Real Estate Agents Bill — Second Reading In Committee Third Reading 
Real Estate Agents Bill — Second Reading In Committee Third Reading 
[Volume:649;Page:18362] 
Real Estate Agents Bill 
Second Reading 
Debate resumed. 
CHARLES CHAUVEL (Labour) 
: 
 I am pleased to take a brief call in the second reading debate of this extremely important and useful piece of consumer protection legislation the Real Estate Agents Bill. The purpose of the bill is a very good one. It is to deliver on the Government’s promise to bring accountability transparency and openness to the real estate sector and those three things are sorely needed. Legislation has been in place for some time and it needs to be updated with the interests of the consumer in mind. This legislation does that. It establishes a very good independent complaints system it will protect consumers and it will support honest real estate professionals who constitute the vast majority of the real estate industry. The bill will put an end to the industry’s self-regulation. It introduces a range of important new consumer protection measures including compensation for consumers who have not been well served by the system. 
The Government believes that reform of the real estate industry is sorely needed. Buying a house may be the biggest single financial decision people make in their lifetime and they need to have full confidence in the professionals who help them make that decision. In that regard this legislation is part of the suite of consumer protection measures that has been so ably pioneered by this Government including Ministers such as Judith Tizard and Lianne Dalziel. One thinks of the Reserve Bank of New Zealand Amendment Bill (No 3) which brought in prudential supervision requirements for non-bank deposit takers and the financial providers and financial advisers legislation which is about to be reported back to the House from the Finance and Expenditure Committee which I have the honour to chair. 
I acknowledge the robustness of the select committee process. I would like to pay tribute to the Green Party and the New Zealand First Party because they played an incredibly responsible role in supporting a fair process at the select committee. 
I would also like to thank those who made submissions to the select committee. This point was touched on by the earlier speaker. Really we were I think in a position where the process could have gone either way. There were intemperate debate and anger involved in the process following the introduction of the bill. Lynne Pillay my Labour colleague chaired the committee with enormous sensitivity. I remember the hearing we held in Auckland which many many members of the industry attended. They were grouped very logically as far as their submissions to the committee were concerned. They were treated with respect and they responded in kind so that we got the maximum benefit from what they had come to say to the committee. I think they went away feeling that they had a proper hearing from us which is a very important part of the process. 
In that regard I note there has been some criticism of some of the submitters. It has just been said that some of them simply filled out a standard form and spoke to it. Well I think we have to make allowances for the fact that to many people the select committee process is a bit of an alien one. It is not necessarily the easiest one to engage in. I think that those of us in Parliament who are used to dealing with the process every day underestimate the mystery that ordinary people sometimes encounter when they want to interact with Parliament’s processes. Yes it is true that some people filled out a standard form submission and that when they were asked particularly technical questions—cross-examined—by certain members they did find it a bit hard to respond. But those of us who took the select committee process seriously tried to move beyond the written form submission and talk to those who came before the committee about their experience of the industry and tried to work out how we could deliver back to the House the best bill that it was in our power to deliver. I think we have done that. The report of the committee speaks for itself. 
I would also praise the measures that are set out in the Minister’s Supplementary Order Paper 243 because I think that taken with the select committee report they really do comprise a suite of measures that will make this industry into one that consumers can have real confidence in and one that the vast majority of real estate agents out there who are honest and hard-working can also feel a great deal of confidence in. 
I thank the officials for their assistance. It was always extremely timely and extremely helpful and when assistance was required on tricky technical matters it was really on point. I will speak a little bit more about that later. 
In conclusion I want to express a bit of regret at the position that seems to be being set out by the National Party on this legislation. I have had a look at National’s minority report such as it is in the commentary on the bill and it is quite apparent when we look at the Supplementary Order Paper that the Minister has tabled that every substantive concern raised by the National Party in that minority report has been addressed. It is simply not right to say that an increased transitional provision of 14 months for the hard stuff if you like in the legislation is not long enough. It makes no sense to compare the real estate industry with the legal profession and any comparison between the Lawyers and Conveyancers Act and the Real Estate Agents Bill is inapt. We are really talking apples and oranges here. It is quite clear that 14 months’ lead-in time for some of these complex matters is more than enough as far as reforming the industry is concerned. Consumers should not have to wait any longer than that and it is a real shame that the National Party wants to make them do that. 
As to the complaint that this is bureaucracy gone wild that is just nonsense as well. I hope that those who espouse that excuse are ashamed of themselves. There is no bureaucracy gone mad here; there is simply an adequate complaints mechanism being set up to make sure that consumers have the protection they need. Yes it will cost a bit of money but probably not a whole lot more than what the current system costs. The costs that will be passed on to those who participate in real estate agent transactions will not be much greater but we will have a far better system to protect those who participate in those transactions. For anyone to say that that is not a desirable goal is a real shame. 
Finally with regard to the issue of property managers as the previous speaker acknowledged the Minister will put in place a review. We heard some evidence on that point. I think that the select committee members by and large were persuaded that there was merit in looking further at the issue of whether property managers should come within a comprehensive regime. There are issues of scope in terms of including them in this legislation but there will be a calm and measured review of that issue. That is appropriate I think given the evidence we heard. 
Here we are with this minority report from the National Party which maintains its opposition to what is very good consumer legislation. It is spurious opposition—it really is. National must be a party that does not actually care much about the interests of consumers; it maintains opposition just for opposition’s sake. It is just like the so-called six principles for opposing the emissions trading scheme—absolute nonsense. This is very good legislation and it ought to be progressed with speed. 
KATE WILKINSON (National) 
: 
 I appreciate the opportunity to rise and speak in the second reading debate on the Real Estate Agents Bill. When the industry itself wants reform and modernisation—it has been asking for reform for some 10 years—when all the parties to a greater or lesser extent and in a reasonably non-partisan way support such an opportunity for positive change to the industry and when consumers want reform and modernisation of the industry how then can such a meal be made out of this legislation? 
The bill went to the Justice and Electoral Committee for scrutiny and I appreciated the opportunity to sit on that select committee during that scrutiny and certainly enjoyed that experience to a certain extent. The bill went to the select committee for scrutiny under the Minister’s banner of vilification of an industry of his having to “drag land sharks kicking and screaming into the spotlight” and to “drop the hammer on them”. I suppose we then have to wonder whether it is any wonder that such a meal has been made of this legislation. 
The select committee process was as expected. We had many submissions. Some submitters were given a couple of minutes; some were given 20 minutes or even more. I do not need to elaborate further on this for people to be able to guess which submitters were given a considerably longer time to submit and which ones understandably felt short-changed. However I echo the concerns raised by my colleague Chris Finlayson regarding the standard form submissions. They were not particularly helpful especially when it appeared that some submitters had merely ticked the boxes without even knowing the substance of their own submission. But after such vilification one can understand their concern to protect their livelihoods. 
It is pleasing that we have a Supplementary Order Paper produced by the Minister that is certainly an improvement in certain respects. There are some 70-plus amendments. Admittedly it is not of the scale of the emissions trading scheme bill which had over 700 amendments; and again it is not of the scale of the meal breaks bill which had a sneaky amendment not even related to the original bill. But we do now have an improved piece of potential legislation. 
I want to make it clear that National supports absolutely the purpose of this bill: “to promote and protect the interest of consumers … and to promote public confidence in the performance of real estate agency work” by “regulating agents” “raising industry standards” and “providing accountability through a disciplinary process that is independent transparent and effective.” We support absolutely the purpose of this bill. We welcome an update of the real estate regulatory framework and so does the industry. We welcome the need for strong consumer protection and strong consumer confidence and so does the industry. However what we do not welcome is an unworkable bureaucratic regime that will add costs to consumers without enhancing their confidence in an industry that like most industries does have some bad players but where the majority are not bad. 
This reform should have been welcomed by all. It should have brought the real estate industry with it into the 21st century. After all that is what everybody wants. But instead this is a missed opportunity. For no matter what reason can be attributed to how this bill has been handled it is a missed opportunity. Certainly some of our original misgivings have been addressed both in the report back from the select committee and also in the Supplementary Order Paper—such as concerning the removal of the 5-year review of the employment status of salespersons. But other misgivings have not been addressed. Property management is still excluded and when we look at the failures of Blue Chip and others it makes one wonder why it has still been excluded. 
Lynne Pillay 
: It’s outside the scope. 
KATE WILKINSON 
: I appreciate that a review has been promised but this is a bill about real estate and property management is an integral part of real estate. This is a bill that is actually tailored to residential real estate and even then it does not really take into account commercial real estate industrial properties and property management. We accept that property management may be outside the scope of the bill but then again KiwiSaver was outside the scope of the meal breaks bill. But we think it is somewhat ridiculous to have a real estate bill that excludes one of the very ingredients of the real estate industry namely that of property management. 
Real estate involves not only buying and selling property; an important part is property management. This Government appears to believe that property managers pose less risk than real estate salespeople. The institute has informed us that it believes that one in five complaints relates to property management groups and we heard throughout the submission process that the two latest claims—in fact the only two claims for quite some time—on the fidelity fund have related to property management not real estate agency sales work. 
Back in 2003 the Real Estate Institute advised the Minister that it was concerned about property managers operating outside the trust account control and audit regime of licensed real estate agents. Now they are still concerned and those property managers have carte blanche to carry on their business without any checks or balances without any trust account control and without any audit—whether a spot audit or a regular audit. 
Property management involves holding significant funds in an account. Hundreds of millions of dollars pass through bank accounts of property managers. What happens to missing rent moneys? Well the institute under this bill has no jurisdiction to deal with any complaints about missing rent moneys. There is no requirement to hold the moneys in a trust account. There is no fidelity fund in the event of misappropriation. As the institute itself stated: “If residential property managers are not covered by the new regime gaps in the current laws will leave consumers vulnerable. If anything goes wrong the only recourse for consumers may be via the courts. If residential letting agents and property managers are not covered they would not have to meet any educational and practice standards comply with any regulations concerning the holding of money in trust accounts and there would be no efficient recourse for consumers with complaints as the authority and the tribunal would not have the jurisdiction to hear or decide on any complaints concerning the letting or management of property. This is contrary to the purpose of the bill which is consumer protection.” 
The second issue we have some concern about is the bureaucracy imposed by this bill. We have noted before the concerning parallels of this latest bureaucratic proposed system with the Department of Building and Housing. Consumers can still be protected without having to bear the costs of senseless bureaucracy. We are not convinced that this balance has been achieved. The industry will not bear the costs; the costs will be handed down to the consumer and housing affordability will get even more difficult. Consumers will simply have to pay more. 
Actually if this bill were really about consumer protection it would include property management and it would not impose even more costs on the consumer. And if the Minister really were listening and he really were concerned about consumer protection then the bill would have required real estate salespersons to have more experience rather than less. The original bill required 2 years’ experience out of the previous 10 years and the industry itself wanted 3 years out of the previous 5 years. The Minister’s amendment has increased it to 3 years out of the previous 10 years yet even the industry itself preferred more experience because it too is concerned about consumer protection. I would have thought that if this Government really were interested in consumer protection then that would be a very simple improvement to make. 
Concern has also been expressed that the transitional period prescribed in order to implement this legislation is not sufficient. It was originally 12 months. The Minister has very generously increased it by a mere 2 months to 14 months. The institute itself has suggested 2 years. I think it is appropriate to make comparisons to the Lawyers and Conveyancers Act which prescribed 2 years. When we are changing the way an industry is to operate as is intended under this bill it is vital that sufficient transitional time is given for it to be able to actually implement those changes. 
So we have a bill that sadly is just another missed opportunity—a bill intended to protect the consumer and to give the consumer confidence. It has been hijacked by hyperbole and political posturing. Regretfully whilst we absolutely support the purpose of the bill we do not believe that it properly addresses the issue of consumer confidence. Therefore we cannot support it at its second reading. 
PITA PARAONE (NZ First) 
: 
 Tena koe Mr Assistant Speaker. On behalf of New Zealand First I stand to make a contribution to the second reading of the Real Estate Agents Bill. We certainly support this bill. It is about bringing more accountability transparency and openness to the real estate sector while at the same time establishing an independent complaints system to protect consumers and provide support for real estate agents. The bill replaces the Real Estate Agents Act 1976 and I think it is timely. Some people will say the bill is overdue and I tend to agree. I think it addresses some of the concerns that come from having on our statute book legislation that is so old. 
Although some people have been very critical of the real estate profession in my view the profession is an honourable one—one that is under some duress here in New Zealand as a consequence of a depressed market brought about by high interest rates and other economies. However this profession is not exempt from having amongst its number—and I am glad to say it is limited to a very small minority—those who have brought it into disrepute. I suspect that because of that small minority we heard from a number of submitters who expressed their concerns to us that the present Act was inadequate in meeting their concerns. I acknowledge the Justice and Electoral Committee which heard these submissions. I understand it received more than 1300 submissions. Just over 600 of those were heard personally by the committee or by video link. I especially want to say to the committee that it has done a fine job. The report it brought back to the House I think addressed many of the issues that submitters were concerned about. 
The report back suggests a number of changes and I am glad to see that the Minister has taken it upon himself to make the necessary amendments by way of Supplementary Order Paper 243 and that he has also given some consideration to the concerns that my colleagues and I had about the bill. These include the points of amendment regarding the rescinding the requirement to review the employment status of sales persons the rescinding of the decision to regulate the conduct of auctions the experience criteria required before agents or branch managers are entitled to have their licences raised from 2 out of 10 years to 3 out of 10 years and the Real Estate Institute of New Zealand being consulted on first-term appointments to the authority and disciplinary tribunal. 
I think those changes may give some relief to the present leadership of the Real Estate Institute in terms of the concerns it expressed during this whole process being taken on board. I know there has been some exchange of views between the principals of the institute and the Minister but without their compromising their positions I think. Both parties have agreed that the protection of the consumer and the strengthening of accountability is the most important thing that comes out of this bill. 
I know that the Real Estate Institute might still have some concerns but I think the bill goes a long way towards not only giving back to the consumers more confidence in the institute but also giving a sense of security to members of the New Zealand public who may need the services of the real estate profession now and into the future. 
Some comment has been made about the fact that property management has not been covered by this bill. I agree with the select committee that the issue of property management was outside the scope of the bill. However the Minister has indicated that a review will be made in the future. 
Hon Clayton Cosgrove 
: Coming at the same time. 
PITA PARAONE 
: At the same time as the bill—OK. The Minister has recognised that as a very important issue. That is important because on any one day of the week property managers hold excessive amounts of money on behalf of both tenants and landlords. Given the financial stress that New Zealand is placed under at this time—I know that that may sound exaggerated but the fact is that we have a group of people holding funds that belong to other people—we need to seriously consider the security and the safety of those funds. New Zealand First will support the Real Estate Agents Bill at its second reading. 
SUE BRADFORD (Green) 
: 
 The Green Party will be supporting the Real Estate Agents Bill and associated Government amendments through all final stages in the House today. We were aware from the start of the contentious nature of aspects of this new law. How could we avoid it given the powerful and effective voices of real estate agents and auctioneers and the somewhat combative statements of Minister Clayton Cosgrove in the earlier stages of the process? 
The consideration of the bill by the Justice and Electoral Committee was intense but informative and I would like to acknowledge all of the more than 1300 submitters for the effort they put into participating in this particular democratic process. I would like especially to thank Barfoot and Thompson in Auckland for showing several of us on the committee around its operations so that we could get a better feel for aspects of the sales human resources accounting and auctioning side of the business. The complexities of those backroom functions are not normally visible to a vendor or a purchaser—my only contact with the industry in the past being in that role albeit on a number of occasions. 
One of the key achievements of this bill will be the establishment of a new Real Estate Agents Authority which will have the power among other things to investigate complaints from people about things like real or perceived conflicts of interest on the part of agents commissions and fees and generally shoddy or inadequate practices. The new authority will investigate complaints on behalf of the consumer for free and is an independent body with the ability to set penalties and award compensation. It will also be responsible for administering the licensing system for real estate agents setting standards establishing fees and levies and providing information for consumers. The Greens believe that having all those functions carried out by a statutory organisation independent of the Real Estate Institute unlike the existing situation will inspire confidence in all those for whom buying or selling a house is often the biggest financial decision of their lives. 
This bill also incorporates the establishment of a separate Real Estate Agents Disciplinary Tribunal whose functions will be to deal with matters referred to it by the complaints assessment committee—a committee appointed in turn by the new Real Estate Agents Authority. During the course of the Justice and Electoral Committee consideration we heard many concerns from industry submitters about their fears that the representation on those new bodies would not include people with a long track record of working in the sector—people who would hold the confidence of agents and their professional association. This concern was shared by the Greens and by other parties and we have been pleased to see improvements to the bill in this regard. During the select committee process we supported changes that mean that firstly the Minister will be required to appoint at least two members of the Real Estate Agents Authority who are licensees or former licensees and secondly in relation to the disciplinary tribunal at least one member must be a licensee. In addition there is a Government Supplementary Order Paper before the House that will further amend the bill so that the Minister now is required to consult the Real Estate Institute when making the first appointment of licensees and former licensees to the authority and the disciplinary tribunal. The Green Party has backed all these changes because we think it critical that the expertise of real estate agents and their own professional body should be brought to bear if these reforms are to have credibility with the industry and so that the reforms will find support among those whose standards and quality of work we are expecting to improve as a result of these measures. 
Another area of much contention during consideration of this bill was the proposal to review the employment status of sales people after 5 years. The Greens had supported this proposal because we have ongoing concerns about the exploitation and low pay of some vulnerable workers and contractors within the industry. However a Government amendment will remove the relevant 5-year review clause. Although we will be supporting the change we also hope that anyone working in the industry who has concerns over his or her employment or contracting conditions or lack of them will not hesitate to avail himself or herself of the remedies available now through existing employment law. At a time when the industry is seeing a major shake-out as a result of the downturn in the housing market it is more important than ever that the employees and contractors who remain are treated well and are able to stand up for themselves with my concern here being especially for some back-office people as well as some agents who run the risk of carrying the can financially for a sector that is going through difficult times. 
The whole area of auctioneering was another difficult issue for the select committee. As the auctioneers who made submissions to us quickly found out this is not an aspect of the housing market with which I and I think some other MPs on the committee had any familiarity whatsoever. I was struggling to grasp what the purpose of the original changes to the auction system were in relation to the rest of the bill especially after receiving repeated assurances that after some admittedly shonky episodes in the past there are now enough safeguards in place in the auction process to protect the ethics and the interests of all involved. Although I think perhaps it might have been a good idea to find a way to enshrine or append an auctioneer’s code of ethics to the legislation in the meanwhile the Greens support the proposed amendment which will leave things with the status quo in regard to auctions. 
One other matter of major dispute during our dealing with this bill was the question of whether property managers could or should be included in the legislation. I was convinced by numerous submitters that it would have been better if we could incorporate property managers within the legislation—for example through regulation of activities such as leasing letting collection of rentals and so on—as this area of work is also a key part of the real estate sector and in fact often forms part of the operation of real estate firms themselves as well as other firms. However in the end there was clear advice to the committee that to try to amend the bill to include property managers was outside its scope. The Green Party therefore welcomes the commitment the Government has made to review with some urgency the regulation of property management in a way that will be coordinated to be simultaneous with the commencement of this bill. The fact that the commencement of most of the provisions of the bill will be extended out from 1 year to 14 months should also mean that this review and resulting legislation will have time to happen effectively and well in full consultation with all concerned. I trust that whatever form our next Government takes that commitment about property managers will be actioned. 
The Real Estate Agents Bill got off to a really rocky start and I think it was unfortunate that such important legislation for consumers and for all stakeholders in the real estate area became more of a political battlefield than was really necessary. I believe that the reforms contained in this legislation are necessary and well worked through and that all the MPs on the committee listened hard to the many concerns expressed to us including issues beyond those I have had time to deal with today. I was particularly pleased after earlier episodes to see a media release from the Real Estate Institute on 30 July this year that welcomed the new bill with amendments and stated: “We are committed to working with the legislators to ensure that the final result is the best consumer legislation possible.” I think that is a commendable attitude on the part of the institute and hope it is one that will be shared by all parties in this House and by all involved in the industry. 
We have seen and will undoubtedly continue to see examples of rip-offs cons shabby treatment of customers and exploitation of workers in the industry. However it will be in the best interests of everyone if the reforms enacted here are carried out with goodwill and commitment on all sides so that we see a steady improvement in quality accountability and protection for all concerned. As I said on an earlier occasion this bill is about justice not only being done but being seen to be done. 
I thank everyone who has had some role in getting the bill to this stage including our committee chair Lynne Pillay; Minister Clayton Cosgrove; and all the submitters. But I would also like to say a special thankyou to the hard-working Government officials and select committee staff for all their work because they really had quite a hard time of it I have to say during the select committee process. I believe they did a fantastic job on very difficult and complex legislation and I thank them. 
I commend the bill to the House. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker. Tena tatou katoa. It could not be a better time to be introducing a new regulatory framework for the real estate industry to help it shape up to the expectations of the consumer client base that it services. Statistics from the Real Estate Institute of New Zealand revealed a dramatic reduction in residential sale volume over the year end. Sales registered in July 2008 were down by a massive 33 percent. It would be simplistic to suggest that the Real Estate Agents Bill will single-handedly reverse a perilous economic downturn but then again one never knows what may turn the tide in encouraging homeowners to take a gamble on the current market. What we do know is that concerns with issues such as misleading representation poor contractual advice and mishandled funds have been making more and more New Zealanders risk-averse to the real-life monopoly board. 
Such was the level of concern in fact that some 1328 submissions were received from the public. This in itself should warrant this bill being accorded particular attention to facilitate the smooth passage of law in the most efficient time possible. However when we think about the foreshore and seabed legislation which received 3946 written submissions and 234 oral presentations we find that that process was not given serious and responsible attention so let us hope that the net is cast differently for this Real Estate Agents Bill. 
The impact of any legislative changes to promote public confidence in the performance of real estate agency work must not be underestimated. An analysis of the number of New Zealand computers visiting real estate websites found an average of 325000 sessions per week. As of July 2008 there were 60150 residential properties for sale on the market being put up for offer by approximately 1500 real estate agents and over 20000 sales people so it is a huge industry and it requires that we take seriously the importance of consumer protection in real estate transactions. This bill is about protecting and promoting the interests of consumers in these transactions. That is a worthy ideal and one that we hope will be taken up as a priority by all parties in this House and it is beginning to look that way. 
There has been much said about the need to regulate agents managers and salespeople to ensure that consumers receive a quality service from an agency that adheres to industry standards. There is no denial that an upgrade has been sorely needed. The 1976 Act for instance included as a maximum penalty that the institute could impose a fine no greater than $750. But more significantly there had already been moves afoot within the industry to upskill and improve. The Real Estate Institute had itself realised the urgent need for consumer protection and had contracted none other than consumer affairs advocate David Russell to carry out its own review of its internal code of ethics and rules of practice. 
This bill then emphasises moves already in place to enhance industry standards and to provide accountability through a disciplinary process. The changes that will be made to an operational code of conduct will ensure that any progress is independent transparent and effective. Those are all values that we as the independent voice of Maori in this Parliament are adamant must be upheld in all spheres of Government including this House. Consumer New Zealand outlined this case clearly to the Justice and Electoral Committee. It told the committee that a significant number of complaints fielded by its advisory service came from people who have had problems with real estate agents. For too long people have had to accept quite a poor service from real estate agents and operators even though I would say also that there are some very good real estate people. The legislation will level the playing field and allow consumers to take action if they have been poorly treated. 
It was pleasing to see the Real Estate Institute of New Zealand giving support to the reforms and its agreement that professionalism will be enhanced and consumers protected through lifting industry standards. It particularly supported the creation of an independent and transparent complaints and disciplinary process. A key initiative put forward by this bill is the recommendation to amend the functions of the Real Estate Agents Authority particularly ensuring that there is consultation with the sector. So we are pleased to see the call from so many of the submissions from real estate agents has been taken up and that the membership of the authority and of the Real Estate Agents Disciplinary Tribunal will be broadened to ensure that industry expertise is represented. We support also the move to ensure that agents who employ independent contractors are liable for their actions as if a contractor were an employee. That will give better protection to consumers. 
However there are a couple of areas that we believe require further work as the bill proceeds through the House. The first of these was presented by the Whitireia Community Law Centre. Its view was that consumers faced with detailed agency contracts and complex statutory rights need far more than “educational information” as provided for in the bill to assist them in understanding their rights to make a complaint. Consumer advocacy should be recognised as an important way of maintaining industry standards and setting in place processes to achieve client care. As a corollary to this the Whitireia Community Law Centre also recommended that the functions of the authority should be expanded to include funding negotiation and conciliation or mediation of consumer complaints. 
The second issue is the contentious one of property management. This is an area of special relevance to Maori. The Maori Party is of course aware that the relatively low Maori homeownership rate would suggest a relatively high Maori renting rate. We know that 56 percent of the Maori population are not in owner-occupied dwellings as opposed to 31 percent of non-Maori. In real numbers two-thirds of our population do not own their residence. The importance of having an effective oversight of the entire industry is crucial. In effect whether one is renting or owning is irrelevant. The key thing is that the process is transparent and of course that all steps have been taken to ensure that people are not exploited by unscrupulous traders or misleading representation. To this effect we will be looking with interest at any Supplementary Order Papers that may come into the House at the Committee stage which may address the issue of property management. 
We are happy to support the bill at this stage in that we support any developments that can lift standards and achieve better protection for New Zealanders in dealing with real estate agents. We join with the Green Party in commending the officials for the way in which this bill has been managed at select committee. Kia ora. 
Hon PETER DUNNE (Leader—United Future) 
: 
 United Future will be opposing this Real Estate Agents Bill as being unnecessary and insidious. It is unnecessary because the concerns that it seeks to deal with—namely bad performance by real estate agents—could have been dealt with by two key amendments to the 1976 Act which this bill repeals. Firstly the provision relating to the maximum fine—$750—could have been substantially increased to bear much more relationship to today’s realities. Secondly we could have actually for the first time in 30 years appointed the regional disciplinary committees that the 1976 Act established. That would have given some teeth to the concern and would have made this legislation completely unnecessary. 
But it is more serious than that. This legislation is also insidious because the real message that it sends is that industry sectors be they the real estate sector or any other industry sector are now on notice from the Government that statutory regulation of their activities is just round the corner. For the last 20-odd years in this country we have put the onus on industry sectors to self-regulate to self-administer. Now the Government is turning that on its head and saying we are moving back down the path of essentially a Government takeover of regulation of those industry sectors. Here is the rub: the costs of that administration will be borne by the consumers. Young homeowners buying their first home will not have any greater protection as a result of this bill’s passing; they will face increased costs from the cost of administration of the new bureaucracy that is being established ostensibly to give them greater protection than they already have. It is a nonsense and it is a con. 
But the whole way in which this bill has been handled reeks of those two comments. I heard on 30 July this year an announcement in the media that agreement had been reached with New Zealand First over the content of the Real Estate Agents Bill and that it would proceed as a result of that agreement. Then there was a statement from the Real Estate Institute welcoming the changes that had been made. I was somewhat perplexed and immediately contacted the institute to find out what had been agreed only to be told two things. First the institute did not know of had not seen and had not been party to any of the discussions about the amendments to this bill but thought it appropriate to make a conciliatory statement. Second the institute’s understanding was that the discussions between New Zealand First and the Government came down in the end to a real estate agent in Tauranga who is known to the former member for Tauranga offering some advice and some drafting which became the basis of the amendments which at that stage were not known. 
This House can draw its own conclusions about the insidious tie of relationships between external parties and people within New Zealand First and what might well have been transacted as a result of that. That is for another place; I will not go there. But I will make the observation that it was not until 2 September over a month later that the Minister actually tabled the amendments that were being sought to be made. So we had the ludicrous situation of the Justice and Electoral Committee completing its work and reporting the bill back to the House a political deal then being struck somewhere else and the outcome of that deal being announced a month or more after the announcement that the agreement had been struck. That does not give any confidence to anybody about the credibility of this process let alone the worth and vitality of the legislation that is being passed. This is not about a better deal for consumers in terms of their interactions with real estate agents; this is all about satisfying the political bluster and the bullying that we heard from the Minister in the lead-up to it. In the old Mike Moore language every cliché known to man is being trotted out by “Mini-Mike” to justify this sort of thing. That is not the basis on which to make law; it simply makes a farce of this place. 
Let me turn to the next issue: the question of property management. I have heard it said right throughout this debate that property management could not be dealt with within the context of this bill because it was outside the scope of it. I want to refer to a case that was disposed of by the Real Estate Agents Licensing Board in June of this year. It was presided over by the Hon Bill Jeffries a former Labour Minister of Justice—and a very good one. It involved Paul Ronald John Romanos trading as Paul Romanos Real Estate and it was brought under section 94 of the Real Estate Agents Act and was accompanied by a section 98 application and one or two other provisions of section 33 as well. The upshot of that case was that Mr Romanos was struck off as a real estate agent. His licence was cancelled because of misappropriation of some $44000 relating to a body corporate of which he was the property manager. 
To suggest that dealing with property management is outside the scope of this bill is ludicrous when the Real Estate Agents Licensing Board already within the provisions of the Act that is being repealed deals with matters relating to the conduct of real estate agents who trade as property managers. I find it incredible that what is happening here is that in effect very shady operators like Mr Romanos and his company are being protected by the absence of reference to property management in this bill. It is no consolation to people for us to say that it is down for another review; the Romanoses of this world will continue to rip off their clients in the interim and all the brave words from the Minister about land sharks and every other ridiculous phrase that he used look absolutely hollow when we see that this type of behaviour is not addressed but implicitly condoned in this new bill. 
I want to know what the status of hearings by the Real Estate Agents Licensing Board of similar complaints will be in the wake of the passage of this legislation. Does it simply cease to be? Is it overtaken by the new Government-imposed statutory agency? What other complaints in train at the moment about property managers will be left to die and to falter? 
That example proves the nonsense of this legislation. This is not about a better deal for real estate agents and their clients. This is not about protecting the public interest. This is about as the Minister so aptly said right at the beginning bringing the hammer down; this is vengeance politics. If he were really concerned about the battlers on “Struggle Street”—I am sure he used that phrase—whom he professes concern for then he would have amended the 1976 Act and he would have done it over a year ago. The great need for change—the urgency of it—to prevent these poor people from being exploited and ripped off looks incredibly hollow when we see that it has taken us over a year to get to that point and when we see that two simple amendments to the primary Act would have dealt with the concerns that were expressed would have ensured that the fewer than 100 out 19000 real estate agents each year against whom complaints are lodged would be able to be disposed of or to be disciplined adequately and would have reinstated public confidence in the industry. 
This bill is a mighty big sledgehammer to crack a very small nut and the sour taste in the mouth that the nut leaves is that the poor long-suffering consumer will yet again bear the cost of this ministerial obsession. This is not the way to make law; this is appalling legislation and it deserves to be opposed with vigour. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 It is a pleasure to stand and speak in support of the Real Estate Agents Bill. Had the previous speaker been on the select committee he would have listened to the submissions—the compelling submissions—about people who have had really bad experiences in the industry and how they were really not well treated in terms of seeing complaints handled and upheld. 
Firstly I thank the officials who have worked incredibly hard on this legislation because the very constructive submissions that we heard had a number of themes and the officials were able to give us very sound advice on them and amendments were made in the Justice and Electoral Committee to ensure that the issues raised were addressed. I also acknowledge Sue Bradford. Sue talked about the visit undertaken by me Labour colleagues and Sue to Barfoot and Thompson who took us right through the whole process of real estate and explained how it worked. It was a very very fruitful visit. 
I note that there were two types of submissions from firms. There were the firms who came along and who had put a tremendous amount of work into their submissions. That was very constructive. They supported many parts of the bill. In fact many supported independent regulation over self-regulation because I think they went to the purpose of the Act. That is why we made an amendment. The original purpose was to promote and protect the interests of consumers relating to real estate. That was the primary purpose but it was also to promote public confidence in the performance of real estate agency work. I thank those firms who came along. I feel that their submissions were very constructive. 
I also note that there were many many other submissions that were standard form submissions. We are all pragmatists here; we know how it works. The Real Estate Institute had a very very strong view about self-regulation and about the status quo and produced a form submission that it encouraged many of its members to sign. That was perfectly pragmatic; that is what happens. But at the end of the day when we sat and talked to people about protection there was very much a meeting of minds with many of those submitters about the need for protection but more important for independence and for a system that the public has confidence in. 
I am absolutely appalled at the games the National Party members are playing. I have to say that they were there they knew what the issues were they were not in disagreement with many but at the end of the day they held the old finger up in the wind to see where they thought they would get a lot of support from in terms of the people who were important to them in an election year. They made a very pragmatic decision—and certainly a decision that I do not respect—not to support this bill. There is absolute nonsense coming from National members around the issue of property management. National knows that it was outside the scope of the bill. We heard from independent people who do not work in the real estate industry but who work in property management. They came to the committee and said: “We support regulation but we won’t be covered. We support looking into this and covering the whole industry around standards.” And we say: “Good on you for doing that.” That is why there is a commitment to review the status of property management and should legislation be required—and I believe that will be the case—then that will come into effect. The Minister has made the commitment that it will come into effect at the same time as this legislation comes into effect. 
All of the nonsense about how this legislation does not meet needs is absolute rubbish. Thank heavens National does not have the numbers because it wants the status quo whereby people who have a complaint are at the mercy of the industry there is no independence whatsoever and there are no fines of any impact that give people who are investing in the biggest investment of their lives the protection they deserve. This is a fantastic bill. It has been dramatically improved by the select committee process and I am proud to stand in this House to commend it. 
Dr RICHARD WORTH (National) 
: 
 I cannot empathise on any basis with the comments that the previous speaker Lynne Pillay made. I think a very good starting point for looking at this type of legislation is to gauge the reactions of both the public and the industry organisation to what has occurred. Just by way of contrast I look for a moment at the Lawyers and Conveyancers Bill. In the passage of that legislation a very committed effort was made by the Law Society and the policy advisers in the Ministry of Justice to come up with legislation that would provide a workable framework for the future and would also enable a high level of consumer protection to be offered to the public and society more generally. 
This bill certainly did not have that intent in mind. It immediately put the Minister in a situation of conflict and confrontation with the industry. He believed quite clearly that there was massive rorting and fraud going on the sector and he decided he would make an example of this particular occupational group. I have had the good fortune as a practising lawyer for perhaps 30 years to have a close involvement with the industry and I can certainly make some comments that although not exactly insider comments reflect an understanding of its operations. One of the things one could say about those involved in the sector particularly those in leadership positions is that they have a passionate concern about the sector and they have in many cases given thousands of hours of time to seeking to improve the lots both of those who work in the sector and of those who seek to take advantage of its services. 
We saw clearly when the bill was introduced where the Minister and his advisers were coming from because the explanatory note to the bill had in it a general purpose statement that started off by noting that “The Real Estate Agents Act 1976 is over 30 years old”. That in itself seemed to the Minister and his advisers a reason for making change. Yet I reflect on the Crimes Act 1961 which is old legislation in respect of which there is no necessary warrant for change. The Crimes Act 1961 would be—what—some 47 years old. So in itself the fact that legislation might be 30 years old is not significant. 
The policy advisers also said in the general policy statement that the shortcomings of the Real Estate Agents Act included that “It provides for a system of industry self-regulation that lacks independence transparency and accountability. This combined with the significant risk posed to consumers from real estate activity such as mishandling of funds poor contractual advice misleading representations conflicts of interest and misuse of information make it essential to provide a regulatory framework that affords consumers an adequate level of protection.” So battle was joined. The end result in a setting of confrontation I believe has not been to produce a statute that has those key elements of consumer protection that may be required. 
What was the response of the institute to all of this? Well it had a number of concerns and I would identify them in two broad categories. First of all it saw—as must be readily apparent—that the bill lacked consistency. It exposes thousands of people to new risk through its failure to include property management and residential letting and leasing within the new regulatory framework. I think it is right to say that the fall-out from the Blue Chip collapse clearly demonstrates the need for these activities to be regulated. I have heard the comments of the previous speaker but here an opportunity to effect significant change and make a significant advance to improve the merit of this legislation was not taken. It is all very well to say that these issues may be addressed in the future but the reality of the shortage of parliamentary time is that it will be some considerable period—certainly if this Government lingers in office for another term—until any appropriate change is made. 
So there was a criticism of lack of consistency. But I think there is a stronger criticism that can be made and that is basically that the bill lacks balance. I do not doubt that the Minister has done his very best but in a setting where he has no basic knowledge of what the problems are it is an exercise fraught with difficulty. So I am not criticising the Minister—he has done the very best he can with his intellect and with the advice that he has had available to him. That a shortfall has emerged is quite understandable. The Minister should not feel bad about that as he shouts across the House. He should not feel embarrassed. I certainly do not feel embarrassed in making comments about the challenge that he has had to face and in fact the failure that has so sadly occurred. 
I was saying that the bill lacks balance and I would just like to develop that for a moment. The 1976 Act has been completely dismantled. Even those parts of it that have worked really well over the past 32 years have been thrown out. There has been this substantial transfer to the authority or to the Minister of a raft of regulatory functions. I note that in its submission the Real Estate Institute spoke about a scorched earth approach. Maybe those are heavy words but I think they can be justified because a number of things have happened here including putting at substantial risk a very cost-effective system of conveyancing at a time when housing affordability as we all know is a significant concern. If this bill is to pass we will also have produced significant avoidable expense some of which will quite clearly be passed on to consumers. 
We will see significant delays to the establishment of the framework and that of course is associated with the issue in the Supplementary Order Paper of an extended period for the transitional provisions. We have compromised the workability and practicability of the new regime by denying input to those with direct industry experience. So the outcome is less satisfactory legislation than might have been expected. 
I think it is appropriate to respond directly to comments that the Minister may make at a later stage in connection with National’s perspective on the bill. I have pretty much summarised where the institute and those in the industry stand but National took a full part in the bill as it was reported from the Justice and Electoral Committee. It noted that some of the concerns that it had expressed had been the subject of patching but it continued to oppose this bill. I think we do so for reasons that are soundly based. Are they based on an industry perspective? Sure. But they are also based on the perspective of the community. 
I think we would say that a new independent authority with industry representation is required to give consumers confidence that there is effective oversight of this industry. I am bound to say that there are circumstances—fortunately only a few—where fraud and resultant loss have occurred. But this bill is not adequate; it is not up to the task of achieving the objective that should have been set. I have spoken about the fact that a majority of submitters were concerned that property management was not included in the bill and I think we all know that the last claims in respect of the fidelity guarantee fund were in relation to property management. The committee was told that about one in five complaints relates to property management. 
Hon Clayton Cosgrove 
: They had no evidence for it. They did a ring-round. 
Dr RICHARD WORTH 
: The Minister is critical of the evidence that has come to the committee. A lot of the evidence that came to the committee may have been flawed. It seems to be the case that it is that flawed evidence that the Government members have relied upon. I hope in the course of further comment on this bill to deal with issues that remain of true concern. 
Amendments recommended by the Justice and Electoral Committee by majority agreed to. 
A party vote was called for on the question  
That the Real Estate Agents Bill be now read a second time. 
Ayes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Bill read a second time. 
In Committee 
Part 1 Interpretation and application 
CHRISTOPHER FINLAYSON (National) 
: 
 As the minority report of the National Party makes clear we support the timely reform of the real estate industry. Indeed we go so far as to say that the Real Estate Agents Act 1976 is well overdue for reform. We also say that the purposes of the Real Estate Agents Bill are well spelt out in clause 3 which is the first clause of Part 1. It is important that we have regulation of the real estate industry that promotes public confidence in the performance of real estate agency work. But we take issue with subclause (2) about whether the purposes of the bill are actually achieved in the way that that subclause says they are achieved particularly where it states they are achieved by “providing accountability through a disciplinary process that is independent transparent and effective.” 
To come back to the general concerns of the National Party—and we acknowledge that the Minister in the chair the Hon Clayton Cosgrove has dealt with two of them—I say the first concern we had which related to property management has not been dealt with. The second concern revolved around the uncertainty created by the 5-year review of the employment status of real estate agents. That excited a great deal of discussion in the Justice and Electoral Committee meetings and it has been dealt with to our satisfaction because that provision is now deleted. The next concern is about the transitional provision and I will spend some time on talking about the practical implications of the transitional provision when we deal with clause 2. We are not happy with that. The next concern we had was that auctioneers remain excluded from the legislation and that the new rules relating to auctions were impractical. That concern has been dealt with to our satisfaction because those clauses have been deleted on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove. The auction bidder’s record was also impractical and that has been dealt with to our satisfaction because as I said clauses 136 to141 are deleted. 
We remain concerned about the bureaucracy and the effect it will have on costs to the consumer. That has not been dealt with. We also remain concerned about the requisite experience for a real estate agent to hold a licence. 
So some matters have been dealt with and it is good that the Minister’s Supplementary Order Paper advances matters but some other matters are not dealt with and we remain concerned about them. Therefore we continue to oppose them. If the Minister was prepared to have an open mind on those matters I believe that the remaining concerns could be resolved but that is a matter for him. 
I will briefly explain one or two matters that the select committee dealt with. A number of exemptions were contained in the bill. I have already mentioned clause 7 in my second reading speech. It deals with the exemption for lawyers and conveyancers and only minor alterations have been made to it. Licensed auctioneers remain exempt and that is fair enough. We deleted the exemptions for Landcorp and the exemptions granted by the authority. Clause 11 is an interesting clause. We tried to find out what the position was under clause 11. If my memory serves me correctly it relates to a particular part of New Zealand only—somewhere in the Ruapehu district—where certain land agents are exempted under the regulations. I questioned whether we still needed that clause because it covers so few people. Clauses 12 and 13 also deal with certain exemptions by Order in Council or on the recommendation of the Minister. I simply refer the Committee to clause 155 and in particular to clause 155(aa) 155(2) and 155(3). It was considered that the regulation-making power in that clause was the best place to deal with issues relating to the exemptions formerly contained under clauses 12 and 13. 
In conclusion on this part I simply say that the purpose of the Act as set out in clause 3(1) is commendable but I regret that the purpose is not achieved by the structure that has been created. Some issues have been dealt with but we simply do not need a bureaucracy to regulate this occupational group. We remain very concerned at the other issues I have dealt with. 
KATE WILKINSON (National) 
: 
 Thank you Mr Chairperson for allowing me to take a call on Part 1 of the Real Estate Agents Bill. As National members have stated throughout the debate on both the first and second readings we support the purpose of the bill as contained in clause 3 which is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work. I cannot underscore enough the fact that we certainly support that purpose. We do not think this bill achieves that purpose and we think that it is a missed opportunity. 
I want to spend some time on the interpretation clause which is clause 4. It is the definitions clause and there are a couple of definitions I would like the Minister to take a call on. The definitions of “residential” and of “real estate agency work” are integral to how this bill will operate how it can protect consumers and how it can be effective. As a practitioner who spent some time in the conveyancing field of legal work I certainly know that even under the old real estate legislation the definition of real estate work was very topical and often discussed. It is a definition that will cause confusion and I think it will be tested in the courts if this Parliament introduces provisions that are uncertain or ambiguous. 
If one looks at the definition in clause 4 of “real estate agency work or agency work” one sees that it “(a) means any work done or services provided in trade on behalf of another person for the purpose of bringing about a transaction; and (b) includes any work done by a branch manager …”. And that is fine but I think we really do need some clarification on the exclusions. Under paragraph (c) the work “does not include—(i) the provision of general advice or materials to assist owners to locate and negotiate with potential buyers; or (ii) the publication of newspapers journals” etc. “that include advertisements for the sale or other disposal of any land or business;”—and that is fine—or the broadcasting of such advertisements. Again that is fine. The work also does not include “(iv) the lending of money on mortgage or otherwise; or (v) the provision of investment advice;”. The Minister just might like to know that there is an extra “or” at the end of that subparagraph which needs to be deleted. It does not affect the substance of the provision but it certainly does affect its form. 
I would like the Minister to take a call to explain to me and to the Committee how the operations of companies such as Green Door and the increasing trend to sell properties on TradeMe are affected by this definition of real estate work or the exclusions thereto. I would also appreciate the Minister taking a call in relation to subparagraph (v) which excludes the provision of investment advice. Many people go to their real estate agents for investment advice. They want to know what investment properties to purchase they want to know the rate of return on property and they want to know whether there is any possibility of making capital gain on property. So they actually do go to their real estate agents. Admittedly that is mainly in the commercial field but not necessarily just in that field; it can also be in the residential field. They go to their real estate agents for investment advice. 
This bill expressly excludes the giving of investment advice but the bill is deficient to the extent that it does not actually say what investment advice really is and where it starts and stops. Does it include the real estate agency work that is done once the purchaser has decided to purchase a property? Does it start at the beginning of the transaction when the advice is first sought? Where does the investment advice start and stop because that is a very important point in determining what exactly investment advice is and whether it is excluded under the regime of this Real Estate Agents Bill. 
I know that the Minister in the chair the Hon Clayton Cosgrove is not listening because he does not actually understand the real estate industry at all but the other issue is in relation to residential property and its definition in clause 4: “residential property means any property used or intended to be used exclusively or principally for residential purposes”. That sounds simple enough and the Minister will know because he is actually temporarily the electorate member for one of the fastest-growing areas in the country which has a proliferation of lifestyle properties. Does a lifestyle property fall within the definition of a residential property or not? What does “exclusively or principally” mean? If a person has a 10-acre/4-hectare property on which there is a house a garage a stable a couple of ponies and four sheep is that residential property for the purposes of this Real Estate Agents Bill or is that excluded? 
Someone might ask why that definition is important. It is important because we can turn to clause 129 and read “Parties may cancel sole agency agreements in respect of residential property 90 days after agreement is signed”. So if a property is a lifestyle property—that is partially used for residential partially used for agistment partially used for grazing—does that mean that the parties to that agreement the vendor-clients can then automatically cancel that sole agency agreement after 90 days or does that mean they cannot because that will be very important. If they cancel it and they cancel it wrongly because of the uncertainty in this bill as enacted they could end up instructing other agents and paying twice the agency fees twice the real estate agent’s commission. So we need to know and the Minister needs to take a call on the scope of that word “residential”. 
The other issue in relation to the definition of “residential” concerns subdivisions. Although clause 129(4A) excludes residential property that “(a) has been developed with other properties in a continuous area; and (b) is proposed to be sold or otherwise disposed of by a vendor who also proposes to sell or otherwise dispose of … some or all of those other properties.” at what stage does residential property fall within that exclusion? Is a subdivision created for example by dividing that 4-hectare paddock into two 2-hectare paddocks? Does that make that land a subdivision that falls within the exclusion provision in the definition of residential property for the purpose of clause 129? 
Although to some that may seem pedantic as one who has been involved in this industry as a lawyer for many many years I can tell members that a number of disputes arise from the vendor-clients who think they have properly cancelled a sole agency agreement for whatever reason but who suddenly find that they have not cancelled it and in the meantime they have gone to another agent and then they run the risk of paying twice the commission. 
I do not think this bill is good law for the protection of the consumer when it has these uncertainties in it. Some of these uncertainties were raised at the select committee but they were not answered and I think one of the basic flaws of this bill is that although it is a real estate bill and relates to real estate agents it seems to have been tailored with only residential property in mind and without giving any thought to other sales of real estate whether commercial industrial or lifestyle. I think those issues do need to be addressed and I do think the Minister needs to take a call on that. 
The other definition I will also speak about is the definition of “transaction”. Although it might be a typo that definition in clause 4 has five paragraphs. Most talk about the “grant sale purchase or the disposal or acquisition” of a licence freehold estate or leasehold estate but paragraph (a) does not include the word “grant”. The word “grant” is specifically excluded in relation to paragraph (a) of the definition of transaction so paragraph (a) includes only “the sale purchase or other disposal or acquisition of a freehold estate …”. It does not include the “grant”. That omission must be deemed to be deliberate because that is the way statutes are interpreted and I want to know why the word “grant” has been deliberately omitted from paragraph (a). 
Finally in relation to this call I will talk about the Minister’s Supplementary Order Paper 243 which talks about the sale and purchase of shares and states that they are excluded. Why are they excluded? In the field of real estate there is often a family-owned company whose sole asset is a farm and for various reasons—for example it could be for GST or other reasons—rather than sell the real estate or the property itself the parties decide to effect the transaction by way of the sale of shares. That for all intents and purposes and common sense says that that is a sale relating to real estate but under this bill it is not caught. I think that that again is a deficiency in this bill which is borne out by the lack of awareness on the part of the Government parties as to how the real estate industry works. I think that that really does need to be clarified because more and more rural property transactions are being conducted by way of a sale of shares. 
Hon DAVID CARTER (National) 
: 
 It is with some concern that I see this legislation back before us this morning. My concern is the relationship between the Real Estate Institute of New Zealand and the Minister in the chair Clayton Cosgrove because that relationship appears to be at an all-time low— 
Dr Richard Worth 
: Fractured. 
Hon DAVID CARTER 
: —permanently fractured. In fact I refer to an editorial in the  
Manawatu Standard 
 on 12 July this year in which the editor said: “Now that the heat has gone out of the property sector Mr Cosgrove looks like a bully.” I say to the Minister that this is not the way to conduct a review of the legislation under which the real estate industry operates. 
I have had a harmonious relationship with the industry for many many years. I have appreciated the worth of that industry. I know that throughout the time National was in Government the industry requested on many occasions that the Act be modernised and reviewed but because National had so many other important things to do we did not get on to the job. Then Mr Cosgrove got the chance so what he did was to go out and call the real estate agents of this country cowboys and land sharks. I know that he has had to back down because Helen Clark put his arm up behind his back and said that is not the way to progress legislation. He has had to eat humble pie with his mate the Rt Hon Winston Raymond Peters. He has had to go to the Rt Hon Winston Raymond Peters and ask him to please support the legislation so that he can get it through the House. He has had to go back to the Real Estate Institute and to work diligently on a Supplementary Order Paper which he promised to present to the institute approximately 2 months ago. I think I am right in saying the institute got it yesterday at around 11 o’clock. It goes some of the way towards starting to mend the fractious relationship that this Minister has created with the industry but it does not go far enough. 
I say to that member who was aptly described by the  
Manawatu Standard 
 as a bully—not my words but the words of the editor of the  
Manawatu Standard 
—that he ought to learn how to handle relationships far better. If he had done that then I think we could have had legislation before the House today that everybody could sign up to. He would not have had to go begging for the support of the Rt Hon Winston Raymond Peters; he would have had support from everybody. But instead he goes around and talks about the industry besmirches it and calls the real estate agents of this country cowboys and land sharks. I am not saying they are all perfect. I am certainly saying to the Minister that the great majority of them are. 
Hon Clayton Cosgrove 
: As I’ve said. I’ll give you all the press cuttings. 
Hon DAVID CARTER 
: Oh the Minister is now saying the great majority are good guys! That is not what he said a couple of months ago when the guy was full of bluster and bravado. He went on TV—I remember seeing it—and talked of carnage in the industry. Now he is saying most of them are good guys. Why did he not think of doing the job properly in the first place? Why did he go out and destroy a relationship that did not need to be destroyed? Why did he not talk to the Real Estate Institute work with it— 
Jill Pettis 
: Unlike that member he did something. 
Hon DAVID CARTER 
: Jill Pettis is piping up now. What does she say? 
Jill Pettis 
: That member did nothing! 
Hon DAVID CARTER 
: I am the one who has been talking to the Real Estate Institute on a regular basis making sure that its concerns are addressed in the Supplementary Order Paper. That member would not have picked up the phone to talk to anybody in the industry. She probably would not know anybody in the industry and if she did she would probably abuse them; she would pick up on Clayton Cosgrove’s words and call them all land sharks and cowboys. That does nothing I say to Jill Pettis. 
What this industry wants is modernised legislation. It wants modernised legislation so that it can operate in the 21st century. The industry has been requesting that for a long time and if the Minister had only worked with the industry and prepared some legislation that addressed the concerns held by a wide number of New Zealanders then we could have had legislation back in the House today that would be supported by most political parties. But no Clayton Cosgrove probably took his lessons from Jill Pettis so he had no chance of being a gentleman. He had no chance at all; instead of that it was bullying tactics bluster and words that I should not be allowed to use in Parliament and will not. Consequently we are here now with legislation that will mend some things that need to be mended but it will not go far enough and it will not be enduring legislation for this industry. Of course it is something that the National Government after 15 November will have to come back and tidy up simply because of the arrogant and bullying attitude of the Minister. 
Kate Wilkinson 
: And ignorance! 
Hon DAVID CARTER 
: The Minister obviously had a run-in with somebody some time—we do not know why. 
ERIC ROY (National—Invercargill) 
: 
 I was not going to take a call on this part but I am so intrigued when I look at this bill because I well remember seeing the Minister in the chair the Hon Clayton Cosgrove on TV using some very extravagant language to describe real estate agents: “rip-off merchants” “rascals” “land sharks”—all of those sorts of words— 
Hon David Carter 
: Cowboys. 
ERIC ROY 
: —cowboys—and he was going to protect the consumer. I will talk a wee bit about that in a minute. 
When one looks at this legislation one asks what the purpose of Part 1 actually is. The purpose rather intrigues me because we had this very very strong rhetoric about how consumers were being ripped off and were at risk and when I look at the commentary I see that the purpose of the Act is to “reinforce the message that the bill sends to the industry”. So here we have this great mischief occurring in the transactions of the nation and this bill will reinforce the message. I feel that if there are such evil procedures taking place in the transactions involving real estate around the country there certainly needs to be quite a bit more than a message. 
I think that this bill is spawned out of envy to some degree. Some real estate agents have actually been successful. Therefore if they have been successful they must have been conducting evil business. That is where it comes from. 
Hon Clayton Cosgrove 
: That’s silly. 
ERIC ROY 
: It is not silly. The Minister is now interested. If one looks at the expenditure of an individual in a lifetime and at the size of the investments people make one sees that No. 1 is real estate. There is absolutely no doubt about that. No. 2 is a motor car. Who are the most hated people apart from politicians? Car salesmen! We have this focus on car salesmen so we have to lift our game and hate those successful real estate agents. The third biggest investment that people make in their lives is carpet which is rather fascinating is it not? So the next thing we will see is that carpet salesmen are ripping off the nation. That is no basis to legislate on. 
The consumer is at risk—well the consumer is frequently at risk in a whole range of ways. Looking after the consumer is a high aspiration but to a degree we have to set out a course—a road map—so that people who are making these real estate investments have a course that they can follow. There is a requirement that real estate agents be licensed and are of good character. Then one writes a contract. I have bought land on a handshake without an agent. Would it not be great if we could do that? 
Hon Clayton Cosgrove 
: You did? 
ERIC ROY 
: The member understands that there are no problems with the great majority of transactions that take place. Then one gets a lawyer. The lawyer looks at the land information memorandum report and the memorials to see whether there is any mischief. There is a structured way in which those transactions take place. 
Hon Clayton Cosgrove 
: So there’s no problem at all? 
ERIC ROY 
: Well here is the point you see. The Minister said “So there’s not a problem?”. I want the Minister to stand up and say “This is the mischief that we have uncovered.” I want the Minister to take a call and say “This is what was happening.” Then we might have something to debate other than a bill whose purpose is to reinforce a message. 
I think we have had the select committee beavering away over submissions. I will have some things to say because I became intrigued by an element in Part 5 so I am looking forward to getting the Minister’s response on that. But essentially we really need to have a clearer amplification of what the purpose is in this bill. What is the mischief? What have these evil real estate agents been doing to the nation of New Zealand that this bill will protect us from? If I am to know what it is then I need to have some clear articulation of what the mischief is so that we can measure whether this bill addresses those things. I look forward to the Minister in the chair the Hon Clayton Cosgrove telling us what those evils are. 
Hon Clayton Cosgrove 
: Hold on help is on the way. 
ERIC ROY 
: Right well let us hear about them. 
Dr RICHARD WORTH (National) 
: 
 At the moment we are dealing with Part 1 of the Real Estate Agents Bill which National opposes. I certainly support what the previous speaker Mr Roy said about the deficiencies of this particular part. I do not want to deal with the purpose provisions because they are now the subject of some amendment. But I would like to deal with what is clearly a gap in this legislation—a gap that others have recognised—relating to residential letting leasing and property management because if the bill were to be extended the extension would take place in this part in substantial measure. 
Members have heard the argument that residential letting leasing and property management should be brought within the coverage of the bill. That would not be very difficult. It could be done by removing the phrase “(other than a tenancy to which the Residential Tenancies Act 1986 applies):” from the definition of “transaction” in clause 4 and by amending the definition of “real estate agency work’’ or “agency work” in clause 4 to include something that might be expressed in this way: “does include the management of leases and tenancies on behalf of another person including the collection or receipt of rent money”. If those changes were made then that would be sufficient to deal with the issue that has been identified as a looming lacuna in this bill. 
Some would say that those changes might carry with them a need for substantial adjustment of the transitional period—and there has been a minor change to that transitional period—but I question that because I think only a very short transitional period would be needed to bring property management under the regime. Why do I say that? Because the current residential property managers’ code of practice and the current property management strands in the National Certificate in Real Estate for salespeople can be very easily adapted to suit this purpose. That was the issue Mr Finlayson was trying to get across to the Minister when he made those points in his second reading speech. I also think there is a strong case for commercial and industrial property management to be included in the legislation. It should not be simply limited to residential letting leasing and property management. 
I would like to pick up on another important point that Mr Finlayson made in the course of his comments on this part because he usefully drew our attention to a series of omissions that have been made with regard to clauses 9 10 12 and 13 in Part 1. These include an exemption for Landcorp Farming Ltd an exemption granted by the authority and some other provisions. What does remain? As Mr Finlayson identified what remains is clause 11. To the challenges that Mr Roy laid down to the Minister in the chair the Hon Clayton Cosgrove—which I hope he will respond to—I would just add that I invite him to look for a moment at clause 11. Clause 11 now states: “A person who is exempted by a regulation made under section 155(aa) may in accordance with that regulation carry out real estate agency work.” So there is a reference to later provisions contained in a later part that will be the subject of debate. But if we look at clause 155(aa) we see that in very broad terms it enables the Governor-General in the case of any person or class of persons to make an exemption. 
The challenge I am throwing down to the Minister is to briefly explain what the current exemptions are but more specifically to invite him to consider the work that has been done by the Regulations Review Committee relating to the use of exemptions. I ask why in this case it has been deemed to be appropriate to depart from the Legislation Advisory Committee recommendations and guidelines for exemptions of this type because I believe that the power to grant general exemptions to people or classes of people from the requirement to be licensed should be removed from the bill. If exemptions are to be made then they should be expressly provided for in primary legislation and clause 11 therefore should also be omitted. The Minister should comment on that. It is simply not appropriate to confer by way of delegated legislation a privilege on a person or a class of persons for no good reason. 
If the power to grant exemptions remains then surely the bill should be amended to require a clear code to be established for the circumstances in which exemptions should be granted. There should be an obligation to consult with affected parties certain factors should be laid down that can properly be considered consideration should be given to the effects of granting an exemption on persons who are licensed under the legislation and are not subject to the exemption reasons should be given for the granting of the exemption and of course it should be clearly recorded that the Minister who will in effect be promoting the regulation is satisfied that granting the exemption will give effect to the purposes of the bill. I ask why it is appropriate to depart from the clear guidelines laid down by the Legislation Advisory Committee in the way that has been done here. 
Those are the issues that I seek the Minister’s response to. He cannot sit there lamely not responding to the issues that Mr Roy and I have laid down by way of challenge. 
CHRIS AUCHINVOLE (National) 
: 
 I would like to speak on the exemption for licensed auctioneers in Part 1. Clause 8 states: “A person who is licensed as an auctioneer under the Auctioneers Act 1928 may sell or offer to sell any land by auction.” I was not involved in all of the proceedings of the Justice and Electoral Committee on this bill but I remember being present for the meeting when we received submissions on the requirements where land was sold by auction. 
The submissions overall as has been said by others here today were detailed and the meetings were often intense occasions. Rightly or wrongly a large section of the real estate industry had developed real fears associated with the bill and the implications that it could have on long-serving dedicated practitioners who had been working in an ethical and thoroughly professional manner often within small communities. There was a movement throughout the industry that generated a particular point of view that did not help those who were uncertain. The fact that there were so many submissions on a very complex piece of regulatory framework would have been hard to manage in any circumstances. 
The other aspect is that other members who have spoken this morning—and I would perhaps put myself in the same category from a technical point of view—do not really have a fixed understanding of the way the real estate industry and particularly auctioneering works. In respect of clause 136 relating to the requirements where land is sold by auction I think it was Sue Bradford who had the decency to recognise this lack of understanding. In her speech this morning she said she had a complete lack of knowledge of auctioneering. I guess that this situation would have got the select committee hearings off to a rocky start. I am not sure that the officials had other than a textbook understanding of auctioneering. 
The rocky start was not necessary and did not help but I can appreciate that for those not involved in auctions and auctioneering it is a system full of mystery uncertainty risk and it has potential for deception. It is none the less probably the world’s oldest system of having a commercial exchange of goods by competitive treating amongst a group of people with a common interest in an item or items of property. There were reports of auctions being held on battlefields in Roman times as a means of personal property disposal. The system in its simplest purest form is exactly that—it is simple. It is a call and a response. Goodness only knows who dreamt up clauses 137 to 141 but on the very first day of submissions it certainly lifted the eyebrows of lifetime-experienced auctioneers right over the top of their heads. 
So that those who are listening to this stage of the debate on the Real Estate Agents Bill can understand what we are talking about I point out that the legislation states that any auction for the sale of land whether the person conducting the auction is a licensee or licensed auctioneer under the Auctioneers Act 1928 must have a bidders record before any bids are taken at an auction. 
The CHAIRPERSON (Hon Clem Simich) 
: I am just wondering whether you are of the view that you are on Part 5. 
CHRIS AUCHINVOLE 
: No we are dealing with Part 1 Mr Chairperson— 
The CHAIRPERSON (Hon Clem Simich) 
: Good. 
CHRIS AUCHINVOLE 
: —where it lists auctioneers as being licensed to conduct sales. These conditions pertain to it so it is relevant from that point of view. The person’s name and address and the reference to one or more documents by which the identity of that person is proved is provided to auctioneers who perhaps are also involved in the sale of goods and chattels cattle and sheep and all of that sort of thing. Not only does one have to get the person’s name and establish a bidders record but also one has to have some document that identifies someone as the correct person. It goes on. In the case of the person bidding on behalf of another person the name and address of that other person and the reference to one or more documents by which the identity of that person is proved must be produced. Clause 137(5) states: “The person engaged to conduct the auction must keep the Bidders Record for at least 3 years and must keep all the Bidders Records made by the person together in the form of a register of Bidders Records.” That was a needless regulation. 
Hon DAVID CARTER (National) 
: 
 Mr Chairman I want to raise two further points to do with Part 1. The first point is in relation to clause 9 which through the select committee process in the Justice and Electoral Committee has been deleted. That was a surprising exemption clause for Landcorp Farming Ltd. I want to know what the rationale was for the Minister the Hon Clayton Cosgrove as he put this legislation together to say there should be a regime for everybody else within New Zealand but that regime should not apply to Landcorp Farming Ltd. 
As the Minister will know from his days as a humble backbencher and from sitting on the Primary Production Committee the Landcorp Farming company is actually involved in significant numbers of residential property sales particularly around the likes of Lake Taupo. It seems to me that this Minister armed with that background information should never have contemplated dealing with the cowboys and land sharks as he calls the industry and then saying one particular State-owned enterprise with which he was familiar should be exempted. So I would be very very interested in the Minister taking a call and explaining the rationale for the inclusion of clause 9 in the bill originally. I am very very pleased that the select committee saw fit to remove that clause. I guess it has done that on the basis of saying “one law for all”. If the law is good enough to apply to the industry generally it should also apply to our own State-owned enterprise Landcorp Farming Ltd. 
The second issue that I want to make sure the Minister has done his homework on is around the definition of an “agent”. Here we now have the definition of an agent meaning “a real estate agent who holds or is deemed to hold a current licence as an agent”. Does that include a cowboy? The Minister has gone out there and said all land agents are sharks and cowboys etc. and they cause carnage. And here he has a fairly defined definition of an agent which seems to me to exempt anybody whom we might possibly have classified as a rogue agent. The Real Estate Institute of New Zealand is involved in a process of licensing these people. All it wants is the ability if there is an occasion where somebody becomes a rogue agent to in fact deal with that person. It has been asking for that and for modernised powers for a long time. 
Perhaps if that definition is not suitable to define a cowboy then the Minister ought to think quite seriously about including specific definitions of a land shark and of a cowboy. I say to the Minister that despite his rather extravagant outbursts and the bullying and arrogance around this legislation he is not right to label the great majority of real estate agents as cowboys because they are not. They are not cowboys and they are not land sharks. 
The Minister at the end of my earlier contribution interjected with some derogatory remark about me being a property developer. Well if the Minister means by that that I have had considerable dealings with and sold properties through real estate agents that is true. There is nothing wrong with doing that; I had every ability to engage somebody if I wanted to. I also had the ability if I was not happy with the system to actually attempt to do it on my own without involving the services of the industry. That has always been a choice available to people. It is interesting to me to note that when most people come to sell property whether it be industrial commercial rural or residential property they do not choose that path. They make a decision to engage somebody because they think the expertise offered by that person will actually further the value of the sale that they are about to engage in. 
So if the Minister would rise to his feet and earn his keep then I would be very very grateful because I think he could help the debate by answering a few of the questions that have been raised. 
The other very interesting comment that I would like to pick up on is something that I picked up from NewsRoom dated 11 October 2008. Mr Cosgrove stated then: “Every day you wake up there is incompetence more silliness and in this case alleged fraud.” As those comments were made nearly a year ago I just wondered whether he did not have some sort of premonition of what was to happen to his own Government. I think we are very definitely talking about incompetence more silliness and in this case alleged fraud. 
GERRY BROWNLEE (National—Ilam) 
: 
 I do want to make several comments on this bill. It raises the fundamental question about why we need this bill in the first place given there is currently an Act that guides a great deal of the activity of real estate agents in this country. The purpose of the bill states that it is for the protection of the interest of consumers in respect of transactions that relate to real estate and promote public confidence in the performance of real estate agency work. That immediately leaves us with the question about the range of work that a real estate agency undertakes. Right now it is not only the listing of properties the advertising of properties and the sale of properties—although technically they do not sell them they facilitate a sale between a seller and a purchaser and they connect the parties in a way that keeps them I suppose in a position of protecting their own interests—but also the extensive engagement in property management. Nothing at all in this bill deals with that aspect of their business. 
No doubt the genesis of this bill was a great deal of publicity made some time ago about one or two rogue performers in the real estate industry. It would be hard then to imagine why we need to turn the whole of the industry on its head with this Act when in fact there would not be a single professional body in this country where there are no rogue operators. Everyone regularly hears about the Law Society having to take action against some of its members for all sorts of things—perhaps coming to Parliament and telling porkies to a committee or covering up activities of someone deemed to be a client. These sorts of things happen and the Law Society duly takes the appropriate action to protect the integrity of its members. Similarly one could say that about the teaching profession and the medical profession. Periodically there are cases of doctors who go off the rails and they are discussed. If we look at all the professional bodies we see they all have some form of legislative protection and arrangement around the way in which those professionals may operate and we may find that there are rogue operators at various times. 
So what was the necessity to tighten up so very much on the real estate industry? I commend the efforts of the Real Estate Institute. It has said it wants to get tougher and wants changes that will enable it to get tougher. But I also accept that the provisions of this bill are just a step or two too far. One of the problems that beset the economy in New Zealand is the extraordinary cost of doing business. It is much higher than in many other countries in the world and when it comes to real estate New Zealand has some of the most expensive transactions anywhere in the world. I know we see people out there offering to do the job for 1 percent of the sales fee etc. but that is always on top of a range of costs that are pre-prescribed and generally prepaid by the vendor. In New Zealand it is not uncommon for real estate fees to be 4 to 5 percent. A fee of 4.75 percent is common and then there is a base fee as well. There is a range of fees up to that sort of level. It would be interesting to know why anyone would expect that this bill will lower that cost. We should surely be always looking to remove costs from our economy through legislation rather than at loading them into the economy through legislation. 
It would be interesting to hear from the Minister just how he thinks the changes he has proposed to this bill make it any more palatable to those who are on the other end of the bill. I suppose it would also be interesting to hear some recitation on the consultation that might have taken place. The Government is very strong on saying it consults widely and seldom moves without widespread acceptance of what it is doing. That is a little hard to understand given the current nature of polling but I will not go down that track. It would be interesting to hear from the Minister how he has been persuaded to change his mind. 
SIMON POWER (National—Rangitikei) 
: 
 I make myself available to the Committee after undertaking other business this morning to make a contribution on the Real Estate Agents Bill which I have taken a long and personal interest in since it was introduced into the House by the Minister the Hon Clayton Cosgrove. I decidedly recall the Minister saying to me across the Chamber that the National Opposition’s decision to oppose the bill because of seven or eight things we were concerned about would be a major problem for us in coming months. The problem for him was that it was not and we have seen from the Minister—and I am sure my colleagues alluded to this during the second reading debate—a major back-down on several of the matters we raised right at the first reading of the bill. 
The Minister quite rightly was initially concerned—this relates to the purpose clause by the way—about people whose decisions on savings and the purchase and sale of real estate were not receiving the type of service that the country would expect from real estate agents. The problem in addressing that of course was that instead of taking an approach that could have been considered to be thoughtful and forward-looking the Minister chose to take the opportunity to make a few political statements around the place. I thought the Minister’s choice of phrase was interesting. I have to remind the Committee of the fact that the Minister announced six times at the last count he was going to review and rejig the real estate industry before we saw a bill. 
We finally got the bill and found the curious thing was that clause 3(1) states “The purpose of this Act is to promote and protect the interests of consumers”. No one has ever argued with that; National has always said that should be a paramount issue. Whether we have to legislate is another issue but the fact is that the bill’s purpose is to promote and protect the interests of consumers. The most extraordinary addition to clause 3 is this: “… and to promote public confidence in the performance of real estate agency work.” That makes sense too as the Minister has been knocking the industry about the head and face—metaphorically of course—for the last 6 or 7 months. I now see that at the last moment the Minister and his officials have decided to flip the coin completely and promote public confidence. I tell the Minister that the easiest way to do that is to talk about the industry in a positive way and suggest legislation that could help to craft such positivity and such consumer confidence over the years to come. 
I am staggered after all the newspaper column inches I have read about the Real Estate Institute and how appalling the industry is that the Minster then decided to put forward Supplementary Order Paper 243 in his name—yesterday I believe or maybe the day before. Many of the proposed amendments on it were contained in National’s minority report on the bill. There are three areas of the Supplementary Order Paper where we would take exception with the Minister and those are around the experience matters which the Minister has changed the transitional period which by my reading of it he has increased by only a couple of months and of course the elusive issue of the non-inclusion of property management. 
I know that the Minister will argue as we have heard that property management could be seen to be outside the scope of the bill but as we know that matter could easily be addressed by leave of the Committee of the whole House. I would be interested to know from the Minister who is sitting there quietly and thoughtfully—it is a pity he did not do that 6 months ago—whether he would be prepared to put that leave and see whether we could indeed by the will of the Committee include property management in the bill at this point in time. I know many of the political parties represented here this afternoon would be prepared to help officials to draft an amendment to that effect so we should test the Committee in order to see its will on that point. 
I said during the first reading debate on this bill that had the Minister adopted the approach that his colleague the Hon Lianne Dalziel did in dealing with the financial advisers legislation and the matters surrounding those reviews this bill could have been dealt with I would imagine cross-party in a pretty constructive and deliberate way. There would have been disagreements on some things but overall there was no need for us to have such a fiery first start to this legislation. We will be working our way through the Committee stage in a part by part debate unless the Minister is of a mind to do so clause by clause. Either way the National Party will be here to address the issues throughout the afternoon and evening. I think the important thing is that the Minister is convinced as we go through the bill part by part that the amendments he is now proposing—having rejected them initially—are up to scratch and will do the job he wants to do. 
I am just signalling as part of the debate on the purpose clause that we are ready to have quite a detailed discussion with the Minister during the debate on the remaining parts of this bill. I have no doubt that he is up to the task but I want to know from him—and I would be grateful if he took the next call—whether he thinks the new Supplementary Order Paper 243 could be further worked to ensure that the amendments present and needed for this legislation to work properly—those proposed by National in its minority report—are considered as part of this process. I would also be interested to know whether the Minister is prepared to seek the leave of the Committee to include property management as part of this bill. If he is then again in the interests of progressing matters we are happy to put the offer to the Minister to draft something for him this afternoon and tonight. I am sure he would be happy if he agrees to that to make his officials available to give us a hand with that so we will move to try to test the Minister on that issue later today. 
Ultimately what has occurred here is that the Minister decided he would dig in and take some political opportunities 6 or 7 months ago. To be fair to him he held fast for a very long time. Then it became clearly obvious that what National had been saying at the first reading of the bill and what other parties had mentioned not only in the first reading but also during the select committee process in the Justice and Electoral Committee was that the bill as proposed simply was not doing the business not just for the industry—which to be fair is a major player in this legislation—but also more particularly for the consumers who use the industry to buy or sell real estate. 
I was not able to be there all of the time during the select committee process but I did enjoy the odd visit when the discussions on this bill were being undertaken and in fairness I acknowledge that members of the committee from the Labour side were interested in having detailed discussions about how the clauses in the bill would work. I felt a bit sorry for the officials because they were moving around a bit in the dark early on in the sense that it was not clear whether the institute or anybody else who had been consulted prior to the first reading was being consulted during the course of the bill being before the select committee. If the Minister can help us with regard to that point it would certainly help to clear that issue up once and for all. 
I am signalling that it is worth saying to the officials involved in this process that their efforts were not unnoticed. They did the best they could do with something that people tried to make into a political hot potato. In the end it really just did not fly because legislatively— 
Hon Clayton Cosgrove 
: Potatoes don’t fly. 
SIMON POWER 
: It depends on whether one throws them I say to the Minister. Legislatively there was always going to be a difficulty with the acceptability and practicality of this legislation given that it deals not just with the industry but also with consumers and its relevance to their buying and selling of real estate. Those issues of course meant that complex questions around the Lawyers and Conveyancers Act and the financial advisers legislation had to be taken into account when coming up with this bill and its purpose which is contained in Part 1. I know that Gerry Brownlee Lindsay Tisch Christopher Finlayson Kate Wilkinson and others will be talking about this matter in some detail. 
I want to finish by saying this to the promoter of this bill: it is not too late; we can still fix the bill. I know that the Minister has made a substantial shift in producing Supplementary Order Paper 243. If he had just gone a step further I am sure the bill would be moving at a much faster pace than it will be moving at this afternoon and this evening. 
GERRY BROWNLEE (National—Ilam) 
: 
 I wonder whether the Minister in the chair might be good enough to turn his attention to clause 6(3) of the bill which states: “For the purposes of this section it is immaterial whether or not a person carries out any agency work as a business in its own right or as part of or in connection with any other business.” The reason I am raising this is that when we see legislation rushed through Parliament we are left with the impression that there must be a few things in here that have not been properly considered. I take the Committee back to the definition of “real estate agency work or agency work” which is contained in the interpretation clause. It states: “(a) means any work done or services provided in trade on behalf of another person for the purposes of bringing about a transaction;”. Well that immediately raises the question about the status of private sales and about the status of deceased estates being sold within a family or for that matter outside a family—private sales between parties who are perhaps consenting over the values and property swaps. It raises the question about mortgagee sales and the way in which for example banks might cluster and group those sales. 
And then it raises other questions. Let us look for example at the recent purchase of a number of properties by the Christchurch City Council from a property developer in that city. Given that those properties were on the market but the parties did an off-market deal there is no doubt that the staff of the council effectively put themselves into a position under this legislation of being the agents who facilitated that particular transaction. It is interesting to note that the catch-all provision of “any other business” would tend to rule out the suggestion that it has to be a related business—a business related to the activities of a real estate agent. There is no suggestion of that at all. 
I think that that potentially causes quite a bit of a problem because we know that off-market sales occur frequently. We know that quite often if someone is the executor of an estate he or she may go out to relatives or family friends or others who are not direct beneficiaries of any particular estate indicate that there is a property for sale and then start to negotiate a deal. Well it would seem that under this particular law that will now not be possible. It will force people to accept the expense involved in taking on a licensed operator in order to give effect to that transaction. 
I am sure that is not the intention of the committee or even of the Minister. It will I think substantially slow the transfer of properties which might rightly be done outside the usual practice of working through licensed real estate agents. It is of course a fact that lawyers’ offices the Public Trust various banking institutions and others will not have a great interest in lining up with their papers all put together to become licensed real estate agents. 
That may not be the worst of it. I think by the reading of this bill the worst of it is that private sales between individuals are most certainly caught. It would be interesting for the Minister to offer the Committee his view on that particular point. 
It is interesting to note too that agency work “includes any work done by a branch manager or salesperson under the direction of or on behalf of an agent to enable the agent to do the work or provide the services described”. There are hundreds of people in this country who work as assistants to real estate agents. They are not real estate agents in their own right and they do not advertise their services. They may well under the instruction of the agent open up a property so that someone can view it. But they do not turn up with the papers that get signed in order for the transaction to take place. They are simply an assistant yet it would seem they are now caught under this bill and will need to meet all the requirements that this bill puts on real estate agents. 
Hon PETER DUNNE (Leader—United Future) 
: 
 I will take a brief call to give notice to the Committee of four amendments that I will be moving to various clauses in Part 1 of the Real Estate Agents Bill. There are three amendments to clause 4 and I just want to draw the attention of the Committee to those. The first amendment relates to clause 4(c)(i). The proposal is to omit that wording because what that definition does is define the scope of activities of real estate agency work or agency work. The amendment effectively says that the removal of a prohibition on the provision of general advice or materials to assist owners to locate and negotiate with potential buyers is actually logical. If we say that that activity by agents is excluded from the definition then in fact one of the major areas of concern that people might have is also being excluded. 
My second amendment relates to clause 4(c)(v) and that is to remove the reference to the provision of investment advice. At the moment we have this rather strange situation where real estate agents providing what might be described as investment advice to clients is permissible. That is permissible under this bill because it is deemed not to be a definition of real estate agency work or agency work. It seems that that is actually a major omission. It may well owe something to the rather negative way in which this particular clause has been drafted. 
The next amendment is a more technical one to the definition of a transaction being “the sale purchase or other disposal or acquisition of a freehold estate or interest in land:”. I am proposing to add the word “grant” because otherwise we do not have any capacity to deal with the issue of letting and leasing. An amendment along those lines would bring in the scope that the legislation intends. 
My final amendment to this part relates to clause 8. I simply propose the deletion of clause 8 for a very simply reason. Clause 8 as it stands introduces an exemption for licensed auctioneers. In fact in the bill as it stands auctioneering generally is excluded yet it is a major part of the real estate industry and the amendment would bring the auctioneering side of the business into the scope of coverage of the legislation. 
I have some other amendments to subsequent parts of the bill and will deal with those as we come to them. But I would ask the Committee to give consideration to those matters. I do not think they are in the main contentious. I think they are designed to make this legislation work as intended and laying aside one’s opposition to the principal Act it is always a responsibility of the House to make sure we get the best legislation in place. I simply ask the Committee to give consideration to those amendments. 
LINDSAY TISCH (National—Piako) 
: 
 I congratulate the previous speaker Peter Dunne on the amendments he is bringing forward. I think they add value to the bill. I do not find the bill as it stands to be a negative one. It is a gut reaction to a concern in the market place. I think the deletions the member proposes add value. I cannot speak for National as to whether we will support them but certainly from my point of view— 
Eric Roy 
: Yes we will. 
LINDSAY TISCH 
: We will be supporting them. The first amendment he mentioned affects paragraph (c)(i) of the definition “real estate agency work” in clause 4. It was the next one that really caught my attention and it affects subparagraph (v) dealing with “the provision of investment advice;”. I am sure there are a lot of experts out there in the market who say to people that if they purchase such-and-such a property they will get a rate of return guaranteed cash flows or whatever. If members have ever been to property seminars they will know that those sorts of things are very much to the fore. Unwilling people have been captured by too-good-to-be-true growth potentials and returns. I am sure that if this subparagraph is not taken out we will have a problem. The issue goes back to other bills the House has been debating over the months. I think the Financial Advisers Bill also encapsulates it. The point the member makes in terms of his amendment deleting that subparagraph certainly would add value. I did not catch what the fourth amendment was but the other one I did pick up on was to omit clause 8 “Exemption for licensed auctioneers”. I am sure that when we further debate these provisions Peter Dunne will have the support of National for his amendments. 
I want to go back to the genesis of this bill. It is interesting that although there has been some concern about the cowboys out there—people who have not operated in the professional way that one would expect—that situation is not unique to this industry. It happens in every occupational class. One can identify it happening right throughout other professions whether it be the medical profession the accountancy profession or the field I come from. I am a valuer by profession. [ 
Interruption 
] I did not quite catch the point of the Minister in the chair the Hon Clayton Cosgrove; would he like to repeat it or is he going to mention it when he responds to my questions? Even in the valuing profession which I was a member of for many years there has been a question mark over some of the practices that have been carried out. The situation is not unique to real estate agents. 
The industry has said that some people should not have been in it and they have disengaged after bringing the industry into disrepute. There is no place for those people in the industry. It does not matter where such people come from; they should be removed. When I look at the interpretation of “agent” in clause 4 I see that it “means a real estate agent who holds or is deemed to hold a current licence as an agent …”. Well so what? What does that actually mean in the market place? To my mind it gives absolutely no protection. If this bill is designed to protect people who are using an agent I have to say that it absolutely does not do that. 
One has to ask where the mischief is. What has actually gone wrong that makes this bill necessary in the format it is in? Where is the harm? That question was put back on 11 December 2007 when my colleague Simon Power spoke in the first reading debate. I will quote him specifically. It is in  
Hansard 
 Volume 644 at page 13817. He quotes people as asking “Where’s the evil?” “Where’s the harm?” and “What is it that this legislation is trying to address?”. Do members know what the Minister said at that time? I shall quote the Minister’s response in an interjection: “A listening Government.” Well if he is part of a listening Government—and that is what we read on page 13817—if the Minister is in tune with and is prepared to look closely at the issues that have been identified he would not be making comments about agents being “land sharks” and “B-grade goon shows”. That is what the Minister said. It is mentioned here. 
Hon Clayton Cosgrove 
: Just the bad ones. 
LINDSAY TISCH 
: Well a “B-grade goon show” is not a way to describe this sort of industry. If one wants to build goodwill with an industry one has to get alongside the people in it and work with them. The Minister says the Government is a listening Government; I say he is out of tune. He is out of step— 
Hon Clayton Cosgrove 
: Tell the victims. 
LINDSAY TISCH 
: The Minister talks about the victims. What about the “willing seller willing buyer’ concept? What about caveat emptor? What about somebody who is about to make an investment actually getting some independent advice whether from an accountant or a lawyer? A lot of the problems have happened because people take at face value what they are told and believe that it is kosher. They do not look behind the scenes. We have always advocated— 
Hon Clayton Cosgrove 
: So it’s their fault. 
LINDSAY TISCH 
: No it is not their fault; it is just that they do not understand and they do not know. But the Minister cannot label land agents a “B-grade goon show”. That does absolutely nothing I say to the Minister for the reputation of this Government in trying to work out a programme going forward. 
The industry is looking for change. It has identified that. It is not averse to change. It is saying that it wants legislation of the time. It wants to make sure that in this new century it meets the demands of the market and safeguards its customers. The worst thing that can happen is that agents get a bad name and people do not use them or look elsewhere. At the end of the day most agents are on a commission. Their jobs are based on a commission. They have to build up goodwill because if they do not they are down the road. Possibly the one good thing about the commission system is that only the good agents survive. 
Gerry Brownlee talked about the excessive fees paid to agents. Well there is no harm—and I have done this in the past—in negotiating a deal in negotiating a flat rate. That is acceptable. If people are in a position to do that then moving to a flat-rate arrangement can work extremely well. 
In the final minutes of my speech I want to ask the Minister a question. He can respond after the lunch break. The interpretation clause talks about “real property”; does that term include mussel and oyster farms? I do not know the answer to that. I have asked about it because we are talking about property. But if we are talking about leases on mussel farms— 
Hon Tariana Turia 
: I’m wondering whether real estate agents are involved in selling mussel farms. 
LINDSAY TISCH 
: Well we are talking about property are we not? I am talking about a lease which is tradable. People have an interest in it. There are mussel and oyster farms throughout my area. There are farms in the Firth of Thames the Coromandel the Marlborough Sounds and in Big Glory Bay on Stewart Island. There are a lot of such properties out there. 
Sitting suspended from 1 p.m. to 2 p.m. 
LINDSAY TISCH 
: I put to the Minister a question specifically relating to clause 4 “Interpretation” about what was included in the term “land” the definition of which talks about “real property”. The question I asked—and I would be interested in a response from the Minister—is whether mussel farms and oyster farms are included— 
Hon Clayton Cosgrove 
: No. 
LINDSAY TISCH 
: Well I would like a more specific answer than just “No.” When the Minister takes a call he might like to explain it to the Committee to me and also to Tariana Turia who was interested in the question I was asking. If those farms are not included in “real property” we want to know why. 
Hon Clayton Cosgrove 
: Only land. 
LINDSAY TISCH 
: The definition talks about “interests”. A mussel farm does not just float there; it is actually on something and I want a more specific answer than just “No.” 
My colleague the very learned lawyer Kate Wilkinson who has interests in the real estate world and understands the complexities of it and who in her time as a lawyer handled many real estate transactions has asked some specific questions that we would like the Minister to respond to. Again they relate to clause 4 “Interpretation” and specifically to the definitions of “agent” “residential property” and “transaction”. Specific questions were put to the Minister by Kate Wilkinson. I hope that over the luncheon break the Minister’s advisers were able to come forward with some very clear answers to those specific questions. They are not difficult questions. We want to know what those terms mean because they form part of legislation that will be voted on shortly. 
I end with those words finalising what I was saying prior to the luncheon adjournment. I look forward to the Minister’s response. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 4 be agreed to: 
to omit subparagraph (i) of paragraph (c) of the definition of real estate agency work or agency work. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 4 be agreed to: 
to omit subparagraph (v) of paragraph (c) of the definition of real estate agency work or agency work. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 4 be agreed to: 
to insert in paragraph (a) of the definition of transaction “grant” before “sale”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 8 be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; ACT New Zealand 2; United Future 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove to Part 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to. 
Ayes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Part 1 as amended agreed to. 
Part 2 Real Estate Agents Authority 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I do not want to labour the process because I know that National Party members are very keen to debate the bill. They have sought to debate this bill; it is the one they will fight every inch on. It is a bill that is inherently about consumer protection but I feel it is incumbent on me to address some points that have been made and will continue to be made as we move through the parts of the bill. 
I would like to make this point. One of the charges against me personally and against the Government is that somehow in putting forward robust consumer legislation to protect consumers as a representative of the Government I have labelled and sprayed the entire real estate industry as a bunch of land sharks. Well I will say just two things. I invite members to get my press statements from the first one that I put out right through to the latest. I invite them also to listen to this. On 7 June 2007 Murray Cleland the National President of the Real Estate Institute said in that wonderful journal of our time the  
Papakura Courier 
: “We want to get rid of unethical operators as much as the Minister does because they damage the industry’s reputation and do a great disservice to all the good”—and I invite members to listen to this—“hard-working people in the industry who as the Minister acknowledges are the very great majority.” Despite the fact that the National Party has continued to perpetrate the myth that this Government in the form of myself has labelled everybody in the real estate movement as a shark as a deadbeat and as dishonest the fact is as reported in many papers and as acknowledged by the president of the institute on 7 June 2007 the vast majority of this industry are good honourable folk. In fact I appointed one of them Mr Murray Giera of Christchurch—I know that Ms Wilkinson did not like this—to the Real Estate Agents Licensing Board. 
But real estate folk who are also the victims have said to me that they have had a gutsful of being tarred by the same brush as members of their industry who through their actions bring the reputation of all of them to the floor. Murray Giera said that to me at a function the other night. He is a good honest person as many real estate agents are but all occupations are judged by the lowest common denominator. 
I will also comment on a couple of other points that have been raised. I found it exceptionally interesting that Mr Finlayson said that the time frame and the transition period for this bill were OK. Members should bear in mind that the time frame for the lawyers and conveyancers legislation—a massive piece of work—was 2 years but the time frame for this bill is 14 months. Mr Worth had risen 5 minutes before him and said that it was not OK that it was far too short. I invite those members to get their act together. 
Part 2 provides robust legislative protection for consumers. I have been asked and I will continue to be asked—I am told that Mr Tisch said he would be asking the question continually—what the mischief is that we are trying to solve. Those members are typical Tories. They listen to one side of the argument. They have not quoted one consumer who has had problems. They have not quoted one victim who has had problems. Those members stare into the stratosphere and ask us to please provide them with some answers to please tell them where the problem is that we are trying to solve. Well let me illustrate it. Caitlin and John Ottaway estimate that they lost $35000 because their agent Shaun Cosgrave—who is no relation to me I say for the record; it is a different spelling; it is from a different part of Ireland—did not tell them that an apartment complex was planned for the site right next to their doorstep. Shaun Cosgrave was fined $750. I believe he was warned by some of our agencies about his conduct. Then what happened? 
Christopher Finlayson 
: I raise a point of order Mr Chairperson. Could the Minister tell us which aspect of Part 2 he is addressing? Part 2 deals with the Real Estate Agents Authority. He took no part in the debate on Part 1. His first intervention this afternoon has been to comment on clause 2 the commencement clause which we can deal with later on. He seems to be all over the place. It is quite entertaining to watch him because it is like watching feeding time at the zoo. If he could confine himself to Part 2 it would be very helpful. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you Mr Finlayson. I am sure the Minister is aware of the situation and I ask him to come to Part 2. 
Hon CLAYTON COSGROVE 
: I am talking to Part 2 “Real Estate Agents Authority” and the authority is charged—as the member may know given that he is a learned lawyer—with protecting consumers. To illustrate the need for an authority to look after consumers and also to address some of the points that have been made I will quote another case. But first I will just add that Mr Cosgrave was then given the Harcourts gold award for customer service. 
The second case I will quote also illustrates the need for an authority such as the one in Part 2. [ 
Interruption 
] Yes because there is a need for an authority to stop these cases from happening again. Bronwyn Hilbron died after waiting almost 3 years for the Real Estate Institute to deal with her complaint over the sale of her house. She claimed that an agent had undersold it by $88000. She chose the existing legislative route which was the institute. 
An honest agent said to me that there is a need for a Real Estate Agents Authority. He has had a vexatious claim—in his view—taken against him and he has waited for years and years for the legislative body to deal with his case. The authority is not just for those who are selling and buying property; we need an authority to expedite cases so that honest honourable real estate folk do not have the sword of Damocles hanging over them for years. To use the popular phrase that Ms Wilkinson uses justice delayed is justice denied. That also applies to the real estate agents who cannot get cases against them heard because there are delays in the system. 
Real estate agents have said to me that they need an independent authority because the system does not work. I believe that it was the Chief Executive Officer of Harcourts Mr Bryan Thomson who said that even if his people are innocent even if they are good honourable folk if they go before a body that is perceived to be in-house—the industry policing the industry—and that body declares them to be innocent folk because they are honourable people then no one believes it. We hear bleating from the guy opposite who did not quite make it to Queen’s Counsel level; he says he is a lawyer but he has not cited one case. I find it interesting that National Party members have not cited one case or given one example of a constituent coming to them with a problem with this industry. They probably do not go to them because it would be a waste of time. I think the setting up of an authority will provide a wonderful opportunity to get rid of the bad guys in the industry. Those good honest souls like Murray Giera and others who toil away and do a damn good job of representing their clients and their profession will have their reputations restored and the profession’s reputation will be restored. 
As we go through this debate I will count how many times members opposite cite a case relating to any victim. If we listened to them we would think that there was no problem—absolutely no problem at all—and that we do not need any consumer protection. Well I invite them to talk to Sue Chetwin of Consumer New Zealand. I invite them to lift up a few pages from the newspapers and look at the research work done by the fourth estate—no friends of ours from time to time—that highlights the need for legislation to protect victims. The victims also include the honourable honest real estate folk who get done over because they cannot have their cases heard. 
We hear a lot of posturing from National members and they are digging in but what are they digging in over? A basic piece of consumer protection legislation. The security guard people asked us to license them. Why? Because they wanted to get the rogues out of the system. Builders did the same. They wanted to get the bad guys out of the system because their reputations were being tarnished. I say to Mr Brownlee that I gave the Real Estate Institute two opportunities. And I said publicly that I believe in self-regulation because often it is tighter than what Parliament can do. But what the institute wanted to do was to up a few fines twist a few penalties but leave the process non-transparent non-independent and non-accountable. I think that would do a disservice to the many honourable folk in the real estate industry. 
This is good legislation. The authority that we are setting up in this part of the bill will deal to the bad guys will reinforce the good honest folk who work in the industry and will ensure I hope that cases like that of Bronwyn Hilbron who died and whose estate now has to take up the cudgels to try to recover what was rightfully hers do not happen again. It would be really nice it would be really wonderful to hear some sort of sympathy from Opposition members for some of the people—the many hundreds of people—who have been done over who have had bad experiences in this industry. But we will not hear those members say that and do members know why I say that? Because Opposition members voted against the amendments on Supplementary Order Paper 243 to Part 1 after saying that they supported them. They are all over the place. 
GERRY BROWNLEE (National—Ilam) 
: 
 I wonder whether the Minister in the chair the Hon Clayton Cosgrove might tell us why there is no fidelity fund attached to this authority. Why is he so confident that—[ 
Interruption 
] Well he is the honourable member of Parliament one minute and has a tattered career the next. That is how it happens: an honourable member one minute and a tattered career the next. That is how it goes. 
The CHAIRPERSON (H V Ross Robertson) 
: Get to the bill. 
GERRY BROWNLEE 
: I am not surprised that the Minister of Foreign Affairs is in the Chamber taking a great interest in the real estate bill because after the election he is likely to have to get a job selling real estate. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. This Parliament has put up for long enough with this member getting up disregarding Standing Orders and Speakers’ Rulings day in day out and acting like a prize buffoon. I only raise this because there are some young people in the gallery today and they should not be subjected to this nonsense. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you Mr Peters. 
GERRY BROWNLEE 
: Speaking to the point of order I want to apologise to this Chamber and to members like Mr Peters for any concerns they might have. I would note though that today in evidence to the Privileges Committee— 
The CHAIRPERSON (H V Ross Robertson) 
: Both members will be seated. I just remind members that when there is a point of order it is supposed to be heard in silence. In both cases there was chipping by both members. I take it that it is one all at the moment. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. You just saw what has become the practice by this member. He sits on a very august authority as an arbiter and a neutral judge. He walks into this Chamber on the very day that he is meant to be a jurist somewhere else and he now wants to tell you about the evidence. That is my complaint about this kangaroo court that he is making of it. Not only is he just about to infringe Standing Orders on the Privileges Committee procedures which apparently this morning were very very big in his mind but now he wants to offend against the rules of this Chamber as well. I ask you to bring him to order or to stop him speaking. 
The CHAIRPERSON (H V Ross Robertson) 
: I just say there was an exchange and I was listening very carefully. I ask the member now to address the bill. 
GERRY BROWNLEE 
: I will but I expect that there will therefore be no further reference to Gerry Brownlee Crown prosecutor or for that matter the “Rt Hon” Gerry Brownlee—which I do not mind in actual fact. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. You were asked by Mr Finlayson to bring the Minister to order—wrongly of course because he was addressing the issue before the Committee. Now Mr Brownlee is now trying to raise an interjection under the Standing Orders that he finds offensive. Frankly if he cannot take an interjection—if the kitchen is too hot— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I have a yellow card in my pocket. It is just about to come out. 
GERRY BROWNLEE 
: That would be the last thing I would want to cause you to have to do. [ 
Interruption 
] I beg your pardon? Yeah right! 
The CHAIRPERSON (H V Ross Robertson) 
: Can we get on with the debate. We have had our fun. 
GERRY BROWNLEE 
: It is serious. It is a serious point and Mr Cosgrove the Minister was quite right to say there should be concerns about people getting ripped off in real estate transactions. He pointed out the very case that I believe was the genesis of this legislation in the first place: the extraordinary situation of one real estate agent in one of our northern cities who was given a real estate agent of the year award through an agency and then later was found to be quite corrupt in his practice. [ 
Interruption 
] The Minister says that perhaps it stopped short of that. Certainly his practices were not acceptable in normal business practice and people got burnt as a result of it. Indeed the Minister himself outlined a number of cases where people got badly burnt. 
But I think simply putting together an authority to manage aspects of real estate agency functions with the authority entirely appointed by the Minister with practices developed only with the Minister’s approval and with ethical standards and statements of responsibility only according to what the Minister is prepared to approve does little if there is not some sort of fidelity fund attached to it. New Zealanders pay some of the highest real estate agency fees in the world and I would have thought that if the Government was so keen to establish yet another bureaucracy that comes under the purview of a Minister then there might well have been a case for a fidelity fund to be established. I will lay this bet: that subsequent to the passing of this bill and subsequent to the establishment of the Real Estate Agents Authority the Minister himself will not accept any liability where there is bad dealing by those people. 
I think that makes the whole thing just a little bit thin. It makes it slightly a sham and it tends to indicate that the costs associated with this legislation loaded on to the costs of selling—and ultimately purchasing—property will simply increase without any greater protection than is in place at the present time. It would be interesting for the Minister to take a call and say exactly what will come out of the new authority that will give people any greater surety about their dealings with real estate agents than they have at the present time. That would be an interesting answer from him. 
We do not doubt the sincerity with which he has brought this bill to the House; we do not doubt that. We know that everyone in this House is concerned about those cases that he raised. But each of us in our constituencies would observe that hundreds of houses are sold in a year possibly even in a month without the sorts of difficulties he outlined earlier. So we are a little perplexed by the need to set up this particular authority and are even more perplexed that the authority’s seven members are apparently all going to be appointed by the Minister according to normal appointment practice. 
Christopher Finlayson 
: Normal Labour practice. 
GERRY BROWNLEE 
: My colleague makes a comment that I will not dwell on because we have had more of those appointments today. 
Hon DAVID CARTER (National) 
: 
 Again there is a particular clause in Part 2 that I want to discuss. It is clause 17 “Membership of Authority”. I want the Minister in the chair the Hon Clayton Cosgrove to confirm that he must name members of the authority within a couple of days of this legislation receiving Royal assent. If that is the case then I say to the member he should have done some homework now as to whom he is going to appoint as the seven members of the authority. I think the Minister should rise and tell us who they are. I am suspicious that we will see a repeat of what we saw at the weekend when the Minister of Conservation appointed 52 Labour lackeys to the conservation boards around the country. 
Hon Dr Michael Cullen 
: Ha! 
Hon DAVID CARTER 
: The Deputy Prime Minister laughs but there is a history of this. We had a member here; nobody knew her name and I had to ask the Parliamentary Library what it was. Her name was Dianne Yates. She got shunted out of Parliament at the whim of the Prime Minister and got about three or four prize appointments. 
Hon Maurice Williamson 
: Four. 
Hon DAVID CARTER 
: Four appointments. Well one thing is for sure. She is too busy to be a member of this authority. [ 
Interruption 
] I am talking about clause 17. I want to know who the members are. We know that two of them will be experienced people as licensees or former licensees but that leaves the appointment of five others. I want the Minister to confirm that when we talk about the member who must have “not less than 7 years’ legal experience” that is one Russell Fairbrother. He was the member of Parliament who was told he was not allowed to go on the list and does not have a show of winning the Napier seat from our excellent candidate Chris Tremain. 
So three slots are now filled—there are four left. I want to know whether the Minister himself would consider whether he would have a conflict of interest if in fact his name were to be advanced. I notice that he is well down the list that came out the other day at No. 18. Against Kate Wilkinson in Waimakariri he will not be back as a member of Parliament so will he fill the first of the four vacancies still remaining on the membership of the authority? Then I want to know who the others are. Charles Chauvel No. 27— 
Hon Maurice Williamson 
: Who? 
Hon DAVID CARTER 
: Charles Chauvel. He has not been here long and he certainly has not done much to contribute. He is standing in the seat of Ohariu so he does not have a show there and he knows it. He has been put down at No. 27. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. With respect this member has been here some considerable time. One would think he might have learnt something in that time about the Standing Orders. This is a narrow debate yet here he is speculating on all the people who will not be on the authority under the pretence that he wants to know who will be. That was his opening gambit. Frankly this is a lazy indolent way of conducting a debate. It is typical of him and we could expect better. I want you to make sure he does do better. 
The CHAIRPERSON (H V Ross Robertson) 
: I ask the member to continue. I had actually indicated to the member a couple of times— 
Hon DAVID CARTER 
: Mr Chairperson I know you waved your hands but the point I make is that within 2 days of this legislation receiving Royal assent seven members of this authority are to be named. That is in the legislation. Now that we know the date for the election is 10 weeks away there is a longstanding convention in this House that there will be consultation between at least the parties in this Parliament on the appointments— 
Christopher Finlayson 
: There was a convention. 
Hon DAVID CARTER 
: There used to be a convention? Well I would hope that this Minister despite his bullying belligerent and arrogant attitude would actually stick to the convention. I therefore think we have every right to know what plans he has for consulting members of the National Party about appointments to this authority. 
The authority will have a very important job to do. It will deal with these hundreds of cowboys and land sharks who Mr Clayton Cosgrove says are in the industry. 
Hon Clayton Cosgrove 
: That’s right. 
Hon DAVID CARTER 
: He agrees now! Only 5 minutes ago he took a call to say that there are not many of them yet he now says there are hundreds of them. 
So the authority will have a lot to do and I want to make sure that it is not stacked with Labour Party lackeys and members of Parliament who know that they are in the last few weeks of sitting in this House because they have been put down on that Labour list well and truly towards the unwinnable positions. I think it is a very fair question for us to be asking. 
Hon Maurice Williamson 
: Lesley Soper? 
Hon DAVID CARTER 
: What is happening to Lesley Soper? She would probably be all right on this. But I think we have a very fair question to ask about the process for appointment—what work has been done so far to find who those seven members are and most important whether the Minister is prepared to consult before those appointments are made. They are very clear questions and I look forward to the Minister taking a call and answering them. 
Hon PETER DUNNE (Leader—United Future) 
: 
 I draw to the Committee’s attention a string of amendments that I have moved to various clauses in Parts 2 3 and 6 of the Real Estate Agents Bill. The amendments are designed to achieve two principal objectives. There are amendments to clause 16(3) to clause 19(c) to insert new clause 34A and to omit clause 155(a) because of the provision in new clause 34A relating to industry training procedures. Those amendments are designed to ensure that the industry training organisation for the real estate sector is actually consistent with all other industry training organisations in the tertiary sector in terms of the way that it operates. 
One of the amendments for instance—that to clause 19(c)—proposes the radical suggestion that “The authority must consult with the industry training organisation for the real estate industry.” It is very hard to see how that will be opposed but I suspect the Government and the Minister in the chair the Hon Clayton Cosgrove who gave my original amendments not even cursory consideration because he is so committed to the future of this industry will find a way to oppose it. He will also find a way to oppose my amendment to clause 16(3) which omits the words “subsection (1)” and substitutes “this Act” because that is clearly subversive. Those amendments are in the best interests of making this unworkable legislation more workable than it could ever hope to be as it stands at the moment. I have also included amendments to three provisions in clause 34 relating to consumer protection. 
I would have thought the Minister and this Government would relish these amendments because—as we have heard right throughout this debate—this is a consumer protection bill. It just imposes more costs on consumers and it will not work but according to the Minister it is a consumer protection bill. So anything that is in the interests of consumer protection I would have expected this Minister who clearly knows all and understands all to be supportive of. I would have expected the Minister to embrace my amendment to clause 34(1)(c) which inserts the words “in the interests of the public”. That is what he says this bill is all about. 
I submit those amendments for the consideration of the House and I make the observation that the Minister who professes such concern about consumers is actually engaged in a political vendetta. I have heard the cases that he has cited as evidence. The trouble is that they are the same cases I have heard cited for the nearly 18 months that this bill has been on the drawing board. In my 24 years as a member of Parliament I have not had one case involving a real estate agent drawn to my attention. 
Hon Clayton Cosgrove 
: Doesn’t that say something about you? 
Hon PETER DUNNE 
: The member says that says something about me. Well that is actually a wonderful summary of what this member actually believes that this legislation is all about. The issue— 
Hon Clayton Cosgrove 
: You’ve dished it out for the last 2 days so don’t get holier-than-thou. 
Hon PETER DUNNE 
: The Minister is indulging in all sorts of petty abuse when he should actually be indulging in making this bill workable. 
The Minister has presided over complete disruption: a regime that is unworkable and a bill that will have to be amended irrespective of whatever happens in this Committee because of the bull-at-a-gate way in which he has gone about it. If he wants to say to the homeowners of New Zealand that that is the standard he seeks that is well and good. If he wants to say to the real estate industry of New Zealand that he does not care what it thinks that is well and good. But let him be up front in the House and say those are his motivations not resort to crocodile tears about a few a handful of cases that have been drawn to his attention. Earlier on when this bill was around in its early stages I made a criticism of the Minister and I received one public response in support of him—one public response that supported his stand. 
There is a need to tidy up the legislation. I think we all accept that. But this bill does not do that. The amendments I am proposing will actually make an unworkable piece of legislation workable. If the Minister was serious in his intent he would adopt them but I bet that he will not. 
KATE WILKINSON (National) 
: 
 I put on the record that National will be supporting the amendments of Mr Dunne because they are sensible. We want good consumer protection legislation but this is not it. I rise to take a call in relation to Part 2 which relates to the Real Estate Agents Authority but I would like to just mention a couple of things that the Minister in the chair the Hon Clayton Cosgrove has said. First of all he said I did not like the appointment of Murray Giera on the board. The Minister might like to recollect that actually I was approached by the Christchurch real estate agents wondering what the delay was in making the ministerial appointment on the board in the first place. It was not until my office contacted the Minister’s office that that board appointment was actually made. So I think it is a little trite of the Minister to suggest that I did not like it. 
Then he challenged the National members to come up with one case—just one case. Well I will come up with two and if he cares to read them rather than just quoting some populist bylines he might know more about the industry and might learn more about the industry. Those cases were Sime and Lethbridge in 2002—both High Court cases. In both those cases the High Court noted that the alleged misconduct was insufficiently serious to meet the high statutory criteria for suspension and cancellation and would have been more properly dealt with by the regional disciplinary committee if it had been operating. 
One can ask why we do not have a regional disciplinary committee. The reason is that the Government did not appoint one. It was its responsibility but it did not appoint one. In fact I see that it has not appointed one for 10 years. So the delay that has been referred to by the Minister is a delay of his own making and not a delay by the Real Estate Institute. 
The answer was “because they had other priorities”. In fact 4 years ago—even then 4 years ago—Dr Worth asked the question: “Is it correct that there is a review of the Real Estate Agents Act 1976 in progress and if so what is the status of that review?”. That was 4 years ago. The response was: “The review was suspended at the start of the 2004/2005 financial year due to other legislative and policy priorities.” So any question of delay is certainly not due to the Real Estate Institute of New Zealand. It is due to the Minister’s own department. 
In fact we talk about the fees fines and small quantum of fines that are provided for under the old Real Estate Agents Act. I will come to that issue later but I have corroboration that there were 4 approaches—officially—in the last 10 years when the respective Minister responsible had been approached to increase those fines. So any suggestion of delays on behalf of the Real Estate Institute is frankly quite fatuous. 
Turning to the Real Estate Agents Authority that is to be established as a Crown entity under Part 2 of the Real Estate Agents Bill I say that we support measures to have good consumer protection legislation. But this is not it. As Mr Dunne has rightly said if the Minister in the chair had bothered to set up regional disciplinary committees and had bothered to increase the fines we would have had some workable legislation but instead he has taken a huge sledgehammer to what is just a nut. 
The authority’s functions are set out in clause 16 and it is really rather interesting because throughout the bill it talks about a registrar. This shows the incompetence of the Minister in the chair to be honest because throughout the bill it talks about the registrar but it had no provision whatsoever as to who that registrar was and how that registrar was to be appointed. That had to be amended at the Justice and Electorate Committee. 
I would like the Minister in the chair to seek the call. He did not seek the call in relation to my queries on Part 1 as to what exactly real estate agency work was what the definition of residential property was—whether it did or did not include lifestyle properties—and what the definition of transaction was so I would imagine that he will not seek a call on this question either which is in relation to the membership of the authority. As has already been pointed out by my colleague the Hon David Carter the authority is to have a membership of no more than seven members. Members will recall that in the original draft of the bill there was going to be no industry representation on this authority whatsoever. Nobody with any knowledge whatsoever of the real estate business was going to be a member of this authority and when we think of what the authority’s function will be which is to administer the whole regime for the agents we see it as totally negligent to have even thought about having an authority appointed by the Minister with no industry representation. Admittedly there now is industry representation and the Minister must appoint at least two members who are licensees or former licensees. So at least now there will be some industry representation on that authority. 
I would like to ask the Minister what he means in his Supplementary Order Paper when he is amending clause 17 to say that the Minister must consult with the Real Estate Institute when making the first appointment of licensees or former licensees. Why just the first appointment? I would like the Minister in the chair to answer that. Why just the first one? Surely the consultation should also apply to the second appointment and the third and subsequent ones. Why just the first appointment? That question may be too difficult for the Minister in the chair but we still hope that perhaps he will take this matter seriously. 
The other issue I would like to raise is in relation to the practice rules. Clause 20 in Part 2 states: “Practice rules are made by the Authority with the approval of the Minister . . . ”. If it is anything like the code of ethics and conduct under the Lawyers and Conveyancers Act I suspect there will be considerable delays in the Minister approving even those. Under the Lawyers and Conveyancers Act it took over 6 months for the code to come off the Minister’s desk with some sort of approval. If that is the sort of expeditious treatment that this Minister will seriously give the real estate industry then I suggest that perhaps he should take another look at it. 
Clause 24 also relates to the prescription of fees that the authority can impose. There are fees payable from time to time. There is then an operational levy to fund the costs of the authority and a disciplinary levy. That is three different types of fees. The question that has to be asked is what sort of quantum of levy and fee the Minister envisages because with the bureaucracy he has built into this real estate agent regime which is similar to what he built into the housing and building regime we might expect a somewhat hefty operational levy disciplinary levy and fee. As we know those fees will be handed down and passed on to the consumer. At the end of the day it will be the consumer not the industry who will be paying for this legislation. If this bill is being enacted for the protection of the consumer—to give the consumer confidence in the real estate industry to promote public confidence in the performance of real estate work and to protect the interests of consumers—then it seems to me that one of the striking things this legislation will do is increase the costs to that consumer. I wonder whether it is the consumer the Minister has in mind or whether it is just more political posturing. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 As somebody who has had considerable experience of working with the legislation and the real estate industry over a long period of time I thought the Committee and the public should be alerted to the kind of debate that is taking place today on Part 2 of the Real Estate Agents Bill. I am hearing from the National Party that everything is fine out there and nothing needs to be done. But I cannot find anybody in the real estate industry with any experience who says that. I cannot find anybody who says everything is fine and nothing needs to be done but I have just heard a procession of National Party members illustrate the fact that they understand nothing about business in New Zealand and claim that everything is fine and above board right now. They cannot point to anybody associated with the industry who would argue that nothing needs to be done but nevertheless they say their idea is to do nothing which is their policy on everything really. 
Hon Clayton Cosgrove 
: Carter said that. 
Rt Hon WINSTON PETERS 
: Mr Carter said that; Kate Wilkinson said that. She did not get to talk about KiwiSaver but I want to know whether she had a clearance from John Key to say what she did say. 
Let us be honest. Here we have a circumstance— 
Hon David Carter 
: Where did the cheque go? 
Rt Hon WINSTON PETERS 
: I will tell the member what the cheque did not do and that is dodge GST. That is a criminal offence and the GST has still not been paid. That is what the cheque did not do. But to come back to the point here— 
Hon David Carter 
: Just pay up. 
Rt Hon WINSTON PETERS 
: My argument to the member is to look in the mirror and just pay the GST or else to keep quiet. How Mr Carter has made the front bench is a matter of bewilderment to all his colleagues. It must be because of something else like patronage of the party. 
Members are concerned about who will make up the seven people on the so-called authority. Who suggested that there should be people from the real estate industry with substantial and requisite experience on the authority? It was New Zealand First that argued for that; I am sure the Minister will not argue against that. That is what we did. We sought the opinion of the industry and tried to get some balance put into legislation that seeks to protect the consumer. 
After all it was Adam Smith who said that men of business seldom meet for food or entertainment without their conversation soon turning to a conspiracy against the public. And that in the case of this industry has happened far too many times. Oh I know why Gerry Brownlee is shaking his head. That is all he knows. 
Gerry Brownlee 
: Where’s the fidelity fund? 
Rt Hon WINSTON PETERS 
: Where’s the fidelity fund? 
Gerry Brownlee 
: Yeah—not there. 
Rt Hon WINSTON PETERS 
: Well here we go; is this not wonderful? The member shouts out that. He is meant to be the spokesperson from National on this bill but he does not know what its provisions are—or are not—and now he is asking me about them. That is typical of Gerry. 
The CHAIRPERSON (H V Ross Robertson) 
: The member should keep to the debate. This is a narrow debate. 
Rt Hon WINSTON PETERS 
: One has to wonder how someone like that could get promoted so far up the ranks in what used to be a great party when he acts like an absolute buffoon knows nothing about the law or legislation and thinks noise means volume. Well I tell Mr Brownlee that it does not mean that. Substance in the end is what matters around here not just a bombastic display of Billy Bunter-ism. It will not work any more and that is a fact. 
I come back to the point which is— 
Gerry Brownlee 
: Tell us about the fidelity fund. Who gets the fidelity fund? It’s not in there. 
Rt Hon WINSTON PETERS 
: I am talking about the membership of the board. Does the member mind if I just get through that first? 
It is rather critical that we have people who when they come to a tribunal situation understand the requirements of the industry and I tell Mr Brownlee it is important that those people are not biased are not prejudiced and have not made up their minds before they hear a case. It is important that they are prepared to wait until all the facts before them are heard before they make up their minds. As Mr Finlayson will tell members that is how good tribunal people show responsibility rather than acting like those with so much arrogance—a quality I have seen Mr Brownlee display—that they make up their minds before they hear any of the evidence. We do not want that sort of person to be on the Real Estate Agents Authority. 
The authority should have people on it who are neutral independent but experienced enough to ask on behalf of the consumer and on behalf of the real estate person against whom the complaint has been lodged what the facts are and where the truth possibly lies—but who first of all ask to hear all the facts all the provisions that relate to the case. That is rather important because it is no use to have an authority if we put people on it who walk in and before the case is half heard rush out go to the media and start to say something else. 
Christopher Finlayson 
: I raise a point of order Mr Chairperson. I am sorry to interrupt the right honourable member but he is concentrating on Part 4. He is talking about the bodies that will adjudicate on complaints. There are two types of committees: there is the complaints assessment committee and the actual disciplinary tribunal. The authority appoints those bodies which then adjudicate. So the member really has to come back to Part 2. It would be quite a novelty to hear him say something about Part 2. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you Mr Finlayson. Actually the member’s time is just about up. 
Rt Hon WINSTON PETERS 
: I have just heard Mr Finlayson “QC (Failed)” with his argument. It is not correct of course because all of the other authorities arise from the Real Estate Agents Authority. 
COLIN KING (National—Kaikoura) 
: 
 I will take up a couple of issues in Part 2 of the Real Estate Agents Bill. 
The first is subclause (3) of clause 16 “Authority’s functions”. It talks about the industry training organisation and raises the spectre in my mind that we will have two very strong competing bodies. I would like the Minister to explain to me what the relationship will be like between the Real Estate Authority and the industry training organisation. Clause 16(1) runs through the various functions of the authority. It will set up a register to register licensees: “(b) ensure that the register of licensees is established kept and maintained;”. It will develop rules it will develop consumer information and it will “(f) develop and provide consumer information on matters relating to the provision of real estate services including providing the public with information on how to make a complaint;”. There is a list of provisions. 
I come to a provision pertaining to the amendments on the Supplementary Order Paper of the Hon Peter Dunne which National will be supporting. Subclause (3) states: “For the avoidance of doubt nothing in subsection (1) affects the role of an industry training organisation for the time being recognised under the Industry Training Act 1992 as an industry training organisation for the real estate industry.” That is the first point on which I want some clarification. Is there an intention to move the industry training organisation to the Real Estate Agents Authority? If we read that provision carefully we see that it states “the role of an industry training organisation for the time being …”. I would like the Minister to clarify what he intends there. 
Secondly I would like the Minister to tell me whether he heard any complaints from the Real Estate Institute of New Zealand about recognition of qualifications obtained in Australia. When I visited the institute in Auckland I heard a lot about the inequity in terms of the qualification that agents require to be registered in Australia. Effectively what was happening was that a lot of people would go from New Zealand across to Australia for a course of about a week and when they came back they would be recognised as fully fledged qualified real estate agents. The second question I would like the Minister to address is whether while he was developing this bill he took that matter into consideration or was it in actual fact outside the scope of the bill? 
When we turn to clause 19 and read of the continuing education function of the authority we can understand the confusion and concern that exist among the industry training organisation. Clause 19 “Continuing education” states: “The Authority may by notice in the  
Gazette 
 make practice rules …” and it talks about continuing education. That is professional development and it will require qualifications to be designed and signed off. There will be tremendous friction within the industry unless action is taken immediately to make sure there is seamlessness between the authority and the industry training organisation. Qualifications will have to be developed and the authority is being empowered to do that but I do not see any ability to bridge that issue. 
We go on to clause 21 “Criteria in relation to approval of practice rules by Minister”. The provision talks about the authority’s relationship with the Minister. It talks about principles and I say to the Minister that paragraph (c) talks about “the consistency of the rules with New Zealand’s international obligations:”. I know that it might be drawing a long bow but I would like to think that serious consideration was given to the need for equal qualifications between Australia and New Zealand. 
CHRISTOPHER FINLAYSON (National) 
: 
 I want to ask the Minister a couple of questions about Part 2 several clauses of which as the Hon David Carter said will come into effect the day after the date on which the legislation receives the Royal assent. That particularly relates to the establishment of the authority to which members have been referring with the exception of the Rt Hon Winston Peters who was really addressing the organisations in Part 4. 
I want to make one point immediately and that is that the Supplementary Order Paper of Mr Dunne raises a very sensible point which I believe the Committee should adopt. It involves an insertion into clause 17 of subclause (3B) which I will come to in a minute. Once the authority is set up clause 16 provides that one of its functions will be to set professional standards for agents and the Committee inserted a subclause (3) into clause 16 that made it clear that the industry training organisation currently in existence would continue to have a role. That is a very important point because when we come over to clause 19 there is a new provision that deals with continuing education. And I suggest to the Committee that that is a very good suggestion because all industries and professions should have mandatory continuing education. 
This is where clause 17 is so important. If there is to be mandatory continuing education then it makes sense that the industry training organisations which are charged with the training required before one can enter the real estate industry should continue to have a role in the area of continuing education. That is why it is important for the Minister to have a duty to consult with the industry training organisations when making the first appointment of licensees or former licensees. The proposal of Mr Dunne makes a lot of sense about the industry training organisations. 
The second point follows on from what Mr Carter said. Immediately after this legislation comes into force the authority will be established. It is to consist of no more than seven members. It will immediately have a role to undertake and given that this legislation could receive the Royal assent very quickly if it is passed I think we are entitled to know the sorts of persons the Minister is proposing to appoint and whether there will be consultation. Are we going to have a repeat of what has been going on with the conservation board the New Zealand Symphony Orchestra Creative New Zealand Te Waka Toi and the Human Rights Commission? All sorts of appointments are being made without any reference to the National Party whatsoever. Will we see Ann Hartley Mike Williams Eamon Daly Georgina Beyer—well probably not Georgina Beyer because she has outlived her usefulness to the Labour Party and it has not done anything for her—or Gary Moore the former Mayor of Christchurch in this position? Are these the sorts of people who will be appointed to this authority? I think we are entitled to know and we are also entitled to know whether there will be consultation. 
The next issue I want to touch on is that of fees and levies. It was addressed in a preliminary way by Ms Wilkinson because as she said clauses 24 25 and 26 deal with certain types of fees and levies and the Real Estate Agents Authority will be in a position to prescribe fees. As we have said all along the National Party has concerns about the bureaucratic nature of what is being set up under this legislation and we are concerned that fees and levies could be enormous especially in the preliminary stages as the authority the complaints assessment committees and the disciplinary tribunal are set up. I would like to have some kind of indication as to whether the Minister has received any general advice on the sort of levy or fee that would be payable because one can rest assured that those fees ultimately will end up being borne by the consumer. Indeed one of the issues that was raised which was the subject of a submission to the select committee was that of consultation over fees and levels of fees. What sorts of levels does the Minister think are acceptable? Should there be consultation? 
JACQUI DEAN (National—Otago) 
: 
 In rising to address Part 2 I say that it is a bit of a concern for National that there are some glaring omissions within legislation that is meant to provide good consumer protection. The exclusion of property managers from the regime is a matter of some concern because it creates inequities within this bill. I would like an explanation from the Minister in the chair the Hon Clayton Cosgrove as to why that is the case if this is such a good piece of consumer protection from the cowboys and the land sharks—so-called by the Minister on a number of occasions. It is interesting. In my travels throughout New Zealand I frequently pop in and out of real estate agents’ offices and they say things about the Minister that are never very complimentary. They ask me about that man— 
Hon Member 
: The angry man. 
JACQUI DEAN 
: —the angry man—who will lose his seat at the next election and why is he going to lose it— 
Hon David Carter 
: Which one? 
JACQUI DEAN 
: Clayton Cosgrove. I will restrict my comments to the Minister in question Clayton Cosgrove. He is the man who is hated by every real estate agent I come across—probably every real estate agent in the land. Why do they hate him? Who wants to be called a land shark? Who wants to be called a cowboy by a Minister of the Crown? And what does this Minister do to fix these land sharks and cowboys? He brings forward to the House the Real Estate Agents Bill. The trouble with the bill is that it has some glaring omissions. It does not even address the issue of property managers. 
I did not sit in on the submissions but I understand that a number of very strong submissions were made to the select committee about the inequities in not making provision for property managers within this bill. Those of us who have children going out into the world and becoming tenants in properties or flatting if they are students or going into the workforce know that they are the very vulnerable young people who have to come into contact with property managers. It seems to me to be a glaring omission on the part of this Government which touts itself as the champion of consumer protection to turn a blind eye to those very people within this Real Estate Agents Bill. 
This bill is not worth much if it does not address the real issues being faced particularly by young people who have to deal with property managers. The submitters to this bill did not consider that the provisions for property management in the Residential Tenancies Act 1986—which of course relate primarily to relationships between parties as tenants owners and property managers—are sufficient to ensure that consumers are protected in property management transactions. So what does the Minister propose to do about it? He proposes to conduct a review. Well that does not provide much comfort to those people who deal on a day-to-day basis with property managers. National’s view is that this bill should include property managers within it and without doing that the Minister’s fine words about cowboys and land sharks remain very pertinent. 
The Hon Peter Dunne really hit the nail on the head when he said the Minister was indulging in petty abuse. That is what he has been doing and that is what he has been doing out in the electorates all around New Zealand. Well I say to the Minister that the real estate agents have heard him they have made up their minds about him and they have no faith in this bill that the Government is putting forward. There are glaring omissions in the bill and just one of those is the exclusion of property managers. This is not a good consumer protection bill. National supports good consumer protection legislation but this is not it. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 16 be agreed to: 
to omit from subclause (3) “subsection (1)” and substitute “this Act”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 19 be agreed to: 
to omit paragraph (c) and substitute the following paragraph: 
(c)The Authority must consult with the industry training organisation for the real estate industry. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove to Part 2 be agreed to. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 2 as amended be agreed to. 
Ayes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Part 2 as amended agreed to. 
Part 3 Licensing 
Hon DAVID CARTER (National) 
: 
 As we move to Part 3 “Licensing” we come to the very nuts and bolts of this legislation. This is the part where we are talking about how one becomes licensed how a licence is suspended how a licence is cancelled how a licence is renewed etc. We come to the very essence of this legislation as it impacts on the real players within the industry and I am talking about the real estate agents themselves. 
I want the Committee to note that we now have a fresh Minister in the chair the Hon Shane Jones and to note also that some valuable questions raised in the previous discussion remain unanswered because Mr Cosgrove who was then the Minister in the chair decided not to answer the legitimate questions put by members of the National Party. In referring to clause 16 I notice that when we are talking about the nuts and bolts of the licensing as in Part 3 this is a significant function of the authority. Therefore I say it is important that we are absolutely assured today by the Minister in the chair that consideration has been given to who the members of the authority are. It is my understanding that following the conclusion of the Committee stage of the debate we will move to the third reading later on today. If that is the case then this legislation will have the Royal assent in the early part of next week—say on Monday or Tuesday depending on how busy our very distinguished Governor-General is. On that basis the Minister has to have revealed on the day after that who the members of the authority are because those members will then have responsibility for administering the licensing regime of Part 3 which affects every person participating as a real estate agent within this industry and affects people who want to enter the industry. 
I think that the least the Minister in the chair the Hon Shane Jones could do is to rise to his feet and assure the members of this Committee that due consideration has been given to the appointment of members to the authority. Furthermore he should assure members—and maybe this has happened with my colleague Simon Power with regard to the normal conventions that have applied in this House for a long long period of time; decades in fact—that there has been a reasonable consensus between and consultation with other political parties as to the membership of this authority. If as we are discussing in Part 3 we are to end up with a licensing regime administered by an authority that has not been appointed in a fair and open manner then this legislation will not be enduring. For example it might be an authority that could be stacked with Labour Party lackeys. I note that it is now 32 years since we last had reforming legislation involving the real estate industry and I do not want to see this legislation coming back because it was rammed through without a fair and consensual discussion in Parliament on the membership of that authority. 
I hope that Shane Jones will be more cooperative than the bullying arrogant Minister whom we had earlier the Hon Clayton Cosgrove but I think that this Committee has every right to know whether those appointments have been considered whether they have been approved by a Cabinet process and if so I ask why the Minister cannot simply tell us who they are today. Unless that authority has the confidence of this Parliament and more important has the confidence of the industry this legislation and the licensing regime we are now debating in Part 3 will not be enduring and I think it would be a shame for this House if that is the process the Minister Shane Jones is prepared to endorse in Parliament this afternoon. 
CHRISTOPHER FINLAYSON (National) 
: 
 I will deal with several aspects of Part 3 “Licensing”. I endorse the comments Mr David Carter has made because a key person in this licensing regime will be the registrar and in the part that we have just dealt with clause 31A provides that the authority is to appoint the registrar. So it is extremely important that the body that appoints the registrar is made up of competent people and that it is not a pay-off for simply leaving Parliament. 
But I come to Mr Dunne’s proposed amendments because I submit that they are very good indeed. He says that he would make three changes to clause 34 and they are designed to ensure that the authority will have broad and full criteria on which to make the decision on the granting and retaining of licences. Again this is intended to ensure that the consumer is properly protected. Clause 34(1) deals with the entitlement to a licence as an agent or a branch manager and an individual must satisfy the registrar that he or she meets the criteria set out in that subclause. 
One of those criteria is that the person is to be a fit and proper person to hold a licence. Mr Dunne is suggesting in the first of his proposed amendments that before the words “is a fit” we should insert the phrase “in the interests of the public”. I fail to see how there could be any objection to that proposal. It emphasises the fact that it must be consumer protection legislation. Ultimately it is in the interests of the public and to spell that out very carefully causes no harm whatsoever. 
The second proposal relates to clause 34(1)(e) which deals with the experience that the proposed agent or branch manager must have had before appointment. Mr Dunne’s suggestion is that instead of having 2 years’ experience within the 10 years preceding the application this person must have had during the preceding 5 years at least 3 years’ practical experience working full-time or working primarily and predominantly in real estate agency work. Again I suggest that as this is supposedly consumer protection legislation the Dunne formula is to be preferred. 
The third and final change is to clause 34(2) which provides that an individual may be licensed as a sales person if the individual satisfies the registrar of various matters. The critical one for current purposes is clause 34(2)(c) and again it is the fit and proper person test and Mr Dunne has suggested again the insertion of the phrase: “in the interests of the public”. I suggest to the Committee that these changes are sensible. They make the clause that much better and I certainly support them. 
The other point I wish to address concerns clause 50. This is another backdown by the Minister. There was extensive debate in the Justice and Electoral Committee about the desirability of this clause and whether the chief executive of the Ministry of Justice should report to the Minister as to whether clause 49 which deals with the employment status of a salesperson should continue to be appropriate. There was considerable debate. The Labour members were adamant that clause 50 should be retained but it is very interesting to observe that the Minister’s Supplementary Order Paper 243 proposes to omit this clause—another win for the National Party which had argued the clause was inappropriate and did not sit happily in consumer protection legislation and if it was to be retained it should be in employment legislation and the person doing the review should be the chief executive of the Department of Labour. So having adopted a stubborn approach to clause 50 and having had his minions argue the case strongly for the retention of clause 50 in the select committee the Minister has cut them off at the knee caps because clause 50 is to go. 
KATE WILKINSON (National) 
: 
 I rise to speak to Part 3 of the Real Estate Agents Bill and following on from my colleague Mr Finlayson I do urge the Committee to consider the proposals submitted by Mr Dunne with those very sensible and consumer protection-related amendments. I do urge the Chamber with some scepticism because when one has the Government of the day voting against a provision that says the authority must consult with the industry training organisation for the real estate industry one has to wonder whether they are trying to create and legislate good law or whether it is still just that political posturing. This is a so-called listening Government but it does not listen to common sense. These amendments suggested by Mr Dunne as he rightly said are hardly subversive they are hardly radical and they actually do improve the consumer protection of this bill. 
Like my colleague Mr Finlayson I want to touch on a few clauses in Part 3. The first one is the entitlement to the licence which is in clause 34. It states that “An individual may be licensed as an agent or a branch manager if … the individual (a) has attained the age of 18 years; and (b) is not prohibited from holding a licence … ; and (c) is a fit and proper person to hold a licence; and (d) has the prescribed qualifications; and (e) has obtained 2 years’ experience in real estate agency work within the 10 years preceding the application to be licensed … ” . 
I am aware that the Minister has an amendment in Supplementary Order Paper 243 that will increase that experience to 3 years in the 10 years preceding the application. Mr Dunne’s amendment will tighten that and add more protection for the consumer by specifying the experience as 3 years’ experience in real estate agency work within the 5 years preceding the application. That is much better for the consumer and if this Government really were a listening Government then it would certainly vote in favour of the amendment proposed by Mr Dunne. 
It was raised during the select committee process whether 18 years of age was actually old enough for a person to be buying and selling on behalf of another person his or her most valuable asset—a home. Often it is the most important significant purchase that any family in New Zealand makes and I wonder whether a person who is 18 years of age is sufficiently old or sufficiently experienced to do that. I think that when we talk about ages there are so many different age limits littered throughout our legislation but when one has the very same Minister who on the one hand says that a person of 18 years of age is not old enough to buy a beer—because he voted against that in the sale of liquor legislation—but that an 18-year-old is old enough to buy and sell someone’s most prized possession a house then one has to wonder about the consistency of that Minister’s judgment. 
The other clause I really want to mention in relation to Part 3 is clause 48. Clause 48(1) states: “A salesperson must in carrying out any agency work be properly supervised and managed by an agent or a branch manager.” It then specifies: “In this section properly supervised and managed means that the agency work is carried out under such direction and control of either a branch manager or an agent as is sufficient to ensure—(a) that the work is performed competently; and (b) that the work complies with the requirements of this Act.” 
On first reading that might seem quite sensible but if one goes back to the original Real Estate Agents Act section 54(2) contains the phrase “effective control”. The wording of that is: “Every branch office of a real estate agent … shall be under the effective control of a person approved by the Board”. So we have changed the terminology from “effective control” to “properly supervised and managed”. The difficulty with changing phraseology and terminology in legislation is that one has to build up a whole new supply of cases to actually explain and verify what that means. Considerable case law already exists as to what “effective control” is. We have now changed that to “properly supervised and managed” and my concern is that this will lead to uncertainty and now a new load of case law which will try to interpret Parliament’s intentions. It will also try to distinguish the difference between “effective control” and “properly supervised and managed” and will try to work out what the intention of Parliament was in relation to this new definition. 
We have to ask ourselves whether this actually adds anything to the consumer protection nature or element of this legislation that could not have been satisfied by using the tried and true terminology of “effective control”. I would like the Minister to take a call on that because I think that is very important and that we have a duty as legislators not to be reckless when we are making law and to me it is certainly not contentious but it is going towards better law-making. I would like the Minister to give us his views of that change in terminology. 
The other clause that I will briefly mention is clause 50 which has been deleted by the Minister’s Supplementary Order Paper 243. National will certainly be voting in favour of that one. It concerns the 5-yearly review of the employment status of salespersons. Having that 5-yearly review hanging over the heads of salespersons was just too untenable and uncertain and really did not add much to the debate. There is no reason whatsoever why salespeople cannot make the choice to be employed on an employment basis or on an independent contract basis—a contract of service as opposed to a contract for service—and accordingly that review has now been deleted from the bill by virtue of the Minister’s Supplementary Order Paper and we certainly approve of that. 
Another concern however in relation to the employment status of salespersons is whether changing the terminology to “properly supervised and managed” as opposed to “effective control” implies changes to the employment status of salespersons so that they may in fact be deemed to be employed rather than self-employed. I am concerned that there might be a plethora of cases that would try to interpret the difference in that terminology and that will lead to uncertainty within the real estate industry as to whether these salespeople are employed or are indeed self-employed. I think it is important that the Minister does address this issue because I think that is the responsible thing for him to do. It is one of the important clauses in Part 3 that we have highlighted and I really would appreciate the Minister taking a call. No calls for the Minister to answer any questions have so far been taken seriously whether in relation to the definition of “transaction” the definition of “residential property” or the definition of “real estate agency work”. Now I am asking the Minister to take a call to explain the definition of “properly supervised and managed”. I would appreciate the Minister’s advice or his getting advice from officials as to the ramifications of that change of definition. 
COLIN KING (National—Kaikoura) 
: 
 I am addressing Part 3 and I would like to pick up on a theme I was discussing in relation to Part 2. Part 3 “Licensing” deals with how to become licensed and again we see that it is done by the registrar as appointed by the authority. I see a very strong similarity here to the potential relationship that existed between the Plumbers Gasfitters and Drainlayers Board and the industry training organisation. When we look at the terms and reasons in respect of a person becoming licensed we find that it goes beyond a lot of what has been normal and into areas where the authority has the ability to cancel licences as one would justifiably understand it could. But when we actually look at it we see clause 53 states that the registrar must cancel a person’s licence and remove that person’s name from the register for various reasons and paragraph (c) states: “if the person has failed to maintain the prescribed qualifications;”. 
That in itself may not mean a heck of a lot but when we look at the relationship that can exist between an authority and an industry training organisation we find that there can be quite a conflict of relationships as was the case as I said earlier between the Plumbers Gasfitters and Drainlayers Board and the plumbers and gasfitters industry training organisation. That was borne out in Hazel Armstrong’s report which stated that there were strong personalities and in that case they were between the registrar and the chief executive officer of the industry training organisation; it just did not work. 
The question I raise is whether a shelf life is now being put on to the real estate agent qualification. It is understood that after 3 to 5 years real estate agents will need to resit to keep those qualifications whereas in the past there was an understanding that once people gained those qualifications they did what was reasonable around the variations of the industry at the time and as long as they were not bankrupt or were not facing criminal charges they were able to keep their licences. The basis on which that qualification kept rolling on was to do with recognising prior learning and current competencies. 
When I look at Part 3 I see that there will need to be continual conversation between the authority especially the registrar and the industry training organisation with regard to the construction of those qualifications. It could get quite personal and it could get very bitter especially if the relationship breaks down and in the end the Minister would have to step in as Dr Cullen did with the Plumbers Gasfitters and Drainlayers Board and sack them. That in itself creates its own reverberations around the industry and it does not do anything to instil confidence. We can see that there is a lot of good within the proposed framework. 
Again I come back to the other point. Are there conversations with Australia and developments along Australian lines so that we are developing similar standards so that these standards are compatible with New Zealand and so that we do not allow a standards issue to develop within the qualifications and start a division that could set the licensing authority up against the industry training organisation? That is the one point I think we really need to be very mindful of. 
The second point of course concerns the definition of a salesperson and how he or she must be supervised. That in itself I think opens a can of worms around litigation and confusion as will the aspect of the independent contractor versus “services of” and “services for”. The Minister has wisely taken the step to take away clause 50 and we certainly see that as being a positive move. 
JACQUI DEAN (National—Otago) 
: 
 The real estate industry is already reeling from the description of it given by Minister Clayton Cosgrove. He described real estate agents as land sharks and cowboys. The real estate industry knows that it does not have the confidence of the Minister because he has told it so. The real estate industry has a view of the Minister because of that position and the grandstanding of that Minister on real estate agents and their profession. Now the Minister brings to the House a bill called the Real Estate Agents Bill which we oppose. The bill intends to provide good consumer protection but it contains some glaring omissions. I raised one omission during the debate on Part 2 and that was the exclusion of property managers from the regime which of course creates inequalities. Minister Cosgrove’s response to that was I suppose typical of him. He indicated that he would conduct a review. When? We do not know. How? We do not know. Who will be conducting that review? We do not know. 
That brings me to another part of Part 3. Part 3 is to do with licensing and how to become licensed. There are a number of clauses dealing with how to become licensed the provisions relating to licences the effect of licences the status of licensees and the renewal cancellation suspension and surrender of licences and so on. The person who considers the granting of licences to become a real estate agent is of course the registrar. The person who appoints the registrar who grants licences is somebody who has been appointed by the Minister. Given the recent occurrences against all the conventions of this Parliament in the appointment to boards— 
The CHAIRPERSON (Hon Marian Hobbs) 
: I just wonder whether I can stop this. I have been upstairs and I have been in this Chamber and that issue really was addressed in Part 1. We are here talking about licensing. You are trying—as did the first speaker on this part—to link it back to two steps back. I think that is really pushing the definition of what is talked about in Part 3. Thank you. 
JACQUI DEAN 
: I think it is important to the real estate agent who is coming under the regime of becoming licensed that he or she has confidence in the person or body that is granting that licence. That is why I raised that issue in the context of the debate on Part 3. We are talking about people’s livelihoods here. We are talking in the debate on Part 3 of this bill which concerns licensing about people’s professions. There are real estate agents in New Zealand who take the profession of real estate agent for a number of years of their working lives. There are real estate agents who are in the job in the long term for maybe 20 years. They enjoy the role and they are good at the profession. 
Hon TAU HENARE (National) 
: 
 I want to have a look at clauses 43 44 and 45 in Part 3. Clause 43 “Duty to produce evidence of issue of licence” states: “A licensee must if asked by any person produce for inspection by that person either—(a) the evidence of the issue of a licence sent to that person under section 41; or (b) a copy of that evidence.” 
Does that mean if I am employed by Barfoot and Thompson and I am walking down the road somebody can ask to see my licence? Is that what it means? I wonder whether the Minister could turn his mind to maybe answering that question. It seems to me that it is a bit like the regime they had in South Africa where one could be walking down the road and somebody would ask in a South African accent—which I will not even try to do—to see one’s pass to see one’s licence to be there. That is what this clause means. That is exactly what it means. 
Charles Chauvel 
: Good point! 
Hon TAU HENARE 
: Mr Chauvel says that it is a good point then shakes his head. It is no wonder these guys are on their way out. 
The CHAIRPERSON (Hon Marian Hobbs) 
: We are debating Part 3. 
Hon TAU HENARE 
: I am just responding to an interjection from the other side of the Chamber. I was on track. [ 
Interruption 
] 
The CHAIRPERSON (Hon Marian Hobbs) 
: We were going along very quietly. On we go. 
Hon TAU HENARE 
: Thank you Madam Chair for bringing the Government members back to order. Fancy having to produce one’s licence! We have licences for driving cars which the police have the power to look at any time day or night when one is in a car or whatever. But fancy anybody from Joe Public upwards downwards and sideways having the ability to stop a person and ask where his or her real estate licence is. That is what clause 43 does. That is exactly what clause 43 does. 
The term of the licence continues in force for a period of 12 months. Well what happens if somebody is late in getting relicensed? I have looked through Part 3 and it has no reference to somebody who is late in getting relicensed. The bill talks about the cancellation of a licence the renewal of a licence and the expiry of a licence but nowhere does it tell us what happens when somebody unfortunately misses the renewal date. We have all been guilty now and then of missing the date on which we have to get some paperwork in. I wonder whether the Minister can turn his head to that issue. 
The interesting clause in Part 3 is clause 45 “Licence may not be transferred”. How stupid is that? Of course it cannot be transferred. Can we transfer our own driver’s licence? No. Can we transfer any other sort of licence? I tell members that it is actually easier to get a gun licence than it is to get a real estate agent’s licence. There will not be a real estate agent left in this country if the Government has its way. But here is the doozy: clause 51 “Renewal of licence”. I commented briefly yesterday about the same issue. Subclause (1) states: “An application for renewal of a licence must before the date on which the licence expires—(a) be made to the Registrar in the prescribed form; and”—here is the little doozy—“(b) be accompanied by the prescribed fee (if any).” Why is it that for the last 9 years this Government has been intent on putting the word “fee” behind everything it does? 
CHARLES CHAUVEL (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 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 34 be agreed to: 
to insert in paragraph (c) of subclause (1) “in the interests of the public” before “is a fit”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; ACT New Zealand 2; United Future 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove to clause 34 be agreed to. 
Amendment agreed to. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Peter Dunne’s amendment to clause 34(1)(e) is ruled out of order as it is now inconsistent with a previous decision. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 34 be agreed to: 
to insert in paragraph (c) of subclause (2) “in the interests of the public” before “is a fit”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne be agreed to: 
to insert the following new clause: 
34AThe Industry Training Organisation for the real estate industry shall prescribe the qualifications necessary before a person is entitled to be licensed as an agent branch manager or salesperson. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the remaining amendments set out on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove to Part 3 be agreed to. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 3 as amended be agreed to. 
Ayes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independent: Copeland. 
Part 3 as amended agreed to. 
Part 4 Complaints and discipline 
The CHAIRPERSON (Hon Marian Hobbs) 
: The debate includes schedule 1. 
CHRISTOPHER FINLAYSON (National) 
: 
 Part 4 is almost the heart of the legislation because the Minister’s yelling and screaming before the bill was introduced indicated he was concerned that there was an inadequate complaints procedure under the 1976 Act. We agree that it was timely to look at the complaints and discipline procedure because any system that regulates a profession or an industry group needs to be effective so that disputes can be resolved justly quickly and inexpensively. 
The problem from the National Party’s point of view is that Part 4 will not achieve that purpose. Rather it will cause added expense. Also what has been constructed is not really suitable for the particular circumstances. That is why we put in our minority view that we were very concerned about the bureaucracy created by this bill. We have mentioned the authority on the way through but we say here that an unnecessary bureaucracy is created. 
Let us take a look at the way this part is constructed. There are two types of conduct that can lead to complaints. The first type is unsatisfactory conduct which is of the lesser standard and the second type is misconduct. We have no complaint with that division of labour as it were. If one looks at the Lawyers and Conveyancers Act one sees there is a very similar distinction to be made. Instances of unsatisfactory conduct are referred to complaints assessment committees and as the Committee can see a number of changes have been made to the way in which the complaints assessment committees are set up. The existing clause 74 is proposed to be deleted and there is a new clause 74 and a clause 74A. 
There will be a complaints assessment committee that will deal with complaints and allegations about licensees. There will also be a panel. The reason for that is we received evidence about the number of complaints made and it became tolerably clear at an early stage that simply to have three members of the board as members of a complaints assessment committee would not work. This is where we say that this is too complex because this bill does not adequately address what to do with the myriad of vexatious complaints that come in. These are the sorts of complaints that should be able to be dealt with very quickly or what may start off as a complaint may be able to be resolved very quickly if the agent and the client have a quick discussion. There may have been a misunderstanding or whatever. But in the way it is constructed it almost encourages a culture of complaint and we do not think this is proportionate to the needs of the consumers. If there could be a provision that provided for in the first instance people being able to talk to their agent if they thought fit we think that would be a much better system. Sometimes of course the relationship between the client and the agent is so bad that one immediately goes to this complaints procedure and that is understood and accepted. 
That is the first aspect of the complaints procedure. I do not think it is a bad idea to have something like clause 84 in the bill. It deals with modes of resolution of disputes and it has been picked up from the Lawyers and Conveyancers Act. It will be possible to resolve matters by negotiation conciliation and mediation. I certainly hope this clause will be invoked if the legislation is passed because that is a much better way of resolving a dispute between the client and the agent than simply going to this more formal complaints procedure. I note it is not compulsory. At some stage we will have to debate the desirability of having compulsory mediation because it is certainly the case in Australia in various tribunals and I think there is a lot to commend it in this country as well. 
The second tribunal I am not so worried about. This is the Real Estate Agents Disciplinary Tribunal set up under clause 97 and the following clauses. There will need to be a tribunal of this nature to deal with the serious complaints. These are complaints about misconduct. 
CHARLES CHAUVEL (Labour) 
: 
 I want to make a couple of brief comments on Part 4—in particular on the Real Estate Agents Disciplinary Tribunal. I would like to address two issues. 
One relates to the composition of the tribunal. The Minister’s Supplementary Order Paper 243 would add to clause 97 a requirement that there be consultation with the Real Estate Institute of New Zealand when making the first appointment of a licensee. That is a useful provision I think on reflection. It probably only restates the requirements of the Crown entities legislation which would apply in any event to the tribunal—that the Minister should appoint only properly qualified people to the tribunal. Clearly in order to determine who was properly qualified the Minister would have to go through some sort of consultation exercise and it is likely that one of the bodies with which he would consult would be the Real Estate Institute. I think it is a useful restatement in effect of an existing requirement on the Minister and it is to be welcomed. 
The other point that I want to make briefly is to deal with the suggestion that somehow the legislation allows insufficient time to set up the various bodies that are required under it. The analogy that has been drawn time and time again by ill-informed members of the Opposition is with the Lawyers and Conveyancers Bill. Well what members who cite that legislation clearly do not know or have not bothered to check is that about 50 or 60 sets of different regulations and rules were required to be promulgated under that legislation in order to bring it into force. It was a very different exercise from and of a very different order of magnitude to this legislation which has got a much simpler set of bodies that are required to function under it. The time allowed for those bodies to be brought into being is ample in my submission. 
Hon TAU HENARE (National) 
: 
 Well I suppose we could call Part 4 “When real estate agents go bad they go feral”. That is the meaning of the current title “Complaints and discipline”. 
It is interesting to look at clauses 71 and 72 which set out provisions to do with unsatisfactory conduct and misconduct. Who decides what is unsatisfactory? There is no list here. There is a wide view of what is unsatisfactory. It could be anything from spitting to whatever. But who decides that? Does the Minister decide that does the tribunal decide that or what? It is not pointed out here. I know that at school it was always the principal who decided what was unsatisfactory or the dean. But I am wondering— 
Charles Chauvel 
: You are wandering all over the place! 
Hon TAU HENARE 
: I am just wondering how long that member has got left in this House. 
Moana Mackey 
: Oh nice one stick around. 
Hon TAU HENARE 
: It should not be very long. Then I turn to an issue that my colleague—[ 
Interruption 
] Oh here we go. One puts a little bit of bait out there and bang they just love to get it— 
Charles Chauvel 
: It beats having to give a speech on the subject. 
Hon TAU HENARE 
: I cannot help that fact. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Come back to the bill and could those people not provide the base. 
Hon TAU HENARE 
: Absolutely I will come back to the bill! Clause 97 talks about some sort of disciplinary tribunal. Well who is going to appoint those people? Oh it is the Minister. So who does the Minister appoint? His mates. 
Hon Member 
: It’s not the National Party. 
Hon TAU HENARE 
: Oh no. It is all about appointing mates. Who do members think will get appointed to the tribunal? Well for a start it will be all the members of the Labour Party who lose their seats in the next election because they will not have anything to do for the next 3 6 or 9 years—most probably 9. But never mind. 
Moana Mackey 
: That member did lose his seat. 
Hon TAU HENARE 
: There we go: out goes the bait and bang there they go again. Well at least I did work when I was out of Parliament not like some people in this House who relied on—but I will not go there. 
The fact of the matter is that we all know that there are bad eggs out there. We all know that there is the odd rogue element out there but boy I tell members that it is easier to get a gun licence and walk down Queen Street with an AK47 than it is to comply with the sort of stuff we see before us. For years and years we have had a system whereby real estate agents who go bad are turfed out run out by the industry itself. Part 4 like the other parts is nothing more than overkill nothing more than smacking a little nut with a huge sledgehammer. That is all it is. 
The disciplinary tribunal is all about Government members selecting their mates for their jobs. 
Moana Mackey 
: Their mates? 
Hon TAU HENARE 
: Their mates for their jobs and I tell that member who it will be. Lynne Pillay will be there because she will not win her seat and she is not high enough on the list to get back in. Paula Bennett will win her seat. That is what it is all about—protecting their mates and jobs for their mates. That is all it is. 
Lynne Pillay 
: National Party hopper! 
Hon TAU HENARE 
: Oh absolutely and absolutely proud of it and absolutely proud of the fact that I have come from small to big and from being not so good to being brilliant. That is all I have to say on Part 4 at the moment. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I call Kate Wilkinson and my apologies to you Kate before. Sometimes your voice needs to come through the bulk of the person in front of you. But go on. 
Hon Tau Henare 
: I raise a point of order Madam Chairperson. When we get some asides we have the opportunity to ask for a withdrawal and apology. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I withdraw about your bulk. It was a geographical feature. 
KATE WILKINSON (National) 
: 
 Thank you Madam Chairperson and it is an honour and a privilege to follow from the oratory of my colleague the Hon Tau Henare. I rise to speak to Part 4 of the Real Estate Agents Bill which relates to complaints and discipline. Really if one thinks about the Minister’s preambles about the so-called “carnage” in the industry and land sharks and cowboys then really this should be the most important part of this bill that we are debating in Committee this afternoon. I have to say that it is disappointing that the queries we have raised and the calls we have asked the Minister to take have been very serious sensible questions and the Minister in charge of this bill unfortunately has failed to answer any of them and doubtless will not be here to even listen to the discussion on the complaints and discipline provisions of this bill. 
I want to talk about the complaints assessment committees. Under the original bill as presented to the Justice and Electoral Committee there was to be one complaints assessment committee of three members. The complaints assessment committee was sort of replacing the regional disciplinary committees that were provided for under the 1976 Real Estate Agents Act. And I will just put on the record that section 101 of the 1976 Act basically stated: “a Regional Disciplinary Committee shall consist of— (a) a barrister or solicitor as its Chairperson: (b) Three members appointed by the Council from members of the Institute within the region for which the Committee is established: (c) One lay member (not being a real estate agent) appointed by the Minister.” Then it goes on to state: “Three members of a Regional Disciplinary Committee including its Chairperson shall constitute a quorum.” 
Now the difficulty that we have and I think some of the difficulties that have arisen with the complaints that have been made in this industry are because we do not have regional disciplinary committees approved by the Minister. I asked the Minister back in June last year who were the current lay members appointed by the Minister to each regional disciplinary committee—that is each disciplinary committee for the region. He said: “I am advised that there are currently no lay members appointed to the regional disciplinary committee pursuant to section 101.” The power of appointment resides in the Minister and for the last 10 years or so the Minister has totally failed to appoint lay members of the disciplinary committee and therefore have them properly constituted. It is no wonder there have been problems at that level in relation to the complaints. 
A Crown Solicitor’s letter addressed to the institute and dated December 2006 states: “The absence of the regional disciplinary committee has effectively left a significant lacuna in the disciplinary structure. Mid-range misconduct either had to be taken to the licensing board or the regional disciplinary subcommittee. In some cases the misconduct was deemed too serious to be dealt with by the regional disciplinary subcommittee but insufficiently serious to warrant an application for suspension or cancellation to the licensing board. This left the Real Estate Institute in a difficult and quite unsatisfactory position.” 
That “difficult and … unsatisfactory position” could easily have been fixed by the Minister merely appointing the lay members of the regional disciplinary committee pursuant to the powers contained in section 101 of the 1976 Act. We have to take with a grain of salt some of the criticism of the processes under the old Act which the Minister believes have failed. The failure is in some ways due mainly to the failure of the Minister to comply with the existing legislation. 
I really want to talk about the complaints assessment committee which is the lower level to where complaints are to be directed; it is the regional level. My colleague Mr Finlayson has already referred to the disciplinary tribunal which is for the higher level complaints. The complaints assessment committee is for the lower level of complaints. The original bill provided for one complaints assessment committee and that shows the Minister’s lack of knowledge and ignorance as to how the real estate industry operates. When we think about the nature of the complaints they are the smaller minor complaints. It might be complaints about a telephone call that was missed or not returned which meant that the person missed out on buying the property of his or her choice—it is those sorts of complaints anything up to misrepresentation rudeness or whatever. 
Some of those levels of complaint go to the complaints assessment committee. The select committee was concerned that if there was only one complaints assessment committee then there might be a logjam of complaints. The committee has made a recommendation but I have to say I am somewhat concerned because it will impose additional bureaucracy the costs of which will be imposed upon the consumer. The Real Estate Agents Authority appoints the complaints assessment committee and it appoints as many complaints assessment committees as in its opinion are required to deal effectively with complaints and allegations about licensees. 
The reason for the committees being appointed as required is that rather than being prescriptive and having a complaints assessment committee for each region it was dependent upon where the complaints were coming from. If there was a pattern then at least this gives the authority the power to enable it to form those complaints assessment committees. Each of those committees consists of three members. One of the members of each committee must be a member of the authority two must be appointed from the panel which I will come to in a minute and one appointee must be a lawyer of not less than 7 years’ legal experience. 
Then of course we had to have a panel of eligible complaints assessment committee members. The authority must maintain a panel of up to 20 persons who are suitable to serve as members of that complaints assessment committee. When assessing and considering their suitability the authority has regard to the person’s personal attributes and also his or her knowledge and experience of matters likely to come before the committee which include without limitation experience and knowledge of the law of the real estate industry and consumer affairs. So we have a panel of 20 persons who are eligible to be appointed to complaints assessment committees as required. The term of office is 5 years after which they resign from the panel. 
I have to ask the Minister what the difference is between this and the regional disciplinary committees under the 1976 Act. Surely when criticism of the real estate industry relates to two main aspects one of which is the regional disciplinary committees and the process when the regional disciplinary committees have not been approved by the Minister it would be a very simple exercise for the Minister just to have approved those regional disciplinary committees without having to go through all the paperwork involved in this major reformation of the industry. 
The other issue that was criticised and that the industry wanted reform on was the quantum of the fines. Again it would be a simple matter to amend the law just to increase the quantum of the fine from $750 to whatever is appropriate. There could be two small amendments rather than this major escapade of a sledgehammer to crack a nut that really has not been handled well. This legislation should have been easy; it should have been simple. The legislation was wanted by the industry and wanted by consumers but for reasons that have become apparent a meal has been made of it. 
COLIN KING (National—Kaikoura) 
: 
 In speaking to Part 4 of the Real Estate Agents Bill I draw the Committee’s attention to the issue raised in the National Party’s minority report that we have certainly got ourselves into a fair-old state around a bureaucracy structure. The interpretation of the various parts talks about complaints assessment committees and the Real Estate Agents Disciplinary Tribunal. After I had conversations with various real estate agents about industry training—and I had a short excursion into that particular industry—I saw that this aspect of it really did need to be tidied up but not with such a massive bureaucracy. 
If we look at some of the fines that have been attributed to the committees to determine we see that they have been stretched out to appropriate levels in a 21st century legislative structure. The fine is not to exceed $10000 for an individual and $20000 for a company. Clause 107 talks about what the disciplinary tribunal can do. Subclause (2)(f) states: “an order that a licensee who is an individual pay a fine not exceeding $15000 …” and for a company it is $30000. The clause covers the level of compensation that can be sought and a specified order cannot exceed $100000. When we stop and think about those sums of money we see that they certainly are a major deterrent in themselves. 
However it leads me to question the Minister as to whether we needed such a massive bureaucracy to achieve it. When making that comment I am raising the issue of the cost of supporting such a structure. We see that there will be a self-funding model. There will be a contribution from the membership—a general fee from the real estate sector. There will be an operating levy and there will also be a disciplinary levy. We certainly hope that we do not see an explosion of costs when we consider that the authority has the ability to appoint and maintain a panel of 20 people to be able to provide what it decides to be an appropriate level of engagement over issues. I would like the Minister to help me understand how he will be absolutely sure that that provision is meeting the intent of the Act. 
I would like to take the Committee’s attention back to clause 92 which talks about the members of the committees not being personally liable. We can appreciate that there needs to be some protection for members on a committee. The track that this process takes us down goes right through to the Court of Appeal. When that occurs anybody’s head can roll. Although we recognise the need to have some level of support and protection for the members of the committees I would like the Minister’s view on clause 92(2): “Subsection (1) does not apply if the person acts in bad faith.” There is an assumption that a person may act in bad faith; however we have not dealt with issues around conflicts of interest. We would expect those to be handled in a way that did not actually bring about vexatious and frivolous claims. I think clause 92 is just a little too robust in its protection of people who are not behaving in the best interests of the situation and not being transparent. Clause 92(1)(a) states: “any act done or omitted to be done in the course of performing or exercising any of that person’s functions duties or powers under this Act or done or omitted to be done …”. 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I will take a brief call to address some of the points that have been raised about Part 4 and about previous parts on which members have expended a lot of hot air trying to make some conspiracy— 
Nathan Guy 
: Not hot air! 
Hon CLAYTON COSGROVE 
:—or cold air in that member’s case—in respect of appointments. Let me make the position completely clear. Some member obviously could not read the bill and said the appointments would have to be made next week or the day after the bill receives the Royal assent— 
Charles Chauvel 
: It was David Carter. 
Hon CLAYTON COSGROVE 
: Of course yes a very learned member. The truth and the facts are—if we get rid of the hot or cold air—that the provision allowing appointments to the authority to be made indeed comes into force the day after the bill receives the Royal assent. However proper appointment processes especially in the period leading up to a general election will be followed. There is no need to rush these things because work can be got on with prior to appointments being made. It is not a requirement to make appointments when this section of the Act comes into force. Despite all the puffery that we hear from the Opposition side again the facts speak for themselves. 
Ms Wilkinson raised issues about the regional disciplinary committees. She seemed to put a thesis forward that had my predecessors and I over the last decade activated regional disciplinary committees with fines I believe in the order of $2000-odd and made up of members of the industry and other lay members then somehow peace would have broken out the veil would have fallen and all ills within the industry would have been solved. That is not true. On 2 October 2006 I met with the chief executive of the Real Estate Institute of New Zealand Christine Le Cren and Mr Cleland the national president and they indeed asked me to appoint members to set up regional disciplinary committees. I urged them and have continued to urge them to use the full extent of the old law. The 1976 Act despite the conjecture that the bar is too high to refer cases to the licensing board gives the Real Estate Institute of New Zealand the facility at any stage to refer any complaint. Whether it be flogging tea bags at smoko defrauding somebody of hundreds of thousands of dollars or acting inappropriately or unethically the institute has the ability as the gatekeeper to decide where these complaints go. I urge the institute rather than setting up another structure—National members talk about bureaucracy and then call on us to activate another structure—to use the powers in the Act that have existed since 1976. 
The other bonus of referring cases to the licensing board is that the board has the ability to impose fines up to $5000—not $2000 or $750 as the other subcommittees did—and it has the ability to suspend delicense or run the errant real estate agent out of town. If the member is trying to suggest that had we activated after 10 years more bureaucracy by activating a regional subcommittee that somehow would have solved every ill then I invite her to revisit her law classes because she appears to be a tad naive. 
Somebody I think it was Mr King asked what this authority is going to do. I can tell the member one thing it will do. It will produce codes of ethics and practice. It will not produce codes of ethics such as the code of ethics prior to Mr David Russell’s redrafting of it. The Real Estate Institute of New Zealand code of ethics states in 13.5: “Members shall never publicly criticise fellow members.” There will be an era of openness when anybody can make a complaint and have it heard. The complaints assessment committees will be set up to expedite deal with and investigate complaints and will recommend courses of action. They will be well resourced indeed and there will not be the delays that we have had with the institute. As I said before I am told that a real estate agent had a case hanging over his head like the sword of Damocles for 3 years. He was not able to have his day before the institute—his day in court as it were. That will not happen under this system. 
Then we come to the issue of costs which somebody raised. Let me just say this. I have said publicly that there are around 18000 or 20000 folk in this industry. If I was to charge them a flat fee of $500 a head to fund this whole framework which I am told is on average the equivalent fee they would pay to the Real Estate Institute of New Zealand depending on where they are in the hierarchy of the structure I would have twice as much money as I need to make this structure work. It may be that as with the Real Estate Institute of New Zealand fees now a manager might pay a slightly higher fee than an agent and a salesperson might pay a lower fee. But when the average commissions prior to last year totalled $1.2 billion and the average commission which I acknowledge has probably gone down a bit given property prices was $15000 per sale or purchase members cannot tell me that the world as we know it will end and that massive costs will be visited on the property seller or the buyer because the real estate person may pass on $500 or thereabouts to the consumer—if that is what the figure is. 
National members do not like the facts. “Old Smoko” the tumbleweed over there does not like them. A spurious case is being made to try to scare people in our communities. If we set up an independent transparent authority consumers who feel that they may have been done over can go and test their case before independents so that even if they lose their case they can feel as if they went to a court that they have had their day and that independents with no vested interest and no axe to grind have assessed their case. Opponents say that all that will be put asunder because massive amounts of money will be visited on the consumer house prices will fall costs will go up and the world as we know it will end. But it is like other professions—lawyers pay more builders with licences pay more and electricians pay more to be licensed. I say come on let us get a life! The time for scaremongering is over. National members are getting a bit desperate in respect of Part 4. Those are the facts. 
I conclude by saying this. Somebody asked what the change in the disciplinary regime will be. In the current regime there is the ability to fine somebody $750 and I note that there is no legal or moral impediment on the Real Estate Institute to pass on that small fee to the victim as dictated by the legislation but it never happens. There is the ability within the tribunal if the case gets that far to have compensation—that wonderful thing where if someone has been wronged especially in respect of his or her home a large asset that person can get compensation. The fines have been lifted as the Real Estate Institute wanted. The level of discipline has also been lifted as the Real Estate Institute wanted. The ability to set up multiple complaints assessment committees and to increase and reduce the number depending on the volume of complaints is again allowed. As Ms Wilkinson says frequently: “Justice delayed is justice denied.” Well she has a dose of amnesia when she talks about this sector. She is not worried about the delays. She is not worried that in the past very few if any complaints have been referred to the licensing board when there was the power to do so. This is a board that can fine people $5000 and throw them out. That is not enough; that is why we are changing it. But that facility is not new in legislation I say to the party that says we do not want bureaucracy and that we should use the existing legislation. When it is not used there is a problem and when we cannot compel people to use it there is a problem. I say to National Party members that what I have said addresses some of their points and I ask that we get a bit of fact back into the debate rather than all the hot air and hyperbole—or cold air in the case of Nathan Guy. 
NATHAN GUY (National) 
: 
 Well after 5½ hours of debate today on the Real Estate Agents Bill we have finally heard from the Minister. What a lot of piffle we have heard! The Government has had to put the House into urgency—we are sitting till midnight this evening and having 13 hours of debate—to get through this bill. 
This Minister could have had a chance of reforming this Act but what a shambles! I cannot believe that he actually took a sledgehammer to crack a walnut as my colleague Kate Wilkinson described this Minister doing in her very very good address. This Minister had the opportunity to win over 18000 to 20000 real estate agents’ votes for this election. But do members know what? Labour will not get any of those votes because it has made an absolute shambles of this legislation. We are seeing that here today with the Government having to move the House into urgency to get this bill passed. It is just so interesting that the Minister had the opportunity to get this legislation right. One of my constituents presented a submission to the Justice and Electoral Committee—and I acknowledge the good work of Christopher Finlayson Kate Wilkinson and Chris Auchinvole on the select committee. My constituent went home and rang me that night and said that he had presented a pretty good submission but that it seemed to be just the National members who had their heads around the bill. He said that the members of the select committee who are sitting on the other side of the House did not have a clue. 
Christopher Finlayson 
: What did he say about Lynne Pillay? 
NATHAN GUY 
: Which one is Lynne Pillay? I want to talk about Part 4 because that is all about complaints and discipline. All of the real estate agents from the region where I live Horowhenua and Kapiti have a complaint for the Government. They have a complaint about the reform of this legislation—that the Government should have got it right. This process is not right and the House needs to acknowledge that today. This part is so bureaucratic. Is that not typical of this Government? The way to correct things is to have more bureaucracy—just put more bureaucracy in the way of trying to correct the complaints and discipline procedure. It will not do it. What it will do in my opinion is encourage a culture of more complaints and that is where we have a real concern about this part. 
I think the Government had a wonderful opportunity to get this reform right. The industry wanted it and the sector wanted it but it is not right. We have some real concerns about this legislation. This part addresses the nub of the issue which is the Government creating more and more bureaucracy to try to address the problem—a sledgehammer that is cracking just a walnut. 
It is an embarrassment that the Labour Government is ramming this Clark-Peters legislation through in urgency tonight—we are debating through to midnight. We are coming to the end of the term of this dying Government. It just shows that the Government has had to put the House into urgency to rattle through the legislation when it could have done it a lot sooner if it had been able to get the numbers. The Government has managed just now to do a deal with New Zealand First to get its support through Parliament. 
We have some real concerns about Part 4 “Complaints and discipline” and about how there will be this wonderful panel of 20 persons who will try to administer the complaints procedure. I heard Chris Finlayson talk about clause 97. He made some wonderful contributions on the establishment of the Real Estate Agents Disciplinary Tribunal which in part we are supporting. But fundamentally we have a real issue with this legislation this afternoon and with the House being in urgency to yet again create more bureaucracy. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
Nathan Guy 
: Party vote. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I am sorry; I said “All those that are of that opinion say ‘no’. ” I heard nothing and then declared the result. I am sorry. 
NATHAN GUY (Senior Whip—National) 
: 
 I raise a point of order Madam Chairperson. I was having a glass of water at that point in time then I put my glass down. I ask the Committee that we recast the vote because it is vitally important that National votes against this legislation. I raise it as a point of order that you please recast that vote. 
The CHAIRPERSON (Hon Marian Hobbs) 
: This is a procedural motion. You will have a chance to vote against the legislation. I am sorry. If every time I had to do a procedural motion I had to watch whether people were drinking—I know it sounds very unfair but I took the procedural motion and I cast the procedural motion. [ 
Interruption 
] To the member who makes these comments I would rather you take a point of order than constantly chip from the side. 
The question was put that the amendments set out on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove to Part 4 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 4 as amended be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Part 4 as amended agreed to. 
Part 5 Duties relating to real estate agency work 
KATE WILKINSON (National) 
: 
 I rise to speak in relation to Part 5 of the Real Estate Agents Bill. This part deals with the duties relating to real estate agency work. I will refer to a few issues in relation to this but not on a clause by clause basis. The first is in relation to clauses 137 to 141 which I appreciate are being deleted pursuant to the Minister’s Supplementary Order Paper 243. I think it is important for the record to know what we are deleting. We are deleting the clauses providing for the bidders record for auctions the proof of identity for anybody who wants to bid the confidentiality of the bidders record and bids being taken only from registered bidders. This shows a huge ignorance of how auctions are conducted. It was so impractical and so unrealistic it was just not going to be workable. 
For example if one turned up to an auction and decided to bid for a property—bearing in mind that it is the auctioneer’s duty to get the best possible price—unless one had filled in the bidders record one would not have been able to bid for that property and the vendor might have missed out on the top price. But not only that bidders also had to fill in details identifying who they were and provide proof of identity which was limited to a driver’s licence a New Zealand passport an overseas passport or other proof of identity as prescribed by regulations whatever that might be. 
The Real Estate Agents Bill then stated that the person engaged to conduct the auction had to keep the bidders record for at least 3 years. Why on earth would one want to keep for 3 long years a bidders record of unsuccessful bidders who might have been interested in a section or house? At least in relation to this provision and these clauses some common sense has prevailed and those provisions will be deleted with our endorsement pursuant to Supplementary Order Paper 243. 
But I come back to something I mentioned when I spoke about Part 1 the interpretation and definitions clause because it relates to clause 129 in Part 5 and that is the definition of residential property. I point out to the Minister that residential property has been defined twice. It seems that it has been replicated both in clause 125 and in clause 129 where it says exactly the same thing. We do not need both of those definitions so for the sake of saving a few words maybe one of those definitions—which are word for word the same—could be omitted without seriously affecting the integrity of this part. I see that the Minister in the chair the Hon David Parker is looking at the bill with some interest because he at least is a lawyer and does know the importance of having sensible readable legislation that has some sense of professionalism about it. 
I asked earlier for the then Minister in the chair the Hon Clayton Cosgrove to take a call on the definition of residential property. Residential property has been defined in the interpretation clause as “property used or intended to be used exclusively or principally for residential purposes.” It has been further defined and this is both in clause 125 and in clause 129 where it is replicated by excluding “property that—(a) has been developed with other properties in a continuous area; and (b) is proposed to be sold or otherwise disposed of by a vendor who also proposes to sell or otherwise dispose of or who has sold or otherwise disposed of some or all of those other properties.” 
During the select committee process submitters were concerned about this provision because the relevance of it is that a sole-agency agreement for residential property can be cancelled 90 days after it has been entered into. This provision deals with residential property such as for example subdivisions that may take longer to sell than the 90 days or staged developments that could take longer as well. It recognises that there are some types of property like those staged developments that may take longer than 90 days to sell and some that will be staged over several years. It recognises that exception to the cancellation of the sole-agency agreement but what it does not do is adequately define residential property so we do not know what property can or cannot be included in that sole-agency agreement that can be cancelled 90 days after it has been entered into. 
During the debate on Part 1 I gave the example of lifestyle property and asked whether the definition of residential property included lifestyle property. So far I think that question has been too difficult for the Minister to address but it is an important question because in relation to agency agreements as I said earlier many of the difficulties are that a person will sign up with a sole agent wanting to sell a property and may then want to choose another agent further down the track. After 90 days that person can cancel the first sole-agency agreement and enter into another with a separate real estate agent but if there is confusion as to the definition of residential property that person might end up having in effect two agency agreements neither of which is cancelled and may end up being responsible for paying double the commission. If the Minister thinks that is unlikely I can tell him that it is not. There have been several disputes that involve two agents or more claiming commission for one sale. One of them is entitled to the commission not both but it is a dispute and an action that vendor clients do not want hanging over them especially if it can be clarified by the Minister in the Committee stage before it is entrenched in legislation. 
I think that is an important point; I do not think it is filibustering. It might be too technical for the Minister who seems just to want to make personal comments about National members but it is a serious point that should be addressed by the Minister or perhaps he could get advice from his officials. It is irresponsible to pass legislation through this House that contains uncertainties especially as to such basic definitions as residential property. I seriously ask the Minister to address this point without being too emotive about it because it is a sensible point. 
I have had 28 years of conveyancing experience so I have read several agency agreements and I have had several conveyancing transactions and I have to say that the signing of agency agreements is one of the most fraught issues that vendor clients have. There is fine print in the agreement and people are often confused as to whether they have a sole-agency or a multi-agency agreement who works in with whom how to cancel that agreement and after the cancellation of the agreement whether the sale has been affected because of what that agent did and whether the agent is still entitled to the commission. A very important practical point from the point of view of selling one’s property is what the agency agreement entails and what the definition of “residential property” includes and excludes. 
ERIC ROY (National—Invercargill) 
: 
 I have become kind of immersed in this bill. It is a fascinating over-prescription. In a lot of ways it is a bit like using a bulldozer to weed the radishes with a heap of prescription and overbearing high-handedness. We are on Part 5 “Duties relating to real estate agency work” and I am drawn firstly to clause 119 which requires that any money in respect of any transaction be held for 10 working days. But what if both parties do not want it to be held for 10 working days? In the last transaction that I was involved in—a rather modest transaction—both the vendor and the purchaser wanted a much quicker turn-round. On the one hand the vendor wanted to go unconditional on another option and needed the money and on the other hand the purchaser—moi—wanted to avoid having money sitting in a GST situation for 6 months until it could be retrieved. In this bill we have a prescription that would totally write off the opportunity for common sense when both the vendor and the purchaser want an alternative. No doubt the Minister in the chair the Hon Clayton Cosgrove will now seek some advice and come forth with a very good explanation as to why that is there. 
Then I am drawn to clause 121 “Agents’ trust accounts to be audited”. That is a really good idea. If I was a real estate agent and I had an audit account called say the “Spencer Trust” or something like that I would really want it to be audited because of its association with other names that might not be quite so wholesome. So I am quite in favour of that. 
Then we come to the latter part of Part 5. I was interested to learn from the comments made by my colleague Kate Wilkinson that all of the provisions in regard to auctions are to be withdrawn. I ask the Minister whether that is right—he could perhaps nod. 
Hon Clayton Cosgrove 
: Yes. 
ERIC ROY 
: Thank you; I commend the Minister for a sensible outcome. I am not sure why he did not seek some advice before those provisions were put in. 
This is where I have had some trouble with this bill; it has been thrown together with all kinds of aspersions cast about skulduggery shysters and every other kind of wrong involvement in the real estate industry when in reality there have been some serious overstatements. Can I confess to actually being an auctioneer? I was going to have some very stern words to say about those provisions if they had not been withdrawn. 
I will make this point for a start. There are a series of mechanisms by which a person can sell a property and it is up to the vendor to decide what mechanism to use. The vendor may not want an auction; there is sale by tender private treaty or negotiation. There is a whole range of things so I have to say that I was very very disappointed in the Minister when I saw those heavy-handed requirements about auctions included. The very nature of an auction is that it is about nuance and entertainment and it is actually about engagement in a process of negotiation verbally so it was disappointing to have had these prescriptions about bidders records times at which people cannot arrive etc. 
I tell the Minister that if I were selling something and an auction was underway and someone rolled up in a Rolls Royce—or let us say a red Hummer or something like that—and wanted to bid and went on the bidders record I would have been distressed if that provision removing the opportunity for someone to bid in that way had not been withdrawn. Then of course— 
Hon Clayton Cosgrove 
: But you’re a happy man. 
ERIC ROY 
: In this little regard. I commend the Minister for dropping out his absolutely hopeless and heavy-handed series of prescriptions about auctions. Auctions do not play a huge part in sales. Quite often they are set up to draw some attention to a property and identify those people with whom negotiations can take place. But I was just wondering what the mischief was. I mean how many people do a runner and are not around after they have had the bid? I think the Minister would struggle to come up with some numbers on that. He was happy to give us some examples before—two only—on another part of the bill when we were asking— 
Hon Clayton Cosgrove 
: If you yield I’ll give you a lot more examples. 
ERIC ROY 
: I ask the Minister which people do runners. I am not sure that that actually is the case. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 What an appalling speech from the previous speaker. I will take a very short call on this part. Opposition to it comes from the party that is not a party of compulsion. What are we seeking to do with this regulation? We are seeking to have some transparency some clarity and what is wrong with that? But again from the party opposite anything that puts any duty for any clarity for consumers is seen as over-regulation. As I have said before to treat protection for consumers so flippantly in relation to the most important and biggest purchase they will ever make in their lives is just downright appalling. 
There were many submissions on the bill and the Justice and Electoral Committee did a lot of work on it. Kate Wilkinson contributed quite a bit of common sense to the bill but at the end of the day National members see some political gain in opposing it. What is so terrible about a provision whereby parties want the money held for 10 working days? This is about accountability in the system but I expect nothing more from members opposite who are members of a party that in no way believes in compulsion of any kind. They just leave it to the free market. 
COLIN KING (National—Kaikoura) 
: 
 I will address Part 5 of the Real Estate Agents Bill. The previous speaker from this side of the Chamber the very learned Eric Roy who is a very capable auctioneer—he is very capable at whatever he does—addressed the piece that I will start on which is the amendment on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove that removes the provisions relating to auction requirements from clause 136 through to clause 141 of the bill. But I will approach that amendment from a slightly different angle. It tends to leave behind the footprint culture and attitude in which this bill was drafted. It clearly relitigates the situation when the Minister was very much on the front foot and deliberately attempting to capture a public perception but that effectively faded away very quickly and was not there. 
I will take a moment to move people away from the massive body we hear about: the approximately 20000 real estate agents. In this case we are talking about the auction system. But in a region like Marlborough if a person puts a foot out of place and does not perform with integrity that person is out of that town. That was really brought home to me when this bill was in its early stages of gestation and was being spoken to in its first reading and I was approached by the real estate principals who operate out of Blenheim. When one stops to think about them one realises they are business owners. They were First National Bayleys Harcourts LJ Hooker Ray White PGG Wrightson and CRT Real Estate. Those companies have incredible recognition and a very high profile in Marlborough including in Blenheim and they are actively involved in many many transactions so I find it very very difficult to understand how the Minister could have so simply and effectively alienated the members of those businesses from his line of thinking. 
Hon Clayton Cosgrove 
: Only the bad ones. 
COLIN KING 
: We had no bad ones in Marlborough. Those business people were very very offended. They come across as very genuine people. They were quite concerned that they were being vilified and all of the comments that have come from this side of the Chamber in a way should be seen from the point of view that there was huge angst amongst those people. 
That is referred to here in Part 5 of this bill. There is the mere fact of the need to have so many amendments come forward on the Supplementary Order Paper. A lot of the amendments are common sense but a lot of those provisions should have been there in the bill in the first place. Sure we can go on about the odd person who does get things wrong and who has done things wrongly. We realise that there needs to be a process but as is illustrated by Part 5 the intention to so accurately prescribe the registration of bidders the keeping of records for 3 years and the requirement to give bidders something to wave so they are identifiable is indicative of the whole approach that was taken to this bill. As we go through this Committee stage it has been very clear that the chairperson of the Justice and Electoral Committee Lynne Pillay feels that in this Parliament we legislate and get things incredibly right—that we are the experts. But what we often do not have is the ability to connect with the coalface where these matters are sorted out. What will come out of this legislation will be a bundle of law that when it hits the ground will turn considerably pear-shaped. 
I will talk for a couple of seconds about an incredible competition I saw when I was with the Real Estate Institute of New Zealand. It was the Australasian championship of auctioneering and it was an incredible experience. The competitors were at a really nice hotel in downtown Auckland and they had got themselves into a competition that was very similar to a Golden Shears final. There were six finalists and they had to auction off a property which they did very well. It was incredible to see the detail that those people had to keep in mind and to manage. I take my hat off to those auctioneers who see themselves as professionals and who see themselves as adding an amazing amount of flair and as getting the very best explanation and description of a property. They are able to market a property in a way that draws out the people who are interested in that sort of property and value and then on the day just like a wonderful chef does—a Jamie Oliver deal—they are able to get the very very best outcome. 
All I have to say to the Minister is that the road to hell is paved with good intentions. Sadly the Minister started off by trying to vilify those people and he tried to maximise the political opportunity. Unfortunately the perceived support that he thought would be out in the population for his position evaporated away and I have noticed a considerable back-down from him. Thank you very much. 
CHRISTOPHER FINLAYSON (National) 
: 
 Part 5 deals with the duties relating to real estate agency work and I want to take a call on just a couple of matters. The first is clause 117A which requires the agent to display certain information. That provision is picked up from section 53 of the 1976 Act. It requires that every agent must clearly exhibit a notice of his or her name and the fact that he or she is a real estate agent licensed under the Act at his or her place of business. One issue that arose is what happens if people do not have an office as such. If they have an office clause 117A(2)(a) requires that that information be provided there. What if they operate out of a car and they simply have signs that they put up outside an apartment block if they are selling an apartment block or outside a house—and we see all these signs around the place at the weekends? Are they required to comply with clause 117A? My understanding is that they are required to do so so some changes may need to be made to the notices that they put up if they are working out of their car at the weekend. 
The purpose of this clause is to require this information to be shown on notices advertisements and other publications that are issued by or on behalf of the agency or the agent. As the report of the Justice and Electoral Committee says this will hopefully promote transparency and help to protect consumers by ensuring that information about the agent is readily available. So that is why that provision was inserted and on its own we have no particular problem with that. 
The second point I want to make is to reiterate the excellent points made by Mr Roy and Mr King about the requirements where the land is sold by auction. There were a number of submissions on those particular provisions and I am referring to clauses 136 to 141. As can be seen from the clauses some of them are derived from the Property Stock and Business Agents Act 2002 of New South Wales. The evidence we received from submitters was that these were designed for a particular problem that had occurred in New South Wales some years ago thus necessitating the legislation and they did not really fit into the New Zealand legislation. We made that point and if one reads the National Party minority report one will see that we said we thought the auction bidders record was impractical. We have heard this afternoon from several of my colleagues that this regime would not have worked at all and that it would have been cumbersome and frankly silly. 
Even though we are concerned about various aspects of the bill that remain we are pleased that the Minister has heard what we were saying and has ignored his colleagues on the Justice and Electoral Committee. This proposal would not have worked and we are very pleased that it has been deleted. Because we need to get on with other parts of the bill and deal with the title and the third reading I will not detain the Committee any further on Part 5. I just wanted to bring the Committee’s attention to those two matters. 
JOHN HAYES (National—Wairarapa) 
: 
 This legislation is opposed by the National Party not because we do not want good legislation to apply to the industry but because I can assure members that the majority of the real estate agents in my Wairarapa electorate are seriously opposed to many of the provisions of this bill. They also took considerable umbrage at being invited by the chair of the Justice and Electoral Committee Ms Pillay to come and make representations to the committee and after driving for an hour and a half from Masterton being invited to appear before the committee for 5 minutes only to face another hour and a half drive back to Masterton. That is at best totally rude and arrogant treatment by a Government that I hope our community will be putting the skids under. 
In my view the legislation in Part 5 is faulty and reflective of our typical nanny State over-prescriptive attitude to developing legislation in this country. Let me give the example of clause 119 “Money to be held by agent for 10 working days”. As someone who has bought and sold the odd property during his life I can say that it is often absolutely out of the question that one would want to enter into a transaction that leaves the money sitting dead in an account for 10 working days. GST for example may apply to the transaction and because of the phasing-in of GST income and payment arrangements it may be entirely inappropriate to keep this requirement for money to be held by the agent for 10 working days. 
However it is entirely appropriate that agents’ trust accounts should be audited as provided for in clause 121. I have no difficulty with that at all. But I turn to the provisions concerning agency agreements—in particular clause 124 “No entitlement to commission or expenses without agency agreement”. As in my colleague Colin King’s electorate down in Marlborough a lot of transactions in my electorate of the Wairarapa are made on the basis of word-of-mouth trust between people who know each other. Very many transactions are never actually put on paper. At the moment I am involved in a transaction with a land agent that has nothing on paper. Each party entirely trusts the other to act in an honourable way. We do not need the over-prescription that is coming from a Government that is trying to prescribe the detail around every breath of every individual for his or her life and his or her behaviour in that life. 
It also strikes me as very strange that a client can cancel a sole-agency arrangement by 5 p.m. on the next working day. What would be the difference between cancelling it then and cancelling it on the spot? Why are we engaged in interfering in the multitude of possible transactions between people and between individuals? The law cannot ever prescribe in detail the behaviour between two people. This legislation is attempting to over-prescribe and over-regulate behaviour. 
It is of concern to National that auctioneering is removed from this legislation. Many transactions around property in the Wairarapa involve auctioning; it does not matter whether we are dealing with farm properties residential properties business properties livestock or other bits and pieces of agricultural material. 
I think it is also of concern that we should be winding up the Real Estate Agents Fidelity Guarantee Fund because I was caught up in this sort of problem myself 20 years ago with the lawyers’ fidelity fund where a particular lawyer who was representing me banked some money that was owed to me as if it was his own. When one comes to seek the guarantee of these funds it is actually quite hard to extract the payments from these bodies even though one has been done down by a professional person. I think it is quite appropriate that there should be some arrangement so that if agents transgress the small people in the community are able to recover some sort of compensation for being done down by somebody else. I will finish at this point but I reiterate that there is strong opposition to this bill amongst the real estate agents in my electorate and I do not support voting for it. 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I will take a very short call to answer quickly a couple of questions members have raised. 
I think Mr Roy and Mr Finlayson and latterly Mr Hayes had a question around clause 119. They asked what would happen if the two parties do not want the money to be held for the 10-day period. Well clause 119(2) makes it clear that the parties can sign an authority requiring the agent to pay the money before the 10-day expiry if there is mutual agreement. It is quite simple quite logical. I do not think many people would disagree with it. 
There were two other points. Mr Hayes lambasted my colleague Lynne Pillay in respect of the Justice and Electoral Committee and said that people who had come from Masterton had had only 5 minutes before the committee. Mr Hayes has been on select committees for a few years now and should know what happens—and I think Mr Finlayson who was a member of the select committee quite rightly made reference to this matter. I am advised that as there were a large number of submissions the members of the committee agreed that where submitters were going to make exactly the same point over and over again they would be taken as a group. That is not unprecedented in the life of this Parliament or of other Parliaments and it even occurred under a National regime some years ago. 
Similarly having chaired a select committee myself I agree—and I think most other members would agree—with the observation made by Mr Finlayson that where a committee receives hundreds of xeroxed submissions with different people’s names on them but saying exactly the same thing—either that one supports a proposition or that one is agin it—then hearing all those submitters is possibly not the most effective way to deal with the political process. Those submissions are noted of course but they are treated in a similar vein to a petition which is very valuable but serves a different purpose in a different process. I think that where submitters come in simply to make a point that is going to be made over and over again they should be grouped in order for the parliamentary process to be used in an efficient way. Maybe Opposition members of the committee would not say so publicly but I suspect some of them appreciated Ms Pillay’s management of the situation. 
The final point I want to make is that Mr Hayes waxed lyrical about the fact that he is in a professional relationship when he is doing a deal with a real estate agent and does not need any protection at all. 
Hon David Parker 
: Waxed dissonant. 
Hon CLAYTON COSGROVE 
: He waxed dissonant says my legal colleague—I was going to say my learned friend but he is a lawyer and I am not—about the fact that he was in a professional relationship with a real estate agent over a property he did not need any protection and all would go well. Other members have asked about caveat emptor; what about buyer beware? To heck with it if something goes wrong and to hell with the fact that some people in our society through no fault of their own do not have the legal qualifications or the professional skill to deal with these commercial arrangements; the market will sort it out. The market will sort it out Mr Hayes said. 
John Hayes 
: If the market can’t the nanny State will. 
Hon CLAYTON COSGROVE 
: I would just make this final observation to Mr Hayes. He railed against our having any protection for the poor folk who may actually be done over—and there are many examples of that happening. I bet that Mr Hayes would have a completely different attitude if he were on the receiving end if he were being done over by an unethical person. I bet that Mr Hayes would stroll—I was going to say sprint—into the House and demand protection for consumers. 
If he does not demand protection for consumers what does he say to his constituents who come to him with exactly the same proposition saying that they did not think they needed any protection because they felt confident that all would go well? They will ask Mr Hayes as their local MP to help them because they have been dealt to and Mr Hayes will turn round and say: “Oh it is nanny State to provide any protections for you lot—my constituents in Wairarapa. Ii is nanny State. Go and fix it yourselves. It is your fault; you messed up.” I wonder what his constituents would then say to him or whether he could look them in the eye. 
It is a sort of global cliché to say that having any protection for consumers amounts to having a nanny State. Well if that is the case we would not need a legal system would we I say to Mr Hayes. We would not need a legal system or a court system to protect people. We would not need a small claims tribunal where people can take small issues—under a monetary limit—to have them sorted out because that would be nanny State would it not? I look forward to hearing what happens when Mr Hayes fronts up to his constituents. Well he will be protected now because we will have brought in this legislation but I look forward to his telling us what he would do if he were in that situation. Even with his great academic prowess his diplomatic career and his experience there is still a possibility that somebody in a professional relationship with him might act inappropriately. 
The question was put that the amendments set out on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove to Part 5 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 5 as amended be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Part 5 as amended agreed to. 
Part 6 Miscellaneous provisions 
KATE WILKINSON (National) 
: 
 Thank you for allowing me to take a brief call on Part 6 the final part of the Real Estate Agents Bill. This part relates to the miscellaneous provisions. It includes the offence and penalty provisions provisions regarding civil remedies provisions for regulations to be made by the Governor-General and some transitional provisions such as those concerning the Real Estate Agents Fidelity Guarantee Fund existing claims and applications that are pending. 
I will start by talking about the penalties regime. The penalties regime is interesting in the sense of its relativity with that in other legislation. I think sadly it indicates that there has been a bit of a personal vendetta against the real estate industry. If we look at the penalties in this legislation and compare them with those in other legislation we see that there is not a lot of relativity. I refer for example to the penalty for failure to notify the registrar of a change of circumstances. Under this bill the penalty for an individual is $25000 and for a company it is $50000. That is just for changing one’s address and not notifying the registrar in time. It could be a mere administrative slip which of course New Zealand First knows about. But the fine under the bill for that is $25000 which I say does seem to be a bit excessive. 
That is not to demean whatsoever the importance of making sure that changes of circumstances are notified. But under the bill the penalty is $25000. If we compare that situation with for example the penalty for failure to notify the registrar of a change of circumstances under the Motor Vehicle Sales Act 2003 we find that the fine in that Act is only $2000. There is a big difference between $2000 and $25000. Yes one piece of legislation relates to selling cars and the other to selling property and they have different Ministers in charge of them. Perhaps we should also go to the Plumbers Gasfitters and Drainlayers Act which is a recent Act. The fine for failure to notify the registrar of a change of circumstances under that Act is $500 as opposed to $25000 under this bill. The fine provided for in the Immigration Advisers Licensing Act is more in keeping with that in this bill; it is $10000 for failure to notify the registrar of a change of circumstances. But again that is significantly less than the penalty provided for in this bill. 
There is a penalty for failure to provide information and again I will look at that from the point of view of relativity. Under this bill the fine is $25000 for an individual and $50000 for a company. If one compares that again with a similar offence under the Motor Vehicle Sales Act 2003 one finds that the fine for failing to provide information under that Act is $2000—not $25000 for an individual as it is under this bill. In the Plumbers Gasfitters and Drainlayers Act and also in the Immigration Advisers Licensing Act by way of comparison the penalties under both Acts are $10000 for the same offence which is still significantly less than the $25000 fine or penalty that is proposed to be imposed under this bill. 
There are also offences set out in the bill that are not comparable with offences in the other Acts that I have used for the purpose of comparison. The failure to provide an approved guide again carries a fine of $25000 for an individual and of $50000 for a company. The fine for failure to provide a copy of a contractual document is again $25000 for an individual and $50000 for a company. 
I really would be interested in the Minister in the chair the Hon Clayton Cosgrove taking a call—although I am not particularly optimistic about that—and telling us how he has calculated and assessed the quantum of penalty for offences that in some situations can be just the result of a mere administrative oversight. I would also like the Minister to take a call even just to answer one question which I have asked three times so far today. It is a very simple question: does the definition of residential property include or does it not include lifestyle properties? I will ask it again because I really would like to receive an answer to it. Although I did say this would be a short call I have got carried away obviously in relation to the penalties. 
I turn to the provision in Part 6 relating to the winding up of the Real Estate Agents Fidelity Guarantee Fund. We questioned the submitters on whether it should be wound up and most of the submitters mentioned for a start that the two claims in recent history on the fund have related to property management and not to real estate agency work itself. If one looks at the purpose of a fidelity fund one sees it is a fund of last resort so one first has to go through the courts. The fund is available in relation to theft of course and the ability of real estate agents to misappropriate money is possibly limited to the extent that they hold the deposit—this is normally monitored by both the vendor’s solicitor and the purchaser’s solicitor—during the conditional period of a contract until it becomes confirmed as unconditional and thereafter perhaps for the statutory period of 10 days which was mentioned by previous speakers unless of course that 10 days has been waived which quite rightly can be done by agreement. The opportunity for an agent to actually misappropriate the funds is quite limited so from that rationale it is possibly sensible to wind up the fidelity guarantee fund. 
But from the point of view of property management for which the claims have been made against the fund it does not make the same sense because sometimes the funds are being held for overseas owners of property who might perhaps not check their accounts more than once a year when they have to do their tax returns. So property managers have more scope than real estate agents to misappropriate the money of clients. None the less Part 6 does provide for the winding up of that fidelity fund. 
There are other transitional provisions as well that cover things where there are pending disciplinary proceedings and that cover the effect of agency agreements that have been entered into before the new legislation comes into effect. The law that is applicable to them is the old 1976 Real Estate Agents Act. That provision had to be inserted in the bill at the behest of the Justice and Electoral Committee because it had not been thought of by the Minister. And there are other miscellaneous provisions in Part 6. 
I think Part 6 is generally fairly uncontentious except for the quantum of the penalties which seems to be somewhat high. One does have to wonder about the motivation behind setting such a high penalty for what is in some cases purely and merely an administrative oversight. 
Nathan Guy 
: Another tax? 
KATE WILKINSON 
: It could indeed be another tax but it is just another way of taking a personal vendetta against real estate agents and the real estate industry. The offences for which a real estate agent could be fined $25000 or $50000 are such that the circumstances would rarely affect the integrity of a transaction or actually have much of a detrimental effect on clients. In terms of relativity certainly we have concerns about the quantum of those penalties. I think Mr Chair that I will probably leave my discussion of Part 6 at that. 
CHRISTOPHER FINLAYSON (National) 
: 
 I want to make a few brief points about Part 6. I endorse what Kate Wilkinson has said and I certainly do not intend to repeat her comments about the strange level of the fines for some offences that simply do not seem to warrant it. During the select committee stage she undertook a very careful comparative analysis with other regulatory legislation. As she said under the plumbers and gasfitters legislation a fine might be $500 but under this legislation it is $10000. So it is out of kilter and it would be good if the Minister in the chair the Hon Clayton Cosgrove would take a call. If he does not want to talk about the generality of the legislation I ask him to just take a look at clause 150 which deals with offences that will be committed if one fails to notify a change of circumstances. 
What is a change of circumstances? Well if one refers to what is still clause 66 we see that one has an obligation to notify the registrar of any change of circumstances and that will mean as subclause (2) states: “(a) any change in the information recorded in the register; and (b) any change in the real estate business for which the agent branch manager or salesperson works (if any); and (c) any change that may be prescribed.” 
If one looks at the purpose of the register set out in clause 63 one sees that again it really is a consumer protection mechanism to enable the public to determine for example whether a person is a licensed agent or a branch manager and how to contact that person. So in the overall scheme of things it is pretty low-level regulation. So it does seem rather strange that clause 150(2) has these penalties up to $10000 in the case of an individual or $50000 in the case of a company. I could go through each of the offences provisions in some detail but I think Kate Wilkinson’s excellent overview should suffice and my particular reference to clause 150 enables the Minister to come to grips with it if he chooses to. 
The second point I want to make concerns the insertion of new Subpart 2A in Part 6 which makes it clear that the civil remedies a person may have against an agent branch manager or salesperson are not affected by the passage of the legislation. This bill as we have said is consumer protection legislation. Although there are compensation provisions it is primarily a disciplinary matter if there is misconduct of any sort but civil remedies are preserved and they will include claims against an agent under the Fair Trading Act or for breach of contract or negligence if we have concurrent liability in this country now and we probably have. 
The third point I make concerns the regulations. We have not yet had an answer from the Minister to the points Dr Worth raised in relation to clause 155(aa) and 155(2) and (3) and I hope that before the Committee stage draws to a close we will be able to hear from the Minister on those points because the whole regulation-making power of the bill is important and needs a response from him. 
I would just observe in passing—and it is in the category of a minor slip—that although there are references to subclauses (2) and (3) in clause 155 there is no subclause (1) so that may need to be tidied up. The major changes that were made to the regulation-making power dealt with moving into clause 155 the provisions relating to exemptions that were formerly contained in clauses 12 and 13. There is still the rather strange reference in clause 11 to exemptions that may be granted under regulations; as I said some inquiries were made and it seemed to relate only to a very few agents in the central North Island. 
What are the other changes contained in the regulations? The regulations relating to audit have been tidied up. More detail is provided about the content of regulations regarding an audit. There are better regulations relating to the prescription of offences so we have an amendment to clause 155(k) which sets the maximum penalty for any offence at in the case of an individual an amount not exceeding $25000 or in the case of a company not exceeding $50000. 
Then there is a change relating to compensation. One sees that clause 155(m) which has been deleted stated that regulations could prescribe the maximum amount of compensation payable under section 107. We had a useful discussion about that and indeed we sought the advice of the Regulations Review Committee on the appropriateness of allowing such a matter to be set by regulation. Dr Worth and his committee reported to us as a result of which we have acted on their recommendation and the maximum compensation the tribunal can award is contained in the bill itself. 
So there are a couple of inconsistencies in the regulations which the Minister may care to address. As Ms Wilkinson said much of Part 6 is unexceptional and is in fact quite sensible but there are the issues we have raised and it would be good if the Minister would condescend to provide us with an answer. 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I rise to make one point and it concerns the point Ms Wilkinson made about residential property. She will know that clause 4 states: “ ‘residential property’ means any property used or intended to be used exclusively or principally for residential purposes”. Of course it depends on the principal use. In case she is thinking of concocting some fear amongst the owners of lifestyle blocks in my wonderful electorate of Waimakariri I just say that the only impact of whether their properties are deemed to be commercial or residential is that if they are commercial the agent of which those people are a client does not have to provide them with a guide as to their rights and responsibilities and bits and pieces and the maximum 90-day provision does not apply. Just in case Ms Wilkinson is thinking of banging out a press statement and frightening all the lifestyle blockers in Swannanoa where she lives and in other places I say to her that there is no material effect on them at all. If their property is deemed to be commercial they are dealt with in the same way effectively that they are dealt with now. If their properties are deemed to be residential then they sign up for 90 days and they are protected because they have the option of pulling the pin on the sole-agency agreement. Also the agent must provide them with a guide in respect of their rights and responsibilities. 
Just in case any scaremongering was about to happen—as the member is wont to do from time to time in my patch—those comments should allay her fears. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 155 be agreed to: 
to omit clause 155(a). 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Noes 63 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Progressive 1. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove to Part 6 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 3; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 6 as amended be agreed to. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 3; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Part 6 as amended agreed to. 
Schedule 1 
The CHAIRPERSON (Hon Clem Simich) 
: The question is that schedule 1 stand part. Those who are of that opinion please say— 
Kate Wilkinson 
: I raise a point of order Mr Chairperson. I would like a call on schedule 1 if that is possible. 
The CHAIRPERSON (Hon Clem Simich) 
: No that will not possible—nor on schedule 2—but you may have a call on clauses 1 and 2. 
A party vote was called for on the question  
That schedule 1 be agreed to. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 3; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Schedule 1 agreed to. 
Schedule 2 
The question was put that the following amendment in the name of the Hon Peter Dunne to schedule 2 be agreed to: 
Under heading “Lawyers and Conveyancers Act (2006 No 1)” to omit “unless the person has had at least 6 months experience as such as a licensee”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Noes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 3; Progressive 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That schedule 2 be agreed to. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 3; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Schedule 2 agreed to. 
Clauses 1 and 2 
KATE WILKINSON (National) 
: 
 I will be taking just a very short call in relation to clauses 1 and 2—in particular clause 2 which is the commencement date. The bill has certain sections that come into force on the day after the date that it receives the Royal assent with the rest of it coming into force—according to the bill—12 months after it receives that Royal assent. I am aware of course that there is a Supplementary Order Paper containing an amendment by the Minister in the chair the Hon Clayton Cosgrove that increases the 12-month commencement date in relation to those sections by 2 months to 14 months. Concern has still been raised that the commencement date is far too soon to enable an industry to change its rules. This bill is reforming an industry and that industry needs sufficient time to be able to do that properly. As a comparison the Lawyers and Conveyancers Act had a 2-year transitional period for that regime to come into place. We would suggest—and submitters have suggested it—that 2 years is actually much more realistic than the amended 14 months that has been prescribed in this bill. 
When we look at what is required to put into effect this new real estate regime we see that there has to be a Real Estate Agency Authority set up. That authority has to appoint complaints assessment committees. The authority has to maintain a panel of 20 persons for those complaints assessment committees and the Real Estate Agents Disciplinary Tribunal also has to be formed and constituted. So we have to make sure that we are responsible in allowing sufficient time for those various bodies to be set up. 
When we are looking at time limits it is also interesting to note that—as I understand it—the current code of conduct for the real estate industry has been on the Minister’s desk awaiting approval since February of this year which is some 7 months. If the Minister’s amendment to the commencement date of 14 months is agreed to in the Committee this afternoon it will take half of that time just to approve the code of conduct. I think we have to be realistic and I think we have to be responsible in enabling a sufficient time for this regime—it is a totally new regime and a total reformation of the real estate industry—to be put in place. I seek the Minister’s assurance that he is confident that 14 months is sufficient to do this job properly. 
Hon Clayton Cosgrove 
: Absolutely. 
KATE WILKINSON 
: I thank the Minister for that interjection. He has given us his absolute confirmation that 14 months is sufficient. Obviously in the event he is proved incorrect we will certainly be reminding him of the assurance that he has given in this Committee this afternoon. 
Apart from that we still have concerns about the commencement date. We do not think that the concession of increasing it from 12 months to 14 months will be that material. The industry believes—and National supports it in that respect—that 2 years is a more realistic time frame. But once again let it be recorded for the record that the Minister gave his absolute assurance that he is confident that 14 months will be sufficient for this purpose. 
NATHAN GUY (National) 
: 
 We are speaking to the Real Estate Agents Bill under urgency. It is a bill that the Government wants to ram through the House. At present we are debating the title and the commencement date. 
I have been thinking about appropriate names for the bill which is overseen by the Hon Clayton Cosgrove. I wondered whether it should be called the “Cosgrove Sledgehammer Bill” or indeed the “Cosgrove Hates Real Estate Agents Bill”—that is another option—or the “Cosgrove Calls Them Land Sharks Bill”. I have heard several interviews with the Minister where he has berated real estate agents in public and called them land sharks and shonky crooks. I cannot believe he would belittle people in our community who are actually doing their best. 
This bill is all about Clayton Cosgrove wanting to make a name for himself. The Labour Party list has just come out. It is interesting to see the literature that has come into my hands. In the past Clayton Cosgrove has wanted the people of Waimakariri to elect him to Parliament but I see that that member who is overseeing this bill is now reliant on his placing on the list. It is ironic how things change when one puts one’s finger in the air. The member overseeing this bill is now reliant on his placing on the list. How times have changed! I am sure that when we are on the campaign trail the good people of Waimakariri will be reminded that that member says one thing then delivers another. 
I think an appropriate comment on this bill would be whether although some in the industry support reform its commencement date just 14 months from now gives sufficient time. It is a fairly big reform of the industry. National members would have thought that an appropriate commencement date would be in about 2 years’ time and in our minority report we put that recommendation. It is good that the Minister has acknowledged it but he has moved the date by only a little bit—about 2 months. It is also good to have on the record that the Minister and his officials believe that the date gives sufficient time for the measures to be implemented. 
The National Party has some real concerns about this bill about the commencement date and about whether the wording of the title is appropriate and I have commented on those concerns this afternoon. I look forward to making even greater remarks when we move to the third reading this evening under urgency. The Government will be ramming legislation through the House for 13 hours today—we will sit until midnight—and I look forward to my colleagues making some very good contributions in the third reading. We believe that this item is significant for the real estate industry and that the Government is being too bureaucratic. It has got it wrong. That was conveyed during the select committee process which attracted hundreds of submissions. It has taken the Government a long time to get the numbers to have this bill go through the House under urgency this evening. I look forward to the third reading which will probably be after the dinner break when we can make some further contributions. 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I rise just before the dinner break to answer finally an issue on the commencement date. My learned friend Mr Charles Chauvel a lawyer of some eminence has pointed out to me that the Lawyers and Conveyancers Act which has been aptly quoted in the Committee as having a 2-year transition includes some 50 sets of regulations and rules that require ministerial and Cabinet approval etc. With this legislation there are 16 matters—not sets of regulations but matters—to be regulated and there are also practice rules to be put in place. 
I have been asked whether I am confident we can achieve the objective within 14 months. Yes I am. Why? Because it is core business of the Ministry of Justice. We are blessed with officials who have guided this process and have provided very very sound advice—despite the Opposition’s nay-saying. I am confident the objective will be met given that there are precedents for the setting up of these agencies. 
It is interesting to note in passing as we debate the title that there are a number of titles we could have given this bill. We could have called it the “Consumer Protection Bill” or we could have given it a name showing that the Labour-led Government was doing something that the National Government—by Mr Worth’s own admission—did not do even though throughout its 9 years in office the real estate folk had asked it to do something. It had other things to do so it did nothing about this issue. I may be doing Dr Worth a disservice; it was one of the National Party members who said that. So yes the Real Estate Institute came to this Government yes we have acted and no we have not acted I suspect in the way that certain people in the real estate leadership wanted us to. One learned lawyer in this place—I do not think he is here—advised me that they spent about a million dollars of their members’ money on hiring the most expensive lobbyists in New Zealand. I even saw a video that those lobbyists—who I am told also represent those eminent and morally upstanding party pill manufacturers—made on how to make a submission and 1300-plus people wrote submissions. 
We have got to a place now where we could quite rightly if we wanted to call this bill consumer protection legislation because it has been endorsed by Sue Chetwin of Consumer New Zealand and before her by David Russell who was pre-eminent in drawing a number of these issues to my attention and to the attention of others. We could call this bill a number of things. 
The Government started this process not 2 years ago. We took it from an idea to reality. Issues had been raised by people like Deb Leask and other victims and by the real estate folk who wanted the name of their profession restored. We put out a discussion document we met on several occasions with the Real Estate Institute we put a bill before the House and here we are. I believe that the extra 2 months—because of the legislative schedule there will be a delay of a couple of months; we are moving to an election—will allow a little more flexibility. 
To come back to the Lawyers and Conveyancers Act I think it is erroneous to compare this bill with that Act—and I suspect the lawyers on that side including Ms Wilkinson may have worked this out—because that Act is major legislation. This bill is basic consumer protection legislation. This is not rocket science. This is basic consumer protection legislation in which standards are set and monitoring is put in place. People who run amok can be hammered—I make no apology for it—victims can be compensated and the name of the profession can be restored. But I think it is a bit rich for members opposite to say we should make consumers wait 2 years when those members were approached by the Real Estate Institute time and time again when they were in Government and in 9 years did nothing. 
It is interesting that today throughout this lengthy debate not one member of the National Party or anyone else who opposes this bill has come up with one alternative proposal. I look forward to National announcing its real estate policy and telling us whether it would repeal this legislation. I look forward to that. Do those members have an alternative? Does the eminent lawyer Ms Wilkinson present an alternative to us? Oh no those members bleat on and bemoan the fact that this Government has got off its chuff and actually looked to protect consumers. I respect the fact that those members do not agree with the vehicle. That is fine. I respect the fact that they do not agree with a lot of the propositions although I still do not know why—apart from the fact that they keep levelling at me that I have a vendetta against real estate folk. Well I understand that to have a vendetta one has to have been wronged I think—the eminent lawyers to my right will tell me. Normally with a vendetta—if one wants revenge—one has to have been wronged. Well I have been involved in real estate transactions and I have had no problem at all with any of the real estate folk I have dealt with. There is no vendetta. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 3; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Clause 1 agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 3; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Amendment agreed to. 
The CHAIRPERSON (Hon Marian Hobbs) 
: The amendment from the Hon Peter Dunne to clause 2(2) is now ruled out of order because it is inconsistent with the previous decision of the Committee. 
A party vote was called for on the question  
That clause 2 as amended be agreed to.  
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 3; Progressive 1. 
Noes 53 
New Zealand National 47; United Future 2; ACT New Zealand 2; Independents: Copeland Field. 
Clause 2 as amended agreed to. 
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I move  
That the Real Estate Agents Bill be now read a third time 
. I take great delight in doing so. I open the debate by making a couple of thankyous. Firstly I thank a number of people outside this place. I thank a woman called Deb Leask who is a victim of some of the disreputable behaviour of the minority of agents in the real estate industry. When these issues were brought to my attention she was brave enough to expose her personal issues in respect of her transaction and to demand that there be change. As for other victims who deserve to be noted I mention also the late Bronwyn Hilbron and her family who have yet to see justice for what she went through. I pay tribute to the Ottaways and to all the other folk who either wrote to me or went to the media and outlined situations where they felt rightly or wrongly they had been wronged. 
I also note that throughout the debate on this bill the National members have brought up only two examples of consumers who had been wronged. Rarely did they acknowledge that there was any issue in the industry to address. In the National Party’s view of course we have nirvana: there is no issue there is no problem and no real estate agent has wronged a Kiwi. I tend to disagree with that. 
It is often said that the three most important things in real estate are location location location. Well in just over an hour the four most important things in the real estate sector will be the consumer the consumer the consumer and as well those innocent and professional real estate agents whose professional skill and reputation is degraded every time one of their number runs amok. I have been accused in this debate of all sorts of things: of being vengeful and of having a vendetta—I think that colourful language was used. Even Simon Power cringes at that. Some of his colleagues actually used that term. 
Hon Member 
: Oh come on. 
Hon CLAYTON COSGROVE 
: No Simon Power did not use it. I make this point: I have no vendetta against the real estate industry. I have engaged in private real estate transactions and used agents before and they were outstanding. By definition to have a vendetta means that I personally have been wronged. Well I personally have not been wronged. I am one of the lucky people who have had good dealings with reputable professional agents. But I and this Government make no apology for perhaps using some colourful language. 
I respect Mr Dunne. He knocked off the common-sense Mr Nice Guy routine today put the boots on and had a good crack at me. That is OK—that is called democracy and I respect his view. But I make no apology for calling those who did consumers over land sharks and I make no apology for saying there are rogues in the industry because there are. Agents told me about and wrote to me with examples of them. I make no apology for taking the Queen’s shilling doing my job and as a public servant standing by every Kiwi who has been done over. That is called doing one’s job as a member of Parliament. I heard propaganda from National members who said I had lambasted everybody in the industry for being a land shark a rogue or whatever the term was. Well they will keep saying that; they will say it again in their repetitive speeches tonight. The facts are and the press statements show that that was never the case. That was a myth created by some in the industry and perpetuated and promoted by the National Party. But who cares about that? 
The most important people in this whole deal are the honest real estate agents and the consumers. Tonight they will have protection. There has been criticism for instance that this bill does not deal with property managers. Well we have announced that there will be a review—a review that will take place within the 14-month period before this legislation is implemented after it is enacted. If the review provides evidence and fact not hearsay and piffle—such as the ring-arounds from various people in the industry who said that one in five complaints was about property managers but who provided no evidence of that—and if legislation is required that legislation will be brought to the House enacted and implemented and it will come into force at the same time as this legislation in 14 months’ time. It will be a concerted measured approach to an issue on which very little evidence has been provided. 
I thank the officials. I will not name them because they may at some time want to buy or sell a property and they may get into some difficulty if it is known they worked on this bill with me. But the officials are from the Ministry of Justice and they know who they are. They did a stunning job under I might say some duress. I pay tribute to the Justice and Electoral Committee but I say one of the disappointments in the process concerned the way that committee members were treated by some people. There was some bullying of officials. I am told that highly paid lobbyists got a million bucks from the industry. I think Ms Chen was the key lobbyist—I am told that she also represents the party pill manufacturers so members should work that one out. I think those people did not act as they should have acted in terms of the pressure that was brought to bear on some people. 
I thank my colleague Lynne Pillay and Simon Power. We did have a difference of view but I respect Simon. Mr Finlayson who I think also became tired of hearing the rote submissions made a contribution as did Ms Wilkinson and others and on our side of the select committee of course Charles Chauvel a learned lawyer and Louisa Wall. They managed a very difficult process. The committee members managed a huge number of submissions and they came under pressure and took the hit from many in the industry. 
I look forward to working with this industry. I think this bill gives us a wonderful opportunity to get rid of the bad guys. We will restore recover and promote the positive work of those in real estate restore the faith that consumers in our community should have in this industry and people—men and women—will be able to hold their heads up high. This is not rocket science; this is basic consumer protection legislation. 
I just say to the National Party members as they warm up and put the liniment on getting ready to go into this debate that they have not served consumers or the New Zealand public well. They have talked about the industry at length promoting and safeguarding it; they have not talked about ordinary Kiwis. And I make this point to those who have listened to the debate on this bill: there has been not one policy not one idea and not one alternative from National. I do not mind criticism; I think it is good to have a contest of ideas. If Simon Power and Kate Wilkinson get into Government will they repeal this legislation? Will they tell us that? Will they announce their policy on the real estate industry? I do not think so. Once they go into the communities and talk to constituents and real people will they find people who disagree with having their biggest property transaction and the biggest asset in their lives protected? People will know that if something happens and they feel aggrieved they can go to an independent authority. If a person wins his or her case the offender can be struck off and can be fined and the victim can get compensation and feel good about himself or herself unlike the situation now where it costs 750 bucks to bring a complaint and the gatekeepers determine whether they will even look at it. 
I do say this: I think there are times in this Parliament when we should put a bit of the pettiness aside and I think Mr Power—I will not talk about the other National members—as a lawyer genuinely believes that consumers should be protected. I think he genuinely knows they need to be protected because he has probably dealt with a number of constituents so he knows that people have been done over and there was a need for change. This industry was given a couple of chances to implement change itself and it chose not to. Communities demanded that we act and we have acted. That crew over there on the National benches had 9 years. They were approached by concerned people—they admitted that; I think it was Mr Carter or Mr Worth who did so—and they said by their own admission in the debate that they did nothing about the industry. I am prepared to cop the criticism the name-calling and all that drama. But I say where is National’s policy where are the ideas and where is the alternative to this bill? I thank the Justice and Electoral Committee Parliament the officials the victims and the honest real estate folk who will be able to hold their heads up high as they proceed through these reforms and their industry is restored to the status it should have. 
KATE WILKINSON (National) 
: 
 I am delighted to lead off on behalf of National in relation to the third reading of the Real Estate Agents Bill. Can I say from the outset and we have always said from the outset that we support wholeheartedly and absolutely the purpose of this bill. The purpose of this bill is to promote public confidence in the performance of real estate agency work and to protect the interests of consumers in respect of transactions that relate to real estate. The Minister mentioned before that the three most important things in real estate are consumer consumer consumer. During the Committee stage he actually said he was part of a listening Government. I would just like to put on the record that the Hon Peter Dunne had some very sensible and practical amendments to this legislation that National did support. One of those suggested amendments was that the authority must consult with the industry training organisation for the real estate industry. The second one was that the qualifications—the experience of real estate salespeople—should not be 2 years out of 10 years or as amended by the Minister 3 years out of 10 years but 5 years out of 10 years. That is to protect the consumer. That is all about the consumer. There was nothing subversive about that nothing radical about that but did the Government members listen to that? No they did not. They ignored it completely. 
This bill should have been an easy bill. This is not an industry that was dragged kicking and screaming—to quote the Minister—to reform. This was not that situation at all. The industry itself has been asking for reform for over 10 years. Yet the Ministers of the day said that it was not part of their policy priorities. The industry had been saying for 10 years that it wanted reform. Mr Dunne mentioned two matters that could quite easily have helped the situation and protected consumers. One was to actually put in place the regional disciplinary committees. They are already provided for under the existing legislation. What did the Minister do? He had the opportunity and he had the power. In fact he was empowered to appoint lay observers on that committee and to validate that committee. For more than 10 years he did not do so so we did not have any regional disciplinary committees to deal with some of those complaints at that early stage to expedite the complaint process. 
The other suggestion and again the industry had been asking for it for over 10 years was to increase the amount of the fines; $750 admittedly was not sufficient. The industry did not think it was sufficient the Government did not think it was sufficient we did not think it was sufficient but for 10 years or more the Minister had been approached by the industry. The Government has had four official approaches in the last 10 years by presidents and others of the real estate industry to address these matters and what did this Government do? It did absolutely nothing until this Minister decided he would go on a real estate crusade and talk about land sharks in the industry talk about carnage and talk about cowboys—he decided that this would be his crusade. 
Well we now have a bill at its third reading. The National Party minority report—and we did do a lot of work during the select committee process—actually expressed some concerns. It is at least satisfying to some extent that some of our objections have been addressed. The uncertainty created by the 5-year review of the employment status of real estate agents has been addressed. That is no longer hanging over the heads of salespeople not knowing whether they are employed or self-employed. There is still the issue that has to be addressed between what is meant by supervision as opposed to effective control under the existing legislation which has been tested in the courts. Now we have new phrases and I am sure they will be tested in the courts as well. 
The auctioneers provisions in this bill had a bidders record and it was the most unrealistic impractical section of legislation that I have seen for a long long time. Thankfully again that was taken out of the bill by a Supplementary Order Paper of the Minister and so it should have been. Who on earth would want to have to keep a bidders record for 3 years even before a bidder knew he or she was going to bid because it might be a spur of the moment bid for a property and the vendor wants to get the best price and he or she had to produce identification—had to produce a passport. Now who takes a passport along to an auction if he or she wants to buy a property? Thankfully— 
Simon Power 
: They could take one of those new ones of Rick Barker’s! 
KATE WILKINSON 
: Oh one of the microchip ones; maybe that would work. But thankfully that provision was also deleted. 
This bill is about consumer protection and it should be about consumer protection. But it should also be about making responsible law and certain law. Now I asked the Minister and I had to ask him about five times during the Committee stage what the definition of residential property was because that is very important and it is actually covered several times in the bill. I said: “Are lifestyle properties included or not included in the definition of residential property?”. That is material to whether the client can cancel a sole agency agreement. Finally after the fifth question he did say that yes it is. The reason I asked that question is that I wanted an assurance. Believe it or not some people actually read the  
Hansard 
 transcripts to get some idea of what is intended by the legislation and by the parties in this House. I wanted it recorded in  
Hansard 
 that the Minister intended by his legislation that lifestyle properties would be defined and included in the definition of residential property. Although that might seem a small matter it is not a small matter if one has a vendor client who has the uncertainty of not knowing whether his or her lifestyle property is residential and cancels one sole agency agreement and enters into another and suddenly finds out that his or her property does not come within that definition it is not excluded and therefore he or she has to pay two commissions. That on the ground is one of the very practical things that has to be addressed by this bill. 
We also heard the definition of real estate agency work and the definition of transaction and the situation regarding shares and whether for example a rural property owned by a company which the parties decide to sell by way of shares rather than by way of real estate would be caught by this bill. We have had no clarification whatsoever. This bill still leads to a lot of uncertainty and uncertain law is not good law whatsoever. 
Property management is not included in this bill. We have heard arguments that it comes outside the scope of the bill but that did not seem to matter with KiwiSaver in relation to the meal breaks bill. Even though it was outside the scope it was included. So why is it not included here? Property management is an integral part of the real estate industry. We heard that the only claims in recent years against the fidelity fund were in relation to property management. We have seen in the headlines the scenario with Blue Chip. Property managers have more opportunity to misappropriate funds than do real estate agents because of the length of time that the money is held in their trust account. Now that property managers are not regulated they do not have to have a trust account and they do not have to be audited. In fact one real estate agency in Christchurch said that this will save it $10000 a year in agency fees. And this is supposed to be legislation for the protection of the consumer! This is not legislation for the protection of the consumer. This bill waters down that protection of the consumer. Property management is such an integral part of real estate that it should have been included. I think it is negligent that it is not included. 
Can I just finish by saying that of course we support legislation that protects the consumer. Of course we support legislation to reform an industry when that industry itself wants it and needs it and the consumer wants it and needs it. But this legislation does not do that. This legislation is a missed opportunity. It is a disappointment and it is a missed opportunity because of the attitude of some Government members and in particular of the author of the bill. I think that is sad because we do not have workable legislation and at the end of the day the consumer will not be more protected by this than under the existing legislation. 
CHARLES CHAUVEL (Labour) 
: 
 I am pleased to be able to speak in the third reading debate of legislation that provides for a long-overdue overhaul of the Real Estate Agents Act 1976. It delivers on the Government’s promise to bring accountability transparency and openness to the real estate sector and to establish an independent complaints system that really does protect consumers and supports honest real estate professionals who as the Minister has said time and time again and as we saw at the select committee constitute the vast majority of participants in this industry. It is correct and right that this bill should put an end to the industry’s self-regulation and introduce a range of consumer protection measures including compensation on a proper basis for consumers who have been ripped off. I was astounded to hear the previous speaker say that this legislation waters down existing protections. All one needs to do is read through the bill to see that in fact the protections are massively strengthened and that is great for consumers and for those honest hard-working real estate agents who form the backbone of the industry. 
The select committee process was robust and I was really pleased to participate in it as a Government member. I think the chair of the Justice and Electoral Committee my colleague Lynne Pillay did a terrific job of making sure that people had dignified hearings and understood that they were being listened to with respect which is an important part of the process of Parliament interacting with the people. I am also interested in the reforms that are enacted in the Supplementary Order Paper and on reflection I think they are sensible. 
Rescinding the requirement to review the employment status of salespersons is appropriate but I do not think we should lose sight of the issue that alone in New Zealand employment law along perhaps with sharemilkers real estate agents have this odd statutory provision that entitles them to be regarded as employees whether or not all the other indicia and tests as to employment status exist. We heard evidence in the select committee that this leads to a race to the bottom in boom times. We are not in those times any more so it might be that we have a temporary reprieve from the problems that having a compulsory employment status lead to. Let us face it the reality is that should a review of the status of real estate agents be required at some point it can always be done at the behest of the Minister. It does not need legislation to require it. It is probably appropriate given the circumstances that we find ourselves in to rescind that requirement. 
I think also on reflection the decision to rescind the regulation of the conduct of auctions is probably the right way to go. The major evil that the original provisions were designed to deal with was the issue of dummy bidding not that that seemed to register with the Opposition ironically. But we did hear evidence that the real estate industry is taking significant steps to clean up its act in that area. I am very confident that through its consumer-education role the new Real Estate Agents Authority which the legislation will create will ensure that consumers are aware of the issues that may affect them if buying or selling real estate through auctions for example. Again we can be confident that there are measures in the legislation that will deal with the evil that it was intended originally to address by regulating auctions in the way that was intended. 
I think the decision to raise the experience criterion for a licensed agent or branch manager from 2 out of 10 years to 3 out of 10 years is the right way to go. Clearly we need to address the concern we heard in the committee that 2 years’ experience over the last 10 years is not sufficient. 
Finally on reflection the decision to formally require consultation with the Real Estate Institute of New Zealand over appointments to the authority and the disciplinary tribunal is appropriate to ensure that the transition between the current regulatory regime and the proposed one is smooth. As I said in my Committee stage speech that was probably going to be a requirement on the Minister anyway given the provisions of the Crown Entities Act to appoint appropriately qualified people. That would have required some sort of consultation process with industry anyway so we will probably end up with the same sort of result. 
I have already acknowledged the sterling efforts of the chair of the select committee. I mentioned the work of the officials in my second reading speech and I will not name them as the Minister refrained from doing but I do want to express gratitude to them on behalf of the committee for their hard work. I would also like to acknowledge the majority of agents who came before the committee and made responsible submissions. They showed us that they intend to muck in and work through the issues that they need to in their industry to make sure that there is proper public confidence in that industry. I wish them well in the tougher economic times that we are experiencing. 
I did want to comment on one other matter though. I refer to the praise that was heaped upon the Supplementary Order Paper moved earlier in the House by Peter Dunne and supported by the National Party. There is a regrettable trend in this House in my respectful view that persons who do not attend select committees none the less come into the House to speak move amendments and vote as if they are somehow greatly informed by the consultation process that we have been through. The reality is that the committee process exists for a reason and my money generally will go with the amendments that have stood the test of the select committee process rather than on a fly-by-night basis without having heard the evidence. I am afraid that Supplementary Order Paper clearly comes into that category. 
It is a matter of regret that the National Party has chosen to maintain what I regard as its pro forma opposition to this legislation—just opposing for the sake of opposing. But the public is wising up to the National Party as the Roy Morgan poll shows tonight with a gap closing from over 21 percent to just over 6 percent and over half the people saying the country is on the right track. That is because this is a Government that is in touch with what Kiwis want unlike the Opposition. The Opposition has only three approaches: copying the policies of this Government keeping secret what its policies are from ordinary Kiwis and just going through ritualistic opposition on bills like this one. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. The member knows it is not appropriate to mislead the House. There is no way that we are copying Labour Party policies because there are none on its website. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you Mr Brownlee. I was looking for a point of order but not that one. I thought you might think the member was being irrelevant. That being the case yours was not a point of order and the member will continue. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. I am worried about the member’s relevance but I did notice that one of the Ministers took time to release one of our policies tonight. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: OK Mr Brownlee. Thank you for that. 
CHARLES CHAUVEL 
: I am sorry I have upset Mr Brownlee so much with the good poll news that the Labour Party is enjoying at the moment. 
All I would say in conclusion is that Kiwis are not fooled by the National Party’s approach and they will rightly welcome this legislation. 
SIMON POWER (National—Rangitikei) 
: 
 It never ceases to amaze me how sure of themselves the Labour Party members are on these issues. Over the last 18 months while National has been so far ahead of Labour in the polls we have modestly gone about our work. Tonight the Labour Party members find one rogue poll and they are cock-a-hoop in this House telling us it is all over and they are on the way back. Well I have news for them: they should just wait another 10 days. That is all I have to say about that matter. 
The Real Estate Agents Bill is worth a few cursory remarks on the way through. I will start by saying the Labour Government had an opportunity at the first reading to get this legislation right. When the Minister came to this House and put this bill before the debating chamber National Party members pointed out at that stage the five or six things that would have to be changed in the legislation in order to make it work. Not only did we do that but we stood and told Government members which provisions of the legislation we supported. Our position on those matters and those factors has never changed; it has been perfectly consistent from the day when I and my colleagues stood up and took first reading speeches on this bill. 
What happened on the other side of the House? On the other side with regard to this legislation we had the Minister storming through the House and announcing the fact that there was to be legislation to wipe out land sharks; he announced that at least five or six times before the legislation was finally introduced. He stood in this House and told us that the Justice and Electoral Committee would do its work. The Government refused to listen to the advice of the submitters to that committee. It brushed them aside as though they did not understand the important points that they were supposed to understand. The officials struggled with the bill because of the practicality of what was being offered by the submitters but the directions from the Government made the officials be pushed and pulled in a completely different direction. They are to be commended for weathering the appalling arrangement that we had to endure in that regard. 
Then the Minister was so sure of himself and of the numbers he had to secure the passage of this legislation that the bill was reported back to the House. Once again National took the opportunity in the minority report on the bill to put on record the five or six things—the same five or six things that we had pointed out in the first reading—that needed to be changed in order for the legislation to work. The Government said no it knew best what would work and said it had the numbers to pass the bill. Let us pause in time. The Government did not have the numbers to pass the bill; that became apparent immediately upon the report back. What position did that leave the Government in? It left the Government in the position of having to negotiate—funnily enough—on four out of the five or six things that the National Party had said right from the start had to be changed in order for this legislation to progress. 
Now I do not know about the deals that were done with other political parties to ensure that the numbers were stitched together in order for this legislation to pass. But whichever political parties were involved I congratulate them on recognising that four of the points where the Government rolled over were matters introduced by the National Party—matters raised at the first reading of this bill raised by the National Party through the select committee and raised in the report back—and still being raised by the National Party today. The question is given that the Government knew those changes had to be made why it did not hear submissions on them. What an appalling process it was when the Government said it would not listen to any of the submitters or take any of their advice. It decided it was pressing ahead but if it had to do a deal to get the numbers to make the legislation work well at the ninth hour it would introduce a Supplementary Order Paper with all the changes on it that the National Party had suggested 4½ months ago. What an appalling process! 
The problem is that the Government has left out the most important changes and that is why the National Party continues to take exception not only to the procedural arrogance and deficiencies surrounding this bill but to matters of substance as well. We know for example that the short transitional period is nowhere near the length that was made available under the lawyers and conveyancers legislation which is an equivalent industry-based statute. This bill has provided for nowhere near that period. Property management is left outside the bill despite the Government being told time and time again by submitters that it should be included in it. The Minister had the ability to fix that during the Committee stage and he declined to do so. We also know that the experience requirement for a licence has been increased from 2 years’ experience in the previous 10 years to 3 years’ experience in the previous 10 years. But we have said all along that 3 years’ experience in the previous 5 years is a preferable formula. There were missed opportunities to deal with auctioneers and their particular regime but more specifically there is the missed opportunity relating to property managers. 
The process around this bill when compared with the way Lianne Dalziel dealt with the financial advisers legislation has been nothing short of combative and unnecessary. Right from the start had the approach by the Minister and the Government been to try to get workable legislation in place we would not have had to endure the farce that ended up with Supplementary Order Paper 243 in the name of the Hon Clayton Cosgrove being introduced at the very last minute as part of a political deal stitched together on four or five matters the Government had refused to listen to the National Party on right from the start. That just proves that no one political party has all the ability all the knowledge and all the right contacts to make the process work in a way that would have seen this bill advance in a much more satisfactory manner. 
I conclude by thanking the thousands of people in the industry who took the opportunity to make submissions. It is just a shame they did not have that opportunity with regard to the amendments on the Supplementary Order Paper. But they did make submissions on the bill at the select committee hearings chaired by the honourable member Lynne Pillay. I attended many of those hearings and I say the submitters who came before the committee were by and large extremely positive in the sense that they wanted to engage on the bill—because they probably had not had an opportunity to do so up until then—and they came along with some pretty constructive and positive suggestions to make. I just think it is a shame that because of the Minister’s blind adherence to a policy that was set up in a combative and direct framework we did not take the opportunities to make those changes earlier in a decent and coherent manner—changes that have ended up having to be made at the last minute by way of the Supplementary Order Paper. So National will continue to oppose this legislation on those substantive issues and process issues. The Minister when he made his contribution said he wanted to know our policy in respect of this matter so I will advise him of it again. If the Minister is listening I tell him that it is the same five points that we made at the first reading it is the same five points that we made at the second reading it is the stuff we had in our minority report on the bill and it is the same points that we are making here again tonight. 
PITA PARAONE (NZ First) 
: 
 My presentation in this the third reading of the Real Estate Agents Bill probably will not be as dramatic as that of the previous speaker Simon Power. 
Hon Annette King 
: What about as loud? 
PITA PARAONE 
: I do not need to be. But I ought to say that I do agree with one of his sentiments and that is that no one political party has all the answers. I always thought that politics was about getting the numbers and to get the numbers one had to negotiate one’s own positions. Notwithstanding who may have been responsible for the five points the previous speaker alluded to I think the important thing for consumers in this country is that this bill will give them confidence in the profession of real estate agents. 
New Zealand First supports this bill as we have done right from the start. In the first reading when one of my colleagues made our presentation we supported this bill going to select committee. Why? To allow the people of New Zealand to have their say. As the report back from the committee indicates over 1300 submissions were received. Hearings were recorded to almost 700 of those submitters. Quite clearly there was a need for change. Quite clearly any change required responsible law. In both cases this bill does provide that. Part of the responsibility is providing consumer protection but also protection to those within the profession. This bill establishes the Real Estate Agents Authority which will essentially be a Crown entity. It will consist of seven members all requiring certain qualifications in order to sit on that board. It brings to an end self-regulation which has pervaded this profession up to this point in time. It is that self-regulation that has drawn the criticism from the general public. 
I have heard comments about the attitude taken by the Minister. Other Ministers may have approached the legislation quite differently but I think it is important that at the end of the day we end up with legislation that is responsible and provides increased protection for the consumer. The bill outlines a complaints and discipline procedure. We think these procedures allow issues to be dealt with quickly and justly. 
Another point raised by critics of the bill was the issue of property management. I said in my second reading speech that property management was outside the scope of this bill. A subsequent speaker said that it was not. However when I made reference to consideration being given by the Minister to having the whole issue of property management reviewed he indicated that that review would fall in line with the time in which this bill is to come into effect. 
As I said earlier on this bill will go a long way to restoring the confidence of the New Zealand consumer in this profession. I know that probably some members within that profession will feel that the bill goes too far; others conversely will think that the bill does not go far enough. With regard to those people who have criticised the bill in this House today I wonder what they will do if they are given the opportunity to be in Government and whether if their criticism of this bill is such that they would repeal it. No comment was made in that regard. 
I want to also make reference to criticism about the Supplementary Order Paper that allows a 14-month time frame for the bill to take place. There was comment about the fact that in the Lawyers and Conveyancers Act they required a period of 2 years. My response to that is: why should the New Zealand consumer have to wait 2 years before the protection that this bill will afford them kicks in? I personally think that even 14 months may be too long but it is much shorter than the 2 years that some people in this House would like to see. 
I do not need to go on any further about this bill. I think the Supplementary Order Paper introduced by the Minister addresses a lot of the concerns that critics of this bill had. I take this opportunity to thank the members of the select committee. I also take the opportunity to thank the Minister for allowing New Zealand First to make its submissions and express our concerns about the bill which has seen some of our concerns addressed in the Supplementary Order Paper. I commend this bill to the House. 
Debate interrupted.