But the committee received submissions particularly from port companies saying that that should also be extended to situations where buildings have come to the end of their useful economic life. In that situation also the building owner should be able to write off the residual amount and claim it for tax purposes. That is an entirely reasonable proposition. Therefore the committee has recommended that the officials consider that issue as part of their ongoing depreciation review. 
A similar matter came up in respect of dredging costs also from the port companies. Under the current rules the initial costs of dredging are not permitted to be deducted for tax purposes. I believe that that is quite fundamentally wrong. As I mentioned I am a chartered accountant and I happen to know that the idea of depreciation is to allocate the cost of an asset across the commercial life of that asset. When one thinks about a big hole being dredged to enable ships to go into the port one is doing that to earn additional taxable income. Therefore it seems to be fully consistent with general depreciation philosophy if one likes that those costs should be able to be capitalised and then depreciated in the usual way against the commercial if one likes stream of income that is arising from the asset that has been created: namely the result of the dredging. I see no philosophical or tax principle why that should not be the case. 
 Therefore I led the committee to the recommendation which Pansy Wong also supported that we should also ask the Inland Revenue Department officials to re-examine that practice to allow for the initial dredging cost to be capitalised and depreciated but for subsequent dredging costs as distinct from the first lot—and putting aside the question of betterment—to be allowed to be expensed. After all when people dredge the hole that they have made to get the ships in and to get greater depth and so on gets filled in with sand and other stuff and they have to clean it out again and that to me is no more than maintaining an existing asset and therefore should be expensed for tax purposes. I want to mention that we have asked officials to continue work on that issue as well. 
Those are the only remarks I wish to offer at the second reading stage and as I mentioned United Future will vote in favour of the bill. 
LINDSAY TISCH (National—Piako) 
: 
 This is an interesting bill which National will be supporting. But there are some points that I think are important and that I wish to bring to the House’s attention. The first one concerns the thin capitalisation rules for foreign-owned banks. Banks in terms of their debt restructuring have been able to claim the interest as a deduction and of course foreign banks have not been contributing to the overall well-being and economy of this country. Page 3 of the commentary on the bill—and I do not intend to read it out—summarises quite clearly a position that has arisen over time. Just to highlight the point the changes as the Government announced in September are expected to result in those banks paying around $360 million a year more in New Zealand tax. That is a significant amount and it is one of the reasons— 
Pansy Wong 
: What’s Labour going to do with it? 
LINDSAY TISCH 
: My colleague Pansy Wong who is a chartered accountant and understands these issues has asked a very good question. What will the Government do with that $360 million of extra tax? 
Pansy Wong 
: Low-quality education. 
LINDSAY TISCH 
: Well it will squander it on some scheme or other as it is very good at doing. 
Pansy Wong 
: Hip-hop tours. 
LINDSAY TISCH 
: There will be hip-hop tours and it will be giving money for twilight golf. That money will be squandered in a number of other areas with absolutely no accountability. However the provision is a very good one. We are actually supporting it in terms of the capitalisation rules. 
The other areas I wish to comment on are the company tax rates and the personal tax rates. When we have very high personal tax rates those who are paying the higher tax look for a way to minimise the risk—to minimise the amount of tax they pay. That is human nature and we see that happening with the personal tax rates up at 39 percent for those earning over $60000. I remember Labour’s pledge in 1999 that only 5 percent of people would be paying the higher rates and now of course about 20 percent of people are paying those higher rates. It is the same with company tax. Paying tax is a disincentive to invest. We put tax on tobacco and alcohol because it is a disincentive. This Government has taken the line that it will tax people more and that becomes for people a disincentive to invest to grow their business and to do the things they like to do. The National Party is a party that would rather see money going into people’s pockets—let them choose what they will do with it. 
It really is interesting to note what sole traders whose taxable income is over the $60000 figure are doing. Instead of paying tax at 39 percent they are forming companies because the company tax rate is 33 percent. So sole traders and partnerships but mainly people on their own—sole traders sole proprietors—are asking why they should pay 39 percent on their taxable income when if they form a company they can actually take out as personal drawings wages salaries or whatever they want to call it up to $60000 of taxable income and pay tax at only 33 percent. And if the taxable income of their business is over $60000 they will not actually pay it at 39 percent because as a company they will have to pay only the company rate of 33 percent on the difference. That is common practice with small businesses. They are doing that as a means of having the money in their pockets and of beating the system and it should not be that way. If we had a fair tax system across the country then we would not find businesses trying to do exactly what I am saying is happening—and I know it is happening because there are numerous examples of exactly that rationalisation and restructuring. The law allows it to happen. Financial planners and management consultants who deal with the restructuring of businesses are saying: “Why pay 39 percent when you can actually pay 33 percent if you form a company?”. 
The point I am making here is that although National is supporting this bill there are certainly areas that the Government should be very mindful of. The Government could make it a lot easier on itself if it had a fair and equitable system where taxes are there for a purpose—not a system where money is taken with one hand and redistributed with the other. That is how socialist Governments work. They grab the money from one side redistribute it on the other side and make more people dependent. That is the welfare system. That is the socialist view. Well we now see as a result of the Budget the other day that New Zealanders have seen through this. They want money in their pockets. They do not want a Government that thinks it knows best how to spend their money that takes their money and redistributes it at a later stage. 
Pansy Wong 
: But Labour’s promising tax cuts. 
LINDSAY TISCH 
: Oh yes Labour will promise tax cuts but we know how the Government has operated over the years. It has increased taxes and in 3 years’ time it will give people a reduction amounting to a measly 67c per week. Well what an absolute insult to hard-working New Zealanders! It is an absolute insult to think that hard-working New Zealanders will get only 67c per week. This is a Government that says it will look after people. The figures are quite astounding actually. If we look at the extra taxes people will be paying between now and 2008 when there will be a reduction we can see that they have more than contributed and a measly 67c per week reduction is absolutely outrageous. There is no justification for it and I tell members that the Government will pay for that because New Zealanders are seeing through it. They do not have a tax structure that reflects investment. There is no incentive and no initiative for people. There is nothing to reward the hard-working and enterprising New Zealanders who are out there making a dollar and of course are having to pay it over to this Government. That is the second point I wanted to mention. 
The third point is about the provision that states that accountants are to have the same status as lawyers. That is fine. We have two accountants— 
Pansy Wong 
: Only two? 
LINDSAY TISCH 
: Only two chartered accountants. There is Mr Gordon Copeland—he was a chartered accountant—and there is my colleague Pansy Wong who has crystallised and articulated very well the argument about taxation. It is always good to have on our team a chartered accountant of her qualifications and experience. She said that accountants will have the same status as lawyers. It is in the provisions and that is something we also welcome. This Government will have much to answer for in a very short time. New Zealand voters will see through the facade the Government keeps putting up. We will see that very very shortly and the Government will pay the price. In the meantime the small changes that are reflected in this taxation bill—namely in the thin capitalisation rules for foreign-owned banks—are changes we are supporting as well as the other provisions. We will be voting for those. 
Debate interrupted. 
Voting 
Correction 
SIMON POWER (Senior Whip—National) 
: 
 I seek the leave of the House to amend the vote taken on behalf of the National Party on the third reading of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill. 
Madam DEPUTY SPEAKER 
: Leave is sought to amend that vote. Is there any objection? No. 
SIMON POWER 
: I incorrectly cast National’s vote as 27; it should have been 24. 
Madam DEPUTY SPEAKER 
: I thank the member. That has been recorded. 
Taxation (Base Maintenance  and Miscellaneous Provisions) Bill 
Second Reading 
Debate resumed. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I did not intend to take a call on this bill but two previous speakers have tempted me to do so. First of all I would like to clarify what my honourable colleague Craig McNair said. Obviously Richard Prebble missed his point completely. I just thought that well age overtakes us all and he misunderstood totally what my colleague had been saying. Of course New Zealand First expects banks to make a profit. We do not put our money in banks so that they can lose it totally and for the Hon Richard Prebble to imply that New Zealand First thought otherwise is totally wrong. We want banks to make a profit. But I make it perfectly clear to the member that the sad fact of life is—and this is what concerns New Zealand First—that the major banks the trading banks are all foreign owned. If we cannot run a bank in this country then what can we run? It is just a building we go into to deposit money. That is oversimplifying it but we should be able to run our own banking system very very successfully and indeed make a profit out of it. It is a sad fact of life that the trading banks in this country are all foreign owned. As we have heard members say—and very eloquently by the United Future spokesperson—banks are not paying their fair share of tax so we support the amendments in the bill that address that anomaly. I listened intently to Lindsay Tisch— 
Pansy Wong 
: Great speech! 
PETER BROWN 
: It was a good speech. The only problem is that it was not very accurate. But never mind; it sounded good. He said that people are forming themselves into companies to avoid paying the 39c tax and pay only the 33c tax. That might be true but equally so there are considerable advantages in a sole trader forming a limited liability company particularly if he or she is taking a commercial risk. I suggest that that is a more valid reason to form a company than doing so to avoid the element of taxation that Lindsay Tisch spoke about. Nevertheless that is a valid reason for forming a company. There is a cost in forming a company and it is a valid reason. If one can minimise one’s tax liability then fair enough. But I would say that the major reason that people are forming limited liability companies is that there are a good deal of advantages in doing so. 
I would like to clarify that New Zealand First would like to give the public in general some tax relief. We would like that. But we are also committed to having more police. We think that the police force in this country is undermanned and considerably undermanned. Can I use the word “undermanned” in this politically correct environment? “Underpersonnelised” does not make sense so “undermanned” will have to do. We want more police. We want more cops on the beat and in all sorts of areas. We want a significant increase in police numbers and that will cost money. We want to give tertiary students a living allowance because it is about time that we looked after them equally as well as we look after somebody on the dole. Right now a person on the dole gets funded by the taxpayer but a student does not. Students have to borrow for their funding. We want to put more money into roading without tolls. I see Mr Cunliffe looking at me. We do not believe it is necessary to have tolls. We want to divert the money that goes into the Crown account into roading and we want to enhance roading in rapid order. We are not into this 10 to 20-year plan; we want to fast track it. We know how it can be done. We want not only to inject more money from the Crown account into the roading account but also to structure either Land Transport New Zealand or Transit New Zealand to have more commercial thrust and to borrow money to get roading cracking. We know exactly what needs to be done and how it can be done within the time frame. [ 
Interruption 
] Good the member is with us there. The economic benefits to this country in fast-tracking roading are absolutely huge—almost beyond belief. So there is a degree of urgency about injecting more capital into roading. 
We want greater investment in health. If we look at some of the countries in Europe where 9.5 to 10 percent of their GDP goes into health—but it includes the private sector—we see that they have a far better health system than ours. I mean by that that per capita they have more doctors more hospitals more hospital beds better access to modern drugs and better access to modern technology. We must put more investment into health. We have an ageing population and that problem is not going to walk away from us. The older we get in this country the more demands we will put on our health system. We have barely kept pace— 
Hon David Benson-Pope 
: More than a 50 percent increase. 
PETER BROWN 
: I do not know whether the member knows what he is talking about. 
Hon David Benson-Pope 
: Has the member not looked at the figures? 
PETER BROWN 
: I have looked at the figures very very well. The Government puts a paltry 6 percent of GDP into health—a paltry 6 percent. 
Hon David Benson-Pope 
: A 50 percent increase. 
PETER BROWN 
: Six percent. 
Hon David Benson-Pope 
: He’s having a senior moment. 
PETER BROWN 
: The member needs a tennis ball. New Zealand First wants to give some tax relief some tax incentives to new exporters. This country is dependent on exporters. It is dependent on trade and we would like to encourage new exporters into the game by giving them some favourable tax relief in order to explore new markets and get things going. We want and need to put more investment into railways in this country. The $200 million that the Government is giving to ONTRACK will not be enough. Anybody who knows anything about the railways knows that it will not be enough. Another area that we would like to put money into—well perhaps not money but we would like to create a favourable tax regime for it. I am talking about shipping and it might surprise members that I have come out strongly on this but it is something that is close to my heart. In this country we operate about nine coastal ships. We have no international shipping—nothing going anywhere outside New Zealand—and the coastal ships operating in this country are struggling. 
Sue Bradford 
: Do you support cabotage? 
PETER BROWN 
: No I do not support cabotage because cabotage adds a cost to users of ships and it makes them less competitive. Cabotage is an area monopoly and we do not support it. We support a favourable tax regime exactly as the ships that service this country now get so that our guys can compete on an equal footing with foreign shipping. If shipowners do not want to take it up then we are none the worse off; but if they take it up it will be a huge advantage for this country. This is an island country and believe it or not 99.5 percent—and anyone can check me on this—of all cargo tonnage that comes into or goes out of New Zealand comes and goes by ship and they are all foreign ships. That is a disgrace for an island nation tucked down at the bottom of the world. Then after we have delivered on those we will give tax cuts to the general public. 
Pansy Wong 
: Oh yes! 
PETER BROWN 
: There might be a little wait but at least the public will see the benefits of what we are trying to do. The member laughs. If her party comes to office it will give tax cuts at the expense of health at the expense of police and at the expense of education. We are not into that. We support this bill. It is a move in the right direction but there is a lot more to do. 
Bill read a second time. 
Instruction to Committee 
Hon DAVID CUNLIFFE (Associate Minister of Revenue) 
: 
 I move  
That it be an instruction to the Committee of the whole House on the Taxation (Base Maintenance and Miscellaneous Provisions) Bill that it take the bill part by part. 
Motion agreed to. 
In Committee 
Hon DAVID CUNLIFFE (Associate Minister of Revenue) 
: 
 I seek the leave of the Committee to take the bill as one question and to have a wide-ranging debate. 
The CHAIRPERSON (Hon Clem Simich) 
: Is there any objection? There is no objection. 
Parts 1 to 4 
PANSY WONG (National) 
: 
 As various members mentioned in their second reading speeches this legislation contains three major issues. I would like to start with one of the most high-profile issues that this legislation seeks to address which is the thin capitalisation provision. That means that a foreign-owned bank would have to measure its equity financing against a yardstick of 4 percent. I understand that the Inland Revenue Department has carried out individual negotiations and consultations with the various trading banks. I must say that National is sceptical as to whether the annual taxation revenue will increase by $360 million. We all know as my colleague Lindsay Tisch and various other members have pointed out that if there is a high income tax break then people and entities can prepare themselves for that with tax consultants and tax lawyers all trying to minimise the tax paid and that that is legitimate. There are legitimate ways to minimise tax payments. 
But there is a further complication to this issue. The bill went into a lot of technical provisions to establish the formula to calculate the equity etc. The Finance and Expenditure Committee deliberations were quite interesting. We were looking at Supplementary Order Paper 337 in the name of the Hon Dr Michael Cullen which was brought to the select committee and the Inland Revenue Department pointed out correctly the complicating issue about financing instruments. New types of debt instruments are being created every day. The Inland Revenue Department first came to the select committee to seek the regulatory-making power to declare whether a certain new financial instrument would be classified as debt or as equity. It was just as well that we had help from the regulatory select committee which brought it to the attention of the Finance and Expenditure Committee that the original Supplementary Order Paper contained powers that were too wide. It was almost as though Parliament was giving away the power of determining the taxation level to the Inland Revenue Department and the department concurred with that advice. 
I would like the Minister to take a call to assure us—because Supplementary Order Paper 378 in the name of the Hon Dr Michael Cullen is very technical in terms of its drafting—that indeed that Supplementary Order Paper now contains a provision that does not subject Parliament in a de facto sense to giving away the power to set the taxation rates because the department can determine whether an instrument is a debt or an equity. We have given the department a narrow power because we appreciate that the banking and commerce sectors will come up with financial instruments and will need clarification of their status from the department in a relatively short time. So I want the Minister to take a call to assure us that the amendments on that Supplementary Order Paper in terms of that regulatory power do nothing but simply clarify whether a financial instrument is regarded as debt or as equity. Members can appreciate that with a bill of 170 pages that contains a lot of technical provisions the select committee relied on the officials to understand it and to preserve the integrity of the intention of the bill’s provisions. I want to make sure the Minister can assure us that we have not given away the power of Parliament’s right to set the taxation level. 
I will now move away from the thin capitalisation rule. I also want to point out that we do welcome the provisions for deductions for example for expenses relating to patents etc. 
CRAIG McNAIR (NZ First) 
: 
 I want to take a call to talk about the thin capitalisation rules. First of all I want to highlight to the Committee that what I said earlier in my second reading speech was misrepresented by Mr Prebble. I have no problem with banks making profits. Obviously I am very supportive of banks making profits. Any business needs to make a profit to survive and obviously that is just a statement of fact. I have no problem with that. What I do believe—whether or not Mr Prebble thinks it is an immature belief a young belief or a junior belief—is that there are certain strategic assets that should be kept within New Zealand hands. The facts are that most New Zealanders agree with my view in that respect. 
Hon Dr Nick Smith 
: So do most of them bank with a local bank or an Aussie bank? 
CRAIG McNAIR 
: Mr Smith from the National Party asks why most of them bank with an Aussie bank; but when only one or two banks in New Zealand are owned by New Zealand and the other 15 or 16 are owned by foreign-owned enterprises it will probably stay that way until more time passes. Kiwibank is growing and hopefully the tide will turn in that regard over time. 
I do not want to focus my whole speech on what Mr Prebble said but I was interested that he said that this is police-State legislation. Towards the end of his speech I honestly thought he would vote against the bill but he said he would vote for it. I do not know whether I am allowed to ask this but I would like that member when he next speaks to clarify his position on that. It would be informative for the Committee. 
We are debating the new thin capitalisation rules on stopping banks from avoiding certain tax that really should be paid. A lot of companies foreign-owned and New Zealand - owned alike are in that situation. I agree that it is in human nature to find the best way to pay the least amount of tax but regardless of whether that is wrong or right what I stated was that for the last 7 or 8 years New Zealand First has been highlighting the issue of unpaid tax and that it needed to be addressed. 
It may be 7 or 8 years too late but tonight we are debating the issue. I am proud to be in a party that has highlighted that issue for many years now—which I believe is a triumph in its own little way. 
Given that we are talking about tax and money earned I think it was disappointing that Westpac joined other Australian-owned banks in not paying imputation to Kiwi shareholders. That highlights the fact that there are certain strategic assets that I believe should be kept within the hands of New Zealanders so that those banks can make decisions in the best interests of New Zealanders because to do so will be in their own best interests. The Australian-owned banks are doing what is in their best interests. I guess some people would say that they cannot really be blamed for that. 
Hon RICHARD PREBBLE (ACT) 
: 
 I have say to the honourable member that that speech was even more confused. If I understood him correctly he criticised Westpac and said that certain assets should remain in the hands of New Zealanders. Westpac used to be the Bank of New South Wales—I think it was formed possibly even before New Zealand was—and now the member appears to be saying he thinks it should be confiscated. I think he should think through his positions. He did make one reasonable point: given my strong speech against the bill why am I not voting against it? Perhaps I did not explain it to him clearly enough. Given the complex nature of our tax laws if we are to keep an integrity to it then these sorts of laws are inevitable. We have thin capitalisation rules for other entities. Is there a particular reason why they should not apply to banks? No there is not. So for that reason the ACT party will reluctantly vote for the legislation. 
Let me give the member an example of the arbitrary powers that exist. I turn to clause 110 “Cancellation of registration” which is a simple example. Clause 110 allows the Commissioner of Inland Revenue to cancel the GST registration of a non-resident. Perhaps that does not worry the New Zealand First Party but non-residents like New Zealanders in Australia do not get treated like that. Is that a police power? Yes it is because the commissioner who is a civil servant is able under this measure purely at his or her own whim to cancel the GST registration of someone just because that person is not a New Zealand resident—and we will trust the commissioner to do it properly. Well I do not know; I just do not like that. I think one should never have any right that one has—and the right to be able register for GST could be quite a valuable right—removed except by process of law by the courts. But we have this measure and the reason it is inevitable that we have to have it is that we have such a complicated tax system that in order to make it work we need police-State measures. 
That is the point I was making to the honourable member. I am saying that if we continue to collect this much tax if we continue to have an escalating tax system and if different taxpayers continue to be treated in different ways then because people think that that is arbitrary and unfair we will inevitably end up having police-State measures. The Australian tax system has it so does the British system so does the United States. Any country that has an escalating tax system that treats different taxpayers in different ways according to arbitrary rules—and I was trying to say to the member that it is an arbitrary rule to determine that something is capital or income—ends up with these sorts of police-State measures. 
I am philosophically opposed to giving those sorts of powers to unelected civil servants even if they have the highest integrity. That is why I say to the member that as a general principle we as a House ought to be starting to have a look at these tax laws and starting to ask ourselves what sort of country we are creating and whether there is a different way of doing it. Of course there is. We just have to go to a low flat rate of tax. Then everyone is treated the same and there are no exemptions and we would not have to hand the Commissioner of Inland Revenue police-State powers in order to be able to collect the revenue. 
Perhaps the member is right. Perhaps for that reason I should vote against the whole of the legislation. I thought about that but I thought the New Zealand First Party might then go around the country—of course that member would not but his leader might—and say I was trying to do special deals for foreign bankers. I am not. I want everyone including banks that are foreign-owned to be treated in exactly the same way. So I thought it would be safer not to vote against the legislation and instead speak against it vigorously in the hope that I might educate the honourable member so that he could see that there are some real reasons why this House ought to be concerned about the Taxation (Base Maintenance and Miscellaneous Provisions) Bill. 
I make this prediction and I am sure the Minister in the chair David Cunliffe will not disagree with it: next year no matter which party is the Government we will see a similar bill that will probably also be 170 pages long and will also give the Commissioner of Inland Revenue arbitrary powers—and this one is an arbitrary power because under that provision he can cancel the GST registration of anyone who is a non-resident New Zealander. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 It is absolutely appropriate that in the last few weeks of this parliamentary session we are debating tax law. When the New Zealand public go to the polls issues of tax will be at the forefront of their minds. They know that in the term of this Government the amount it gets by hook or by crook out of the pockets of hard-working New Zealanders has gone up from $34 billion when Labour came to Government to $50 billion this year and by the Government’s own estimates by 2009 it will go to $60 billion. The spending appetite of the Minister in the chair David Cunliffe and the members opposite—[ 
Interruption 
] David Benson-Pope the famous tennis player from the Government benches is getting a bit upset that I dare suggest to him that the tax increases. 
Hon Rick Barker 
: That member is unbelievable. 
Hon Dr NICK SMITH 
: I ask Mr Barker or Mr Benson-Pope what justification there has been for increasing the taxes by $7000 for every single household. I can understand that Rick Barker and David Benson-Pope are getting upset. They know that the electoral guillotine is coming along. They know that the electors out there have had enough of the tax-and-spend policies of this Labour Government. Those electors are struggling to meet their family bills and the extra $7000 a year that every household is having to pay in increased taxes is one reason why this Government will go down the tube in a few weeks’ time. 
I am disappointed that in this bill there is no reduction in taxes. Every New Zealander knows that the Government is bursting at the seams with money. The Government boasts a $7.5 billion surplus so why will those meanies on the Government benches not let working New Zealanders have a little bit of their hard-earned cash? What is it about the members opposite that they believe they are so smart and so brilliant that they can spend hard-working New Zealanders’ money better than New Zealanders can? 
Mahara Okeroa 
: We are! 
Hon Dr NICK SMITH 
: I just heard the interjection from the member for Te Tai Tonga. He said that yes the Government can. How does he justify taxing my constituents an extra $7000 per household? Suddenly he is silent. He cannot justify it and that is why he knows that a tax cut for working families is what we should be giving in this bill. 
But I am also amused because clause 11B provides for the tax deductibility of failed or withdrawn resource management consents. That is an issue David Benson-Pope should be interested in. It costs New Zealanders who are putting up with the bureaucracy of the Resource Management Act tens of thousands of hard-earned dollars and all Labour can offer them is a tax deduction. We on this side of the Chamber say that we should fix the Resource Management Act. Let us make sure that businesses and private individuals are not having to spend huge sums of money on failed and withdrawn resource consent applications. Would that not be a smarter policy proposition? What is gained by those hard-working New Zealand families and businesses having to apply to create wealth for New Zealand to put a garage on their house or maybe to be able to expand their business? [ 
Interruption 
] 
I remind the member opposite that the Forest Industries Council says that 20 new forest processing plants are being built in Australia as we speak. How many are being built in New Zealand? Not one. The only one we have is in Thames which is in the very good member Sandra Goudie’s electorate and that is being appealed by the Government. That is why members on this side of the Chamber say that the first thing a National Government will do is reduce taxes. You bet that we will bring in a tax bill—one that reduces taxes for ordinary New Zealanders and does not increase them. 
We have carbon taxes. The Government has increased income taxes and petrol taxes. National’s tax spokespeople have identified 34 increases in taxes that this Government has imposed on hard-working New Zealanders. 
Hon David Benson-Pope 
: No one believes you. 
Hon Dr NICK SMITH 
: Well I say to Mr Benson-Pope that if that is the case why did 80 percent of the New Zealanders who voted in the  
New Zealand Herald  
poll on tax say that they prefer National’s policy on tax over Labour’s policy when we have not announced it yet? I say that again: 80 percent of New Zealanders prefer National’s tax policy over Labour’s and we have not yet announced it! That says what New Zealanders believe. It says that they know that this Government is taxing the heart out of ordinary working New Zealanders. 
It is interesting. Even Jim Anderton a member of this Government has signed up to the view that taxes need to be reduced. Even United Future members Labour’s bosom buddies in Government have said that the Government is taxing too much and needs to reduce taxes. Why is it that the only parties left in this Parliament that want to keep putting up taxes are the Labour Party and what I call the “Watermelon Greens”? Although they are green on the outside they are good old plain red socialists in the middle. Only those two parties stand by Labour’s policy of continuing to increase taxes. 
One of the very first bills from an incoming National-led Government will be a tax relief bill. That will be one of the first things we do. One of the second things we will do is to fix the Resource Management Act. We will not have this bumbled amendment from David Benson-Pope—an amendment that has just been rubbished in the Finance and Expenditure Committee. It is the sort of resource management bill that we have— 
Hon David Benson-Pope 
: The select committee approved it. They thought it was great. 
Hon Dr NICK SMITH 
: I wonder whether David Benson-Pope stands by his view that no longer having de novo hearings in the Environment Court is a good idea. [ 
Interruption 
] Is it not interesting? David Benson-Pope says that the most significant change in his resource management bill is the removal of de novo hearings in the Environment Court. 
Hon David Benson-Pope 
: Tell the whole story. 
Hon Dr NICK SMITH 
: That is what the member said. I seek the leave of the Committee to table a press release from Mr David Benson-Pope dated 14 February this year in which he said that the most significant change in his resource management bill was the removal of de novo hearings in the Environment Court. 
The CHAIRPERSON (Hon Clem Simich) 
: Leave has been sought for that course. Is there any objection? There is. 
Hon Dr NICK SMITH 
: Mr Benson-Pope does not want to table his own press release in the Chamber because it is garbage. There is as much truth in his own press release as there is in his claims to this Parliament about what he did with tennis balls when he was a teacher at an earlier time. 
David Benson-Pope’s resource management bill is a disaster. It is a flop. Even his own colleagues have abandoned his key reforms and not until we get a National Government will we get the sorts of resource management reforms that are required. That is why I again draw the attention of the Committee to clause 11B. The only thing that Labour is promising in respect of the Resource Management Act is that if people get dorked in the process and lose their money they can reclaim it in their tax return. That is as good as it gets. Nothing is said about the lost opportunity and lost wealth. All people will get is a tax deduction. National will do far better than that. 
This bill is a disappointment. As has so correctly been said when we are taxing the heck out of New Zealanders we continually have to have bills of this sort to try to knock all those New Zealanders who try to avoid the capricious tax that this Government is imposing on them. We need a change of Government so that we get a reduction in tax. 
GORDON COPELAND (United Future) 
: 
 As others have mentioned a significant part of this bill deals with the thin capitalisation rules to ensure that foreign-owned banks in New Zealand pay their fair share of taxation. As I said earlier we are not asking them to pay any more than their fair share. But I am afraid that I cannot buy into the rather sunny utopian philosophy that has been voiced on this issue by the Hon Richard Prebble of ACT. He has just been joined in that sunny optimism by the Hon Nick Smith of the National Party. Both members correctly defined the problem: that we have to pass these huge tax bills. In fact there are two of them every year each about 160 pages long so we are churning out tax law at the rate of about 320 pages per year. I agree that that is a bad thing and I think that their analysis is correct in that regard but I do not think they have come up with a solution to the problem. 
 If we buy into the argument that a flat tax rate of let us say 20c in the dollar would mean that businesses would no longer endeavour to avoid paying tax or to minimise their tax bill I think we are dreaming. As someone who as I mentioned has worked in the sector I know that any self-respecting tax adviser to a big corporation does not really think he or she has done a good job unless the corporation ends up paying no tax whatsoever. That view will continue to be held regardless of whether the tax rate is 20c in the dollar. I do admit on the basis of human nature that the motivation to minimise tax is greater the higher the tax rate is but I simply dispute the optimistic view that if we had a rate of say 20c in the dollar that would somehow magically remove the need for bills such as this one. It certainly will not. 
The other thing I have been surprised by in this debate is the announcement by Peter Brown that New Zealand First will cut taxes. It has taken New Zealand First a long time to make that announcement and it almost sounds like a deathbed conversion. Anyway New Zealand First joins the ranks of all the parties in Parliament with the single exception now of the Labour Party—because Nick Smith is wrong is he not? The Greens do have a tax reduction policy; they want to make the first 5000 bucks earned by every taxpayer tax-free. Is that right? 
Sue Bradford 
: Absolutely! 
GORDON COPELAND 
: Every single party in this Parliament except for the Labour Party now believes that the time has arrived for Kiwis to get some tax breaks and some tax cuts. So I think the New Zealand First announcement tonight is quite momentous from that point of view. Although New Zealand First is a johnny-come-lately at least it has finally got it right. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 It was interesting to hear the last speaker correctly announce that even the Green Party is in favour of tax reduction. We are here tonight debating the Taxation (Base Maintenance and Miscellaneous Provisions) Bill. It is yet another complex pile of bureaucratic socialist engineering to try to outwit clever lawyers accountants and tax people when all of it is unnecessary. One simple question that has been put tonight is yet to be answered. This question has been put many times over the last couple of sittings of Parliament and is yet to be answered: why not avoid it all by just lowering the tax rate and taking out the incentive for those who invest so heavily in trying to get around the New Zealand tax system? Why is that question not answered? The reason is quite simple. It is that the Labour Party and all socialist parties fundamentally disagree that one can lower the tax rate and still provide basic services at the level people have come to expect. 
Yet all the evidence in New Zealand from our own experiment back in the 1980s was that when the tax rate was lowered the actual tax revenue went up. I see a former Minister from that period in the Chamber and I am sure that he will agree with me. 
Hon Richard Prebble 
: That’s right. 
SHANE ARDERN 
: That is exactly what happened. The members on the Government side of the Chamber—and I see a couple of current Ministers having a little conversation in the back—should pause for a moment and listen to this because clearly it is news that has never ever made it to their ears. It is just too logical for them to understand it—too simple. When the tax rate was lowered in the 1980s tax revenue went up. More tax was paid. Far less was spent on consultants. There was far less need for this kind of bureaucratic nonsense to try to stop those who would use various tax loopholes—tax provisions is probably a more accurate way to describe them—to get around the taxation system. 
Here in the New Zealand Parliament tonight we face a situation that is absolutely unique. Never before in the history of New Zealand have we had a situation like this. That is we have surpluses that are higher than ever before in this country no matter how we measure them. Whether we measure them on a per capita basis or on an export dollar basis—whatever measurement we use—at the moment this socialist Government enjoys the highest surpluses New Zealand has ever seen. Yet at this stage with those revelations—and clearly they must be revelations to the Government—and in these circumstances the Government still cannot see its way clear to having a lower tax rate for all New Zealanders in particular for those they purport to represent. That is the most perplexing thing. The Government purports to represent hard-working ordinary mums and dads yet it is that group that the Government is so disadvantaging through its taxation policy. I say to the Committee that I cannot understand for one moment why the Government will not listen to that kind of simple logic when the evidence is overwhelming that lowering taxes will work and has worked before. 
I would like to talk tonight about a number of other areas of income tax. One of them is the whole notion that if a company is growing and prospering then the State should take a bigger chunk of its profits and have a bigger say in how it operates. Effectively that is what happens. Through passing copious piles of regulation and legislation such as the bill we have before us that is exactly what the Government does. The Minister of Finance effectively says to those companies that he is much better at advising them on what they should do with regard to the management of their businesses than they are. He has no track record to prove it. No Government in this country has ever had a track record to prove it. But despite all the evidence the Minister of Finance believes that he and his advisers are in a better position to tell companies how to run their businesses than they are. So what the Government says is that it will take a higher percentage of their income. 
Hon DAVID CUNLIFFE (Associate Minister of Revenue) 
: 
 I would like to take the opportunity to respond to a couple of the questions that members opposite have raised. 
The first came from Pansy Wong in relation to Supplementary Order Paper 378. Her question was whether the changes to the definitions there would change the underlying policy around equity and debt. The answer is no. The amendments were made at the request of the banks themselves. They provide some certainty and clarity but the underlying policy will not change. The regulation-making power cannot be used for anything beyond clarifying those definitions. 
Mr Prebble raised the issue of clause 110 which gives the Commissioner of Inland Revenue discretion to deregister non-residents who do not carry on a taxable activity in New Zealand. Mr Prebble described that rule as akin to those in Nazi Germany. It seemed a long stretch of the imagination because what that provision in fact does is clarify that someone who is not carrying on a business in New Zealand and essentially is not incurring any input costs to defray GST on should not be able to take the GST margin as a final profit because he or she does not operate in New Zealand. In other words we are treating such people in the same way that we would treat any other business in New Zealand. It is entirely fair and of course we must reject the suggestion of Mr Prebble. 
Mr Nick Smith argued that this so-called greedy Government has seen its tax take go up but he forgot to tell the Committee that in fact tax as a share of GDP has gone down. According to the OECD in the year 2000 tax as a share of GDP was 37.2 percent and in 2002 it was down to 36.3 percent. [ 
Interruption 
] The member has asked about the growth in GDP. It is true that under this Government GDP growth is nearly double that achieved by National when it was in Government throughout the 1990s. So part of the reason why tax as a proportion of GDP has fallen is that the economy has grown so quickly under this Labour-Progressive coalition Government. 
Mr Nick Smith argued that the Government was sitting on a $7.5 billion surplus. That simply does not wash. Kiwis know that whether they are in surplus or in deficit is determined by whether after they collect their pay packets and pay the bills they have got any cash left in their pockets. [ 
Interruption 
] On a cash measure that is right. In 3 of the next 4 years according to the Budget we will be in a cash deficit situation. In 2008 we will face nearly $3 billion of cash deficit. There simply is no pot of gold. For the ladies and gentlemen out there in radioland National is spinning them a line. If National were ever lucky enough to be elected which is looking increasingly unlikely it would spend New Zealand into the kind of oblivion that Rob Muldoon left the country in last time Labour had to rescue it in 1984. 
Nick Smith argued that 80 percent of people prefer National’s tax policy—even though it has not got one. That is the highest number that National members will ever see because when they finally unveil their policy and try to make the numbers add up it will be very very clear that they do not. New Zealanders know a swindle when they see it and they will vote for the Government that has delivered solid growth and fiscal credibility for the last 5 years. 
Gordon Copeland said that Labour does not believe in tax cuts. Well that does not square with the evidence in this year’s Budget because we brought in a nearly $2 billion business tax cut package. I will recall it for members. Fringe benefit tax thresholds were raised provisional tax was eased tax on actively managed funds was erased tax on international migrants and venture capital funds was lowered there was a small-business tax discount in the first year of operation and there were tax cuts in the $3 billion Working for Families package. This Government has already cut taxes. [ 
Interruption 
] 
He asked the key question—and Mr Shane Arden is asking it again—“Why didn’t you just cut rates?” and that is a good question. The answer comes back to the central point of this bill which is that if you just cut rates the benefit would flow— 
Dr Richard Worth 
: I raise a point of order Mr Chairperson. Prior to your assuming your position as Chairperson of the Committee we had a most unpleasant exchange with your predecessor which was all about members bringing the Chair into the argument. In the last minute we have had three instances of gross breach by this very young Minister. If he could just be brought to order we would be grateful. 
The CHAIRPERSON (Hon Clem Simich) 
: Thank you for raising that point. The member is quite right but I did not intend to interrupt the Minister. 
Hon DAVID CUNLIFFE 
: I shall endeavour to speak in the third person. The central question is why we did not just lower the tax rates. There are two key reasons for that. This bill makes clear that certain large banks are foreign-owned and they have kind of forgotten to pay tax—or enough tax—for the last 5 years. If we lowered the tax rates much of the benefit of that would flow straight to the foreign owners. It would not go to the hard-working Kiwi battlers to the panel beater shops to the farmers in Taranaki to my constituents in New Lynn; it would go to the Sydney financial markets like the $360 million of tax that three Aussie banks have forgotten to pay per annum—and this bill is required to fix that. Do I care? You bet I care because that adds up to the loss of an Auckland hospital every year built from scratch because those banks have hired smart accountants and lawyers to cheat the honest people of New Zealand of their hard-earned tax money. 
I say ladies and gentlemen that this bill is sadly necessary. It is moderate. It has even been agreed by the New Zealand Bankers’ Association as a good basis for moving forward. Of course I make no comment about individual taxpayers but I regard it as sad but true—and it goes back to New Zealand First’s point—that although making a profit is an entirely laudable and legitimate thing to do being a good corporate citizen in paying one’s fair share of tax is also a good thing to do. We regret that we have had to clamp down on this kind of corporate behaviour but we make no apology for it. We do it for the sake of children and mums and dads in New Zealand who elect the Government to defend the interests of the little people from the Queen Street lawyers who are paid to enrich big foreign-owned business interests. 
Hon RICHARD PREBBLE (ACT) 
: 
 Before I get on to the populist nonsense that the Associate Minister of Revenue put forward let me just go to a technical point. He suggested that what I had said about clause 110 is wrong. What is a way of settling that? Well KPMG which is one of the world’s largest accounting firms said this about clause 110: “If clause 110 is enacted non-resident businesses engaged solely in taxable activities outside New Zealand may at the commissioner’s discretion have their GST cancelled. The effect of this would place New Zealand at a disadvantage in attracting non-resident businesses as non-residents would be treated less favourably. … The unilateral and retrospective cancellation gives potential for significant losses.” I say to the Minister that that is an arbitrary use of power. I suspect this is the first time he has ever looked at clause 110. 
Then the Minister came up with an argument that makes me take back everything I said about the New Zealand First MP—compared with the Minister he is highly mature. The Minister told us that we cannot have a cut in tax rates because if we did so an overseas firm would be paying less tax. I say to the Minister that that may well be so but his attitude also means that every New Zealander has to pay more tax just because this Minister is concerned that some overseas taxpayers will pay less. What a load of nonsense! That is exactly what the Minister said. Members can look at his  
Hansard 
. 
If the Minister wants to know why he will be in Opposition—because I do not think he will lose New Lynn—within the next 3 months it is because the Labour Government for ideological reasons refused at Budget time to make a cut in tax rates that all New Zealanders thought was reasonable. He can try to tell us that the books are cooked and that it is not really a $7 billion surplus. Good luck to him. I say to him that every New Zealander knows that this Government has been collecting record tax receipts and that the average New Zealander—the person who pays tax—according to Treasury is now in no better financial position after tax than he or she was 5 years ago. The country is more prosperous the Government is much much more prosperous but not the people paying tax because of the increased amount of tax they pay—and people are paying more tax because inflation has put them in higher tax rates. In spite of the Minister’s promise or the promise made on his behalf that only 5 percent of all New Zealanders were going to pay a 39c tax rate I say to the Minister that now 20 percent of all New Zealanders pay it. Now people are being told that they have to pay 39c in the dollar because if they do notWestpac might get a tax cut. I would like to be on a panel with David Cunliffe debating that during the election campaign to see what the average New Zealander thinks of that particular argument. 
But let me make it quite clear to the Government the real reason the 38000 reasons that Dr Cullen feels he cannot cut tax—apart from his ideological belief in tax. He has increased the number of civil servants and bureaucrats in New Zealand by 38000. He has a paper from Treasury which has a lot of experience in how much it costs to employ civil servants which states that as a result of that the Minister will be in deficit within the next 3 years. That is because the cost of employing those 38000 people includes of course not just their salaries but also their accommodation and the like. 
The interesting thing about employing civil servants is that they actually cost more every year. Why is that? Well out of that 38000 about 1000 will probably bring a personal grievance case against the Government next year. Another number will be pregnant. Another number will actually do some work—they will produce some papers—and then the Government will have to hire some consultants to look at the work that is being done. Every year they cost more and more money and Treasury which has a great deal of experience in these matters has told Dr Cullen that he will be in deficit as a result of the 38000 extra civil servants. 
They are not actually producing any more hospital operations—there are more bureaucrats more costs but no more hospital operations. We all know that the result of the extra bureaucrats is a scholarship system that is a disaster. They have not resulted in higher educational standards and they have not resulted in the elderly getting better social services—no not a thing. But they have meant that the Labour Government feels completely unable to make any cut in tax rates. 
That is the real reason I tell Mr Cullen; it is not because he is trying to catch the Westpac bank. The reason Dr Cullen cannot make a tax cut is that he has 38000 bureaucrats who are not producing any more hospital operations. 
PHIL HEATLEY (National—Whangarei) 
: 
 My understanding along with the understanding of 3.5 million New Zealanders is that Wellington the Beehive and Dr Cullen are absolutely and utterly awash with cash. Every New Zealander believes that Wellington is absolutely awash with cash. But I have found out from Mr Prebble this evening that Wellington is awash with civil servants as well—in fact with 38000 extra civil servants. It is no surprise that what was not an election issue 3 or 4 months ago is now an election issue—that is the fact that Wellington is awash with cash and it is time for some serious tax cuts. 
Now the Labour Government has put forward this bill and the Budget a month ago made a tremendous offer to New Zealanders which was 67c extra to spend in 3 years’ time. 
Lindsay Tisch 
: How much? 
PHIL HEATLEY 
: It is 67c extra to spend. I can see the galleries clearing; the people up there did not know they had an extra 67c in 3 years’ time. Look—they are off down the road to buy themselves a packet of chewing gum just to celebrate and good for them! National thinks there should be some serious tax cuts on top of the 67c in 3 years’ time because Wellington is awash with cash and every New Zealander knows it. 
I would like to support Nick Smith who was challenged by the tennis player opposite about the number of tax and levy increases over the last 5 years. I have a document that came out in August 2003 and it lists 24 tax and levy increases from Labour which is the party that members will recall promised at the 2002 election there would be no new taxes. That is what it promised back then but there have been 24 tax increases. 
Perhaps members will remember the petrol tax increase—that 4.7c plus GST increase that came along with road-user charges for diesel vehicles. That tax was up 30 percent. The second was petrol tax II which of course we are seeing at the moment. The third was the threatened flatulence tax which at the time was going to be 9c on sheep 54c on cattle and 72c on dairy cattle. Well that one did not come to pass because of political pressure. The fourth was that income tax went from 33 percent to 39 percent. Members will remember that and the Hon Richard Prebble talked about that. Fringe benefit tax went up from 49 percent to 64 percent and trust income tax the sixth increase went up from 19.5 percent to 33 percent. There was an electricity tax and an increase in the tax on alcoholic beverages—from $21 per litre to $38 per litre of alcohol. Members will recall a debate all night on the sherry tax. Dr Cullen decided he would stiff-arm the elderly; they could not go to bed with a sherry because he whacked the tax up from $21 to $38 per litre of alcohol. He hit the elderly hard. He believed he was stopping young people from drinking high-alcohol beverages but it was the elderly sitting with their blankets over their knees in front of the heater and watching  
Coronation Street  
who were the ones that suffered. 
Members will recall that the ninth increase was the driver’s licence renewal fee. Its cost went up as did the costs of birth death and marriage certificates. I have never had so many emails on an issue as those from people concerned about the cost of those certificates going up significantly. The ciggy tax increased so that the cost of a packet of cigarettes went from $7 to $8. And there were Accident Compensation Corporation (ACC) levies ACC motor vehicle levies a petrol ACC levy and the resident withholding tax. The 16th was an import fee and the 17th was a Fire Service levy. Households’ and motorists’ levies went up 17.7 percent. A fishing-licence went up 10 percent. 
LINDSAY TISCH (National—Piako) 
: 
 My colleague Phil Heatley who was only halfway through his speech made a very valid point. We should look back over the last few years at the record of a Government that says it is looking after middle New Zealand—that is what the Associate Minister of Revenue said; he said it is looking after hard-working New Zealanders. My colleague to my right Phil Heatley represents the area of Whangarei and what a great electorate MP he is. Up in his area there are so many people who are in business so many people who are enterprising and want a reward for their initiative and what does this Government do? It sticks it to them—absolutely sticks it to them. The Minister says the Government is looking after middle New Zealanders; well I will mention some of the facts my colleague did not get to mention. 
He did not mention the carbon tax. Well the carbon tax has come about because we have ratified the Kyoto Protocol. What does that do? At this stage we do not really know because of the implications of the carbon tax that is being introduced. But we do know that it will affect our international competitiveness. On the world stage it will be difficult for us to compete internationally when two of our most significant trading partners the United States and Australia have decided not to ratify that protocol. That is the first thing but let us look now at what the implications of the carbon tax are. At $15 per tonne of carbon dioxide emissions that tax will be a compliance cost added on to all New Zealanders not just those in business. What does it mean? It means that we will probably see a 4c per litre increase in the price of petrol at the pump over and above the 5.6c per litre increase that we debated in the House about a month ago. Do members remember that one? 
Phil Heatley 
: Yes tax No. 33. 
LINDSAY TISCH 
: Ah there we are—tax No. 33. On top of that we are going to have a 10 percent increase in electricity charges. Well who will be paying that? I tell members that it will be the hard-working New Zealanders the hard-working families. I am telling the Minister and the Government now that that is their death knell because people are not prepared to accept it. The Minister had the audacity to stand up here and say Labour was the party that was going to give tax cuts and that it was the party looking after hard-working New Zealanders. 
Hon David Carter 
: 67c. 
LINDSAY TISCH 
: That is 67c— 
Hon David Carter 
: In 3 years’ time. 
LINDSAY TISCH 
:—in 3 years’ time so I ask Labour members what planet they are on. I tell them that they will be looking for another job shortly. 
Let us look at the Holidays Act. Well for those in business there are increased compliance costs of employing staff in the holidays. I was down in Queenstown at Queen’s Birthday weekend and do members know what was happening on Monday? Businesses were shut. Why were they shut? Because under this Government someone who works on a statutory holiday gets penal rates—that is OK; we used to have penal rates anyway—but on top of that employers have to give a day off in lieu. It is double-dipping. So what are the firms saying? They are saying they cannot afford to pay the costs and they just shut down. Who misses out in that arrangement? I will tell members who misses out: it is the employees—the people whom this Government says it is looking after. They miss out because at the end of the day if the business does not meet the bottom line and make a profit—the Government thinks “profit” is a dirty word—the business cannot reinvest and cannot create jobs. It is as simple as that but Government members would not know that because they have never been in business. They have never invested a dollar never put a dollar at risk. 
So what happens now is the Government introduces costs like the provisions in the Holidays Act concerning statutory leave and relevant daily pay and people abuse the system to get extra money because they are having a holiday. Then we have the open-ended provision for bereavement leave that allows 3 days’ leave for the funeral of a close relative and 1 day’s leave for that of a close associate—open-ended—and we wonder why businesses are saying: “Enough’s enough!”. That is what they are saying and they come to National and tell us to sort it out—and we will sort it out. I tell the Minister that we have a business policy that is attracting the attention of all New Zealanders. 
CRAIG McNAIR (NZ First) 
: 
 In speaking again in the Committee stage I just want to raise a few points that some members have referred to concerning what my colleague Peter Brown and I have said on the issues raised in this bill. 
First of all I say to Mr Copeland who said that he had never heard New Zealand First advocate a tax reduction that for a long time even since before the last election New Zealand First has constantly talked about tax reductions. That has been in our policy for many years and we have talked about it in exactly the way Peter Brown talked about it in his speech. New Zealand First believes that once we prioritise our economic and social spending we should look at a reduction in tax. That is what Mr Brown said and we stand by that statement. Our policy even states: “following the achievement of intermediate growth goals and focused social expenditure aim to reduce personal income tax levels;”. That is pretty simple and clear and we stand by it. 
Marc Alexander 
: You are down to one finger now. 
CRAIG McNAIR 
: Well it is all right for “Mr 2 Percent” over there to be talking about a one-finger campaign but the fact is we are campaigning on the right issues and the people of New Zealand seem to be happy with the direction we are going in. 
Lindsay Tisch 
: I raise a point of order Mr Chairperson. The member cannot refer to somebody as “Mr 2 Percent”. The member must refer to other members by their full name but in his speech the member called the member from United Future “Mr 2 Percent”. I do not know of any member in the Chamber whose name is “Mr 2 Percent”. I think the member should stand withdraw that comment and apologise to the member. 
The CHAIRPERSON (Hon Clem Simich) 
: Thank you for raising that. All members know that if they are referring to any other member in this Chamber they are to use the member’s full name and if a member is referring to a party the member is to refer to it correctly. But the member may not have been referring to anyone at all. 
CRAIG McNAIR 
: Our other policy concerning taxation is: “Upon achieving short term growth goals aim to reduce corporate taxation beginning with a 20% tax rate for ‘new exports’ net income;”. So the question that I come to as far as this taxation bill is concerned is where is the vision in this bill. I ask where the vision is for this Government to be taking our country down the track of high expenditure with the growing numbers of civil servants increasing the State sector by 38000—as was just commented on. Where is this Government’s vision as far as taxation is concerned? As Mr Tisch has just said it is 67c in 3 years. We in New Zealand First say that is a stick of gum in 3 years. 
Another issue that I want to speak about briefly is what the Associate Minister of Revenue was saying—rightly so—just a few moments ago about banks paying the appropriate amount of tax. He was very passionate on that issue. I am glad to see that he was passionate on that issue but New Zealand First is asking why the Government was not passionate on that issue 7 or 8 years ago when we started raising it. The fact is we are approaching an election and it just seems too coincidental that this Government is bringing this bill in under urgency in this way. We say it is incredibly ironic and the fact is New Zealand First has been passionate about this issue for the last 7 or 8 years. The Minister was very passionate on the issue and I was very impressed with how passionate he was but the fact is the Government has berated New Zealand First for many many years while we year in year out and month in month out have spoken against banks doing that. 
We have suggested different ways that we can stop those banks wriggling their way out of paying their taxes. I remember talking to an official when we were going through this bill. I asked him whether he thought that this bill would be it and that the banks would put their hands up in surrender and say: “OK we’ll just start paying the appropriate amount of tax.” He said they would try to find new ways to avoid paying tax. 
MARC ALEXANDER (United Future) 
: 
 I raise a point of order Mr Chairperson. I just wonder whether a copy of the speech made by the member who has just sat down will be made available for purchase later. It was absolutely riveting stuff. It had the crowds in the rafters jumping up and down—stunning! 
The CHAIRPERSON (Hon Clem Simich) 
: That is not a point of order. I am going to call someone who may just by chance speak to the bill. 
Hon DAVID CARTER (National) 
: 
 Mr Chairperson I am pleased you have allowed me to take a call because I want to focus on the seriousness of this bill. I want to focus on the tax bill before the Committee tonight. 
Today I have had the privilege of actually being amongst real people at the Fieldays at Hamilton. Thousands of people were there and I was very interested to see that Dr Cullen and Helen Clark had made another significantly tactical error by having Helen Clark there to open the Fieldays. She was in the main arena at around 12 noon today and she had assembled about 20 loyal Labour Party supporters and perhaps 100 passers-by. Helen Clark had the audacity to say at the opening that agriculture was the backbone of the economy—and everybody laughed! Everybody laughed because the people who were there had been talking to me about tax. The issue on everybody’s lips at the Fieldays was tax. New Zealanders know they are grossly overtaxed. 
We have had Dr Cullen trying to control the argument for many months now by saying that New Zealanders are not grossly overtaxed yet he had the audacity and arrogance to come into the House and actually recognise that New Zealanders are overtaxed and to say that they needed a tax break. “Yep they need a tax break.” said Dr Cullen. The Labour caucus had been briefed at 1 o’clock that day. Labour members had nodded their heads and said: “Dr Cullen you are on the right track. Go in there and offer them a tax cut. Go in there and offer them 67c a week.” But there was a proviso. 
Lindsay Tisch 
: What was that? 
Hon DAVID CARTER 
: People have to hang around for 3 years before they get their 67c. Phil Heatley’s contribution when he wisely advised New Zealanders listening tonight not to spend their 67c all in one go was important. Tax is an issue at this election and tax is an issue because Labour has created it as an issue. It has grossly overtaxed New Zealanders. Phil Heatley mentioned 24 new taxes— 
Shane Ardern 
: It’s 33! 
Hon DAVID CARTER 
: My point exactly—it was an old newsletter. Phil Heatley has been busy producing newsletters for a long period of time busy trying to keep up with the rate at which the Government keeps imposing new taxes. The figure now is over 30 new taxes and everybody down at the Westpac Stadium tonight watching that game had one thing on his or her lips. 
Lindsay Tisch 
: What was that? 
Hon DAVID CARTER 
: It was not the British and Irish Lions and it was not Wellington; it was tax. People know they have been overtaxed and ripped off by this Labour Government for 6 long years and even Dr Cullen notices it—even Dr Cullen acknowledges it. He comes in here and audaciously stupidly and arrogantly says: “You guys have been pretty good. You’ve paid your taxes. You deserve a tax break so if you hang around for 3 years we’ll give you 67c a week.” That is the issue at this election. We are debating this tax legislation today but that is what people will focus on at the next election. They know that the Government has created a huge surplus of $7 billion. It is not a Government surplus; it is surplus taxpayer funds that have been collected over the last few years. It is money that the Government has collected and now is wastefully spending. That is what New Zealanders are focusing on. So I tell Dr Cullen as we debate yet another tax bill that he has created the environment for this election. 
Mr Cunliffe is sitting in the chair and has not taken a call while I have been in the Chamber. 
Hon Member 
: Yes he has. 
Hon DAVID CARTER 
: Not while I have been in the Chamber. He knows that he is beaten. He hangs his head dejectedly knowing that he listened patiently to Dr Cullen who normally delivers but after that Budget he is trying to justify the generosity of giving people 67c—provided people wait 3 years; we have to add that proviso. It is no wonder that 700 New Zealanders who went out of Auckland International Airport last week ticked Australia as their permanent place of residence now. The Australian Government managed to deliver substantial tax cuts. The Australians do not have to wait 3 years for 67c. That Government knows the importance of delivering tax cuts to an overtaxed country. 
KENNETH WANG (ACT) 
: 
 It is very very frustrating for us constantly debating this taxation bill. To me it is all about money-grubbing and money spending. 
I would like to draw attention to the fact that this House has been sitting under urgency since yesterday and before that we debated the Appropriation (2004/05 Supplementary Estimates) Bill. That bill has been debated and is in the past. But what was it about? It was all about giving legitimacy to this Government grabbing more and extravagantly spending more. This bill is another example of this Government grabbing even more. We say that if we had adopted a lower flat tax rate in the first place as the ACT party has suggested—25c in the dollar—there would be no need to sit here until midnight debating this bill and wasting taxpayers’ money. 
I would like to draw attention to the fact that before Michael Cullen’s 2005 Budget speech the public had already spoken. The  
National Business Review  
survey at the end of April this year showed that 63 percent of New Zealanders were looking for lower tax rates. They expected our Government to deliver. They expected our Government to listen. Unfortunately we have a very arrogant Labour Government that did not listen. 
I would like to comment on the Minister’s statement that if we had a lower tax rate it would benefit only those who are rich the corporates and foreign owners who would grab our money and directly transfer it overseas overnight. But I would like to draw attention to the basic knowledge that in this country over 90 percent of businesses are small businesses. Those small-business owners have spoken. One needs only to look at the opinion polls. Business confidence has plunged to a 70-year low. Why? Do members think they are foolish or dumb? Of course one cannot say that; one would not dare to say that. But why does the Government still insist on a high tax rate? Is the Government going to label them all as rich or foreign-owned corporates or crooks? Of course the Minister is shaking his head. 
I know that the reason for this Government taxing all and taxing more is only that it wants to spend more. Of course there are 38000 more civil servants. Under this Government that is not a big figure. It expects to spend more. It wants to spend more on things like the hip-hop tour and the wananga institutions. 
Every New Zealand family has also spoken out. Even Michael Cullen admitted earlier this year that the average New Zealand family’s income in real terms is no better off than it was 6 years’ ago. Those Labour members should not shake their heads; they should just look at the real figures. Those members can say: “We have a great plan—the Working for Families package.” but the Government is not a machine to produce wealth. Where does the money come from? Tax and more tax. This Government knows how to do that very very well. It should just remember where that revenue came from. It came from hard-working New Zealanders. It came from the 90 percent of business owners such as dairy owners electricians and plumbers. 
Hon PAUL SWAIN (Minister of Labour) 
: 
 I move  
That the question be now put 
. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 First of all I congratulate the Hon David Cunliffe the member for New Lynn on taking a call before—a very passionate call. What that young new Minister’s call demonstrated overwhelmingly was two things. One is that there is no substitute for experience and the other is that David Cunliffe does not have any—he absolutely does not have any. I just say to that member that it was interesting to listen to him stand up and justify the Government’s position by saying that the way to defend poor hard-working “Joe Hard-worker” out there—a traditional Labour supporter—is to layer another tier of bureaucratic nonsense on top of him and employ another pile of bureaucrats to add to the now 38000 new bureaucrats and civil servants that this Government has employed. Somehow that will protect people. 
But what “Joe Hard-worker” will tell Mr Cunliffe when he goes back to New Lynn is that people have been told and have read that in this country we have had strong growth over the last 6 years. They have been told and they have read that the Government—the Minister the Hon David Cunliffe and his Government colleagues—have a surplus like none other. They have been told that. Yet those hard-working small business people or other hard-working New Zealanders have never had it so hard. They are struggling. They cannot pay the school fees cannot pay to get the 10-year-old Japanese import through the next warrant of fitness and are struggling to meet their mortgage payments so this Government is not working for them. The Minister will learn that when he goes back to his electorate in the election campaign that is coming up. 
The reason for that is very simple: this Government simply has its hands too deep in the taxpayer’s pocket. There are 34 new taxes. I congratulate my colleague from Whangarei on his newsletter which is now well out of date. It shows 24 new taxes and is a very important document. In fact we may table it at the end of this debate just to bring the Government up to speed with what it is doing. By the time that newsletter was off the print another 10 new taxes had been added. This Government has introduced 30-odd new taxes. That is the reason why the good folk of New Lynn will tell the Minister when he goes back there that he is just too tough on them. And he is not delivering the services he promised either. He said and they believed him that if they paid a little more tax—were a bit more generous and gave a few more dollars—the Government would fix the health and education system. 
Well what have people got? Three billion dollars more are going into health but there are fewer operations. A whole pile more money will go into various educational courses but with less end results there. We have 1200 more bureaucrats in the education system alone. I have before me something quite interesting. I have a document with a photo of a person who looks very similar to the Prime Minister. I am not sure whether it is her but it states: “My commitments … [are] No rise in income tax for the 95 per cent of taxpayers earning under $60000 year. No increase in GST or company tax.” Where does one go from there? The fact is that a huge number of the people who believed in that commitment have been let down. That is a broken promise like none other we have seen in the history of New Zealand. 
When we look at the legislation that we are debating tonight we see a complex list of regulations to try to stop some foreign banks from using the taxation system which has been designed by that Minister to avoid paying their fair share of tax. No one will have too much sympathy for the banks that do that and I accept the proposal the Minister has put forward in that regard. But here is a simple question for the Minister which he did not answer and on which there is overwhelming evidence: if he were to lower the tax rate and flatten the tax rate would those banks go to the effort that they do now to avoid paying that tax and would this regulation be necessary? The evidence in this country if one goes back through history is overwhelmingly that no they would not make the investment they do in terms of employing high-powered tax consultants lawyers and accountants to get around the New Zealand system. The banks just would not bother; it would be cheaper to pay the tax. 
JILL PETTIS (Senior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 378 in the name of the Hon Dr Michael Cullen to clause 2 be agreed to. 
Amendments agreed to. 
The question was put that the following amendment in the name of the Hon Dr Michael Cullen to clause 2 be agreed to: 
to omit from subclause (9) the expression “75C”. 
Amendment agreed to and clause 1 agreed to. 
Clause 2 agreed to. 
Schedulesagreed to. 
The Committee divided the bill into the Taxation (Base Maintenance and Miscellaneous Provisions) Bill and the Privacy Amendment Bill (No 3)  
divided into Taxation (Base Maintenance and Miscellaneous Provisions) Bill Privacy Amendment Bill (No 3)  
pursuant to Supplementary Order Paper379. 
Bill reported with amendment. 
Report adopted. 
Taxation (Base Maintenance  and Miscellaneous Provisions) Bill 
Privacy Amendment Bill (No 3) 
Third Readings 
Hon DAVID CUNLIFFE (Associate Minister of Revenue) 
 on behalf of the 
 Minister of Revenue 
: I move  
That the Taxation (Base Maintenance and Miscellaneous Provisions) Bill and the Privacy Amendment Bill (No 3) be now read a third time 
. 
The central feature of the Taxation (Base Maintenance and Miscellaneous Provisions Bill is the introduction of important reforms designed to ensure that foreign-owned banks operating in New Zealand pay sufficient tax on their New Zealand incomes. Specifically the bill strengthens the thin capitalisation rules to ensure that the income of banks cannot be sheltered by interest deductions arising from excessive debt. Banks must have enough capital in New Zealand on which no interest is deductible to fully fund their overseas investments. The new measures will result in the more efficient operation of thin capitalisation rules in New Zealand while giving greater protection to the New Zealand revenue base. This bill is around 170 pages long. Every year from foreign banks alone it will therefore protect about $2 million of revenue per page. 
In keeping with the Government’s commitment to the business sector the bill also introduces a number of business-friendly measures including a number of technical changes to the tax depreciation rules to improve their operation and reduce compliance costs. These include broadening the rules on tax deductibility for business environmental expenditure such as the costs of preventing remedying or mitigating the discharge of contaminants. The bill will allow those costs like other business costs to be taken into account for business purposes. The other measures in the bill aim to improve the operation of tax law. Of interest to tax professionals and in particular chartered accountants is the introduction of new measures to give greater clarity to the operation of a statutory privilege for those in the business of providing tax advice. 
Finally as a result of this legislation a consequential amendment makes a change in a cross reference contained in the Privacy Act. 
Having reached the third reading this legislation is the result of a long process involving the work and input of many. It includes the submissions on the proposed legislation made by interested parties the dedicated work of officials who supported the bill during its development and passage and the detailed analysis carried out by the Finance and Expenditure Committee. I am grateful to all of those involved in bringing the bills to their third reading and I now commend the bills to the House. 
PANSY WONG (National) 
: 
 What a sad speech that was from a dejected Minister. When the public is listening to this debate they will contrast that with the passionate debates that were championed by my National colleagues. My colleagues are very confident and happy because they are speaking on behalf of the New Zealand public. They know that this legislation is the last technical complicated legislation that will be brought in front of the House by this minority Labour Government. This will be the last time because when National takes the Treasury benches we will make sure that both the company tax and the personal tax rates will be lower. 
 That will negate the need for the countless pieces of complex tax legislation that this House has to debate. 
I was reflecting on some of the Labour members who actually bothered to take calls during the second reading debate and the Committee stage. The Hon Harry Duynhoven actually tried to convince New Zealanders that they have not paid enough tax. So I hate to think what else this Labour Government has in mind for hard-working New Zealanders in terms of taking money off them. As United Future has rightly observed Labour is the only party left in this House that does not believe in lowering taxation. The problem with regard to Labour refusing to register the importance of lower tax a complication caused by the different rates for personal tax and company tax and by high taxation is that that leads to tax compliance costs for individuals. As an accountant I can imagine my colleagues the chartered accountants and the tax lawyers. They are the ones who benefit from that situation. I wonder whether the Minister has looked at the number of tax consultants from large accounting firms who come in front of the Finance and Expenditure Committee month in and month out to debate and to make submissions on behalf of their clients. My accounting colleagues have told me they do not actually enjoy tax minimisation work. They would rather expand their management work in their consultancy companies. It is a lot more satisfying than tax consultancy because they can actually assist their clients to expand their businesses rather spending so much time on investigating means to minimise taxation. 
One of the most high-profile issues contained in this legislation is to do with the thin capitalisation rule. I understand that the Inland Revenue Department has carried out separate consultation with the foreign-owned banks and we accept the measures that will be introduced to counteract the very innovative way in which those banks try to minimise their tax payments. But the Minister has refused my invitation to take a call and explain why on the one hand the Labour Government has introduced the thin capitalisation rule to ensure that foreign-owned banks will pay their share of tax while on the other hand nobody is prepared to share with the New Zealand public information on the sort of arrangement Transpower has entered into. Is it an arrangement to minimise tax in New Zealand or to minimise tax overseas? Where is the ethic of a Government that introduces legislation to ensure that foreign banks pay their tax but that will not tell the New Zealand public whether Transpower’s deal disadvantages New Zealand taxpayers? The Minister of Finance the Hon Michael Cullen says the public will simply have to take his word for it. Well I am afraid that the public no longer takes the word of Labour Ministers seriously because we have learnt from past experiences that they sometimes stretch the truth rather far. I think Labour members still have calls available and I hope that one of them will stand up and share with the public the truth behind the Transpower deal. 
I also want to share with the public a piece of information I obtained from the Inland Revenue Department. All my fellow National MPs have raised the issue that even a Labour Minister believes that the New Zealand public is entitled to some tax relief and that the Hon Michael Cullen has proposed a tax cut of 67c a week in 3 years’ time. I have asked the Inland Revenue Department how much work is involved in changing the tax thresholds. The department told the Finance and Expenditure Committee that to adjust the tax thresholds takes only 3 months but that to cater for changes in relation to provisional taxpayers takes about 10 months. So if this Labour Government is serious it should at least show some remorse for overtaxing New Zealanders for the last 6 years by bringing forward the date of that very miniscule tax relief for the majority of New Zealanders. But I imagine that could be too much to hope for. 
My colleague Dr Nick Smith has raised another excellent point about the legislation we are debating tonight. He was asking why people who have applied for resource consent and whose applications either fail or are withdrawn should be grateful for a tax deduction at all. Most individuals who engage in activities would rather that their projects get the green light to go ahead. To have a tax deduction for a very lengthy and drawn-out resource consent process is no consolation prize for them. 
It was because of the refusal of the Labour Government to acknowledge that New Zealanders deserve to pay less tax that we have had the Inland Revenue Department admit it has to set aside $3.2 million to set up a small-business unit to explain to small and medium sized businesses what their tax obligations are. How does that action square off with the continued promises and claims made by Labour members that they are serious about reducing compliance costs for small and medium sized businesses? All that such businesses want to do is to get on and expand. Why should they be grateful for a so-called subsidy to prepare their PAYE and all sorts of other source deductions? The Government has long used businesses as its tax agents and I think that most small and medium sized businesses would prefer this Labour Government to simply lower the whole range of tax to avoid them having to apply for subsidies to fulfil the tax compliance procedures. 
GORDON COPELAND (United Future) 
: 
 During the Committee stage of the original Taxation (Base Maintenance and Miscellaneous Provisions) Bill the Minister in the chair David Cunliffe took the call and challenged with some determination the statement he claimed I had made that the Labour Government had not reduced taxes. I say to the Minister—and I conceded this in my second reading speech—that there are some aspects to this legislation that will reduce the quantum of tax for some taxpayers but I put squarely to him that the net effect of this legislation is several hundred million dollars more of tax for the Government. The net effect of this legislation is not any reduction at all in tax for New Zealanders. We are to collect $360 million more under this legislation from the banks alone. 
When I think of the figure of $360 million it has a kind of familiar ring to it. One of the other members recognised straight away that 360 million bucks is exactly the amount of revenue the Government intends to return to New Zealand taxpayers on 1 April 2008 by adjusting the tax brackets by 6.12 percent—an adjustment that Dr Cullen says we could not afford until then. But in the legislation that we are to pass into law tonight we will collect 360 million bucks from the banks themselves. So where is the problem? Why is the Minister of Finance about the only person in New Zealand who does not realise that it is time for tax cuts and that we can afford them? It reminds me of the famous grandmother who watched all the troops marching past and said: “Isn’t it a shame? The only person marching in step is my grandson.” It is that kind of myopic vision. 
Also when the Minister David Cunliffe tried to claim that somehow or other this legislation was going to reduce taxes my mind went to an instance in this House a little while ago when the newest member of the House ACT member Kenneth Wang in his first question to the Minister of Finance asked him how many increases in tax he had undertaken since he had become the Minister in late 1999. The Minister responded that the figure was nine. The honourable Phil Heatley told the House tonight that it was actually somewhere between 24 and 32; as Phil Heatley is an honourable member I accept his word in that regard. Then in a supplementary question to the Minister Kenneth Wang asked how many rates of tax he had reduced since he had become Minister and there was a deafening silence from the Minister. I think that all of us in the House were just amazed that Kenneth Wang whether by luck or by skill had actually caught the Minister on the hop completely. That is the memory that New Zealanders will take into this year’s elections. 
Let us unbundle the logic of another comment that the Minister in the chair tried to make in the Committee stage. He said that if we reduced the company tax rate a considerable benefit arising from that would go to overseas investors in New Zealand companies. That is exactly the point. If we want to attract new investment into this country then we need to have a competitive corporate tax rate. We heard from the Hon Richard Prebble that in some Eastern European countries those rates are down to 16 percent. 
Hon Richard Prebble 
: Russia’s down to 12. 
GORDON COPELAND 
: Russia’s is down to 12 percent. Ireland has had a very very low rate; I am not sure where it is now—I think it may have gone up a bit—but it was down to about 12 percent at one stage too. That is the whole point. 
There is a kind of—and I hate to use the word—inconsistency a logical inconsistency in that two bills down from this legislation in the urgency motion is the Overseas Investment Bill. With that bill the Government wants to encourage overseas investment in New Zealand. How does that square with it wanting to do exactly the opposite when it comes to the corporate tax rate? 
I want to reinforce also a point made by again Kenneth Wang—that is the great majority of companies in this country actually employ five or fewer people. As he said about 97 percent of them employ fewer than 20 people. We are talking about tax relief for all those companies so why do we get fixated about a little bit of leakage going offshore when the money potentially coming back the other way would be far greater? Even the leader of the Progressive Party recognises that reality. Even his party is saying that the corporate tax rate should come down to 30c in the dollar. In a way I think we relish taking this issue into this year’s election. 
I want to add just one other piece of information. Pansy Wong said she had a new piece of information. I have a new piece of information for the House as well. Today at the Finance and Expenditure Committee meeting John Key asked Dr Cullen whether he might have second thoughts about waiting until 2008 for the 6.12 percent adjustment to the tax brackets. I thought I knew where John Key was coming from—that he was thinking to himself that a couple of weeks from the election date Dr Cullen might suddenly say to the nation: “Hey guys I got it wrong and yep we’ll do it after all and we’ll do it from maybe 1 April 2006.” But no he got a categorical response from Dr Michael Cullen: “No I am not going to change. You’re going to have to wait until 2008.” So there it is. It is on the record. It is straight. It is clear. If nothing else New Zealand voters will have some pretty clear choices to make in this year’s election. 
Hon RICHARD PREBBLE (ACT) 
: 
 I rise to speak to the third reading of the Taxation (Base Maintenance and Miscellaneous Provisions) Bill. It was agreed that we would take the legislation as one question. The Associate Minister of Revenue Mr Cunliffe was rash enough to decide to get up and make—I guess I have to say in fairness—a vigorous defence of the Budget and the decision of the Government not to grant tax relief. That resulted in a wide-ranging debate—which actually had been agreed to. Mr Cunliffe must have realised the position from the reception he got. For example I have just listened to the speech made by Mr Copeland whose party normally supports Labour. Mr Copeland in his gentlemanlike way completely lacerated the Government’s position. 
Mr Cunliffe wants us to believe that the Government does not have a $7 billion surplus. Of course to believe that one has to believe that the Auditor-General who signed off the Government’s accounts got it wrong; that Treasury which is required by law to state whether the Government’s accounts are correct actually got it all wrong; and that there is no $7 billion surplus. I just say to the Government that it has no chance at all of putting across that line. It is nonsense. The $7 billion surplus most certainly does exist and there is the ability to have tax cuts. 
The reason the Government is in trouble is that even someone such as the President of the Labour Party Mike Williams could not believe that the Government would not adjust the tax rates. The whole country expected adjustments because inflation has happened and because one of the promises that Labour was elected to Government on—I have a copy of the promise somewhere if it has forgotten it—was that no more than 5 percent of the population would have an increase in income tax but of course 20 percent of people in the workforce are now paying the 39c tax rate. The answers Dr Cullen gave in the House—apparently Mr Cunliffe was not listening because he denied that those answers were given—show that people in New Zealand on average incomes after tax are no better off today than they were 6 years ago. 
Of course that does not apply to the Government. The Government is much better off. It has been collecting revenue. As Kenneth Wang speaking on behalf of the ACT party pointed out this tax revenue has not come from a few overseas companies because although those overseas companies may pay some tax the vast bulk of tax in New Zealand is paid by average New Zealanders. 
 In the case of New Zealand companies 97 percent employ fewer than 20 people and I think about 97 percent of them are New Zealand - owned. The Associate Minister got up and said that the Government could not give a tax cut because it would help overseas companies and the banks but that argument just will not wash with the average small-business man. The reason why someone like Kenneth Wang is so upset about it is that he is a small-business man. He knows that it is companies like his that are paying the extra tax just as the average New Zealander knows how much money he or she has left. 
I believe that tax is going to be the big election issue. I have no difficulty in believing Mr Carter who told members that when he was at the Fieldays today the issue that people wanted to talk about was tax. That has been my experience. 
I know what has happened to the Labour Government. It has looked at the polls and found that the polls say—and they still say—that 66 percent of people would pay more tax in return for a better health system. Well I come from the ACT party I believe in low tax but even I would pay more tax to have a better health system. But I just know that if I paid more tax I would not get a better health system. If we relook at those polls we also see that the other 30 percent of people who do not say they would be prepared to vote for more tax know that they would be the people who would pay it. Most of the people who answer yes to that question do not think they personally would have to pay the increase. When we put the question a different way as the  
National Business Review  
did—which again Kenneth Wang pointed out—before the Budget and I do not know why Dr Cullen did not notice it we see that two-thirds of all New Zealanders now think they are paying too much tax. 
I suspect that that figure has now gone up further. The result of the silly decision made by the Government to give the price of a packet of chewing gum in 3 years’ time in tax relief has caused everyone in New Zealand to look at the question and to realise that there has been inflation over the last 6 years and that the Government has not adjusted the tax rates. We also know that the Government across the Tasman both before the election and now after the election has dramatically adjusted tax thresholds for inflation. As we live in a global world we are aware of that fact. 
Of course we then have to ask why the Government is not prepared to adjust the tax rates. There are two reasons. The first is an ideological one. Dr Cullen firmly believes that he can spend our money better than we can. That is his view. So he is in favour of higher tax. If it were up to him I think he would lift it even further. That is the arrogance of a socialist. 
But the second reason is that we all know that Treasury has told him that the effect of the Labour Government employing 38000 extra bureaucrats over the last 5 years will blow out even the massive $7 billion surplus. That is because—and it is a well-established fact—when any one employs an extra person there are also extra costs in overheads but when an extra civil servant is employed his or her costs go up every year. The reason is that civil servants generate more costs. They produce new ideas and the Government then has to go out and hire consultants to find out whether those ideas are any good. 
I will use a parliamentary example which we all would have seen. We now have the Parliamentary Service Commission. The position I am in is that I find that about every 3 years somebody from the commission comes into my office and tells me that my desk which I thought was perfectly adequate has to go because a new Occupational Safety and Health Service study says it is not ergonomically efficient. The whole civil service is like that. It is always coming up with these things. When we pass these regulations most small businesses ignore them but not the civil service—it applies them! There is a huge cost in putting in new furniture putting in no-smoking areas training people to use non-sexist language training people how to be sensitive to Maori or whatever the latest cause is and the cost goes up every year. Imagine that there are 38000 new civil servants all of whom have to be taught about non-sexist language about bicultural New Zealand or about whatever the latest thing the civil service is into! Of course it is going to cost $7 billion! That is why Dr Cullen and a socialist Government cannot reduce tax. But of course an ACT party in Government could because we are not politically correct for a start. 
I point out a further reason. Let us take the Ministry of Health: with all its extra bureaucrats there are no extra operations—not one. If we asked the public whether they wanted more Ministry of Health bureaucrats all well trained in biculturalism and non-sexist language or whether they wanted granny to have her hip operation the answer would be that they wanted granny to have her hip operation. 
So if a Government were prepared to put a control on Government expenditure we could have very substantial tax cuts. The ACT party says we could go immediately to a low flat rate of tax. Where is the relevance of that to this legislation? The original bill was 170 pages long. With a low flat tax it would not be necessary. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 That was an interesting contribution from Richard Prebble. I am not sure whether I could decipher what was true and what was a figment of his imagination. I take it that the 38000 new bureaucrats is a reasonably accurate figure. I think that illustrates the concerns New Zealand First has with this Labour-led Government propped up by the “Poodle Party” of United Future. 
I want to take this opportunity to again make New Zealand First’s position clear when it comes to tax. We support a fresh look at— 
Dr Richard Worth 
: Do you support National? 
PETER BROWN 
: I will come to National in very short order. I think that when I get to it the member will be hanging his head in shame. 
New Zealand First would like to see taxation eased for New Zealanders but we do recognise that most law-abiding New Zealanders want greater resources given to the police. That will cost money. Most New Zealanders so they tell us want students to have a universal living allowance and we support that. Most New Zealanders— 
Dr Richard Worth 
: Very expensive. 
PETER BROWN 
: It is an expensive exercise. The member is clearly thinking. Most New Zealanders with the exception of members of the Green Party want more investment into roading—far more than that Government is doing at the moment. Most New Zealanders by a significant majority want an improved health system. We have an ageing population and New Zealanders want and need greater financial investment in that sector. I take issue with the Hon Richard Prebble who said that if we put more money into the health system it would not improve. That is far from the truth. Other countries have invested in the health system to a greater degree in proportion to GDP. This Government puts about 6.1 percent of GDP into our health system but that is too low. We believe that it should be increased on a gradual basis to something like 9.5 or 10 percent including the investment from the private health sector which is in the vicinity of about 1.9 percent. 
We would like to see incentives for new exporters. We believe that we have to add to our export base by encouraging exporters to get involved and a tax incentive would go a long way to achieving that. 
 In this volatile world we believe we have to put more investment into our defence forces. We have to put more investment into our railway and more I suggest into our shipping—not by direct investment but by way of creating a favourable tax regime for encouraging our ship owners and ship operators to get more involved in the industry. Currently there is not one single ship running overseas and that for an island nation tucked down at the bottom of the world is a disgrace. 
Labour spoke about rather than introduced its new tax thresholds—it did not introduce anything in this Budget in terms of thresholds. I think it created more enemies than it made friends. I met a number of people who were prior to Budget day absolutely devoted Labourites—that is the only way I can explain them—and they felt insulted to know that they will wait for 3 years until 2008 when they will get the grand total of 67c a week extra even though the Minister of Finance will pay each and every one of us in Parliament something in excess of $10 extra per week. 
I want to touch on the banking industry for a moment. I take up what Gordon Copeland said because I agreed with him when he said that all we want in this country is for banks to pay their fair share of tax. We want nothing more and nothing less. Currently as I understand it a court action is being taken because it is deemed that they are paying a good deal less. 
Nobody in New Zealand First has said anything about not wanting banks to make a profit. We would like them to be owned by New Zealanders or by New Zealand companies. They are not and we see that as a sad fact of life. We want them to make a profit and we want them to pay their fair share of tax. I make that quite clear. 
New Zealand First believes in tax cuts. This legislation does not deliver on that but it changes the structure in a way that is encouraging and for that reason New Zealand First supports it. We see tax cuts as something at the end of the line after we have delivered on the social good. We believe that the Government’s Working for Families package is a tax cut. It is a targeted tax cut for the low or relatively low paid. It might well spread higher up the chain but basically it is a targeted tax cut for the low paid. New Zealand First supported the legislation when it went through the House just after last year’s Budget and we are pleased with the feedback we are hearing on how it has been delivered thus far. 
One of the urgent things we believe should be done is to put more money into roading. I am pleased that the National Party has taken our suggestion on board of diverting the petrol tax into the roading account. There was a time when that party was totally opposed to it. We started a process in 1998 of diverting 2.1c per litre of petrol into the roading account which if my memory serves me correctly was about $70 million. Had that continued every year with no growth in petrol sales and fuel consumption remaining about the same—in other words 2.1c equalling the same value—at this point in time there would have been something like $2.7 billion put into roading. 
The National Party when New Zealand First and National had a parting of the ways which is putting it politely stopped all that although that is not so according to Don Brash. He blamed Labour in his speech to the Automobile Association convention. He said Labour came in and stopped it. It actually stopped in the 1999 Budget which was delivered by Bill Birch. At the same time behind the scenes in 1998 when we implemented it Bill Birch was telling Winston Peters in particular but it was well known to the rest of us in the New Zealand First caucus that he would not have a bar of transferring that money across. “Over his dead body” I think was the term. So it was definitely a New Zealand First initiative. 
I ask the National Party now it has taken the idea on board and indeed is promoting it how many lives have been lost because that money has not been injected into roading. How much better off would the country be economically and socially if that money had been diverted across as New Zealand First advocated? I know that this legislation has nothing to do with roading or petrol tax or anything like that. But since this Government has come into power it has upped the price of petrol on at least two possibly three occasions by way of taxation increases. All of them to our mind have been unnecessary and they have all been an additional cost to the average New Zealander which was totally unwarranted. 
New Zealand First supports this legislation but we believe that taxation in this country has to be looked at freshly and reviewed positively. We believe in essence that tax should be fair reasonable and encouraging. This legislation is a move in that direction. 
LINDSAY TISCH (National—Piako) 
: 
 National speakers have crystallised and articulated the argument about taxation. Taxation will be an election issue. What the Budget did was an absolute insult to hard-working New Zealanders. We support the Taxation (Base Maintenance and Miscellaneous Provisions) Bill because there are some issues in it that are of merit but the hard-working New Zealanders who expected some tax relief when the country is running a $7.4 billion surplus feel cheated. They feel cheated because they are the ones who have earned the money. They are the ones who toil away. There is no reward for hard work enterprise or initiative. This Government just takes and takes. That is why the Labour Government is on notice that taxation will be an issue at the election. 
My colleague Phil Heatley mentioned that 30-odd new taxes have been introduced. The compliance costs associated with those are immense. I want to clarify again from my speech in the second reading debate one tax that has not yet been introduced but has been mooted. It is the proposed carbon tax. That tax valued at $15 per tonne of carbon dioxide emissions will put about $250 on every household in New Zealand. What does that mean for someone on a fixed income? Where will those people recoup the costs of the extra $250 of tax? That boils down to 4c per litre on fuel—on petrol at the pump. Members will bear in mind that we have just had a tax increase at the pumps of 5.6c per litre. It also means that there will be about a 10 percent increase in electricity charges. 
Peter Brown 
: How much on petrol? 
LINDSAY TISCH 
: It is 4c per litre on petrol. That is when carbon dioxide emissions are valued at $15 per tonne. The Government could put a $25 per tonne value on that charge and then the costs that I have just mentioned will escalate. The value at the moment of trading carbon credits on the secondary market is around £19 per tonne. So in New Zealand dollars the figures I have mentioned are very conservative when the outcomes could be a lot higher. 
It has often been said that taxation is theft. Well that is what this Government has been into for the last 6 years. It has taken more money off people—socialist Governments do that and then they want to redistribute the money and say how great they are. I wonder why 700 New Zealanders per week decide to go to Australia. What is the attraction? Seven hundred New Zealanders per week are finding it more attractive to shift offshore. They have more opportunities to make a living for themselves in Australia. Australia just had a Budget the other day and it was bad news for New Zealand. Australians will get A$6 per week and when will they get it? They are actually getting it now—not as this Government is providing for in 3 years’ time. This Government is saying that on 1 April 2008 it will give us 67c a week. 
The credibility of this Government is in tatters. Any integrity it might have had years ago has gone. Hard-working New Zealanders will not stomach this. Everywhere I and my colleagues go we find the big issue is taxation. I put the Government on notice that that will be an issue. Hard-working New Zealanders feel cheated by this Government which had an opportunity to give tax cuts through running a $7.4 billion surplus. They feel cheated and they will acknowledge that and record their protest at the polls in a very short time. Members must watch this space because taxation is a key issue. 
Bills read a third time. 
Misuse of Drugs Amendment Bill (No 3) 
Second Reading 
Debate resumed from 9 June. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 I rise to speak at the second reading of the Misuse of Drugs Amendment Bill (No 3). Since the first reading of this bill some quite substantial changes have been made. Most of those have occurred because of the inclusion of Supplementary Order Paper 298 tabled in the Health Committee in the name of the Hon Jim Anderton. The original bill included provisions to change the amount of a drug that a person could have in his or her possession before being legally presumed to be in possession of that drug for the purpose of supply. In this bill we are looking specifically at methamphetamine. The original bill also proposed to add a Ministry of Justice official to the Expert Advisory Committee on Drugs in order to bring a justice perspective to that committee which has been primarily charged with the health concerns regarding drugs and any new substances that come into that category. 
At the first reading we were looking at a bill that created two new importing and exporting offences for precursor substances. It included new powers for search and seizure without warrant for ephedrine and pseudoephedrine and also had some interesting provisions to allow what are called controlled deliveries so that the police can establish who is involved beyond the border control issues with the manufacture and supply of illegal drugs. I think that that is a very good thing. When we are trying to look in particular at the organised crime scene around drugs it is important that we allow the police to have those kinds of powers to investigate and follow through on controlled deliveries. 
The first reading of this amendment bill included a revised approach to offences related to the possession of needles and syringes. The Ministry of Health funds the Needle and Syringe Exchange Programme which has been set up to reduce the spread of HIV/AIDS hepatitis C and other blood-borne viruses among injecting drug users. Currently those caught by the police in possession of needles and syringes have to prove that the equipment was indeed supplied by the needle exchange or through some legal means. The outcome is that it has been a very time-consuming matter for those staffing the needle exchanges who spend unreasonable amounts of time in court as defence witnesses. This amendment reverses the onus of proof requirements so that the prosecution must now provide evidence that the equipment was not legally obtained. 
There was some discussion in the select committee about considering—and even in the last few days there have been calls by the New Zealand Drug Foundation to do this—an extension of those provisions. Some would prefer to see needles and syringes eliminated from being able to be used evidentially. My caucus and I looked again at the request of the New Zealand Drug Foundation— 
Peter Brown 
: I raise a point of order Madam Speaker. There are people chattering all over the place. I can hardly hear the member speak. 
Madam DEPUTY SPEAKER 
: Would members please keep the chatter down. 
JUDY TURNER 
: I was just talking about the consideration given to the issue of whether general equipment like needles and syringes should be able to be used evidentially in court cases. One concern we in United Future had is that although there may be some purpose particularly from a health perspective in making sure that somebody cannot receive an additional charge when he or she is charged with the possession of an illegal substance a person should be able to face an additional charge of being in possession of a needle and syringe when that relates to the other end of drug offences—when people are being charged with the offence of supply. When the police—and we did discuss this with the police when they were at the select committee—discover for instance a box of syringes and needles in a place they are searching and when the offence is the supply of drugs and the supplier is obviously well geared up to facilitate the drug use of his or her clients then we felt and the police certainly believed that the police should be allowed to use needles and syringes evidentially as part of their case. We certainly support that. I think the majority of the select committee members felt that just changing the onus of proof was a sufficient measure and that we would still like to leave the police some flexibility in that regard. 
The new Supplementary Order Paper was received with mixed feelings by the United Future caucus. In our opinion the intention of the Minister to respond quickly to the call from many community agencies to at least regulate or to ban new party pills and products as they come on to the market was a noble gesture. The Supplementary Order Paper the Minister has tabled certainly allows Parliament to respond with speed. However we were concerned that the more substantial legislative work that needs to be done to regulate substances deemed by the expert advisory committee to be of a low risk would have been better served by a more comprehensive legislative model put in place separate from the Misuse of Drugs Act. Our concerns were heightened when we realised that by creating a new class of drug under the Misuse of Drugs Act with all its existing Order in Council provisions there was a very real possibility that substances like cannabis could be downgraded by those same Order in Council provisions in the future. We considered that to be a very real threat. I certainly do not believe and United Future certainly does not believe that that was ever the intention of the Minister so we moved to have discussions with the Government around that issue. 
We are very pleased to see that some limitations have been put into the bill on the power of the Order in Council provisions so that full public and parliamentary scrutiny would be required before any such changes took place. However we accept that there is a place in this bill for Orders in Council. The Regulations Review Committee cautions us about the overuse and misuse of Order in Council provisions but we see a place for them. When a crisis arises that the police are aware of and want Parliament to respond to quickly Order in Council provisions are an appropriate way to allow the Government to respond by bringing in some controls on substances that cause concern. 
Having secured those changes United Future is pleased to see this legislation advance but we certainly want to be in discussion with whoever is in Government after the election. We want to see the continuation of the ongoing legislative work that needs to be done to have a separate restricted substances Act put in place to give legal and regulated substances their own legal framework separate from that for illegal substances. The committee’s commentary on the bill suggests that that work should be done and we are very much in support of that. Given the speed at which the new social tonics are being developed and marketed I believe that our next Government needs to make that work a priority. We support the second reading of this bill. 
STEVE CHADWICK (Labour—Rotorua) 
: 
 I am pleased to take a call in the second reading debate on the Misuse of Drugs Amendment Bill (No 3). I thank the members of the Health Committee. This was a very complex bill that came before the committee. I think its complexity comes from the fact that we are dealing with a drug-regulating regime that was established in 1975 by the Misuse of Drugs Act and subsequently amended by the Misuse of Drugs Amendment Act 1978. That is 30 years ago and we are now finding that we do not always have the right framework in current legislative provisions to deal with the issues that we are dealing with in this bill. 
The committee was quite happy with the amendments in the bill which address matters like presumption of supply levels being amended by Order in Council. We spent a lot of time on that. We looked at thresholds for presumption of supply in relation to methamphetamine. It was of great concern to us that although the drug had been reclassified in a previous amendment to the Act the thresholds had been set at the wrong level so we needed to reconsider the threshold. We did not have any problem with this. 
The bill also strengthens the provisions for offences of importing and exporting the horrible precursor substances ephedrine and pseudoephedrine that are now used in manufacturing P. That problem has caused us a lot of concern. 
The trends we have seen in pill shopping at pharmacies have changed and we needed to move our eye to the importing and exporting of precursors. We needed to make a shift to strengthening the powers of the Customs Service in the monitoring of importing and exporting. 
Supplementary Order Paper 298 added a new Part 3 to the bill which relates to benzylpiperazine. I note that this Supplementary Order Paper came in on 9 November. This legislation is not a knee-jerk reaction to a new substance on the market. The media said we were rapidly pushing it through the House; we have not done that at all. We received the Supplementary Order Paper in November and here we are in June debating the second reading of the bill. 
We had a lot of issues to grapple with over the current construct of the Misuse of Drugs Act and what we could do about a substance like benzylpiperazine. We also asked about some other substances out there unregulated that are causing concern because they are being used for their psychoactive effects. These include substances like “nos”—nitrous oxide. We even looked at things like nail polish remover and hairspray—products in the commercial market that are now being used for their psychoactive effects for heaven’s sake! We had to grapple with how we could regulate these substances. 
Everybody on the committee realised that a social problem with benzylpiperazine is emerging rapidly and we also knew of problems with other products. So we were looking at a framework for dealing with these substances as restricted substances. I thank the committee for its work. 
The concern was raised—which Judy Turner talked about—that we needed a stand-alone restricted substances bill but we were advised that simply to get officials to work on developing a stand-alone bill and to get advice and look at the policy of such a bill would take about 6 months and we were aware that we just did not have enough time for that at this stage of the political cycle. I was really pleased that in the end we agreed to do our best to get benzylpiperazine put on a restricted substances schedule. I thank the committee for that. I think it was a very pragmatic decision which supported the Minister’s intention to show that we are going to manage the substances that are out there being used now and that we need to do something about. 
So we went back to expeditious scheduling which I think was put in the original bill for the very purpose of enabling us to respond quickly rather than have to amend standing legislation. We did not support the recommendation to develop a stand-alone bill. 
I believe that now we have the framework in place it will allow us to add substances to the new schedule. I am very happy that the legislation is robust. We put all sorts of restrictions in the bill about sale and regulatory provisions that will make it a lot stronger. When we get to the Committee stage we will consider those aspects of the bill. 
Dr LYNDA SCOTT (National—Kaikoura) 
: 
 The Misuse of Drugs Act is designed to classify drugs that do harm in our society due to addiction and death. There are three categories: A B and C. The expeditious scheduling of drugs was originally set up by Wyatt Creech. He developed the initial legislation in 1999 and when the Labour Government came in the Health Committee continued that work. It shows that we can work across party lines at times for good legislation for New Zealand. 
The provision for expeditious scheduling under the Misuse of Drugs Act has been used for Ecstasy and for Fantasy which at the time were causing the deaths of young New Zealanders. We needed to be able to respond quickly to the smart chemists—the people who can change the chemical structure of a drug rapidly to escape the ambit of the Act—who prey on young people. That is why we put in place approval by resolution of the House which is called an affirmative resolution process. That new system set up an expert advisory committee that recommends to the Minister of Health that a drug be added to the schedule and at what level. The Health Committee then reviews that recommendation for 1 month. This process was used for Fantasy for Ecstasy and for P drugs that can cause death and serious addiction. P often causes the person taking it to become incredibly violent and in this country we have seen some serious acts of violence committed by people who are taking it. 
The bill we are debating today concerns the precursors of methamphetamines. National members totally support the original bill that came to the Health Committee. We want to do all we can to curb drug abuse in this country. Of course legislation against drug abuse is only the tip of iceberg. Getting to the cause of why our young people wish to take drugs in the first place is something we all need to battle with on a societal level. National totally supports that. 
The situation with Supplementary Order Paper 298 however is somewhat different. The Regulations Review Committee stated to us that the bill proposes moving presumption of supply matters to the schedule of the principal Act so that they may be set or altered by Order in Council and approved by resolution of the House. Normally a bill would come to the House then go to a select committee after the first reading and there would be submissions from the public. 
Benzylpiperazine and legal highs as they are known as at the moment have no regulation around them. They do not fit under the Food Act the Misuse of Drugs Act or the Animal Products (Ancillary and Transitional Provisions) Act—they do not fit anywhere. So it is fair enough that they need some regulation around them to stop young people especially the under-18-year-olds using them. The Expert Advisory Committee on Drugs said that those drugs did not cause serious or moderately serious harm but that they just needed regulation. Is it appropriate we ask to use the expeditious scheduling regime to regulate those drugs? The answer that National came to was no. We should have had an actual bill before the House so that we could get it right. 
We have seen what happens when Governments rush things—members will remember the sherry tax the intent of which was to stop young people and it totally missed the target. So we must take our time to make sure— 
Hon Jim Anderton 
: It reduced it by half a million litres. 
Dr LYNDA SCOTT 
: The Minister says it works. Young people now are queuing up in accident and emergency departments at night. It has not been working at all. I say to the Minister that more and more young people in the country are drinking alcohol. He may not like that but that is the fact. Young people are in more damaging situations and in more motor vehicle accidents. We see more 14 and 15-year-olds in accident and emergency departments. It has not hit the target in any way whatsoever. It has been an utter failure. So I say to the Minister that he should open his eyes. 
I return to the bill and the Supplementary Order Paper. No one disagrees with trying to do something about those so-called legal highs but there has to be a process whereby we get it right; otherwise we miss the target. Many times in this House I have seen people with good intentions but all they do is put a lot of regulations in place that miss the target and do not achieve what they are intended to achieve. The problem is that we never go back and look at whether we have actually achieved our aims. No clear research takes place to see whether a piece of legislation worked; if it did not work there is nothing that lets us change it or get rid of it and get something else. In this case National members agreed with the advice of the Regulations Review Committee and we felt that the extension of the procedures currently used for amending the classification of a controlled drug should not be extended in this way to something that is considered to be of only moderate harm and needing regulation. But we said we are totally committed to properly evolved legislation dealing with restricted drugs and substances being brought into the House and passed within 12 months. 
The problem with solvent abuse is how one can tell whether an 18-year-old is buying a can of paint to spray paint a car or whether he or she is actually going to sniff it. We need to listen to the people in the community about how to hit our target. No one disagrees with trying to get to the bottom of those problems but we do not want to set up something that has to come back to the House and be amended. The select committee said it wanted to see a properly developed Act. 
Another change that the select committee made was that one could only increase—not decrease—classification. I think that was because it was worried about a Labour-Green coalition. I remember when I sat on the Health Committee we went all over the country listening to people as part of the cannabis inquiry. That was simply because Labour needed the Greens. We spent a huge amount of money on the inquiry going from one end of the country to the other listening to opinions on whether we should decriminalise cannabis. I think United Future was really concerned that if a Labour-Green coalition formed we could see cannabis reduced down the schedule by that process. In the end it could not get the support in the committee and the majority agreed that one could only increase not decrease a classification by Order in Council. This would mean that a controlled drug could not be changed to a restricted substance without the controlled drug classification being removed by Parliament first. So it would have to come through the parliamentary process. 
This is what is meant by unintended consequences. We rush those things through without proper scrutiny then we have unintended consequences. The Associate Minister of Health may not be here the next time; he may not be in a Labour-Green coalition. If the people who thought they were promoting one thing are not there they will get something else. It is called unintended consequences and it happens all the time. I say to the Minister that he should be glad that the legislation was limited to not being able to decrease the classification of a substance. We agreed with that limitation. 
I was pleased to see the change to the needle exchange provision whereby the onus of proof is moved from the one who has it in possession to those who are prosecuting. For those who go on the needle exchange programme the risk of HIV and hepatitis is high—because they are legally given those needles on the exchange programme. The current law has been an impediment to them so National agreed with that. 
All in all we agreed with the originally introduced bill but not the way that the Supplementary Order Paper was developed. So we will be supporting the bill as a whole but not the Supplementary Order Paper which is now Part 3 of this bill. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I will take just a very brief call on the Misuse of Drugs Amendment Bill (No 3) because I think it is a common-sense and sensible bill just like this Labour-led Government and I commend it to the House. 
SANDRA GOUDIE (National—Coromandel) 
: 
 The New Zealand National Party certainly supports the original Misuse of Drugs Amendment Bill (No 3) which deals with changes to legislation concerning drugs. We recognise the extraordinary harm to health and safety caused by inappropriate use of controlled drugs. 
I had the opportunity to sit in on the Health Committee for a very brief period and a gentleman who actually manufactures party drugs was making a submission to the committee. I asked him what research had been done into the long-term effects of the use of party drugs. Of course there has been none. I think that is an extraordinary oversight. Nobody has any idea what the cumulative effect or the combination of effects of using those party drugs is if people are using other medications or if people have other conditions that predispose them to being affected by the contents of those party drugs. There has been absolutely no real research into the peripheral effects of the use of party drugs. 
There should have been some requirement on the manufacturers of party drugs to provide information to the House or to the authorities or to whomever that determines what the long-term effects of party drug usage is and whether it has any peripheral effects on any other existing medical conditions. It is extraordinary that we have these party drugs but we do not require a bit more oversight in respect of their use. I guess one reason that we are going through this whole process is to put some controls around those drugs and to see where that takes us. Although we are putting controls around them we are not requiring any research into their effects. That is something that should be looked at. Perhaps some sort of requirement on the manufacturer to do research is necessary for us to have a better understanding of what those drugs have the potential to do if they are taken consistently on a long-term basis. 
 Certainly it is fairly well-known that our young ones’ bodies are not well-developed; at the age of 18 they are still developing and their bodies may not be able to handle these types of substances particularly if they are mixed with alcohol—certainly with the amount of alcohol they are consuming in this day and age with the lowering of the drinking age which I think was one of the bigger mistakes made by this Parliament. 
National members are mindful of the Regulations Review Committee’s statements that the affirmative resolution procedure should not proliferate that it should be used only in limited and exceptional circumstances and that any extension of the procedure in relation to the Misuse of Drugs Act 1975 should be permitted only where it is a necessary adjustment to alter the schedules of controlled drugs and essential in order to achieve the purpose of the Act in dealing with the serious risk of emerging drug threats. Of course if we have done no long-term research into party drugs into legal party highs how do we know what the effects will actually be? There could be some emerging risk from long-term usage but we do not know. 
Dr Wayne Mapp 
: What is the Government doing about it? 
SANDRA GOUDIE 
: Yes the member is absolutely right—what is the Government doing about that? It did not actually come up in the select committee and nothing has been done about it as far as I understand. 
Hon Jim Anderton 
: That’s rubbish. 
SANDRA GOUDIE 
: Well the question was asked at the select committee so— 
Hon Jim Anderton 
: Well ask a question of me. 
SANDRA GOUDIE 
: The Minister was not at the select committee and he was not the person producing the stuff. I would have thought that the person producing the stuff would actually know but no—[ 
Interruption 
] There was none. The producer said there was none so unless somebody else is doing it well—who would know? It is certainly a question and perhaps the Minister would like to take a call and give us an explanation of his understanding of the research into party drugs and those legal party highs. We would certainly welcome the opportunity to listen to him give that explanation. 
New Zealand National is very concerned about the increasing use of benzylpiperazine party drugs herbal highs etc. particularly among the 18-year-old age group. It has been an emerging problem for some years and we believe that the response should be well-considered legislation with the public given opportunity for full submissions and with nothing rushed through by way of Supplementary Order Papers. Everybody should have the opportunity to participate. In actual fact I think there is too much haste in the promulgation of law in this Parliament and I think the process should be slowed down somewhat. 
So as per the recommendations of the Regulations Review Committee National members consider that legislation around restricted drugs which are often legal substances should be covered by primary legislation. We therefore do not support the Hon Jim Anderton’s Supplementary Order Paper but instead commit that as a Government we would ensure that properly evolved legislation dealing with restricted drugs and substances was brought into the House and passed within 12 months. I note that many of the press releases around this legislation seem to be pretty well dominated by Mr Anderton. 
Hon Jim Anderton 
: I am the Minister. 
SANDRA GOUDIE 
: Well he seems to be capturing the moment yet he is presenting a Supplementary Order Paper that has not gone through the full process. I think that is a bit of a shame. I am glad that we are supporting the original bill and are not supporting the Supplementary Order Paper. I am very pleased we are taking that position. 
A party vote was called for on the question  
That the amendments recommended by the Health Committee by majority be agreed to. 
Ayes 107 
New Zealand Labour 51; New Zealand National 25; New Zealand First 13; Green Party 7; United Future 8; Progressive 2; Maori Party 1. 
Noes 9 
ACT New Zealand 9. 
Instruction to Committee 
Hon JIM ANDERTON (Associate Minister of Health) 
: 
 I move  
That it be an instruction to the Committee of the whole House on the Misuse of Drugs Amendment Bill (No 3) that it take the bill part by part. 
Motion agreed to. 
In Committee 
Part 1 Substantive amendments to Misuse of Drugs Act 1975 and consequential amendments 
Hon JIM ANDERTON (Associate Minister of Health) 
: 
 I rise to speak in this Committee of the whole House debate on Part 1 of the Misuse of Drugs Amendment Bill (No 3) to explain the effects of Supplementary Order Paper 377 and the tabled amendments in my name. Firstly the bill was originally intended to extend the powers of customs officers under section 36 of the Misuse of Drugs Act 1975 to all precursor substances. However the bill as drafted did not accurately reflect that intention. Section 36 of the Misuse of Drugs Act makes certain powers under the Customs and Excise Act 1996 applicable when dealing with controlled drugs. Those powers enable customs officers who are investigating drug importation offences under the Misuse of Drugs Act to question persons undertake searches and obtain documentation using their Customs and Excise Act powers. The amendment to section 36 of the Misuse of Drugs Act was intended to extend that application of Customs and Excise Act powers to investigations under the new importation offences involving precursor substances. The bill as written however confined those powers to pseudoephedrine and ephedrine— 
Debate interrupted. 
Sitting suspended from midnight to 9 a.m. (Thursday)