Volume 634 Week 27 - Thursday 12 October 2006 
Volume 634 Week 27 - Thursday 12 October 2006 
[Volume:634;Page:5699] 
Thursday 12 October 2006 
Madam Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Next week in the House priority will be given to the remaining stages of the Insolvency Law Reform Bill the Communications Legislation Bill the Reserve Bank of New Zealand Amendment Bill and the Sports Anti-Doping Bill. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I wonder whether the Leader of the House could give us any indication at this stage as to whether he believes there will be a need for Parliament to set aside time for legislation that might result from the Auditor-General’s report today. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I do not know of course until I have seen the Auditor-General’s report and the Speaker’s response to that. However I can tell the member that I have verbal advice from both Treasury and Crown Law that repayment of moneys has no relationship to the expenditure being unlawful including the National Party expenditure and that can be remedied only by legislation. 
Questions to Ministers 
Marsden Fund—Code of Ethics 
1. TE URUROA FLAVELL (Maori Party—Waiariki) 
 to the  
Minister of Research Science and Technology 
: Does he recall advising the House that the Marsden Fund is “run by researchers who are our very own senior researchers making their own applications”; if so what is the code of ethics that enables these very senior researchers to do this? 
Hon STEVE MAHAREY (Minister of Research Science and Technology) 
: 
 I thank the member for the question which has undoubtedly captured the imagination of the House today. What I was saying in context yesterday was that Marsden is a fund that our most senior researchers apply to. Unlike most of our research funding the funding is untargeted and therefore enables researchers to put forward proposals that they believe will advance their academic field as judged by panels of their peers. Contracts between the Marsden Fund and researchers “must comply with the Royal Society of New Zealand Code of Professional Standards and Ethics and with other recognised codes relating to the type of research being undertaken”. I will seek leave to table the relevant code of ethics at the end of the question. 
Te Ururoa Flavell 
: Does the Minister recall advising the House: “the Marsden Fund is based largely almost exclusively in fact on a Western tradition of knowledge.” and does he consider this to be an instance of institutional racism which a previous Labour Government departmental report described as “bias in our social and administrative institutions that automatically benefits the dominant race or culture while penalising minority and subordinate groups”? 
Hon STEVE MAHAREY 
: No I do not regard it as a case of institutional racism. The point I was making yesterday is not that Maori knowledge cannot be studied but that the Marsden Fund like most funds of this kind around the world comes out of a Western tradition of knowledge. That is how things are done. As a professional sociologist could I say that the definition the member has read out is absolutely right and does not apply at all to this particular fund. 
Dr Ashraf Choudhary 
: Could he tell the House what the process is for deciding what research is funded by the Marsden Fund? 
Hon STEVE MAHAREY 
: Preliminary applications to the Marsden Fund are assessed by one of nine panels each made up of about eight leading researchers. The top 25 percent of applications are then assessed by international experts and recommendations are made to the Marsden Council which makes the final decisions. As an additional check an independent councillor oversees the process. The fund is governed by strict conflict of interest procedures in order to ensure that panel members have no involvement in the assessment of proposals that they might submit. As I confirmed yesterday to avoid any perception—and I emphasise the word “perception”—of a conflict of interest the council agreed recently to prevent panel members from applying for funding from next year. 
Dr Paul Hutchison 
: When will the report into the Marsden Fund that the Prime Minister said on Radio Pacific she would order or the report that the Minister said was ordered as reported by Radio New Zealand and the  
National Business Review 
 be available so that the public can be assured that process prioritisation and quantum of funding is absolutely robust? 
Hon STEVE MAHAREY 
: As I have said repeatedly I am convinced that the Marsden Fund is absolutely robust and has been ever since the Rt Hon Simon Upton launched that particular fund. What I have said is that the Prime Minister is able to access directly from the Marsden Fund numerous reports on how it works. Unlike the member I have confidence in Garth Carnaby and the team to provide that information. I have no doubts about its processes. 
Dr Paul Hutchison 
: I raise a point of order Madam Speaker. I asked a very specific question as to when the report that the Prime Minister ordered will be available to the public and the Minister failed to answer that very specific question. 
Madam SPEAKER 
: I thought the Minister did address the question but if he wanted to just reinforce his point he is entitled to do so. But he did address it as to reports. 
Hon STEVE MAHAREY 
: As I have said the report to the Prime Minister is available at any time she asks for it. She has asked for that report the Marsden Council knows that it may be asked for a report and at any time that she wants it she knows that it is available. But like me having discussed this matter she has total faith in the processes—unlike that member who now has to go out and explain to the science community why he is trying to undermine this particular fund. 
Te Ururoa Flavell 
: In light of the Minister’s statement that the Marsden Fund is based “almost exclusively … on a Western tradition of knowledge” what is he as responsible Minister intending to do to ensure that apparent Western bias is addressed in order to reflect the multicultural nature of education? 
Hon STEVE MAHAREY 
: I cannot detect any bias and therefore I will not be doing anything. 
Dr Paul Hutchison 
: I seek leave to table one paper—that is a report from Radio Pacific dated 28 September 2006 in which the Prime Minister stated she would be asking for a report about the robust procedures relating to the Marsden Fund. 
Document not tabled. 
Hon STEVE MAHAREY 
: I seek leave to table the Royal Society of New Zealand’s code of professional standards and ethics which applies to the Marsden Fund. 
Document by leave laid on the Table of the House. 
Economy—Operating Balance 
2.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: What is the Crown’s actual operating balance for 2005-06 as reported in the last line of table 3 of the Financial Statements of the Government of New Zealand released yesterday? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The figure is $11473 million of which approximately $2.8 billion is accounting and revaluation changes and $2.9 billion is investments and returns on the New Zealand Superannuation Fund. 
John Key 
: Has he seen page 21 of the Financial Statements of the Government of New Zealand which indicates that in the year 2000 tax revenue as a percentage of GDP was 28.8 percent and that it has now risen in 2006 to 33.1 percent at a time when GDP has clearly been growing; and how can he justify taking an even larger slice of the cake? 
Hon Dr MICHAEL CULLEN 
: In that time we have done a number of things. We have for example restored the level of New Zealand superannuation which was cut by the previous National Government. We have removed the policy of very large increases in student fees every year. We have established interest-free student loans. We have massively increased the Working for Families payments which count as expenditure as opposed to tax reductions in terms of the accounting principles. According to a report I have recently seen New Zealanders are 88 percent satisfied with their quality of life in New Zealand. I suspect that that figure would be matched in very few countries in the world. 
Hon Mark Gosche 
: Has he received any reports on the consequences of large-scale tax cuts in an economic environment with inflationary and current account imbalances? 
Hon Dr MICHAEL CULLEN 
: I have seen reports of Australia’s experience of introducing large-scale tax cuts earlier this year. The result was higher interest rates and higher mortgage repayments leading to a slump in consumer sentiment. 
John Key 
: Is the reason that the Minister of Finance raised more revenue than could arguably be required that the Labour Party—as we now find out in the very recently received report from the Controller and Auditor-General—had spent $768000 of taxpayers’ money and will he be decent enough to pay the money back? 
Hon Dr MICHAEL CULLEN 
: The member yesterday was terribly excited about an $11.5 billion surplus. The proportion of that figure that $750000 represents is not even within the daily forecasting error by Treasury. 
John Key 
: Is the Prime Minister not in the House because she is embarrassed as the Labour Party is that Labour owes $768000? 
Madam SPEAKER 
: Would the member please be seated! When I stand members sit. That question is outside the scope of the primary question. Does the member have another supplementary question? 
Hon Phil Goff 
: He’s too excited to be leader really. 
John Key 
: I am too embarrassed to be in that member’s party—that is for sure. 
Madam SPEAKER 
: Would the member please withdraw that comment. 
John Key 
: He interjected on me. 
Madam SPEAKER 
: Would members on the Government side of the House also stop their interjections that are likely to provoke other interjections. Right from the outset let us remember what the rules are. 
John Key 
: When the Government increased its tax revenue last year to a whopping 33.1 percent of GDP was it because the Government knew that it needed $768000 of taxpayers’ money and is that the reason the Prime Minister is not here today to defend that—because she is deeply embarrassed about the situation—or had she seen the report already? 
Hon Dr MICHAEL CULLEN 
: The expenditure referred to represents approximately 0.001 percent of total Government revenue for the year. What I would like the member to do is to explain what the National Party spent its leader’s budget on as no invoices are available and the Auditor-General could not examine what it spent the money on. 
John Key 
: If the $768000 of taxpayers’ money that the Labour Party inappropriately spent is so insignificant at 0.001 percent of GDP why does the Labour Party not have the courage to pay the money back? 
Hon Dr MICHAEL CULLEN 
: I have no parliamentary responsibility for that question as Minister of Finance or as acting Prime Minister. The Prime Minister will respond when she has had a chance to read the reports. 
John Key 
: Has the Minister seen page 19 of the Financial Statements of the Government of New Zealand and if he has seen it could he explain why yesterday he told the House: “The fact is that the largest operating surplus as a percentage of GDP particularly excluding accounting changes occurred when Sir William Birch was the Minister of Finance.”—if he has read page 19 he will know that in fact the graph shows that the highest level under Sir William Birch was 3 percent of GDP yet yesterday the surplus was 7.3 percent of GDP—and yesterday when he tacked on his pithy little answer: “The member just makes it up as he goes along.” was he the member he was talking about? 
Madam SPEAKER 
: Before members go any further I draw their attention to Standing Order 371 to which reference was made yesterday. If members would like to consider that. They should ask their questions straight without other comment and the answers should be given in like way. 
Hon Dr MICHAEL CULLEN 
: I assume Madam Speaker that when the question has not been asked in that way the answer can follow likewise. Of course the member is so upset because he got the pith taken out of him yesterday. 
Roading—State Highway 1 Picton to Christchurch 
3.  
TIM BARNETT (Labour—Christchurch Central) 
 to the  
Minister of Transport 
: What progress has been made on State Highway 1 between Picton and Christchurch? 
Hon ANNETTE KING (Minister of Transport) 
: 
 Considerable progress has been made in the last few years. New Zealanders and visitors to one of the most beautiful parts of our country can enjoy the realignment and replacement of the narrow bridge over the railway line at the elevation just south of Picton the Okiwi Bay realignment the Saltwater Creek realignment and the main north road four-laning project just south of the Waimakariri River—to mention just some of the improvements that have happened under this Government. 
Tim Barnett 
: What action has been taken in respect of the Awatere Bridge? 
Hon ANNETTE KING 
: The Awatere Bridge was completed in 1901 and has served the community well. But by the early 1990s there were intensified calls for the one-lane road-rail bridge to be replaced with a bridge suitable for State Highway 1. Under this Government those calls have been heeded. Construction of the new bridge started in February. It is the largest roading project in the district in recent history—long awaited. Nine months into the project all the foundations are in place the road deck is under way and the rail bridge is preserved alongside the new road bridge. That is due to the good work of the previous Minister of Transport who got the project off the ground whereas the National Government only talked about it. 
Colin King 
: Can the Minister tell Parliament that while in Opposition Labour spent 9 years complaining about the Awatere Bridge and then on becoming the Government took 7 long years before it did anything about it? 
Hon ANNETTE KING 
: The Labour Government has done something about it. I just ask why the National Party which has represented that district for most of its existence—most of the time since the bridge was built in 1901—and which had 9 years to do something about the bridge when the people of that member’s district were saying it was a problem did nothing. It took this Government to take that matter seriously. The bridge is under way; it is being built and will be opened—no thanks to the National Party at all. 
Tim Barnett 
: What other reports has the Minister seen on the Awatere Bridge? 
Gerry Brownlee 
: Oh great question! 
Hon ANNETTE KING 
: That is a very good question because I happened to see a report which I am sure Colin King has seen as well in the  
Marlborough Express 
 following a visit by Dr Brash to Marlborough. He made a speech to the Marlborough Chamber of Commerce and said: “It’s unacceptable to have a one-lane bridge on State Highway 1 and I’m going to work towards its replacement.” Well I say to Dr Brash that it is too late; the bridge is almost finished. And he is going to work towards its replacement? I need to ask Dr Brash what he is going to do. Will he dig some holes? Will he put a plank on the bridge? I tell the member that if he is serious about helping the people of Marlborough he ought to become better informed. 
General Practitioners—Shortages 
4.  
Hon TONY RYALL (National—Bay of Plenty) 
 to the  
Minister of Health 
: Does he stand by his comments to July’s rural health conference in Dunedin that claims of a general practitioner crisis were “exaggerated” and that he was “sick of the rural GP crisis syndrome”; if so why? 
Hon PETE HODGSON (Minister of Health) 
: 
 I have said more than once that we need more general practitioners in New Zealand. I said in July as I do now that claims of crisis will make it harder to encourage younger doctors to become general practitioners. 
Hon Tony Ryall 
: In a week when the Minister announced a U-turn and a back-down on elective surgery then announced a U-turn and a back-down on his view that there is no crisis in rural general practice what is it that made him change his mind? 
Hon PETE HODGSON 
: The member needs to pay more attention. In December of 2005 just before Christmas I signalled publicly that we would need to increase general practitioner training places. Then the Royal New Zealand College of General Practitioners set about to find those training places. It has found them and I was happy to announce last week that the details have been finalised and we can start training more general practitioners from next year. 
Sue Moroney 
: What is the Government doing to ensure the stability of the general practice workforce? 
Hon PETE HODGSON 
: In addition to our 7-year $2.2 billion investment in primary health which has seen the sustainability of general practices improve—which the Government celebrates I might say—I announced last week that we would fund an additional 15 general practitioner training places a year. The places will be targeted for young doctors to gain experience in rural New Zealand and has been welcomed by the College of General Practitioners. In addition the clinical training agency has a review of general practitioner training under way which should offer more advice about the next steps needed to further develop the general practitioner workforce. 
Barbara Stewart 
: Is the Minister concerned that a rural general practice network survey shows that patients can be at risk because some rural general practitioners are so seriously sleep deprived due to on-call demands that they may be clinically unsafe; if not why not? 
Hon PETE HODGSON 
: Although the number of general practitioners in New Zealand is comparable with Australia but slightly lower and comparable with Britain but slightly higher there is disparity region for region where general practitioners are. There is no shortage of general practitioners in the eastern suburbs of Auckland and in the southern part of the West Coast there have not been general practitioners for decades. That continues to be a matter of concern for this Government. 
Hon Tony Ryall 
: In light of the Minister’s U-turns and denials has he seen the unprecedented open letter to him from the Rural GP Network referring to his claims of a rural general practitioner crisis being exaggerated where it criticises him for implying that New Zealand does not have a general practitioner shortage and says: “Minister you are wrong. There is a problem that needs a solution. … Please don’t try to wish our problems away.” and has the Minister considered what support he could give to rural New Zealand with the $768000 that could make a difference if only Labour would pay it back? 
Madam SPEAKER 
: Before I call the member I will just remind members that when they are asking questions they do not preface them with editorial comment. 
Gerry Brownlee 
: Madam Speaker I would have appreciated you giving that advice to the House at the conclusion of Annette King’s much-editorialised answer. 
Madam SPEAKER 
: Would the member please be seated. I am talking about questions and the member knows exactly which Standing Order I am referring to. Of course the answer has to address the question and it must actually relate to that question. However I could not hear much of Annette King’s answer so I am sorry I cannot help you there. 
Hon PETE HODGSON 
: It is a matter of fact that in years gone by the number of general practitioner training places has been under-subscribed. It is now a matter of fact that they are over-subscribed because more young doctors want to become general practitioners. In December of last year the Royal New Zealand College of General Practitioners advised the Government of that over-subscription and suggested an increase. An increase has been delivered and I am very proud about that. 
Hon Tony Ryall 
: Why is the Minister of Health paid $1000 a day to deal with the pressing issues in our health service such as the elective services crisis and problems in the mental health maternity and the general practitioner workforce yet we have a Minister of Health who spends his day spinning for the Government and coming up with U-turn after U-turn—and will his next U-turn be that the Labour Government will in fact pay back the money that he said it would never pay back? 
Hon PETE HODGSON 
: In respect of U-turns it is difficult to see how a U-turn can have occurred when I have confirmed something that I first signalled in December 2005. However the National Party’s current health policy thin though it is contains the advice that it intends to strip hundreds of millions of dollars from primary health. I want to know when it will change that policy and do a U-turn. 
Jo Goodhew 
: When the Minister opened a Dunedin rural general practitioner conference and accused the Opposition of exaggerating and romanticising about a general practitioner crisis was he referring to the stressful sleep-depriving poorly paid on-call work that threatens general practitioners’ family life or to the patient-doctor ratios that see the Hokitika general practitioner Anna Dyzel caring for 5500 patients on her own or to the struggle that rural communities like Twizel Waimate Kurow and Levin have to attract replacement general practitioners—what is so romantic about that? 
Hon PETE HODGSON 
: It is a matter of fact that that meeting the member refers to had no media at it. In fact the only person who has spoken at length about it is the member who asked the question. I invite her to characterise my remarks fully and accurately because that is the honourable thing to do. 
Jo Goodhew 
: When will the Minister admit what the Opposition has been saying for a year—that the best way to encourage medical students and registrars to live and work in rural areas is to give them lengthy experience in rural general practice and that that is the key to solving the rural GP crisis? Maybe this will be his next U-turn. 
Hon PETE HODGSON 
: The fact of the matter is that the Dunedin school of medicine has been pioneering in New Zealand rural practice. The Dunedin school of medicine is considering looking at longer experience in the undergraduate years—this is a matter for tertiary education not health of course. My colleague the Minister for Tertiary Education has—because he is not a person with reckless tax cuts on his mind—asked for a review to see whether the medical schools of New Zealand are being adequately funded and the results of that review will be made available to him presently. 
Jo Goodhew 
: I seek leave to table an article entitled “After hours biggest issue for rural GPs”. 
Document by leave laid on the Table of the House. 
Jo Goodhew 
: I seek leave to table an article in  
GP Pulse 
 entitled “GP ratio 
of 1 to 5500 a tad high”. 
Madam SPEAKER 
: Leave is sought to table that article. Is there any objection? There is objection. 
Jo Goodhew 
: I seek leave to table the  
New Zealand Rural After-Hours Primary Care Provider Survey: the impact of oncall on providers and their families 
. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Jo Goodhew 
: I seek leave to table the  
New Zealand Rural After-Hours Primary Care Provider Survey: finding workable solutions to providing rural after-hours care 
. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Jo Goodhew 
: I seek leave to table the  
Royal New Zealand College of General Practitioners Forecasting General Practitioner Workforce Capacity 
. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Hon Tony Ryall 
: I seek leave to table two documents. The first shows Annette King as Opposition spokesperson on health saying there are not enough doctors in New Zealand and that she would fix it. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Hon Tony Ryall 
: I seek leave to table the second report which shows that the number of doctors dropped every year she was Minister of Health. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Question No. 3 to Minister 
Hon ANNETTE KING (Minister of Transport) 
: 
 I seek leave to table an article from the  
Marlborough Express 
 entitled “Don gets an ear bashing” which sets out that Don Brash was going to fix the Awatere Bridge even though it has already been built. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Hon ANNETTE KING 
: I seek leave to table  
Marlborough Roads 
 which sets out that the Awatere Bridge commenced in February this year—long before Don Brash went down to start the process. 
Madam SPEAKER 
: Let me remind members particularly some seated I am afraid in back rows that when points of order are being made there is no comment. That is the last warning. 
Health and Fitness—New Zealanders 
5.  
LYNNE PILLAY (Labour—Waitakere) 
 to the  
Minister for Sport and Recreation 
: What is the Government doing to preserve the Kiwi lifestyle by keeping New Zealanders fit and healthy? 
Hon TREVOR MALLARD (Minister for Sport and Recreation) 
: 
 The Government has invested $67 million over 4 years to give New Zealand’s young people and their families the tools to become active and healthy. The package includes the improvement of nutrition in schools and early childhood education services school-based health promotion events the creation of youth-focused websites to promote healthy eating and physical activity the sponsorship of television and radio programmes that promote healthy choices and Government departments leading by example in the promotion of healthy workplaces. The Labour-led Government is committed to giving young New Zealanders the best chance at a long and healthy future. 
Lynne Pillay 
: What other initiatives is the Government undertaking to encourage New Zealanders to be more active? 
Hon TREVOR MALLARD 
: The Push Play Nation campaign runs throughout October culminating in Push Play Day on 3 November. This includes a challenge to find New Zealand’s most active region. It will be again the occasion of challenges between parties and the media in order to show who is more active. I think it is very important because people around this building are like most New Zealanders with more than 50 percent of us overweight or obese. Push Play Nation encourages everyone to incorporate regular physical activity into their daily routines to prevent obesity from becoming an epidemic. 
Sue Kedgley 
: Does the Minister agree with a recent submitter to the Health Committee Dr Miles Williams that the best chance of giving young New Zealanders a long and healthy future is to reduce the overwhelming pressures on them to eat unhealthy food by changes such as prohibiting the advertising marketing and sponsorship of energy-dense foods directed at children particularly in the school setting and at sports events if we are to be successful in averting the looming health crisis and in giving young New Zealanders a good chance for a healthy life? 
Hon TREVOR MALLARD 
: The short answer is “No”. The reason I do not think that is the case is that I think all the informed evidence now is that taking a balanced approach is important. It is a matter of combining healthy balanced eating—absolute bans have been shown not to work—and a good menu of physical activity rather than being obsessed about one little area. 
Election Advertising—Government Response to Report 
6.  
Dr DON BRASH (Leader of the Opposition) 
 to the  
Prime Minister 
: What steps if any will her Government take to address any findings or recommendations that may be made by the Controller and Auditor-General in his inquiry into election advertising? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: The Government will take whatever steps are appropriate—[ 
Interruption 
] 
Madam SPEAKER 
: I am sorry. If members wish to remain in this Chamber they will allow the member who is answering to be heard. Otherwise they will leave. 
Hon Dr MICHAEL CULLEN 
: The Government will take whatever steps are appropriate when we have had the opportunity to properly consider the report which was tabled approximately 32 minutes ago. [ 
Interruption 
] 
Madam SPEAKER 
: I remind members of Speaker’s ruling 23/8 that reference is not made to members who are not in the Chamber. Some members who made those comments have been here long enough to know that Speaker’s ruling. 
Dr Don Brash 
: Will the Prime Minister in light of the clear findings of the Controller and Auditor-General today now do what she should have done in the first place and make a commitment to repay the more than three-quarters of a million dollars that was wrongly used? 
Hon Dr MICHAEL CULLEN 
: The Prime Minister will respond when she has had a chance to consider the report. However I do notice that the Controller’s report rests heavily upon the legal opinion of the former Solicitor-General and that that opinion is dissented from strongly by Mr Jack Hodder of Chapman Tripp. Where two of New Zealand’s leading legal minds Jack Hodder and Terence Arnold disagree there is clearly room for uncertainty. 
Rt Hon Winston Peters 
: I ask the Deputy Prime Minister whether it is the case that he has or members have had insufficient time to read the report— 
Hon Member 
: It’s out of order. 
Rt Hon Winston Peters 
: Well what would the member know about parliamentary rulings? 
Madam SPEAKER 
: Come on both of you please. Comments like that will provoke a reaction. Will the member just ask his question please. 
Rt Hon Winston Peters 
: Precisely! What would he know about parliamentary rulings? 
Madam SPEAKER 
: That is not the question. 
Rt Hon Winston Peters 
: It is. 
Madam SPEAKER 
: No that question is out of order then. 
Hon Dr Nick Smith 
: Point of order! 
Madam SPEAKER 
: No would you both sit down please. I am on my feet. That question asking about the Standing Orders is obviously out of order. Would the member now please address his original question to the Minister. 
Rt Hon Winston Peters 
: I raise a point of order Madam Speaker. I hardly got started when a member of Parliament shouted out to you that it was out of order. With respect he had not even heard what I was going to say and you should have stopped him rather than trying to rebuke me for countering him. 
Madam SPEAKER 
: Would the member please just ask his question. 
Hon Dr Nick Smith 
: Point of order! 
Madam SPEAKER 
: No I just want the member to ask his question. Is your point of order continuing on this point of order or is it a new one? 
Hon Dr Nick Smith 
: It is a serious point of order. 
Madam SPEAKER 
: It is a new point of order? I have ruled on the previous point of order. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. Mr Peters began his question by asking the Deputy Prime Minister. You will know that the question is set down for the Prime Minister and the practice is even though she is not present that one addresses the question to the Prime Minister. In that regard Mr Peters was incorrect and we rightly pointed that out. 
Madam SPEAKER 
: Would the member please address his question. 
Rt Hon Winston Peters 
: I ask the Deputy Prime Minister answering for the Prime Minister— 
Madam SPEAKER 
: Just ask the question. [ 
Interruption 
] 
Rt Hon Winston Peters 
: Well listen to that! 
Madam SPEAKER 
: Mr Peters please. Please be seated. 
Rt Hon Winston Peters 
: No Madam Speaker. You get them to cooperate. 
Madam SPEAKER 
: Mr Peters you will not be remaining in this Chamber if another comment like that is made or any other member makes such a comment. The primary question is addressed to the Prime Minister so supplementary questions must be addressed to that Minister. Of course the Deputy Prime Minister is answering on her behalf. So would the member please now ask his question. 
Rt Hon Winston Peters 
: Thank you Madam Speaker. [ 
Interruption 
] 
Madam SPEAKER 
: If that member wishes to remain in the Chamber he will please refrain from such comments. Would the member please ask his question. 
Rt Hon Winston Peters 
: Thank you Madam Speaker. Is it the case that the Government and other parties have had insufficient time to study the report—a report that I might add Don Brash has not read given that he said that it was clear in its findings? 
Hon Dr MICHAEL CULLEN 
: I had noticed that unlike myself Dr Brash had not been reading the report but nevertheless asked a question on the basis of the report. The Prime Minister intends to read the information available before responding. She will respond. 
Dr Don Brash 
: Does the Prime Minister regret now that the Controller and Auditor-General has resisted her attempts to intimidate him her previous statements that he had “a credibility problem” and that he should “go back to the drawing board”; if not why not? 
Hon Dr MICHAEL CULLEN 
: I notice certain assertions in the report that are still contestable. They certainly relate to the legal interpretation on which the entire report is largely based. They also relate to the issue of the nature of the report made before the election in 2005 and I would be happy to discuss those on a later date. 
Dr Don Brash 
: Does the Prime Minister now regret her earlier decision to totally ignore demands for the unlawfully spent pledge card funds to be repaid and does she wish to make any expression of regret or apology to the New Zealand public in this regard? 
Hon Dr MICHAEL CULLEN 
: The Labour Party received a draft report—or a number of draft reports of course to individual members—and obviously until the final report which was tabled today is considered a final response cannot be given. I do however emphasise to the member that if he cares to read the information just given to him including the Speaker’s report repayment does not make the unlawful nature lawful. Validation is still required. 
Rt Hon Winston Peters 
: Has the member seen this recommendation by the Auditor-General for the future operations of the Parliamentary Service and I will read the first bullet point on page 54: “Ensuring proposed advertising is checked (either by Service staff or some independent person) before expenditure is incurred to ensure that the proposed advertising is for a purpose within the scope of the Party and Member Support appropriations.” which is precisely what New Zealand First did on every occasion? 
Hon Dr MICHAEL CULLEN 
: It is a correct quotation. But what of course the Controller and Auditor-General says in his report is that the Parliamentary Service has not properly applied the interpretation of the rules. However that interpretation— 
Hon Bill English 
: Oh someone else’s fault! 
Hon Dr MICHAEL CULLEN 
: That is what the Auditor-General says in his report if the member would just read it. 
Hon Dr Nick Smith 
: Blame someone else. 
Hon Dr MICHAEL CULLEN 
: Dr Smith should get a big-print version for himself. What in fact that also means is that again the Auditor-General is relying upon the previous Solicitor-General’s legal opinion which is heavily contestable as Jack Hodder’s legal opinion appended to the Speaker’s report makes clear. 
Gerry Brownlee 
: Who’s he? 
Hon Dr MICHAEL CULLEN 
: “Who’s he?” asks Gerry Brownlee about Jack Hodder! He is just one of this country’s leading lawyers. Gerry Brownlee has never heard of him. I tell members that long after Gerry Brownlee is dead and gone Jack Hodder will have some influence on this country. 
Gerry Brownlee 
: Just a Government lackey! 
Hon Dr MICHAEL CULLEN 
: I raise a point of order Madam Speaker. That is not what we say about people outside. Mr Brownlee has just called Jack Hodder a “Government lackey”. I suggest he talk to his colleague Chris Finlayson before he continues that kind of stupid commentary about a very very good independent lawyer. 
Gerry Brownlee 
: We have a report in front of us produced by the Auditor-General an Officer of Parliament. We have a report in front of us produced by you the Speaker of the Parliament. We have had various other institutions of the State including the Chief Electoral Officer express opinions on this. Apparently we are to put it all aside because the Labour Party’s own lawyer has a different view. 
Madam SPEAKER 
: Would the member pleased be seated. 
Gerry Brownlee 
: Dr Cullen should not come in here and have a go at me over that. 
Madam SPEAKER 
: Mr Brownlee! 
Gerry Brownlee 
: That is the sort of reason why his party is in trouble. Labour members are a bunch of thieves; pay it back! 
Madam SPEAKER 
: Mr Brownlee please be seated. The essence of the point of order is about comments made by members of the public who are not in this Chamber to in fact defend themselves. I ask members to confine their comments in an appropriate way. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. I wish to withdraw and apologise for the comment I made suggesting that Mr Hodder was in some way in the pocket of the Labour Party. But I do point out that he is acting as the Government’s lawyer. 
Madam SPEAKER 
: You have made your point of order and that is sufficient. 
Hon Dr MICHAEL CULLEN 
: As the Government’s lawyer— 
Madam SPEAKER 
: No he is not. 
Hon Dr MICHAEL CULLEN 
: —or even the Labour Party’s lawyer he was not acting on behalf of either. Mr Rennie has acted on behalf of the Labour Party. 
Madam SPEAKER 
: Please be seated. The Speaker hired legal advice and that legal advice was Mr Hodder. He had nothing to do with any political party whatsoever. 
Rt Hon Winston Peters 
: I raise a point of order Madam Speaker. I ask you how you have allowed a member—namely Gerry Brownlee—to get up and carry on protesting long after you were on your feet; that is something you will not allow from any other member of Parliament yet you leave him in this House. I know that it is a stylised piece of behaviour for tonight’s news but it should not be tolerated in this House and I am asking you to address that issue now. 
Madam SPEAKER 
: No the member is quite right. I have been tolerant because Mr Brownlee is the Opposition leader in the House. But if that happens again when I am on my feet I will ask Mr Brownlee to leave. 
Hon Dr MICHAEL CULLEN 
: I raise a point of order Madam Speaker. I was going to make this point before the member intervened. Towards the end of his outburst the deputy leader of the National Party made an accusation that is clearly unparliamentary. Not only that but because it rests upon the finding of unlawful expenditure it also applies to Katherine Rich and a number of other members of the House. 
Madam SPEAKER 
: I am not sure what that is about. I did not hear but did you make an unparliamentary statement Mr Brownlee? If you did please withdraw and apologise. 
Gerry Brownlee 
: Madam Speaker I want your guidance. 
Madam SPEAKER 
: Thank you. 
Gerry Brownlee 
: We are clearly here today asking questions about a report that relates to funds that were quite obviously—from reading those reports—misused. Now the question that comes to mind is if those funds were misused and if Dr Cullen is saying the only way that the use of those funds can be made legal is by changing the law to retrospectively validate that expenditure then is it unreasonable to suggest that it could be considered theft of taxpayer funds? 
Hon Dr MICHAEL CULLEN 
: Of course even if there were some virtue in the argument it is still unparliamentary to use the term the member used. I point out also that it applies to other members including members of Mr Brownlee’s own party. I emphasise that if Mr Brownlee cares to read the reports he will discover what I have already been advised by Treasury and Crown Law. That is that repayment—whether or not it occurs—is irrelevant to the issue of the expenditure being unlawful in the first place and validation has to occur; it is the only means of remedying the unlawfulness. [ 
Interruption 
] 
Madam SPEAKER 
: Yes we do and we could progress if you withdraw and apologise. That was an unparliamentary comment. 
Gerry Brownlee 
: That is my offer. I withdraw and apologise. I raise a point of order Madam Speaker. I wonder whether you could tell us then what standing in this argument Mr Jack Hodder has given that the Government wants to hang its hat on him? Can I further table a document showing that the Government itself appointed Mr Terence Arnold to the bench of the Court of Appeal. He was in fact the author of the original report. 
Madam SPEAKER 
: That is not a point of order. [ 
Interruption 
] Can I address the point of order; then you can have leave. Thank you. That is not a valid point of order because you are drawing the Speaker into the debate. I suggest that people read both reports totally. You were asking leave Mr Brownlee? 
Gerry Brownlee 
: I sought leave to table a document showing that the Labour Government appointed Terence Arnold the author of the original report to the bench of the Court of Appeal because it respected his legal experience. 
Madam SPEAKER 
: Leave is sought to table that document. 
Hon Dr MICHAEL CULLEN 
: The Government has no objection to that. I made it clear that both the gentlemen I refer to are distinguished lawyers. Of course it was Mr McCully who attacked Terence Arnold’s integrity before he was appointed. 
Document not tabled. 
Rt Hon Winston Peters 
: I ask the Minister whether he has read page 55 of the report which in particular refers to part 5 of the Auditor-General’s 2005 report then at bullet points 627 628 and 629 sets out a series of future circumstances all of which are critical of this report because they are at variance with what else he says in the remainder of the report? 
Hon Dr MICHAEL CULLEN 
: I have only just been able to get to that point in response to the member’s question. I have been a little busy on my feet in the last few moments and I cannot actually read and answer questions at the same time but I think what is said there is actually— 
David Bennett 
: You can spend taxpayers’ money though. 
Hon Dr MICHAEL CULLEN 
: Well I can do what Lyndon Johnson used to say was important for a politician. 
Madam SPEAKER 
: Members are starting again and I say to Mr Bennett that that is the last time. You have a loud voice so you are heard when you intervene. It is your last warning. 
Hon Dr MICHAEL CULLEN 
: Indeed that seems to be the recommendation. It does seem to me to be at variance with the Auditor-General’s claim that what he said in 2005 was absolutely clear. I think it is important that those rules are properly reviewed. That will take some time. It will also mean that any legislation will have to deal with the fact that currently considerable doubt is around a great deal of current Parliamentary Service expenditure. 
Rodney Hide 
: Here is my cheque—where is Helen Clark’s? 
Hon Dr MICHAEL CULLEN 
: I think that in the member’s case Alan Gibbs may as well have signed it directly rather than going through the middleman. However as I said before the Prime Minister will respond when she has had time to consider the reports. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. Mr Hide could not have asked a more simple or clear question. For the acting Prime Minister to stand up and suggest that somehow Mr Hide is influenced from outside this House seriously breaches the Standing Orders. He should withdraw he should apologise then he should answer the question. 
Hon Dr MICHAEL CULLEN 
: I did not suggest that the member was influenced from outside the House. I merely suggested that he receives donations. Is the member now saying that the National Party does not receive any donations from outside the House? That is a fairly extraordinary claim. However I accept that the first part of the answer was out of order. I repeat the second part—the Prime Minister will respond when she has had a chance to consider the report. 
Rodney Hide 
: I raise a point of order Madam Speaker. I just want to make it plain to the House that this is a cheque in my name for the money found by the Auditor-General to have been spent inappropriately despite the best advice. What I want to know is when Helen Clark will front up with her money. When will she write a cheque for the money spent in her name inappropriately? I would like that question addressed. 
Madam SPEAKER 
: I thank the member. That was not a point of order. The Minister did address the question and as members well know there is no requirement for a yes or no answer to questions. 
Dr Don Brash 
: What is the Prime Minister’s response to the clear finding in the Auditor-General’s report and the Crown Law opinion that because the use of her leader’s budget to fund the pledge card was unlawful the cost of the pledge card was an election expense clearly placing the Labour Party in breach of the campaign spending cap in section 214B of the Electoral Act? 
Hon Dr MICHAEL CULLEN 
: As I said the legal opinion on which that is based is highly contestable. However the Labour Party will not be bothering to contest it. 
Dr Don Brash 
: Does the Prime Minister accept the Auditor-General’s finding that the Labour Party spent more than three-quarters of a million dollars illegally and will she as the highest elected official in the land express confidence in Mr Kevin Brady as Auditor-General and in his findings? 
Hon Dr MICHAEL CULLEN 
: No we do not accept that. We accept that that is the view of the Auditor-General and that is the basis on which we have to act. We believe that the rules we operated within were such as to allow the expenditure that occurred. 
Rodney Hide 
: I raise a point of order Madam Speaker. You make it plain in your report that you consider that all members must seriously consider paying back the money if confidence in Parliament is to be maintained. I happen to share that view with you and I think that there are other parties in this House that do so also. What I would like— 
Madam SPEAKER 
: Look I thank the member but the member’s point of order is not a point of order. It is drawing the Speaker into the debate and I suggest that members can all take an opportunity to read that report in full. 
Rodney Hide 
: I raise a point of order Madam Speaker. I am not wanting to draw you into the debate at all. What I am interested to know is what action you will be taking in order to see—this is an important point— 
Madam SPEAKER 
: That is drawing the Speaker into the debate I am sorry. 
Rodney Hide 
: Madam Speaker you have written that you suggest that the money should be paid in order to maintain confidence in Parliament. I accept that. Is that the end of the matter for you? 
Madam SPEAKER 
: But if members read the whole report—and this is why I will not accept any more points of order like this—I will be reporting back to the House on the matter. So would members please read the report and not just make selective quotes from the report. There needs to be an opportunity for the whole of the reports to be considered. 
Childcare—Eligibility for Assistance 
7.  
GEORGINA BEYER (Labour) 
 to the  
Minister for Social Development and Employment 
: What steps has the Government taken to extend eligibility for childcare assistance? 
Hon DAVID BENSON-POPE (Minister for Social Development and Employment) 
: 
 I am pleased to advise the House that on Monday this week the income limits for eligibility for childcare assistance were increased by around $5000 making approximately 1250 families eligible for childcare assistance for the first time. In addition approximately 3900 families who are already receiving childcare assistance will automatically get a higher rate. More than 5000 families now stand to benefit from increases to childcare and out-of-school care and recreation—known as “OSCAR”—subsidies. 
Georgina Beyer 
: Can he inform the House how many families are currently receiving childcare assistance? 
Hon DAVID BENSON-POPE 
: At the end of August this year 34900 families were receiving childcare assistance for over 43000 children. I am pleased to inform the House that this uptake is greater than was forecast for that period. 
Judy Turner 
: Has he considered when extending the eligibility for childcare assistance the need for respite care for kinship caregivers; if not does he accept that the Government is at risk of taking advantage of grandparents who take on the burden of raising their grandchildren in their golden years and that the Government should start to recognised those grandparents’ contribution to society? 
Hon DAVID BENSON-POPE 
: No I do not agree with that member’s proposition. As she is aware the Government is currently undergoing policy development work in line with the undertaking in last year’s election manifesto. 
Controller and Auditor-General—Confidence 
8.  
GERRY BROWNLEE (Deputy Leader—National) 
 to the  
Prime Minister 
: Does she stand by her response to question for oral answer No. 1 on 11 October 2006 that it is not her position to “express judgment one way or another” when asked whether she had confidence in the Controller and Auditor-General? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: Yes. 
Gerry Brownlee 
: Has she reconsidered in the light of today’s report her position—like her colleague Peter Dunne has done—and why will she not now apologise for her earlier intemperate and misguided comments regarding the Auditor-General? Why is she digging in and saying she does not have confidence in him? 
Hon Dr MICHAEL CULLEN 
: She is not saying whether she has confidence in him because it is a matter for Parliament. The Controller and Auditor-General is not an appointment of the Government. 
Gerry Brownlee 
: Does the Prime Minister recall seeing on page 30 of the drafts provided to her earlier that the Auditor-General makes it clear that by publishing his report in 2005 and warning parties to stay inside the rules in election year he expected MPs and parliamentary parties to be especially careful in that area; and does she now regret her decision not to meet with the Auditor-General to discuss her spending proposals for the 2005 election? 
Hon Dr MICHAEL CULLEN 
: On the latter part of the question I have no advice. I myself believe that the Controller and Auditor-General’s interpretation of his own report is open to question. I do not think it is as clear as he now in his 2006 report makes out it is. 
Gerry Brownlee 
: Can we assume from the answer the Prime Minister gave earlier to Dr Brash that it is the intention of the Labour Party to advance validating legislation to make legal the election overspend and the spending of Parliamentary Service funds on electioneering and does that mean that the Labour Party has no intention of paying the money back? 
Hon Dr MICHAEL CULLEN 
: I am now able to tell the member that the Labour Party will be paying the money back. I have been waiting for the Prime Minister to read the report and issue a response which she has now done. 
Hon Bill English 
: She’s not the Labour Party. 
Hon Dr MICHAEL CULLEN 
: Oh you have finally woken up to that! However validating legislation is still required. If the member cares to read the Speaker’s report—and I have received very similar advice from both Treasury and Crown Law—he will find that validation is required even if all the money is repaid by every party in the House. That is the only way of rendering the appropriation lawful—and that covers the spending by Katherine Rich and others. 
Gerry Brownlee 
: Will the Prime Minister concede that that answer is only technically correct because of course the expenditure has already been incurred and that there is an obligation on the Labour Party to pay the money back? 
Hon Dr MICHAEL CULLEN 
: It is clear that the member was so stunned by the answer that he did not hear it. I will say this very slowly for Mr Brownlee: the Labour Party—or perhaps the “Lay-ba Par-tee” to use the National Party form—should and will be paying the money back. This does not affect the need for validating legislation—it remains unlawful. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. I do apologise for asking the same question twice. I was just shocked by the first answer but on behalf of the taxpayer also delighted. 
Madam SPEAKER 
: That is not a point of order. Is there another supplementary question? 
Gerry Brownlee 
: Will the Prime Minister accept the criticism— 
Hon Trevor Mallard 
: He’s one of their brighter ones! 
Gerry Brownlee 
: Sorry? 
Madam SPEAKER 
: Interjections are permitted. It was not an unparliamentary remark—unless the member objects in which case I will ask the member to withdraw and apologise. 
Gerry Brownlee 
: Does the Prime Minister accept the criticism of the Auditor-General when he says: “I find it hard to accept that despite my 2005 Report and the message to be careful about advertising expenditure in the pre-election period behaviour did not change.”; if she does not accept that why not? 
Hon Dr MICHAEL CULLEN 
: No the Labour Party and the Prime Minister do not accept that. The Auditor-General might have thought he was being clear; if he meant to be clear he should have been clear. 
Gerry Brownlee 
: When will the Labour Party pay the money back? 
Madam SPEAKER 
: That question is not within the Minister’s responsibility. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. The two occasions today that Dr Cullen said the Labour Party would pay the money back were on the floor of this House. It is not an unreasonable— 
Madam SPEAKER 
: I agree with the member that the remarks were made on the floor of the House. But the Minister has no ministerial responsibility for the Labour Party. 
Gerry Brownlee 
: Has the Prime Minister been told by the leader of the Labour Party when the Labour Party intends to pay the money back and will she pass that message on to the House? 
Hon Dr MICHAEL CULLEN 
: I have no advice on that but I am sure it will be very soon. 
European Union—Butter Import Rules 
9.  
R DOUG WOOLERTON (NZ First) 
 to the  
Minister of Trade 
: What does the Minister estimate the likely annual revenue loss to this country will be if changes to the European Union butter import rules mean that Fonterra can no longer act as sole importer to the European Union for its products? 
Hon PHIL GOFF (Minister of Trade) 
: 
 The suspension of New Zealand butter imports to the European Union in July clearly put New Zealand’s butter trade and revenue at risk. However in working with officials we were able to first avoid disruption to the butter trade then through an interim arrangement ensure that we could fill—and we have filled—our 2006 butter quota without loss of revenue to the New Zealand exporter. No decision or agreement however has yet been reached on rules that may apply in future years. 
R Doug Woolerton 
: Does the Minister envisage any long-term loss of market share as a result of the European Union decision and what steps if any are Government trade negotiators taking to avoid such a loss from occurring? 
Hon PHIL GOFF 
: I am sure it would be the intention of the European Commission if it thought it could achieve it to remove the quota rent from New Zealand. However New Zealand is staunchly resisting that. The negotiators have been in Brussels in the last two weeks of last month. We have made it absolutely clear that our expectations are that although the European Court of Justice decision is upheld that will not be at the expense of a contract negotiated between and accepted in good faith by the European Union and New Zealand back in 1995. 
Election Advertising —Statements of Chief Electoral Officer 
10.  
Hon BILL ENGLISH (National—Clutha-Southland) 
 to the  
Minister of Justice 
: Does he agree with the statements of the Chief Electoral Officer that the Labour pledge card and the A2-size pamphlet headed “Working together” “clearly encourages … voters to vote for the Labour Party” and that “the expenses of these publications should be included in your [Labour’s] return of election expenses”; if not why not? 
Hon MARK BURTON (Minister of Justice) 
: 
 The member’s question appears to paraphrase a statement setting out a legal interpretation of the Chief Electoral Officer—a statement that I have not received. As I have previously advised the House on a number of occasions it would be inappropriate for me to comment on what are legal interpretations of the Chief Electoral Officer made in the course of his duties under the Electoral Act 1993. Furthermore I would not expect to receive copies of statements from the Chief Electoral Officer to any political party including the Labour Party because I do not have ministerial responsibility for political party expenditure. 
Hon Bill English 
: In his capacity as the Minister overseeing the Electoral Act is he aware that following that opinion from the Chief Electoral Officer the general secretary of the Labour Party wrote back to him agreeing on 13 September 2005 to include the pledge card as an electoral expense that would be counted for the campaign spending limit but after the election on 3 October wrote again to the Chief Electoral Officer saying that he had changed his mind and would not include the pledge card as an election expense? 
Hon MARK BURTON 
: As I have pointed out to the member it would be absolutely inappropriate for me to receive those communications between that statutory officer and political parties. Otherwise I might equally have received copies of correspondence between the Chief Electoral Officer and the Exclusive Brethren on how it sought to avoid $1.2 million of an election advertising smear campaign on behalf of the National Party being counted in the National Party’s election campaign expenditure. I did not receive that either. 
Hon Bill English 
: Is the Minister aware that the Auditor-General’s finding today—that the Labour Party pledge card and brochure were electioneering—confirms the opinion of the Chief Electoral Officer the Solicitor-General and Pete Hodgson Labour’s strategist that Labour therefore breached the campaign spending limit which is set down under section 214B of the Electoral Act and that that is an act of corrupt practice? 
Hon MARK BURTON 
: Of course I have not read the reports tabled in this House today. Opportunity has not yet presented itself. If I had chosen to comment having not read them I might make the sort of silly mistake the member’s colleague Mr Brownlee made attacking a very senior legal practitioner who was part of one of those reports. The member who is so busily commenting on them clearly had not read them. I have not read them so of course I will not comment on them. 
Hon Bill English 
: Is the member aware that the test of whether Labour’s publications amount to electioneering and therefore count for the campaign spending limit is not reliant on the Auditor-General’s report but on well-known legal cases such as the case against RegBoorman in the Wairarapa in 1988 and  
Peters v Clarkson 
 in Tauranga in 2005; and that that is how we know Labour breached the spending limit because its publications breached the guidelines laid down by the court of New Zealand? 
Hon MARK BURTON 
: The member does not seem to be able to grasp that I as Minister of Justice do not have responsibility for individual party expenditure. Otherwise I might equally be called on to explain and account for the National Party’s overspend on its broadcasting activity. 
Hon Bill English 
: Is the Minister aware that in respect of breaching section 214B of the Electoral Act publications were authorised by Heather Simpson and that she told the police she did not regard the pledge card as electioneering because it was part of the 3-year publication plan and does he believe that “planning” to break the law means that one did not do it? 
Hon MARK BURTON 
: I am afraid it is not my responsibility to provide that member with free legal advice. 
Hon Bill English 
: What is the Minister’s view of an Electoral Act which sets a limit on campaign spending under section 214B—[ 
Interruption 
] I raise a point of order Madam Speaker. I think there were six interjections in the first sentence of my question. I am prepared to accept a reasonable level of interjection but I think Parliament has a right to hear the question. 
Madam SPEAKER 
: I would agree but the same rule is also to apply to those who give the answer. All members in this Chamber are entitled to be heard. 
Hon Bill English 
: Does the Minister believe that the Electoral Act for which he is responsible is effective when the Labour Party was able to break the campaign spending limit by over half a million dollars and get away with it when Bob Clarkson went to court in 2005 and if he had gone over the limit he would have been chucked out of Parliament? 
Hon MARK BURTON 
: As I previously said I do not have and it is inappropriate for me to comment on the legal interpretations of statutory officers in my capacity. But I have informed the House previously as I have informed select committees that I do believe there is cause to have a good look at electoral law around the whole area of electoral expenses donations advertising and broadcasting. And that work is well advanced. 
Rt Hon Winston Peters 
: As Mr English has brought the question of Bob Clarkson to issue here is the Minister aware that at the court Mr Clarkson denied knowledge of working with the Exclusive Brethren yet just 3 weeks ago admitted he did? 
Madam SPEAKER 
: I think that question is asking an opinion of the Minister on a matter that was raised but I do not think the Minister has ministerial responsibility for that. 
Hon Chris Carter 
: I raise a point of order Madam Speaker. I heard a very unparliamentary comment from the member for Hamilton East which I think he should withdraw and apologise for. 
Madam SPEAKER 
: Would the member please withdraw and apologise. 
David Bennett 
: What for? 
Madam SPEAKER 
: I did not hear what the member said but would the member please— 
David Bennett 
: I raise a point of order Madam Speaker. What was the comment? 
Hon Chris Carter 
: When Mr Peters was speaking I heard him yell out “liar”. 
Madam SPEAKER 
: I am sorry but that is unparliamentary. [ 
Interruption 
] It was Mr Clarkson who said “liar” was it? Members please whoever made that unparliamentary comment which was obviously heard by members would he or she please withdraw and apologise. 
Bob Clarkson 
: I raise a point of order Madam Speaker. I tell the truth and he does not. 
Madam SPEAKER 
: So you are calling the member a liar and you are refusing to withdraw and apologise? 
Bob Clarkson 
: Definitely. 
Madam SPEAKER 
: Would you please leave the Chamber. 
Bob Clarkson withdrew from the Chamber. 
Hon Chris Carter 
: I raise a point of order Madam Speaker. I stand by my statement that the member for Hamilton East also called out “liar”. 
Madam SPEAKER 
: If the member says he did not say that I will take the member’s word. 
David Bennett 
: I raise a point of order Madam Speaker. I did say that as well. 
Madam SPEAKER 
: The member did say it. Would he then please withdraw and apologise. Before the member said he did not say it. 
David Bennett 
: I never said I did not say it. 
Madam SPEAKER 
: But you know that “liar” is an unparliamentary word. [ 
Interruption 
] Please be seated. I understand that the member is a new member. Would he please now withdraw and apologise for using an unparliamentary term. 
David Bennett 
: I withdraw and apologise. 
Hon Trevor Mallard 
: I raise a point of order Madam Speaker. I would like to remind you of your earlier warning to that member that he was on his last warning. 
Madam SPEAKER 
: That member is a repeat offender but he has withdrawn and apologised so perhaps for the benefit of the rest of the Chamber he could just hold his counsel. 
Hon Bill English 
: Is the Minister surprised that Winston Peters thought that if Bob Clarkson breached the electoral spending cap under section 214B it was so serious that he had to take him to the High Court but now he is busy— 
Rt Hon Winston Peters 
: I raise a point of order Madam Speaker. That is a ridiculous prefix to a question about which the member knows nothing. Surely it is not within the purview of the Minister anyway. 
Madam SPEAKER 
: I suggest that the member rephrase his question as a question. 
Hon Bill English 
: Speaking to the point of order I point out that the Minister is responsible for section 214B. There are in fact only three or four court cases regarding section 214B and it is quite legitimate to ask him about the effectiveness of that section given the behaviour of Mr Peters. 
Madam SPEAKER 
: The Hon Mark Burton has been asked a question. 
Hon MARK BURTON 
: I did not actually hear the question from the member. 
Madam SPEAKER 
: Please repeat the question. 
Hon Bill English 
: Does the Minister believe that the Electoral Act is effective when Mr Peters took Bob Clarkson to court over the issue of whether Mr Clarkson had breached section 214B but right now is supporting a Government that certainly did breach the section? 
Hon MARK BURTON 
: I think the matters surrounding the case of Mr Clarkson are among many of the reasons why the review of electoral law particularly as it relates to electoral expenses donations advertising and broadcasting is required—similarly as it applies to GST problems suffered by the National Party and in particular the $1.2 million smear campaign funded in aid of the National Party during the last election campaign. 
Rights of Indigenous Peoples—Draft United Nations Declaration 
11.  
METIRIA TUREI (Green) 
 to the  
Minister of Foreign Affairs 
: What is the Government’s position on the draft United Nations Declaration on the Rights of Indigenous Peoples? 
Rt Hon WINSTON PETERS (Minister of Foreign Affairs) 
: 
 The New Zealand Government cannot support the declaration. 
Metiria Turei 
: Why is the Government maintaining its opposition particularly in response to article 3 the right to self-determination as that right is a repeat of the same article in other human rights documents and does not threaten New Zealand’s State integrity because the New Zealand situation in regard to its indigenous people does not fit the UN criteria for a lawful secession; if so given this fact how could he possibly justify not supporting that declaration when from New Zealand’s perspective there are very few issues for it to consider? 
Rt Hon WINSTON PETERS 
: I am not certain whether that was a question or a lame attempt at a legal opinion but let me just say that New Zealand’s longstanding position in negotiations on the declaration was that it had to satisfy several fundamental requirements. It had amongst other things to be consistent with international and New Zealand law and policy; protect the rights of all citizens; and safeguard territorial integrity and political unity as well as the responsibility of democratically elected Governments to govern for the welfare of all their citizens. The declaration fails to meet these three imperatives. 
Hone Harawira 
: Tena koe Madam Speaker. Tenatatou te Whare. Does the Minister agree with the statement of the United Nations Secretary-General: “For far too long indigenous peoples’ lands have been taken away their cultures denigrated or directly attacked their languages and customs suppressed their wisdom and traditional knowledge overlooked or exploited and their sustainable ways of developing natural resources dismissed. Some have even faced the threat of extinction.”? 
Rt Hon WINSTON PETERS 
: If one looks around the world one can be less than satisfied—in fact greatly dissatisfied—with developments over centuries and in some countries even up until recent times. But New Zealand is not one of those countries. New Zealand is a country that for example in political terms has seen dramatic elevation of Maori representation in this Parliament. I am glad to have been part of that. In so many other areas New Zealand has made giant steps. I want to say just in case people are arguing this point that Maori were widely consulted from May 1997 under the then New Zealand First - National Government— 
Interruption 
]—quite rightly so; we started the process. There have been numerous—[ 
Interruption 
] Well I do not know where the Chinese were but if the member wants to throw up over them that is fine. 
Hone Harawira 
: I raise a point of order Madam Speaker. The question was whether the Minister agrees with the United Nations Secretary-General’s statement. It was not about the policy of New Zealand First in 1997. 
Madam SPEAKER 
: The Minister was actually addressing that question until he went on a bit. Is the Minister finished? 
Rt Hon WINSTON PETERS 
: I want to say as to the question that of course I agree. No rational sane person with an understanding of history— 
Rodney Hide 
: What about this Minister though? 
Rt Hon WINSTON PETERS 
:—would not agree with substantial parts of the Secretary-General’s comments. When I said rational and sane that ruled out Rodney Hide of course. 
Metiria Turei 
: Why is the Government maintaining this negative and destructive stance on the draft declaration when in fact the States and the indigenous peoples who have been negotiating the agreement have come extremely close to consensus on almost all of the articles bar just two or three and support the draft which is to go to the UN General Assembly later this year and when it would be extremely embarrassing for New Zealand to be added to the hold-out countries given the impacts and the difficulty that so many indigenous peoples face across the globe and knowing that this declaration could be the only protection available to them—yet New Zealand denies it to them? 
Madam SPEAKER 
: I just remind members that both questions and answers have to be succinct. 
Rt Hon WINSTON PETERS 
: What the House has just been told by way of a question is not in any way exact precise or true. In fact many of the 47 countries in respect of the United Nations Human Rights Council vote registered their disquiet nevertheless about aspects of the text. That is the reality. Precisely New Zealand does not believe that this matter really addresses in the way it should the needs issues and interests of indigenous people around the world. That is why we have not gone along with it. 
Hon Dr Michael Cullen 
: In light of the last answer can the Minister confirm he has received advice that a number of the countries supporting the text have actually privately said they propose to ignore it and that the New Zealand Government does not believe that is a principled position to take? 
Rt Hon WINSTON PETERS 
: Again that is a fact. What we have are some countries that are just growing tired of the issue and allowing it to go ahead even though they have expressed now and then their grave disquiet about its text. New Zealand has taken this issue very seriously; we do not bow down to criticism that we in this country have not stood up for the rights of indigenous people. 
Electricity—Pricing 
12.  
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Minister of Energy 
: Why has the price of electricity increased by over 39 percent since Labour became the Government in 1999 and what changes in Government policy if any will be made to provide additional renewable energy? 
Hon DAVID PARKER (Minister of Energy) 
: 
 Because the so-called reforms of the previous National Government have not resulted in the decrease that residential users were promised at the time. In real terms—that is adjusted for inflation—the increase over the last 7 years has averaged under 3 percent and totalled 18 percent. 
Hon Dr Nick Smith 
: Rubbish! 
Hon DAVID PARKER 
: No it is absolutely true—in fact I will repeat it for the benefit of the member because it is true. In real terms—that is adjusted for inflation—the increase over the last 7 years has averaged under 3 percent per annum and totalled 18 percent. Government proposals to improve electricity market arrangements in order to put downward pressure on prices will be announced with the New Zealand Energy Strategy. This strategy will incorporate a range of measures to support the development of additional renewable energy resources including details of a previously signalled “cap and trade” option. 
Hon Dr Nick Smith 
: Is the reason that New Zealanders have faced huge power price hikes not that this Government through its electricity State-owned enterprises—as noted yesterday—has made a profit of over $1.1 billion so that New Zealanders are being fleeced by this Government not just with high taxes but also with excessive power prices? 
Hon DAVID PARKER 
: No. 
Charles Chauvel 
: When will the New Zealand Energy Strategy become public for consultation and what will it achieve? 
Hon DAVID PARKER 
: The New Zealand Energy Strategy is expected to be released in draft next month for consultation. I have no doubt that this strategy will provide New Zealand with a cost-effective reliable and environmentally sustainable energy system that New Zealanders will be proud of for decades to come. 
Metiria Turei 
: What is the Minister’s view of today’s High Court decision that the climate change effects of Mighty River Power’s Marsden B coal-fired power station project may be considered in granting its consent—a decision that overturns a previous Environment Court view—and is he pleased that this should spell the end of new fossil fuel - burning energy projects in New Zealand? 
Hon DAVID PARKER 
: I have not read that decision so I cannot comment upon it. But it has been made clear by the Government for some time that we prefer and promote renewable alternatives over more thermal generation which produces greenhouse gas emissions. 
Peter Brown 
: Noting that previous answer does the Minister agree that if technology relating to the storage of carbon dioxide was on stream New Zealand would have the ability to turn our vast coal reserves into enough electricity to power New Zealand for over a thousand years at very reasonable cost; if so what is the Government doing to assist research into developing carbon storage technology to help provide for our future needs? 
Hon DAVID PARKER 
: A couple of points there. I agree that if carbon capture and sequestration becomes cost-effective and proven technology the world needs to look at adopting it. It is more important for the rest of the world than it is for New Zealand. The advice I have received is that our renewable alternatives are likely to be cheaper than the use of coal with carbon capture and sequestration. 
Hon Dr Nick Smith 
: Does the fact that the electricity companies owned by the Government doubled their profits to over $1.1 billion confirm the statement by Roy Hemmingway that the reason he was sacked was that he was an independent commissioner who was prepared to stand up against the Government State-owned enterprises in the interests of consumers? 
Hon DAVID PARKER 
: Again the answer is patently “No”. 
Hon Dr Nick Smith 
: Has the Minister noted in the annual report yesterday from Meridian Energy that it endorsed National’s idea for a “cap and trade” system for greenhouse gases endorsed National’s ideas for reform of the Resource Management Act and endorsed National’s ideas for transferable water permits; and now having had New Zealand’s largest electricity company endorse those three significant policy proposals from National why does he not listen to National and accept that we have got it right? 
Hon DAVID PARKER 
: I do note the comments that Dr Turner has made and I agree with virtually all of them. I disagree with the National Party’s characterisation of them as reflecting long-term National Party policy. Indeed it is only in the last week that National has at long last signalled support for Government policy relating to price-based measures in the electricity sector. 
Hon Dr Nick Smith 
: How can the Minister say that Dr Keith Turner is supporting the Government’s policy when Dr Turner specifically criticises the Resource Management Act in his annual report saying that delays in the Project West Wind proposal have added $90 million to its costs and advocating strongly for direct referral to the Environment Court which National has long promoted? 
Hon DAVID PARKER 
: Again the member over-simplifies. I also note from that report Dr Turner’s express approval of the changes the Government has made to the National Government’s prior electricity policy settings—namely the most recent amendments we have made to the Government policy statement and to the section 26 notice to the Commerce Commission both of which will encourage renewables. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. My question was quite specifically about Dr Turner’s comments in respect of the Government’s resource management policy and direct referral. There has been no comment at all on that and the fact is that Project West Wind has gone up by $90 million in price as a consequence of delays. I ask the Minister to address Dr Turner’s concern about the Government’s resource management policies. 
Madam SPEAKER 
: Does the Minister wish to add anything? It is outside the question although it was raised. 
Hon DAVID PARKER 
: I am very happy to because I have the answer for Dr Smith. In respect of the pricing of the Project West Wind proposal that price increase is caused by changes in exchange rates and steel prices. 
Hon Dr Nick Smith 
: Delays—Dr Turner says delays. 
Hon DAVID PARKER 
: No it is not delays caused by the Resource Management Act processes. The delays that are encountered in consenting New Zealand power stations are no different from those experienced in most developed countries. The Resource Management Act is not the bugbear that the member would like to present it as; it is a necessary part of a developed country where we want to minimise environmental effects. 
Madam SPEAKER 
: I thank the Minister. 
Question No. 4 to Minister 
Hon TONY RYALL (National—Bay of Plenty) 
: 
 I seek leave to table a transcript of the Minister of Health and Labour’s strategist Pete Hodgson in which he was directly asked whether Labour would pay the money back and he said “No we won’t be paying it back.” 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Urgent Debates Declined 
Election Advertising—Auditor-General’s Report and Speaker’s Response 
Madam SPEAKER 
: I have received a letter from Rodney Hide seeking to debate under Standing Order 380 the Auditor-General’s report on advertising expenditure and the Speaker’s response to the report. Standing Order 380 requires that the matter for debate be a particular case of recent occurrence and involve the administrative or ministerial responsibility of the Government. For there to be a particular case of recent occurrence the event upon which an urgent debate is sought must be an event that has occurred before the House meets. The presentation of a paper at the commencement of a sitting does not give grounds for a debate at that sitting. This application is declined on that ground. 
I must also point out to members that the reports that are the subject of the application do not involve the administrative or ministerial responsibility of the Government. The advertising expenditure in question is appropriated in Vote Parliamentary Service. The Parliamentary Service is not an instrument of executive government. The appropriations are made in respect of each parliamentary party for party and member support. They cover funding for the parliamentary parties to support their leaders’ officers research operations whips’ offices and members’ parliamentary operations. Ministers are not responsible as Ministers for that spending. The spending is incurred as members of a parliamentary party not as Ministers. The Speaker is the responsible Minister for Vote Parliamentary Service. It is the Speaker who is answerable for the appropriations not a Minister. Any future such application could be declined on that ground. 
 This does not mean that the matter is not of sufficient importance to require the immediate attention of the House. It simply does not meet the requirements of the urgent debate procedure the principal purpose of which is to hold the Government accountable for urgent and important matters for which it is responsible. I ask members to give consideration to facilitating the debating of the matter early next week when members have had an opportunity to read and digest the reports. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I raise a point of order Madam Speaker. I just ask for a bit of further clarification on that matter. I think you are being very good in being quite specific about what your thinking will be should you receive other requests subsequent to the tabling of the report today but it would seem to me that if you follow the logic that you are apparently going to apply here then this House would never have had a snap debate on the September 11 tragedy for example or on other numerous other incidents that have occurred internationally for which clearly the Government of New Zealand has no responsibility and carries no particular ability to affect the outcome. 
Madam SPEAKER 
: I thank the member and I say there are various methods as I indicated in my statement as to how debates in the House can be held. 
Third Readings 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Securities Amendment Bill the Securities Markets Amendment Bill the Takeovers Amendment Bill and the Fair Trading Amendment Bill be now read a third time 
. These bills are designed to encourage investment in New Zealand’s financial markets. They address three principal deficiencies in our securities markets laws. 
First parts of our law are not as effective as they should be. Our insider trading rules have been overly complex. The Investment Advisers (Disclosure) Act fails to deliver meaningful information to consumers and disclosures made by substantial securities holders are confusing. Second other aspects of our law are out of step with international norms. This Government recognises that given the small size of our capital markets in global terms there is a real investment cost if our regulation does not look like that expected around the world. Third the regulators of our financial markets must have the tools to enforce the law effectively. 
This legislation tackles each of these issues. Its objective is to improve the confidence of investors both here and overseas in the integrity of New Zealand’s capital markets. The bills do this by strengthening the regulatory framework in our securities securities trading and takeovers law. 
The main provisions of the bills include a new insider trading regime focused on the damage such conduct poses to the efficiency of and confidence of investors in financial markets; comprehensive prohibitions for the first time in our law and consistent with international practice against market manipulation and conduct creating a false impression of securities trading activity price movement or market information; simplification of the substantial security holder regime by requiring disclosure of relevant interests by class and for listed voting securities only; improvements to investment adviser and broker disclosure law by requiring important additional information to be disclosed to clients before giving advice and by making all disclosures mandatory—also the Securities Commission is given a public enforcement role in this area—and finally a complete overhaul of the size and range of penalties and remedies available under securities and takeovers law aimed at deterring illegal behaviour and encouraging compliance. 
I tabled further changes to the Securities Legislation Bill by way of a Supplementary Order Paper in the Committee of the whole House stage in response to issues raised by business after the bill was reported back from the Commerce Committee. Those changes picked up a number of minor amendments necessary to better target some provisions ensure the efficacy of others and correct minor errors in the bill. For example amendments were made to ensure that capital market advisers are not caught by some of the insider trading or continuous disclosure provisions of the bill where they are legitimately advising their clients on their own activities. 
I would like again to thank the Commerce Committee for its work on the legislation and those who made submissions on it. I also thank all the officials who worked extremely hard to get the legislation to this point and it is a great credit to them that we now see the passage of this legislation. I would especially like to thank Kirstie Hewlett; I know it is unusual to name an official in the House but Kirstie has gone beyond what would be expected of any official in her role as manager of the financial sector team at the Ministry of Economic Development. She coordinated the work programme that led to this legislation. She has incredibly high standing out there amongst the stakeholders and I wish her well in her forthcoming work which will be even more difficult than the work she has done for us. There is still a large amount of work being done by officials in that team and they have done an excellent job on this legislation under considerable pressure. 
This legislation is an important part of the Government’s wider securities law reform programme. It creates the regulatory conditions for boosting investor confidence in participation enhancing the integrity of our financial markets and ultimately assisting economic development and economic transformation by increasing investment in New Zealand. I recommend the bills to the House. 
JOHN KEY (National—Helensville) 
: 
 On behalf of the National Party I rise to support this omnibus legislation—the Securities Amendment Bill the Securities Markets Amendment Bill the Takeovers Amendment Bill and the Fair Trading Amendment Bill. I start by saying that I spent the better part of 20 years in the financial markets so I feel I have at least some capacity to comment on some of these issues. Some of the things the Government is trying to achieve here have a degree of merit. There is no doubt that New Zealand requires very strong capital markets if we are to develop and grow as a country and deliver the prosperity that I think all New Zealanders would want to enjoy. 
In a sense the legislation is an important milestone in terms of taking New Zealand forward in this area and that is because in the late 1980s New Zealand had a reputation—maybe not necessarily warranted—as being like the Wild West and we relied very heavily on offshore capital markets. Yesterday the Government announced an $11.5 billion surplus. I think the public of New Zealand know that some of that money should be returned in the form of tax cuts. But what was really interesting was the scenario that the Government was really hogging the cash of hard-working New Zealanders. On the back of that New Zealanders have borrowed an additional $60 billion in the last 6 years alone—$40 billion in the last 3 years. That capital has come from offshore. We are the most indebted nation in the OECD in terms of our offshore borrowings. We are hugely reliant on them and that is one of the very concerning matters about our 9.7 percent current account deficit. 
One of the reasons why we really need confidence in our capital markets is that we rely very heavily on that capital. Interestingly enough one slightly unique feature of our current account deficit is that it is heavily made up of an equity portion as opposed to a debt portion. So in other words it sometimes reflects as it has with the widening of the current account deficit recently that returns in New Zealand have been greater. It shows just how reliant New Zealand is on foreign capital markets. So in that regard we kind of support this legislation. 
The second point I want to make if I may is in relation to insider trading. New Zealand is dominated by a number of fairly large domestic financial services players. They are often owned offshore. For the sake of the House I will not bother naming those firms but I can tell members that they already adopt global standards. I spent quite a large period of my time with Merrill Lynch. When Merrill Lynch operated in New Zealand for instance it adopted the global standard and that is the case today. I think the New Zealand public can take quite a high degree of confidence that even without this legislation there is already embedded in our systems some pretty strong stuff around the declaration of people who are trading around directors’ disclosure and around the onus on advisers not to prejudice their firm. So I think we can take quite a lot of good faith from that. 
The interesting thing about this legislation though—and the point that I want to spend the rest of my time discussing—is that when one looks to try to build confidence into the market one sees it is incumbent on a number of players. It is incumbent on financial advisers if one likes—those who are out there giving financial advice—that they do not interrupt or prejudice the New Zealand financial markets by somehow using information that is inappropriate and therefore give the market a bad name. It is hugely reliant on directors of companies who do have inside information that they do not act in a way that will obviously be not only outside the law but give New Zealand a bad name. It is also important that the Government plays its role. 
One might ask why that is important. Well the Labour Government that was elected in 1999 has done tremendous damage to confidence in the New Zealand financial markets. It started with a Prime Minister who did not understand the issues of insider trading herself. The Government owns 82 percent of Air New Zealand and the Prime Minister was so ignorant of the legislation that operates around this area that she did not know when she told the people of New Zealand “don’t sell your shares” that that was a form of insider information and a form of tipping. She was ticked off for that. That was the first of a number of examples we saw where this Government was completely clueless when it came to securities legislation in New Zealand. 
A few months ago we saw an extension of that cumbersome and quite inappropriate behaviour when David Cunliffe the Minister of Communications went on to a Bloomberg newswire—a wholesale news service—and started giving a directive about what Telecom’s dividend profile should be. This is the same man who was responsible for legislation that was being introduced to the House that could have involved the physical separation of Telecom. He went on to say that if Telecom did not act in the way that the Government liked then he would deem that to be a pretty negative position. 
That was a completely inappropriate action by a Minister of the Crown. But maybe most interestingly of all the Government decided for purely political reasons it would turn the largest company on the New Zealand stock market—Telecom—into its little political plaything. We are not arguing on this side of the House about whether local loop unbundling should occur. But the Prime Minister of this country took a very unusual step in giving Telecom the largest company in New Zealand a public kicking because she thought it might be a reasonably good way to shore up a couple of votes. Unfortunately when she did that she wiped $3 billion worth of market capitalisation off that company—$3 billion! It was a bit like: “How do you make a large company into a small company? Give it to Helen Clark to look after for a while.” She wiped $3 billion off that company and every New Zealander in the country paid for it. Every single New Zealander knows that Helen Clark cost them money. The reason is that one of the largest shareholders in Telecom of course is the New Zealand Superannuation Fund—the people who are managing money on behalf of the taxpayers of New Zealand. So Helen Clark for purely political gain decided she would put the boot into Telecom because that made her feel good and she might win a few votes and on the back of that it cost that company’s market capitalisation $3 billion. It cost the hard-working taxpayers of New Zealand who have been saving for their retirement a whole lot of money. 
She did one other very interesting thing when she did that and it was done in a purely politically driven way. We have seen an exodus of offshore fund managers come to New Zealand with one simple message: “We are getting out of New Zealand. We are withdrawing our capital from New Zealand. The reason we are doing that is we don’t understand the rules of the game out here anymore. We don’t understand the regulatory environment and the way that’s interpreted. We don’t understand the situation where on a Monday the Government can give a policy directive as to what it wants to occur in terms of investment in lines companies such as Vector—something that sent the stock price of Vector up 10 percent—and on the Wednesday it could be sent down 10 percent because the Commerce Commission then put it under price control.” They do not understand why the Prime Minister of New Zealand thinks it is really good to wipe $3 billion worth of market capitalisation off the value of that company. They do not understand why the political process is one where the Prime Minister of New Zealand thinks the way to win votes is to get inside this kind of information. 
This legislation goes some way to improving the private sector and its involvement in this country. It will give more surety and confidence to the financial markets. But I predict that the confidence of the financial markets will never return under a Labour Government led by Helen Clark. It will never return under a woman who herself was an insider trader—in my opinion—when it came to the pledge card and the inappropriate use of $760000 worth of taxpayers’ money. It will never return under the standards set by a Labour Government. The only way confidence will come back into the financial markets is not with the changes National is supporting here today but when a decent Government is elected by the people of New Zealand. That I can assure you Mr Speaker will be happening sooner as opposed to later. 
MARYAN STREET (Labour) 
: 
 I rise to speak to this legislation—unlike the previous speaker John Key—and wish to make a couple of comments in response. First of all this omnibus legislation is intended to encourage investment in New Zealand’s financial markets by strengthening the regulatory framework in our securities securities trading and takeovers laws. As a member of the Commerce Committee which attended to this legislation I have pleasure in bringing it back with amendments that have been unanimously supported by the parties around the select committee table. For all the previous speaker’s opportunism and barely related cant the legislation is an important part of the Government’s securities law reform programme. 
In addition to the comments made by the Minister the Hon Lianne Dalziel in her third reading speech I say it is designed to ensure that regulation encourages an efficient and effective market for securities trading. It reduces transaction costs for trans-Tasman companies by aligning parts of our law more closely with Australia. It also enhances the integrity of New Zealand’s financial markets by providing domestic and international investors with the assurance that our regulation in this area is consistent with international norms. 
The main provisions of this legislation are to do with insider trading definitions prohibitions against market manipulation substantial security holder disclosure and declaration of contravention mechanisms. The amendments that the Commerce Committee has as I have said unanimously put forward in the report attached to this legislation are in large measure amendments that simply allow for consistency and for comprehensiveness of these provisions. 
This is good and modern omnibus legislation. It has been well served by the officials who have advised the select committee. I also congratulate the chair of the select committee Katherine Rich for her guidance of this legislation through the process. So far from scoring cheap shots of dubious worth and even more dubious accuracy I would rather stick to the content of this legislation and commend it to the House for passage. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 It is worth reiterating in the interests of accuracy that this afternoon we are debating the third readings of in fact four bills: the Securities Amendment Bill the Securities Markets Amendment Bill the Takeovers Amendment Bill and the Fair Trading Amendment Bill. 
One of the interesting things in this third reading debate is that both sides of this House agree with the purpose of this legislation. The aim of the legislation—as I understand it from the work of the Commerce Committee—is to inspire confidence in New Zealand’s capital markets. When the Minister the Hon Lianne Dalziel spoke to the third reading just now she said that the aim of the legislation is to encourage investment in New Zealand’s financial markets. Naturally National supports those objectives and there are a number of measures in these four bills that National supports including issues relating to insider trading disclosure requirements for advisers and brokers enforcement procedures and the penalties associated with insider trading. National naturally supports those measures in this legislation. 
I take up from where my very very experienced colleague John Key left off. We in this Parliament have to understand—and members of the Government need to understand—that it is not just legislation that affects our capital markets and investment in this country. The legislation can be improved significantly and I believe this legislation we are debating this afternoon does improve our securities legislation. But the behaviour of the Government can have just as great an effect as the legislation if not greater. My colleague John Key mentioned the Government’s absolutely inept handling of the Telecom decisions—the decisions surrounding its decision to unbundle the local loop—and the profound impact that had on capital markets in New Zealand. Why would offshore investors look at investing in this country when they see a country where a Government is so ignorant of the realities of business investment that it does things that wipe $3 billion off one company? That company would obviously have had foreign shareholders in it. What are they going to do when they see a Government in New Zealand behave in that kind of way and just wipe $3 billion? 
 It is easy to say the words. It is easy to say “$3 billion”. I invite members to reflect on how much money that is—$3 billion is $3000 million. For every New Zealander that is many many dollars just wiped off our capital markets through the inept handling of a Government policy decision. This legislation does not save people from that kind of inept Government behaviour wiping billions off New Zealand’s capital markets. 
If that was an isolated incident maybe one could say that these things happen from time to time. But it was not. The way in which the Labour Government handled the Air New Zealand fiasco was an absolute disaster and showed the absolute incompetence of the Minister of Finance when it came to dealing with capital markets and major business in this country. It seemed to me to be Dr Michael Cullen’s personal decision not to accept the Singapore Airlines deal on Air New Zealand. He thought a better deal was out there somewhere and he kept Singapore Airlines at bay for weeks as the capital value of Air New Zealand plummeted. A lot of foreign investors had shareholdings in Ansett as part of the joint Air New Zealand - Ansett operation. I happened to be in Australia not long after that and I heard comments by Australian investors in Ansett asking what kind of mickey mouse markets and Government we had in New Zealand that would allow that kind of thing to happen. A tremendous highly respected international investor wanted to buy a greater shareholding in the Air New Zealand - Ansett conglomerate which would have saved the capital market value of that airline. Instead Dr Cullen said: “No no we don’t want that.” and caused massive loss of capital value. So there are two examples—the Telecom fiasco and the Air New Zealand fiasco—that just destroyed confidence in New Zealand’s capital markets. It has nothing to do with this legislation; it is the inept behaviour of this Government. 
Another example is the recent sacking of the electricity commissioner. The Government did not like the fact that the electricity commissioner had sufficient integrity not to be manipulated by this Government. We saw that happen to a former Commissioner of Police when Helen Clark first came to power. Helen Clark the new Prime Minister of New Zealand knew she could not manipulate Commissioner Peter Doone so she knifed him the back. And my word since then the performance of the New Zealand Police at least at a high level has caused many concerns around New Zealand in terms of some of the decision making in respect of the breaches of the law by this Labour Government. So we have that example too of when the Government’s behaviour has again lost confidence in our markets. Obviously the electricity market is hugely important but the Government just sacked the commissioner because it found that it could not manipulate him. 
Another very interesting case currently before this Parliament is the Government’s decisions on the taxation of international shares—international equities—by investors in New Zealand. That legislation will have a profound effect on our markets in this country. The select committee has already heard evidence in public—so I am not breaching any confidence—from major fund managers in New Zealand saying that if Labour not only goes ahead not just with the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill as introduced into Parliament but also backs down on the international provisions and goes with the new provisions put in front of the select committee by way of a letter and a press statement from the Ministers then even with those changed provisions investment funds in New Zealand will go offshore to Australia. We have been told that already investment funds are going offshore to Australia. So even the good provisions in these bills cannot stop the lack of confidence in New Zealand’s investment and capital markets because of the ignorance and inept behaviour of this Labour Government. 
I want to come to another couple of matters. One of the bills that we are debating the third reading of this afternoon is the Fair Trading Amendment Bill. Where was the fair trading by the Labour Party when Helen Clark took taxpayers’ money to the tune of over half a million dollars to pay for its electioneering? That was a trading issue. Where was the fair trading? What is the use of having this kind of legislation in New Zealand when the Government sets an example by taking—I guess we are not allowed to use the word “stealing” but that is what it was—taxpayers’ money to pay for its election pledge card? 
Labour members say that it is OK because they did it at previous elections. I have been involved in this Parliament for 22 years. I do not know how many elections that is—about eight I think. It never entered my head during the 2002 election or the one before that Labour’s pledge card which was so central to its election campaigning was paid for by taxpayers. That thought never entered my head but on the day when the pledge card arrived in my letterbox at home last year I glanced at it and saw there was the parliamentary crest. Because the rules had changed to make matters more transparent Labour could not hide its spending and I saw that the New Zealand taxpayers had paid for that electioneering. My God! I was stunned. We are debating the Fair Trading Amendment Bill this afternoon but nothing about that theft of taxpayers’ money was fair trading. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
Tena koe Mr Assistant Speaker tenatatou katoa i te Whare. I was telling a group of friends recently that one knows one is a Maori when one’s people want one to be in Parliament and all one wants to do is to go home. But I also add that one knows one is in Parliament when one has to do research and give speeches on mind-numbing topics like this one which uses such sexy language as “takeovers” “fair trading” “management banning orders” “pecuniary penalties for civil liability events” “market manipulation laws” “collapses of finance companies” “structurally weak capital markets” “disclosure” and “deceptive conduct”. But that is the job and we are here to do it as best we can. 
The purpose of the Securities Amendment Bill is to reform our country’s securities laws and with language like that it will take a lot to fix a dictionary of double-talk. On top of that this bill is supposed to be read in conjunction with the Securities Markets Amendment Bill the Takeovers Amendment Bill and the Fair Trading Amendment Bill so it is supposed to change the way that business is done with the Commerce Commission the Securities Commission and the Takeovers Panel. 
This group of bills also brings in what is called a standard of civil liability to deal with breaches of rules about contributory mortgages and the putting out of ads that include untrue statements. We have to laugh when we think that this particular legislation is coming up today on the very same day that the Auditor-General’s report comes to Parliament. Of course we would also have to ask whether the distribution of Labour’s 2005 and even its 2002 pledge card would breach those standards of civil liability. Would the fact that taxpayer money was spent on election advertising without including the appropriate details be considered an untrue statement? If so who would be expected to own up to the civil liability and again who would be expected to cough up the $450000 to repay the unlawful spending of taxpayer funds on a dodgy pledge card of party political promises? 
Another key principle in this legislation assumes that investors can have greater confidence in our securities markets with these new more effective laws. That is OK except that the legislation is making changes in order to attract foreign investment to our shores. That can be a worry because no matter how we dress it up this country has a stink reputation in all the important places overseas at the moment. This Government has already been taken to task by the United Nations committee on the Convention on the Elimination of All Forms of Racial Discrimination. In fact the New Zealand Government’s response to the Draft Declaration on the Rights of Indigenous Peoples did not once mention the words “indigenous” “Maori” “whanau” “hapu” “iwi” or “tangata whenua”. It is as though we are not even here. 
So when we consider this legislation today we have to consider also that this Government has said that it will not support the Draft Declaration on the Rights of Indigenous Peoples when it comes before the United Nations General Assembly next month. The whole world will be there to see that happen and the great myth of New Zealand’s racial harmony will go straight down the toilet. Again in respect of this legislation the Government has insisted that the Draft Declaration on the Rights of Indigenous Peoples must be consistent with international and New Zealand law—I guess the Government forgot about the Foreshore and Seabed Act—and that the declaration must protect the rights of all citizens. I have to ask how dumb is that? The Government wants a declaration on indigenous peoples that has to protect the rights of all citizens. We recognise the United Nations Convention on the Rights of the Child which does not have a requirement to protect the rights of all citizens and we recognise statements on the rights of women that do not include protection of the rights of all citizens but when it comes to indigenous people all of a sudden we have to include that protection. Responses like that weaken the text and diminish the rights of indigenous peoples—and the world has noticed. 
I refer to those issues because they impact on New Zealand’s credibility in the international community. Respected international organisations like Amnesty International have condemned those activities as shameful and it is a joke to think that we can repair that damage to our reputation by simply tinkering with the securities legislation. 
All the fans of free markets reckon that opening up the country to unrestricted foreign investment will lead to enhanced economic growth more jobs and better living standards for all. That is a load of bulldust. I can remember some years back that Harley Davidson was being hammered in the market place in the US losing out in motorbike sales to Honda Suzuki and Kawasaki. And what did Ronald Reagan do? Did he leave Harley Davidson to face the music in the free and open marketplace? Like hell he did! He whacked a massive tariff on Japanese bikes so that Harley Davidson could survive. So when I hear all the rubbish that is said about free markets I chuckle to myself. 
Although the legislation makes securities and takeovers law less complicated easier to enforce and harder to avoid—and that is all good—we still have to be careful of foreign investment that compromises our security our sovereignty and our rangatiratanga. Foreign investment keeps going up every year including the buying up of land in Aotearoa which is a policy the Maori Party does not support. We also have to consider the security of our matauranga—our cultural and intellectual property—and the need to protect that from the multinational rape and pillage brigade. I raise those issues in respect of the Securities Amendment Bill because the most important tool for the security and protection of such vital assets to our nation is of course the Draft Declaration on the Rights of Indigenous Peoples. Along with that we have the Wai 262 claim which aims to protect Maori cultural and intellectual property rights in exactly the same way that indigenous peoples all around the world are using intellectual property rights laws and international agreements. 
The whole notion of free trade and the exploitation of indigenous knowledge that the Wai 262 claim is addressing also raises issues in relation to the Fair Trading Amendment Bill. The new bill deals with what is called “misleading and deceptive conduct” “false representations” “unfair practices” and “the importation of goods bearing false trade descriptions”. As we head towards Halloween I will highlight a case of misleading conduct impacting on Maori. The website for Halloween Town a “one stop Halloween and horror headquarters” was advertising Maori tattoo kits online with a picture of a full-face moko but after complaints from people like Ngahihi O Te RaBidois from the Waiariki Institute of Technology the fake moko was pulled. We hope that this bill will make it even harder for Halloween freak shows to exploit Maori knowledge and taonga.  
 This legislation is also supposed to strengthen the laws on investment advisers who will have to be more open to their clients—again a good idea. It is a bit like kaitiakitanga: accepting responsibility for those for whom we are guardians. Disclosure will help to protect people’s interests. 
One of the things I have heard from the Federation of Maori Authorities is that investment advice is a skill and that financial education should be a key aspect of our learning. The need to understand savings and budgeting was also raised by Kathy Loveday of the Budget Advisory Service in relation to the KiwiSaver Bill. It is not a new idea but it is certainly an idea worth promoting. Financial literacy is also something I have talked about earlier in this House. NgaiTahu have an initiative called WhaiRawa to improve their people’s financial management skills and enhance their financial security and independence. If whanau had those financial literacy skills then things like market integrity and market confidence might actually mean something to them and we might see that knowledge translated into diversified investments beyond housing properties and land into other areas of the economy. In today’s market a lot of people do not invest not just because they do not have a lot of money but also because they just do not know how to invest. 
The Maori Party supports the transparency and accountability of foreign investment and it supports proper regulation and protecting the interests of New Zealand investors. In the interests of integrity and fair trade and as a matter of principle we will support this bill. Kia ora tataou. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak on the third readings of the legislation. This legislation is designed to help build confidence in New Zealand’s financial markets and as a result to encourage investment in New Zealand’s financial markets by strengthening the regulatory framework that is embodied in securities and securities trading. The legislation first saw light on 14 December 2004—some 2 years ago—when the Hon Judith Tizard who was then the Associate Minister of Commerce and is now the Minister with responsibility for Auckland Issues addressed this Chamber with a sterling first reading speech. 
The Securities Amendment Bill tightens the regulatory framework with the likes of clauses such as 3A containing new section 17B which allows the sharing of information between the Commerce Commission and the Securities Commission and new section 55F proposed to be inserted by clause 8 which increases the amount of pecuniary penalty under the Securities Act to $500000 for an individual and up to $5 million for a body corporate. New sections 60A 60B and 60C proposed to be inserted by clause 11 also tighten the regulatory framework. New section 60A allows the court to make management banning orders new section 60B allows the management banning orders to be for a period of 10 years and new section 60C allows the contravention of a management banning order to result in imprisonment for 3 years. So the bill brings some real teeth to securities legislation. 
Today however I wish to argue that although the changes proposed to this legislation may strengthen the regulatory framework this will do little to promote economic growth and that recent announcements by this Government have done far more to create damage to investor confidence in our markets than this legislation will ever do to build confidence. 
In July 1999 Helen Clark in an address to the New Zealand Trade Centre said: “In my lifetime our living standards have slipped from the third highest in the world to 25th today. We are in danger of slipping into the next range of nations like Estonia and Latvia in the sub-OECD grouping which have never reached European living standards. We’ve had those living standards but we are losing them and we will continue to unless we can keep our talent at home and create the conditions for rapid growth of new industries.” 
Prior to that speech in another speech delivered to the New Zealand Employers Federation conference Helen Clark said: “Labour knows the economy now is more competitive innovative and dynamic than the economy of 10 years ago.” In fact she said: “We would go so far as to suggest that a large part of that is due to the changes made by the last Labour Government.” She was in fact referring to the introduction of GST the reduction of top marginal tax rates and the privatisation of a number of New Zealand companies including Telecom—which I will speak about later. She must also have been referring to the labour liberalisation laws that had created a dynamic competitive and innovative economy that set the benchmark for solid growth through the late part of last century and the early part of this century. Michael Cullen agreed with the Prime Minister at that point. In his Budget 2001 speech he went so far as to say: “We need to set ourselves a goal of being back in the top half of the developed world in terms of per capita GDP—a position we have not occupied since 1970.” 
Unfortunately the Clark-Cullen Government has given up on that objective. In the face of the results of the recent October  
Monthly Economic Review 
 from the Parliamentary Library the only news of any merit is that unemployment has remained steady at 3.6 percent of the workforce. Of course this overlooks the huge numbers that are now permanently registered on the sickness benefit and the invalids benefit. It ignores the fact that our workforce works the second-longest hours in the OECD yet has productivity rates at the bottom of the scale. 
The rest of the results are far less motivating. Economic growth is down from 3.1 percent to 1.9 percent. Inflation is up from 2.8 percent to 4 percent. The current account deficit is a whopping $3.1 billion above the $12.1 billion of last year at $15.2 billion. Lastly of those key statistics interest rates are heading north from 7.09 percent to 7.56 percent. 
With that backdrop one can understand why we do not hear Michael Cullen getting too fired up about his 2001 speech. I quote again. He said: “We need to set ourselves a goal of being back in the top half of the developed world in terms of per capita GDP—a position we have not occupied since 1970.” No the Government has moved from the semantics about being in the top half of the OECD to those of economic transformation which is an inane description for an approach of “Box on keep our mates happy and do nothing that will actually grow the economy.” 
One of the items that conveniently falls into the economic transformation agenda—one that will not really add one point of economic growth or ruffle too many feathers—is the changes that are proposed in this new securities legislation. The objectives of the legislation are all about promoting confidence in the New Zealand sharemarket. The National Party agrees that promoting confidence in the New Zealand sharemarket is important and it supports the legislation on that basis. However the announcement of yesterday’s $11.5 billion surplus must surely signal that the economy has the ability to handle tax cuts as one legislative item that will promote economic growth. 
 Promoting confidence in the New Zealand sharemarket involves increasing the certainty for market participants in relation to the integrity of the market and the mechanisms for implementing law. A number of factors can influence the level of confidence both in domestic and international investors. Strengthening the insider-trading regulatory regime is only one activity geared at achieving this aim. 
In saying that I comment that we have experienced the unique situation in recent months of one of the biggest examples of market uncertainty in the history of the New Zealand sharemarket. The announcement of the unbundling of the local loop and the messy way in which the announcement was leaked to the market saw billions wiped off Telecom’s share value and confidence in the New Zealand sharemarket go out of the window. On the one hand it is all very well bringing in new legislation such as this which has the potential to improve the law around insider trading to amend the disclosure regime required of substantial security holders and to increase the disclosure requirements of investment advisers and brokers; but on the other hand it is not acceptable that foreign investors lose total confidence in the market because of this bumbling Government’s handling of the Telecom announcement. 
As stated in an article in the  
Dominion Post  
of 19 August: “The regulators can’t be allowed to think their actions are somehow detached from what goes on in the financial markets. Comments alone are capable of huge wealth creation—and destruction.” as was the case with the Telecom announcement. “In May the Government’s announcement that it was to regulate Telecom pared $1 billion off the value of New Zealand’s largest listed company in one day. Commerce Minister David Cunliffe’s remarks to a journalist later that month that Telecom might need to cut its dividend lopped off another $275 million. And then there was Vector. On Monday August 7 the Government made encouraging noises about how regulators needed to give greater consideration to incentives for infrastructure investment. Vector stock added $240 million in value on the Tuesday. A day later the Commerce Commission announced its intention to declare control of the electricity distribution services supplied by Vector. This knocked $300 million off the stock.” As the  
Dominion Post  
quite rightly points out this is “Ridiculous.” 
The biggest concern about all this was the comments around the international investment community—and I quote the  
Dominion Post  
again which stated that New Zealand is almost now “ ‘finished’ as a destination for international investors. The big overseas funds don’t like uncertainty. Any market that delivers the kind of shocks seen in the Telecom and Vector share prices could be seen as too big a risk.” 
The point I make is that it is all very well to have this legislation coming through as part of the economic transformation agenda but to be honest international markets will take very little notice of the legislation compared with announcements such as that made by the good Minister of Telecommunications. It is all about reputation security of investment and a discount rate applied to investments in the New Zealand market. 
David Cunliffe was reviewed by the Securities Commission over the way he handled the Telecom announcement. However the commission was clear in pointing out: “Ministers need to exercise caution when commenting on matters that might affect share prices.” So in one breath although legislation will improve the infrastructure around securities legislation we as a country need to be very careful about the announcements we make to the financial markets because if we are going to continue economic growth in this country those kinds of announcements are particularly important. 
LINDSAY TISCH (National—Piako) 
: 
 This is important legislation and in the first reading second reading and Committee stage National has had a major input. The legislation has now been divided into four bills. It started as the Securities Legislation Bill— 
Hon Lianne Dalziel 
: He can read them out. That will take 3 minutes! 
LINDSAY TISCH 
: I hear the Minister in charge of the legislation interjecting. I would have thought she might be prepared to take a call on the third readings of these important bills. 
Hon Lianne Dalziel 
: I did! 
LINDSAY TISCH 
: Oh did you! It was so vague that I do not recall anything the Minister said. Maybe she would like to take another call as other Labour members have not been prepared to take a call. 
Hon Member 
: They never do. 
LINDSAY TISCH 
: They never do even though these are important bills. The Securities Amendment Bill the Securities Markets Amendment Bill the Takeovers Amendment Bill and the Fair Trading Amendment Bill have been split from the original legislation. I want to take a short call to— 
Hon Lianne Dalziel 
: You can’t do anything else! 
LINDSAY TISCH 
: The Minister says I cannot think of anything else. I tell her that this legislation is about building confidence in the capital markets. It is about the mum and dad investors and small investors along with the institutional investors who need to have confidence in the process and confidence in the capital markets. But this Government has been caught short and in a number of areas. 
As my colleagues John Key Lockwood Smith and Chris Tremain said in their speeches if we look at what happened with Telecom and the unbundling of the local loop we see that $1 billion was wiped off the shares in 1 day! When the Minister of Communications tried to fudge things the following day another $2 billion was wiped off the capital of Telecom. As John Key said that affects every New Zealander because many superannuation funds—and in fact the New Zealand Superannuation Fund—invest in Telecom. So when we are talking about confidence reputation and integrity in the market we see a Government that has fallen short. Air New Zealand was mentioned by Dr Lockwood Smith and the opportunity for offshore investment—an opportunity that was lost. 
I spoke about this legislation in the Committee stage. It was interesting that on the day we were talking about confidence in the markets reputation integrity of the process what did the Government do? It fired the chair of the Electricity Commission Mr Hemmingway. If the Government does not like something it interferes in the process. That is what it does. 
Although we are talking about and supporting the breakdown of this legislation into four bills at the end of the day it is a matter of the public and its perception of whether there is confidence in the Government and whether the reputation of the markets can be sustained. National members would hope so. We have supported this legislation right through and our speakers have crystallised and articulated those arguments that we believe are important for the markets in New Zealand. With that in mind National will be supporting the third reading of this legislation. We want to make sure that the purpose of the legislation to inspire confidence and to encourage investments is its primary purpose. We are happy to support that process because it is important that New Zealand as a trading country has investments that there is some integrity in the market and that there is that transparency so that small investors—be they mums and dads; be they the small investor or the institutional investor—can have confidence in our capital markets. 
Bills read a third time. 
Insolvency Law Reform Bill 
In Committee 
Part 1 Interpretation and scope 
Dr RICHARD WORTH (National) 
: 
 As will be apparent from the material before members National has some real difficulties with this bill. There is no doubt that it was well-intentioned legislation and I think it is always a tragedy when commercial legislation of some significance does not attract support across the Chamber. Clearly it was intended that this legislation have that support. 
I simply note in dealing with Part 1 that the concerns of National are set out in a minority report that appears in the commentary on the bill. It is noted there that National opposes the bill and in saying that the bill is being touted as the first major review of company and personal insolvency law in four decades those members of the National Party who participated in the deliberations of the Commerce Committee enter their reservations. Those reservations are substantially centred on the concept of voluntary administration and we also have reservations in respect of the no-asset procedure. There will be an opportunity to talk on those two issues later in the context of the legislation. 
It is interesting to reflect on why it was seen as necessary to change the title from “bankruptcy” to “insolvency”. Bankruptcy has a very settled meaning—a meaning that is well established in history—and insolvency is somehow seen as a softer and in some sense a more kind word. Bankruptcy which is of course what insolvency is is a legally declared inability or an impairment of ability of an individual to pay his or her creditors. It can arise in two main ways. First of all a declared state of bankruptcy can be requested by creditors in an endeavour to recoup a portion of what they are owed but in the overwhelming majority of cases the bankruptcy is initiated by the bankrupt individual or organisation. 
I have said that this concept of insolvency has a long history. Without getting involved in that history to any great extent it is interesting that in the Old Testament Moses’ laws prescribed one “holy year” that should take place every half a century when all debts were eliminated amongst the Jews and all debt slaves were freed due to the heavenly command. Of course in Ancient Greece as the Minister in the chair the Hon Lianne Dalziel nodding wisely will know bankruptcy did not exist. If a father owed—and since only locally born adult males could be citizens it was fathers who were legal owners of property—and he could not pay his entire family of wife children and servants were forced into what was called debt slavery until the creditor recouped losses via their physical labour. Many city states in Ancient Greece limited debt slavery to a period of 5 years and debt slaves had protection of life and limb which regular slaves—mostly war prisoners—did not enjoy. 
Finally just on these historical matters and I will be able to deal in greater substance with other parts of the bill at later calls the word “bankruptcy” is formed from the ancient Latin “bancus”—a bench or a table—and “ruptus” which means broken. A bank originally referred to a bench that the first bankers had in public places in markets and fairs on which they tolled their money and wrote their bills of exchange—that type of activity. So when a banker failed he “broke his bank” to advertise to the public that the person to whom the bank belonged was no longer in a position to continue his business. This practice was very frequent in Italy and it is said that the term “bankrupt” is derived from the Italian “bancarotta”—a broken bench. But enough of that. 
Part 1 covers in a preliminary way some key provisions and I will turn to those now. First of all clause 3 has interpretation provisions and possibly of some relevance is the definition of “current summary instalment order”. 
MARYAN STREET (Labour) 
: 
 It is my pleasure to rise to speak to this Insolvency Law Reform Bill and to have been on the Commerce Committee during the progress of this bill—which the previous speaker was not. I would like to get to the point of the National Opposition’s minority view on this bill because there was much more unanimity on this bill around the select committee table than would be indicated by National’s blanket opposition to the bill as it stands. 
There were two points on which National decided to oppose this bill just for the sake of it. One was to do with the issue of voluntary administration and it hinged around the creditor status of the Inland Revenue Department. This status means that when a company goes into liquidation or elects to go into a voluntary administration regime the department has the first call upon the moneys owing. I will explain in case members opposite do not understand the significance just what that means in practical terms. 
First of all the department’s priority status is absolutely essential. If workers in a company that is going under are to receive the payments due to them the department has a claim on PAYE GST child support payments and other welfare payments that are due to it. It seems to me that it is right and proper to retain the department’s creditor status in order to ensure that the moneys due—as those moneys are—are not misappropriated by companies and allowed to be used to pay for other things. We did hear examples of companies that have not paid PAYE but have banked that money for 1 2 or 5 years and have used it to employ additional staff. That is not correct by any yardstick or measure. 
Those were particular examples but there is a general principle at issue as well—that is the department has entitlements that must be observed. When we looked into some of the examples we found that the department could perhaps improve its processes. Even by its own admission it said it could improve its processes for extracting the entitlements that are due. So we tightened up provisions in this legislation to ensure that where payments due were defaulted on for two pay periods or more they were then brought to the attention of the directors so that the directors did not go on blindly with the default position and not pay the due entitlements. That is an example of a particular application of the department’s creditor status. 
Beyond that and I alluded to this earlier is the general principle of the Inland Revenue Department’s creditor status. The department is required by law to make sure that it receives the entitlements due to it—and that is the basis of the department’s priority—so there is no reason for the Opposition to oppose this bill on that count. 
KATE WILKINSON (National) 
: 
 In speaking to the Insolvency Law Reform Bill I would like to make some comments in rebuttal of the previous speaker’s concentration on the Inland Revenue Department’s status and in particular the priority in relation to wages. The Inland Revenue Department’s four-pronged priority status remains—it is not just in relation to wages but also to GST and withholding taxes. It is interesting to note that the Law Commission report itself recommended abolition of this priority yet for some reason the bill retains it. If we look at some of the criticisms made in commentary relating to the Inland Revenue Department’s priority status we see that they include such comments as: “New Zealand’s decision to retain the Inland Revenue priority is out of step with Australia and the United Kingdom offends the pari-passu principle and could be seen to incentivise inefficient tax collection. For these reasons alone the decision to retain the Inland Revenue priority is a poor policy decision and should be revisited.” Yet that seems to have been ignored in this bill. 
It has been commented that the policy decision in relation to the Inland Revenue Department requires consideration because it conflicts with the goals of introducing a business rehabilitation regime and harmonising trans-Tasman business laws. Unless reconsidered the Inland Revenue Department voluntary administrators and general unsecured creditors will have great difficulty in effectively implementing the new voluntary administration procedure. Some have said that while the Inland Revenue Department still has preference the voluntary administration will be a waste of time. One of the questions that has been raised is why an administrator would bust a gut to trade a company out of trouble just so that it can pay the Inland Revenue Department. In fact one of the final verdicts on voluntary administration is that it will create a new dimension for the insolvency industry but it will not be a panacea. 
The main problem with insolvency as we all know is that there is rarely enough money to pay all the creditors everything they are owed. Insolvency law provides a system that kicks into place in the event of financial failure and if we look at why businesses or people become bankrupt or insolvent or go into liquidation we see that it is not all because of reckless or irresponsible trading. According to 2004-05 figures about 3000 people filed for bankruptcy that year. Of those 15 percent attributed their bankruptcy to the excessive use of credit facilities extravagance gambling or speculation; 35 percent to unemployment or loss of income; 10 percent to relationship breakdowns; another 10 percent to ill health or absence of health insurance; and the final 10 percent to adverse legal action or the incurring of liabilities due to giving personal guarantees as collateral for bank loans or failed businesses. Personal guarantees as we well know are often secured by way of collateral mortgages and therefore such guarantors do not rank as unsecured creditors and do not have to line up in the queue. 
With any financial failure there is only so much money to go around and not all creditors will get their money back. Some are secured and are the lucky ones; others need to line up and get a proportion. Under this bill the new voluntary administration procedure is introduced and this is one of the most significant reforms in the bill. It is not unlike the receivership provisions we have in existence at the moment. Some of the problems that often surround receiverships are the cost of those receiverships and the stigma attached to them. It is not unlikely that a stigma will also be attached to voluntary administration under this new regime. 
Under the bill when a company enters into voluntary administration an administrator is appointed to operate the company. Again that is similar to a receiver under the existing receivership rules. The administrator reports to creditors and at the end holds a meeting of creditors to determine whether the company shall be liquidated returned to the directors or be entered into a restructuring plan. There are similarities with the receivership regime but under this new bill the deed of company arrangement requires approval from 50 percent of creditors receiving 75 percent of the value of a company’s debt. Effectively this means that a creditor holding 26 percent of that debt can quite easily defeat that deed of company arrangement which in effect defeats the liquidation. If the Inland Revenue Department for example were that creditor then it would be able to defeat any plan for voluntary administration. As a preferred creditor it is also able to receive the proceeds of liquidation before unsecured creditors. 
The Australian experience which has been used as a comparison in many cases indicates that most companies entering into the voluntary administration arrangement are in fact subsequently liquidated. However the argument in favour of it is that it may provide a more orderly liquidation and the opportunity to negotiate with creditors. In theory it allows the directors to refocus from if you like the firefighting to active business improvement so that the company may then be able to trade out of its difficulties. But it is certainly not the panacea that the bill purports it to be. The Inland Revenue Department’s four-pronged priority is certainly an issue we take issue with and on that basis National is opposing this bill. 
I would like to speak later in relation to the no-asset procedure scheme but I am aware of the time restraints and I will let my colleagues take further calls on this part of the bill. 
CHRISTOPHER FINLAYSON (National) 
: 
 Insolvency laws are fundamental to the efficient operation of the State and indeed they have been with us since time immemorial. Under the Roman law of the Twelve Tables creditors might as a last resort cut the debtor’s body into pieces each of them taking his or her proportionate share. Even among the Jews whose legislation was of a comparatively humane character the harshness of bankruptcy law was illustrated by the Old Testament story of the woman who sought the help of Elisha saying: “Thy servant my husband is dead; … and the creditor is come to take unto him my two sons to be bondmen.” I am not suggesting that we have provisions like that in this legislation—and indeed we do not. 
The Insolvency Law Reform Bill is a reform of the 1967 legislation and let it be stated quite bluntly that without doubt insolvency law reform is much needed. Personal bankruptcy laws are currently set out in the 1967 Insolvency Act and they were developed at a time when bankruptcy laws affected more the individual trader. But modern personal bankruptcy tends to be consumer debt - driven and certainly this legislation recognises that shift in society. 
Certain parts of the legislation I think are positive but the bill founders for the reason that National speakers have said—that is that the centrepiece of the bill as the minority report says is voluntary administration. That is the real heart of the new legislation and the voluntary administration scheme which will replace as the minority report says the seldom-used compromise scheme—and I know from my time in practice that it was very seldom used—will not work because of the issue of the priority status for the Inland Revenue Department. As the minority report says unless the Government can address that issue the voluntary administration scheme will be severely compromised. That is why we in the National Party are going to have to divide the Committee on those issues. 
That is a shame because as I said there are some major amendments that are worthwhile. There is amendment of the voidable transaction provisions; amendment of the liquidation provisions of the Companies Act to counter perceived abuses since that Act was passed in 1993; introduction of rules and prohibitions on the use of phoenix companies; modernisation of the laws of personal insolvency—and when we come to Part 2 on the procedure for declaring people bankrupt I will say something about what I think are useful improvements there; as my friend Ms Wilkinson also said introduction of a no-asset procedure for individuals; and what I find particularly interesting concerning what I call the conflict of laws issues of bankruptcy introduction of the model law on cross-border insolvency. 
But if National is to support the bill the issue of the Inland Revenue Department priority will need to be addressed. I went back and looked at the Law Commission’s 1999 paper which dealt with some of these issues. In particular the 1999 report dealt with priority debts in the distribution of insolvent estates. The Law Commission recommended that the priority given to the Inland Revenue Department should not remain. It recommended abolition of the priority for GST customs duties and levies under the Fisheries Act and Radiocommunications Act and it recommended limiting the PAYE priority but only to PAYE in respect of unpaid wages. It recommended that unpaid PAYE relating to previously paid wages should not have priority and that the priority should be retained in certain limited circumstances. So the Law Commission was in favour of that. Moreover New Zealand’s decision to have this model of legislation is out of step with both Australia and the United Kingdom countries with which we have very close legal and trading relationships. For reasons that I will develop later in the debate this model offends the paripassu principle and really as I will say later incentivises inefficient tax collection. So it is a poor policy decision. It needs to be revisited. There were opportunities during the select committee hearings to look at those issues and they were not looked at. As a result of that the legislation is flawed. The Inland Revenue Department’s priority will severely erode the effectiveness of the new voluntary administration procedures. 
Those are preliminary comments; as we get into the substance of the parts I can deal with some of those arguments in detail. But I say in closing that it is a shame that after 40 years—when there is a major need for insolvency law reform because the business laws of our country need to be kept up to date—and after all this time and all this work a couple of provisions in this bill will render it inefficient and impractical law and that is why National is opposing it. 
Hon DAVID CARTER (National) 
: 
 I rise with pleasure to take a brief call on the Insolvency Law Reform Bill. I listened with interest to the previous speakers Kate Wilkinson and Chris Finlayson and I thank Chris very much for the history lesson around the earlier ways of solving insolvency difficulties. I am pleased that the legislation as proposed by the Labour Government does not include some of those more historic means of sorting out these problems. 
I think it is a shame that National is in a position whereby it has to oppose this legislation. Law that has been on the book for such a considerable length of time clearly needs to be revised and it is a pity because a reasonable idea around voluntary administration has actually been corrupted by this legislation which is basically incompetent. The legislation introduces voluntary administration which is a process used widely around the rest of the world but it will fail in this country because the submissions to the Commerce Committee have been largely ignored despite the fact that the committee did not receive a lot of submissions—there were 11 submissions only. I understand from National members on the select committee that they were significantly in support of the principle of voluntary administration but said that where it will fail is in the greed of the Government and the Minister of Finance in maintaining the priority status of the Inland Revenue Department. 
I think the Minister in the chair Lianne Dalziel should take a call in the Committee stage and tell us what other countries around the world have established insolvency legislation incorporating voluntary administration while still retaining the priority right of the revenue department of that country to get the first claws on the money. I would be grateful if the Minister would answer that question because I suspect the legislation is before the House with special preference being maintained for the Inland Revenue Department for no other reason than the Minister of Finance being able to come in at question time and crow about a Budget surplus of $11.5 billion. Surpluses of that magnitude it seems to me are one good reason why in this legislation the Minister in charge Lianne Dalziel could have given thought to accepting the work of the select committee and the well-researched well-regarded submissions received by the committee acknowledging that voluntary administration could work and in fact would work if the principle of priority status being given the Inland Revenue Department were removed. That is the major point that I want the Minister to take a call on. 
It is all very well for the National members of Parliament to come in and work hard at opposing the bill in the Committee stage but a Minister who either does not understand the legislation or just cannot be bothered answering the questions legitimately raised by National members is frankly not good enough. So I say to the Minister that she should give us a very simple answer to the questions I have raised. Which of the countries where voluntary administration works and works successfully have maintained a preferential status for the revenue department of those countries? That is the essence of the debate. That is the reason the National Party finds itself having to oppose the legislation. It simply will not work practically or fairly because of that preference being retained by the Inland Revenue Department. 
DAVID BENNETT (National—Hamilton East) 
: 
 As we debate this bill it is important to look at the history behind the legislation which has been thoroughly exposed by some of our great members with legal minds and also some of the reasons why one would want to have legislation such as this. When one puts such strength and urgency on the Inland Revenue Department’s ability to retain first call on the money the question must be raised that David Carter just raised: why would one want to do that? It is quite simple. The Government wants to retain these huge Budget surpluses so that in election year it can have a big spend-up to buy the votes of ordinary New Zealanders. It has done that before and it will do it again. This is just another example of the tax-and-spend Government we have here today. 
But there is another reason the Government wants to build up finances: so that it can pay for its election campaigns. Today we have seen evidence of that in the Auditor-General’s report. It is good that we have the former president of New Zealand First Doug Woolerton in the Chamber to make comments about the Government’s spending. Look at this. New Zealand First took $90540 in 2005 and $59906 in 2006. A total of $150446 of hard-working New Zealanders’ money went to those guys so that they could sit in those cushy chairs. That is what this legislation is about. It is about raising money. It is about paying for their own election campaigns and that is shocking. 
Hon David Carter 
: It is corruption. 
DAVID BENNETT 
: It is corruption corruption on a grand scale across the whole of that side of the Chamber. But when one has that corruption one has to look at the reality of what this bill actually means for individuals out there who are dealing with high credit. We have a Government that has provided an economy that has high interest rates and a high exchange rate. That has encouraged people to buy a lot of consumer goods—all that increase in availability of credit. The student loan scheme is another example. It is teaching the wrong lessons to young New Zealanders about the availability of credit. Kiwibank will loan 100 percent of mortgages. Those kinds of things open credit availability for ordinary New Zealanders and that is when people get into trouble and that is when they need legislation that looks after them and looks after the companies and individuals who supply money to them. 
If one walks down the streets of New Zealand these clothes traders are quite obvious—basically trucks that go around selling very expensive clothing in the poorest areas of our country. It is very difficult to see how a Government can allow that kind of increase in personal debt and at the same time allow the Inland Revenue Department to have first preference over ordinary New Zealanders who have high debt levels. What have those New Zealanders got? They have a Government that looks after the Inland Revenue Department and does not attack the high debt that gets those New Zealanders into trouble. If they did not have this high debt they would not need legislation such as this. But no this Government is quite happy to let that happen because it does not care about those people. It knows best. It knows so well that it does not even follow the international examples. It is willing to walk away from the Australian example. 
That is why National members are opposed to this bill. There was the ability for this Government and this country to have taken on board some of the lessons learnt internationally—lessons in regard to voluntary administration and lessons that would enable all New Zealanders to work a way out of any problems they may encounter. 
The CHAIRPERSON (Hon Clem Simich) 
: Would the member please come back to clauses 3 to 6. 
Hon Clayton Cosgrove 
: What clause is the member on? Tell us. 
DAVID BENNETT 
: Clause 3 “Interpretation” clause 4 “Rights and powers under other Acts not affected” and clause 5 “Act binds the Crown”. Well an Act binding the Crown! That would be an unusual thing in this Parliament would it not? Imagine if those members were actually bound by something in legislation! They would just change the legislation. Why bind oneself; just go and write another one a year later! They do not need to be bound by legislation. I thank those members for allowing us to look at the binding of legislation. 
Chris Tremain 
: Retrospective! 
DAVID BENNETT 
: Yes let us just do retrospective legislation. That will keep everyone happy. But do these guys want us to go through how the Act will bind the Crown? Clause 6 explains that corporations and other entities are not subject to this Act. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to Part 1 of the Insolvency Law Reform Bill but before I do that I will just outline the legislation that is the key reason why National is not supporting the voluntary administration regime. It is section 6A of the Taxation Administration Act which makes it clear that it is the Commissioner of Inland Revenue’s statutory duty to “… collect over time the highest net revenue that is practicable within the law …”—and Mr Woolerton might want to listen to that little clause again because he obviously was not listening. It is section 6A of the Taxation Administration Act which he probably has not taken much time to read during his time in Parliament. That is a very important point because it sets the Inland Revenue Department’s priority to collect above all others what is owed to it in terms of PAYE GST and various other things. Section 6A of that Act outlines the department’s statutory obligations which lie at the very heart of why National will vote against this bill. 
Voluntary administration lies at the very heart of this bill. In fact voluntary administration has been introduced under this bill in accordance with New Zealand’s obligations—and this may be news to Mr Cosgrove as well—under the 2000 Memorandum of Understanding on Coordination of Business Law. In a nutshell National believes that voluntary administration has significant merit but only under the right conditions because it is only with the Inland Revenue Department having it on a level playing field with non-secured creditors that voluntary administration will work. 
 National believes that the retention of the Inland Revenue Department’s priority status above unsecured creditors coupled with the responsibility to collect over time the highest net revenue that is practicable within the law will ensure that the department will be in favour of liquidation and recovery for itself as opposed to supporting voluntary administration. We believe that without the department’s support voluntary administration is doomed from the start which is why we do not support this bill. 
The minority view from National states: “All the submitters on [the voluntary administration] provision were unanimous in their view that unless the Government addresses the issue of the priority status for IRD the voluntary administration scheme will be severely compromised.” It goes on to state: “We do not believe that Parliament should pass another piece of redundant legislation when there is a groundswell of opinion from practitioners who believe that it will not work without the removal of the Inland Revenue’s priority status.” 
Let us review some of the merits of voluntary administration. As I said to Mr Cosgrove when I enlightened him on this legislation voluntary administration was introduced under the 2000 Memorandum of Understanding on Coordination of Business Law. It aimed to replace the seldom-used compromise scheme already available to companies in financial distress. A lack of incentives to get a majority of creditors to consent to a compromise has been the reason for the lack of use of that part of the older legislation. 
Voluntary administration was introduced in Australia in the early 1990s. It has had some degree of success there largely because the Australian office of taxation has had its priority status reduced—and we will talk about the reasons why that was able to happen over there later on. Many other jurisdictions have now introduced it. I think that is one of the reasons why we did not look at some of the other jurisdictions such as the United Kingdom where voluntary administration had been introduced without increasing director responsibility or liability which is what happened in the Australian model. 
Voluntary administration allows an insolvent company the court or secured creditors to put a company into voluntary administration and to appoint a voluntary administrator. While the company is under voluntary administration there is a stay on creditor enforcement. I think that is a key point because the voluntary administration process allows a business to trade out of a difficult position and gives it time to review its profitability and its ability to trade out and to restructure its balance sheet and move on. The administrator manages the company calls meetings of creditors and develops a structuring plan on which creditors are able to vote. A majority of creditors determines whether the company is restructured— 
GEORGINA BEYER (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 66 
New Zealand Labour 50; New Zealand First 7; Green Party 5; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Motion agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to clause 3 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 50; New Zealand First 7; Green Party 5; Maori Party 4; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Amendment agreed to. 
Part 2 Nature of bankruptcy and process of being made bankrupt 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I will take just a brief call to explain this part. It provides for the application by a debtor for his or her own adjudication and bankruptcy. Previously a debtor had to apply to the High Court for adjudication. Now the application will be made to the official assignee. As was the case before the adjudication is automatic on the application being made. The only procedural requirement is that the debtor must first file a statement of affairs with the official assignee which allows the official assignee to advise debtors of alternatives to bankruptcy and of their best option. The reason I am spelling it out is that this part is a very technical restatement apart from the change to that one aspect of the existing law. 
CHRISTOPHER FINLAYSON (National) 
: 
 I will take just a brief call on Part 2 of the Insolvency Law Reform Bill because as the Minister in the chair the Hon Lianne Dalziel says it deals with the essential nature of bankruptcy and the process for being made bankrupt. 
Although the National Party is opposing this bill for reasons we have already elaborated on one of the good things about it is that it does away with old-fashioned terminology. Under the old regime one needed— 
Hon David Carter 
: Would Winston have understood it then? 
CHRISTOPHER FINLAYSON 
: I will explain the Winston hypothetical in a few seconds. Under the old regime one needed to petition the High Court if the bankruptcy notice was not complied with within a particular time. Now of course that terminology has gone and the High Court Rules will need to be amended. 
Part 2 deals with what happens if someone fails to comply with a bankruptcy notice. Let me give the Committee this example. A person has proceedings struck out against a member of Parliament in a defamation case and incurs costs. The plaintiff is told to pay those costs but refuses to pay them. Time goes by and the impoverished and excitable defendant gets upset about that. So how does the defendant go about recovering his or her costs? He serves a bankruptcy notice in accordance with clause 29 of this legislation. The bankruptcy notice obviously has to be in the required form and it sets out the amount that the successful defendant in the defamation case wishes to recover from the plaintiff. If that notice is not complied with then the actual bankruptcy proceedings may begin. 
There are a couple of points on adjudication that I want to address briefly. The court has a discretion as to whether to adjudicate a person bankrupt. I refer to clause 36: “The Court may at its discretion adjudicate the debtor bankrupt …”. Indeed the court may refuse to adjudicate in certain circumstances and they are set out in clause 37. It is sometimes thought that bankruptcy will follow simply because the notice has not been complied with. Well that is wrong. I can recall at least one case where the court looked at the situation after the time for complying with the bankruptcy notice had expired and decided that it would not be just or equitable to declare the debtor bankrupt. 
I have one or two concerns about the debtor application procedure. It seems to me that it is almost too easy for a person to go into bankruptcy under this legislation. Clause 45 sets out the circumstances when a debtor may file an application. A debtor may file such an application with the assignee if he or she has combined debts of $1000 or more which is peanuts. I wonder whether the figure should be more substantial particularly bearing in mind the costs to the Government of administering bankrupt estates and the steps for example that the assignee must take after bankruptcy which are set out in this part as well. 
One or two changes have been made to the legislation as it has gone through the select committee. For example clause 24(2) talks about execution process. As the majority report stated the term “charging order” has been deleted because it is not a form of execution process. I wonder whether the Minister ought to check whether the terminology referred to in that clause will continue for very much longer—writs of sale possession arrest or sequestration—because I have an idea that the High Court Rules Committee is completely redoing Part 6 of the High Court Rules dealing with execution. I have a feeling that some of that terminology will change. So if the terminology is going to change in the High Court Rules it should also be changed in this legislation and a couple of Supplementary Order Papers may be required—although I suppose it will be a bit too late to do that. 
Part 2 does not contain anything too magical; it simply sets out the nature of bankruptcy and the process of being made bankrupt. Apart from some of the minor points I have made I have no particular objection to this part but of course we have overriding objections to the bill that colour the way we will look at it. 
Hon DAVID CARTER (National) 
: 
 I was not going to take a call but I was again intrigued at the contribution made by Chris Finlayson who talked about a member of Parliament being sued for defamation and having to move the case to the High Court and seek a strikeout—with some success. I assume that Chris Finlayson was referring to my action involving the current Minister of Foreign Affairs the Rt Hon Winston Peters. 
My question to the Minister in the chair the Hon Lianne Dalziel is whether there is any change to the way in which bankruptcy papers are served on the person from whom one is chasing money. In my particular case I had huge difficulty serving the bankruptcy papers on the Rt Hon Winston Peters. Of course after this case was successfully struck out in the High Court costs were awarded to me of about from memory $13000-odd— 
Shane Jones 
: Oh chicken feed! 
Hon DAVID CARTER 
: Well it might be chicken feed if one double-dips in the way that Shane Jones does but in my case it was quite a significant amount of money. 
Despite repeated attempts through solicitors to get Mr Peters to front up and pay his due bills it became a matter whereby the only way we could make progress was to try to serve some bankruptcy papers on the Minister of Foreign Affairs the Rt Hon Winston Peters. The Minister may be interested to know that in my particular case it was quite difficult to do so because the officer serving the papers asked where he lived in Wellington. We looked up the electoral roll and of course Winston Peters was not on the roll in Wellington. He appeared to be of no fixed abode which made it quite difficult. 
Craig Foss 
: Hummingbird. 
Hon DAVID CARTER 
: In fact I suggested that the guy go to Courtenay Place and just hang out there for a while and eventually he would find him. 
The long and the short of it was that on one occasion we were able to find him when we knew he was going to have a beer at the Back Bencher. 
Hon Member 
: Did that work? 
Hon DAVID CARTER 
: It did work. Ultimately after a lot of soul-searching and a lot of time—and no doubt more cost—we managed to catch up with the Rt Hon Winston Peters to serve bankruptcy papers on him as he walked into the Back Bencher on Molesworth Street. 
My simple question to the Minister in the chair is whether this legislation in any way makes it easier to serve bankruptcy papers on any member of the public or any Minister of the Crown who owes money and repeatedly refuses to pay it. From my recent experience when a person lives a fairly nomadic lifestyle—as the Rt Hon Winston Peters does—it becomes quite difficult to track that person down. So it is a relatively simple question for the Minister. She struggled to answer the question we put to her earlier but in this case we hope she is a little better briefed on the legislation. We ask whether this legislation in any way changes the current provisions for the serving of bankruptcy papers on any person particularly the Rt Hon Winston Peters when he does not pay his bills. 
NATHAN GUY (National) 
: 
 It is great to take a call in the Committee stage of the Insolvency Law Reform Bill. Parts of this bill seem pretty reasonable. We have heard from Mr Finlayson that he agrees in principle with the part we are on to now but some parts of it seem absolutely ridiculous. Let us talk a little about voluntary administration. 
Hon Lianne Dalziel 
: No it’s not in this part. You can talk only about the part we’re dealing with. 
NATHAN GUY 
: It is great that the Minister in the chair Lianne Dalziel is keeping up. It is interesting that 27 submissions were received on this bill but those submissions were not actually heard in essence. The considerations they made were not taken into account in this part at all. 
The concern I have is about the priority status the Inland Revenue Department will have around— 
Hon Lianne Dalziel 
: It’s not this part—wait until you get to it. 
NATHAN GUY 
: I am just pre-empting it I say to the Minister. I am just warming up for that part. My concern is that the Inland Revenue Department will still have its hand out. With this priority status it will still be there clipping the ticket. In fact when we look at the tax take of this Government at $11.5 billion—that is a “b” not an “m”—surely it would consider that for those individuals who are under financial pressure the department should not be there being the first cab off the rank. 
I will talk a little about the no-asset procedure. Giving individuals the ability to write off debt reduces down— 
The CHAIRPERSON (Hon Clem Simich) 
: Clauses 7 to 100—would the member speak on anything relating to those clauses please. 
NATHAN GUY 
: They are all related to that matter Mr Chairperson. Actually the paramount concern is that this has been reduced down from 3 years to 12 months and the write-off to $40000 when in fact personal responsibility should be the essence. What will happen is that small businesses those creditors—the electricians and the plumbers—will all be punished under this bill. Small businesses will be dealt a cruel blow. 
In speaking to Part 2 the interesting thing for those start-up businesses is that they are struggling under regulation and compliance costs now. It was interesting that the results of the survey—which the Minister will know all about—recently done by 1400 businesses showed that the compliance costs for small businesses are $3000 per employee. This is shocking and it is causing small businesses a whole lot of unnecessary red tape. The big thing is that we need less regulation. My concern for the small businesses is that when debtors hang them out to dry on the 20th of the month and they are waiting for a cheque to come—and I have been in that situation in a small business when a truckload of bulls has been sent off to a meat company and we wait and wait to see whether the cheque will come from the meat company—it can be extremely nerve-wracking. Mr Roy I am sure has also been in that situation before. Debtors are a big concern for people in small businesses. 
We have a bad culture in this country of spending beyond our needs. We have a low-growth economy and a high-spending Government. It is no wonder that individuals become bankrupt. It is interesting when I look at a statement made by Michael Harper a partner with Chapman Tripp. He summarised it pretty well: “However what is most disappointing and ironic is that the most significant risk to the government ambition of introducing and implementing a successful rehabilitation procedure will be the government itself.” 
Hon Lianne Dalziel 
: Part 2. 
NATHAN GUY 
: So we have some concerns about this bill. For the reasons I have just alluded to—in speaking to Part 2—we will not be supporting it. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 Can I just say that I was rather interested while listening to the radio and not being in the Chamber to find that one of the most critical issues concerning the National Party in respect of the Insolvency Law Reform Bill is the question of service. Apparently a fellow colleague who is usually in this House at the same time that I am—probably to no effect whatsoever mind you—decided that he could not find his colleague so he had to come to the launch of the Back Bencher exhibition which I was launching to serve notice. 
It takes a certain type of character and a certain type of personality to think that the right thing to do is to attack a parliamentary colleague—but not while he is in the House and can defend himself. Oh no! He waits until his colleague is not there. It is a sort of “ambush ‘em in the back” tactic. He is the kind of person who would if he were in the army demand a job as a sniper a long way away from the action where he could shoot from a position of safety without ever having to confront the enemy. 
It takes a certain type of character to decide that despite the fact that his colleague is a very well-known New Zealander—I might just say that humbly myself—he could not find him in New Zealand. He had to come to the launch of the Back Bencher exhibition which I was launching because that was the only place he and his lawyers could serve notice on me. Does anybody in New Zealand believe that? 
Shane Jones 
: No. 
Rt Hon WINSTON PETERS 
: No they do not. 
Hon David Carter 
: I raise of point of order Mr Chairperson. 
Rt Hon WINSTON PETERS 
: Oh he cannot take it—I knew that. He can dish it out but he cannot take it. 
Hon David Carter 
: I am happy to take it but the member might also like to tell the Committee that parliamentary laws do not allow the service of such documents in the precincts of Parliament which is where we would have wanted to do it if the member had allowed us to do so. 
The CHAIRPERSON (Hon Clem Simich) 
: The member should not have raised that point of order; it is a matter of debate. I say to the Rt Hon Winston Peters that we are debating Part 2. 
Rt Hon WINSTON PETERS 
: I know Mr Chairperson but— 
The CHAIRPERSON (Hon Clem Simich) 
: I am still talking. I have allowed the run-in to that because I know the member will get to it. I have allowed whatever the member is saying as being in rebuttal—fine. 
Rt Hon WINSTON PETERS 
: In the circles in which I mix we talk of nothing else and that is why I am taking part in this debate. 
Here is the point. Briefly there for a while every good New Zealander would have thought we had a problem with the issue of service and our insolvency laws. That of course is the last problem we have. We have problems in other areas but the country yokel does not know that. And now David Carter tells me what the rules are in respect of the Parliamentary Service! I make it very clear that every parliamentarian can waive his or her rights to not being served in this House as I have done. In fact when Russell McVeagh sued me I went down to their offices and got the writ off them. Mind you what happened to the case? They sued me for millions in a gagging writ—[ 
Interruption 
] One of Mr Carter’s friends of course. 
Hon Clayton Cosgrove 
: Which friends? 
Rt Hon WINSTON PETERS 
: Russell McVeagh—they are friends of Mr Carter. Of course a while ago Mr Carter yelled out: “Pay your bills!”. Well let me just tell members about this issue. Mr Carter thinks he is winning because I had to pay him $8000 which I did happily. It was not a problem; it was a mere bagatelle—I am only a poor country boy! 
I will ask you a question Mr Chairperson because I know you are a man of the law. How much do you imagine Mr Carter has paid his lawyers so far? Who is winning here? I gave him $8000; he paid his lawyers $95000 so who is winning? It ain’t Mr Carter! More important let me tell members what happened in this huge matter on which he wanted service. He went to the court and said: “You know all those horrible things I said about Winston Peters when he was away from New Zealand? I didn’t mean at all that he was a corrupt human being in any way shape or form.” Mr Carter is a big lion in the media and a lamb when he is faced with— 
Dr Richard Worth 
: I raise a point of order Mr Chairperson. This speech is way out of order. You have properly given to the Rt Hon Winston Peters an opportunity to make some short rebuttal comments. This has no relationship at all to Part 2. He is abusing the privilege of being a member of Parliament in not speaking to the part. 
The CHAIRPERSON (Hon Clem Simich) 
: Thank you for raising that. 
Hon Clayton Cosgrove 
: I distinctly heard Mr Peters draw to the Committee’s attention the need for one to pay one’s bills and various things like that. If one cannot pay one’s bills that leads directly to the issue of insolvency. The member opposite Dr Worth is a lawyer; I would have expected him to make the connection. But I am happy to outline it for him and I am sure Mr Peters is as well. 
The CHAIRPERSON (Hon Clem Simich) 
: Thank you for helping me out there. The right honourable member was speaking in rebuttal but he has touched on matters that are relevant to this part more than most members have done so far in the debate. 
Rt Hon WINSTON PETERS 
: I have to be frank here. I never thought for a moment that in all the halls of jurisprudence in this country the issue of service was what was concerning them. I never thought for a moment given that there are lawyers in the National Party like Mr Worth— 
Hon Member 
: Who? 
Rt Hon WINSTON PETERS 
: Mr Worth. 
Hon Lianne Dalziel 
: Dr Worth. 
Rt Hon WINSTON PETERS 
: Well Dr Worth—on a good day! I never thought for a moment that Dr Worth had appraised his party of the fact that this was the No. 1 issue concerning insolvency law reform. But you see this party is split three ways. That is why the C-team came along today and said: “You’re qualified Dr Worth. I know nothing but I’ll take this issue on and have a go in the Chamber.” That is why I have responded. 
I am trying to address the issue of service because apparently it is a huge issue. I want to make one little point though. The service was effected. There was no problem paying the bills. But it is amazing that someone who is so bold outside the House and all around Parliament should say—in the conniving sneaky way that bespeaks his whole professional life—of all things when he gets to court: “I never meant any of the words I said about him. I cannot understand how it came about.” 
There is another little thing. It was reported to me that this man said about Gerry Brownlee: “If you’re talking about the fat fella from Fendalton forget it.” That is what Mr Carter said recently. 
Hon Clayton Cosgrove 
: You’re joking! 
Rt Hon WINSTON PETERS 
: Oh yes. He was asked about the leadership of the National Party and he said: “If you’re talking about the fat fella from Fendalton forget it.” 
Lindsay Tisch 
: I raise a point of order Mr Chairperson. You cannot allow the member to go on in this fashion. It was brought to your attention previously in the 5-minute speech that he is completely out of order. We are debating a bill—quite specifically what the bill is about. I ask that you instruct the member to be brought back to the bill. 
Hon Clayton Cosgrove 
: In speaking to the point— 
The CHAIRPERSON (Hon Clem Simich) 
: No. 
Hon Clayton Cosgrove 
: This is very important. This goes towards decorum in the House. 
The CHAIRPERSON (Hon Clem Simich) 
: Are you trying to help? 
Hon Clayton Cosgrove 
: I am indeed. You know me. I just ask for your advice given that Mr Peters told the Committee what Mr Carter said about his own colleague which I will not repeat. It is unparliamentary for a member to say such a thing and I take offence on behalf of Mr Brownlee. I call on Mr Carter to withdraw and apologise to Mr Brownlee. 
Hon David Carter 
: I can assure the Committee that I did not ever make those comments. Mr Peters cannot prove that at all. I did not make those comments. 
The CHAIRPERSON (Hon Clem Simich) 
: I know where we are on this matter. David Carter quite correctly tried to use examples in speaking to Part 2 but he did refer to another member of Parliament specifically for his example and I think it is right that I allow the counterargument from Mr Peters in the time that he has. I have done that and he has referred many times to issues in Part 2. He is entitled to have time for a rebuttal and he is doing that. 
Rt Hon WINSTON PETERS 
: Part 2 is about the nature of bankruptcy and the process of being made bankrupt. Because that is not “service”; it is the process of being made bankrupt. I for a long time in my legal career have been very concerned about the total process of insolvency and some of the unfairness arising from it. I am bringing to the Committee’s attention the character of a person who would have a go at a guy who is not in the Chamber when he knows he could have waited or given me some notice and I would have been here. 
But let me say why I am not surprised. When that member was the National Party whip whose duty it was to support his leader he was the numbers man for Jenny Shipley against Jim Bolger. His whole career is filled with that sort of behaviour. That is why I mentioned his quotes to somebody inquiring about the National Party leadership when he said: “If you’re talking about the fat fellow from Fendalton forget it!”. That is what he is like. He is probably as nice as pie in the caucus to Gerry Brownlee. He is probably as nice as pie to everybody else. But he is a seething mass of discontent and backstabbing when he is away in private. 
Dr RICHARD WORTH (National) 
: 
 Just while the Rt Hon Winston Peters is in the House I have to say that his comments were a gross abuse of the Committee stage of a bill. But I want to deal with Part 2 of the Insolvency Law Reform Bill in a very precise way and before doing that I will just make two quick preliminary comments. The first comment is that this particular bill merited close consideration by the Commerce Committee and by a number of Labour MPs on that committee. They were Charles Chauvel Shane Jones Winnie Laban Mahara Okeroa and Maryan Street. As I look around this crowded debating chamber I see those people remaining mute not prepared to contribute to this legislation at all leaving the hapless and helpless Minister trapped in the middle unable to respond in a substantive way to some of the more significant points advanced. I think that that is a tragedy because surely in those names that have been mentioned there was a faint asset reflective of intellectual power but in the Committee stage it has been completely denied us. That is the first point. 
The second point I make is that this particular part Part 2 has a number of subparts—six altogether. Those subparts are: “Bankruptcy and its alternatives” “Process of being made bankrupt” “Appointment of a receiver” “Adjudication” “What happens on adjudication” and “Role of creditors”. I condemn the Government for this method of legislative drafting because by having one part and multiple subparts it starkly limits the length of Committee stage contributions. 
In clause 8 of Part 2 the alternatives to bankruptcy are laid out but only three are described—inappropriately and inadequately I would say. The three that are described are a proposal to creditors paying creditors in instalments under a summary instalment order—and we have seen how in the Part 1 definitions there has now been inserted a definition of a current summary instalment order—and finally entry to the no-asset procedure which is the subject of comment in National’s minority report. But there are of course many other options and I would like to highlight what those other options are in the context of clause 8. 
Firstly there must be sale of assets because it is quite possible that people in financial difficulties might solve those difficulties by the sale of some of their assets and money raised from the sale of assets can of course be used to pay their debts. The second possibility is that of budgeting—of limiting one’s outgoings to what one can afford. Establishing a budget might also identify existing expenses that can be reduced or eliminated and the budget advisory service is available to provide assistance and support in that regard. Another possibility relates to a creditors’ pool which involves all of the debts being combined and then repaid by regular payments. Quite clearly such a proposal must be agreed to by all the creditors involved and it is normally administered by a third party such as a budget adviser an accountant or a financial adviser. Refinancing is another possibility. It might be possible to refinance current debts perhaps using a mortgage broker a banker an accountant or a solicitor for suggestions on appropriate financing alternatives. 
So there are these other possibilities that must be considered as we look at the Draconian step of bankruptcy and the impact of bankruptcy on the interests of secured and unsecured creditors—for it is very rarely the case that all the debts are repaid as a result of the formal processes proposed by the Insolvency Law Reform Bill which were earlier the subject of action by the Bankruptcy Act. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to Part 2 “Nature of bankruptcy and process of being made bankrupt”. It is interesting that the New Zealand First leader came into the Chamber during the debate on this part. I am surprised that he left the Chamber but he had obviously left Mr Woolerton in control. 
R Doug Woolerton 
: I raise a point of order Mr Chairperson. The member cannot comment on a member’s absence from the Chamber or otherwise. 
The CHAIRPERSON (Hon Clem Simich) 
: I thank the member for raising that point. It is correct. I ask the member please to desist from that. 
CHRIS TREMAIN 
: I will continue and I will desist from referring to the absence of the member who is no longer here. I will perhaps refer to New Zealand First. 
The CHAIRPERSON (Hon Clem Simich) 
: Do not compound it. I asked you to desist. 
Hon Clayton Cosgrove 
: Don’t be a plonker. 
CHRIS TREMAIN 
: Thank you Mr Cosgrove. I will move on to subpart 1 “Bankruptcy and its alternatives”. We are talking here about two key parts—clause 7 “Nature of bankruptcy” and clause 8 “Alternatives to bankruptcy”. The nature of bankruptcy clause talks about bankruptcy affecting the legal status of a person and that it has important consequences. Indeed it does such as the stigma that comes with bankruptcy. If someone becomes bankrupt he or she effectively loses everything. This is the point I want to make to members on the other side in relation to getting into business. There are 360000-odd small businesses throughout this country and it is the small-business people who go out there and put everything on the line to try to take this country forward in terms of growing their lot. I think the statistics are that 90 percent of small businesses over a 5-year period struggle to stay in existence and they will face potential bankruptcy. There is a lot of stigma attached to being bankrupt. People can lose everything—their house; their relationship along the way which is something we should all take into account in this instance; and their family; a whole heap of things—and it is not good. 
I will move on to clause 8 “Alternatives to bankruptcy”. A debtor who is insolvent may have an alternative to bankruptcy and three points are made in the clause: making a proposal to creditors paying creditors in instalments under a summary instalment order and entering the no-asset procedure. That might be something that Mr Woolerton may want to think about. 
R Doug Woolerton 
: Yes I can’t wait. 
CHRIS TREMAIN 
: He might be interested in this. Given the $150000 of debt that his party may face in the very near future listening to this bankruptcy procedure section might be quite a good use of his time. When New Zealand First has to face fronting up with that $150000 Mr Woolerton may have to consider some of the provisions in this legislation. There are three options that could be open to New Zealand First and the first is making a proposal to its creditors. I guess that comes back to making a proposal to the taxpayers of New Zealand. That will be interesting. 
Secondly New Zealand First could look at paying creditors in instalments under a summary instalment order. What it could do is take the $150000 and perhaps pay it over 15 months—maybe by $10000 a month. That might get it across the line of paying the money that should be paid back to the taxpayers of this country. 
The third option is entering the no-asset procedure. I am not aware of the balance sheets of New Zealand First or the Labour Party. Quite frankly I do not have time to look at them. But the balance sheets of both parties would be something that anyone would look at in considering any of those three procedures. The balance sheets will be a huge thing. I say to Mr Woolerton that it will be interesting to understand whether there is enough equity in the New Zealand First balance sheet to cope with a $150000 debt. 
In continuing with alternatives to bankruptcy I now want to focus on entry to the no-asset procedure. I tell the member that the no-asset procedure is a 12-month procedure. It is an alternative to personal bankruptcy which is probably quite a good thing because in that particular situation New Zealand First could actually have a look at bankrupting the party rather than personally bankrupting each and every one of its members. New Zealand First is sitting on—what is it at the moment? One percent in the polls? Two? Not even that. I guess that is bankruptcy of a nature in itself is it not? 
TIM BARNETT (Senior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
Hon DAVID CARTER (National) 
: 
 Mr Chairperson you gave the Rt Hon Winston Peters a very liberal occasion on which to rebut my earlier arguments. I just want to take the opportunity of correcting three or four statements he made. Firstly in response to an interjection from Doug Woolerton he said there was a difference between a debt and a proposed liability. In my case I was talking about a debt; it was costs awarded by the courts. I took every opportunity to get that money from Winston Peters with a number of accounts being sent to him but to no avail. 
Mr Peters then said that I had had every opportunity—in fact I think he used the words that I “didn’t have the guts”—to ring him up and say I had served the documents on him in Parliament. I suggest to Mr Peters that he becomes familiar with Standing Order 400(c) which says that such processes are not allowed to be carried out in the precincts of Parliament without the express permission of the Speaker. 
The third point I want to correct is that Mr Peters said the matter concerned around $8000-odd. I cannot remember the exact figure but it was well in excess of $13000. 
The final point I want to make— 
R Doug Woolerton 
: I raise a point of order Mr Chairperson. I understood that you allowed Mr Peters a rebuttal and now you are allowing a rebuttal of that rebuttal. I do not think that is right and I just wanted to make that point. 
The CHAIRPERSON (Hon Clem Simich) 
: You have made it. I was just about to stop the member at his final point. 
Hon DAVID CARTER 
: The final point I want to make is that subsequent to further legal action Mr Peters lost for a second occasion. The courts have invited me to prepare a list of costs and it will be presented to Mr Peters. I hope that on this occasion he will front up and pay. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 70 
New Zealand Labour 50; New Zealand First 7; Green Party 5; Maori Party 4; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Part 2 agreed to. 
TIM BARNETT (Senior Whip—Labour) 
: 
 The Committee has made good progress so far. I seek leave for the Committee to report progress. 
The CHAIRPERSON (Hon Clem Simich) 
: Leave has been sought for me to report progress. Is there any objection to that? There appears to be none.  
Progress reported. 
Report adopted. 
The House adjourned at 5.55 p.m.