Volume 664 Week 46 - Tuesday 22 June 2010(continued on Thursday 24 June 2010) 
Volume 664 Week 46 - Tuesday 22 June 2010(continued on Thursday 24 June 2010) 
[Volume:664;Page:12113] 
Tuesday 22 June 2010 
( 
continued on Thursday 24 June 2010 
) 
Tariff (Malaysia Free Trade Agreement) Amendment Bill 
Second Reading 
Debate resumed. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 I was pointing out before the break that one of the Maori Party’s concerns about free-trade agreements is that a consequence of the global market is that businesses and workers including Maori may be forced to produce their goods at the lowest cost by taking production offshore resulting in job losses at home with people buying overseas goods rather than those made in New Zealand. It should not be forgotten that in April of this year we had some 20000 Maori job seekers who could have benefited from employment opportunities. Unemployment creates stress on the whanau and relying on benefits for income diminishes the ability to manaaki. Yet on the other hand Maori enterprises increasingly want to play their part as a significant export earner for New Zealand. We know also that more support is required that would increase the capability for Maori taking their assets to the world. Presumably Dr Sharples’ mission to Shanghai will help to achieve that. 
We question how workers in both New Zealand and Malaysia will be treated with regard to workers’ rights and minimum standards on labour issues. I ask whether the free-trade agreements will comply with our basic employment law and our moral code. For Maori the expression of manaakitanga towards others means that we ensure respect for the health and safety of all workers yet we cannot ignore the fact that there are opportunities for Maori to leverage their assets to increase economic prosperity internationally. Every economist will tell us that the transfer of assets following Treaty settlements continues to build a platform for iwi-led economic development. 
The Maori Party has been genuinely conflicted about free-trade agreements. We are concerned about their impact on the situation for Maori and on the sovereignty of the nation in the wider sense. We are concerned to see that low work standards and low wage rates are not introduced into New Zealand. We worry about what the agreements mean in the larger context of human rights and indigenous rights. We will be scrutinising the effects of free-trade agreements upon the environment but we also recognise the significant opportunities that might emerge for Maori to utilise their resources expertise and knowledge to open up opportunities in the international market place. 
Accordingly although we initially opposed this bill at its first reading for the subsequent readings of the Tariff (Malaysia Free Trade Agreement) Amendment Bill our votes will represent the diverse viewpoints that both characterise our constituents and should be considered in further debates. Thank you. 
Dr KENNEDY GRAHAM (Green) 
: 
 I listened last night to the debate on the Hong Kong free-trade agreement and the ensuing debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill with considerable interest. Members may recall the comments I made last night on the Hong Kong agreement where I critiqued the format of the national interest analyses that the Government currently produces when it addresses free-trade agreements. I challenged the Government to I would say come clean on the impact on free-trade agreements on imports and the New Zealand domestic economic sector particularly the manufacturing sector. I called on the Government to drop the euphemisms that it employs such as negative adjustment effects when it really means company failures and job losses. I asked the Government to be more specific in its national interest analyses in the future to drop the ideological fixation and to acquire a certain new-found objectivity. 
I appreciated the response that my remarks elicited from particularly Maryan Street which I thought was very thoughtful and constructive but also Mr Su’a William Sio’s acknowledgment of those concerns. I actually recall in the 2009 debate on the ASEAN free-trade agreement similarly constructive comments from Pete Hodgson. It is clear I think that Labour unlike National shares to some extent the Green Party’s concerns over free-trade agreements at least as they are currently structured and promulgated. I note also of course the Maori Party’s position. As we have just heard from Rahui Katene the Maori Party is literally split over the issue of free trade and I sympathise. 
It is clear to us I think that National however is regrettably mired in a neoclassical orthodoxy. Most of its members prove unable to emerge into the sunlight of a new economic model. A few of them would not even recognise a new model if they tripped over it—and I say that more in sorrow than in anger. I invite Tim Macindoe to prove me wrong within the next few minutes. Labour on the other hand is caught between a legacy and a hard reality. The legacy is a commitment to liberalise the economy from the 1980s—the shadow of Rogernomics still shades its world view. The hard reality is recognition that all is not right with globalisation as it is currently prosecuted and promulgated. So Maryan Street calls for rejigging of the Foreign Affairs Defence and Trade Committee procedure and greater transparency. The Green Party appreciates that and thinks it is a very constructive proposal. I call upon the Foreign Affairs Defence and Trade Committee chairman to respond equally constructively. 
So what do we need? I would suggest we need at least six new things. The first is an examination by the select committee of the structure of the national interest analyses themselves as they are currently used by the Ministry of Foreign Affairs and Trade. The second is agreement that in the national interest analyses and in the submissions equal attention should be given to the import sector as to the export sector. The third is that there should be greater transparency in the New Zealand Government’s negotiating process with the Ministry of Foreign Affairs and Trade reporting to the committee during the negotiations rather than after them as a fait accompli. The fourth is the adoption of a longer time frame for negotiations so that New Zealand’s domestic economic interests have more time to make a proper input into the committee’s deliberations and for that matter the negotiations themselves. The fifth is a more detailed analysis of the effect of “negative adjustment processes” on the manufacturing sector. The sixth is equal attention being given to the effects of free-investment provisions and to the free-trade provisions and there should be separate sections in the national interest analyses to that end. 
The Green Party submitted a minority view in the report of the Foreign Affairs Defence and Trade Committee on the Tariff (Malaysia Free Trade Agreement) Amendment Bill as members know. We advanced three critiques of the agreement. First the underlying theory on which the Government rests its commitment to free trade is misguided in the sense that it is not necessarily the case that both parties to such an agreement will benefit even in comparative terms let alone in absolute 
terms. Secondly the resulting skew towards economic growth is injurious to our medium-term employment stability and also to our long-term economic resilience. Thirdly free-trade agreements are misleadingly named. They should be called free-trade and investment agreements. 
Our submission to the committee’s report was a shortened version of our written views. I have here a longer version setting out in more detail our critique of free-trade agreements as currently pursued. I seek leave to table this document for the benefit of the House. Is that possible? 
The ASSISTANT SPEAKER (Eric Roy) 
: The process for doing that is that the member raises a point of order then seeks leave. My advice would be that he should do that at the conclusion of his speech. 
Dr KENNEDY GRAHAM 
: I shall do that. I conclude by assuring the House that the purpose of our party’s critique of trade policy is not to be perennially negative as ACT is wont to assume from time to time depending on which ACT members are sitting there; the purpose is to generate a reasoned debate over New Zealand’s trade policy and the place of the country’s trade policy in the global economic context. I recall the ASEAN free-trade agreement debate last year when the Green Party made it clear that we were not against trade per se just against the current manifestations of it under the current agreements. It seems the Labour Party to some extent at least shares those concerns. The Green Party will give an undertaking that if we can start afresh with a new look at trade policy we will be very constructive in cooperating on the committee with not just Labour and the Maori Party but indeed National as well. 
I seek leave of the House to table the longer version of the Green Party’s minority report on the Malaysian free-trade agreement. 
The ASSISTANT SPEAKER (Eric Roy) 
: Leave is sought for that purpose. Is there anyone opposed to that course of action? It appears not. Leave is granted. 
Document by leave laid on the Table of the House. 
CHRIS TREMAIN (National—Napier) 
: 
 It is a pleasure to rise this morning to debate the Malaysian free-trade agreement. I will not be taking the approach that my learned colleague Kennedy Graham took in discussing neoclassical orthodoxies. I have to say that most New Zealanders around the country are not particularly focused on neoclassical orthodoxies— 
Hon Maryan Street 
: It’s neo-liberal not neoclassical. 
CHRIS TREMAIN 
: Regardless whether it is neo-liberal or whatever most New Zealanders do not work in that sort of league and really understand things at a much lower level. Once the Green Party starts to understand that and speak at a level that most New Zealanders understand they will be in a far better space. But far be it from me to advise the Green Party on how to run its politics. 
I will bring the debate back to a context that most New Zealanders understand—to delivering on promises in elections. That is what National is doing. We made a big commitment to this country when we stood at the election on having a strong growth agenda. We had six levers that we were going to pull extremely hard to ensure that that growth agenda came through. 
The first lever was a tax system that encouraged Kiwis to get out there and work hard. We are delivering on that and that is fantastic. The second lever was an investment in infrastructure to provide a framework for businesses to work under to grow and to provide jobs. It is businesses that provide jobs in our economy and the other side does not understand that. We are pulling very hard on that second lever to make sure that we deliver jobs and growth to the economy. 
The third lever was an attack on compliance costs and bureaucracy. We saw that with the aviation bill yesterday with which we are reining back compliance costs. We are making cheaper the cost of running businesses and getting our product to market. Again that is another fantastic example of National delivering on its election promises. 
The fourth lever was controlling Government spending and focusing on delivering efficiencies and value for money in the Government sector. This Government is delivering really well on that I am proud to say which is fantastic. The fifth lever that is part of our vision and strategy to grow the economy was lifting the standards in education. Throughout the country we are seeing standards throughout primary and secondary schools and tertiary education lifting and growing. 
But the area I want to focus on today is the sixth lever and that is innovation and trade. We have seen in this urgency debate two examples of trade bills coming through firstly in respect of the Hong Kong free-trade agreement and secondly in respect of the Malaysian free-trade agreement which is before us on the table today. It is a big part of our trade agenda and is supported by the Opposition and most parties within this Parliament with the exception of the Greens. Most parties understand that exporting is the key driver of our economy. That is what will grow businesses and grow jobs and it gives us options within government to collect more tax over time and deliver better education and better health services. That is how it works I say to Mr Graham. 
Rather than focusing again on neo-liberal orthodoxies I really want to give voters out there a really good example of what this means at the coalface. I will use the example of Zespri whom Maryan Street mentioned yesterday when talking about the kiwifruit industry. I will give members an exact example of how this free-trade agreement will work for New Zealanders and for Kiwi business using a green product with a low carbon footprint which is the kiwifruit industry. Zespri is a company that is getting behind this Government’s agenda. It has set a growth projection for their industry of taking kiwifruit sales from $1 billion to $3 billion by 2025. It is absolutely fantastic to see what they are doing. If we compare the growth in the kiwifruit industry with some of our other industries we can see what an industry like the kiwifruit industry can do when it gets its whole plan together and goes well. 
Right now the kiwifruit industry is up there at 9.88 percent growth annually year on year even ahead of the dairy industry. We would not think that but dairy is at 9.71 percent growth. The kiwifruit industry is even ahead of the meat industry at 5.62 percent. So the kiwifruit industry is getting behind this Government’s agenda is really on board and is taking it ahead. 
The key points that Zespri spoke about which will ensure that they can grow and achieve that $3 billion is maintaining a single point of entry. That is something other industries around the country particularly the meat and wool industries need to have a strong think about if they are to grow their own industries and utilise the free-trade agreements that we are bringing out. If we have a look at those growth figures I was talking about before we see that the wool industry in particular has not grown at all in the last 10 years; in fact it has gone backwards. It has to have a long hard think about how it will take its industry to the wider market to utilise the free-trade agreements. 
If we think about an industry that has a green sustainable product then it has to be wool. There has to be a story to tell there. There has to be a way that farmers can drive more revenue into their profit/loss accounts and balance sheets. They can use wool to grow jobs in this country so I think they have a lot of thinking to do there. 
In terms of Zespri a big chunk of driving the growth to $3 billion is through using these free-trade agreements. In their document they are fully behind this Government taking their industry to a $3 billion level. I think that that is to be applauded. With the free-trade agreements we are in a great space. I am proud to be supporting the bill at this point in time. Thank you. 
JACINDA ARDERN (Labour) 
: 
 I am very pleased to hear from the senior Government whip that the Government is in a good space! But I have to say that I felt like that speech was a somewhat patronising contribution which is a shame. I do not think those Kiwis out there watching the debate in the House today necessarily tuned in to hear the senior whip tell them what they would and would not understand of the Green Party’s contribution. I think members are perfectly entitled to raise issues in whatever language they choose and people will judge that on its merits as they will judge the previous speaker’s speech. 
I rise to talk briefly on the Tariff (Malaysia Free Trade Agreement) Amendment Bill in the second reading. Obviously Labour supports this bill because it was the good work and steerage of Jim Sutton and the Hon Phil Goff that saw the majority of this agreement fall into place. That demonstrates as well that some of these negotiations started as early as 2005. Now we are looking at supporting these measures which will allow the Malaysia - New Zealand Free Trade Agreement to be ratified. 
To give a bit of background which has probably already been mentioned by some of my colleagues I tell members this deal expands on the New Zealand - Australia Free Trade Agreement signed in February 2009 and it essentially cuts the trade barriers between Malaysia and New Zealand. 
I will talk a little bit in greater detail about the issue of an export-led recovery because it is something that we have heard a lot about from the Government and it is relevant to this debate. In all of these debates we hear the upsides and the downsides of free-trade agreements. I will talk about the merits of the Government talking solely about an export-led recovery without talking about the framework that exporters are working within because I believe that is relevant. I think it was on 8 September 2009 that Bill English said: “We’re looking for how to make sure we get a sustainable export-led recovery.” This agreement in my view is only part of a solution in that regard. Sadly the National Government has failed to look beyond free-trade agreements at other measures to assist New Zealand exporters. For instance—and this is probably the most important measure I want to speak to—National’s refusal to even consider examining monetary policy will I think limit the extent to which new potential exporters will enter into the fray. John Key and Bill English have both said that they think we have the best monetary policy in the world but if they took the time to speak with struggling exporters who see their gains wiped out by very volatile exchange rates I think they would see the issue a little differently as Labour does. 
For those with an interest in this issue I really recommend their looking at the speech that the Hon David Parker made on this issue recently and also the one made earlier on this year by Phil Goff when he said—and it was quite a historic move on our part—that the consensus on monetary policy was over and for good reason. We have a relatively low level of exporters in New Zealand comparative with the number of industries and entrepreneurs that we have in this country and it is time that we start asking questions about that. 
National’s closed mind on monetary policy has not only been challenged by Labour; it has been challenged by the IMF which I always quote with a few disclaimers. It recently issued a report that stated that inflation targeting was a necessary tool but not a sufficient tool for economic stability. If indeed the National Government’s sole focus was economic stability through controlled inflation one would think it may have taken that into consideration when looking at the forecasting Treasury delivered to it over the increase in inflation that would be generated via its latest Budget. This forecasting predicts some of the highest levels of inflation we have seen in some time—5.9 percent from memory—which will have a significant impact on many New Zealand householders. But that of course is an ongoing debate. 
The IMF actually advocated additional use of monetary tools including the exchange rate and limiting the amount banks can lend against the value of property. That suggests that other tools are available and that perhaps we should be looking more broadly at some of them. 
Paul Quinn 
: Stick to what you know best; it’s certainly not economics. 
JACINDA ARDERN 
: I look forward to hearing Paul Quinn’s contribution on this debate. He obviously wants to give the House a diatribe on his view of economics. 
But before he does that I will talk briefly about the foundations that need to be laid at the same time as a free-trade agreement is signed. I do not think it is just a matter of the Government facilitating these kinds of agreements and then stepping back. In fact I think the agreement with China was a very good example of how we can aid our exporters to enter into a massive and difficult market with success. We did that in 2008 by running a nationwide China roadshow and also launching a Government website with information on the free-trade agreement and assistance on doing business in China. I think that was an incredibly important move towards assisting our exporters in that regard. Given that we are such a small market I think it takes the Government to invest in some of those measures. 
What is National doing to help New Zealand businesses make the most of opportunities in Malaysia? I guess one of the best indicators we have is what measures have been put into the Budget and I have to say that not only is there very little but actually the Government is scaling them back. In the 2009 Budget for instance National cut funding to New Zealand Trade and Enterprise by $101 million over the following 4 years. That is another example of where a cut in investment in the long term will lead to a reduction in New Zealand’s potential growth so it is a short-term band-aid fix that sets us back for very minimal savings. There have also been budget cuts to New Zealand’s Market Development Assistance fund. That stands in direct contrast to what was quite a considerable investment by Labour in this area. In fact in its last term the Labour Government increased the funding for Market Development Assistance for New Zealand Trade and Enterprise from $6 million to $54 million—again in recognition that collectively investment in this area would reap even greater gains. 
Investment in this area is one thing; it is also incredibly important to make sure that New Zealand has an appropriate brand to trade on. We have several significant exporters who can of course trade off their name. Zespri is one of them. One of Zespri’s successes has been the fact that it has been able to trade as a single export desk. It does not have a multiple range of exporters all marketing different brands of kiwifruit for instance and that is something we have to keep an eye on; it is something that is under threat. In the same way New Zealand’s brand becomes a brand across a whole range of products for small exporters. They capitalise and trade off our brand because in and of themselves they may not be significant enough to trade solely on their own brand. This means that brand protection around New Zealand is incredibly important. Not only has the National Government depleted some of its investment in the marketing on behalf of our exporters but also it has done some damage to New Zealand’s brand. 
I reflect briefly on the three recent issues in which New Zealand has made national headlines—I will make that four as there may have been some redemption in regard to the All Whites. That one I am proud of. The All Whites have got us into the international headlines. The second most recent one is the Prime Minister’s vasectomy—not something I personally wish my country to be known for. That made international headlines on the world stage. Then there was the lack of respect the Prime Minister showed by making cannibalism jokes at an inappropriate time—again not something that I would wish my country to be known for. Finally there are the proposals from the Government for the mining of parts of New Zealand’s most precious conservation estate. Again that was noted in the  
Economist  
and the  
Guardian 
 as undermining our brand. These things do not help the New Zealand brand and they do not as a consequence help our exporters. I do not think they help any of us as individual citizens who might be proud of our record and of our reputation. 
I extend a challenge to the National Government and say that it is not just about signing free-trade agreements; it is about supporting our exporters and making sure the appropriate statutory framework is in place for them to be a success. That means reviewing our monetary policy. It is also about our brand. 
Dr CAM CALDER (National) 
: 
 It is a pleasure to rise and speak briefly on the second reading of the Tariff (Malaysia Free Trade Agreement) Amendment Bill. It is the sinews of trade that bind the world together and the sinews of trade that allow countries to have a relationship that means they are likely to maintain friendly relationships rather than unfriendly relationships. An ability to communicate between countries is enhanced by trade between those countries. 
It was a source of great surprise to me that in the world’s best economic conditions under the last administration—conditions unsurpassed in decades—the tradable sector declined year after year after year. This means that in terms of the goods we sell overseas to allow us to provide the services we need here at home for our people to protect our most vulnerable and to provide world-class services in medicine and education we were not doing as well as we could. 
This bill the Tariff (Malaysia Free Trade Agreement) Amendment Bill will boost innovation and improve export access to one of the key markets in Asia to which New Zealand exports. This agreement with Malaysia is an important part of National’s focus on free trade and on improving access for our exporters to world markets—a priority that the Prime Minister mentioned in his speech to Parliament in February. It is only as I said before by lifting our economic performance through selling our goods and services overseas that we can create jobs boost incomes and improve living standards here in New Zealand. 
More than 70 percent of New Zealand’s trade is within the Asia-Pacific region and at this stage I pay tribute to the excellent work done by our Minister of Trade Mr Tim Groser who has been travelling all over the world and opening up markets for our products all over the globe. There will be greater certainty and opportunity— 
Hon Tony Ryall 
: Tireless and relentless. 
Dr CAM CALDER 
: He is tireless and relentless as another extremely well-performing Minister Mr Ryall has observed. 
There will be greater certainty and opportunity for New Zealand businesses in future trading and investment in Malaysia. There are potential longer-term gains from regional integration. I give just a few details: 95 percent of New Zealand’s exports to Malaysia will be duty-free from day one—95 percent. On full implementation this agreement will amount to duty savings of over $10 million a year for our exporters. I commend this bill to the House. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 It is an honour to rise in this debate today. The first thing I will do in debating the Tariff (Malaysia Free Trade Agreement) Amendment Bill is to welcome the Minister of Trade back to New Zealand from his successful foray into supporting Australian politicians. 
Hon Tim Groser 
: I wasn’t consulted! 
GRANT ROBERTSON 
: Ha ha! I am sure as the day evolves we will be able to see the impact of the Minister’s triumphal visit to Australia on the fortunes of the Australian Prime Minister. 
Hon Maryan Street 
: Where are you going next? 
GRANT ROBERTSON 
: Yes! Some colleagues have suggested that Mr Groser’s visa for the United States has been revoked by Barack Obama for fear of what might happen to him while Mr Groser is over there. In all seriousness I congratulate Mr Groser as the Minister of Trade and indeed in his role in his former career on the work he has done on free-trade agreements; he has had a bit to do with this one in particular. I also congratulate former Labour Ministers Phil Goff and Jim Sutton who played a key role in the initial development of the Malaysia - New Zealand Free Trade Agreement and the many foreign affairs officials who work on these agreements. An awful lot of work goes on behind the scenes not just it might be said from trade negotiators but also from those who manage the overall relationship between New Zealand and countries like in this case Malaysia. The trust that is built up over time lies behind an agreement like the Malaysia - New Zealand Free Trade Agreement. We are not able to make these kinds of high-quality agreements if we do not have high-quality diplomats and foreign affairs officials working overseas and negotiating for them. I offer my congratulations and thanks to those foreign affairs officials and indeed to the officials from other departments and agencies who have been involved in this particular agreement. 
This agreement is highly significant. It is also a high-quality agreement as well as free-trade agreements go. Malaysia is a significant country for New Zealand trade as other speakers have noted. Between 2004 and 2008 there was an 80 percent increase in New Zealand exports to Malaysia and in 2008 our exports were worth nearly $1 billion. It is a significant trading relationship for New Zealand and one that is obviously growing. It is a high-quality agreement in the sense that 95 percent of the tariffs that are being reduced will come into force on the day of agreement. That is excellent. It will be 99.5 percent by 2016. That is 5 years earlier than for the ASEAN free-trade agreement so that is an improvement in quality. It is a step forward in terms of how our trade agreements are progressing. 
A conservative estimate would tell us that there is a benefit of probably $10 million per annum just in the tariff changes. This agreement will really benefit exporters. It is of high quality. It has the elements of a free-trade agreement that we are used to. It takes into account services as well as goods and I do not think we always give as much attention to the importance of the services side of these free-trade agreements. A lot of successful New Zealand businesses are involved in the services sector perhaps as well as in the exporting of goods but this is a high-quality agreement in terms of services as well as in terms of our core exports. 
I think my colleague Maryan Street has already talked about the importance of the kiwifruit sector and clearly the removal of the tariff there will make a huge difference for Zespri. I know that Zespri and some of our other large exporters have also played a key role in this agreement. The agreement also binds in the existing duty-free access for New Zealand dairy products. Dairy products are usually a problem for us in our free-trade agreements but it is good to see that we have managed to put a situation in place in this agreement where we bind in what is already a good situation and hopefully improve on it as we go ahead. 
I will talk about two elements that sit around this agreement having now outlined the fact that obviously Labour supports this bill. We support the free-trade agreement and we recognise the quality of it. Free-trade agreements need to be seen as part of our overall economic approach. I think my colleague Jacinda Ardern has already addressed the question of monetary policy and the fact that it is important to talk about what we can do better in terms of monetary policy. We have had a consensus in that area but the question many exporters raise with me and with other colleagues is whether that balance of monetary policy is right in terms of supporting the exporters who are a key part of this free-trade agreement. Those exporters are worried about the volatility of exchange rates. They are concerned that our current monetary policy focus is too narrow. I think that when we look at free-trade agreements we need to look at them alongside the rest of what we are doing. 
We also need to look at them alongside domestic policy. We need to look at how we are encouraging and supporting exporters; at what kinds of regional development plans we have; at what the plan for growth and jobs in New Zealand is; at whether we are creating the skilled population the productive population that will be able to take advantage of an agreement like this; at where the Government’s skills strategy is; and at why the Government is not encouraging more people into tertiary education rather than shutting the doors on people going into tertiary education. Free-trade agreements are fantastic and give a deliverable outcome to New Zealand but if New Zealand is to take advantage of those agreements it needs to have the infrastructure behind it. We need the infrastructure behind that in terms of how the economy is organised. We need to ask how we can have a skilled and productive workforce and how innovative ideas are able to be supported and taken forward. The Government is very proud of this bill as it should be but we need to ask where is the overall economic plan to deliver high-quality jobs to support the people who have the skills and to give people new skills to make sure they can contribute to this free-trade agreement and to growing the New Zealand economy. 
The other element I will raise relates to what I call the side agreements to this free-trade agreement. In particular in this case as has been the case in a number of recent free-trade agreements there is an environmental cooperation agreement and a labour cooperation agreement. These have become a feature of recent bilateral free-trade agreements for New Zealand and I think that is an extremely positive thing. For some time since around the beginning of the century the Ministry of Foreign Affairs and Trade and others were very reluctant to negotiate environment and labour cooperation agreements and some of our partner countries were also clearly reluctant but they have now become a regular feature. They offer a very important alternative and a very important different track for our relationships with these countries. 
I have just come back from China with a Wellington City delegation and one of the main things being raised with us as a delegation was the question of how we could work together in terms of environmental cooperation. The Chinese—and I am sure the Malaysians as well—are very interested in renewable energy. They are very interested in freshwater management. They are very interested in a range of environmental issues such as air quality where New Zealand has some expertise and knowledge and where they also obviously have a great deal of expertise and knowledge. 
I believe that these environmental cooperation agreements in particular are a real opportunity for New Zealand. I hope that the Government will not see these agreements just as a tack-on that has been put on to the end of a free-trade agreement to placate people but rather as an opportunity to actually grow our relationship with countries that are developing at an enormously fast rate which is putting huge pressure on their environment. Here is an opportunity for us. We have the framework; let us use it. Let us make it a key part of our relationship with Malaysia in this case and with all the countries that we have free-trade agreements with. 
The same goes for labour cooperation agreements. The labour cooperation agreements have sometimes been even more controversial because they cut to labour standards issues such as issues about wages and about health and safety. In China those are major issues at the moment. Foxccon faces huge issues with its workforce. It has massively increased the wage bill but it is still having major issues. We have a lot to offer countries with regard to a cooperative model of labour relations and the importance of health and safety. I just urge in closing that this is a high-quality agreement but there are also side agreements that offer a huge opportunity for New Zealand to broaden and deepen our relationship with Malaysia in this case and our relationships with other countries that we have a free-trade agreement with. 
I am happy to support this bill. Free trade is not the be-all and end-all of our economic relationships but it is an important part of driving our economic growth and improving our relationships with the countries in our region. 
JOHN BOSCAWEN (ACT) 
: 
 I did not take the ACT call in the normal order when the Tariff (Malaysia Free Trade Agreement) Amendment Bill came up late last night but I will do so now. I have listened with interest to the debate over the last half hour or so and it is interesting that Grant Robertson concluded his speech by saying that free trade is not the be-all and end-all of raising economic aspirations but that it is a very important part. I agree with him. 
I was particularly interested to hear the contribution of Rahui Katene this morning. She talked about the competing concerns within the Maori Party caucus. She talked about the fact that when this bill is enacted it will reduce the tariffs that apply to imports from Malaysia and it will introduce greater competition for products manufactured in New Zealand. However the benefit of course is that it will reduce the price of products and goods purchased from Malaysia and as such it will raise the living standards of New Zealanders. If New Zealanders can buy those same products cheaper then their money and their spending power goes further. As Rahui Katene said it enables the Maori iwi Maori interests to leverage their assets to look for trading opportunities in Malaysia to export products into Malaysia and also to build on Maori development and Maori employment. 
Then the debate became quite wide ranging. Chris Tremain used the opportunity to outline the six key planks that the National Party stood on in the last election campaign. In particular he focused on the growth of Zespri. Jacinda Ardern then took the opportunity to speak about the Labour Party’s policy in respect of monetary policy and she suggested that the Government should be looking beyond simply facilitating free-trade agreements. 
But the contribution that interested me the most was Mr Cam Calder’s contribution. Cam Calder made the point that 70 percent of what this country sells is sold to Asia—70 percent of what we sell. Asia is our future; Asia is where we are marketing our products. I think that is a very important issue. 
Jacinda Ardern talked about four headlines. She talked about the four headlines that New Zealand had achieved on the international stage in the last couple of months. We will make another headline and it will come on 1 July. It will have a huge impact on the welfare of New Zealanders and our exporters. I refer of course to the emissions trading scheme. 
On 1 July we will introduce the most comprehensive emissions trading scheme in the world. We will introduce the first emissions trading scheme outside Europe and it will be the most comprehensive scheme. How do I know that? I listened with interest to the speech of the Hon Dr Nick Smith the Minister for Climate Change Issues when he spoke in the first reading debate of the National Government’s amendment bill. What did Dr Smith say? On 24 September last year—not 5 years ago when Dr Smith was in the Opposition but 6 months ago when he was the Minister for Climate Change Issues—he said that this emissions trading scheme would be the first for any country outside Europe and that on 1 July 2010 it would become the most comprehensive scheme by including transport industry and energy emissions. To all of the New Zealanders who listened to Dr Smith when he was travelling up and down the country trying to minimise the damage that this emissions trading scheme will do to New Zealand exporters and New Zealanders I repeat that Dr Smith told this House on 24 September last year that it will become the most comprehensive scheme by including transport industry and energy emissions. 
I will bring it back to the issue of our free-trade agreement with Malaysia and to Cam Calder’s comment that 70 percent of what we sell we sell to Asia. Dr Smith is very fond of saying that 29 of the 38 developed countries that signed the Kyoto Protocol—the annex 1 countries—have an emissions trading scheme. The countries that Dr Smith refers to are the countries of the European Union plus Norway and Switzerland. Eighty percent of what those countries sell is sold to themselves—80 percent of their exports are to other countries within Europe. Only 20 percent of their exports leave Europe. If we contrast that with our situation we see that we sell 15 percent of our exports to Europe so by definition we sell 85 percent to countries outside Europe. 
By Dr Smith’s acknowledgment we are selling 85 percent of our exports to countries that do not have an emissions trading scheme. As Mr Cam Calder reminded the House this morning of that 85 percent of exports 70 percent goes to Asia. Seventy percent of what New Zealand exporters are selling goes to countries that do not have the extra cost of an emissions trading scheme—85 percent in all. For the National Government to go up and down the country trying to convince New Zealanders that the emissions trading scheme is good for our exporters is an absolute disgrace. Europe has exposed 20 percent of its exports outside Europe and is competing with countries that do not have that cost but we are exposing more than four times that number of exports. 
Trade is very important. The ACT Party probably more than any other party in this House is concerned about the need to raise New Zealanders’ prosperity and is interested in implementing policies that will do something about that. 
I noticed Rahui Katene commented that she was concerned about the impact of the free-trade agreement on workers’ conditions and wages and in particular on unemployment among young Maori and I dare say among young Polynesians and all other young people. We had a chance to do something about that earlier this year. The House could have supported the legislation of my colleague Sir Roger Douglas on youth wages that would have given 16 and 17-year-olds the chance to gain employment by being employed on less than the minimum wage. What choice would an employer make between a young 35-year-old who possibly has a wife or a husband and two young children and who needs reliable employment and a 16-year-old? I suspect that if an employer had to make a choice between a 35-year-old with commitments and a young person the employer would choose the more mature person all the time. Young people are being denied the chance to get employment. 
The ACT Party will be supporting this bill. We support free trade. We support the opportunities that it gives our exporters and businesses. We support having the opportunity to try to raise New Zealand’s prosperity and living standards. Only by creating employment and investment will we create a more prosperous country. 
If Jacinda Ardern is concerned about world headlines then I suggest that all the parliamentarians in this Parliament should hang their head in shame. On 1 July we have an emissions trading scheme—I think Mr Groser is laughing. I invite Mr Groser to explain how he thinks it can be good for those who sell 85 percent of our exports to be exposed to trading with countries that do not have the extra cost of an emissions trading scheme. 
Mr Groser may not think that is important but Meat and Wool New Zealand has stated that the cost for the average dairy farmer from 1 July this year will be $3900. Those farmers will pay that. That is 3c a kilogram on milk fat. It is $75 a week for the average dairy farmer. It is about $35 a week for the average beef and sheep farmer. Parliamentarians in this Parliament may like to laugh about that but if we are really concerned about raising New Zealand’s prosperity our livelihoods and our incomes then we need to be doing a lot more than trying to penalise exporters in the way that the emissions trading scheme will do. Thank you. 
TIM MACINDOE (National—Hamilton West) 
: 
 About half an hour ago speaking more in sorrow than in anger—I think those were his words—our Green Party colleague Dr Kennedy Graham invited me to dispel his and the Green Party’s fears over free-trade agreements. I suspect that the huge number of Green Party members and supporters in the Chamber and the gallery at this moment and the thousands more glued to their broadcasts on TV and radio at home as I rise to take this call on the Tariff (Malaysia Free Trade Agreement) Amendment Bill are sadly probably fairly unshakeable on this topic. Nevertheless I will have a go; the challenge was extended so earnestly and so thoughtfully in the best inter-party spirit of neo-liberal orthodoxies and I do appreciate it. 
Perhaps the first topic I could explore that might appeal to my Green Party friends and supporters at home in Hamilton West is the environmental aspect. This agreement that we are steering into the statute book is Malaysia’s first bilateral treaty on environmental cooperation to be negotiated in the context of a free-trade agreement. 
Dr Cam Calder 
: The first? 
TIM MACINDOE 
: The first I tell Dr Calder. It establishes a set of shared trade and environmental principles to promote sound environmental practices and sustainable development. That is surely worth a celebratory bowl of lentil soup and a burst of morris dancing at the next Green Party regional conference. 
Another aspect that may see the Greens treat themselves to an extra pumpkin and herb muffin is the continuing appeal of New Zealand’s education system to Malaysians. The strengthening economic and cultural ties reflected by this agreement stand to get a further boost and are very significant especially at a tertiary level. I am sure that will appeal to the previous Labour speaker Grant Robertson who is the new spokesperson on tertiary education and who is I understand especially excited and inspired by events unfolding across the Tasman as we speak this morning. It is worth noting that between 2003 and 2008 the number of fee-paying Malaysian students in New Zealand increased by more than 70 percent. 
Hon Member 
: What percent? 
TIM MACINDOE 
: More than 70 percent; it is a popular statistic this morning. That made Malaysian students New Zealand’s third-largest source of international fee-paying students. It is worth noting also that international full fee-paying students are worth over $2 billion a year to our economy. 
The final point I make is just very quickly to reiterate the benefits of that to some of our major exporters. The Malaysia free-trade agreement eliminates Malaysian tariffs on 99.5 percent of New Zealand exports within 7 years of the agreement’s entry into force. Specifically—just looking say at the kiwifruit industry—this means that exports that currently incur a 15 percent tariff from Malaysia will become duty-free by 2012; based on the latest figures New Zealand’s exports to Malaysia have grown already by 173 percent since 2007. There are great benefits for the milk industry as well. 
There we have it; I do not have a lot of time. Those are three great benefits. This agreement is another great step forward from a great Government. It is enough to make Dr Graham and his supporters green with envy. 
A party vote was called for on the question  
That the Tariff (Malaysia Free Trade Agreement) Amendment Bill be now read a second time. 
Ayes 110 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 3(Flavell Sharples Turia); Progressive 1; United Future 1. 
Noes 11 
Green Party 9; Maori Party 2 (Harawira Katene). 
Bill read a second time. 
In Committee 
JO GOODHEW (Junior Whip—National) 
: 
 I seek leave of the House for this debate to be taken as one question—a wide-ranging debate with unlimited calls. 
The CHAIRPERSON (Hon Rick Barker) 
: Leave is sought for that purpose. Is everybody clear? Is there any objection? There is no objection. Leave is granted. 
Clauses 1 to 5 
Hon MARYAN STREET (Labour) 
: 
 I will highlight in the Committee stage some particular aspects of the Malaysia - New Zealand Free Trade Agreement. Last night and again this morning we spent time talking about the general impact of this free-trade agreement on the New Zealand economy with some reference to specific sectors. I will continue some of the analysis of the specific sectors and then talk a little more about additional provisions contained in this free-trade agreement. 
I spoke last night about kiwifruit in particular but also our other primary products which will benefit immediately that this free-trade agreement is passed and ratified by this Parliament. Last night I spoke about kiwifruit in particular. Kiwifruit will benefit by millions of dollars immediately on implementation of this agreement and also will our meat wool dairy fish and forestry products. But today I will talk a little about some of the manufactured goods that will benefit from this free-trade agreement and give some numbers. As we know the tariff reductions follow a progressive sliding scale over a period of time through to 2016 when all but 0.5 percent of tariffs on our exports will have been reduced to zero. This is an improvement on the ASEAN free-trade agreement not only in speed but also in absolute numbers. 
For example steel is one of our manufactured products. That industry in particular currently bears a 50 percent tariff on exports into Malaysia. A 50 percent tariff is a very high charge. By 2016 at the latest that charge will be eliminated. Under the ASEAN agreement if I remember correctly some residual tariff—some 10 percent I think—will still apply on steel products but into Malaysia it goes to zero. 
It is similar for paints and varnishes. We often hear about kiwifruit dairy produce meat wool and all of those primary products at which we excel in New Zealand. But here we have a relatively small proportion of our manufactured exports into Malaysia which currently carry a 25 percent tariff. That tariff will be eliminated by 2016. Another area is plastic products. Currently plastic products out of New Zealand bear a 30 percent tariff into Malaysia—again a huge expense and something that really places obstacles in front of the New Zealand plastics industry as it looks to increase its exports. But in the case of plastic products these tariffs are eliminated in 2012. That is in very short order. We are at 2010 now and within 2 years there will be no tariffs on our plastic products going into Malaysia. There are gains for profits from our manufactured goods as well as from our primary produce. They are very tangible gains and these achievements in this free-trade agreement actually mean more profit remaining in New Zealand. 
I will draw attention also to some other features; I may come back to this one a little bit later in this part of the debate. The rules of origin in this Malaysian free-trade agreement are in fact as I understand it the most liberal of any free-trade agreement. That is a cause of some celebration or congratulations to the officials who have worked in this area. Rules of origin have often been a complex and difficult area to arrive at agreement on. I congratulate the Minister and the officials on achieving a very liberal rules of origin regime. 
I go to another thing that is very important. Members of the Government and the National Party like to cast Labour members as people who know nothing about business; who do not understand the contribution that business makes to the New Zealand economy. Well they may like to live in that outdated and outmoded perception of Labour but we are busy forging ahead. Phil Goff’s record in promoting sealing and initiating free-trade agreements recognises and demonstrates absolutely that the Labour Party understands fully the contribution of the business sector to the New Zealand economy. 
So apropos of that we have agreements in this free-trade agreement with Malaysia that impact specifically on business flows. Let me take a couple of examples. If we look at goods for a moment we can see there is an agreement that New Zealand goods will be cleared by the Malaysian customs department within 48 hours. Now that is hugely helpful especially in a small country like ours that is dependent on primary produce. We do not need our kiwifruit to languish even in refrigerated containers in a city a terminal a port a receiving area in Malaysia for any longer than they absolutely have to. So a guarantee that our goods will be cleared by Malaysian customs within 48 hours is extremely important. In fact Malaysia has never agreed to that before. This is new for them but it gives New Zealand exporters a potential edge over their competitors and that is to be welcomed. 
Another point in this free-trade agreement that relates to business and making business happen more easily into the Malaysian market is around business people so this agreement includes a recognition that people seeking to trade in goods and services—and investors—will be treated equally in Malaysia. There are provisions to enable New Zealand business people who seek to work in Malaysia to be able to stay and visit there for up to 10 years; there is no such provision as that in the ASEAN free-trade agreement. This agreement makes it easier for New Zealand business people to get a foothold to remain in Malaysia and to promote their business and New Zealand products into those markets in the Malay Peninsula for a period of time. That will allow for consistency and the building up of relationships which are necessary in order for that trade to happen smoothly. In addition the agreement includes a provision to facilitate those temporary entry applications of business people within 40 working days. 
So at every point this agreement has attempted to facilitate New Zealand business and business people operating securely and with certainty into the Malaysian market and all of those provisions are to be welcomed. Members on this side understand how important it is for business people not only to have access to foreign markets but to have reliable rules and provisions that allow them to trade and work securely and with certainty so they can plan that there will be some kind of longevity to their enterprise in those foreign markets. I welcome those provisions. 
STUART NASH (Labour) 
: 
 We have heard some very good speeches on the Tariff (Malaysia Free Trade Agreement) Amendment Bill which is one of those bills on which all parties agree. 
Dr Kennedy Graham 
: Wrong. 
STUART NASH 
: We do not necessarily agree on the philosophy of how New Zealand companies are best going to take advantage of this bill— 
Dr Kennedy Graham 
: Wrong. 
STUART NASH 
: I apologise to Kennedy Graham; the Greens do not agree on this bill which is a real shame because we need to look at what is best for this country going forward and how we will grow our economy in a truly sustainable manner while not really abdicating any of our global responsibilities. I think that these free-trade agreements do a perfect job in that respect. 
I think of our past trade Ministers the Hon Jim Sutton and the Hon Phil Goff. Last night in the Chamber I said that Phil Goff will be New Zealand’s next elected Prime Minister. He will be a very good Prime Minister because he will be the only Prime Minister who has actually worked on the ground negotiating with New Zealand’s partners on free-trade agreements. Phil Goff knows how the world operates; he knows what it takes to grow this economy. When John Key was on the 18th floor trading New Zealand’s currency Phil Goff was on the ground floor out there making it work for New Zealand exporters. That is a huge difference and it will make a great difference to this country next year when Mr Goff is sworn in as our Prime Minister. 
We need to concentrate on the economic benefits of this free-trade agreement. It has been mentioned and it is important that Malaysia is New Zealand’s eighth-largest export market which was worth almost a billion dollars in 2008. Between 2004 and 2008 our exports to Malaysia grew by 80 percent and a classic case of that growth is the education market. Malaysia is a very important and growing education market for New Zealand providers because between 2003 and 2008 the number of Malaysian students in New Zealand as mentioned by my colleague Mr Grant Robertson increased by over 70 percent. Malaysia is New Zealand’s largest source of fee-paying university students and the second-largest source of PhD students. At least one country in the region understands the value of education. Imagine if our Government put the same value on tertiary education as the Malaysians did! Mr Robertson would have nothing to say. He has taken over a shadow portfolio that is full of problems and holes but he is making a great deal of it; I feel sorry for Mr Joyce actually. Education is a major export earner for New Zealand in terms of this free-trade agreement. 
This agreement will eliminate tariffs on 99.5 percent of New Zealand’s current exports by 2016. The remaining 0.5 percent is excluded on the basis of religion and safety so we are talking about alcohol. We have to remember that Malaysia is a Muslim country so alcohol is really the only product of significance in relation to our exports to Malaysia. That product is worth about $1.6 million per annum. In the way our wine marketing is going at the moment we have to get a lot slicker but China is soaking up a lot of our surplus wine. 
The percentage of estimated duties that New Zealand exporters would have to pay will be reduced by 86 percent by 2016. That is about $10 million per annum in duties—not an insignificant factor at all. Malaysia currently has import taxes on over 10000 products it imports from New Zealand. Again the Malaysian market is not insignificant by any stretch of the imagination and it is growing. Let me give another example. New Zealand Steel lines currently face 50 percent tariffs; by 2016 those will be tariff-free. That is a great example of how this free-trade agreement will grow this country’s economy in the niche products we produce. 
Let me tell members a little bit about Malaysia. It has a population of 28 million people so it is quite a big market. Its parliamentary system is very similar to our own; it is based on the Westminster parliamentary model. Malaysia is renowned for its international trade and manufacturing as key sectors of its economy. I think my colleague Maryan Street mentioned that we all understand the potential for our manufacturers to suffer because of this free-trade agreement so manufacturing industries in this country that may be affected have been the last to have phase-out provisions which is very good. 
I do not know whether any member recalls this but Malaysia was severely hit by the 1997 Asian economic crisis; foreign direct investment literally ran out of the country. Share values on the stock exchange dropped by over 75 percent. Malaysia devalued; in fact it pegged the exchange rate. The Finance Minister was sacked and Malaysia started reform. 
When I read that about Malaysia I thought: “Goodness me—sacking the Finance Minister and starting reform—that’s not a bad way!”. I tell Cam Calder that I think he should take that on board. I think he should do a reform and do what Australia has done. National members cannot tell me that Mr John Key is as popular as all that; we can look at what he is doing to ordinary New Zealanders on the ground. People who live in Napier and who are on the medium wage will find that after the Government’s tax cuts they will get $3 more a week. There will be a revolt. I think that this is an opportunity for Cam Calder to shine and to organise to do what they are doing in Australia. He should have a look at the model and then be in. Anyway Malaysia got rid of the pegged rate. It was abandoned in 2005 and Malaysia is now on a managed floating system. But the Malaysian economy has really grown out of that crisis. It sorted itself out; it reformed. It really took off and it is in great shape at the moment. 
Malaysia is now one of the region’s leading education and health care providers which reminds me of quite a funny story. I was in Taiwan earlier this year with three of my colleagues. Taiwan also has a brilliant health care system. One of the features of a lot of these Asian countries is that they really look after their people with health care. Again that is something else we could perhaps learn from. But the Taiwanese were extolling the virtues of their cosmetic surgery sector over there and saying what a wonderful industry they had and how safe it was. They were suggesting that I went back and sampled it. I did not quite know how to take that so if members see me heading over to Taiwan in the next 6 months and I come back with a slightly straightened nose—it was dented by an errant rugby boot about 20 years ago—they will know what has happened. I am only kidding; I am not quite that vain. Maybe that is where John Key is at the moment? 
Coming back to Malaysia I tell members that the statistics about Malaysia and in fact about the whole of Asia show what an important region it has become to New Zealand’s economic growth and prosperity. As Mr Boscawen kindly pointed out before only 15 percent of New Zealand’s exports go to Europe. What a change that is! I do not know whether anyone here remembers the history but we almost went into a state of panic when it was announced that the British Isles were entering the European Economic Community. We thought: “What the hell are we going to do about this?” because we were so inextricably linked to the UK with our exports. We had to have a complete philosophical change in relation to how we viewed the world and I suppose to how we viewed what were then the seeds of globalisation. So we have moved and what a long way we have come. 
However working in Asia and in markets like Malaysia brings its own challenges. There is a different language a different religion a different culture and different customs. We can compare doing business in Australia or England to doing business in a foreign country like Malaysia. In Australia and England we can go along and talk about rugby or cricket go out for a beer and hand over some All Blacks jerseys. We have a lot in common from a cultural sporting and heritage background. But I suggest that doing business in Malaysia is a completely different kettle of fish. I would argue that this free-trade agreement—as with the free-trade agreement with China and a lot of the others we are debating such as that with Hong Kong which we talked about last night—is incredibly important. The real challenge we face as a country is how to really optimise our advantages and our opportunities in this market. My concern is that although this is a very good bill New Zealand companies just do not have the tools to take advantage of it. 
Cam Calder spoke about how the tradable economy has declined and I would like to elaborate on that a little bit. That statistic is brought up a lot and it is a very important statistic; we all have to take a step back and say that that is the case and ask what we are going to do about it. I think what has happened is that as we have changed focus our companies have not had the tools to put marketing in place. As I mentioned 97 percent of our companies are small to medium sized enterprises that employ 19 people or fewer. They do not have the resources to employ full-time international market development managers to go and locate themselves in China Malaysia India or any of those other emerging economic markets that will be so important to our future. 
The previous Labour Government understood the value of marketing and it realised that we needed to do something. That is why Labour increased New Zealand Trade and Enterprise’s funding for market development assistance from $6 million to $54 million. Now there is only $10 million in that international growth fund so I agree with Cam Calder. This is a serious problem but the National Government has cut $110 million I understand from New Zealand Trade and Enterprise. I ask how we will help our country’s companies to take advantage of the opportunities that these free-trade agreements bring. Fonterra is fine and Fletcher Challenge can operate on its own; they are huge multinationals with the resources to do that. But the other 97 percent of New Zealand companies are the ones we really need to lift up and help. New Zealand Trade and Enterprise needs to be our international eyes and ears on the ground but this Government has not provided the funding for that. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I want to make a couple of contributions to this wide-ranging debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill. The first is to talk in a bit more depth about the tariff changes that are being brought in to force. Perhaps later in another call I will talk about some of the issues around services. 
It is important to acknowledge again the quality of this agreement. This is a high-quality free-trade agreement. We see a lot of free-trade agreements coming before this House and this one makes advances on previous agreements. Mr Hayes and others on the opposite side of the Chamber who have experience in these matters know that the optimal agreement for all of us is a comprehensive World Trade Organization or WTO agreement that gives us global rules that are fair and take into account the special and unique circumstances of particular countries. I see Dr Graham nodding in agreement. I think it is important to say at the outset that from a Labour Party point of view we are aiming for a global agreement. The Doha development round is in difficulty and it would be good to see it make more progress. It should still be New Zealand’s highest priority in trade negotiations. But in its absence regional and bilateral agreements remain important and this bilateral agreement demonstrably will lead to benefits for New Zealand. 
To go back to the tariff elimination process on entry into force as well as confirming the outcomes from the ASEAN deal the agreement binds in Malaysia’s level of openness on $821 million worth of exports—that is today before the agreement is even signed. Those exports encompass butter milk powder cheese wool kiwifruit apples and some manufactured products. It is a significant achievement on day one on the agreement’s entry into force. To eliminate tariffs on those key export areas for New Zealand is extremely significant for those exporters and extremely significant for the New Zealand economy. As a number of other speakers have already stated it amounts to 95.1 percent of our current total exports to Malaysia. For a bilateral agreement that is a very significant amount on its entry into force and once again I pay tribute to the officials and the Ministers involved for getting such a good outcome on day one. 
In the 2011-12 period tariffs will be removed from $27.9 million of current exports. They include electrical parts fibreboard chocolate and some other manufactured products. A further 3.2 percent of our exports to Malaysia will be covered. That means that by the end of 2012 98.3 percent of our current total exports will be duty-free. So there is another step forward in the next 2 years. Finally in the period 2013-16 tariffs will be removed from a further $10.2 million of current exports. They include paper products plastics paints whiteware iron and steel. That will bring us as has been previously stated by 2016 to 99.5 percent of current exports being duty-free. That is an achievement worth celebrating and it is in advance of the ASEAN deal. 
It is worth dwelling briefly on the fact that this deal brings things into force ahead of the ASEAN deal. It is difficult when we make a trade agreement at a regional level to then go back to a bilateral partner and say that we would like to make further progress to make faster progress. To be able to do that on so many fronts in this bill is excellent. I mentioned in my second reading speech some areas where that will happen. In terms of paints varnishes and plastic products this agreement is well in advance of the deal with the ASEAN countries. In 2016 they will be duty-free for New Zealand; under the ASEAN deal they will be duty-free in 2020. It is significant that under this particular deal those tariffs will be removed more quickly. It means that this agreement is a high-quality agreement. 
I am sure that some people in the Ministry of Foreign Affairs and Trade—some of Mr Hayes’ Mr Groser’s and my former colleagues—will be deeply concerned that the 0.05 percent of tariffs remaining were not removed. As Mr Nash has already said they are mainly tariffs on alcoholic products but also on tobacco firearms and tyres. My personal view is we need to respect the fact that there will be countries we negotiate with that have reasons why they do not want to go there. One of the nuances of free trade that I think is important to highlight is that being an absolutist in free trade does not take into account the experiences and the different cultures of other countries. We need to respect that when we sign these agreements. We need to negotiate hard and we need to ensure that we get the best possible benefit for our exporters but we also need to remember the overall context of the relationships that we have with those countries. Alcoholic products are the obvious ones that we can highlight and say that they have to do with religious practices and we should be prepared to be somewhat flexible on that issue. 
I certainly come from the school of thought that holds that for a long period of time New Zealand’s free-trade policy although delivering considerable benefit to New Zealand was a little bit like playing a lay-down misère hand in a game of five hundred. We said to the rest of the world: “Here we are. We are prepared to give you absolutely everything we have and hopefully you will give us a little bit back.” That approach to free trade did not work as well for us as it could have and perhaps it left us with fewer cards to play in later trade agreements. My having said that this agreement is a high-quality agreement but it gives us some pause to reflect that from time to time we need to be flexible that we do not need to be absolutist and that we have the ability to take into account the circumstances of other countries. 
I want to refer to services which my colleague Stuart Nash has already dwelt on. I note that the services sector will benefit significantly from this agreement not only in the area of education but also in the area of environmental services. As I said in my second reading contribution this issue relates to the so-called side agreement on environmental cooperation. It is not actually a side agreement and I am very pleased that a lot of the literature that the Ministry of Foreign Affairs and Trade has produced recognises that those environmental and labour cooperation agreements are treaty-level agreements. In the parlance of diplomats that is significant. It gives status to those agreements and it means that the free-trade agreement and the two cooperation agreements can be seen as part of a single entity in terms of our relationship and can be worked on together. The services area is where it comes together because environmental services such as waste-water management air quality management noise abatement services and nature and landscape protection are areas where New Zealand has expertise areas where there is a lot that we can take to other countries and indeed receive in return. In the services sector there is the chance for leverage off the environmental cooperation agreement so that we can maximise the benefit to all New Zealanders. 
The area of education has been discussed at some length but export education is a vitally important part of what we are doing. We have a good history with Malaysia in that area. I know that the university I attended the University of Otago had a significant number of Malaysian students over the years including people who have risen to the heights of being Government Ministers which obviously has a flow-on beneficial effect for New Zealanders as we go ahead in the education area. As I said earlier the services sector is not an area that we often highlight because it is easier to highlight the actual products that we are exporting but this agreement delivers a number of important opportunities for New Zealand exporters. 
Another services area that has not been talked about much today is information and communications technology services—ICT services. Here in Wellington we have a number of newer start-up software companies that I know have been developing their markets in Asia and Malaysia is a huge opportunity for them. As Mr Nash said that is an example of our exporting some of the fantastic ideas that New Zealanders come up with but we need to continue to generate those ideas and to support the people who generate them. 
The services sector is vital to New Zealand because it builds on the comparative advantage we have of a strong schooling system and a tradition of innovation but we put that tradition at risk if we are not prepared to invest in the innovators if we are not prepared to put money into tertiary education and into assisting researchers to commercialise their opportunities and develop export markets. Information and communications technology is another services sector that under this agreement can offer great potential for New Zealand. 
It is important to be able to see the balance within this agreement of goods and services. It is a high-quality agreement but as Mr Boscawen picked up earlier I do not believe that free-trade agreements are the be-all and end-all and there is further opportunity for development. 
Dr KENNEDY GRAHAM (Green) 
: 
 This debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill is proving to be arguably the most interesting free-trade debate that we have had in my time here. We have had debates on the free-trade agreements with the ASEAN countries and yesterday Hong Kong although the debates on the Hong Kong and Malaysian agreements have merged into one debate in a way. We are joined in a genuine dialogue and I thank my colleague Tim Macindoe and others even Chris Tremain for responding to my comments and for responding to members on the Labour benches as well. I may have a bit more to say about that to continue the dialogue in the third reading. This is not the place to do that here. 
I would now like to address the Minister in the chair and to take the opportunity to pay my personal respect to Tim Groser for his skill and devotion to the task. I hope he understands that the critique that the Green Party advances on trade policy in no way reflects any diminution of the high regard that we have for him or for that matter for his colleagues. I take the opportunity to ask the Minister a number of factual questions on which I may perhaps stand to benefit from his answers. They are advanced in a positive spirit. There are five or six of them and I hope I do not get too confused in my own thoughts. 
Question No. 1 has to do with the description in the national interest analysis of the benefits of the free-trade agreement to New Zealand. It is divided into basically two dimensions: one is the static benefit and the other is the second-order net benefit. It was explained to us in the Foreign Affairs Defence and Trade Committee and this is in the committee’s report that the term “static benefits” means the initial shock—the immediate competitive shock—to an economy through trade liberalisation. My question is whether as we are told that “The removal of a tariff encourages exporters to improve their competitiveness by allocating their resources more efficiently and increasing their market share.” we can have evidence of the greater efficient allocation of resources. I ask whether we can have evidence in a specific sense obviously not in terms of the Malaysian agreement because we are discussing that but let us say in terms of the China agreement and perhaps the ASEAN agreement so that we can understand the effect in practical terms. I am often criticised and I enjoy the criticism for being excessively theoretical. What we want is a practical example of the static benefits. 
The second-order benefits we are told include innovation and technology. The definition I was given in the select committee stated that second-order benefits meant the dynamic productive gains over the longer term through investment competition and adjustments of scale. The committee’s report states that the agreement’s second-order benefits “include innovation and technology transfer which lead to increased exports and access to new markets. These effects should lead to an improvement in New Zealand’s economic performance including the creation of new jobs.” My question relates to the fact that those second-order benefits through innovation and technology presumably apply to Malaysia as well as New Zealand. I think it is an example of the inherent bias and slant that we bring to bear on our so-called objective analysis in the national interest analysis when we trumpet the benefits to New Zealand exporters through all this but remain silent or mumble when it comes to New Zealand imports and the effect of an agreement on our own domestic manufacturing sector. So my question is initially theoretical but I assure members it will quickly become practical. If the second-order benefits were equally distributed then presumably there is no net economic benefit to New Zealand. Is that correct or is it wrong? 
I come to my second question. I note the lament in the so-called disadvantages section of the national interest analysis that the agreement’s principal disadvantage is that it did not go far enough. There is the 0.5 percent that Mr Robertson was lamenting although he was gracious broad-minded and globally-minded enough to issue a caveat and say we should be flexible and not 100 percent absolutist about this. I could phrase that differently. We are told there that “New Zealand would have preferred an even more ambitious goods market access outcome.” notably so that it could export—wait for this—alcohol tobacco and firearms. 
Well New Zealand wine is very nice and probably not very many of us are teetotallers. However I advance the suggestion that it is cultural insensitivity of the highest degree to lament in our national interest analysis that another country with another religion and a different culture from ours and with which we have cordial relationships and a degree of mutual understanding is to be criticised by implication for not importing New Zealand firearms and tobacco. Never mind the alcohol although that is an issue! What are we doing here? It is hubris and it has slid into our national interest analysis in the name of so-called objectivity. These analyses are not objective documents; they are creeds. What manner of cultural insensitivity drives us to insist that those people accept those exports from us? Have we no shame in this respect? I am sorry; I meant that to be a factual question so I will look to the Minister to answer it in a very low-key deadpan rational way. 
I turn to question No. 3. The national interest analysis talks about the negative adjustment effects and it goes as far as to identify a few sensitive sectors: “margarine clothing footwear carpets … steel plasterboard and most wooden furniture.” Yet when I asked in the select committee whether any study had been done in New Zealand by the Government or by academia about the effects on those sectors of previous agreements the answer was no New Zealand had not done any studies. New Zealand we are told looks to the study done by the Asian Development Bank about the effects of free trade on Europe and the United States. My suggestion is to ask whether we are 100 percent convinced given the different scale of those economies from that of New Zealand’s economy that that study applies ipso facto to our economy or might we just stretch our 4.2 million population capacity to undertake a study of our own? If we have not done such a study—and I am told we have not—then we should do so. That is another question to the Minister: should we take that on? 
I will now ask question No. 4. We are constantly told that the Green Party can start morris dancing again on the grounds that because there are environmental protocols in the agreements we can be happy and go home. I have a question for the Minister to answer factually. I have asked about this and the answer as far as I can understand it is that there have been no meetings yet in relation to any free-trade agreement under the environmental protocols. I will be happy to stand corrected on that but could I please have details of any meetings held under the environmental protocols of any free-trade agreement: details of when and where the parties have met and a transcript of the meetings. 
Finally question No. 5 derives from the earlier comments: has a review of the effects of free-trade agreements on New Zealand’s domestic manufacturers ever been done? If not should we take that on in this country? Never mind the Asian Development Bank—there should be a New Zealand Government study or a commissioned academic study of the effect on New Zealand’s companies. Which companies have suffered economically? Which domestic manufacturers in this country have suffered economically in terms of both revenue and employment—jobs lost within their own companies? If we do not have the courage and the integrity to take on that kind of study then we should. Thank you. 
Hon MARYAN STREET (Labour) 
: 
 I will talk about some additional items that have not been covered so far in this debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill. I acknowledge the comments of the previous speaker Dr Kennedy Graham and say that last night when I spoke for the first time on this legislation I made reference to the 0.5 percent of tariffs that will remain including those on wine and pork products which are clearly exceptions made on the grounds of religious and cultural custom and practice. That will always be the case and should always be recognised by New Zealand. 
I will talk about a couple of things. One thing that has not been mentioned so far which I think is a good feature—and this free-trade agreement I think is not the only agreement where such a thing has been put in—is the establishment of a free-trade agreement joint commission. That instrument can be used in the future to assess and amend the impact of this free-trade agreement. The purpose of the joint commission is to review the implementation and operation of the free-trade agreement and to recommend any amendments to it so this particular construction makes this free-trade agreement—along with others but we are talking about only the Malaysian one at the moment—a dynamic agreement. It means that we can look at the agreement again in a year’s time—because the requirement is that the free-trade agreement commission should meet within 1 year of the free-trade agreement entering into force and after that as often as the parties agree—to assess whether improvements can be made to the free-trade agreement. The joint commission will be established and it has in its brief a number of committees that will look at the trade in goods the trade in services technical barriers to trade the sanitary and phytosanitary measures in the agreement investment and economic cooperation. 
I will link this debate to some comments from the Maori Party earlier. In the consideration of this agreement I will next go into the labour and environment treaty-level agreements. My colleague Grant Robertson has pointed out that these agreements are indeed binding treaty-level agreements. But the connection with the Maori Party’s comments earlier goes to the labour cooperation agreement. The Maori Party has expressed concerns about the rights of workers and the treatment of workers and that party is absolutely right to do so. We must be clear however that a free-trade agreement does not prescribe for any country how it might run its internal industrial relations or indeed its labour market system. We would resent it if Malaysia started to tell us how to run our industrial relations and our protections for workers so Malaysia would be rightly offended if we intruded into its domestic policies in that regard. 
Two things are important about the labour cooperation agreement. Let us be very clear to start with that these are Malaysia’s first such agreements and that Malaysia has not had labour and environment agreements with other countries before now. So we could say for the Maori Party’s benefit that New Zealand has brought those agreements to the table in that regard which is a very constructive thing to have done. But two things are of significance in my mind as a Labour member of Parliament and are important in the labour cooperation agreement. The first is that no domestic labour policies may be used for protectionist purposes. In other words both countries agree that they will not drive down the wages of workers in order to secure some economic advantage that prohibits or inhibits New Zealand exports into their market. They will not apply domestic policies that will be used for protectionist purposes. That is important. The second important thing is that there is an agreement to pursue the principles embodied in the ILO Declaration on Fundamental Principles and Rights at Work and its follow-up in 1998. This is no effort for New Zealand but it is significant that we have that agreement with Malaysia. Both countries are bound into ILO principles and declarations and that becomes important. 
The shared objectives of this labour cooperation agreement are that we have a goal of promoting working conditions and improving and advancing the quality of life for workers. In addition there is a 90-day time frame in which to resolve any issues arising out of this agreement. If we think something is going wrong with this part of our free-trade agreement—the labour cooperation agreement—we can actually raise the matter and seek to resolve it and there is 90-day time frame for resolving such issues with Malaysia should they arise. That includes even the involvement of Ministers. So this is a significant addition for Malaysia and it is a significant aspect of this free-trade agreement that we should not lose sight of. 
Similarly the environmental cooperation agreement will address all sorts of things again establishing a framework for cooperation with the intention of working together across a whole lot of environmental issues including environmental expertise and technology waste management wetlands management ecotourism and environmental remediation—the list goes on. That also becomes a significant piece of this apparatus and therefore subject to the same provisions for resolving any disputes that arise out of it even to the level of Ministers. 
I will have the pleasure and privilege of meeting with the Malaysian Foreign Affairs Minister on Friday as he is visiting this country and I will have this discussion with him. This is a good moment for us to be passing this Malaysian free-trade agreement legislation through all its stages and I too add my acknowledgment of Minister Tim Groser for his part in advancing and concluding this free-trade agreement. We have a Minister who understands not only the mechanisms but the detail of such free-trade agreements exceptionally well and that has been an advantage to New Zealand. 
Services are also included in this agreement and the primary one which I will use my closing moments to speak on as it is of real significance is education. Malaysia has long had a relationship with the New Zealand education system. At the time of accompanying the Minister on his gracious invitation to the signing of the free-trade agreement in Kuala Lumpur if I heard about the Colombo Plan once I heard about it a gazillion times. I was almost tired of it. However it is part of our historical connection with Malaysia—a connection that was founded in education and educational exchange. Malaysia is keen to upgrade the quality of its universities. It does not rank highly in the world’s assessment in terms of its universities and it is very keen to benefit from New Zealand in that regard. Thank you. 
Hon TIM GROSER (Minister of Trade) 
: 
 I want to answer some of the questions that have been raised particularly by Dr Kennedy Graham. They have also been touched on by Grant Robertson. In doing so I want to issue a consumer welfare warning. Three of us are of course former Ministry of Foreign Affairs and Trade employees. I am speaking on behalf of the centre-right faction of the ministry. There is serious danger of this developing either into a university-style seminar or even worse an internal Ministry of Foreign Affairs and Trade discussion which is what drove me out of the institution in the first place. 
Hon Maryan Street 
: I’m the exception; it is all right. 
Hon TIM GROSER 
: Ms Street is indeed the exception; she has made some very interesting points and I will address some of the substantive points that she and others have made in some comments during the third reading. But I do want to respond now to the direct questions. 
First of all in respect of the distinction between static and dynamic effects of trade agreements—and I remind members of my warning about turning this into an academic seminar—the question was asked as to whether there is any evidence for that and in particular whether there is any evidence that the removal of tariff rates has actually brought some of these benefits. I want to put on the record the fact that I have been for 30 years a deep sceptic close to the point of being an opponent of econometric measurements of the benefits of trade agreements ever since the early phase of the CER negotiations when I was an economic official in Canberra for the New Zealand Government in the 1970s. The then IAC the Industry Assistance Commission which is now the Productivity Commission of Australia estimated that the effects of entering into a free-trade area with New Zealand would be equivalent to 0 point something 1 percent of GDP and therefore was not worth the trouble. 
Of course the problem with these econometric measurements is that they are arithmetical approximations of reality. There is a huge amount of literature about x-efficiency gains and second-ran dynamic effects which no economic model can capture. I have no time for these models whatsoever. For example if we look at any modelling done on the removal of tariffs in the 1980s and import licensing on textiles and clothing we would see a sector that structurally in New Zealand was based upon the import substitution model and that was trying to compete on price with the added advantage of massive frontier protection. No model would have picked up Jeremy Moon for example. No model can ever pick up an operation like Icebreaker. All the models showed at the time the complete destruction of the clothing and textile industry of New Zealand because that was the model on which the existing structures were based. 
It is a matter of record and a matter of obvious sympathy for the people in the 1980s who suffered the consequences of liberalisation because they were moving out of uncompetitive industries but we are now seeing the upside for the first time. We are seeing a company like Icebreaker specialising in design—innovative high-cost high-value products. The argument that we could never export T-shirts to China is factually wrong. We can except that they are at the absolute top end of the market. Mr Moon once told me in Beijing a couple of years ago when I went there with the then Prime Minister Helen Clark for the signing of the China free-trade agreement that it had taken him 6 years to build Icebreaker to a million-dollar revenue—goodness knows how he and his family and employees managed to survive during that period on such a low turnover—and another 5 years to go from $1 million to $100 million. The way he did it of course was to take advantage of the global supply chain. No model could predict that. No model ever will be able to predict that and there is a vast amount of literature to support that theory. Frankly my view in terms of economic theory is that one is better to rely on Economics 101 than on high-class econometric analysis. That is a personal view but it is a very strongly held view and it is a view that I have applied over 30 years of practical experience in this area. 
The second question was on benefits to Malaysia. The question I wrote down—please forgive me if I have slightly mischaracterised it—was: “In the event that the second-order effects were equally beneficial and assuming that the benefits were shared would there be any net economic benefit?”. The answer is that absolutely there would be because trade is not a zero-sum game. This is not a division of spoils of war that we are talking about in respect of Malaysia or any other trade agreements. This is a provision to allow both Malaysian people and New Zealand people who live and work in their respective workforces to raise their productivity raise their real wages increase the trade between the two countries and benefit mutually. 
Given the pressure of time and my strong interest in facilitating the work of this House I will not carry on at great length but I want to address an issue that Dr Graham raised about cultural differences in respect of for example the exemption for liquor firearms and tobacco. I say that I completely agree with Maryan Street and Mr Grant Robertson and implicitly I think with Dr Graham that we should respect cultural differences. Free trade is not a religion—I completely agree with their observations on that. Free trade is a pragmatic means of enhancing the welfare of people in New Zealand and in the countries we trade with. We should and we do respect cultural differences. This has been reflected in almost all trade agreements from GATT 1947 onwards and while I have the privilege of being the Minister under the current Government I have continued to exercise flexibility and respect for other peoples’ cultural differences. 
With regard to wine in particular the issue I think is best handled in the following way. We understand that different societies have different cultural practices on alcohol and I agree with Mr Robertson Ms Street and others who have said that we should continue to do that. On the other hand—and I am sure members would agree; I do not want to caricature their positions in any way—it is very important to protect a billion dollar - plus industry in New Zealand from discrimination in those markets with regard to other exporters of alcohol. I think the balance here—and I suspect that members would be fairly comfortable with this—is to try to ensure that in agreements like this where countries for cultural and social reasons do not want to enter into internationally legally binding trade agreements we secure side understandings that say “In the event that your policy were to change in the event that you grant tariff concessions to other exporters of wine or alcoholic beverages we would expect equivalent treatment.” So it is based on non-discrimination but it still leaves the importing country which will often be an Islamic country in this context the full freedom of action to apply their own standards in terms of their societies. I think that is a perfectly reasonable position and that is the position I have adopted and will continue to try to adopt in the future. 
Just briefly on one of the last questions Dr Graham put as to whether there have been studies of the economic effects of removing tariff protection there have been a truckload of studies done by both previous Governments and many academics and institutions like the New Zealand Institute for Economic Research. Fundamentally they show that we have suffered adjustment effects out of uncompetitive industries. That has been difficult for the families of the people who have been displaced. But equally we have seen a huge growth in exports from industries that never would have arisen had we tried to freeze the structures of industry in place 25 years ago and never made any change. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I will start by acknowledging Tim Groser’s input on this bill and also the explanation that he just gave as well. Having somebody with that sort of experience in his field is clearly of benefit to the country and is able to build on the work that has been done on the Malaysia - New Zealand Free Trade Agreement which the previous Labour Government initiated in 2005. Obviously many people have said that a bilateral agreement like this is less favourable than a more wide-ranging global trade agreement or even a regional trade agreement. But nevertheless I think New Zealand has been very successful and adept at being able to forge and to be a vanguard in pushing forward bilateral free-trade agreements to its advantage. Ultimately with such a small internal market we are an exporting nation and we rely absolutely on our export growth in order to prosper. On that I will touch on a point that was raised earlier regarding being sensitive to cultural aspirations of the countries that we forge agreements with. The same can be applied in reverse in the sense that the agreements we have signed have also acknowledged the Treaty of Waitangi. So we receive reciprocity from other countries in terms of acknowledging our particular cultural areas of sensitivity and the importance they have for us. 
This free-trade agreement—and I am very pleased to hear that the Malaysian Minister of Foreign Affairs is coming tomorrow because I think it is particularly appropriate that we are discussing this in Parliament the day before he arrives—will inevitably bring about an increase in the export activity that is currently under way between Malaysia and ourselves. I notice that between 2004 and 2008 export growth grew by 80 percent. If we look at our free-trade agreement with China we see that in a very short period of time a couple of years our export growth has risen by over 60 percent. Although we are not necessarily expecting the same with Malaysia it could quite easily see big increases in exports particularly in milk with the duties and the quotas eliminated; steel products where 50 percent of the duty on that is removed; kiwifruit where 15 percent of the tariff is removed; and so on. There will be an estimated $10 million of savings annually. 
Something Maryan Street brought up is important too: to put into this agreement the effects on the environment and on labour—the environment in particular. Our ability to sell high-value goods and commodities in the world is dependent on the way we are seen as being an ethical environmentally responsible producer of those goods. That is fine from our side but not so long ago I think just a few years ago there was definitely some discussion about the environmental standards for example in logging and forestry in Malaysia. If this free-trade agreement can in any way assist in the environmental standards and not denigrate or degrade those standards in Malaysia then I think it is also in that respect a positive move. 
I want to touch on the fact that although we are at the vanguard of free-trade agreements I suspect we are not keeping up with some of the other parts of our economy that can really push and further our export growth. The importance of for example monetary policy being much more predictable and far less erratic is something that comes up invariably over and over when I go around to talk to exporters particularly but not necessarily in the high-tech area. They start off with an assumption that the New Zealand dollar might be at an exchange rate of 66c but they find that a little while later it is at 75c and then it drops down to a figure that is much less than that. This gives them an extraordinarily difficult time in trying to predict their profitability and therefore the actual life of the company. 
We have relied very much on inflation control measures to balance this. I notice that the International Monetary Fund recently stated that it is probably foolish for us to rely on a single tool with which to modify our interest rates. I believe there is scope for lateral thinking on that. We may not want to go as far on the issue as Singapore does which has banded its exchange rate but nevertheless as we enter these free-trade agreements and this one with Malaysia I think we need to look at some of the other aspects of our exports that are perhaps not getting the attention that free-trade agreements like this one are getting. 
My colleague Stuart Nash mentioned the drop that New Zealand Trade and Enterprise is going to receive through a cut in funding of $101 million. That does not inspire a huge amount of enthusiasm or hope that we have a Government that is really committed to exporting across the board. It cannot just be in freeing up markets it has to be in all the aspects behind that to ensure that we are able to put our goods into markets. 
On that note again I say that this free-trade agreement with Malaysia will largely—not wholly—benefit the production of our commodities. Another recurring theme that is coming through in pretty much every analysis I have read is that our commodities over time have actually declined in real value. If we look for example at comparably sized countries like Denmark like Finland we see that where they are getting the additional value in their economy and in their commodities is not in the lightly processed commodities that they send overseas but in their high-value manufactured goods both in terms of their labour productivity and also in terms of their ability to export real value. Sixty-six percent or more of our exports come from commodities. 
I was reading just the other day an interesting account of a seminar series called the Waipuna seminar series that Mike Moore the former Prime Minister had conducted in 1993. Actually Clayton Cosgrove was one of the principal authors of that book. Exactly the same issues in that seminar series are the issues we are facing today. We are exporting commodities that are declining in value despite the increase in dairy products despite all the optimism that there will be a protein shortage around the world. Those are declining and we need to be diversifying and adding value to our exports. The challenge is how we do that. 
We can rise to challenges. We did rise to challenges in the early 1970s when 75 percent or more of our exports were going to Britain and to Europe and suddenly 10 years later it was less than 20 percent. We are able to adapt. We are able to move our exports in a different direction. We have not been able to adapt in the export sector as successfully as we would like. Despite the $6.5 billion worth of exports in the high-tech sector—nearly 80 percent of that $6.5 billion is exported; it is an incredibly valuable highly productive sector—we have not been able to grow that. Other countries around the region are doing that Malaysia being one of them and Singapore being another as well as Taiwan and Korea 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I will take a brief call on two or three matters. The first is my response in part to Dr Graham’s comments particularly in relation to the question of how the national interest analysis discusses the missing 0.5 percent. I appreciate the Minister’s explanation about those issues and indeed I understand the point particularly about alcohol. I am not sure that we could make quite the same point about firearms and tobacco but I endorse Dr Graham’s comment about the way in which the national interest analysis raises this matter. I think that something for future thought is the fact that the language and phrasing in the analysis does not pick up the spirit of the Minister’s comments and indeed of others in the House about showing our respect for other cultures and our belief—and I was perhaps diplomatic in my language earlier—that we do not need to do that. We do need to respect and understand other countries and the limitations of these free-trade agreements and I think that some of the language in the national interest analysis on that issue perhaps left a little to be desired. 
The second point that Dr Graham raised that I will respond to concerns the importance of environmental cooperation agreements and the actual discussions that take place as a result of them. One agreement I know a little about was with Chile in the Pacific Three Closer Economic Partnership which is now morphing its way into being the Trans-Pacific Strategic Economic Partnership Agreement. I know that significant work was done there with a number of meetings particularly in the eco-tourism area. A lot of information was shared about how to grow that sector but also about how to ensure that the effects of tourism were mitigated on the environment. There was significant exchange. The Ministry for the Environment in New Zealand was actually the lead agency. It brought in a number of eco-tourism operators who were able to share their experience but they heard equally from the Chilean side. In fact in talking to a number of the eco-tourism operators who were involved in that I discovered that they felt they learned as much from the Chileans even as the learning went the other way. That is the advantage of those agreements. 
That brings me to the point that I will raise to build on Maryan Street’s comments about the environmental cooperation agreements. Those agreements were seen as I said in my second reading speech somewhat as tack-ons. I think it is important that in this House we make clear that the expectation of parliamentarians is that those agreements are much more than that. They are treaty-level agreements that are of significance to us. They round out our relationship with countries so that it is not just about free trade and tariffs it is actually about building a stronger and deeper relationship in which environmental cooperation has leveraging possibilities for services. But it is more than that as well. It is in fact a sign of our values and that is why the labour cooperation agreement is significant and important as well. 
There are obligations in the agreement to set up committees and to have those committees meet and I implore the Government to continue to see those parts as important parts of free-trade negotiations. It is true that in the early years of this century a number of other countries were reluctant to have those parts but New Zealand has pushed on. As Maryan Street said we have in fact led the way in those agreements. We are the ones who have said no those must be part of our free-trade agreements. I think we now need to back that up with further action and ensure that they are meaningful. 
I do not believe I say to Dr Graham that such agreements are a sign that the Green Party should recommence morris dancing—in fact nothing should encourage the Green Party to recommence morris dancing—but they are a sign that there is an understanding of the importance of environmental cooperation the importance of labour cooperation and the fact that as Maryan Street said we are referencing International Labour Organization agreements and the outcomes of the Rio Earth Summit. That is important. It gives great stability to those agreements to have international agreements alongside them. I think it is important to note that environmental cooperation agreements and labour cooperation agreements are rising in their importance that their status has been increased by being at a treaty level and that they are now a very important part of free-trade agreements. 
Dr KENNEDY GRAHAM (Green) 
: 
 I am saddened to hear the discouragement from Mr Grant Robertson about the morris dancing. I now have to advise the House that no invitations will be issued to anybody for that. I add that from time to time there is a touch of Handel and Fauré in there between bouts. 
I will not take up much of the time of the Committee. I have just two queries to make if I may and I address them to the Minister in the chair the Minister of Trade. I thank him very much for his answers. He missed one and Grant Robertson touched on it a moment ago: the environmental and labour protocols. I ask the Minister to forgive me if it has been provided in the past; I have not noted it. Could we perhaps please have from the officials for the benefit of members of the Foreign Affairs Defence and Trade Committee a list of the meetings held under both environment and labour protocols under each free-trade agreement since the beginning of each agreement with details of when they met where and if possible transcripts or at least a report. 
My second and final point is that he mentioned that truckloads of studies were done within New Zealand about the effect of free-trade agreements on the domestic economy. I would have intuitively assumed that to be the case. I just offer the view that I made two inquiries on the number of studies. One inquiry was with a senior economist from a university. He consulted with his colleagues and the answer was none. That came as a surprise to me. The second time I asked was within the committee. I asked officials and I was told no but there was an Asian Development Bank report pertaining to Europe and the USA which is why I mention the comments. If there are such studies specifically—it may be a matter of definition—on the effect of free-trade agreements on the domestic economy in New Zealand then on a purely factual basis I personally and perhaps other colleagues would benefit if the Minister and his officials would be good enough to give us a bibliography. I certainly will explore it. Thank you. 
Hon TIM GROSER (Minister of Trade) 
: 
 Very briefly on that point there certainly have been specific studies on the CER which was our first free-trade area agreement. Off the top of my head I cannot give Dr Graham references but most certainly I have written some myself and read many others. In respect of more recent free-trade agreements there was a long period between drinks; our second free-trade agreement after the one with Australia in 1982 was the one with Singapore and I recall that it was concluded in 2002. I doubt whether it is profitable to try to examine the near-term effects of any specific free-trade agreements because they will be bound up in a general analysis of the impact of removal of tariff protection. The removal of tariff protection comes from a variety of different sources: from Uruguay round commitments from unilateral liberalisation and from free-trade agreements with Singapore Thailand and eventually—when this bill is passed and we assume the House will pass it—Malaysia. I think it would be impossible for any economist to disaggregate the effects of the removal of tariff protection. The studies will show the effects on the New Zealand economy of the removal of it but I think it is highly unlikely that we will see a disaggregated analysis other than in respect of the CER agreement with Australia firstly because of the significance of that agreement and secondly because of the longevity of that agreement. 
STUART NASH (Labour) 
: 
 I enjoyed Tim Groser’s contribution to the debate. There is no doubting his competency experience and ability to represent New Zealand’s best interest when overseas and that is very good. But I would like to ask the Minister of Trade one political question. There were advantages in having a Minister of Trade like Phil Goff sit round the Cabinet table because Phil Goff understood the politics of politics. He knew when to push hard he knew when to pull back he knew whom to talk to he knew whom to massage and he knew when to get money. 
I will bring up again what I have mentioned a couple of times. Although the agreements we have debated today and last night and also the China free-trade agreement are no doubt exceptionally good for this economy I have some slight concerns that we do not have the processes in place to allow the 97 percent of small to medium enterprises that may have the ability to scale up and look at export markets to do so. I am worried that we do not have the tools in place to allow that to happen. As mentioned our whole trade focus has changed. It used to be Eurocentric and now it is pretty much focused on Asia. Fifteen percent of our exports now go to Europe but it used to be nearly 100 percent. Mr Groser knows those figures a hell of a lot better than I ever will. 
In the 2009 Budget National cut the funding of New Zealand Trade and Enterprise by $101 million over the next 4 years. As Mr Groser will be aware the Labour Government increased New Zealand Trade and Enterprise’s funding for market development assistance from $6 million to $54 million and it is now just under $10 million. Although I do not doubt Mr Groser’s absolute ability skill and competency around the trade negotiation table I ask whether he feels that he has the confidence of his caucus colleagues or the skills and experience round the Cabinet table to now stand up and fight for the money that is necessary for our companies to take advantage of these free-trade agreements. What I would have liked to see in the Budget was not a cut to the funding of New Zealand Trade and Enterprise or to anything related to trade development; it would have been great to see a massive increase in funding because as the Minister of Finance has said New Zealand is an export-led economy and he hopes that New Zealand will drive its sustainable growth through export growth. So the rhetoric does not quite match the action. 
I do not know whether the Minister has time or is willing to answer those questions but that is a concern I have. 
Hon TIM GROSER (Minister of Trade) 
: 
 I say very briefly and not in the spirit I am sure in which the member asked the questions yes I am afraid shock waves are going through the New Zealand Public Service as a result of the election of the National Government because the truckloads of money that have been pouring through the front door in the last 9 years leading to an increase in core Government expenditure of some $30 billion has stopped. Public servants are now experiencing the shock waves caused by having to be asked to do more with less. In respect of the idea that we do not follow up on these free-trade agreements because New Zealand Trade and Enterprise has somehow switched off I will be sure to make a point of personally inviting Mr Nash to the next New Zealand Trade and Enterprise - Ministry of Foreign Affairs and Trade seminar on free-trade agreements. I opened two seminars last week in which we did exactly as Mr Nash was proposing. 
A party vote was called for on the question  
That clauses 1 to 5 be agreed to. 
Ayes 110 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 3 (Flavell Sharples Turia); Progressive 1; United Future 1. 
Noes 11 
Green Party 9; Maori Party 2 (Harawira Katene). 
Clauses 1 to 5 agreed to. 
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon TIM GROSER (Minister of Trade) 
: 
 I move  
That the Tariff (Malaysia Free Trade Agreement) Amendment Bill be now read a third time 
. I want to respond to the interesting debate at previous stages of this bill. I thank all the members of the Foreign Affairs Defence and Trade Committee for their work. I thank all members for their contributions in this debate. I acknowledge the support of the Labour Opposition for the bill. Of course as members opposite have made us aware in several of their interventions it is part of a broader pattern by which we have moved quite consciously and quite deliberately to take this issue out of the partisan arm wrestle. In the context of this bill I want to emphasise the importance of that in a very real and practical sense for New Zealand. 
For other reasons that I will not go into the fact that my mum has just passed away became a matter of wide public comment in New Zealand. I was going through her papers a week or two ago and like all mothers and grandmothers and all fathers and grandfathers she had proudly cut out articles about things that her children and her grandchildren were doing. One article she had cut out was an article written by me congratulating the previous Prime Minister Helen Clark and the then Chief Executive of Hong Kong Tung Chee Hwa on initiating the beginning of a Hong Kong - New Zealand free-trade agreement. It is a matter of public record that this negotiation failed in its first iteration—or in its second iteration to be frank. Prior to that when I was working in the Ministry of Foreign Affairs and Trade and was the principal economic adviser to the ministry I had negotiated in principle an earlier attempt to have an agreement with Hong Kong and that too failed in the sense of not working at that time. Only on the third attempt to implement the strategy did we actually succeed. As Ms Street will recall she and I went up to the signing ceremony in Hong Kong a month or so ago and finally New Zealand nailed this agreement. 
A couple of interesting lessons that are applicable to this bill have emerged from that. One is the importance of consistency of strategy and the second is the importance of flexibility in tactics. Our first two attempts failed but the strategy behind them was correct. In respect of consistency the reason why we eventually nailed this agreement with the separate customs territory of Hong Kong and Macau was that we were able as a small country with a population the size of that of Sydney to maintain a completely consistent policy approach. I repeat: it is very important for this country with so little material power to have a consistent policy that can sustain itself over the phase of the electoral cycle and then to have complete flexibility in tactics. In respect of Hong Kong what we were trying to do of course was push the door open to China. In the event our tactic did not work. It proved possible only to go right to Beijing and do the real deal with Beijing first then come back and open the Hong Kong door. So our tactics were not right in terms of the flux of international politics at the highest level—because this is serious stuff internationally—but the strategy was right. That I think is a lesson New Zealand needs to bear in mind in dealing with the outside world remembering that we are 4.5 million people and 0.2 percent of world trade. 
The Malaysia - New Zealand Free Trade Agreement follows exactly this pattern. I recall having launched the Singapore - New Zealand free-trade agreement under the then National Government in the 1990s being invited up for “secret talks” in Kuala Lumpur. At that stage the idea of Malaysia doing a free-trade agreement with New Zealand was highly controversial. Now 13 years have elapsed to the point where we are now able to address this matter in a formal parliamentary sense and I celebrate New Zealand’s success once again. But the story is the same. The strategy must be consistent and the tactics need to be completely flexible because we need to adjust to the political realities of the major trading countries which are much larger countries than ours; otherwise we will fail. We were able in the case of Malaysia to begin a dialogue when its policy structures were not sympathetic to moving this forward. We were then able to move it forward in the context of AANZFTA—the ASEAN-Australia-New Zealand Free Trade Agreement—negotiations which are only now being phased in since the beginning of this year. The lesson once again is consistency of strategy and flexibility in tactics. 
It is only when we look back that we can see how far we have travelled. New Zealand has travelled a great distance on these issues. New Zealand is a country that I have always argued suffers more than any other country in the developed world from lack of access to markets. Numerous econometric studies—putting aside my own distaste for econometric studies—and other more rounded economic studies indicated that in the 1980s the impact on New Zealand which was then suffering from an acute lack of access opportunities for our traditional products in a relative sense was more negative than that on any other developed country. 
In that context I might take up one point that was made by Mr Shearer in his remarks about commodities. I share his frustration as I think most members of the House would at our relatively slow progress in taking advantage of higher-value products moving up the value-added chain. The way I would express that concept these days—because we as a country have been debating it for 30 years—is to participate in the global supply chain. And it is a big challenge for us. The global supply chain is where the action is. According to the latest OECD study 58 percent of the world’s trading goods are intermediate goods. In other words we do not have vertically integrated production with everything made in New Zealand then exported; if we want to gain entry into the really sophisticated features of modern international trade we produce components or bits of the global supply chain. This requires a shift in our thinking as a country and it is quite challenging for some people who still think in traditional terms—that everything must be 100 percent produced in New Zealand. But if we as a country want to move up the value-added chain if we want to participate where the real action is I agree with Mr Shearer that that is where we have to go. 
I do not know whether I am disagreeing with him but I draw his attention to the point that these free-trade agreements address one aspect of that. I will introduce the technical term for it for a minute. It is called tariff escalation. The problem for New Zealand historically in getting out of the commodity trap has been the cost issue of tariff escalation. That means that countries have wished to import our raw commodities whether they are wood wool or dairy products and then put higher and higher levels of protection around the further processing of those goods. It confined us to being a hewer of water—I have forgotten the familiar biblical phrase. 
Chris Auchinvole 
: Drawer of water hewer of wood. 
Hon TIM GROSER 
: I thank the member. It was not because we did not want to move into the higher value-added areas; the structure of tariff protection in our markets prevented us from gaining access. So these free-trade agreements do help to address the issue that Mr Shearer was concerned about. 
In the brief time I have available I want to reinforce the points made about the labour and environment cooperation agreements because I think we need to understand what we are trying to do here. I assure members who have spoken on them that they are more than just clip-ons. I have strongly pushed them forward. I am working with the Opposition in the context of the TPP or trans-Pacific partnership. Maryan Street will recall that she Phil Goff as Leader of the Opposition Helen Kelly as the president of the Council of Trade Unions and I went to see the president of the American Federation of Labor and Congress of Industrial Organizations or AFLCIO and we have been able to carry forward this agreement. In my brief remaining speaking time I want to give assurances to members that it is not just some cynical exercise. We are taking it seriously. In respect of the environment agreement it is exactly the same. I do see significant opportunities for New Zealand. I am not quite sure whether it is public knowledge yet so I will be cautious but there is an extraordinary new opportunity in China involving a pilot project of very significant standing which will potentially be a massive gain in terms of cleantech and will have New Zealand involvement. 
I strongly support these free-trade agreements. I strongly support their voluntary nature. I think we have to work with developing countries that are sensitive to compulsory models. I think we have a great future. 
Hon MARYAN STREET (Labour) 
: 
 It gives me great pleasure to rise and speak in the third reading of the Tariff (Malaysia Free Trade Agreement) Amendment Bill. Although it gives me great pleasure I am sure that it will give Lain Jager and Carol Ward of Zespri Group even greater pleasure to know that the third reading of this bill is now before the House. And so it will pass in a matter of minutes. 
I make the reference to Zespri because as we have traversed in the second reading and Committee stage the benefits of this free-trade agreement—and will continue to do so in the third reading—it is clear that as far as the exporting of goods is concerned this is indeed a very high-quality free-trade agreement. Within very short order in comparison with other free-trade agreements we will see almost all tariffs eliminated from our goods exported into Malaysia. By 2016 99.5 percent of our goods will be tariff free. Better than that at the moment of implementation there will be a benefit instantly for kiwifruit and for other primary production items. In the case of kiwifruit we will see the elimination of a 15 percent tariff on exports. 
That is a multimillion-dollar deal for one of our horticulture industries. That multimillion-dollar deal means that profit will be retained within New Zealand and it will not carry the cost of the tariff that has applied until this moment. As I think mentioned in the second reading along with our other primary products that are exported into Malaysia—butter cheese honey wool apples milk-powder and increasingly now liquid milk as well—with this free-trade agreement we will see an improvement in the profit margins for all of those industries because of the elimination of the tariff cost. 
We have talked quite a lot about the benefit for trade in goods. I now take the opportunity of this third reading to focus a little on those things that I have not had time to speak about in my previous contributions. I want to talk a bit more about the trade in services which is particularly significant in this free-trade agreement. The services referred to in this free-trade agreement are substantial. The one of particular interest is education. Education is New Zealand’s single most important services export after tourism. Tourism attracts very few barriers but that sector and the education services sector stack up very very favourably as the most important services export sectors. What has been achieved in this free-trade agreement is that access for the education services sector has become New Zealand’s highest priority for the negotiation of services in this free-trade agreement. We have a very good deal—a very good arrangement—that includes primary secondary and higher education plus additional training particularly English language training. Making that education available on very favourable terms in Malaysia will boost our education exports here. 
Malaysia has agreed to provide New Zealand with most favoured nation treatment in private education. It means that education providers will enjoy the best treatment that Malaysia gives any of its competitors from other countries. Having a most favoured nation status in respect of education exports will make things easier for our very qualified and very capable education sector. I made reference earlier to the fact that Malaysian universities are keen to improve their performance and that the Malaysian Government is keen to improve the performance of Malaysian universities. With the research and teaching record in our tertiary education sector we can assist in that area and that also benefits New Zealand. 
I will say a couple of other things about this agreement in general. I have spent some time talking about the binding treaty agreements on labour and the environment that are a part of this free-trade agreement. I reiterate the fact that these agreements remain dynamic as does the free-trade agreement. Should any disputes or issues arise out of the maintenance of labour standards according to ILO declarations and principles or any application of domestic labour policies that are used for protectionist purposes there is a process to resolve those issues right up even to ministerial level. 
I look forward to additional clauses I suppose being added into such free-trade agreements in future because it seems to me that this will be the way of trade in the future. If we do not care in a cooperative way for the fragility of this planet then it does not matter how good we are at producing high-quality exports because there will be no orderly productive and sustainable means of continuing trade. I cannot overstate that point. In the end it remains the most critical basis on which we engage with other countries. Either we have a sustainable planet or we do not and if these agreements can be used to enhance cooperative arrangements for sustainability sustainable production and sustainable trade arrangements then so much the better. The world is better for it. 
This free-trade agreement is significant. When we were in Malaysia the Minister of Trade talked about it being the icing on the ASEAN free-trade agreement cake. It is just much better in its terms and timing than the ASEAN free-trade agreement which is a significantly beneficial agreement on its own. We have a long history of engagement with Malaysia particularly on cultural and educational matters. It is fitting that this House passes this legislation without further delay and that the free-trade agreement with Malaysia proceeds forthwith. Thank you. 
JOHN HAYES (National—Wairarapa) 
: 
 I rise in support of the third reading of the Tariff (Malaysia Free Trade Agreement) Amendment Bill. It is great to be in a waka with 121 paddlers where all but 11 of them are paddling in the same direction. 
This bill will give us new market opportunities. It will help exporters and it will help service providers. It will provide transparency and certainty. Malaysia is our eighth largest export market. It is bigger and more important to us than Germany India and Canada. In the period between 2004 and 2008 our exports to Malaysia grew at a rate of 80 percent which is double the rate of growth of New Zealand’s exports to the rest of the world. Our investment in Malaysia has grown by 77 percent since 2003 and it now sits at about half a billion dollars—or it did in 2008 which are the last figures I have seen. That means that our investors have confidence in the integrity of Malaysia’s systems particularly its justice system and in the integrity of its private sector law. 
The Green Party contains nine paddlers who are facing the back of the canoe not the front. I will respond to Dr Kennedy Graham’s request for some practical examples of why the Greens’ understanding of life is in a practical sense different from that of the other paddlers in this waka. The Green opposition to the bill is set out in a minority view in the Foreign Affairs Defence and Trade Committee’s report back to Parliament: “It wrongly assumes that the two trading countries will both be better off as a result.” of signing up to this agreement. How wrong can those members be? How muddled can their thinking be? 
I think that the Greens may be using computers. If that is the case I invite them to type the word “Ricardo”—R-I-C-A-R-D-O—into Google which is a search engine. Then they should read what it says about Mr Ricardo. His insight is that trade barriers—whether they are subsidies to farmers regulations prohibiting clothing or textile imports or taxes—will make us and Malaysia worse off. Ricardo argues that it does not matter whether Malaysia is better at making things than New Zealand. He says that each country should stick to what it does best and should stick to producing whatever its economy is best at turning out. Ricardo argues that even if New Zealand was worse at producing everything than Malaysia was we should still stick to what we are least bad at producing. 
Dr Kennedy Graham asked for some practical examples; I will try to give him one. I have a company in Dannevirke called Metalcraft Industries. Let us say that it produces an electric drill in half an hour. It can also—it has very good people working there—produce a flat-screen television in about an hour. But a Malaysian worker can produce an electric drill in 20 minutes and a flat-screen television in 10 minutes. So if New Zealand and Malaysia do not trade which is the outcome Dr Graham wants nothing will change. It will take us 90 minutes to work to produce a flat-screen TV and a drill while in Malaysia the TV and the drill can made in half an hour. So if we follow the Green Party way of looking at the world nothing will change. But if we get rid of the trade barriers as this bill aims to do both countries can trade and both countries can be better off. The Malaysian worker can make two televisions in 20 minutes and the Dannevirke worker can make two drills in an hour. If we trade one drill for one TV then both New Zealand and Malaysia will be better off because they save at least one-third of the time involved. 
Contrary to Green belief it is simply not possible for trade to destroy all of the jobs in New Zealand. It is also impossible to import everything from abroad and export nothing. If we did that—if we followed this Green utopia—we would have no cash with which to buy anything. It may surprise the Greens but goods and money do not just appear and disappear; they are interconnected. No one beyond New Zealand would accept a New Zealand dollar in payment for some other good or service if we were not exporting products like milk cheese wool and timber so that our dollars can be used as a basis for paying back other countries. 
Having gone down this road with Ricardo my second suggestion is that “Dr Green” and his paddlers going in the wrong direction could type into “Mr Google” the words “Abba Lerner”—A-B-B-A L-E-R-N-E-R—and read what is arguably the most important theorem of trade theory. In 1936 before even Dr Kennedy— 
Chris Auchinvole 
: Dr Kennedy Graham. 
JOHN HAYES 
: —Dr Kennedy Graham was born Abba Lerner said that a tax on imports is exactly equivalent to a tax on exports and he proved this. 
Finally we could think about the practical examples Dr Graham asked for. We can think about countries that are restricted like North Korea and we can think about countries that are open like South Korea. I then leave it to Dr Graham to determine who is the better-off from that openness of economy. We can think about Austria and we can think about Hungary. We can also think about our recent experience in signing the free-trade agreement with China. As I said in the House last night in the year to April 2010 our exports to that country increased by $860 million. That is an increase over a 12-month period. That increase is virtually the same size as us finding another export market the size of Indonesia. Opening that free-trade agreement with China has helped every person in this country and to some extent it has insulated New Zealand from the recession that we find ourselves in. 
Finally I say that this is a good bill. It is a good bill for the people of Dannevirke; it is a good bill for all of the people in the Wairarapa. It is good for all New Zealanders and it is good for all Malaysians. It has my absolute support. Thank you. 
STUART NASH (Labour) 
: 
 May I be the first member in this House to offer my congratulations to Julia Gillard the new Australian Prime Minister. I understand that she won the vote. [ 
Interruption 
] Sorry Kevin Rudd stood down and she put herself forward. I understand that she is also the first female Australian Prime Minister. 
Chris Hipkins 
: And the first ginga! 
STUART NASH 
: She will not be the last so congratulations to Julia Gillard. I must admit that I tend to agree with John Hayes in the sense that countries around the world must concentrate on their areas of competency. Having said that—and this is sort of true free-market policy; Michael Porter as we know came out about 20 years ago to New Zealand and suggested such—I also take on board Dr Kennedy Graham’s comments. I think my colleague Grant Robertson and maybe even Maryan Street mentioned this as well. We cannot put trade in front of absolutely everything else. There are areas of national interest or of great importance where it makes sense to have certain barriers in place to protect them. If we look at the national interest documents for any free-trade agreement there are areas that are protected because they are considered more important than a complete and open free-trade agreement. 
I do find it slightly rich that National is lecturing the House on economic policy because the Budget showed that its economic philosophy is outdated. It dates back to last century. I think this is probably the only Western democracy that is following the economic philosophy of the Regan and Thatcher years. I think National would find that the philosophies followed by the Americans the Brits the Canadians and certainly this Labour Party are based on much more updated and relevant economic policies that put money in the pockets of every New Zealander and are all about sustainable economic growth. 
Although as I said I tend to agree with John Hayes that this bill is by far the best for all New Zealanders there are risks involved. We acknowledge those risks; we understand those risks. However I am supporting this bill because I think that it is in our national interest. 
This free-trade agreement was signed in Kuala Lumpur on 26 October 2009. It provides New Zealand exporters service providers and investors with new market access opportunities and greater certainty and transparency in Malaysia. It builds significantly on the platform provided by the recently signed agreement establishing the ASEAN-Australia-New Zealand Free Trade Area. As has been noted Malaysia is New Zealand’s eighth-largest export market. Currently it is more important to New Zealand than for example Germany India or Canada. As has been mentioned in this House during this debate it reinforces the fact that our traditional trading markets of Europe have now been replaced by the more dynamic and closer Asian economic block. 
The commercial significance of the free-trade agreement is underlined by the robust and growing trade relationship between New Zealand and Malaysia. For an example between 2004 and 2008 New Zealand goods exported to Malaysia grew by over 80 percent—more than double the rate of New Zealand’s export growth to the world over the same period. In 2008 New Zealand’s exports were worth almost $1 billion which is not insignificant by any stretch of the imagination. New Zealand’s service exports to Malaysia have continued to grow in a range of sectors including private education which we talked about it. They provide the highest numbers of overseas PhD students to our universities information computer technology and engineering. 
At the same time New Zealand investment in Malaysia has grown albeit off a relatively low base by an annual rate of 77 percent since 2003 to almost half a billion dollars in 2008. It is a very important market but I will outline again my concern that I mentioned a couple of times—that is that this Government has not provided the companies that are in a position to take advantage of these free-trade agreements with the tools needed to do so. When I asked the Minister about this he gave some sort of smart answer saying that he is asking people to do more for less. I do not think that actually works. One cannot ask people to do significantly more for significantly less. In this House—and I am assuming this bill is going to be passed because the vast majority of us agree with it—in the last 24 hours we have passed a free-trade agreement with Hong Kong and with Malaysia. Recently we passed one with China. These markets are incredibly different from New Zealand. They have a different legal system a different culture a different way of doing business and different religions—in fact everything is different—yet 97 percent of our businesses are small to medium sized enterprises and simply cannot afford to employ an international marketer or an international market development manager. 
Mr Groser said he would like to invite me to the next meeting with New Zealand Trade and Enterprise and the Ministry of Foreign Affairs and Trade. Well I would like to go along to that. I would relay a story. There is a New Zealand exporter who is a very good friend of mine; I am very happy to provide the Minister with his name. He turned up at a pre-arranged time at a New Zealand Trade and Enterprise office for a meeting that had been arranged in New Zealand only to be told that he should go to the equivalent office of the nation that he was in. He turned up there a little bit annoyed—as one would if one has flown halfway across the world only to be told that one cannot be seen by New Zealand Trade and Enterprise—only to be told by those people that the reason New Zealand Trade and Enterprise did not want to see him was that that was the day of their Christmas party. How professional is that? We want to send a message out there that New Zealanders are professional we are competent we know what we are doing and we know how to do this. 
I saw a recent survey; I think it was presented by either the outgoing Minister of Trade or someone who came to the Labour economic caucus. We hear from a whole range of people; members would be surprised at the people who would like to talk to us because they are a little disillusioned with what is happening. The perceptions of New Zealand business people overseas are that we are unprofessional and we do not quite know what we are doing. We are a little bit lax and there is this old No. 8 wire mentality that all we have to do is turn up hand out a couple of All Black jerseys give out a couple of bottles of wine and maybe a pottle of manuka honey and the deal is done. Then we sit down and we get pissed with them. No longer is that good enough in the 21st century. No longer is that sufficient to get the deals done. In this day and age of globalisation we are competing with everyone. This free-trade agreement levels the playing field. Malaysia has free-trade agreements with Japan and ASEAN and it is negotiating a free-trade agreement with the United States etc. This is not the first as it is with China. We are not the first to get in there and make it happen; this is just levelling the playing field. 
We need to be incredibly professional and diligent in the way we handle our international business. Quite frankly having a New Zealand exporter turn up to a New Zealand Trade and Enterprise office only to be told that he cannot be seen because it is the office’s Christmas party just reinforces the stereotypes that a lot of overseas business people have of New Zealand and it has to change. It has to change if we are to take advantage of these free-trade agreements. That is why I have great concern that this Government has cut over $100 million from New Zealand Trade and Enterprise’s budget over 4 years—$100 million. That is not about doing more with less; it is about cutting services. It is about cutting essential services at a time when we are looking to develop markets into a whole new region. This is not about doing business with Australia or the UK where rugby jerseys and sport are part of the local vernacular; this is about getting there and proving that New Zealand businesses are the most professional and can do the deals. Cutting $100 million from New Zealand Trade and Enterprise is not the way to do that. I would love to come to one of these meetings I say to Mr Groser and I would love to relay that story. 
Hon Clayton Cosgrove 
: He won’t listen. 
STUART NASH 
: The member is dead right. I would love to see the response of New Zealand Trade and Enterprise. I said to my friend when he told me this story that he should not worry about Tim Groser. He is a very good trade negotiator but he has no weight around the Cabinet table which has been proven by how much money has been cut from his budget. My friend should take his story to the Prime Minister. John Key would be absolutely annoyed if he heard that that is the way that officials are dealing with New Zealand businesses. I tell members that if Phil Goff who has spent a considerable amount of time negotiating free-trade agreements on behalf of New Zealand heard a story like that he would be ropeable—absolutely ropeable—because that is not the way we treat New Zealand businessmen and businesswomen who are going overseas to take advantage of these free-trade agreements. It is hard enough as it is let alone with that sort of carry-on. 
I support this free-trade agreement. As I said I take on board Dr Kennedy Graham’s concerns but having read the national interest analysis having gone through the costs and the benefits and understanding where New Zealand has to position itself I have come to the conclusion that the benefits outweigh the costs of this free-trade agreement. I support it and I congratulate Mr Groser on getting the ball across the line so to speak. But also I very much acknowledge that Jim Sutton and Phil Goff did the vast majority of the grunt work for this free-trade agreement. Thank you very much. 
Mr DEPUTY SPEAKER 
: Before I call the next speaker I say that the member made an unparliamentary remark earlier on. I do not know whether he realised it but I just ask the member to be very careful with some of the language. I did not pull him up at the time but I just mention that. I am sure it was unintended and I am not asking to take it further. 
Dr KENNEDY GRAHAM (Green) 
: 
 I appreciate the comments of the previous speaker my colleague Stuart Nash in acknowledging the concerns of the Green Party. In fact I think that both the debate on the New Zealand - Hong Kong China Closer Economic Partnership Agreement and all the stages of the debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill have been with the singular exception of the contribution from John Hayes very constructive indeed. I welcome that from all other National Party colleagues not the least of whom is Chris Tremain. I make the point however that nothing I have heard—and I have listened very closely to everything that has been said in the debates on both the Hong Kong and Malaysian agreements—changes our view with regard to the current manifestation of trade policy. 
In the second reading John Hayes simply said China’s exports have increased by $860 million and that is fantastic. We recognise that that is a significant thing but it is not everything. Chris Tremain admonished me to steer clear of theoretical models and I appreciate that. I assure him that I shall not do that but that I shall add a touch of practicality now and again to it to satisfy him and his constituents. But after Chris Tremain offered that admonishment he basically spoke in tones of awe—and we can speak in tones of admiration but not of awe—about Zespri. That was his contribution. Cam Calder said the free-trade agreements boost exports create jobs and increase income. That is true but it is not the total story. Tim Macindoe mentioned the environmental protocols morris dancing and Asian students in his electorate. I know that very well having been to Waikato University recently and spoken to students at the Pacific college. Tim Groser said that free trade is not a religion though he none the less spoke in papal tones and now and again unctuously. 
I just make the point that everything that the Government members have said is focused on exports. At no stage did they really address the issue of the effect on the domestic New Zealand economy which is only one of the things that we are trying to get this House to focus on. The Government is being either blind or wilful and it is not focusing. 
On the point of style I just say that at least my colleagues Tim Macindoe Chris Tremain and others offered their derision in tones of good humour; that is appreciated. That cannot be said for John Hayes whose patronising attitude was rendered in supercilious tones. It was quite different from the attitude of the other speakers. I will not reduce the dignity of the House any further by responding in kind though I could. 
On the note of whether we are going to competitively Google—or be Googly competitive—on this thing I just offer the response that I actually studied Ricardo back in the 1960s; John Hayes and I are much the same age. I know Ricardo’s theories very well indeed; in fact we can go from Ricardo through Smith Mill Malthus Marshall Jevons Keynes Samuelson Hicks and Friedman—yes Friedman—to understand the theory of economics and the theory of trade. I suggest that John Hayes goes through all of those people as well. It does not stop with Ricardo; it only began with Ricardo. 
And in fact having completed that stony pilgrim’s path John Hayes should then by invitation from me investigate the whole theory of ecological economics which is where the Green Party is coming from. If we recognised each other’s theoretical framework with dignity and explored it perhaps we could have a reasoned dialogue. I think that every member except for the chair of the Foreign Affairs Defence and Trade Committee will be prepared to do that. I invite members to study these people whom they can Google: Tim Jackson Herman Daly Peter Victor Robert Costanza and J R McNeill. Then they will understand ecological economics—both the domestic dimension of it and the free-trade dimension. 
All of that is simply to say the Green Party having just been misrepresented requires a reiteration of its policy. The Greens are not against trade which is what Mr Hayes was misrepresenting. We are against unsustainable trade; we are against unfair trade. The Government’s trade policy rests on a commitment to a neo-liberal—yes neo-liberal—free trade. Globalised free trade is the manifestation of the problem of the globalised economy. The case for free trade rests on the assumption that trade is voluntary. This is getting at what Mr Hayes suggested we do get at. Both parties must be better off than before the voluntary act. When trade is based on the absolute advantage enjoyed by the countries in terms of the commodities in question this is self-evident. But the Ricardian theory of comparative advantage also justifies trade even when one country may have an absolute advantage over another in all goods. The theory is that the combined production of all countries trading is greater than if they produced separately and each country stands to gain individually even if not to the same extent. That is the Ricardo theory. This theory derives from the fundamental tenets of neo-classical economics I say again for the benefit of Mr Tremain. 
The Green Party considers those tenets to be dangerously obsolescent requiring refinement with a new approach that reflects the economic conditions of the 21st century. Specifically let me make a number of points. First the extra combined production from free trade cannot in fact be achieved without extra resource inputs. There is also the increase in the depletion rate of the natural resource base from which the product is made. What trade economists mean when they say no extra resources is simply no additional labour or financial capital. Neo-classical economics omits natural capital from its theories. 
Second the extra transport costs associated with free trade are not included in the theory. International transport is energy-intensive often subsidised. Its external costs are omitted from the pricing. Sea trade emits 0.8 billion tonnes of carbon dioxide 3 percent of anthropogenic emissions. That is expected to grow threefold by 2050. The same is expected of aviation and surface freight. 
Third free trade assumes the cost of specialisation to be negligible. But in fact it requires retraining and perhaps physical relocation. As specialisation shrinks the economic sectoral breadth of the country’s job choice narrows. This comprises a loss to human welfare. The invisible hand has narrowed the freedom to choose. 
Fourth although free-trade agreements have withdrawal clauses such that New Zealand can theoretically opt out if trade becomes disadvantageous this assumes that specialisation is reversible. But in fact the retraining and relocation of a furniture maker to enable that person to become a dairy sharemilker apart from being socially traumatic may be irreversible for social communal reasons. 
Fifth the specialisation resulting from free trade bequeaths a narrow range of sectoral products country by country making each country vulnerable to the vagaries of the global economy. Taking the argument to the extreme if New Zealand were to narrow its sectoral breadth—and that is what Mr Hayes and perhaps even Mr Groser are suggesting—to become a national dairy farm surrendering its capacity to maintain our other economic activities it would become a milk colony to the global economy. 
Finally much international trade is pursued in the name of choice to ludicrous lengths. When marginally different varieties of ice-cream biscuits and crackers pass east and west across the Tasman in the night such activity not only defies consumer rationality but also in an age of climate change defies basic common sense. 
There are both theoretical and very practical moral and environmental reasons not to pursue free-trade agreements in the current form that they manifest. For that reason the Green Party will oppose this bill. 
JACQUI DEAN (National—Waitaki) 
: 
 The Malaysia - New Zealand Free Trade Agreement represents significant opportunities for New Zealand and although it is my pleasure to follow on from the contribution of the Green member on green economics I have a slightly different view. That might be because I am a rural-based MP who represents the farming sector. 
Here is my take on this free-trade agreement. Dr Kennedy Graham gave us three to four points so I will give a couple. First New Zealand is a small country in a large world. Second New Zealand’s economy relies on exports. 
Dr Kennedy Graham 
: No it doesn’t. 
JACQUI DEAN 
: Yes it does. Third New Zealand’s primary produce makes up a huge proportion of total New Zealand exports. Fourth about half of those exports go into the ASEAN region. So for me at least it follows that free-trade agreements—and this one in particular since we are speaking to the Tariff (Malaysia Free Trade Agreement) Amendment Bill—represent significant opportunities for us in New Zealand. 
This agreement follows on from the free-trade agreements with China and Hong Kong. Those bills were debated and passed in the House last night. They represent a huge opportunity as well as do free-trade agreements with ASEAN countries for primary producers of New Zealand. 
Specifically speaking to New Zealand’s major goods that are exported to Malaysia I mention kiwifruit. It has been spoken of often in this debate but I believe that it bears mentioning again. Currently kiwifruit exports incur a 15 percent tariff from Malaysia. That tariff will go and it will become duty-free by 2012—only 2 years away. That is only one and a half growing seasons away. If that is not exciting for the kiwifruit growers of New Zealand then I do not know what is. I think it is exciting. Based on the latest figures New Zealand’s kiwifruit exports to Malaysia have grown by— 
Hon Member 
: Heaps. 
JACQUI DEAN 
: The member opposite just said the word “heaps”. That was the kind of simplistic term used by Labour members. However we can be slightly more precise. Members opposite may say that New Zealand’s kiwifruit exports to Malaysia have increased “heaps” but I think it bears repeating that it has increased by 173 percent to be more precise. That is very impressive. Meat wool dairy—that excludes liquid milk—fish and forestry retain their duty-free access as products and are bound in so that Malaysia cannot reapply tariffs on New Zealand agricultural exports. 
Speaking as a representative of a rural electorate where agriculture is incredibly important I can only repeat my congratulations to the Minister of Trade Tim Groser for his good work in negotiating this free-trade agreement with Malaysia which was not easy. Again it represents huge opportunities for New Zealand. We should be grateful to the Minister and grasp this opportunity with both hands. With those few words I commend this bill to the House. 
JACINDA ARDERN (Labour) 
: 
 It is my pleasure to have another opportunity to speak to this bill in its third reading. In my second reading speech I touched on not only the elements of what makes a successful free-trade agreement but also the context under which they are then for want of a better word operationalised. For me obviously the first starting point for a successful free-trade agreement is that it is well negotiated and that we work through some of the many and varied complications that these free-trade agreements present. We see in the detail of this one in particular some interesting issues arising out of margarine at some point. Also there were exceptions in the free-trade agreement around the trade of alcohol and there were cultural and religious issues. So these are very complex free-trade agreements that are being negotiated and their success revolves around the prowess of our negotiating teams. 
Secondly I also had an opportunity to touch briefly on the environment under which our exporters operate generally in New Zealand and the economic framework and monetary policy we have in New Zealand. It has a significant impact on them as exporters particularly the volatility of our exchange rate. I issue a challenge to the Government to consider that issue if we are truly going to have the export-led recovery it claims. That is the second point I wanted to raise in relation to free-trade agreements generally. 
Thirdly once a free-trade agreement has been agreed as Stuart Nash and others have pointed out in this debate it is not a matter of allowing that free-trade agreement to then sit on the table and just exist. There is a lot of investment that can go into making a free-trade agreement a success for our New Zealand exporters by supporting them and boosting our investment in New Zealand Trade and Enterprise to support them appropriately. We can also do that by making sure that we maintain our brand and trade on our brand appropriately off the back of these free-trade agreements. There are other elements that we may not be debating directly as a consequence but that are still incredibly relevant to our success as an exporting nation. 
Before I go on to talk about some of the economic benefits of this free-trade agreement I briefly want to touch on my disappointment at the way Government members in particular have responded to the challenges put up by the Green Party today. I think they were patronising at best and offensive at worst and we should always— 
Grant Robertson 
: It must’ve been Paul Quinn. 
JACINDA ARDERN 
: Strangely it was not Paul Quinn on this occasion. John Hayes really outdid himself in his contribution this time. The Greens raised some valid issues that are raised around trade almost every time we have this debate. When we are discussing free-trade agreements there are very valid issues around human rights. The first point I would like to make on that front is that I support a negotiated and agreed rule-based global system of trade. Having said that it is also very valid that we think about the implications for a broadening of free trade given our role as a nation that has very strong labour law and that is developed around the impact we can have on some of our trading partners who may not have entrenched in their systems some of the rules that operate in our own. 
I am talking about a level of corporate responsibility being exercised in the way we operate in some of those nations. If the large amount of time we spend talking about how to better negotiate the free movement of butter were spent talking about how we globalise some of the most essential core elements of human rights then we would be a long way down the track to making some vast improvements to labour laws for a starting point globally. So that is just a small point on that issue. 
I come back to the economic benefits of this particular free-trade agreement. I think it has already been mentioned that Malaysia is New Zealand’s eighth-largest export market and that it totalled about $1 billion in trade in 2008. It might be a useful comparison to point out that that is the same amount of debt the Government is adding to New Zealand in order to deliver its tax cuts in the last Budget. I think it probably points to the magnitude of both that export market and that level of debt. In fact we have actually wiped out the benefits of this free-trade agreement in one fell swoop. Between 2004 and 2008 exports to Malaysia grew significantly by 80 percent. It has been estimated that this agreement eliminates tariffs to 99.5 percent of New Zealand’s current exports by 2016. My understanding is that there are exemptions in that for alcohol which I touched on briefly. The percentage of estimated duties that New Zealand exporters would have to pay will be reduced by 86 percent by 2016 which is incredibly significant. It is useful to point out that when we compare that with New Zealand there is duty-free access to 72 percent of imports from Malaysia. I think it is worth making the point that a lot of these free-trade agreements in particular the one with China are free-trade agreements that are primarily beneficial to New Zealand in that regard. 
There was a lot of discussion over whether the China free-trade agreement should have been used as an opportunity for New Zealand instead to prove a point on our political position on democracy labour laws and human rights and whether we should proceed with a free-trade agreement. It is an interesting debate to have but at the end of the day the point was well made that when we have in the same way we have with Malaysia a situation where that country already has very open access to New Zealand markets we are in a sense cutting off our nose to spite our face. Having said that it does not mean that we do not still have a duty to ensure that those issues where they exist are put on the table when the opportunity arises in those diplomatic negotiations or leader to leader or however we choose. That is a trade-off that was made in that particular scenario. 
Finally there has been great discussion over the benefit of this agreement for Zespri in particular. It is an excellent example of where this agreement has been beneficial. I know that one of my colleagues is not as enthusiastic about kiwifruit as I am. I undertake to find out what benefits it will have for nectarines as I understand that that is Clayton Cosgrove’s fruit of preference. 
Grant Robertson 
: His passion. 
JACINDA ARDERN 
: There is some passion for the nectarine. 
Charles Chauvel 
: And feijoas. 
JACINDA ARDERN 
: He is also partial to the feijoa so I undertake to find out whether that will have a significant impact. 
New Zealand steel lines which currently face a 50 percent tariff will be tariff free. I would have thought that that would be the perfect excuse for the Government to perhaps reduce the enormous subsidies it is putting in place for such producers by the emissions trading scheme. I understand that my generation will be covering off those subsidies for the next 50 years. Given we are removing tariffs for that particular industry and it will make a cost saving perhaps we could balance what is currently an emissions trading scheme that has no incentives to reduce pollution built into it. That might be something that one of my other colleagues might like to pick up on in his or her contribution. Otherwise I reiterate that Labour supports this bill. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I am grateful for the opportunity to speak on the Tariff (Malaysia Free Trade Agreement) Amendment Bill. It is undoubtedly another great achievement for the National Government although I must note that the genesis of it has been over a long period of time. It would even date back to the days when the current Speaker the Hon Dr Lockwood Smith—not the Assistant Speaker who is currently in the Chair—was spending time up in that area. Often it takes time to achieve— 
Simon Bridges 
: Good things take time. 
Dr PAUL HUTCHISON 
: That is right. Undoubtedly not only will this agreement have the effect of expanding our vital trade with Malaysia and the remainder of the Asian area but also tariff reduction will be sped up at a far greater rate than was expected to occur under the initial agreement that established the ASEAN-Australia-New Zealand Free Trade Area. 
There is no doubt that that is wonderful for some of our most important innovative products. Kiwifruit is the classic example. We were absolutely dazzled by the innovation of Zespri the other night. It brought us its new varieties of kiwifruit: a particularly sweet one designed for the Asian market not to mention the pink one which would suit the Labour Opposition but it was a fine fruit. The real point of this— 
Grant Robertson 
: There’s a point? 
Dr PAUL HUTCHISON 
: There is a huge point and it is that kiwifruit is a little fruit that had very little significance anywhere in the world until New Zealand innovators grasped it by its skin and made it a highly valuable export product. Obviously this free-trade agreement is a living example of New Zealand’s benefiting from that approach. 
I was intrigued by the contribution of Dr Kennedy Graham. As always it was extremely thoughtful. I must say that we cannot agree with all the thoughts behind it but I look forward to having a look at the list of names of environmental economists that he read out. For me a simple-minded physician surgeon I often think of the words of Galbraith who pointed out that economics were common sense made complicated. Some of the thoughts of Kennedy Graham did seem to be a trifle complicated. 
It was interesting to hear the contribution from the Minister of Trade Tim Groser who has made a tremendous contribution not only to this agreement but also to many others. He mentioned that econometric models on the impact of tariff removal clearly are very problematic to rely on but he went on to say that free trade is a pragmatic way of advancing the welfare of New Zealanders and of the other country that is involved. It is extremely important to realise that this agreement is just one of the many free-trade agreements that New Zealand is entering into. The countries involved do not just include China; before too long they are likely to include India Indonesia and the USA which means almost half of the world’s population. There is no doubt that free trade is a pragmatic way of advancing the welfare of New Zealanders because we are an exporting nation and free trade is the pragmatic way by which we will have if we are successful in exporting first-class education first-class health services first-class welfare services etc. 
But it is also important that we respect the fundamental cultural differences between countries. I keep being reminded of those in the areas of tobacco yes and alcohol etc. but also on a day-to-day basis. I had a group of Malaysian teachers in my office this Monday afternoon up in Pukekohe and I asked them what they were doing in terms of climate change. They said that pervading their school system was a great and increasing consciousness of practical measures to improve the environment. So it is very refreshing that for one of the first times ever environmental protocols are built into this agreement. I think Kennedy Graham was slightly sceptical about that—and he has a furrowed brow on my saying that—but it is a very important start in terms of practical implementation. Hopefully that will be part of the agreement that has been achieved. 
This agreement is incredibly important for an exporting nation such as New Zealand. I was delighted to hear from Jacinda Ardern that steel tariffs will be coming off. That is vital for the area I represent Hunua and clearly it is vital for the future of New Zealand. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I am pleased to take a call in the third reading of the Tariff (Malaysia Free Trade Agreement) Amendment Bill. We have had an extremely interesting debate today. Although the matters we are debating in this urgency motion call into question the meaning of the word “urgency” the opportunity we have been offered here today has been useful. I congratulate members on all sides of the House for their contributions particularly Dr Kennedy Graham. There is a broad consensus between National and Labour on the issue of free trade although there are some differences in emphasis and nuance. The Green Party has a different view and I think it is good that Dr Graham has taken the opportunity to put those views out there. As I have said in earlier speeches I certainly share some of the concerns he raised about an absolutist approach to free trade. Free trade is not magic and it is not the panacea for all things. To my mind it is an important part of our economic well-being and it is part of a global economy in which people can get the benefits of their labours but it is not everything. It should not be put up on a pedestal as being in some way or other above and beyond rigorous analysis and that analysis is what Dr Graham brought to the debate today. 
As a number of other speakers have mentioned this is a high-quality bilateral free-trade agreement. It makes a number of positive moves in advance of the ASEAN free-trade agreement. I think it is good when we are working on free-trade agreements to build on what has been done earlier. The ASEAN free-trade agreement offers a lot of potential for New Zealand exporters but in a number of key areas this agreement brings in tariff reductions well in advance of that period of time. As with other agreements there are phased tariff reductions in the Malaysian free-trade agreement but 95 percent of those reductions will take place on the day that this agreement comes into force once the House has dealt with it. That is a very impressive achievement of which all of the officials not only those from the Ministry of Foreign Affairs and Trade but also those from other departments who have been involved can be justifiably proud. The final phase of bringing in tariff reductions will be by 2016 and that will get us to as was stated earlier 99.5 percent of the tariffs being removed. 
This is indeed an excellent agreement. It is one that offers huge scope for manufacturers exporters and service providers. Our trade with Malaysia has a large component to do with the export of goods but it also has a growing component around services and a historical connection to services particularly in the education area. There is a lot in this agreement that New Zealand can be proud of and a lot that we can also see an opportunity to exploit. As was stated in earlier readings the 0.5 percent of tariffs that remain are mainly as a result of discussions on cultural and religious matters particularly to do with alcohol. I restate the comment I made in the Committee stage that I believe the way the national interest analysis describes New Zealand’s enthusiasm for 100 percent of the tariffs to be removed is a little unfortunate. The recognition from both Mr Groser and Dr Graham in the earlier part of the debate was that we have to respect other countries where there are issues particularly those of a cultural or religious nature. I think that brings us back to my concern that New Zealand has from time to time in trade negotiations taken a very absolutist stance. That is not only potentially difficult in terms of our respect for other countries’ cultural and religious beliefs but also from a negotiating point of view it has sometimes put New Zealand in a less than advantageous position when we have pretty much given everything away while still trying to negotiate. 
The other aspect I want to reflect on again is the importance of the environment and labour cooperation agreements which are of a treaty status. They sit alongside the free-trade agreement and are to be considered together as being the engine room of the next stage of our relationship with Malaysia. In the past those agreements have sometimes been seen as just add-ons that were there to placate people who think we need free trade to be more than just free trade and that it should be seen in a wider economic context. I take comfort from the Minister’s statement that he understands that environment cooperation and labour cooperation are now an important part of our negotiations with other countries. There are a lot of opportunities for New Zealanders in the environmental area in terms of services and I think that the environmental cooperation agreement can be used for leverage for those service providers. We also need to learn from the Malaysians because all over Asia at the moment issues about sustainable development loom large for Governments and for people. We need to be there contributing our skill and technical knowledge learning from what has been developed in those countries and making sure that as part of our ongoing relationship with these countries we have strong environmental standards and strong labour standards. New Zealand can be proud of the fact that we have led the way in making those a part of free-trade agreements. 
I conclude by again congratulating the Minister of Trade and indeed previous Ministers Phil Goff and Jim Sutton on having brought us to the position where we are today. I hope that the Malaysia free-trade agreement will not only see an increase in wealth for New Zealanders through increased exports and services but also see a deeper stronger relationship between New Zealand and Malaysia across trade environment labour and other fronts. 
A party vote was called for on the question  
That the Tariff (Malaysia Free Trade Agreement) Amendment Bill be now read a third time. 
Ayes 110 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 3 (Flavell Sharples Turia); Progressive 1; United Future 1. 
Noes 11 
Green Party 9; Maori Party 2 (Harawira. Katene). 
Bill read a third time. 
Motor Vehicle Sales Amendment Bill 
Second Reading 
Debate resumed from 30 June 2009. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 I rise to speak in the second reading of the Motor Vehicles Sales Amendment Bill 2009. Labour is supporting this bill but it baffles me as to why it is being prioritised in urgency. In fact reflecting on that this morning while I was considering what I would say I decided that we should be calling the bill the “Motor Vehicle Sales Very Urgent Amendment Bill”. This raises issues about the priorities the Government is applying to this legislation. Government members seem to think that one of the most important things the House should be giving its attention to today is a bill to reduce the compliance costs for used car salespeople but as my colleague Chris Hipkins said in his speech on the first reading that sums up the National Government. This bill is so urgent that the last time I spoke on it during the first reading was 30 June 2009 so it is a very urgent bill that we must pass today—in urgency! 
Although this bill is important and very urgent and we do support it I ask whether it will address the primary concerns that are facing many New Zealanders right now and I ask why National is prioritising it when the House should be using its valuable time to consider measures to protect New Zealand jobs. Just this week about 175 meatworkers at Bernard Matthews Waipukurau plant are being laid off. That was reported in  
Hawke’s Bay Today 
 on 17 June. That follows Silver Fern Farms’ announcement last week that it plans to cut 174 jobs at two of its Christchurch meat plants. These job cuts reflect a worrying trend and have prompted— 
Peseta Sam Lotu-Iiga 
: I raise a point of order Mr Speaker. The bill we are actually talking to is the Motor Vehicle Sales Amendment Bill. I do not need to explain any more. I think we are getting away from that. 
The ASSISTANT SPEAKER (Eric Roy) 
: The member has raised a point of order of relevancy and a second reading is the tightest debate that we have. I ask the member to refer specifically to the bill. 
CLARE CURRAN 
: In addressing the Motor Vehicle Sales Amendment Bill I was referring to a worrying editorial in the  
Otago Daily Times 
. It described New Zealand’s meat industry as heading for a train crash and that was reported on 15 June. Our meat industry is very important along with our rail engineering industry and many other industries. Yet although we are dealing with the Motor Vehicle Sales Amendment Bill this Government prefers to sit on its hands and do nothing about that industry or many of the other industries where major job losses are occurring. Instead the Government seems to believe that the House’s time is better devoted to legislation on the sale of used cars rather than on the livelihoods and well-being of New Zealand workers and their families. Many of those people are not able or are struggling to afford to run a car let alone consider selling one and buying another one because of the rising costs they are facing and the cost of living particularly in relation to electricity and petrol costs as a result of the emissions trading scheme—costs that are being put on to ordinary consumers. Ordinary people are also facing rises in GST which will affect them and many of them are losing their jobs and struggling to find new jobs. 
While I was reflecting on the bill and its importance in this context I started to think about the used cars that I myself have owned over the years and about the number of cars that other members of the House have owned. I certainly know that our very well-respected Speaker Dr Lockwood Smith takes a great interest in cars. I reflected on my first car and thought I would share with the House a little story about it. It was a motor vehicle that was bought and sold on a number of occasions being constructed in 1948 and being a Morris 10. 
Grant Robertson 
: Very nice. 
CLARE CURRAN 
: It was a very nice car and it cost $125. It was bought I think in about 1978 or 1979. His name was Maurice. When I bought him he was in a paddock. Being a 1948 Morris 10 he had running boards and the old side indicators. 
Chris Tremain 
: Did it have an iPad? 
CLARE CURRAN 
: No but there was a crank that I had to turn sometimes when the engine would not work. With reference to the Motor Vehicle Sales Amendment Bill Maurice served me well for a number of years and was eventually replaced by a 1959 Volkswagen. When I reflect on that I think that a number of members of the House will have owned a number of vehicles during their lifetime and many of them would have been used cars and that would be very relevant to this bill. 
On a more serious note I point out that the Motor Vehicle Sales Act 2003 came into force in December 2003 and it replaced the Motor Vehicle Dealers Act 1975. The Motor Vehicle Sales Act made fundamental changes to the way in which sales of motor vehicles were regulated. This bill amends the Motor Vehicle Sales Act which was passed by the Labour Government in December 2003. The objective of the Motor Vehicle Sales Act 2003 was to promote and protect the interests of consumers in relation to their motor vehicles sales but sadly by that time Maurice had been sold and passed on and I think he ended up in a paddock with again plants growing through him. 
The aim of this bill is to reduce compliance costs close loopholes and improve the effective operation of the Motor Vehicle Sales Act. That Act sought to introduce a new registration regime for motor vehicle traders and make them more accountable to consumers but also to offer some degree of flexibility for participants in the motor vehicle industry. The policy underpinning the Act had several core elements to ensure accountability and accountability is a very very important word. It is something that as members of the House we all take very seriously. These elements included the requirement for those trading vehicles to be registered for more disclosure concerning used motor vehicles and for the provision for consumer remedy through the Motor Vehicle Disputes Tribunal. This bill increases the financial limit on the jurisdiction of the Motor Vehicle Disputes Tribunal from $50000 to $100000 and it is vitally important that consumers have avenues for recourse when it comes to trading. The bill also intends to reduce for traders the compliance costs that are currently associated with requiring an annual statutory declaration to be made as part of the registration renewal process. 
The Motor Vehicle Sales Amendment Bill was referred to the Commerce Committee on 30 Jun 2009 which happened to be the date almost a year ago on which I last spoke on the bill. Now it is very urgent and back in the House today during urgency for its second reading. The closing date for submissions was 20 August 2009 and the Commerce Committee reported back to the House on 14 December 2009. So that is about 6 months—it is 6 months and 10 days ago. We received and considered eight submissions from interested groups and individuals and we heard two submissions. 
I would like to thank my fellow select committee members for their work on this bill as well as the Ministry of Consumer Affairs for its advice. As a member of the Commerce Committee I have helped examine the Motor Vehicle Sales Amendment Bill and recommend that it pass with a number of amendments. It would also be interesting to hear today from other members about their own experiences with used cars. It would be good to hear any interesting stories they could share with the House. I have owned only one car that had a name and it would be interesting to know whether other members have named their cars. I commend the bill to the House. 
The ASSISTANT SPEAKER (Eric Roy) 
: Before I call the next member it might be helpful if members of the House acquainted themselves with the rules for debate on a second reading. They can be found in Speakers’ rulings 105/5 to 106/6. The rules may exclude members talking about the names of their cars. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 I will take just a short call on the Motor Vehicle Sales Amendment Bill. Before I refer to the bill I would like to diverge slightly. I understand that Australia has a new Prime Minister and I think it is a good time to acknowledge Julia Gillard and to wish her well. I thank Prime Minister Rudd for his efforts over the last 2½ years in governing our closest ally Australia. 
The Motor Vehicle Sales Amendment Bill promotes and protects consumers’ interests. It also creates an environment of confidence where consumers can choose and purchase vehicles. The previous speaker Clare Curran said this bill would be passed today under urgency but it will not. It will have its second reading today but it will not be passed—that is through all stages—under urgency. This bill is in line with the National Government’s efforts to reform regulations to cut red tape and to reduce compliance costs. Compliance costs are not just about form-filling for the sake of form-filling and they are not about recording for the sake of recording. They are not about paying administration fees and costs for the sake of paying fees and costs and creating more bureaucracy. One of this Government’s six policy drivers is to boost long-term economic growth. That is about creating jobs lifting incomes raising living standards and cutting regulation and red tape. This bill fits within our long-term strategic plan for this country. 
I will talk about a few parts of the bill that the previous speaker did not refer to. In fact I will address the bill because the previous speaker did not. It amends the process for traders renewing their annual registration and reducing compliance costs as we have already stated. It will make annual statutory declarations part of a registration renewal which I think is critical. It is about closing the loopholes around preventing the automatic banning of traders whose registration has lapsed. The bill is also about removing requirements for private sellers at car markets—that is not sellers in the market place but private sellers—who want to display consumer information notices. The bill also increases the financial limit at which cases may be heard by the Motor Vehicle Disputes Tribunal from $50000 to $100000. I think that that is in line with not just inflation but also the pricing of motor vehicles as time goes on. Finally it also allows the tribunal to award costs for non-attendance of either party to the dispute and it allows the decisions to be published. I think that that is a critical part of the bill. It provides incentives for justice to prevail and it also provides for the accountability and the transparency of those decisions so that the public may see how such decisions are made and how they are disclosed. 
We heard this bill in the Commerce Committee. Admittedly the prior speaker did refer to it being over a year since the first reading but we heard submissions and we worked through the bill in what I thought was a collaborative way—as we do in that select committee. 
Clare Curran 
: We certainly do. 
PESETA SAM LOTU-IIGA 
: We certainly do. It is a bill that is to be commended for its overall purpose. Thank you. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I am very pleased to stand in this moment of urgency to also make a contribution on the Motor Vehicle Sales Amendment Bill. I was not a member of the Commerce Committee but I was pleased that I was able to stand here with my colleagues who worked so cooperatively to get this bill through the committee. We are supporting the second reading of this bill. The bill really builds on and amends slightly the Motor Vehicle Sales Act 2003 which was enacted by the previous Labour Government. This bill was worked on under Labour. It has been heard in this House. It was brought to this House over a year ago and now in urgency we are hopefully going to progress it quickly. 
I will refer to a couple of points about the purpose of this bill which is obviously to promote the interests of consumers in relation to motor vehicle sales. We hear a lot about the trustworthiness or not of used-car salespeople. They are often likened to politicians—all that we can do I think is to raise their profile in the hope that perhaps our profile might be raised as well! The bill makes a number of changes. It helps to reduce compliance costs. It helps the people in the industry with those compliance costs but at the same time it ensures that consumers are guaranteed protection in the buying and selling of used cars. 
As I said before the bill amends not dramatically but slightly the principal Act of 2003 which was brought in under the previous Government. The policy of that Act had several core elements. There was a requirement for those who trade in motor vehicles to be registered; it required the disclosure of information concerning motor vehicles; and it provided for consumer redress through the Motor Vehicle Disputes Tribunal. In many ways it was very good legislation designed to try to tidy up matters and to give clarity and certainty to people who are involved in buying and selling motor vehicles particularly to consumers. However the fact that this bill has come back to the House now under urgency is somewhat perplexing. I would not have thought that we needed to work until midnight to try to progress this bill but nevertheless now that it is here and all sides of the House agree on it I guess the point is to get it through. 
A requirement of the 2003 Act was that it be reviewed after 2 years. The Ministry of Consumer Affairs completed that review and it was tabled in the House in 2006. The review considered how the registration process the banning provisions the information disclosure process and the Motor Vehicle Disputes Tribunal were operating. This amendment bill flows out of that review of the Act’s operation. The review made a number of recommendations. I will not go through them all but I think that the first recommendation is important. Clause 9 sets out an amendment to section 39(2) of the Act to remove the requirement for motor vehicle traders to make an annual statutory declaration of their trading details where those have not changed. That is replaced by a requirement to confirm with each annual renewal that details have not changed. In many ways it is a very simple change but it lessens the requirements on motor vehicle traders to jump through hoops when that is largely unnecessary. The Labour Party just like any other party certainly supports any moves that will enable business in New Zealand to progress more speedily and with the minimum amount of obstacles in its way so it supports those moves. 
One of the technical recommendations in the review was to amend the cc rating of motorcycles. It recommended that paragraph (b)(iii) of the definition of “motor vehicle” in section 6 of the Act be amended to exclude motorcycles up to 50cc not 60cc as it is currently worded in order to reflect the ratings used in other relevant legislation. That brings the Act more or less into line with other legislation. It is more or less a technical change and again it perplexes me that we are here under urgency to ensure that those sorts of changes are made. Why is moving from 60cc to 50cc in a definition considered to be so urgent that we have to put this bill through under urgency? 
The review recommended extending the inspection powers to the Commerce Commission. It recommended that consideration be given to amending the inspection powers set out in sections 124 to 129 of the principal Act to also include the Commerce Commission to allow appropriate enforcement of the information provisions of the Act and it also explored including such inspection powers within the Fair Trading Act 1986 as well. I think this provision in a sense extends the comfort zone and the security that consumers have in the buying and selling of used cars and motor vehicles. 
In that line I say my first car by the way was called Molly. It was a 1958 Morris Minor van. I currently own a 1957 MGA which actually does not have a name. 
Clare Curran 
: So you’ve gone backwards! 
DAVID SHEARER 
: I have gone backwards rather than moving forwards. I have been unsuccessfully trying to restore my MGA for the last 12 or 15 years. It is a hole that I pour money into according to my wife. But I am diverging from this debate. 
I will get back to recommendation No. 8 of the review which was about the ability to award costs to any party for non-attendance at a Motor Vehicle Disputes Tribunal hearing. Clause 23 of the bill amends clause 14 of schedule 1 of the Act to allow costs to be awarded against any party to a claim for non-attendance at a hearing for no good cause. 
Once again I say the bill tidies up a lot of the provisions of the legislation enacted in 2003. The review of that Act was done in 2006 so it has been sitting there now for 4 years and we have wanted to address its recommendations. It is good that that is being done now but I repeat the point that I have made before about this bill being debated in urgency. My belief is that urgency should be used for critical legislation that needs to go through in a particular time and that will have an important bearing on New Zealand. I do not really think that this bill meets those particular criteria. 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. It is interesting that New Zealanders seem to have an extraordinarily close and intense relationship with their motor cars. We have already heard evidence of that. I am tempted myself to start telling stories of cars owned and of those I would have liked to own or wish I had not owned at different times. 
Clare Curran 
: Did you have one with a name? 
DAVID CLENDON 
: Oh yes! It is true that we do have a particularly emotional attachment to those things albeit they are only steel rubber and glass. Nevertheless we still engage with them at a level different from the level at which we engage with other commodities and home appliances which is essentially what they can be reduced to. For that reason alone it is important that we have adequate consumer protection in relation to the buying and selling of motor cars and this Motor Vehicle Sales Amendment Bill takes us some steps closer towards that. Cars are named typically as being the second most expensive item that people will purchase after a home. In the age of $10000 television sets perhaps that is not quite as true as it once was nevertheless they are a significant investment. For that reason we need to endeavour to make sure that people are reasonably well protected when they go out to purchase those quite expensive items. 
The car business has historically attracted its share of rogues and perhaps even more than its share of rogues. It just seems to be one of those industries—again perhaps because of the emotional connection that people feel with cars. People get involved in the buying and selling of cars for all sorts of reasons not all of them beneficial. I think the amendment that proposes—that insists in fact—that new management coming into a company must be named in order that people have a clear sense of whom they are actually dealing with is good. It is very difficult to mount an argument that cars are actually an asset; in fact they are a serious liability for most people. Business people are increasingly recognising that through choosing to lease rather than purchase their vehicles. Nevertheless for most people a car is still a major asset. 
I think it is valuable and important that an amendment in this bill proposes some attention to the Internet purchases of vehicles. If it is possible to enter into a contract to purchase a car online then there should be sufficient provision for accurate and complete identification and so on. I did a quick check a couple of weeks ago when it seemed that this bill might be debated in the House and I discovered that on TradeMe something like 32000 vehicles were for sale of which 25000 were identified as being in private sales. About 7000 vehicles then on a given day are available for sale from dealers. Clearly the Internet is a significant medium these days for the purchase of vehicles so it is important that this legislation on motor vehicle purchasing keeps up with the reality that more and more people are going to a screen and a mouse in order to purchase vehicles which is a mixed blessing in itself. 
I have said that many of us have an emotional connection with cars and I am certainly one of those. My first car was also of 1948 vintage. I recently owned a car for 9 years but that ownership ended when a runaway truck destroyed it. I have gone back and bought a 1985 vehicle which was made in New Zealand I am pleased to say. I suspect that it will give many years of service. I look forward to the day when the emotional connection with cars will be reduced because we will have options in the form of a fast efficient reliable modern public transport system. I think our attachment to cars is very much because historically they have given us a mobility that we have not been able to achieve by other means given the absence of investment over 50 or more years in modern efficient public transport. At that point I will end my remarks. Kia ora koutou. 
Debate interrupted. 
Sitting suspended from 1 p.m. to 2 p.m. 
Points of Order 
Holidays (Football World Cup) Amendment Bill—Leave to Debate 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I seek leave for the House to set aside 1 hour before it rises today to debate and if it sees fit pass all stages of the Holidays (Football World Cup) Amendment Bill. 
Mr SPEAKER 
: Is there any objection to that course of action? There is objection. 
Questions to Ministers 
Economy—Reports 
1. 
KATRINA SHANKS (National) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Statistics New Zealand today reported that real GDP grew by 0.6 percent in the March quarter. The economy has now grown by 1.9 percent over the past four quarters following the contraction that began at the start of 2008. The continuing recovery which is broadly aligned with that of our trading partners is good news because it helps to create new jobs and raise New Zealand’s living standards. However there is significant work to do. The economy has recovered only about half of the fall that it incurred during 2008 and growth is mixed across the sectors. That is why the Government will continue with its policy programme. 
Katrina Shanks 
: What challenges does the economy face? 
Hon BILL ENGLISH 
: We need to overcome the effects of the recession and of the mismanagement of the previous Government which means that we need to rebalance the economy so that it will save more produce more worthwhile output and rely less on consumption and debt. We also need to reduce New Zealand’s vulnerability to overseas lenders. As the United Kingdom Budget showed if these problems are allowed to persist then major and painful changes will be needed later. There are encouraging signs that the recovery is headed in the right direction and we welcome those. 
Hon David Cunliffe 
: Has the sharp growth in overseas demand for raw logs seen in today’s statistics been matched by the closure of timber mills loss of jobs and decline of the domestic industry to such an extent that the Timber Industry Federation called it a “rape and run industry”; if so when will he take action to ensure that our economy is one that produces added value and secures jobs for New Zealanders? 
Hon BILL ENGLISH 
: The forest products industry is cyclical; sometimes log prices are up which makes it harder for domestic sawmills. Actually for quite a number of years log prices have been down which has made it easier for domestic sawmills. The good news is that the growth across the economy is coming from the right places. Government consumption is no longer growing rapidly. Export volume growth is the strongest that it has been in 3 years while overall tradable sector output has shown its first signs of sustained growth since 2004. 
Katrina Shanks 
: How is the Government tackling our economic challenges? 
Grant Robertson 
: Not that well. 
Hon BILL ENGLISH 
: Yes that is right—very well. The Government needs to use every tool at its disposal. In the Budget we made changes to the taxation system to try to assist the rebalancing of the economy. I know that the Government is continuing to focus on the careful use of public money to ensure that we do not take any more than we need to from the incoming-earning side of the economy. 
Clare Curran 
: Was he surprised by the drop in the communications sector or was it expected given the continual delays in the Government’s broadband plan which has failed to lay an inch of broadband fibre in 18 months creating a crisis of confidence in the industry? 
Hon BILL ENGLISH 
: I do not make guesses about quarterly growth rates let alone individual components of them because they do fluctuate. The broadband plan as the member will know is quite complex and I am pleased to say it is on track on target and going very well. We certainly hope that we will lay ultra-fast fibre considerably quicker than for instance the Australians. 
Katrina Shanks 
: How does growth in the past year compare with previous growth in the economy? 
Hon BILL ENGLISH 
: There is little doubt that the economy entered a long-term slow-down over the past 5 years well before the world was in recession—that is New Zealand went into recession before the world did. For example per capita GDP declined between 2005 and 2008 even when the rest of the world was doing well. This is primarily because of the economic mismanagement of the previous Government. Even today average per capita income remains at only 2004 levels. 
Hon David Cunliffe 
: When he refers to “the economic mismanagement of the previous Government” does he include the zero net debt achieved under Labour and does he include the world record - low unemployment rate achieved under Labour; and would he care to speculate on whether today’s results would have been achieved had we taken his advice when he was in Opposition and given unaffordable tax cuts to the wealthy in 2005 and 2006 thereby making debt worse? 
Hon BILL ENGLISH 
: If the previous Government had taken any amount of sensible advice it would have done a lot better than it did. For instance it would not have blown out Government spending from 2004 onwards it would not have helped to foster a property boom it would not have put taxes up and now we would have a faster-growing economy. 
Privacy—Minister’s Statement 
2. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Minister for Social Development and Employment 
: Does she stand by her statement that “people do have a right to privacy but they have in my opinion broken privacy deciding to go out there put their names and faces to it as well in photos in the paper”; if not why not? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 I stand by all my actions and statements on this matter to date. 
Hon Annette King 
: Does she agree with the Privacy Commissioner’s findings that there is sufficient substance in the complaint against her for releasing information about a sole parent for the matter to be referred to the Director of Human Rights Proceedings; if so why? 
Hon PAULA BENNETT 
: Whether I agree is irrelevant. That is what the Privacy Commissioner has decided to do that is the process we are now in and it is one that I will respect. 
Hon Annette King 
: What has been the cost to the taxpayer to date for a 1-year long investigation by the Privacy Commissioner into her alleged breach of privacy and what further cost will be incurred in legal fees Crown Law advice officials’ time and possibly a payout if this matter continues unresolved; and will it be more than the $15000 reportedly sought in compensation several months ago? 
Hon PAULA BENNETT 
: I am not aware of or responsible for any costs incurred by the Privacy Commissioner. 
Hon Annette King 
: I raise a point of order Mr Speaker. I was not asking what the Privacy Commissioner’s costs were; I was asking what costs she has incurred. 
Mr SPEAKER 
: I do not believe that the member’s question was quite as precise as that. I believe that the Minister gave a perfectly fair answer to the question asked. 
Hon Annette King 
: Why does she not immediately apologise for her breach of the Privacy Act over a year ago and undertake not to commit such a breach in future if only to minimise the mounting cost to taxpayers who will have to continue to pick up her bill for this matter which is now going before the Director of Human Rights Proceedings? 
Hon PAULA BENNETT 
: I stand by all my actions to date. 
Hon Annette King 
: Does she regret whipping up to quote her a “horrific debate that’s been very personalised and ugly” against beneficiaries who dared to speak out against her cuts to the training incentive allowance which would have helped to get them back into work; and why not stop the ugliness now by apologising moving on and helping those women step up? 
Hon PAULA BENNETT 
: It seems to me that the Opposition does not want to have a debate about welfare. I would turn round and say that actually welfare is not a four-letter word; it is something that we do need to address in this country it is a debate that we will have and I will be proud to lead it. 
Hon Annette King 
: I raise a point of order Mr Speaker. I did not ask about what she thinks should happen in welfare reform. I quoted what she had said about a “horrific debate that’s been very personalised and ugly” and I asked her what she would do to get back to work the people whose training incentive allowance was cut by her. 
Mr SPEAKER 
: The—[ 
Interruption 
] There will not be debate while I am considering this matter. I think in fairness the question asked if I recollect correctly whether the Minister regrets something that led to something else. The Minister did not really say anything that related to the question. She instead said what the Government’s priorities were around welfare. I think it would be helpful if the Minister were to try to answer the question. I realise there is no precise answer but if the Minister could attempt to answer the question. 
Hon PAULA BENNETT 
: Certainly Mr Speaker. The member asked about the training incentive allowance and she made allegations that it had been cut. It was not cut. What happened was we addressed that funding to the more than 50 percent of people who are on the domestic purposes benefit who have such poor literacy and numeracy skills that they do not even have National Certificate of Educational Achievement level 2. That is where we are addressing that money—to where it is absolutely needed the most. 
Emissions Trading Scheme—Effectiveness in Reducing Climate Change 
3. 
CHRIS AUCHINVOLE (National—West Coast - Tasman) 
 to the  
Minister for Climate Change Issues 
: What reports has he received on support for emissions trading schemes as an effective measure to reduce climate change? 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 Emissions trading schemes are widely accepted as the most efficient way of reducing emissions with schemes now operating in 29 of the 38 developed Kyoto Protocol countries. As well many states in the US and Canada and parts of Asia have adopted such schemes. 
Chris Auchinvole 
: Has the Minister received any reports of parties reversing their position on an emissions trading scheme? 
Hon Dr NICK SMITH 
: Yes I have. Radio New Zealand reported yesterday that Labour is reconsidering its climate change policy and whether it would have a carbon tax instead of an emissions trading scheme. I note that such policy U-turns have not been particularly helpful across the Tasman. 
Chris Auchinvole 
: What would be the impact of switching from an emissions trading scheme to a carbon tax? 
Hon Dr NICK SMITH 
: Such a switch would be hugely destabilising. New Zealand has struggled for over a decade to develop a credible and consistent policy on climate change that puts a price on carbon emissions and it has switched twice already between the options of a carbon tax and an emissions trading scheme. My greatest worry is in relation to the forestry sector which Labour introduced into the emissions trading scheme in 2008 under a scheme that requires stability over the harvest cycle of trees. It is hugely damaging to now contemplate scrapping that scheme which would potentially risk deforestation and a lack of confidence in that sector. I also note that it would be bad news for consumers in that the carbon tax policies of the previous Labour Government would cost a lot more in terms of increased power and fuel costs. 
Charles Chauvel 
: Is the Minister aware of the analysis contained in  
The Carbon Challenge 
 by Dr Geoff Bertram and Mr Simon Terry of the Sustainability Council published yesterday and in particular its conclusions that his emissions trading scheme is “technically obsolete” and “beyond rescue” as a sustainable framework for tackling climate change and that it “completely fails as a mechanism to make today’s polluters meet today’s emissions bill”? 
Hon Gerry Brownlee 
: I raise a point of order Mr Speaker. Can we take it that the flashing light on Mr Chauvel’s lapel is in fact a distress signal and do we need to get someone in here to help him? 
Mr SPEAKER 
: Members of the House will know that it is to do with support for the St John Ambulance. One of the member’s own colleagues was wearing one yesterday. I invite Charles Chauvel to ask his question again. 
Charles Chauvel 
: Thank you Mr Speaker. I am delighted to support St John Ambulance. Is the Minister aware of the analysis contained in  
The Carbon Challenge 
 by Dr Geoff Bertram and Mr Simon Terry of the Sustainability Council published yesterday and in particular its conclusions that his emissions trading scheme is “technically obsolete” and “beyond rescue” as a substantive framework for tackling climate change and that it “completely fails as a mechanism to make today’s polluters meet today’s emissions bill”? 
Hon Dr NICK SMITH 
: No I do not. We have carefully balanced the need for New Zealand to make progress on curbing emissions growth with the need to ensure that the economy grows as the Minister of Finance outlined with the latest GDP figures. It is a balanced policy approach and I fear for both climate change policy and the economy with the switch that Labour has made in now favouring a carbon tax. It is an extraordinary flip-flop. 
John Boscawen 
: Does the Minister agree with the conclusions in Geoff Bertram and Simon Terry’s book  
The Carbon Challenge 
 that the New Zealand electricity industry will make some $566 million of windfall profits from New Zealand’s emissions trading scheme over the next 2½ years; if so does he think that supporters of New Zealand’s emission trading scheme remotely understand the massive wealth transfer and the massive windfall profits to the New Zealand electricity industry? 
Hon Dr NICK SMITH 
: No I do not. Effectively Mr Terry and Dr Bertram want the Government to take a far more aggressive policy and a far tougher approach to climate change. Our Government’s policy is one that provides a careful balance—that is that we make progress in curbing emissions that we do our fair share on climate change but also that we need to be cautious of imposing excessive costs on New Zealand businesses which would simply relocate offshore to do their emissions. That would cost New Zealanders jobs and do nothing for climate change. 
Charles Chauvel 
: Is the Minister aware that the authors of  
The Carbon Challenge 
 conclude that most of the future $5.7 billion bill arising from New Zealand exceeding its Kyoto Protocol target will fall on future taxpayers making it “a massive intergenerational transfer of liability” and that because forestry credits must be paid back when trees are harvested in 2020 or afterwards using these credits to pay the Kyoto bill is like “putting it ‘on the plastic’ for the next generation to pay.”? 
Hon Dr NICK SMITH 
: I note that the Government’s policy around forestry and the emissions trading scheme is unchanged from the legislation that was put through Parliament by David Parker. What I find extraordinary is that that was Labour’s policy only 18 months ago. Charles Chauvel has now thrown that to the wall and said Labour’s view now is that there should be a carbon tax. Where does Labour stand on this critical issue? Nobody knows that now. 
Ministers—Rules for Declaration of Pecuniary Interests 
4. 
Hon TREVOR MALLARD (Labour—Hutt South) 
 to the  
Prime Minister 
: When he said “there’s always clarification of the rules and they’re not always straightforward” in relation to the Hon Christopher Finlayson on four occasions failing to declare a directorship he held what did he find “not always straightforward” about the requirement to declare “the name of each company of which the member is a director”? 
Hon BILL ENGLISH (Deputy Prime Minister) 
 on behalf of the  
Prime Minister 
: The member was quoting selectively at that point. In the stand-up with journalists the Prime Minister was talking about the pecuniary interests register in general not Mr Finlayson. 
Hon Trevor Mallard 
: Has he discussed this issue with the Attorney-General? 
Hon BILL ENGLISH 
: I cannot answer as to whether the Prime Minister has discussed it with the Attorney-General. 
Hon Trevor Mallard 
: Has the Prime Minister seen the legal advice on this matter referred to by Chris Finlayson? 
Hon BILL ENGLISH 
: Again I cannot answer that question but I think I can say to the member that we need to keep these things in perspective. The Register of Pecuniary Interests of Members of Parliament is available to members to assist them to modify their register if and when information comes to hand or legal advice changes. As members know the requirements around the register have evolved over recent years. 
Hon Trevor Mallard 
: Did he seek Cabinet Office advice in relation to the opinion from the lawyer for Mr Finlayson’s friend’s trust on the meaning of whether the requirement that “the name of each company of which the member is a director” means that “the name of each company of which the member is a director” must be so declared; if so what was that advice? 
Hon BILL ENGLISH 
: Again I cannot give the member that answer. What I can say is that I am sure the member shares my view that clarification of the rules is often required. For instance when in the previous Parliament a member did not declare on the register a $100000 gift the member opposite was part of a party that voted against a censure motion when clearly the register’s requirements had not been met. 
Hon Trevor Mallard 
: When he said on 17 November 2008 “I expect high standards of my Ministers” did that include the expectation that his Attorney-General would file false returns and that the Prime Minister’s response would be “I don’t know because I don’t ask.”? 
Hon BILL ENGLISH 
: No; as the member knows the Prime Minister has high standards. He might be a bit confused by that member’s standards. The member seems to regard this as a significant breach of the register that requires censure but when he was given the opportunity to vote for a censure motion for a former member who did not declare a $100000 gift he decided to vote against that censure motion so I am not sure what the member’s standards are. 
Hon Trevor Mallard 
: Is it the Prime Minister’s view that the Attorney-General’s filing of four false declarations is more or less serious than the member for Clutha-Southland declaring to three Speakers that his primary place of residence is Dipton? 
Hon BILL ENGLISH 
: It is the Prime Minister’s view that he expects a high standard and he expects members to comply with the requirements of Parliament and that is what his members do. 
Community Max—Expansion 
5. 
HEKIA PARATA (National) 
 to the  
Minister for Social Development and Employment 
: What announcements has the Government made on Community Max? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 Minister Turia and I have added an extra 1500 Community Max places taking the total number to over 5000. This is an additional $17.4 million in Government investment. These additional places will be available in the Bay of Plenty East Coast Northland and Waikato areas. 
Hekia Parata 
: Why have these areas been selected to extend the Community Max programme? 
Hon PAULA BENNETT 
: These regions have been selected as they have high youth unemployment rates under the household labour force survey some of the highest numbers of young people receiving the unemployment benefit and high levels of Maori unemployment. They are more rural areas as well which find it hard to access Job Ops as there are fewer employers in those areas. We think Community Max will make a big difference. 
Hekia Parata 
: Can the Minister give examples where Community Max is making a real difference? 
Hon PAULA BENNETT 
: I have seen many outstanding Community Max programmes but recently I visited Motuti Marae in the far north in the Hokianga where I met a group of young people who were doing everything from bee-keeping to fashion design carving real leadership programmes and business skills with tourism ventures. They were absolutely awesome. They were making a real difference and they were looking at sustainable employment for them in a very rural area. 
Rahui Katene 
: What are the likely impacts of the announcement today about the extension of Community Max on addressing the high level of Maori unemployment? 
Hon PAULA BENNETT 
: More than 50 percent of the uptake of Community Max has been by Maori in really rural areas. I have just described one programme but many groups—marae-based as well—have picked up these programmes. They are giving real skills to their young people. They are helping them to get drivers’ licences and to learn skills that they will take into the workforce with them. That is leading to more sustainability in those rural areas as well. I think Community Max will make a big difference we are already seeing it make a difference and it is a delight to be able to put extra numbers into those areas. 
Jacinda Ardern 
: What is the Minister doing to find out what has happened to the 39 percent of youth who have completed the Community Max programme but who are not in work not in training and are not receiving any form of Government support? 
Hon PAULA BENNETT 
: People have gone to a range of places. It is true that some of those young people have gone overseas. Some of them have stayed on their marae. They are working they have not gone on a benefit and they are doing more volunteer work. A number of them are doing different things. What I do know is that 80 percent of those who have completed their Community Max programme have not gone back on a benefit. That is an outstanding result. 
Rahui Katene 
: Have any evaluations been received about the impact of Community Max and what have been the key findings? 
Hon PAULA BENNETT 
: At the end of May 1466 people had completed the programme—149 of them in March nearly 500 in April and just over 800 in May. Of those people 72 percent completed the full 6 months. Of those who had completed the full 6 months 81 percent are not currently receiving a benefit which means that they have not gone back on to a benefit and have had real results. So at this time the programme is certainly showing something positive. We want to see how it sort of trickles out over time as well. 
Jacinda Ardern 
: Can the Minister tell the House to the nearest thousand how many young people are not receiving Government support but also are not in education training or employment? 
Hon PAULA BENNETT 
: That number moves around daily as one can imagine because young people are in and out and doing a whole lot of different activities. We have been doing an analysis across departments because as the member might well understand it affects education it affects my portfolio and it certainly affects tertiary education as well. Some of our preliminary results show that around 7000 of the younger ones—16 and 17-year-olds—are not touching any sort of programme or training. That is a key focus for this Government particularly around Youth Guarantee. 
Foreshore and Seabed Act Review—Northland Coastline in Customary Title 
6. 
Hon JIM ANDERTON (Leader—Progressive) 
 to the  
Attorney-General 
: Is it Government policy to grant customary title in the entire Northland coast from Mangonui up the cape and down to the Hokianga Heads? 
Hon CHRISTOPHER FINLAYSON (Attorney-General) 
: 
 No. It is the Government’s policy to determine each application for customary title on its merits assessing the facts of each case and applying the tests that will be set out in the statute. 
Hon Jim Anderton 
: Has the Minister seen Professor Margaret Mutu’s statement in the  
New Zealand Herald  
today with regard to the coastline pictured in the  
New Zealand Herald 
 that “we own it”; if so what has he done to show the rest of New Zealand that we all own it? 
Hon CHRISTOPHER FINLAYSON 
: No I have not read the article. 
Hon Jim Anderton 
: Will the Northland claimants be making their claim for title to the courts or to the Government? 
Hon CHRISTOPHER FINLAYSON 
: It is a bit early for that. 
David Garrett 
: Would the granting of customary title over all or part of Ninety Mile Beach enable the Maori owners to prevent four-wheel driving and tour buses on what would then be Maori-owned foreshore and seabed? 
Hon CHRISTOPHER FINLAYSON 
: I would not have thought so. 
Hon Jim Anderton 
: If the Minister cannot tell the House at this point in time who will be making the decision on any claim to ownership how can he rule out in any way at all that the claimant might get title to the whole coastline? 
Hon CHRISTOPHER FINLAYSON 
: Well no one will be making any claim as at this time because the law has not been passed yet. When the law is passed there will be an opportunity for interested parties—be they iwi or in some cases hapu—to enter into negotiations with the Crown or to exercise the court option that was taken away from them by the Government of which that member was a senior Cabinet Minister in 2004. 
Hon Jim Anderton 
: As the Minister is blaming the previous Government for this how will he resolve the new Treaty agreements that will be created when people form an expectation that they own the coastline as stated in the  
New Zealand Herald  
today because he refuses to rule out their title to it while he is reassuring other New Zealanders that “title” in this case does not mean “title”? 
Hon CHRISTOPHER FINLAYSON 
: In my previous answer I did not blame the previous Government. I set out the facts of the situation. The facts are that when the law has been passed we can then deal with negotiations and court applications if there are any and they can be determined on their facts. 
Hon Jim Anderton 
: I seek leave to table the definition of title in the  
Oxford English Dictionary 
 which states that it is a right or claim to the ownership of property. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? [ 
Interruption 
] Did I hear objection? There is no objection. 
Document by leave laid on the Table of the House. 
State Highways—Safety Ratings 
7. 
NIKKI KAYE (National—Auckland Central) 
 to the  
Minister of Transport 
: What reports has he received on the safety ratings of New Zealand’s State highways? 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 I am pleased that this morning I had the opportunity to release in conjunction with the Automobile Association the KiwiRAP star rating report. For the first time New Zealanders have access to a comprehensive star-based rating system that shows the relative levels of safety built into our State highways. The report provides a regional breakdown of the prevalence of key safety features found on our State highways and shows that roughly 68 percent of vehicle kilometres travelled are on 3 or 4-star roads with about 33 percent on 2-star highways. 
Nikki Kaye 
: What is the Government doing to improve the safety of State highways? 
Hon STEVEN JOYCE 
: The Government is taking a number of steps to improve the safety of State highways including the major step of progressing the work on the roads of national significance. Upgrading this roading infrastructure will include retrofitting safety improvements and installing separate carriageways through our busiest high-volume rural highways. These seven roads carry high levels of traffic including freight and it is important that they are safe to use. Upgrading them will not only raise their star rating but help save lives and reduce injuries. 
Nikki Kaye 
: How can drivers use this information to protect themselves on the road? 
Hon STEVEN JOYCE 
: Improving the safety of New Zealand’s roads and encouraging safer driving are key parts of the Government’s Safer Journeys strategy. Drivers should use the ratings to educate themselves about the relative safety of the roads they drive on and adjust their driving behaviour accordingly. We all need to take responsibility by being aware of conditions and adjusting our driving and our speeds. KiwiRAP can help drivers make the right choices to stay safe on our roads. 
Housing—Access to Appropriate and Affordable Housing 
8. 
MOANA MACKEY (Labour) 
 to the  
Minister of Housing 
: Does he believe that all New Zealanders should have access to appropriate and affordable housing? 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 As I have stated repeatedly in the House this Government is committed to assisting New Zealanders who are most in need. 
Moana Mackey 
: Is it now Government policy that if someone legally challenges a Housing New Zealand Corporation tenancy termination for antisocial behaviour all maintenance work on State houses in that community will stop until the legal action is resolved? 
Hon PHIL HEATLEY 
: No. 
Moana Mackey 
: If the answer to my first question is no why is there one rule for the Pomare community and another for every other community? 
Hon PHIL HEATLEY 
: I have made no secret of the fact that when we came into Government we were faced with an Auditor-General’s report that said that $2 billion worth of maintenance and upgrades needed to be done to State houses and that they were in a state of serious disrepair. Unfortunately Pomare not only has the problem of houses in a state of serious disrepair; it had an antisocial behaviour problem because the previous Government had tolerated antisocial behaviour in those houses—serious antisocial behaviour by gangs. We will not tolerate it. 
Moana Mackey 
: I raise a point of order Mr Speaker. I deliberately made my question very specific. I asked why he was applying one rule to Pomare and one rule to every single other community and he did not address that question. 
Mr SPEAKER 
: I listened very carefully because the member’s question was commendably to the point but I confess that I believe that the Minister answered in terms of the difference: the difference was he argues—I believe—that in Pomare an extensive degree of refurbishment is required. I took it that that was the difference he was telling the House about. 
Moana Mackey 
: Has everyone on the waiting list turned down an offer from the Housing New Zealand Corporation to live in one of the Pomare properties; if not where did he get his information when he said on TV on Tuesday night that Pomare’s bad reputation means that no one wants to live in these properties? 
Hon PHIL HEATLEY 
: As the member opposite has pointed out there are 10000 people on the waiting list and we have not offered them all a place in Pomare. 
Mr SPEAKER 
: I gave the Minister the benefit of the doubt on the previous answer to a very straightforward question and I believe that this question was straightforward too. A little more helpful answer would I think have been helpful. I invite Moana Mackey to ask her question again. 
Moana Mackey 
: I will help the Minister by asking it again. Has everyone on the waiting list in the Wellington region turned down an offer from the Housing New Zealand Corporation to live in one of the Pomare properties; if not where did he get his information when he said on TV on Tuesday night that Pomare’s bad reputation means that no one wants to live in these properties? 
Hon PHIL HEATLEY 
: It is my understanding that houses in Pomare have been offered 84 times to various tenants and have been turned down 84 times. That tells us that it has a name for serious antisocial behaviour. 
Todd McClay 
: What reports has the Minister seen—[ 
Interruption 
] 
Mr SPEAKER 
: I apologise to the honourable member. I say to on this occasion the Labour front bench that the level of interjection means I cannot hear. The member may not be particularly happy with an answer but he should not just yell endlessly. There will be a further chance to question the Minister if he is not happy with the answer. 
Todd McClay 
: What reports has the Minister seen in the media today about community redevelopment projects? 
Hon PHIL HEATLEY 
: I have here the front page of the  
North Shore Times 
 which features an article “Happy in New Zealand homes”. It says that my announcement last week drew cheers from tenants who attended the official opening of 44 new units in Northcote. The quote is Mr Heatley did it “amidst cheers from residents”. 
Hon Trevor Mallard 
: Is the Minister prepared to have the Housing New Zealand Corporation offer houses in Pomare that are currently vacant to all persons currently on the Lower Hutt or Upper Hutt waiting lists? 
Hon PHIL HEATLEY 
: Eleven of the houses in the area that the member mentions are available for letting. Not everyone in the area who is on the waiting list wants the houses because they do not have the right number of bedrooms. But they are available for letting. My understanding is that houses have been offered for letting 84 times and have been declined 84 times. That is because no one wants to live in the neighbourhood generally speaking because for the last 9 years no one did anything about the serious antisocial behaviour there. 
Uranium—Shipment Through New Zealand Ports and Exclusive Economic Zone 
9. 
GARETH HUGHES (Green) 
 to the  
Minister for the Environment 
: When did the Government become aware that radioactive uranium ore was being shipped through New Zealand ports and the exclusive economic zone for later use in nuclear reactors? 
Hon Dr NICK SMITH (Minister for the Environment) 
: 
 I am advised that Government officials have been aware since the 1970s of the trans-shipment of yellowcake uranium ore through New Zealand ports. I was advised in March this year that the Environmental Risk Management Authority had issued a permit for trans-shipping yellowcake through the Ports of Auckland. I note that the yellowcake poses little health or environmental risk and that the Australian Government ensures that its ore is used only for peaceful purposes—that is non-military use. 
Gareth Hughes 
: Can the Minister confirm that this is a radioactive nuclear material? 
Hon Dr NICK SMITH 
: Yes I can. I note though that uranium is naturally occurring. It is a very weak radioactive element which is widely distributed throughout the Earth’s crust in rocks soils stream sediments rivers and oceans. I am also advised by the National Radiation Laboratory that uranium is common in foods and also exists in our human bodies. Uranium contributes to natural background radiation—and perhaps that might explain why Mr Charles Chauvel keeps flashing. 
Gareth Hughes 
: Does not the shipping of radioactive uranium undermine New Zealand’s proud nuclear-free history and the blood sweat and tears of hundreds of thousands of Kiwis who in the 1980s fought to entrench our nuclear-free status which is just so important to our valuable “clean green” brand? 
Hon Dr NICK SMITH 
: No; in fact if we took that sort of silly position on radioactive substances we would destine hundreds of New Zealanders to a painful death because many of those radioactive imports are used to treat cancer. 
Gareth Hughes 
: When will the Government act to ensure that New Zealand is not part of the nuclear chain in supporting nuclear generation and possibly nuclear weapons? 
Hon Dr NICK SMITH 
: I have already made plain that the Australian Government has strict criteria that it will allow the export of uranium ore only for peaceful purposes. Furthermore my colleague Georgina te Heuheu has just this week been part of a conference that is to establish very clear reporting requirements to ensure that such radioactive substances are used only for peaceful purposes. The key point I make to the Green Party is to differentiate between the very fair position and a position strongly held by this Government of opposition to nuclear weapons and a view about the overall use of nuclear technology in which it is important not just for health services but for energy generation in a number of other countries. 
Chester Borrows 
: What level of radiation exposure do yellowcake containers transiting New Zealand pose? 
Hon Dr NICK SMITH 
: I am advised by the National Radiation Laboratory that the radiation exposure is very low. If a person stood right next to a drum for 130 hours he or she would have the same level of exposure as someone would naturally have over the course of a year. The Environmental Risk Management Authority actually advises me that the high level of risk is from the toxicity not the radiation and then it is a risk only if someone ingests—that is eats—large quantities. Given that the substance is only to be in the hulls of ships I do not think the risk of that is high. 
Gareth Hughes 
: Was the Government notified that in May of this year the  
Pacific Pintail 
 and the  
Pacific Heron 
 carrying radioactive mixed oxide plutonium en route to Japan via the Tasman Sea possibly passed through New Zealand’s exclusive economic zone? 
Hon Dr NICK SMITH 
: I have received advice only in respect of uranium and the use of yellowcake. I am advised that that poses no significant risk to New Zealanders’ health or our environment. 
Gareth Hughes 
: Is it acceptable that successive Governments did not even know that radioactive uranium and plutonium had been passing through our waters? 
Hon Dr NICK SMITH 
: Governments have been aware but unlike the sort of attitude where the mere mention of the word “uranium” makes the party breathless most parties take a rational view of risk and expect officials to advise us of issues where there are significant risks to the public health or the environment. All of the science advice is that there are very low levels of risk. I note that any New Zealanders holidaying in Australia in any one of the national parks where there are extensive uranium deposits would be exposed to a greater degree of radiation through their holiday than they would be by these shipments. 
Gareth Hughes 
: Will the Minister now take a stand and make clear that as a nuclear-free country it is not OK to have nuclear shipments going towards the nuclear energy and possibly nuclear weapons industry? 
Hon Dr NICK SMITH 
: No. It is as if the member has a paranoia about anything that relates to radioactivity or uranium. I remind the member that uranium is prevalent right through our environment including in our own bodies. Although it is right to have a strong position against nuclear weapons the peaceful use of nuclear technology is part of a modern society. 
Gareth Hughes 
: I seek leave to table two documents the first being an editorial from the  
Taipei Times 
 which shows that uranium from Australia is used in Chinese power stations in lieu of the uranium that goes into Chinese warheads. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Gareth Hughes 
: I seek leave to table the energy science report  
Nuclear Safeguards 
 which illustrates that our actions enable countries to have the capacity to develop both nuclear energy and nuclear warheads. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Early Childhood Education—Minister’s Responsibility for Centres 
10. 
SUE MORONEY (Labour) 
 to the  
Minister of Education 
: Does she stand by her recent statement to the House that she has no responsibility for decisions that early childhood education services make as a result of her removal of the subsidy for 80 to 100 percent qualified staff? 
Hon ANNE TOLLEY (Minister of Education) 
: 
 Yes. The decisions that services make in response to this reprioritisation are their own responsibility and they have a number of options available to them. I take responsibility for the decision to reprioritise the funding from the two highest teacher-led early childhood subsidy bands towards raising participation because those groups were failed by the previous Government. 
Sue Moroney 
: Who is responsible then for the $2.7 million funding cut for ABC Learning Centres throughout New Zealand affecting 8000 children and their families? 
Hon ANNE TOLLEY 
: As I just said in the previous answer I take responsibility for the decision to reprioritise the funding away from those two top teacher-led bands and into increasing participation for children who are not currently attending early childhood education. The Opposition fails to grasp that the spending on early childhood education has more than trebled in the last 10 years yet participation has not grown commensurately. 
Su’a William Sio 
: Is she responsible for the $95000 per annum funding cut for the Mangere Living and Learning Family Centre which affects 113 children 98 percent of whom are Maori and Pasifika? 
Hon ANNE TOLLEY 
: Yes I have said that I am responsible for changing the funding for the top two bands in teacher-led services but those services have a range of choices that they can make. Those choices include meeting this Government’s 80 percent requirement for qualified teachers changing the services they deliver or changing the hours of their services. They have a range of decisions and that is their responsibility. 
Louise Upston 
: What has the reprioritisation of the funding for the 80 to 100 percent qualified staff in early childhood education services allowed the Government to do? 
Hon ANNE TOLLEY 
: We have to do more to increase participation in early childhood education. Despite the spending growing by 300 percent the previous Government increased the numbers of children attending education before they go to school by less than 1 percentage point—300 percent more for less than 1 percentage point. Reprioritising those two top funding bands has allowed us to invest an extra $91.8 million over 4 years for a package to boost participation among groups that are currently missing out. 
Moana Mackey 
: Is she saying that the Gisborne YMCA should be grateful that as a best-case scenario it will lose $186000 per annum in funding and that the Papamoa East community should be grateful that a kindergarten for 50 families that was planning to go ahead is no longer happening because of her funding cuts? 
Hon ANNE TOLLEY 
: I am saying to those services that they have 8 months before the changes are made and they have a range of options to meet those funding changes. They can make those decisions; I suggest they talk to the parents who use their services. I would be really disappointed if the first thing they did was increase their charges. 
Sue Moroney 
: Does she accept responsibility for the fact that a kindergarten planned for Papamoa East will now not go ahead because of her funding cuts? Will she apologise to the 50 families who want to enrol their children at that kindergarten? 
Hon ANNE TOLLEY 
: No I do not take responsibility for decisions that that kindergarten association has made. I have taken responsibility for reprioritising the funding; the kindergarten must take responsibility with its parents for the decisions that it makes. 
Moana Mackey 
: I seek leave to table an article titled “Government Funding Cuts Hit Kindergartens Hard”. 
Mr SPEAKER 
: I am sorry I did not hear the source of the document. 
Moana Mackey 
: It is from the  
Tauranga Region Kindergarten and Home Based ECE News 
. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Game Animal Council—Progress on Establishment 
11. 
JOHN HAYES (National—Wairarapa) 
 to the  
Minister of Conservation 
: What progress has been made regarding establishing the Game Animal Council? 
Hon KATE WILKINSON (Minister of Conservation) 
: 
 I have received the final recommendations on the process for setting up the New Zealand Game Animal Council from the Game Animal Council Establishment Committee. I am very pleased to see that the hunting sector is working together to improve hunting opportunities and I acknowledge the assistance of the Hon Peter Dunne on this matter which forms part of the Government’s confidence and supply agreement with United Future. The Government will consider very carefully the recommendations and their effects on all interested people before making a formal response in the next few months. 
John Hayes 
: What are the recommendations in terms of the groups that should be represented on the council? 
Hon KATE WILKINSON 
: The report recommends that the council include an independent chair together with representatives of recreational hunters commercial operators iwi farmers and the Government. 
Hon Peter Dunne 
: Does the Minister agree with the President of the New Zealand Deerstalkers Association that the Game Animal Council will “foster improved communication and collaboration between government commercial interests and recreational hunters.”; if so can she point to situations where that type of cooperation and collaboration is already happening perhaps on a smaller more local scale? 
Hon KATE WILKINSON 
: Yes. I believe this process has already led to greater collaboration and communication amongst the hunting sector; there are some great community initiatives—for example the wapiti programme in Fiordland and Stewart Island. Indeed the Department of Conservation has employed a hunting adviser to improve its services to hunters. 
Transport Systems—Concerns 
12. 
DARIEN FENTON (Labour) 
 to the  
Minister of Transport 
: What recent reports has he received about concerns with transport systems? 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 I receive many many reports in the transport area some of which highlight ways in which our transport systems can be improved. For example in response to an earlier question I referred to the KiwiRAP report which I launched this morning. Another example is the briefing that I received yesterday from the Civil Aviation Authority in regard to a television story showing security issues with airline electronic checking procedures. I am pleased to report to the House that the airlines are taking immediate steps to rectify those problems and the Civil Aviation Authority is currently following that up to ensure it is satisfied with those corrective actions. 
Darien Fenton 
: Does the Minister have concerns about the Civil Aviation Authority statement that having someone check in bags without boarding the plane in the TV3 sting was the most worrying aspect of the incident and why was the Minister not aware of this potential security breach? 
Hon STEVEN JOYCE 
: I think it is safe to say that just about everybody who uses the transport system was unaware of this potential security breach. My role has been to ensure that the breach once recognised was acted on very quickly and I have ensured that that is the case. The Civil Aviation Authority is responsible for improving the security arrangements with airlines and it has been working with the airlines since this issue came to light in the last couple of days. My understanding is that a corrective action will be in place very soon. 
Darien Fenton 
: Can the Minister confirm to the House that the journalist who checked herself in using his name referred to herself as Joyce Stephen; if so has he encountered this sort of confusion before? 
Hon STEVEN JOYCE 
: If I refer back to primary school I think yes it has occurred from time to time. Also it is fair to say I have checked in at times and people have gone looking for Mrs Joyce instead of Mr S Joyce. 
Question No. 2 to Minister 
Hon ANNETTE KING (Deputy Leader—Labour) 
:  
I seek leave to table one page from Budget 2009 and one page from Budget 2010 regarding Vote Social Development and showing that the training incentive allowance has been cut from $29 million under the previous Labour Government to $17 million in the latest Budget and is estimated to be as low as $13 million by 2013— 
Mr SPEAKER 
: The member has made a statement but she knows that all members have the Budget documents. There is absolutely no need to table them. 
Motor Vehicle Sales Amendment Bill 
Second Reading 
Debate resumed. 
JONATHAN YOUNG (National—New Plymouth) 
: 
 This Motor Vehicle Sales Amendment Bill makes vehicle traders accountable and provides consumers with redress through the Motor Vehicle Disputes Tribunal. The Motor Vehicle Sales Act promotes and protects consumer interests. We want to create an environment of confidence and informed choice for consumers. This bill is in line with the National-led Government’s efforts to reform regulations cut red tape and reduce compliance costs. Reforming regulations is one of National’s six policy drivers to boost the long-term performance of the economy create jobs lift incomes raise living standards and provide the high-quality public services that Kiwi families need. 
The general purpose of this bill is to amend the Motor Vehicle Sales Act 2003 to improve its workability and transparency. By way of background the Act introduced a new compulsory registration regime for motor vehicle traders and new disclosure requirements for used motor vehicles. A review reported back in 2006 some areas that required amendment and those changes form the basis of this bill. The amendment bill suggests changes to the registration of motor vehicle traders to information disclosure and to the Motor Vehicle Disputes Tribunal by amending the process for traders renewing their annual registration and by reducing compliance costs associated with making annual statutory declarations as part of registration renewal. The bill also closes a loophole preventing the automatic banning of traders whose registration has lapsed but who are subsequently convicted under the Act for misconduct while registered. 
The bill removes the requirement for a private seller to display a consumer information notice when selling a vehicle through a car market. However the recommendation of the Commerce Committee is that clause 7 be amended to make it clear that the Motor Vehicle Sales Act requires motor vehicle traders to display a consumer information notice when displaying or offering for sale a used motor vehicle physically or when displaying or offering for sale a used motor vehicle over the Internet when a contract to buy the motor vehicle can be entered into online. That is to distinguish between Internet advertisements that offer the ability to enter into a contract to buy the vehicle online and therefore should display a consumer information notice and advertisements that are effectively classified advertisements for which the provision of a consumer information notice would be an unnecessary and onerous requirement. 
These measures will bring improvements to the bill. As I said before this bill is in line with National’s commitment to reduce regulatory compliance costs. At the same time it promotes and protects consumer interests in order to create an environment of confidence and efficiency by making vehicle traders accountable and providing consumers with redress through the Motor Vehicle Disputes Tribunal. Thank you. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Assistant Speaker kia ora tatou katoa i tenei ahiahi. Kua tu ake tenei ki te tautoko me ki i te tikanga o tenei o nga pire ka whakatakotohia ki mua aroaro o te Whare. Mena ko tona putake ko te tiaki i te hunga hoko waka nei ka pai ka pai ka pai. Kei te whaiwhai haere tenei pire i wetahi i whakatakotohia ki mua i te aroaro o te Whare i nga ra tata hui kaika kua hipa ake ara ki te tiaki i te hunga e tuku nei i o ratau moni mo tetahi mea penei ano ra i te waka i nga motoka. E ai ki ta te pire ko te tino putake o tenei he whakatakoto tikanga hei whakahou i te ahuatanga o ta ratau rehita a-tau. Ka mutu ko tona tikanga he whakawhanui atu me ki i te kupenga i nga here mo te hunga kua whakatahangia na nga mahi tukino pea nga mahi he pea kua kitea mai ai i nga tau ara me ki mo te hunga tuku korero he nei me te mea ano hoki ko nga rehita me ki kua oti pai te wahi ki nga rehita o tera momo hunga. No reira a pai tonu enei korero katoa koinei matau e tautoko nei. 
Ka mutu hei whakaatu i te ahuatanga o te pumau o te tino hiahia o te Kawanatanga ki te kokiri i tenei take ko tetahi o nga take o te pire nei he whakawhanui atu i te titiro o tenei pire ara kia whanui tonu te titiro o te Motor Vehicle Disputes Tribunal. Ko ta ratau mena ka whakatakoto whaina ki runga i tenei hunga kua piki haere tera mai i te rima tekau mano tara ki te kotahi rau mano tara i raro i te ahuatanga o tenei ture.  
I tino aro atu au ki nga korero o te hunga o roto o te Community Law Centre o Otepoti. Ko ta ratau ko te tino tautoko i te tikanga o tenei pire ka mutu ko ta ratau tino korero ko te ki atu he pai ki a ratau kia whakaatu wetahi korero i runga i nga waka hei kupu awhina ki te hunga hokohoko nei i nga waka. No reira ki taku titiro he mea awhina tenei. Mena ka puta mai me ki nga korero tautohetohe taupatupatu ranei mo te pai ranei kino ranei o te waka e hokona nei ka mutu te tumanako ka tiaki pai i te ahuatanga me ki ka noho hei kupu korero hei tiaki i te hunga e hoko nei i nga waka.  
Ki a au nei e tika ana kia mohio mai ai te hunga hoko i nga waka mena ka rere tika tonu te moni ki runga i te rawa pai ka mutu kia mohio mai ai mena he moni kei runga he nama ranei kei runga tonu i te waka pehea te tawhiti o te waka pehea te roa me ki te tawhiti o te haere o te waka ka mutu mena e tika ana te whakaaetanga a-tika me te rehita o taua waka. No reira he pai korero pai enei hei whakatakoto ki runga pepa. Kei te tautoko te Pati Maori i tenei ka mutu kei te tautoko ake i te korero a te taraipiunara i te pire nei ki te ki me panui whanuitia nga korero ki runga i te ipurangi kia taea ai e te motu whanui tonu te kite atu i te whakahaere o etahi o nga kamupene nei. Na me pai enei i te mea me whakanui i te Minita mo nga Take Consumer Affairs i tana aronga i tenei take.  
Engari anei ano etahi patai hei mea whakatakoto ki mua i a ia hei wananga mana a nga ra kei mua i te aroaro. E toru nga take. Tuatahi me ki ko te tumanako ka ata titiro ia ki nga here a-waka nei mo nga tamariki mo nga mokopuna kei roto i nga waka. I puta mai tenei korero i te ropu e kia ana ko Te Puawaitanga ki Otautahi Trust. I roto i te ahuatanga o ta ratau titiro me ki ki nga ahuatanga e pa ana ki nga tamariki te hauora o nga tamariki i roto i nga waka a-whanau. E ai ki ta ratau o nga motoka o nga waka tekau e rua o aua waka he tamariki kei roto ehara i te mea kei te herea na te tatua. Ka mutu o ia rima waka me era here a-turu kotahi anake e tika ana tana here ki roto i te waka. No reira e tika ana me tumeke tatau ki era momo kaute. Ko ta ratau ko te ki atu me titiro ki tenei ahuatanga me kaha tiaki tatau i nga tamariki mai i te whanautanga mai ki roto i nga turu here hei tiaki i nga tamariki i roto i nga waka. No reira anei au e patai nei a mena tekau ma ono tamariki ka mate ia tau na runga i te ahuatanga mo nga aitua i te rori me tupato ka tika. Ka mutu rua rau whitu tekau ma rima o ratau o nga tamariki o te motu me ki ka heria ki te hohipera. No reira enei korero katoa he whakatupato i a tatau me te mea ano hoki te tumanako ia ka tirohia tenei take e te Minita.  
Ko te take tuarua ko te hunga haere kore raihana. Karekau he paku raihana ki te ki atu anei kua mana taku taraiwa i te waka. E ai ki ta tetahi rangahau i roto i te Injury Prevention Research Unit i te Kura Rongoa o Otautahi te whare wananga ki taku mohio e ai ki ta ratau rangahau waru rau rua tekau ma rima o nga taraiwa Maori he taraiwa Maori i roto i nga taone me ki i tuawhenua. No reira ko tenei mahi ko te taraiwa kore raihana i waenganui i te iwi Maori kei waenganui i a tatau. Kai konei te mahi he taraiwa kore raihana. Ka mutu i roto i tetahi atu o nga rangahau me ki mai i te AA Driver Education Foundation i kawe haere i etahi rangahau i roto i Te Tai Tokerau i puta te korero iwa tekau ma rua paiheneti iwa tekau ma rua paiheneti o nga tangata taraiwa nei i Te Tai Tokerau karekau he raihana. Iwa tekau ma rua paiheneti. Ka mutu rua tekau o enei tangata kaore i ahei ki te whiwhi i te raihana na te kore mohio ki te tuhi ki te panui i nga korero. No reira he mea ohorere tenei ki a au otira me pera ki te Whare. Ka mutu i puta te korero o te etita me ki te kaiwhakatika korero o te Car Buyers Guide. Ko ta ratau e ki nei me titiro te kawanatanga ki te tuku putea hei awhina me ki i tenei hunga kore mohio ki te panui ki te tuhi ranei kia taea ai e ratau te whiwhi i te raihana. Me hoki ano ra ki tera korero rua tekau paiheneti kare i te mohio ki te panui ki te tuhi. No reira koinei te whakahau ki te Minita.  
Ko te take whakamutunga ko tera ko te ata titiro me kaha nei ki te panapana haere ki te tautoko ranei i te korero ara ko te anti - drink-driving campaign. Me kaha a ia ki te tautoko i tera kaupapa i te mea te ahua nei ia wiki ia wiki ka korerohia ko te ahuatanga o te taraiwa haurangi nei i roto i te Whare.  
No reira koinei nga whakatupato tuatahi ara me titiro ki nga here a-tamariki i roto i nga waka. Ka rua ko te hunga taraiwa kore raihana. Ka toru me kaha nei ki te tautoko i tera korero mo te taraiwa kore haurangi. No reira kati ake koinei taku hei tautoko i te ia o tenei o nga pire me te tumanako ia ka aro mai te Minita ki enei korero. 
[ 
Greetings to you Mr Assistant Speaker and to us all this afternoon. I rise to support this bill before the House in respect of its purpose. If its purpose is to protect car buyers then that is great fine and wonderful. The goal of this bill in terms of protecting the rights of buyers when purchasing vehicles is consistent with that of other bills that have come before the House during urgency in days just past. The bill amends the process for motor vehicle traders to renew their annual registration. In addition it extends the range of people banned from car trading such as those who stoop to giving false registration information or those who have lapsed registrations. Because all these measures make pretty good sense to us we support the bill.  
To show that the Government is taking this seriously it intends increasing the jurisdiction of the Motor Vehicle Disputes Tribunal for offences under the Act from $50000 to $100000.  
I was interested in the views of the Dunedin Community Law Centre which strongly supported the consumer focus of this bill. It was particularly aware of the requirement for traders to display a consumer information notice on vehicles to help consumers in disputes that relate to misrepresentations about the condition of vehicles for sale. That will provide some protection from scurrilous characters.  
I believe it is important for consumers to know whether there is money owing on a car the distance travelled by the car and as well to have the warrant of fitness and vehicle registration information. The Maori Party is supporting this bill and further to that the decision for tribunal findings to be made available on the Internet and the focus on greater transparency and accountability. This is a positive move and we congratulate the Minister of Consumer Affairs on her initiative in this regard.  
However I ask the Minister to consider a few other areas of which there are three priorities. Priority one is to ensure the use and correct use of child restraints. This is a proposal from Te Puawaitanga ki Otautahi Trust which in its role as a Well Child provider has been working on vehicle safety within families. The trust tells us that two cars out of 10 have children travelling unsecured and only one in five car seats is fitted properly. We should be shocked at those figures. The trust believes there is a need to promote and protect our children from birth and for them to be in a suitable correctly fitted child restraint each time they are in a vehicle. And if we have to ask why we should do that we might think of the 16 children who die each year as a result of a motor vehicle accident and of the 275 who are hospitalised. So this is a warning to everyone and hopefully this matter will be considered by the Minister.  
Priority two is the issue of unlicensed drivers. A study was conducted by the injury prevention unit at Christchurch school of medicine of 824 Maori drivers in urban and rural areas. It found that driving before obtaining a driver’s licence was common practice. Another study by the AA Driver Education Foundation of young people in Northland showed that 92 percent had no licence and 20 percent of these people could not get a licence because they were illiterate. This was a surprise to me and it should be a surprise to the House. The editor of the car buyers’ guide  
The Dog and Lemon Guide 
 is calling for the Government to fund a scheme to help those who are illiterate to get a licence. I turn our attention once again to the fact that 20 percent of those drivers are illiterate and I urge the Minister to take that into consideration.  
The final priority I would put to the Minister is to drive the anti - drink-driving campaign hard because every week the consequences of drink-driving are often mentioned in the House.  
So these are words of caution that firstly child restraints be considered; secondly about the unlicensed drivers; and thirdly about the need for a concerted effort to support the anti - drink-driving campaign. That is enough. I support the thrust of this bill and hope that the Minister will show due concern about what has been presented. 
] 
Bill read a second time. 
Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill 
Second Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill be now read a second time. 
 The bill proposes a number of taxpayer-friendly measures. 
The first of these is a very positive change that will allow New Zealanders to bring their retirement savings with them when they return home from Australia permanently. This will be very good news for the many New Zealanders who work in Australia and who under Australian law currently have their compulsory superannuation contributions locked into an Australian complying fund until they reach retirement age. For New Zealanders wishing to return home after a number of years in work in Australia the prospect of leaving behind these contributions can and does present a significant financial dilemma. For some it may mean the difference between bringing their skills and experience back to New Zealand or deciding to remain in Australia. 
The changes in this bill will help to overcome that problem by allowing New Zealanders with retirement savings in certain Australian superannuation funds to transfer those funds to KiwiSaver when they return home permanently. Similarly KiwiSaver members who move to Australia will be able to transfer all their savings in the scheme to an Australian complying superannuation scheme including contributions from the Crown and any member tax credits. Even New Zealanders who have already returned from working in Australia may now be able to retrieve the contributions they were required to make to Australian superannuation funds. 
The ability to transfer superannuation funds across the Tasman will apply once both Australia and New Zealand have enacted the necessary legislation. The New Zealand experience is contained in this bill and notwithstanding events in Australia today it is understood that Australia will introduce its complying legislation later this year. This change is a major step forward. It is the result of an agreement with Australia that was signed in July last year to recognise the close relationship that we share and the benefits that a skilled mobile labour force can bring to our two countries. 
The remainder of the bill focuses on a number of technical or remedial measures to improve the way the tax rules work and to reduce compliance costs for taxpayers. These technical measures include changes to the KiwiSaver rules to make them easier for people to understand and to ensure that the rules work in the way that they were intended to. In particular the enrolment rules for those under 18 years of age are being clarified so that young people and guardians have greater certainty about their obligations under the scheme. 
The bill also clarifies the gift duty rules around gifts such as amenities and art work made to local or central government or to approved donee organisations by making it clear that such gifts are exempt from gift duty. This change will be welcomed by those who want to contribute to their communities by gifting items such as art works or other items for public benefit. I have recently announced that the Government is intending to repeal gift duty altogether if concerns about creditor protection and social assistance targeting can be addressed. Officials are currently consulting on those matters. My expectation is that if gift duty is to be repealed the provision will be included in the November tax bill later this year. In the meantime the provisions in this bill tidy up the operation of the existing gift duty rules. 
The bill also sets composite tax rates for 2010-11 which are based on an average of the old and the new rates to take account of the substantial personal income tax reductions that take effect on 1 October this year. 
Other technical amendments that the bill contains are intended to make the tax laws easier to apply. They include changes to the legislation on binding rulings which set out how the Inland Revenue Department will apply tax laws to give greater certainty about the tax implications of business decisions. 
Other changes in the bill are of a remedial nature. They remove certain unintended consequences following earlier reforms. Further to those changes I advise the House that at the Committee stage I shall release a Supplementary Order Paper relating to several other measures. The most important of those will be to remove the taxation impediments for banks and their covered bond programmes. The rest will be of a more remedial nature but all of them need to be legislated for as soon as possible. Included amongst those other matters is an adjustment to the prospect of tax treatment of certain optional convertible notes and minor changes to the transitional life insurance rules. These are both changes that taxpayers have asked for. 
In bringing the bill to its second reading I want to record my thanks to all the members of the Finance and Expenditure Committee for their consideration of the bill and for their work in further refining and clarifying its content. The result of their efforts is a package of measures that will help to improve the way the tax rules work across a number of areas and in so doing will reduce compliance costs for taxpayers. I therefore with pleasure commend this bill to the attention of the House. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take a call on behalf of the Labour Opposition in response to the second reading speech of the Minister of Revenue the Hon Peter Dunne on the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill. Labour supports this bill. When members of the public are watching Parliament on television or listening to it on the radio particularly if the main time they listen to it is around question time or the Wednesday general debate they sometimes go away thinking that the entire business of this House consists of members calling each other names or attacking each other across the floor. Of course that is not true. It is on occasions such as this when we have a largely technical bill one that makes needed improvements to our tax legislation and is not particularly partisan a bill which was started under the previous Labour administration and continued—by the same Minister it might be observed—in the current one that we see Parliament at its work in a select committee and in the House making sure that the detail is up to snuff and that the bill will have the effect that it is intended to have. There has been good cooperation in the Finance and Expenditure Committee. I commend its chairman Craig Foss and members on all sides for a constructive approach that was taken to this bill. 
On process matters however I observe one word of slight disappointment and that is that I heard today that the Minister has a substantive Supplementary Order Paper about banks covered bond programmes and other matters to be introduced in the Committee of the whole House stage. I think it is a matter of some regret that that material was not introduced and subjected to the very useful and open select committee process that had previously ensued. Were the justification for that step simply that taxpayers wanted it there might be all manner of changes to the tax law that the Minister might propose. He might drop rates to zero! The Budget went part of the way there in some regards. He might get it into his head to go all the way. There must be another reason for that. We will not prejudge it but I will record now that it is not good practice for this House to face substantive Supplementary Order Papers on the floor when that could have been avoided in a bipartisan process. 
I will briefly touch on the summary of the bill’s provisions. I will raise a couple of specific matters and then talk about the context for a minute or two. The bill introduces the following: the trans-Tasman portability of retirement savings. That is the most important measure in the bill in my view. It applies to New Zealanders who have not opted out of KiwiSaver hitherto and who move across the Tasman for family or employment reasons. It might be observed that they will not be going for lower tax rates because tax rates in Australia are significantly higher than tax rates in New Zealand. But if they move across the Tasman they can take their KiwiSaver savings with them rather than as previously having to wait until they are 65 to collect them. That will be important to them if they are setting up a new home. 
However I think this needs to be monitored. It is bipartisan but we need to monitor it because if there is a perverse effect such that the early release of substantial KiwiSaver funds acts as an incentive for people to move across the Tasman we might find that it runs contrary to other objectives of the Government such as closing the gap with Australia or stopping the brain drain—although we are hearing less and less about those measures as the gap widens and more Kiwis leave. 
The next point is that there are new rules for under-18-year-olds seeking to enrol in KiwiSaver where the parents’ or guardians’ permission is required. That is absolutely sensible although we would note that we strongly believe—and I will expand on this later—that KiwiSaver remains a very very important step towards closing the country’s yawning savings deficit and thereby assisting to reduce the current account deficit. 
The bill introduces flexibility in a provision applying to resident cooperative companies that require a member to hold shares in proportion to their trading stock transactions with the company. As cooperatives become a broader and more important part of our economy that flexibility is to be welcomed. 
There is the effective cancellation of branch equivalent tax account debits and there is a 5-year tax exemption on profits for non-residents operating offshore rigs or seismic vessels in New Zealand. I would not be surprised if some member moves an amendment that states “provided that they do not spew oil all over our beaches”. Let us hope that they do not. We will of course hold the accountability instruments of the Government to account in that regard. 
There are a number of new rules relating to binding rulings. Binding rulings are important but sometimes it is to be observed that the private sector might we say it uses a ruling for purposes beyond that for which it was originally intended. One can think of certain large-scale banking transactions that have been reversed by the courts and by negotiation with the Inland Revenue Department where there was allegedly an unfit purpose for which binding rulings were quoted. However the changes in the bill are useful. 
There is an exemption from gift duty for gifts made to local or central government donee organisations and distributions of property made in accordance with certain court orders—and we are pleased to admit Cure Kids to the list of charitable donee organisations. 
I will touch on three broader themes that attach themselves to the bill. The first is concerning retirement savings the second is about KiwiSaver and the third is about anti-avoidance measures which relate to the provisions for loss attributing qualifying companies in clauses 20G and 20H of the bill. Firstly on retirement savings portability Labour as I have said before believes that it is a sensible arrangement. That is the Minister’s favourite word and it is embodied in the bill. It allows more flexibility for New Zealanders. The chief policy risk is that there is a perverse effect whereby the flexibility around KiwiSaver deductions becomes somewhat greater or it is easier for New Zealanders to get their money out of the scheme if they go across the Ditch to live in Aussie. They can take their KiwiSaver savings with them earlier than they might be able to access them in New Zealand. We will just need to monitor that. I believe that people will make their decisions about where they live for other and different reasons but it is not beyond the realm of possibility that we may need to come back and look at that in the future. 
It is a positive step for current and future New Zealand superannuitants and this Government has however ultimately undermined their future security by other measures. It would be remiss of me notwithstanding the bipartisan nature of this legislation not to note again for this House that there has been a grievous broken promise in regard to superannuation repeated once again in Budget 2010. The single biggest decision if we can call it that that was made in regard to Budget 2009 was the decade of deferrals of the pre-funding of New Zealand superannuation. As members and listeners will recall that pre-funding—the paying into the New Zealand Superannuation Fund of $2 billion or $3 billion a year to build up a fund about the size of the New Zealand economy of $160 billion—was there to support the baby boom as they moved through to superannuation. Otherwise there would not be enough tax revenue to pay their pension. By not pre-funding the Government has put at risk the future of superannuation. There are no two ways about that. 
In Budget 2010 not only has National broken its promise to recommence pre-funding when the Government’s books are in surplus—that is now 2016 and the pre-funding does not supposedly resume until 2019 3 years later—but even then I note that in the fiscal risks section of the Budget documents that funding stream has been removed as “no longer required”. I am sure Grey Power members will be extremely concerned to hear that. We are extremely concerned. We think it is irresponsible and I have made my point on that I believe. 
On KiwiSaver likewise at a time when the National Government the Labour Opposition and members on the cross benches are all remarkably agreed on the need to rebalance this economy in the wake of the global financial crisis in the wake of the then exposed housing and property bubble and at a time when we all agree that the key ingredient to narrowing the financial deficit on our current account which drives the whole kit and caboodle is to improve our domestic savings rate how silly it now seems that one of the first moves the incoming Government made was to halve the incentives for ordinary Kiwis to participate in KiwiSaver taking it from 4 percent to 2 percent. That is a matter of great regret and I think it is a measure that everybody in this House will come to regret. Labour is pledging again today that we will not only restore KiwiSaver but also take it forward. We believe it is a very very important measure. 
My final point in conclusion is just a small point on loss attributing qualifying companies. There are a couple of technical measures in the bill clauses 20G and 20H which make them easier to use. We expect further substantive reform from this Government to tighten the provisions on loss attributing qualifying companies because they are a black hole. 
CRAIG FOSS (National—Tukituki) 
: 
 I acknowledge previous speakers. I thank the Finance and Expenditure Committee for its participation in the work done on the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill before us now. It has changed a bit since it arrived at our committee and I congratulate Minister Dunne in particular but also Minister English and Minister Power because this bill is part of the negotiations on a single economic market with Australia. They are all involved in these discussions and reaching agreement. As Minister Dunne just noted some changes are still to happen on the Australian side but the goodwill and good faith are there and they will be facilitated. 
I also thank the officials of our committee and the Inland Revenue Department for their advice and particularly our specialist tax adviser Therese Turner. Almost by default we have an independent drafting specialist adviser Mr David McLay in this instance for this tax bill. Of course I thank members of the Finance and Expenditure Committee. The Hon David Cunliffe is quite right: the committee worked very well together on this bill and saw what it needed to do to make some changes and amendments to the bill that came before us. 
I will not be making a long speech but I raise a couple of points in the bill that we will be addressing in the Committee stage. Of interest to submitters—I think there were about 18 of them—were the binding rulings around which there was a fair bit of discussion; solid representation from the professional sector; and particularly the branch equivalent tax account debit changes. There were some quite robust submissions on those issues. I think the committee as a whole learnt a fair bit about that. We have made substantive changes to what was originally proposed in the bill that came to the committee. Generally we have found pretty good common-sense solutions which follow intent and acknowledge original notice given to the proposed changes. 
Another item that had discussion was the remedial amendments to KiwiSaver. As policy as large as KiwiSaver pans out some changes need to come on the way through. But particularly in respect of the treatment for under-18s in KiwiSaver there were some quite strong allegations of children being signed up without necessary knowledge of their parents. Suddenly an 18-year-old is making a decision for the rest of his or her life to opt into KiwiSaver and we thought that was unfair so we had some good advice on that. 
I agreed with most of what the previous speaker the Hon David Cunliffe said until he got to his context part. We reject totally his allegations of a broken promise in and around superannuation but we will save that for another day. I will leave the House with one point: when the Government is borrowing about $14 billion and paying something like 5.5 percent for it and it has financial assets on the other side achieving something like 4 percent for it well there is 1.5 percent worth of quite substantial loss to the taxpayer. Simply trying to keep one organisation going while funding another one is like having a $400000 mortgage and a $200000 savings scheme. One gives away the spread both ways but at the end of the day the taxpayer is the loser. 
I look forward to the Committee stage of this bill. I commend the bill to the House. 
Hon DAVID PARKER (Labour) 
: 
 The previous speaker Craig Foss made reference to the fact that the Government is borrowing money. Why then did the Government increase the amount of money that it was borrowing in order to fund tax cuts that go so disproportionately to the people in society who are already best off? 
I turn to the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill. As previous speakers have said on behalf of the Labour Party we support this bill which improves the portability of retirement savings between New Zealand and Australia. There are some restrictions on portability that I know will disappoint some people. For example KiwiSaver contributions can be used by a first-home purchaser to go towards the deposit. But as I understand it the agreement in respect of portability with Australia means that the savings that are transferred from an Australian scheme to a KiwiSaver scheme cannot be used towards a house purchase in New Zealand and that is a sad detriment. Let us hope that sometime in the future that might be able to be fixed. 
A couple of points need to be made in the discussion about KiwiSaver. Firstly New Zealand has an abysmal savings record. We really do have a poor savings record. New Zealand has for many years spent more than it earns and that is reflected in our current account deficit. Increasingly it is reflected in the non-tradable part of our current account deficit in the amount of interest and dividends that flow to other parts of the world as a consequence of us owing ever-greater amounts to overseas jurisdictions. Of course this bill which improves portability of retirement savings between Australia and New Zealand exists only because the previous Government introduced KiwiSaver. Were it not for that we would not have portability of retirement savings. 
It is notable that the National Government opposed the Budget when we introduced KiwiSaver. Its mantra at the time was that we should have been having more income tax cuts which would have meant we could not afford the incentives that were put in place by KiwiSaver. Indeed following National’s election to Government the National-led Government faced with a choice between keeping the generosity of KiwiSaver and delivering income tax cuts opted for income tax cuts ahead of improved savings. This was a bad mistake for New Zealand. Even though KiwiSaver has begun to improve New Zealand’s savings record it is still lamentably poor when compared with for example Australia’s. Australia is going in the opposite direction. Australia announced in its latest Budget that over the next few years it is increasing compulsory savings through its workplace superannuation scheme from 9 percent of earnings which it currently is to 12 percent. That makes our savings look lamentably poor. 
The National Government has a mantra that says that this latest Budget is the greatest tax switch or something like that in the last 20 years and that somehow it is changing the shape of the New Zealand economy in a dramatic way following its last Budget. We all know that that is an exaggeration. There is a change towards taxing consumption through GST with reciprocal decreases to income tax but of course there are two things to be noted about that. Most of the net benefit of that goes to the people who are the highest earners. The total proportion of tax that is paid by the lower two-thirds of earners goes up and the proportion of tax paid by the higher earners goes down. The other point is that low to middle income earners generally have to spend all of their earnings to live. Although they might have an increase in their income after the deduction of income tax they spend it all. They have to pay GST on everything that they spend essentially or most of what they spend and therefore they do not end up much better off. 
If the Government was really interested in catching up with Australia it would have addressed the biggest difference between New Zealand and Australia which is savings and investment. Australia has more savings it has deeper capital markets and it has more money to invest in profitable sophisticated enterprises that generate foreign exchange earnings and Australia also avoids ownership of its own country by overseas interests to the same extent. Of course if we sell something to an overseas party because we are running such an enormous current account deficit as New Zealand is in the end the overseas party gets the dividend flows from the future profits of the enterprises that it has purchased from New Zealanders. In the case of lending to New Zealanders via banks that overseas party also get the interest flows. 
If people do not believe that that is the biggest difference between New Zealand and Australia and if they really do think the big difference between New Zealand and Australia is mining they are sadly mistaken. I saw a presentation recently from Rick Boven from the New Zealand Institute who told us that mining accounts for approximately 10 percent of the difference between the earnings in Australia and New Zealand. It is not even the majority; it is 10 percent. There might be some other flow-on benefits to other parts of the economy but essentially 10 percent of the difference lies in mining which is not as the Minister for Economic Development Gerry Brownlee would have us believe. The big difference lies in capital markets and savings. If we want an example of that we should reflect on the fact that in 2007 the combined profit of the four biggest banks in New Zealand was more than the combined profit of the rest of the NZX 50—that is the 50 largest companies in New Zealand listed on the New Zealand Exchange. The combined profit of those four banks was greater than the profits of the balance of the NZX 50. 
We should then reflect on the fact that those four banks are Australian-owned. The Australians own not just their own banks they own ours. The collective profitability of those banks is bigger than the rest of the NZX 50. We do not have much left there that we own either. It is absolutely clear that the big difference between New Zealand and Australia lies in the fact that over the years Australia has saved. I am pleased to see Sir Roger Douglas in the House. I am pleased to again acknowledge him in respect of the changes that he has tried to make in New Zealand for close to 40 years on this issue. It goes back to the Kirk savings scheme which Sir Roger was responsible for the design of and subsequent moves. Every time a Labour Government takes steps towards the progress that Australia has made—actually the Australians started later than Kirk and look what it has done for them—National comes in and undermines it. 
It is good that this portability legislation is before the House today. It would not be here but for the introduction of KiwiSaver by the previous Government. But more important it is an opportunity for us to reflect on why New Zealand is so much less economically well off compared with Australia and it relates to savings. I really cannot emphasise that point enough. The big difference between New Zealand and Australia is savings and investment. 
Another area that is related to this which is not addressed by the bill but which I think needs to be considered is the tax mix in New Zealand. Our tax mix is different from that of Australia and the rest of the OECD. Despite Bill English’s comments to the contrary his so-called tax switch did nothing significant to change that. National’s tax switch not only was unaffordable in terms of the effect on the Government deficit but has also increased the tax burden of businesses as opposed to individuals. Given that we rely upon businesses to generate the wealth that we need to earn incomes and generate the taxation revenue that the Government needs to pay for health and education it seemed to me to be a retrograde step—particularly the reduction in depreciation for short-lived assets that are so expensive for our export businesses to purchase. 
Trans-Tasman portability of retirement savings is a good thing. It is sad that we cannot enable people to use them for a first-home purchase deposit if they bring back money from Australia. It is progress none the less. But the big difference between New Zealand and Australia is savings. This bill is an opportunity to highlight that. Thank you. 
AMY ADAMS (National—Selwyn) 
: 
 It is a pleasure to take a call this afternoon on the second reading of the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill. I was part of the Finance and Expenditure Committee that examined the bill. Tax legislation is possibly not the most stimulating of topics that we deal with in this House and for a wider audience it possibly does not generate the highest levels of interest. But it was quite an interesting process to work through the bill which enjoys a broad level of support in the House and I think that is sensible. 
There are certainly sensible measures within the bill such as allowing much easier flow of retirement savings between New Zealand and Australia. That is a welcome step. Many many New Zealanders who have worked in Australia and been subject to its compulsory retirement savings scheme have come back to New Zealand and been unable to access or transfer those funds and in the time between their transfer back to New Zealand and their reaching retirement age they have simply lost touch with those funds. Huge sums of money in Australia have not found their way back to their rightful owners. Anything we can do to ensure New Zealanders get the benefit of retirement savings they have made in Australia—and similarly for New Zealanders who go to Australia—is to be encouraged and applauded and I certainly do that. 
I will briefly touch on two other aspects of the bill that I found interesting during its passage through the Finance and Expenditure Committee. The first of those tidies up the rules for under-18-year-olds enrolling in KiwiSaver. Some traps in that process had been discovered that we had to work through. We looked at some interesting issues in relation to guardianship and the various situations that under-18-year-olds might find themselves in. The committee spent a bit of time on that with help from officials and I am comfortable that the position we have come to is a sensible one. 
The last matter I want to touch on briefly in this contribution is the reasonably well overlooked provisions in this legislation relating to binding rulings. Binding rulings are a part of tax law that I am very interested in because I think they are a very very important part of our tax structure whereby we enable taxpayers to find out in advance what the tax consequences will be rather than saying: “Have a go enter in then we’ll tell you later whether you’ve got it badly wrong.” They are a very valuable part of our tax system and one that I would like to see better utilised. So I applaud anything that clarifies the way in which they work. Although the provisions in the bill seem restrictive on the face of it they make it clear where the Commissioner of Inland Revenue can and cannot issue a binding ruling. To the extent that they will help taxpayers and their advisers better understand that process and know when to use it I think they are a welcome step and I certainly encourage taxpayers to take full of advantage of them. As I said any step we can take to enable people to understand how tax law will affect them at the front end of a transaction is to be welcomed. I commend the bill. 
STUART NASH (Labour) 
: 
 I rise to support the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill. There is no doubt that that is quite a mouthful. It is another bill that was started under Labour that is being debated in this session of urgency. The bill is supported by all in the House. It is a sensible bill and it goes a long way to clearing up a few areas and making it easier for people to understand tax matters. 
As has already been mentioned the main provision is the introduction of changes to the tax rules to allow New Zealanders returning home from Australia or Australians deciding that this is really the best place in the world to live to bring their retirement savings with them and for New Zealanders to take their retirement savings to Australia if they decide that the land of no clouds severe water shortages and a million Russel Normans is better than Godzone. The bill also includes a number of technical changes to the rules surrounding KiwiSaver gift duty exemptions and binding rulings to improve the way in which the rules work and to reduce compliance costs for taxpayers. 
In regard to retirement savings portability as mentioned it is a sensible arrangement. We have been told that under this scheme potentially $16.6 billion in lost contributions from New Zealanders working in Australia would come back to New Zealand. Even if a fraction of that money was to come back home it would have a positive impact. When we consider how the country has been hollowed out to the tune of hundreds of millions of dollars as a result of the finance company collapses then any money that returns this way in the form of savings is more than welcome. 
And of course Australians know how to save. As my colleague David Parker alluded to the Australian superannuation scheme is light years ahead of the New Zealand equivalent. That this Government keeps comparing itself with Australia’s is a little strange if not downright disingenuous all things considered. This National Government has ultimately undermined its commitment to New Zealand superannuation. We have the Cullen fund which was designed as a top-up to the Government’s national superannuation and this Government axed contributions to it. Since this decision was taken by Mr English the Cullen fund has gone on to make a small fortune as the global equity markets have recovered in the wake of the global financial economic crisis. Then we have KiwiSaver. About 1 million Kiwis have taken up this scheme. I ask Iain Lees-Galloway whether he remembers who developed KiwiSaver. Was it a Labour Government? 
Iain Lees-Galloway 
: The Labour Government—Michael Cullen. 
STUART NASH 
: Yes I think it was a Labour Government. A million Kiwis view it as a vital part of their retirement savings and planning for the future which is what the scheme was set up for. One of the major differences between the New Zealand scheme and the Australian scheme is that theirs is compulsory. We once had a compulsory superannuation scheme whose architect was Sir Roger Douglas when part of the Kirk Cabinet. It was visionary at the time only it was removed illegally as it turned out by Prime Minister Muldoon. 
Brendon Burns 
: Which Government? 
STUART NASH 
: National I think. It is good to see Sir Roger Douglas sitting in the House because that was visionary legislation. Imagine what our economy would look like now if his superannuation scheme had continued like the Australian scheme did—it was set up at about the same time—into the 21st century. I think this economy would look quite different now if Sir Roger’s scheme had continued. 
As David Parker also mentioned Australian employers will soon be obliged to pay 12 percent of an employee’s salary into the fund and to invest it in local and international infrastructure as well as in a huge number of other local and international investments. Members should correct me if I am wrong but I believe that it is one of the largest superannuation funds in the world right now and growing. And this Government has cut employer contributions when the Australians are increasing theirs. It is quite interesting. 
Anyway I come back to the bill and its key provisions. It includes trans-Tasman portability of retirement savings. The portability arrangements will allow retirees who have retirement savings in both New Zealand and Australia to consolidate them in one account in their country of residence. These amendments give effect to an agreement between the Minister of Finance and the Australian Treasurer made in July 2009. These arrangements are expected to come into effect during the second half of 2010. The amendments cover only the transfer of retirement savings between the KiwiSaver scheme and an Australian complying superannuation fund regulated by the Australian Prudential Regulation Authority. By that I mean that it cannot be a private superannuation scheme; it has to be a KiwiSaver scheme. A member must permanently emigrate to Australia and supply proof of his or her emigration to the provider. In order to protect the value of the savings transfers of savings between New Zealand and Australia will be exempt from any entry or exit taxes. For permanent emigration to a country other than Australia the current rules for transfer and cash withdrawals will apply. However if a member permanently emigrates to Australia the following new rules will apply—and I am referring to a member of the scheme not a member of this House. Well I suppose it could be a member of this House if a member wanted to go there—or to go back home. A member will be able to transfer all of the Crown contributions; his or her member tax credits will not be recovered by the Crown. Retirement savings may not be withdrawn in cash and a member must transfer the full amount of his or her savings and not a partial amount. 
Requirements for proof of permanent emigration to Australia will be the same as for permanent emigration to other countries. KiwiSaver members can request to transfer their savings at any time after supplying the provider with proof of their permanent emigration to Australia and fees charged by KiwiSaver providers on the transfer of retirement savings to Australia must not be unreasonable. I cannot imagine the investment sector being unreasonable! Why would that provision need to be included? Australian rules will provide that New Zealand - sourced retirement savings may not be transferred from Australia to a third country. 
The following rules will apply to funds transferred from Australia to KiwiSaver. A person who is retired may withdraw his or her Australian-sourced retirement savings at age 60. A member tax credit of up to $1428 per year will not be paid on contributions to KiwiSaver schemes consisting of Australia-sourced retirement savings. Australia-sourced retirement savings may not be withdrawn for use for the purpose of buying a first home diverted to a member’s mortgage repayments under the mortgage diversion facility or used to count towards eligibility for deposit subsidy. Australia-sourced retirement savings may not be transferred to a third country either. [ 
Interruption 
] I know that this is rather dry but this is an important bill because a hell of a lot of people in Australia want to come home. 
David Garrett 
: No no it’s fascinating. 
STUART NASH 
: I think it is important that we outline some of the reasons we are doing this and some of the practical measures. When the member opposite starts jumping up and down about speeches I have to ask what planet he is on. He is the man who introduced “three strikes” and what a load of bollocks that was. I come back to the bill. 
David Garrett 
: Absolutely! 87 percent of the public are wrong Nash! That’s why you’re sitting over there. 
STUART NASH 
: Is someone talking? Is there a noise somewhere in the House? Anyway the current inability of individuals to streamline and consolidate their personal retirement savings has led to some individuals paying multiple fees for the administration of their retirement savings account. These costs undermine the effectiveness of policies aimed at improving retirement living standards. Also the ability to transfer savings is one factor individuals take into account when considering employment opportunities on either side of the Tasman. 
The Australian superannuation Minister has indicated that around A$13 billion is involved and I mentioned this before. That is about NZ$16.6 billion in lost retirement savings in many small retirement savings accounts of New Zealand workers in Australia. Under the status quo an individual may transfer their KiwiSaver savings to Australia on permanently emigrating there but Australian complying superannuation funds may not be transferred to New Zealand. 
There are a number of other provisions in the bill. I will leave it at that because it is a very good bill. Mr Foss acted as a good chair of the Finance and Expenditure Committee. We received some very good advice from the Inland Revenue Department and some good submissions as well. It is good legislation so I commend it to the House. Thank you. 
AARON GILMORE (National) 
: 
 It is a great pleasure to follow that invigorating speech from the wonderful revenue spokesperson from the Opposition Stuart Nash. This Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill contains a whole lot of issues and tidy-up matters and I will focus on a couple of the remedial matters. We are a Government unlike others in the world that is making the tax system simpler and easier and reducing costs to people and I think they are really neat things. 
A couple of good provisions in this bill have not been touched on by previous speakers and I think they are worth mentioning. One of those is the exemption from gift duty for the gifting of assets to city council organisations. We had a couple of submitters who were very keen to make sure that that measure went through. This arose when there were a number of organisations gifting certain assets to local government in particular which would result in gift duty. That really was not a sensible situation and it discouraged the gifting of assets to local government. So there is an exemption in the legislation that allows for transfers to be made to local or central government. There have been some quite high-profile cases where if this measure had not been passed there would have been some particular issues and problems that would have discouraged sensible gifting arrangements. 
The other thing I want to touch on is the issue of the branch equivalent tax account debits—or BETA debits. For people like me who happen to be qualified accountants this is quite an exciting aspect of the tax law. But for most people this is something that makes them shake their heads and roll their eyes. I can see Mr Garrett doing the same. These things are quite important because they allow for the offsets that exist when companies are investing overseas. Some other changes have been made in order to simplify tax law so the need for this particular aspect of tax law has been removed as a result of this bill. I think that is a really good thing. Again this is a Government that believes in simplification and that was a good step forward. 
We had a very good chairperson through this select committee process in Craig Foss—and I note that Mr Nash over there passed over him in his speech. He is a wonderful MP from the Tukituki—a beautiful part of the world in the Hawke’s Bay. I thought we had wonderful work from the officials who tried to grapple with some very complicated matters. I know that tax is never the most exciting topic at the best of times but they made it interesting enough for members who did not quite have a tax background to get their heads around it and understand the importance of some of these changes and I think that is a good thing. This bill wraps up all of that stuff in a way that it can be understood and it sorts a whole lot of things out. 
I do not want to touch on anything more in particular on the tax changes. A few barbs have been thrown from the Opposition about some of the wider issues around superannuation but the issue of savings and investment is part of a journey. This bill is another step along that journey towards improving our savings rates and encouraging people with the right incentives to do a bit more and bring more savings back to New Zealand—and that has to be neat. For those Kiwis coming home to New Zealand—and there have been hundreds of thousands of them coming home in the last 18 months under a John Key - led Government—this bill will allow them to bring their savings through with KiwiSaver and I think that is a good step forward to bolster our private savings effort. 
I finish off by talking about an issue that is quite exciting—the continuing exemption for offshore oil drilling operators. I know that there is some fear and loathing about that but I think that that has the potential to bring significant funds into New Zealand and that has to be a wonderful thing. Thank you very much. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am very pleased as a member of the Finance and Expenditure Committee to contribute to the second reading debate of the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill. It is in large part a wash-up bill for a number of measures but the most important parts of it at the heart of the bill are the key changes that make it much easier for trans-Tasman retirement savings to be moved from one side of the Tasman to the other. That is an absolutely essential change. 
I think that just about every member of this House would acknowledge that although we still remain very firmly two countries we are also very much one market. There is a huge flow of people from one side of the Tasman to the other and it is not all a two-way trade. I imagine that we might see soon a former Australian Prime Minister in retirement perhaps and we might have a Socceroos coach looking for somewhere to bolthole for awhile. So these people and many many others might well need the benefits of a better flow of trans-Tasman portable superannuation savings. It happens across the age spectrum. My dear late parents emigrated to Australia 8 years ago at the age of 82 with two of my brothers living there. They may have got some modest benefit from these changes. 
The KiwiSaver scheme was extraordinarily well-designed by Michael Cullen and I think there was probably input from the then Minister of Revenue and current Minister of Revenue Peter Dunne. In fact the KiwiSaver regime did and still does allow New Zealanders to take their savings to Australia. Currently and unfortunately the matter being addressed by this bill is that those New Zealanders who live in Australia are not so able to move their savings back over here should they wish upon retirement to return to the land of their birth. 
We are talking about sums estimated at A$13 billion or NZ$16.5 billion and they are amounts that are bigger perhaps than the health budget in this country. We are talking about very very large amounts of money and I think that has the effect of locking New Zealanders who might wish to return home for their final years into staying in Australia beyond the time they would prefer to come home. So this is a very sensible and even essential set of changes to allow a better flow of trans-Tasman savings. It is a step forward in that respect. 
That said obviously when we look at the whole context of savings we do need to note that at the same time that the Government assists with this step forward it takes two steps backwards when we consider the broader view of superannuation. The first thing of course was the decision in last year’s Budget to suspend contributions to the New Zealand Superannuation Fund. I noted the comment from Finance and Expenditure Committee chair Craig Foss a speech or two ago that it is not appropriate to borrow for savings. Of course that does not apply when the Government wants to borrow to fund tax cuts as it has done in this year’s Budget—that is a perfectly appropriate thing to do. The other thing is that the analysis earlier last year was that the New Zealand Superannuation Fund was losing money and therefore it should not be invested in when in fact the latest Treasury figures show that the Government’s superannuation fund—the national superannuation fund the Cullen fund—has bounced right back and is contributing positively back well and truly into the black. 
The other thing to note in this year’s Budget in respect of the superannuation fund is that although we will back in surplus—now projected to be in 5 years—contributions to the New Zealand Superannuation Fund would still be suspended for another 4 years. So we know that the Government has taken a philosophical position about savings and continues a pattern of behaviour by National Governments over the generations—to not truly support retirement savings. This goes right back to Muldoon’s axing of the excellent Kirk-Rowling Government scheme in 1972-75 which as has quite rightly been acknowledged could well be a multibillion dollar fund. It could be projecting us into prosperity if it had been left in place rather than used as a cynical electoral ploy in the 1975 election. 
But let us move back to the current period and look at KiwiSaver which of course has been subject to some amendments through this bill. I note the recent Australian Budget where employer contributions are required to rise to 12 percent of an employee’s salary and I note that New Zealand’s Budget last year cut the employer contribution to KiwiSaver from 4 percent to 2 percent. So we now have a 10 percent differential between what one can receive in one’s retirement savings scheme via one’s employer on that side of the Tasman as opposed to this side of the Tasman. That really is a betrayal I think of those 1.2 million Kiwis who have signed up to KiwiSaver. National has actually gutted the KiwiSaver scheme in large part. That really is most unfortunate. 
I want touch on Supplementary Order Paper 105 which the Minister has put forward. I acknowledge the Minister’s move in this area around the Screen Production Incentive Fund. This fund was introduced by the previous Labour Government in 2008 as a measure of assistance to the film industry. In legislation passed last year changes were made around the taxation treatment of what is known within the industry as “SPIF” the Screen Production Incentive Fund and grants from it. The logic of the advice at that time was if a film producer was receiving a grant from the Government then that person should not get any particular assistance with tax treatment any more fully. 
The problem with that was it created a differential treatment between films that received other Government funding such as through the New Zealand Film Commission and those that received funding through the Screen Production Incentive Fund. The net effect of that was that any film that did not get a Screen Production Incentive Fund grant was able to immediately start claiming the tax deductions that are obviously needed in the film industry—some make money; a lot do not—but the treatment of a film that received a Screen Production Incentive Fund grant meant that one would have to wait up to 3 years to get any offset against the investment of the film grant. 
I acknowledge the Minister. He has listened to the New Zealand film industry which has pointed out this anomaly and the implications of it for the film industry. It is an industry that as I noted either does very well or bombs. People lose large amounts of money very regularly in the film industry. So I acknowledge the Minister’s Supplementary Order Paper which tidies up that issue on behalf of the film industry and puts things on a more equitable basis. 
I go back to the new rules around trans-Tasman portability of savings. I acknowledge that the KiwiSaver scheme already has portability inherent in it because it was well designed by Michael Cullen and the last Labour Government. But this bill will make some changes to the rules around those who permanently emigrate to Australia and also will now allow New Zealanders resident in Australian who have contributed to a savings scheme in Australia—with those large volumes of employer contributions—to benefit from the return of those funds to New Zealand if they decide to come back here to retire. 
There are some constraints as to what one can do with Australian-sourced savings. For instance if one returns to New Zealand one cannot use it towards any of the KiwiSaver housing-related incentives. Some members may recall that one could use KiwiSaver towards a first home deposit and so on. So there are limitations upon it but in the broad sweep of things it is a very very positive move. It will allow New Zealanders who have contributed—sometimes over 20 30 or 40 years—to Australian-based superannuation schemes to repatriate those funds back to New Zealand to see them into a well-funded retirement. 
These changes are very very good moves in respect of many thousands of New Zealanders. I think these measures will be an incentive for New Zealanders who currently may be trapped in Australia with quite generous superannuation schemes but were not until this legislation able to repatriate those funds bring them home and set themselves up for their retirement. Anything that encourages New Zealanders to return to the land of their birth has to be applauded and supported and that is why Labour has been very very firmly supportive of this bill. 
Finally I acknowledge Craig Foss the chair of the select committee and the officials who supported us through the processing of this bill. Thank you very much. 
Bill read a second time. 
Residential Tenancies Amendment Bill 
In Committee 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I seek leave for the Committee stage of the Residential Tenancies Amendment Bill to be taken as one question with unlimited calls. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought for that purpose. Is there any objection? There is no objection. 
Parts 1 and 2 schedule and clauses 1 to 3 
MOANA MACKEY (Labour) 
: 
 It is with great pleasure that we finally come to the Committee stage of the Residential Tenancies Amendment Bill. This bill has been a long time in making further progress through the House since it was reported back from the Social Services Committee in about September last year. It is very pleasing that we finally see some action to progress this bill. Labour has put up a number of amendments in the Committee stage. We support this bill; it was Labour legislation to start off with. Unfortunately following the change of Government the Minister of Housing has seen fit to water down the protections for tenants under this legislation so I have moved a number of amendments in my name in an attempt to address that watering down and restore some of the protections that Labour saw fit to award tenants under its bill. 
It is fair to say as a background that tenants in New Zealand do not enjoy an enormous amount of protection compared with tenants in other countries around the world that we generally compare ourselves with. Many other OECD countries have secure tenancies; New Zealand does not have those. This means that any tenant in New Zealand can be evicted on 90 days’ notice for absolutely no reason at all. That does not provide security for families in New Zealand. In saying that I acknowledge that the situation in New Zealand is very different from for example that in Europe where there are a large number of corporate landlords as opposed to mum and dad landlords. I feel that the bill that Labour originally put forward provided a number of protections for tenants that did not need to be removed considering that in New Zealand compared with other countries the balance is already heavily weighted towards the landlord. 
I do not hold out much hope that the Government will support my amendments because I fear some of these arguments have already been had and lost. But there is one particular amendment on a new issue that I hope the Government will support. Certainly Labour will be arguing very strongly that the amendments put forward in my name in this Committee stage should indeed be supported. 
The first amendment in my name that I will speak to relates to the issue of letting fees. In Labour’s bill we prohibited the charging of letting fees to tenants. This is the situation where a tenant goes into a letting agency in order to find a property to rent and a landlord has engaged a letting agency to market the property to prospective tenants. When a tenant finds a property that he or she wishes to rent the letting agency then charges that tenant a week’s rent usually—sometimes more—for that service. Labour thought that that was particularly unfair. It is hard enough at the moment for tenants to get into the private rental market without putting up another barrier. When we consider that rents are likely to rise as a result of the taxation changes in the Budget we see that this barrier for tenants is not needed and not warranted. I make the comparison of letting agents with real estate agents. When someone wants to sell a house and engages a real estate agent to market that house to prospective buyers the vendor pays the charges or the commission to the real estate agent not the person who buys the house. 
The argument is often put up—and it was put up to us in the Social Services Committee—that when the rental market is tight the letting agency is in a way working for the tenant not for the landlord because it is so hard to find a property that it is in fact good for the tenant that a letting agency is doing that work. But that argument does not apply when someone sells a house. Regardless of the state of the housing market the person who has engaged the professional agency be it a real estate agent or a letting agency pays the agency’s commission. It is not the decision of the tenant or the purchaser to engage that professional agency so why should those people be the ones who pay for its services? I welcome the Minister’s arguments on this matter because it is a significant barrier to getting into the rental market. It is yet another thing that people have to pay on top of the cost of moving on top of the cost of an upfront bond and on top of the fact that rents will be going up—and they have been going up. The letting fee might not seem like a lot of money to some members here but for someone to have to pay another week’s rent on top of everything else may well make the difference between that person being able or not able to get into the property. 
An interesting fact is that a lot of property agents came along to the select committee and said they were annoyed because other agents could charge letting fees but they could not. When we asked them whether they would be happy to just have the right to charge those fees taken away from everyone they said yes. They wanted to have a level playing field; they did not want to have those fees as a source of income. National Party committee members and Labour Party members agreed there should be a level playing field but the National Party’s point of view was that everyone should charge tenants a letting fee and the Labour Party and the Green Party—I am not speaking for it—then said no one should charge letting fees to tenants. If a landlord wants to engage a property management agency or a letting agency to market a property then the landlord should pay the cost of engaging that agency. The charge should not be put on to the tenant. 
So there is an amendment in my name that would make this change and prohibit the charging of letting fees to tenants. I urge members to support it. I think it is only fair that this amendment be passed into law. 
The second amendment that I will talk about is one that started off in a member’s bill in the name of my colleague Maryan Street. It is around the issue of joint and several liability when there is damage to a property. This issue arose out of a case in Dunedin where a student flat burnt down. One tenant was responsible for the action that caused that but the other tenants were not. In fact they were not there. They did not know anything about it and they could not have stopped it because they knew nothing about it. But they were held liable. We have heard I believe that two of the tenants who had nothing to do with causing the fire and who could not have stopped it even if they had wanted to were bankrupted as a result of the insurance company going after them to get back the money that it had to pay out to the landlord to fix that property. That is a situation where clearly only the insurance company wins. 
I want to be quite clear about this issue because I know that there tends to be a bit of mischief about trying to misrepresent what Labour believes about it. Absolutely a landlord should be able to recoup the cost of damages caused to a property but Labour says we should make the person responsible for causing the damage the one who is targeted for recouping that money rather than people who are not responsible for it. It may well be that the response that Labour put up is not the best way of doing it and that the Government thinks there is another way of achieving that. If so we would definitely be open to considering other options. But I do not think anyone thinks it is fair that an insurance company can get two bites of the cherry by chasing after people who could not possibly have stopped an action from happening. We have ended up with young people at university being bankrupted as a result of the actions of that company. 
This is a serious issue. The Minister has known about this issue for a long time. In fact when in Opposition he dealt with it as the spokesperson on housing when my colleague Maryan Street first brought her member’s bill to the House. He has had more than 18 months to deal with it as the Minister. The select committee reported back on this bill many many months ago; I think it was in September last year. He has known about the issue for a long time and I hope that he will be able to stand up and tell us either why he will not be addressing it—why he does not feel the situation needs to be addressed—or if he is prepared to address it what he intends to do about it. 
I will save my other amendments for further calls. Certainly the issue of letting fees is critical and I do not understand how the Government could possibly say it is unfair that the person who engages the letting company should pay for that as opposed to the person who ends up renting the property particularly in light of the Budget changes and the hardship that is being faced by many people. In fact 30 percent of New Zealanders rent their properties and 50 percent of them have a combined household income—not personal but combined—of under $50000 a year. These people cannot easily absorb another couple of weeks’ rent on top of everything else and that is what makes the issue of letting fees even more critical than perhaps it was when the previous Labour Government put forward legislation to prohibit the charging of letting fees to tenants. It is an issue of fairness. I do not see the Government scrambling to make sure that in a tight housing market the real estate agents charge buyers and not vendors for marketing properties so it is difficult to comprehend why the Government and the Minister of Housing feel it is necessary to whack another cost on to tenants who in the current financial situation are already struggling. 
I have to say that issue was a big one at the select committee. It was an issue on which even those who thought that letting agents should be able to charge whomever they wanted acknowledged that charging tenants the letting fee caused hardship. There were people who acknowledged that it did keep people out of the housing market. We had a comment from one of the National members on the committee that those people could just go down the road and find somewhere else to rent. That comment worried me because I think that sometimes National members do not understand that the lowest-paid New Zealanders do not have a lot of choice when it comes to these situations. 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 I take this call to clarify the purpose of the Government’s two Supplementary Order Papers. The first proposes minor technical amendments to improve and streamline the implementation of the bill. More specifically it separates certain intertwined provisions of the bill so that they may be brought into force via separate commencement orders as envisaged by clause 2 to ensure that parties have sufficient time to prepare for their new rights and obligations. The bill provides for administrative and Tenancy Tribunal forms to be updated and approved by the chief executive of the Department of Building and Housing rather than by regulations. It updates the Tenancy Tribunal’s jurisdiction to mirror the new process for dealing with abandoned goods as proposed in clause 42. It removes the requirement but retains the ability to prescribe a fee for providing a debtor’s address details to the District Court for enforcement purposes. It provides for the form of notices filed with the District Court—for example a notice of appeal—to be governed as is the case under other legislation by generic court rules rather than separate regulations. Although the aforementioned changes are minor in nature collectively they will aid clarity reduce unnecessary regulation and facilitate improvements to the administrative processes over time in response to feedback from users. 
The second Supplementary Order Paper proposes minor consequential amendments to the bill that reflect the recent enactment of the Unit Titles Act which was passed obviously before this legislation. We would have had to make other changes had the reverse been the case. 
Both Supplementary Order Papers are consistent with the policy intent of the bill and the changes recommended by the Social Services Committee. I assure members that the Supplementary Order Papers I am tabling today are worthy of support. They have no policy impact except to make the legislation more streamlined and understandable by those who use it. I urge members’ support. I will be happy to respond to members’ queries in due course. 
SUE MORONEY (Labour) 
: 
 I will make a contribution on the Residential Tenancies Amendment Bill. Although I am not on the Social Services Committee and have not had the opportunity to hear what sounds like some very fine submissions on the bill the issue of letting fees is an important one in every single community in our country none more so than in the community of Hamilton. 
Even though we are in the Chamber debating once again legislation that started out as good robust Labour Government legislation it is legislation that yet again is being watered down by the Government. Even though we are debating such watered-down legislation at least some progress is starting to be made on this issue although Labour would like to see much more progress than is possible in the bill before us. 
My colleague Moana Mackey spoke in very fine detail about letting fees. This is a classic issue of trying to balance the difference between the haves and the have-nots. Generally the people who are landlords have the financial capability and therefore the power in this relationship. They not only own their own home that they live in but also have enough financial assets to own other homes that other people can live in. They are the haves. 
Then we have the have-nots. They are the people who for many many reasons—whether financial or a deliberate decision not to own property—are not in a position of owning and holding property. Therefore they heavily rely on some form of regulation to protect their interests. As we have heard those protections are currently not strong enough. However I would argue that the bill before us does not make them strong enough. It does make some improvements and I acknowledge the Minister of Housing for his work on that but we need to go an awful lot further. The Minister has picked up a previous Minister’s work and good on him for doing that. 
I will dispel a myth in relation to what I will call the Rugby World Cup amendment so that people understand what I am talking about. Labour members are proposing giving tenants some certainty in the situation where a major event comes along and landlords see an opportunity to make a lot of money because accommodation needs will be very high in their city. I want to dispel the myth that this is an Auckland-only issue. We are talking about the Rugby World Cup and the city I live in Hamilton will have exactly this issue as well. On behalf of tenants in Hamilton I support Labour’s amendment to make sure there are some protections so that people cannot be thrown out of their accommodation in order to make space for landlords to bring in people who are prepared to pay more because of a lack of accommodation in our city. And it will not just be for the Hamilton-based games of the Rugby World Cup because there is a very good proposal for Hamilton to have a passenger train service during the course of the Rugby World Cup. 
Hon Ruth Dyson 
: Where to? 
SUE MORONEY 
: From Hamilton to Auckland. People with foresight and vision can see why that would make a big difference. If that proposal goes ahead Hamilton will take the overload from Auckland and lots of people will stay in Hamilton. 
It is my view that I do not want to see one family or one child put out of the place they call home because some landlord in Hamilton Auckland Christchurch or wherever wants to exploit their ability to make a bigger profit over the period of the Rugby World Cup or any other event for that matter. I think it says a lot about our country if we are prepared in that circumstance to allow people with low incomes or people with children to be turfed out of their homes in order that their landlords can make a greater profit than they need to. They would be turfing people out who are paying enough rent to cover the landlords’ costs so the only reason that it would occur was that the landlords wanted to make a profit. 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 On the matter of charging letting fees I think the Committee should note that up until recently real estate agents had the exclusive right to charge letting fees. They lost that right. All the Residential Tenancies Amendment Bill does is allow all agents not only real estate agents but also other property managers to charge letting fees. The ability for them to do it as recommended by the majority of the Social Services Committee will reduce the size of letting fees through increased competition. 
In fact I think what will happen is we will find that a whole lot of agents will not charge letting fees at all just as they have not charged them for decades. That is why we are levelling the playing field by allowing everyone to do it. If they do that is up to them; they will have to provide the service that goes with it. If they do not then they provide a point of difference which as I said has been in existence for many decades now. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 By way of introductory remarks I agree with many of the principles behind the Residential Tenancies Amendment Bill. It is a bill that the Labour Party is generally supportive of—obviously with our minority report in mind. I think all Kiwis should have some security in where they live. Kiwis are entitled to some certainty in their accommodation arrangements; they need to be able to put down roots. Their kids need to have stability in where they go to school. Where children live has a direct relationship on the stability of their lives their schooling their early childhood education and so forth. Giving people even those who cannot afford the homeownership dream stability in their rental arrangements is really important. 
People have the right to live peacefully in their homes even if they rent them with relatively minimal disruption. They are also entitled to be treated with respect by their landlords. I have been very concerned in the last few days as the media coverage has reported the way some tenants of State houses are being treated in the neighbourhood of Pomare which is in my electorate. I think that some of the issues those people are confronting have direct relevance to the debate on this bill. The suggestion is that the Government is not living up to its own expectations and the things it talks about in this bill when it comes to State house tenants particularly those in Pomare. 
In the neighbourhood of Pomare over 40 Housing New Zealand Corporation houses are empty. Over 30 of those houses have effectively been abandoned by the Housing New Zealand Corporation and it is not putting new tenants in them. To some extent those houses are uninhabitable as they have been badly run down. Unfortunately by simply abandoning them the Minister of Housing has made the problem so much worse. He has basically abandoned that whole community. We now have whole rows of empty houses that are prone to vandalism and to squatting in some cases. Simply leaving those houses there and saying that it is an antisocial neighbourhood which is what the Minister tried to argue this afternoon makes the problem worse. A whole lot of empty houses in a neighbourhood make the problem worse. Who wants to go and live in a neighbourhood where a whole lot of houses immediately around them will be empty and subject to vandalism squatting and the various other things that go on? The Government is effectively creating a ghost town. The Government is exacerbating problems that may have existed before and it is stereotyping an entire community based on the actions of a small number of people who are being dealt with in other ways. I think it is absolutely shocking that the Government has all but turned its back on an entire community in my electorate. 
Moana Mackey 
: Punishing them. 
CHRIS HIPKINS 
: It is punishing innocent people. Good families who are trying to do the best by their kids are being punished because the Government is on this grand crusade to persecute a small number of people. I think that that whole community deserves to be treated with a little bit more respect than that. 
I extended an open invitation to the Minister yesterday and I am happy to re-extend that invitation today. If he wants to come and meet the residents of Pomare I would be happy to arrange that. I would happily go with him and show him around the neighbourhood. It is a community that I have spent quite a lot of time in. I have knocked on every single door in Farmer Crescent in that neighbourhood over the last few years. I know many of those residents very well and I am absolutely appalled at the stereotyping that the Minister has undertaken. For him to suggest that they are all antisocial or members of gangs or involved in criminal activity is absolutely disgusting. Those people deserve to be treated with some respect and they are not getting that respect from the Government. I think that is really disappointing when we consider some of the rhetoric that sits behind the bill we are debating at the moment. Clearly it is rhetoric that the Government is not willing to live up to itself. 
These houses have been poorly maintained. Yes they need redevelopment; there is no argument from me about that. As a matter of fact they have been neglected over several decades. I do not think the blame rests with the previous Labour Government or with the National Government that preceded it. I think that generally speaking that community has not had the level of investment in and maintenance of those State houses that it should have. I do not want to go back over a debate on who is responsible for that; I want to know what will happen now who will deal with that situation and who will give the residents of Pomare the type of neighbourhood they can be proud to live in. All we are seeing at the moment is the Government far from dealing with the situation turning its back on the problem and saying that the tenants are to blame for the situation they find themselves in. I simply do not think that is an acceptable argument for the Government to be putting forward. There is so much more that the Government could do in the area. 
We cannot ignore the impact that tenancy arrangements made by the Housing New Zealand Corporation or others have on surrounding communities. For example I have been a regular visitor to the primary school in Pomare and having a whole lot of empty State houses in that neighbourhood has had a big impact on the school. It is struggling to cope with how to respond to that quite understandably. Empty houses have impact not just on individual families; they have an impact on whole communities. I have been really concerned to see the stereotyping of that community that has gone on. I absolutely accept that some people in that community have behaved inappropriately. I do not want to go into that in great detail at the moment but I absolutely object to the idea that an entire community should be punished because of the actions of a few. 
We heard the Minister say in the Chamber this afternoon that it is not the Housing New Zealand Corporation’s policy to leave empty all of the State houses in an area where there have been some evictions but that is exactly what is being done in Pomare. The question that Moana Mackey put to the Minister this afternoon which he did not answer was why Pomare is being treated differently from all of the other State housing neighbourhoods throughout the country. Why is Pomare being picked off and picked on by this Government? The residents of Pomare were told before the last election that if they had maintenance problems with their State housing the National Government would address those. Phil Heatley went up and down the country and said that he was shocked by the state of State houses in New Zealand and that he would do something about it. The residents of Pomare will be struggling to reconcile that with the fact that he has made massive cuts to the maintenance acquisition and redevelopment budgets of the Housing New Zealand Corporation in this year’s Budget. They were looking forward to Phil Heatley making good on the promise he made them before the last election; a promise that he is now very keen to forget—I guess along with all the other promises on the National Party pledge card on tax cuts and so on. 
I will talk a little bit more about some of the other provisions in the bill but I restate the point—I think we should not underestimate its impact—that residents of rental properties whether those properties are owned by the Housing New Zealand Corporation or otherwise are entitled to be treated with respect by their landlords. I assert very strongly that the Government as the landlord of the people in Pomare is not treating those people with the respect they deserve. I think the Minister should do something about that. There are opportunities there. A redevelopment plan is on the books; he could put money into the redevelopment plan and give those residents a neighbourhood that they can be truly proud of. 
We have to deal with the reality that increasingly people are renting their homes rather than owning them. That is a problem. I am moving on now from the issue of Pomare to talk a little bit about some of the issues to do with why residential tenancies are becoming more and more important as more people find themselves tenants rather than homeowners. I did a little bit of research on this issue a few months ago and discovered that purchasing a home prior to the Second World War was about the equivalent of 3½ years of the average annual salary. After the war that figure went up a little bit as members can imagine because people were paying for the cost of a war and the figure went up to about 5 years then back down to about 3½ years at the time the baby boomers were purchasing their homes. Now it costs about 10 years’ of the average salary for people to purchase their own home and that makes homeownership much more of a dream for so many families and it makes tenancy arrangements so much more important. That is something this House needs to consider and that is why some security in tenancy arrangements ensuring that both landlord and tenant are in mutual relationships of respect and making sure that those things are very clear in the law and that the law is up to date are very very important. Increasingly New Zealanders will be finding themselves in rental accommodation because they cannot afford the homeownership dream. 
I conclude my preliminary comments and I look forward to the rest of the debate. 
DARIEN FENTON (Labour) 
: 
 I am pleased to have the opportunity to take a call in the Committee stage of the Residential Tenancies Amendment Bill. First I say how pleased I am along with my colleagues that the bill is before the Committee having been introduced by the previous Labour Government in the last Parliament in May 2008. We were very pleased about it being introduced then and we looked forward to its speedy passage through the House particularly with issues such as boarding houses being included in the new legislation. Unfortunately people who rely on the provisions of the bill have had to wait a very long time. The Social Services Committee did great work and reported back in 2009 and here we are almost 2 years later finally getting to the remaining stages of this bill. It has been a long long time coming. 
I am also disappointed at the potential lost opportunity this bill represents. My very good colleague Moana Mackey has put up some excellent amendments and I hope the Minister of Housing will genuinely take them into account because I think there are some very important issues in them. 
I had to wonder about the Minister having been so busy swanning around Northcote. Today in question time he could not resist holding up the report by the  
North Shore Times 
—that really good left-wing local newspaper! Front page— 
Hon Ruth Dyson 
: What’s it called? 
DARIEN FENTON 
: The 
 North Shore Times 
. 
Hon Dr Jonathan Coleman 
: I notice you advertise in it. 
DARIEN FENTON 
: Every week it has a column from the member opposite Dr Coleman or his colleague. There is never anything from Labour in there but the Minister of Housing was on the front page. He could not help but tell the House how the tenants had cheered. Does the Minister know why they cheered? It was because they had been worried about whether their community urban renewal project would continue because it has been up in the air. I ask members to guess who started that community urban renewal project way back in the early 2000s. Labour set up that project and put forward the funding. 
Hon Dr Jonathan Coleman 
: You actually were in Government then. You would expect you would have done something. 
DARIEN FENTON 
: Labour funded the Tonar Street project I say to Dr Coleman. It was Labour that put the money forward to fund it yet the Minister last week was taking credit for something that he had absolutely nothing to do with. It was a hilarious thing to see. I know those tenants quite well and I know that they are Housing New Zealand Corporation tenants. They rely on legislation like this to have their issues heard. They come to see me in my office in Northcote and I am sure they come to see the member opposite Dr Coleman as well. I am very very pleased for them. 
The other interesting thing about that little celebration the other day was that on that same day there was a report in the  
New Zealand Herald 
 saying that the Tonar Street project was on hold because of issues to do with stormwater and so on. The Minister did not like that because it kind of spoiled his big moment. In the report in the  
New Zealand Herald  
the journalist had gone to ask what was happening to the staff of the community urban renewal project. As of last week they did not know what their jobs would be and whether they would still be working in the Cadness Street properties. 
Hon Dr Jonathan Coleman 
: That’s because you keep on telling them they won’t. 
DARIEN FENTON 
: That is true I say to Mr Coleman. I know those workers and I talk to them. Eighty percent of their jobs have changed from being community urban renewal project officers to being some sort of mortgage broker. 
It said in the report that they had gone to the union to ask what was happening with the restructuring in Housing New Zealand Corporation. That is a fair thing to do; after all the Public Service Association (PSA) represents those Housing New Zealand Corporation workers. The Minister could not help himself. In the presentation at Tonar Street he said that a union official had made some comments—a union official—and the Minister asked what a union official would know about stormwater. It was unbelievable. I suggest the Minister should talk to the PSA and get to know a few of those Housing New Zealand Corporation workers. They are very very worried at the moment. 
I particularly want to mention the amendment that my colleague Moana Mackey is putting forward about— 
Simon Bridges 
: You should stand for North Shore. 
DARIEN FENTON 
: Well I have not made up my mind yet so I tell Mr Bridges not to worry about it. I will let him know when I have made my decision—how is that? 
I want to talk about the representation of the Tenancy Tribunal and my concerns about the changes that raise the monetary threshold of the automatic right to be represented by a lay representative or counsel from $3000 to $6000. The problem for the people of Northcote I have been talking about is that there is no way they can afford that. 
MOANA MACKEY (Labour) 
: 
 I thank the Minister of Housing for his very brief comments on the issue of letting fees. As I said to him Labour members were not arguing against the level playing field; we were asking why he was opposed to the person who engages the letting agency paying that fee as opposed to the tenant. I do not believe that he addressed that question at all and I would very much appreciate it if in the interests of moving the Committee stage along he would be prepared to address why he thinks it is unacceptable that the person who engages a business is the one who pays for it. I look forward to his answering that question. 
I will pick up on my amendment that was alluded to by my colleague Sue Moroney. It is about what happens to tenants during major events. Over the time of the International Sevens held in Wellington earlier this year boarding-house tenants in Wellington were evicted en masse. They were told that they had to leave their homes—well boarding houses are not really homes; their places of residence—so that their rooms could be charged out to tourists here for the rugby. That move was to my knowledge unprecedented; it was unexpected. The police hospitals and emergency accommodation providers in Wellington were overwhelmed by the sudden outpouring of extremely vulnerable tenants on to the streets of Wellington. It raised a very very serious issue. Because there is no such thing as a secure tenancy in New Zealand that situation is possible. 
I live in a very beautiful part of the country which is incredibly popular over summer. I know people who are told every summer that they have to move out of their homes. For a couple of months they have to move out so that their landlords can rent the places out for three or four times the cost to people who come to the East Coast and Gisborne for their holidays. I think that is incredibly unfair but I have tried to be extremely reasonable with the Government on this issue. I have not tried to cover off the holiday situation in my amendment; I have kept it to the schedule of major events. Let us keep focused on that for now and let us say that it is illegal to evict tenants “for the purpose of providing short term accommodation for a major event” as listed in the Major Events Management Act. 
This is a serious issue. I have already been approached by tenants in Auckland who have been told by their landlords that they will have to move out over the time of the Rugby World Cup. And why would they not be told that? There is price-gouging going on in Auckland over the Rugby World Cup with some hotels charging thousands and thousands of dollars a night— 
Darien Fenton 
: And locking their workers out. 
MOANA MACKEY 
: —and locking their workers out at the same time. They are trying to make sure that their workers cannot have any salary negotiations during the Rugby World Cup period because God forbid that workers should be able to stand up for their rights and ruin a good time! 
Coming back to my amendment the fact is there are private sector tenants who have already been told that they will be issued with a 90-day notice to leave their homes—their homes. They have children—and I know that the Government is going to give schools a holiday over that time—and they will have to move away from their communities. Those tenants will have to find somewhere to put all their furniture and they will have to pay to move out and then move back in. They have been told that they can move back in at the end of the period but when they have asked about their furniture and said that storing it was really expensive the landlords have very helpfully said that they could leave it so that the people coming to stay over the time of the Rugby World Cup could use it which solves the problem that a lot of those people will want to live in furnished homes. I have no problem with people who live in their own home letting it out—of course not. A lot of them will get out of Auckland for the duration of the Rugby World Cup and they will charge people to stay in their homes. They will make a bit of money and I say good luck to them. But when a landlord is evicting a family—a family that the landlord has a tenancy agreement with—purely to make money by providing accommodation for visitors over the time of the Rugby World Cup I do not believe that that is something this House should be endorsing. 
I spoke to the Minister about it some months ago and suggested that he get his officials to work on the matter so that he could rely on their wording and not on wording that I had come up with. I asked the Minister in the select committee the other week whether he would support my amendment but he has not told me yet. I sincerely hope the Government will support the amendment. 
The other thing is that boarding-house tenants and people living in short-stay motels have also been told that they have to get out for the duration of the Rugby World Cup. That provides two problems. There is the moral argument that it is just wrong to kick people out of their homes so that someone can make a huge packet of money by providing accommodation to tourists over the time of the Rugby World Cup. But the second problem is the question of where these people are going to go. When people are evicted en masse out of boarding houses and out of their short-stay accommodation they will pour on to the streets of Auckland at a time when emergency accommodation providers will not be in a position to assist them. I think the Minister should grab the issue with two hands and say that yes the Government will deal with it. He should draw a line in the sand and say that this practice is not OK. I have not had any indication from the Minister about whether he will support my amendment but I sincerely hope he will. 
I will go on to two other amendments in my name which relate to representation at the Tenancy Tribunal. Labour has put forward two amendments on this matter because there are two issues. The first is that currently when tenants go to the Tenancy Tribunal the monetary value of what is in question has to be at least $3000 in order for them to be able to take a representative with them. Labour under the Residential Tenancies Amendment Bill that we put up got rid of that provision altogether. We said that tenants were allowed to have representation at the Tenancy Tribunal. That was not something we did lightly because the Tenancy Tribunal is intended to be an expeditious agency. It is intended to be low cost and it is intended to be fast. There is absolutely no question that once a whole lot of lawyers and everything else are added into the mix things can become more protracted. But the Government is ignoring the reality that often the people the tenants are going up against are professionals. The people the tenants are going up against are tenancy managers property managers and the Housing New Zealand Corporation. I do not know on what planet it could be said that Housing New Zealand is not a professional advocate. We were told during the process that the Housing New Zealand Corporation could say that yes the tenant can have an advocate as well. But that does not happen. Labour thinks it should be clear that a tenant has a right to representation. 
We are talking often about people who have English as a second language. We are talking sometimes about people who are illiterate and not able to read the documents in front of them. We are talking about people who are simply unfamiliar with a tribunal process such as that of the Tenancy Tribunal. We are talking about people who can be overwhelmed by it. We are talking sometimes about people who have mental health issues or drug and alcohol addiction issues. We are talking sometimes about people who are in extremely vulnerable situations such as those who have escaped from domestic violence. Labour members think these people should be allowed to have representation at the Tenancy Tribunal. Indeed it may actually speed up the process because sometimes tenants do not know what their rights are so they argue everything under the sun. Sometimes having an advocate there to focus them on their strongest argument and telling them to forget about the rest because those issues are not covered by the law can help the process. 
So I have two amendments in my name in relation to the Tenancy Tribunal. The first is to reduce the monetary threshold from $6000—the Government has lifted it from $3000 to $6000—to $100. The more important one is to get rid of that threshold altogether and to not have a prohibition on representation at the Tenancy Tribunal. We have put forward two issues. If the Government says that no it does want all tenants to have representation that is fine but let us reduce the monetary threshold down to $100. I can tell the Committee that people who live in boarding houses do not have $6000 worth of stuff. They do not. They might have $100 worth of stuff or $200 worth but they do not have even $3000 worth so their entire life’s possessions could be being thrown out by a boarding-house landlord—their entire life’s goods. The fact that the worth of their entire life’s goods amounts to only $250 means that according to this Minister and this Government they should not have representation to help them fight eviction even though everything they own—every single thing—is at risk. To some members of this Committee $6000 might not seem like a lot of money but I can tell them that to boarding-house tenants it is far more money than they would ever hope to see or ever hope to own. 
A number of cases that have gone before the Tenancy Tribunal have been about mental health patients living in boarding houses ending up having to go into care for a number of days. When they come back they find out that their landlords have evicted them while they were away—because boarding-house tenants currently have no protection under the residential tenancies laws and we have been waiting a long time for them to get coverage—and all their stuff has been chucked away. They want to go to the Tenancy Tribunal but their stuff is not worth enough to trigger their being able to take some help to the tribunal. Well I do not think that is fair and I do not think that most members of this Committee would think it was fair. 
I urge the Government to support those two amendments. I urge the Minister to stand and take a call. 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 I would like to respond to the member in respect of the amendments she has put forward. They have been presented with some thought and consideration and they are genuine amendments. I certainly acknowledge that. I will start with the last one which is the issue about tenants having advocates before the Tenancy Tribunal. It might be worth informing the Committee and those listening and the member that I can give six ways in which tenants can get an advocate who may or may not be legal counsel to assist them at the Tenancy Tribunal so that they are in no way disadvantaged. The first way they can have an advocate is if they ask the other party the landlord for consent. If a landlord consents to the tenant having an advocate then the tenant can have an advocate. 
There is another way and that is if the dispute exceeds the sum under this new legislation which is $6000. So if we are talking about $6000 or more being in dispute then the tenant can certainly have an advocate and in fact can have legal counsel. If the landlord is represented by an advocate or by legal counsel then that is the third way that a tenant can be represented by an advocate or legal counsel. Fourthly if the nature of the issue at stake is quite complex then the Tenancy Tribunal can allow the tenant to have an advocate and perhaps be represented by counsel. So if it is a complex issue the tenant can certainly have an advocate. If there is significant disparity between the two parties the tenant can have an advocate. If there is a large disparity between the tenant’s knowledge and ability to defend him or herself and the landlord’s knowledge and ability then the tenant most certainly can have an advocate. We talk about this as a sort of David and Goliath situation. If a tenant is indeed vulnerable and in a “David” situation he or she can have an advocate. If the person is a minor or has a disability then absolutely he or she can be represented by someone approved by the Tenancy Tribunal. A person who is young or who has a disability can have a representative appointed to help him or her. 
The last way is that the tribunal itself can rule in favour of the tenant having an advocate. It can do so for a reason other than the David and Goliath situation or the complexity of the issue or when the other party has legal advocacy or whatever the other reasons are and it can do so even if none of those reasons is fulfilled. So there is no shortage of avenues for a tenant to have an advocate and that is why we do not believe it is worthwhile supporting the amendment that the member Moana Mackey has put forward although I acknowledge that it is a serious issue and I appreciate the fact that she did bring it forward. 
The other issue she talked about was the issue of tenant liability for damage. Labour would like to reduce the liability for damage accidentally caused by a tenant or by a tenant’s guest to the value of 4 weeks’ rent. We are opposing this Supplementary Order Paper as well because limiting the liability for damage would impose unfair costs on the landlord who did not cause the damage was not the one who allowed the tenant’s guest into the house and was not there when the tenant accidentally caused the damage. Why would a landlord the owner of the property get stuck with the fix-up bill for damage caused by a tenant or a tenant’s guest? National believes in personal responsibility and we believe that it is important that tenants meet their obligations in this regard. In the same way we expect—and this legislation makes sure of it—that landlords who are obliged to fix properties and keep them in a decent state of repair should do so as soon as possible. That of course as one of the previous speakers said is one of my challenges and one of Housing New Zealand Corporation’s challenges in Pomare in the Hutt Valley. 
There is also the issue over the Rugby World Cup. Moana Mackey is rightly concerned about the people who during the Sevens competition were asked by the owners of the property to vacate so that they could have in residence visitors from overseas and within New Zealand who could pay quite high fees for accommodation in Wellington. Moana Mackey is concerned that that might happen with other national sporting events particularly the Rugby World Cup. My challenge to the Labour Party and the member if they are concerned about that is to vote for this legislation because the reason why landlords were previously able to do that in Wellington is that they had to give only 24 hours’ notice for someone to move out. This legislation which hopefully Labour will support means that they will have to give 28 days’ notice before someone leaves the accommodation. Boarding-house operators will be very reluctant to ask someone to leave 28 days in advance of a sporting event because they may very well get 27 days of no rent. So we think it is important to support this legislation to fix that problem of people being asked at short notice to leave in order that overseas tourists can take up their positions in that accommodation and pay a much higher rent. This legislation requires boarding-house operators to give 28 days’ notice not 24 hours’ notice. Had that provision been in place when the Wellington Sevens event was on I do not think we would have seen as many people asked to leave the premises they were living in in order to make room for those travelling with deep pockets from overseas. 
The CHAIRPERSON (Lindsay Tisch) 
: Before I call Moana Mackey I just ask that the level of discussion around the Chamber be lowered. It is very difficult to hear what speakers are saying. 
MOANA MACKEY (Labour) 
: 
 I thank the Minister of Housing for his comprehensive response. 
I will take a final call in respect of my last amendment which is to clause 9. The Minister and I will never see eye to eye on these issues. On the issue of the Tenancy Tribunal I say to the Minister that it is not happening. If he talks to any of the advocates who are out there they will tell him that it is not happening. I think it would be far cleaner for the Tenancy Tribunal to say that a tenant can have an advocate. The Tenancy Tribunal has powers to exclude people who are problematic; if someone is vexatious and deliberately dragging the matter out the tribunal can deal with that. I think that is far easier than having a convoluted list of A B C D E F and G things saying that someone can have an advocate when we know from the experience of tenants that it is not happening. I think my amendment is a really clean and simple way of dealing with it and I do not think it will cause the problems that the Minister has outlined. 
When it comes to the Rugby World Cup issue I say that yes of course boarding-house tenants will have more protection under the law. But all it means is that a landlord has to give his or her tenants more notice that he will evict them; it does not mean that he cannot evict them. It means that instead of being able to give 24 hours’ notice that a tenant has to get out a landlord now has to give 28 days’ or 90 days’ notice—it is just notice. The Minister did not address my question about tenants already being told that they are going to be given 90 days’ notice. We have had plenty of warning that the Rugby World Cup is coming; it is not something that suddenly jumps up overnight with landlords thinking “Oh here we go.” So I do not think the Minister addressed either of those questions. 
My final amendment is on cleansing orders. The Social Services Committee actually removed the requirement—and Labour voted in favour of this because we thought it seemed sensible given the arguments we had heard—for a tenant to be told that a cleansing order had been put on a property. We had heard a lot of argument about why it was ridiculous why it would be unfair to landlords if something had been cleaned up and the property was all hunky-dory and fine why should we worry tenants—yada yada yada. At the time that kind of made sense and I think the select committee was under quite a lot of pressure to report back; we did not have time to investigate as much as we should have done. 
Since then I have been contacted by a number of people who work in this area who are really really concerned that the select committee took it out and I think it raises enough concern that the Committee of the whole House should put it back in. I have been told that there are not consistent standards. What we are talking about here largely is methamphetamine labs. That is what this measure was trying to address. These labs leave residue that is dangerous and yes we should deal with that. The argument we heard was that the cleansing orders was put on the land information memorandum report. Well tenants do not have enough money to pay for a land information memorandum report in order to see whether there has been a cleansing order. Who will pay up to $300 or $400 on the off chance that there might have been a cleansing order on his or her property for a methamphetamine lab? Tenants simply cannot afford to do that they are not going to and they should not be required to. 
I have discussed this with the Property Investors Federation. Obviously it would rather that this provision was not in there but I have put a 5-year limit on. The federation said that it would be happier with this provision if it had a 5-year limit. So for the 5 years following a cleansing order during that time a tenant would need to be notified that there was a cleansing order on that property and be shown documentation that it had been cleaned up. I think the protection of tenants should be paramount. I think the chemicals we are dealing with here are very dangerous. 
I do not think the select committee made this decision with all of the information before it. Yes it is a requirement under law for a cleansing order to be placed on the land information memorandum. I have been told by councils that that practice is not uniform. Some councils take it off the land information memorandum once the cleansing order has been approved; some leave it on. It is not policed. Some councils do not know when a methamphetamine lab has been found so they do not know that the cleansing order is meant to be on the land information memorandum. 
I say to the Minister that I think there are too many questions in this area. I think the clause the Minister himself drafted and put into the legislation should be put back in until we are certain that this provision is an undue burden. 
As I have said I have spoken to the Property Investors Federation. It has said that a 5-year time limit would make it far more comfortable with this provision. I welcome any short comments that the Minister has on this. I really hope that this is the one amendment that we can get some agreement on. Again I say that on all my other amendments he has not really answered my questions which suggests to me that he does not have an answer to my questions. 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 I will again respond to Moana Mackey’s amendment to clause 9 because it concerns a serious issue and she is taking it seriously. She is not trifling with the Committee at all. Methamphetamine manufacture within some properties including rental properties is a problem. It is something that the Minister of Police is certainly getting on top of but it does happen from time to time. 
It is worth explaining to the Committee what the process is when a meth lab is discovered in a property. The manufacture of methamphetamine is illegal so if anyone is caught manufacturing methamphetamine two things have to happen: firstly that person is busted by the police; secondly the police inform the local district council which has to—having been informed and the police have to inform the district council—issue a cleansing order. The council documents that a cleansing order has been placed over the property. So after a methamphetamine lab is found in a property the police have to go to the council. The council then registers a cleansing order against the property. Once there is a cleansing order the cleansing order goes to the owner of the property. The owner in this case a landlord has to have the property decontaminated to a particular standard—in other words the property is clean to a standard that people can live in it. So there is a process for when methamphetamine labs are discovered. 
In some cases a property cannot be cleaned and it needs to be destroyed. We have seen that happen a few times and in fact we have seen it happen to State houses a couple of times. I think it may have even been in Chris Tremain’s electorate of Napier. The problem of compulsory disclosure of a landlord having to disclose to a tenant that the house had previously been used for methamphetamine manufacture may very well drive landlords and owners of properties not to declare to the police or the local council that they have been used as a meth lab. We prefer that the processes in place incentivise the clean-up of properties used for methamphetamine production. We must incentivise that clean-up or otherwise the destruction of that home. The only way to do that is to have an easy process which we have: on discovery of a meth lab the police find out about it; then the police take action through the courts against the perpetrator the police inform the district council the council issue a cleansing order and the property is cleansed to a very high standard or is otherwise destroyed. That is why we will not support Moana Mackey’s amendment. 
I also note for members that renting out contaminated premises is a breach of the Residential Tenancies Act and the Tenancy Tribunal can terminate the tenancy and award punitive damages to tenants should they be put in unhealthy and unsafe contaminated conditions. So there is a belt and braces approach to this problem. We want to incentivise the reporting of discovery of methamphetamine or other drug manufacturing labs. We do not want to disincentivise reporting of methamphetamine or other drug manufacturing labs within the rental community. 
The question was put that the following amendment in the name of Moana Mackey to clause 9 be agreed to: 
to insert the following subclause after subclause (1): 
(1AA)Section 13A(1) is amended by inserting the following paragraph after paragraph (n): 
“(na)whether an owner or occupier of the premises has been ordered or required under this Act or any other enactment (including but not restricted to section 41 or 82 of the Health Act 1956 or section 124(10)(c) of the Building Act 2004) in the last 5 years to cleanse the premises and if that is the case the nature and date of the order or requirement and the steps if any that have been taken to comply with the order or requirement; and”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 50 
New Zealand Labour 40; Green Party 9; Progressive 1. 
Noes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Moana Mackey to clause 13A be agreed to: 
to omit this clause and substitute the following clause: 
13ARequiring key money prohibited 
Section 17(4) is amended by omitting paragraph (c) and substituting the following paragraph: 
“(c)any sum required to be paid by the tenant to or at the direction of the landlord in respect of any fee or other charge for services rendered by any solicitor or letting agent relating to the grant or assignment of the tenancy is prohibited:”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 50 
New Zealand Labour 40; Green Party 9; Progressive 1. 
Noes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Moana Mackey be agreed to: 
to insert the following clause after clause 31: 
31ANew section 51A inserted 
The following section is inserted after section 31: 
“51ATermination of tenancy for provision of short-term accommodation for major event not allowed 
“(1)It shall not be acceptable for a tenancy boarding house or other to be terminated for the purpose of providing short term accommodation for a major event as defined under section 7 of the Major Events Management Act 2007. 
“(2)A tenant who had their tenancy terminated may apply to the Tenancy Tribunal for a finding that it was terminated for the purpose outlined in subsection (1). 
“(3)Where the Tenancy Tribunal finds that a landlord is found to have terminated a tenancy for the purpose outlined in subsection (1) the landlord will be subject to a penalty to the value of the daily rent of that property charged under the tenancy agreement for each day it was rented out for the major event.” 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 50 
New Zealand Labour 40; Green Party 9; Progressive 1. 
Noes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Moana Mackey to clause 38 be agreed to: 
to add the following subclause after subclause (1): 
(2)Section 59 is amended by adding the following subsection: 
“(5)The tenant liability for damage to their rental premises is limited to 4 weeks’ rent if the Tenancy Tribunal is satisfied the tenant neither caused the damage intentionally or recklessly nor intentionally or recklessly encouraged or permitted another person to damage the premises.” 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 50 
New Zealand Labour 40; Green Party 9; Progressive 1. 
Noes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Moana Mackey to clause 63 be agreed to: 
to omit “$6000” and substitute “$100”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 50 
New Zealand Labour 40; Green Party 9; Progressive 1. 
Noes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Moana Mackey to clause 63 be agreed to: 
to add the following subclause after subclause (1): 
(2)Section 93 is amended by repealing subsection (7). 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 50 
New Zealand Labour 40; Green Party 9; Progressive 1. 
Noes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 110 in the name of the Hon Maurice Williamson and Supplementary Order Paper 120 in the name of the Hon Phil Heatley be agreed to. 
Amendments agreed to. 
Parts 1 and 2 schedule and clauses 1 to 3 as amended agreed to. 
Bill reported with amendment. 
Report adopted. 
Residential Tenancies Amendment Bill 
Third Reading 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 I move  
That the Residential Tenancies Amendment Bill be now read a third time 
. This bill amends the Residential Tenancies Act 1986. I introduced this bill to the House on 13 May 2009 and I am pleased to begin the bill’s final process for passage through the House. Keeping the Kiwi dream of homeownership within reach is a key focus for this Government as many will know. That is why we are working so hard to make housing more affordable by freeing up the supply of land and reducing the red tape that has been strangling the building and construction sector. I acknowledge my colleagues the Hon Maurice Williamson and the Hon Dr Nick Smith who are working hard on the Resource Management Act and the Building Act in order to streamline them to make sure that red tape is indeed slashed. We are also easing the burden of interest rates by growing the economy. We do not want to see interest rates go to 8 9 or 10 percent like they were under the previous Government. We want people to be able to afford a mortgage. We are eliminating low-quality spending and are progressing a programme of personal tax cuts so people can better afford a mortgage. 
The reality is there will always be those who for either lifestyle or affordability reasons want or need to rent a place to live. Since the vast majority of families rent privately it is important to ensure that the legislation governing the sector supports adequate private-sector provision of decent rental housing. That is why this bill is all about balance. It will enable the thousands of mum and dad landlords throughout the country to manage their tenancies and protect their investments while ensuring that people who rent their homes have access to stable good quality housing and the protections we would expect they would be afforded. The bill extends coverage of the Act to more people involved in renting including the most vulnerable tenants in New Zealand: those living in boarding houses. Up until now people living in boarding houses did not have significant protections but protections will be there now. For example there is the provision that I spoke about during the Committee stage where boarding-house operators will now need to give 28 days’ notice for someone to move on instead of just 24 hours. 
We will clarify the responsibilities for outgoings such as water rates by introducing overarching principles to indicate where landlords or tenants are responsible for charges. We will introduce clear and fairer processes for terminating and renewing tenancies to provide an appropriate balance between flexibility and certainty of tenure and encourage landlords and tenants to comply with their obligations; for example by enabling the Tenancy Tribunal to award financial penalties against landlords who do not live up to their side of the bargain and by improving the enforceability of Tenancy Tribunal orders. Just as important as what the bill amends are those features of the Act that have served us well over the years that the bill retains. When things go wrong it is important that both landlords and tenants can access quick low-cost and impartial dispute-resolution services. That is why this Government is very reluctant to open up the Tenancy Tribunal so freely to lawyers as the Labour Party suggests we should. 
The dispute resolution process under this Act is an extremely exemplary example of how this can be achieved. As I said if there is a David and Goliath situation—if the tenant is a minor if the tenant has a disability if we are talking about large sums of money over $6000 or a situation where a landlord has a lawyer or an advocate—in all those cases a tenant can access advocacy and in many cases legal counsel. Tenancy adjudicators have specialist knowledge of the Act and are empowered to take an inquisitorial approach to resolving disputes. It is quite different from the courts system and it is another reason why we do not need lawyers to freely enter the dispute resolution process when it comes to the Tenancy Tribunal. Landlords and tenants are encouraged to represent themselves at hearings with the use of solicitors and representatives limited to only as I said where the nature of disputes brings particular disparity between the parties. This means the process is quick cost-effective and most important very very fair. 
During the consideration of the bill the Social Services Committee heard from a wide range of submitters with a diverse range of backgrounds and perspectives. That is testament to the fact that our tenancy laws affect people from all walks of life and political persuasions. Tenancy laws will always contain contentious elements as strengthening the rights of one party almost inevitably means reducing the rights of another. This legislation seeks to balance out things more perfectly than has been the case in the past. I acknowledge the difficult and important role that the Social Services Committee has played in ensuring that those competing interests were properly considered and appropriately balanced in the bill. I acknowledge the work undertaken by the previous Government in terms of what we are proposing to pass here today. I also acknowledge the work of the Opposition in investigating and putting forward Supplementary Order Papers or amendments that were substantial and thought out and attempted to address issues that are real. There was no trifling with the House; the amendments put forward were worthy of consideration. Obviously we chose to vote against them for good reasons of our own but we appreciate the debate. I thank the select committee staff Department of Building and Housing officials and the Parliamentary Counsel Office drafters who worked on the bill. 
Most important I thank the hundreds of landlords tenants and others with an interest in tenancy matters who participated in the review of the Act. By sharing their experiences they helped shape a better bill. The reform of the Act which directly affects the lives of around one-third of New Zealand households has been a long time coming and I acknowledge that. It is with pleasure and satisfaction that I am able to oversee its final progress through the House. I commend this bill to the House. 
MOANA MACKEY (Labour) 
: 
 It is extremely pleasing to speak on the third reading of the Residential Tenancies Amendment Bill which has been a long time coming. I am sure all members of the House will be pleased when this legislation is finally passed into law. 
The Minister of Housing said in his third reading speech that this law is all about balance and he is absolutely right. But with the greatest of respect I say that I do not believe he has that balance quite right. There is absolutely no doubt that the law we are passing in this House today—or whenever it finally ends up being passed—is far better than the status quo and Labour will be supporting it for that reason. But the Minister had the opportunity to make the lives of the hundreds of thousands of tenants in New Zealand a lot easier by inserting a few simple amendments and I am very disappointed that he chose not to do that. 
People who rent their properties do not have security of tenancy. It is not like people owning their own home where they know that they are in it and no one can make them leave it with 90 days’ notice. They face enormous pressures; rents are going up. I had a letter from a Housing New Zealand Corporation tenant today. Someone on the minimum wage under National’s tax cuts will get $3 extra a week. Members should guess how much this tenant’s Housing New Zealand Corporation rent is going up. It is going up $3 a week and that is not even including inflation. When we factor in inflation she is far far worse off. Even if we pretend that inflation and the GST increase do not exist her tax cut of $3 has already been swallowed up by a $3 increase in her Housing New Zealand Corporation rent. She is worried. It may seem like a small amount of money but that is what we are talking about with the 30 percent of New Zealanders who rent the majority of whom have a combined household income of less than $50000. The Government should be protecting these people not taking protections away from them as that Minister did when he amended the legislation that Labour put in place. 
The Minister mentioned boarding-house tenants and he is quite right when he says that it is incredibly important that they come under the protection of residential tenancy law. But I say to the Minister that the job is not done. It is all very well to say that they now they have the protection that someone can evict them only with 28 days’ notice instead of 24 hours’ notice. But those boarding houses are filthy and disgusting in many cases. I spoke to one of the councils here in Wellington and I was told that prior to the 1991 changes to the Building Act which the previous National Government put through councils were responsible for boarding houses. They had to know where they were. They could go in and check them as multi-residential dwellings. They had to make sure that they were in a state fit to be lived in. That responsibility was taken away from councils with those 1991 changes. The Minister may not know that; I did not know that until the council told me. 
The fact is that a lot of councils do not know where these boarding houses are. They are disgusting and a number of them do not even have running water. Unless someone points it out to the council something may never be done. The tenants will not do it because they are usually vulnerable people who do not know that they can just go to the council if they do not have running water. The Wellington Central MP Grant Robertson pointed it out to the council. The council thanked Mr Robertson and said that now it knows it is there it is going to go in and make sure it is fixed given its limited public health role and keep an eye on it. But it should not have to be like that. It should not be that some of our most vulnerable citizens rely on the Coalition to End Homelessness taking MPs around to show them the parlous state of boarding houses for action to be taken. The journey for reform in the area of boarding houses has only just begun and Labour will be more than happy to assist the Minister on that particular journey. 
I come to the amendments that were unfortunately voted down in the Committee stage. When we talked about boarding-house tenants the Minister alluded to the fact that over the Sevens in Wellington boarding-house tenants were evicted en masse. I put up an amendment in the Committee stage that would have made that illegal and said that for a major event like the Rugby World Cup it is not OK to evict boarding-house tenants—or indeed any other family—from their home for the purpose of making a quick buck. The Minister chose not to deal with this serious issue. He does not think it is serious enough; he thinks it is OK that someone can be given a 90-day notice. The point is that although boarding-house tenants will have to be given 28 days’ notice of eviction landlords have had more than 28 days’ notice of the Rugby World Cup. They have told their boarding-house tenants already that they will have to get out over the Rugby World Cup. Private sector rental tenants have been told that they will be issued a 90-day notice and will have to get out over the Rugby World Cup. I am shocked that the Minister of Housing thinks that is OK and should be allowed to happen. I am very very disappointed in him in that regard. 
When it comes to the issue of letting fees it is hard enough for tenants to get into housing nowadays without the Government putting more and more hurdles in front of them. Labour thinks it is only fair that if landlords want to hire a property management organisation to market their properties they pay for it—not the tenants. Apparently the National Government does not think that that is the case. 
When it comes to the Tenancy Tribunal I acknowledge that in all those situations theoretically one can get representation but I say to the Minister to go and talk to the tenancy advocacy groups which will tell him that it is not happening. People are being denied representation in the Tenancy Tribunal. It seems simple to say that across the board tenants can have representation because we know that in many cases it expedites the process. It stops tenants from being vexatious when they feel they are not getting their own way or when they start to panic that they do not know the points of law and do not necessarily know their rights. But more than that the Tenancy Tribunal has the power to remove people who are being vexatious. So if the Minister is worried that a tenant advocate will go in and start to try to drag out the process or slow it down the Tenancy Tribunal—and he did not mention that it has this power because it did not suit his argument—is able to remove tenants if it feels that they are not conducive to the process. 
As he says and I completely agree this process is meant to be fast and cheap. In fact the situation the Minister outlined where tenants have all these rights to representation sounds good. But I say to the Minister that it is not happening. Very very vulnerable people are being denied representation at the Tenancy Tribunal. 
Dr Rajen Prasad 
: Does he care? 
MOANA MACKEY 
: I hope he cares. I hope this is not just an exercise in saving face and not wanting to vote for a Labour Party amendment. 
On the issue of the level of the threshold I say that $6000 is a lot of money to a boarding-house tenant. To say that a tenant has to be able to meet the threshold of the monetary claim being worth $6000 or more is ridiculous. They will never get there. That is la-la land stuff for some of the most vulnerable tenants that we are talking about. So it is extremely disappointing that the Government is lifting the threshold from the current level of $3000 to $6000. It is even more disappointing that it is not prepared to remove that threshold altogether and make sure that the Tenancy Tribunal is a fair forum for everyone including those who are not familiar with that process or not able to adequately represent themselves. 
When it comes to the issue of cleansing orders the most astonishing thing was that I was arguing to put back in a clause that the Minister himself put in the original bill. This was Minister Heatley’s clause in the Residential Tenancies Amendment Bill. I have never heard such an eloquent destruction by a Minister of his or her own clause before. He got up as though he had never seen it before and failed to mention that he put that clause into the legislation. At some point in history Minister Heatley thought that it was important that tenants be told about methamphetamine labs and whether cleansing orders had been put on properties. I do not know who got to him in the meantime. The Social Services Committee made a decision that we would take the clause out; it was a rushed decision because the select committee was rushed. Subsequent to that decision I have seen overwhelming evidence that it is not as clear-cut as the Minister made out. The practices across councils are not uniform and they are not policed. They are not at the level that the Minister seems to think that they are. 
The Minister also failed to address how a tenant will afford $300 for a land information memorandum in order to find out whether there is a cleansing order that they have no idea is there. On a whim tenants—who have also had to pay a letting fee because the Minister thinks that they should have to; who have also had to pay a bond; and who have also had to move all their stuff—will now have to go to the council because they are worried the property might have been a methamphetamine lab. They have to be prepared to chuck down $300 on the off chance that there was a cleansing order on the property for a methamphetamine lab. All we said was that the tenant has to be told that this happened and be shown that it has been cleaned up. More than that I improved the Minster’s clause. I spoke to the property investors and asked them how they felt about this. They said that they would rather we stuck with what the select committee did. But at the select committee we said that a 5-year time limit would be fine. We did not think that people should have to be told for ever; we thought that 5 years would be a fair time limit. If there was a cleansing order in the last 5 years tenants would have to be told. It saves everyone money. It means a tenant does not have to fork out hundreds of dollars for a land information memorandum that they might not even need. Let us be honest: in this tight housing market where it is really hard to get a property when tenants finally find a place they can afford how many will want to wait however many days it takes to get a land information memorandum and then find the money to pay for it? It is astonishing that the Minister voted against his own original contribution to this legislation. 
This is very good legislation overall. It is not as good as the one we put up; it is a shame that the Government watered it down. This is a missed opportunity. 
JO GOODHEW (Junior Whip—National) 
: 
 I move  
That this debate be now adjourned 
. 
Motion agreed to. 
The House adjourned at 5.30 p.m. (Thursday)