Volume 644 Week 64 - Tuesday 11 December 2007 
Volume 644 Week 64 - Tuesday 11 December 2007 
[Volume:644;Page:13633] 
Tuesday 11 December 2007 
Madam Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Questions to Ministers 
Benefits—Unemployment 
1. RUSSELL FAIRBROTHER (Labour) 
 to the  
Minister for Social Development and Employment 
: What reports has she received regarding the number of New Zealanders receiving an unemployment benefit? 
Hon RUTH DYSON (Minister for Social Development and Employment) 
: 
 I am delighted to report to the House that the number of New Zealanders receiving an unemployment benefit is at its lowest since 1979. Our Government has invested in New Zealanders. We have rebuilt the tax credit system to make work pay and we are providing active support to help people find jobs. More than 141000 people have come off an unemployment benefit since 1999 which is a decrease of 88 percent. 
Russell Fairbrother 
: What progress has been made in reducing the number of young people receiving the unemployment benefit for long periods of time? 
Hon RUTH DYSON 
: Great progress. Five years ago our Government made a commitment with the Mayors Task Force for Jobs to ensure that all young New Zealanders are on a clear pathway to economic independence and well-being. That collaborative effort has resulted in a tremendous achievement. This week fewer than 250 18 and 19-year-olds have been on an unemployment benefit for longer than 13 weeks. That is a drop of 97 percent since December 1999. This afternoon my colleagues and I will meet with the Mayors Task Force for Jobs to look at our next challenge. 
Russell Fairbrother 
: Are people leaving the unemployment benefit only by simply transferring to sickness or invalids benefits? 
Hon RUTH DYSON 
: The answer is no. The reason that most people leave the unemployment benefit is to enter paid employment. 
Madam SPEAKER 
: It is impossible to hear the Minister’s reply. I ask the Hon Ruth Dyson to please start again. 
Hon RUTH DYSON 
: The answer is no. Most people leave the unemployment benefit to enter paid work. Only 8.5 percent of all unemployment benefit cancellations between September 1999 and September of this year have been as a result of transfers to the sickness benefit. Over the same period 60000 people went the other way. That makes a net transfer of 31000. One-third of 1 percent of unemployment benefit cancellations over the same period were as a result of a transfer to an invalids benefit; and over the same period 450 went the other way. That makes a net transfer of just 2850. The combination of those two factors is nothing like the 141000 people who are no longer dependent on the unemployment benefit. 
Electoral Finance Bill— 
New Zealand Herald 
 Coverage 
2.  
JOHN KEY (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she stand by her statements in relation to the  
New Zealand Herald 
’s coverage of the Electoral Finance Bill that “There have been weeks if not months with full-blooded attacks front-page headlines editorials attack stories cartoons you name it.” and that complaining to the Press Council “just doesn’t get you anywhere”; if so why? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister)  
on behalf of the  
Prime Minister 
: Yes; because that is the case. 
John Key 
: What does it say about the Government’s confidence in its own bill that in the face of criticism the Prime Minister cannot argue about the specific points journalists are raising but can only smear those journalists as being shallow error-prone and making major gaffes because of their limited knowledge? 
Hon Dr MICHAEL CULLEN 
: The Prime Minister was speaking to a group of journalists and journalism students in relation to the nature of parliamentary reporting. On that occasion of course she was not talking specifically about the debate around the details of the Electoral Finance Bill; she was talking about the fact that we have a robust media in this country that is sometimes—not always—highly accurate. 
John Key 
: Is it not the case that the Electoral Finance Bill has been widely criticised by almost every other newspaper in the country by the Law Society by the Human Rights Commission and by New Zealand Bill of Rights Act specialists and does the Prime Minister consider that those people and organisations are wrong in their analysis as well as the  
New Zealand Herald 
? 
Hon Dr MICHAEL CULLEN 
: There was a great deal of criticism of the bill as it originally entered the select committee. A very large number of changes were made in the select committee and indeed a large number of changes were made during the Committee of the whole House. That of course means that there is now quite a different bill from the one that went into the select committee. 
John Key 
: Does the Prime Minister by mentioning a possible complaint to the Press Council mean that in her opinion the  
New Zealand Herald  
has not been fair and balanced in its coverage of the Electoral Finance Bill and in fact has deliberately misled or misinformed its readers; if not what other grounds does she have for even considering a complaint to the Press Council? 
Hon Dr MICHAEL CULLEN 
: Clearly the Prime Minister was not considering a complaint to the Press Council because she says “there was little point in complaining to the print media’s self-regulatory watchdog the Press Council.” She was pointing out that the  
New Zealand Herald  
has run a campaign. Clearly it has. A front-page editorial that says “our view” and “their view” and where “their view” is simply other newspapers saying the same thing as the  
New Zealand Herald 
 
is scarcely a balanced coverage. 
Rt Hon Winston Peters 
: Could the Prime Minister confirm that one of New Zealand’s primary concerns in the Pacific is to remove the influence of foreign interests in national elections in various countries in the Pacific; and what reports has she seen to advise that it is both a sound policy abroad and one to be encouraged back here in New Zealand? 
Hon Dr MICHAEL CULLEN 
: That is indeed the New Zealand Government’s position within the Pacific and of course it is very interesting to see when one reads  
The Hollow Men 
 the very clear evidence of external influence being brought to bear on New Zealand’s electoral process via the National Party. 
Jeanette Fitzsimons 
: Has the Prime Minister noted that the Business Roundtable’s John Boscawen paid $9000 to get a Canadian call centre to make automated calls to 82000 Aucklanders urging them to join his rally against the Electoral Finance Bill; and is she concerned that this kind of activity could herald the way in which electoral campaigns could be bought and sold in future? 
Hon Dr MICHAEL CULLEN 
: Indeed I have seen reports suggesting that Mr Boscawen has spent considerable sums on hiring outside agencies to conduct what has been described as a phone scam. But the fact that Mr Boscawen has also paid for extraordinarily badly put together newspaper advertisements which no one would have got past the first 235 words of is neither here nor there. 
John Key 
: Does the Prime Minister agree with the key principles of the Press Council that “a publication is entitled to adopt a forthright stance and advocate a position on any issue”; and has not the  
New Zealand Herald  
simply been doing that? 
Hon Dr MICHAEL CULLEN 
: The media are certainly entitled to take a forthright stance. Sometimes some of them have difficulty understanding that politicians—on both sides of the House—are entitled to take a forthright stance in response. That is called being in a democracy. 
John Key 
: Is it not becoming a hallmark of this Government that it simply attacks the motives of people and organisations that dare to disagree with or challenge the Government—just as the Government did when it did not like what the Auditor-General had to say just as it did when the Minister of Finance tried to say that the only reason journalists reported tax cuts was that they were for their own benefit and just as it has now when the  
New Zealand Herald  
has been running a fair and balanced campaign against the Electoral Finance Bill; and do we not all know on this side of the House that it is the beginning of the end when the messenger starts to be shot because the Government cannot win the argument? 
Hon Dr MICHAEL CULLEN 
: That obvious and robust defence of the  
New Zealand Herald  
suggests that the member might well be described as the  
New Zealand Herald 
’s page-boy from now on. 
Rt Hon Winston Peters 
: Does the Prime Minister recall the  
New Zealand Herald 
’s very neutral stance on Peter Shirtcliffe and the Campaign for Better Government—which comprised only three family members and campaigned back in 1993—its 57 editorials attacking anyone who questioned Fay and Richwhite or on the question of the Airways Corporation board its attack on some member of Parliament who had attacked the board chairman even though the board chairman chaired the board of the  
New Zealand Herald— 
and if it was not prepared to disclose that interest why does he expect it to disclose something now? 
Hon Dr MICHAEL CULLEN 
: Well many things! I recall the  
New Zealand Herald  
launching a very similar campaign against the abolition of the right to appeal to the Judicial Committee of the Privy Council which it said would mean the end of our legal system. But one must be fair: one also recollects the  
New Zealand Herald  
stating in one editorial that the National Party was doing very well until Mr Key started to announce policy. 
John Key 
: Has it dawned on the Prime Minister that it is not necessarily the  
New Zealand Herald  
that is wrong that it is not necessarily the millions of New Zealanders who are opposed to this bill who are wrong and that every organisation around this country that thinks this legislation is wrong is not necessarily wrong itself; has it ever dawned on the Government that for once in its life it is wrong so why does it not just scrap the bill as we suggested 6 months ago? 
Hon Dr MICHAEL CULLEN 
: I suspect that the Government has been wrong more than once in some 8 years of Government; it would be rather surprising if we had not been. I am equally confident however that this is not one of those occasions. But the member should not be afraid of robust debate; some day he may want to be able to engage in robust debate with the media. 
Jeanette Fitzsimons 
: Does the Prime Minister personally agree that the involvement of ordinary citizens in the review mechanisms for the Electoral Finance Bill should consist of more than just the usual chance to make submissions? 
Hon Dr MICHAEL CULLEN 
: It is always very difficult to ensure that there is a proper canvassing of opinion from the public at large—particularly on complex issues like electoral law where there is obviously not a simple yes or no answer around a whole range of matters. I think working through how best to engage in a review that incorporates public participation that is as wide as possible is a difficult matter and is one that we need to give more time and consideration to. 
Tertiary Education Strategy—University Equity Obligations 
3.  
Dr PITA SHARPLES (Co-Leader—Maori Party) 
 to the  
Minister for Tertiary Education 
: Is he satisfied that New Zealand universities are fulfilling their equity obligations under the tertiary education strategy; if so what response does he have to the situation at Auckland University which one newspaper today summarised as: “Fears held for poor Maori and Pacific Islanders”? 
Hon PETE HODGSON (Minister for Tertiary Education) 
: 
 The member asks an important question. The answer is yes mainly because there will be more university places next year than this year and more places still the following year. There is an increase in access to universities in this country. 
Dr Pita Sharples 
: What action will the Minister take to ensure Maori students are not being disproportionately disadvantaged by the restricted entry policy of Auckland University? 
Hon PETE HODGSON 
: The member may not be aware that every university is required to show how it will increase participation and achievement of under-represented groups including Maori and Pacific Island students in its investment plan. Every university does so. 
Dr Ashraf Choudhary 
: Has the Minister seen any reports on the increases in student numbers and in funding to New Zealand universities? 
Hon PETE HODGSON 
: The funding increase over the past couple of years has been about 18 percent or 19 percent. The increase in student numbers from last year until next is forecast at somewhere about 4 percent or 5 percent. So the number of full-time students will increase it is thought from about 107000 to 112000. 
Judy Turner 
: Is the Minister satisfied with the direction of the tertiary education strategy for regional polytechnics and will he assure the House that the strategy will not suck young people out of the regions into major cities increasing the unlikelihood they will ever return? 
Hon PETE HODGSON 
: I think if there is any trend at all in the way the polytech funding and plans are going it would be to increase the amount of in-region activity not to decrease it. So all other things being equal that would see the opposite effect to the one the member suggests. 
Dr Pita Sharples 
: Given the response to my question how then will the Government honour its commitments in its tertiary education strategy to support affordable equitable access to tertiary education across the sector? 
Hon PETE HODGSON 
: The member will be aware of 8 years of activity to increase the affordability of education for New Zealanders. In the case of university students the number of Maori students has increased in recent years—it is now up at around 13000; it used to be 12000 or thereabouts a few years ago. For Pacific Islanders the increase has been even greater. It has gone from about 6000 in 2000 to about 9000 now. These are useful increases. I am not for a minute suggesting that they are sufficient increases but certainly the increase in Maori and Pacific Island participation is something this House can be very proud of. 
Dr Pita Sharples 
: What response does the Minister have to Efeso Collins who believes that students from poorer backgrounds would be excluded under the new regime at Auckland University describing the outcome of the actions as creating “an underclass”—an analysis confirmed by both the Auckland University Students Association and Dr Bedggood a member of the Association of University Staff of New Zealand? 
Hon PETE HODGSON 
: I think what has happened is that a number of these commentators have made an understandable mistake in thinking that the number of places in our universities or polytechnics are somehow being capped at their current level and that therefore because of an increase in demand some students would be excluded who otherwise would not be. The truth is a little different. The truth is that we are moving from unplanned and open-ended growth to planned and managed growth but growth nonetheless and as a result of that we will see more students in polytechnics and universities next year than we have in this year. 
Hon Georgina te Heuheu 
: More underclasses. 
Hon PETE HODGSON 
: I am not sure what that prattle from the other side of the House has to say but I can assure the member that we will have an increase in participation in our tertiary education not a decrease. 
Environment Minister—Confidence 
4.  
JOHN KEY (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she have confidence in the Minister for the Environment; if so why? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the  
Prime Minister 
: Yes; because he is a hard-working and conscientious Minister. 
John Key 
: Should Trevor Mallard apologise for his attack on Erin Leigh in this House; if not why not? 
Hon Dr MICHAEL CULLEN 
: The Prime Minister awaits the report of the State Services Commission. 
John Key 
: What reason has Mr Mallard given the Prime Minister for refusing to apologise in the House at this point? 
Hon Dr MICHAEL CULLEN 
: Mr Mallard and the Prime Minister are both awaiting the report of the State Services Commission. 
John Key 
: Is the reason Trevor Mallard will not apologise that Mr Mallard did not rely just on the briefing note when he defamed Erin Leigh in this House but he also relied on other information that information came from two other people David Parker and Heather Simpson and that proves more than anything else that the Public Service is now politicised under Labour? 
Hon Dr MICHAEL CULLEN 
: No. I am advised the Minister did not talk to either of those people before giving the answer in the House. 
John Key 
: Well why then will the Minister for the Environment not apologise for something that the ministry itself is apologising for? 
Hon Dr MICHAEL CULLEN 
: The ministry of course has apologised to the Minister for giving information that the head of the ministry now considers to be inadequate. 
John Key 
: Does the Prime Minister think that Trevor Mallard’s actions in the last few months live up to her promise that “The Labour Government will set new standards both in terms of behaviour and performance so that we will govern for the people and be accountable to them”; if so how is that the case? 
Hon Dr MICHAEL CULLEN 
: The Prime Minister has a clear record of operating sanctions against Ministers who have not performed up to the required standard unlike the member opposite because of course when Dr Nick Smith was found guilty of contempt of court his colleagues welcomed him back with applause and no sanction occurred. When Mr Tau Henare was engaged in the altercation with Mr Mallard nothing happened to him. 
Madam SPEAKER 
: It is very difficult to hear. 
John Key 
: Is it not just the case that Mr Mallard has completely lost objectivity that he no longer is in control of his own actions in this House and that he is wrong the Government is wrong and the ministry is embarrassed by the spin that Mr Mallard has put on this; and why does the Prime Minister not just put Mr Mallard out of his misery before the New Zealand public do so in 10 months’ time? 
Hon Dr MICHAEL CULLEN 
: If the member really believes in the rule of law and of standards then he will await the full inquiry report before rushing to judgment. 
Prisoners—Numbers 
5.  
Hon PAUL SWAIN (Labour—Rimutaka) 
 to the  
Minister of Corrections 
: What reports has he received on prison numbers? 
Hon PHIL GOFF (Minister of Corrections) 
: 
 I am advised by the Department of Corrections that the prison muster as of yesterday was 7828. That means that current spare capacity in the prison system yesterday was 1122 spare beds. I compare that with just over 100 spare beds during the prison crisis under the previous National Government in 1999. That utterly contradicts Simon Power’s claims that the prison numbers are out of control and have reached crisis level. [ 
Interruption 
] Mr Power has got it wrong again and Mr Ryall who is interjecting should know that there are no prisoners in court cells at the present time. 
Hon Paul Swain 
: Can the Minister advise whether notwithstanding the efforts of previous hard-working and conscientious Labour Ministers of Corrections current prison numbers are consistent with the Ministry of Justice forecast in 2006? 
Hon PHIL GOFF 
: Although for much of the year prison numbers were tracking way above the 2006 Ministry of Justice forecast the figures for early December are practically identical to the total number forecast for that period and numbers appear to be currently tracking very closely to those predicted. 
Simon Power 
: Can the Minister confirm his department’s briefing released on Friday which states that the peak prison muster in September was 8457 when the latest forecast predicted those numbers would not be reached until 2011; can he also confirm the department’s view that this muster crisis is due to an increase in violent crime which has increased by 32 percent since Labour came into office and that “average sentence lengths have not changed significantly”? 
Hon PHIL GOFF 
: On the very last point although a gutless National Government never put in serious penalties for serious violent offenders Labour has increased the minimum non-parole period for serious offenders from 10 to 17 years—Bell for example got 30 years—which was something the National Government never did. In fact the National Government released serious violent offenders automatically after they had completed two-thirds of their sentence regardless of the risk assessment by the Department of Corrections. I can confirm for the member that numbers have tracked down steadily from those quoted by the member. There is no crisis and contrary to the member’s allegations that the Effective Interventions programme by the Labour Government is not working clearly it is. 
Judy Turner 
: Considering that re-offending substantially feeds prison muster numbers is the Minister happy with how his department is supporting inmates to reintegrate through literacy and numeracy programmes drug and alcohol treatment and resettlement options; if not what plans has he to better support the thousands of inmates due for release in the next 12 months or do we need them to justify all the new prisons we are building? 
Hon PHIL GOFF 
: There are a range of programmes designed to assist rehabilitation. Some of them are working extraordinarily well such as the offender programmes Kia Marama and Te Piriti for child sex offenders. There are now much higher numbers of people in work in prison getting work skills work experience and work habits which are proven to be related to offending. There is much more being done in terms of drug and alcohol rehabilitation—in fact my predecessor Damien O’Connor ensured that we are on track to having six drug rehabilitation units—and there is much greater emphasis on training and education skills which the member mentioned. In fact the number of inmates doing New Zealand Qualifications Authority units has gone up quite dramatically and is at a very high level. 
Hon Paul Swain 
: Has Labour’s Effective Interventions programme been an effective intervention? 
Hon PHIL GOFF 
: Yes. Simon Power gets it wrong and then entrenches himself in that position. He said it was not having an impact. 
Simon Power 
: This was the Minister who was opposed to it. 
Hon PHIL GOFF 
: If the member wants to ask a question he should rise to his feet and ask it instead of interjecting across the House. Yes the programme has clearly been effective in ensuring that although the worst and serious violent offenders are now spending much longer in prison those who are there for short-term sentences where the focus should be on preventing reoffending are being dealt with in more effective ways at much less cost to the community. 
Simon Power 
: Why was the Minister previously opposed to electronic bail and to the introduction of the Sentencing Council both of which are crucial parts of the Effective Interventions package? 
Hon PHIL GOFF 
: At the time I was Minister of Justice and the paper was first looked at electronic monitoring had not proceeded to the level of effectiveness that it has now—and it has. This is a modern new-age Government. We take advantage of new technology. Electronic monitoring is working well. I am in favour of a Sentencing Council that ensures that there is consistency in sentencing. When I see that sentences in Auckland for identical offences to sentences in Invercargill bear no logical relationship to the other I see that there is a need for sentencing guidelines and a Sentencing Council. 
Electoral Finance Bill—Interpretation of Clause 80(d) 
6.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Justice 
: Does she stand by her assurance that before the Electoral Finance Bill is passed she will give the House an interpretation of clause 80(d) so that members know how to comply with the law; if so when will she be giving this interpretation? 
Hon ANNETTE KING (Minister of Justice) 
: 
 I stand by my assurance. 
Hon Bill English 
: What does the Minister think was wrong with the interpretation she has already given to the House? 
Hon ANNETTE KING 
: The interpretation I gave was my view. Since I gave that view others have raised a number of issues—some in a sensible manner; some in a very verbally abusive manner. But I am prepared to listen to all of them. 
Charles Chauvel 
: Does section 213 of the Electoral Act 1993 which deals with activity in a member’s capacity as a member of Parliament re-enact a provision that has been in force in our law since 1956 and would the Electoral Finance Bill re-enact this provision in clause 80? 
Hon ANNETTE KING 
: Yes. I thank the member for his constructive contributions to the debate during the Committee stage. They were unlike some of the other contributions we have had which have been designed more to hinder than to help. 
Hon Bill English 
: Can the Minister answer the two questions I have already put to her: what was wrong with the interpretation of clause 80(d) she originally gave the House and when will she give another one? 
Hon ANNETTE KING 
: Before the bill is passed. 
Hon Bill English 
: Can she understand people’s frustrations that even today despite the fact that she said she was wrong in her interpretation she cannot say how and that when the bill is passed officials MPs public servants and the public will have precisely 2 working days to work out what this law means before it comes into practice? 
Hon ANNETTE KING 
: I understand the member’s frustration. However I believe it is nothing more than crocodile tears. He has been a member of this House for many many years and he has a pretty good idea of what an MP does even if he does not spend much time in his electorate carrying out those duties. 
Hon Bill English 
: Given that the process the Government has put this bill through will give the New Zealand public politicians and officials 2 working days to understand what its many and vague provisions mean will the Government support National’s amendment to put back the date of commencement of this bill to 1 April 2008 in order to give people the opportunity to understand how the law works? 
Hon ANNETTE KING 
: No. I believe that most people who will be working with the bill are faster learners than the member opposite. 
Hon Dr Michael Cullen 
: Assuming or given—whichever word we wish to use—that the bill is passed next Tuesday will people be allowed to think on other days than working days and are there actually 8 working days between that time and 1 January? 
Hon ANNETTE KING 
: The Minister of Finance is absolutely right of course. That is why he is a successful Minister of Finance unlike the person who has been asking the questions who was an abject failure in that role. 
Rt Hon Winston Peters 
: Has the Minister received any reports on the propensity in some political parties to seek to interfere with the democratic process as best evidenced by the seething cauldron in Rakaia right now where the headquarters of the National Party are supporting David Carter against all other good competent and able candidates? 
Madam SPEAKER 
: The last bit is not in order. 
Hon ANNETTE KING 
: I am sorry I cannot comment on the example because I have not seen it but I would not be at all surprised by it. 
Hon Bill English 
: Can the Minister confirm that as of today on one provision that applies to MPs the Minister of Justice does not know how the law is going to be applied so how can she rely on the rest of the community understanding the other dozens of complex provisions in time to comply with the law by 1 January? 
Hon ANNETTE KING 
: I will not confirm that. I believe that the member is quite incorrect but then he has become a peddler of malicious fabrications. He is also the person who claimed last week that debate on the bill had finished. That is what he said last week and it did remind me of John Key when he said that the war in Iraq was over. 
Rt Hon Winston Peters 
: Can the Minister confirm that the intent behind the legislation and its interpretation is to ensure that people can arrive at free and fair democratic decisions without the duress or coercion of privilege and money and a small clique at the top which is what is happening right now in the Rakaia electorate? Ask Mr Connell he knows what I am talking about. Look at the choice they are going to have: David Carter of all people. 
Hon ANNETTE KING 
: In the number of spurious questions that we have received from the National Party they have lost the reason why this bill was introduced but certainly members who are supporting it have not lost why it is being introduced and neither have the public. They know what the National Party got up to in 2005 and they know it attempted to buy the election. It will not be buying the next one. 
Rt Hon Winston Peters 
: Has the Minister heard of a recent example where there were five nominees for a democratic position in New Zealand but the party hierarchy came in and heavied the other four out of standing and is that the kind of— 
Hon Dr Nick Smith 
: It’s not true! 
Rt Hon Winston Peters 
: It is true all right. I will table the documents to prove it is true. Is that the kind of thing we want to be happening at the local or national level in New Zealand politics? 
Madam SPEAKER 
: The Minister is responsible for answering questions within her ministerial responsibility. As long as there is no reference to any particular instance and if it is a reference generally to the law in her response then that is fine. 
Hon ANNETTE KING 
: I think that most members of the House certainly those on this side of the House and in support parties support a democratic open process where everybody gets a fair go. I think the member is giving an example of some party or other that does not give its members a fair go. 
Capital and Coast District Health Board—Patient Deaths 
7.  
HEATHER ROY (Deputy Leader—ACT) 
 to the  
Minister of Health 
: Has he been advised of any deaths of patients from other district health boards requiring tertiary surgery at Capital and Coast District Health Board; if so on what date was he advised? 
Hon JIM ANDERTON (Associate Minister of Health) 
 on behalf of the  
Minister of Health 
: The Minister receives a number of allegations about health issues on a regular basis the most recent being the statement by Ms Roy in the House on 6 December about a so-called “killer hospital”. These allegations are always followed up but on examination many are found to be without foundation. I am advised that the member herself has not provided any information to authenticate her allegations. I am further advised that the Capital and Coast District Health Board contacted her on three separate occasions to request that she provide the information she had but she has not done so. On the contrary just yesterday she made an Official Information Act request for information the hospital has on these incidents and that would suggest to me that she does not have any information. 
Heather Roy 
: How can there be any confidence in a Minister who just 5 weeks ago was “running this show” who 1 week ago was dodging questions about patient deaths at Capital and Coast District Health Board who yesterday was shooting the messenger and who now has gone from being the new sheriff in town to appointing a monitor to solve the crisis at Capital and Coast District Health Board? 
Hon JIM ANDERTON 
: I think that if the member is questioning the credibility of the Minister she should look in the mirror and provide any information she has on this serious matter so that she can retain whatever credibility she has left. 
Hon Marian Hobbs 
: Is the Minister aware of any professional bodies raising concerns about comments on staff performance at Capital and Coast District Health Board? 
Hon JIM ANDERTON 
: Yes. I am aware that the Association of Salaried Medical Specialists—not known to be a supporter of this Government—has labelled Heather Roy’s attack on clinical staff working at Capital and Coast District Health Board as “disgraceful untrue unfair and unprincipled” and called upon her to apologise. I am also aware that clinical staff at Wairarapa Hospital have spoken out in support of the care given by their colleagues at Wellington Hospital saying: “Despite all the bad press that Wellington Hospital is getting at the present time we experience the support from teams of dedicated and hard-working professionals who are always there when we need their services.” I think most members would endorse those sentiments. 
Barbara Stewart 
: Can he assure us that overall bed numbers at Wellington Hospital will not be reduced by up to 30 percent in order to fit into the new regional hospital; if not why not? 
Hon JIM ANDERTON 
: I do not have any advice on that matter but I would find it very difficult to understand how one could go into a rebuilding programme and reduce the number of beds by 30 percent. It does not seem right to me. 
Heather Roy 
: Does he stand by his statement in this House on 7 November that “I am running this show.”? 
Hon JIM ANDERTON 
: I think that the Minister was indicating that he was going to take responsibility for the position he held as Minister. As far as I can see he is doing just that and very well. 
Heather Roy 
: I seek leave to table the  
Hansard 
 of question of the day No. 2 on 7 November 2007. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Heather Roy 
: I seek leave to table the front page of Saturday’s  
Hawke’s Bay Today 
 newspaper saying that three deaths on— 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Corrections Department—Confidence 
8.  
SIMON POWER (National—Rangitikei) 
 to the  
Minister of Corrections 
: Does he have confidence in his department; if so why? 
Hon PHIL GOFF (Minister of Corrections) 
: 
 Yes much more than I would have had 10 years ago. Why? Well I will give the member just three out of many reasons. Firstly prison escapes per 100 prisoners are just one-sixth of the escape number 10 years ago under a National Government. That means the escape rate has fallen by 84 percent. Secondly drug taking in prisons is less than half what it was when the National Party left office; fewer inmates are giving positive drug tests. Thirdly much more is being done in positive areas to prevent reoffending such as greater provision of work and drug and alcohol rehabilitation programmes—factors that are associated very closely with offending levels. 
Simon Power 
: Can he give this House an assurance that high-profile serious offenders in Paremoremo prison are not getting special treatment and why did his department refuse to answer written questions from me earlier this year about whether William Bell and others were getting special treatment in order to “protect the privacy” of these inmates? 
Hon PHIL GOFF 
: I can tell the member that I have been absolutely assured by the Department of Corrections that William Bell was not getting special treatment. I know that the member is fond of saying that inmates at the maximum security block at Paremoremo prison are in a holiday camp but it is a holiday camp where people are locked in their cells from 5 at night till 8 in the morning and it is a holiday camp where very spartan conditions apply quite properly—I make no apology for that; I believe that these inmates are a serious risk to the community and they deserve the close personal supervision and monitoring that they get every hour of the day. One thing I can tell the member is that unlike when National was in Government and the Minister said the perimeter fence at Paremoremo prison was not to stop the prisoners from escaping but just to slow them down we have now got proper security in that prison and unlike the situation under National inmates do not escape from it. 
H V Ross Robertson 
: What has the Labour-led Government done to reduce the number of escapees so dramatically? 
Madam SPEAKER 
: It is very difficult to hear. I will be asking some members to leave if the noise continues at this level. 
Hon PHIL GOFF 
: In the 1990s prison escapes were as high as 154 inmates escaping a year. In the last 4 years the figure has been under 20. It has come down from as high as 154 to under 20. Why has it come down? Well I mentioned that in my answer to the last question; one of the reasons is that we have put in 17 kilometres of perimeter fencing and it is much harder for people to get out. Unlike at the prison close to Mr Power’s electorate one does not have to cross just a 6-wire fence to get to the prison; one now has to cross a perimeter fence. There is electronic monitoring. There is much better monitoring and supervision of inmates and the factors that lead to escapes. That record is a record to be proud of. It is one of the lowest escape rates of any country in the Western World. 
Simon Power 
: Why did his department move a convicted murderer to within 300 metres of the workplace of his victim’s daughter after it had already placed him next door to where she lives or does he not recall his stating in 2003 that his new laws would make that sort of mistake a thing of the past? 
Hon PHIL GOFF 
: I absolutely recall that. Regrettably the murder the member is referring to happened in 1992. At that time there was no Victims’ Rights Act in New Zealand. It was only in 2002 that we brought in the right for every person registered on the notification list to be advised of any plans for release or parole. Unfortunately the victim whom the member is referring to was not on the victim notification register—unfortunately. Three members of her family were. The Parole Board as a result of that ensured that a condition of release was that the particular offender would not live within 50 kilometres of the three people who were on the victim notification register. The family of the victim has now been contacted by the police. They are now on the register and as a result the Department of Corrections not only has recalled the inmate—it moved the inmate within 24 hours of being notified that the inmate was living next to one of the family of the victim—but also has now asked the Parole Board which has the authority in this area not to release that inmate at the point that he might be released again in the vicinity of anyone on the victim notification register. If the National Government instead of doing nothing on victims’ rights for 10 years had brought in the Victims’ Rights Act before that murder this problem would not have arisen. 
David Benson-Pope 
: What action has been taken to reduce access by inmates to contraband such as drugs and cellphones? 
Hon PHIL GOFF 
: It was very clear that there was a major problem with both drugs and cellphones in prisons. We have taken effective action against that. As I have noted we have halved the rate of positive drug tests in prison. We are doing more in a bill that is currently on the Table before the House. With cellphones we have also had much closer searching but we are now in the process of putting jamming devices in every prison so that if any cellphone is smuggled in it will not work anyway. 
Simon Power 
: How does the Minister respond to the brother of the young woman whose mother’s murderer was placed next door to her and then near her workplace who said: “What annoys me most is how Corrections and its Minister have misled the public and purported to have systems in place that they clearly have not and that the Minister has just ‘shrugged off’ my family’s case in a dismissive one-liner ‘She wasn’t on the register’ ”? 
Hon PHIL GOFF 
: I have already answered that question at length and I will not repeat what I have already said. But in that article it was also suggested by that person that the victim whom the offender was placed next to had not gone on the victim notification register—she did not want to be on it. Fortunately the police have approached her and she is now on that register and we can ensure that that situation will not happen again because the system does work as long as people register. 
Simon Power 
: Does the Minister have confidence in his department when in addition to these botch-ups the last 2 weeks have seen four offenders escape including a convicted murderer; a twelfth guard suspended from Rimutaka Prison this year; and an alleged head-butting incident and brawl involving Manawatu Prison staff at a Palmerston North hotel? 
Hon PHIL GOFF 
: How many times does the member have to be told that if he wants to talk about escapes he should know that escapes are at a rate one-sixth of the level they were when his party was in Government and he sat behind and was an apologist for the National Minister of Corrections. Yes from time to time there will be incidents. I cannot say that all corrections officers at a party will behave better than National members behave at their private parties. I deplore the way that that particular corrections officer behaved but it was totally outside the jurisdiction of the prison it was not on prison property and it was not in prison time. I am not sure how the member expects the Department of Corrections to act in that regard. 
I raise a point of order Madam Speaker. Mr Power is on record in the  
New Zealand Herald  
this morning as saying that he was going to ask a totally different set of questions. Perhaps he would like to take the opportunity to do what he promised to do. 
Madam SPEAKER 
: That is not a point of order. 
Simon Power 
: I seek leave to ask the Minister a further question in addition to my allocation. 
Madam SPEAKER 
: Leave is sought. Is there any objection? Yes there is objection. [ 
Interruption 
] Would the House please settle and show some respect to the next questioner. 
Road Toll—Trucking 
9.  
JEANETTE FITZSIMONS (Co-Leader—Green) 
 to the  
Minister of Transport 
: How does the Government expect to meet a road safety target of no more than 200 fatalities a year by 2040 while simultaneously allowing bigger trucks on our roads given that deaths from crashes involving trucks make up around 20 percent of the total road toll even though only 6 percent of the total distance travelled on New Zealand roads is travelled by trucks? 
Hon ANNETTE KING (Minister of Transport) 
: 
 As the member knows following the briefing I gave her last week no decision has been made to allow bigger trucks on New Zealand roads. Cabinet has agreed to further work on developing a controlled permit system to allow heavier vehicles on specified routes. The Ministry of Transport in conjunction with key stakeholders is crafting a sensible permit system for heavy vehicles and I expect a trial to begin next year. A key feature of it will be road safety. 
Jeanette Fitzsimons 
: When the Minister said that roads will be safer with bigger trucks is she saying that children who will be walking to Maramarua School down State Highway 2 now that their bus service has gone will be safer because the trucks will be bigger and heavier and what evidence can she offer to support this? 
Hon ANNETTE KING 
: I am saying two things. The first is that the trial is for a permit system to allow trucks that are capable of carrying 50 tonnes to be able to load up to 50 tonnes. By doing that—if we take the example of Fonterra which says it will take 58 trucks off the road—fewer trucks will be going past the school the member mentioned. The second thing is that over the last 15 years the number of fatal truck crashes that occur for every 100 million kilometres driven by trucks has halved—down from about six fatal crashes per 100 million kilometres to three fatal crashes. So the trend in terms of accidents with trucks has been going down not up. 
Peter Brown 
: Will the Minister acknowledge that truck drivers are not always to blame in truck crashes and will she further acknowledge that if we had built better roads when materials were cheaper—that is concrete steel and bitumen—instead of siphoning off the money into the Crown account as the National Party did when it was in Government— 
Hon Member 
: Get over it! 
Peter Brown 
: The member says “Get over it!” Will the Minister acknowledge that if we had done all that there would be people alive today who were killed on our roads? 
Hon ANNETTE KING 
: The member makes two very good points. Obviously better roads make it safer for those on it including those who are driving trucks. I also agree with the member that trucks are not always the cause of accidents. We do have some drivers in New Zealand who when they see a truck feel they have to pass it and sometimes they make decisions that have fatal consequences. 
Jeanette Fitzsimons 
: How does the Minister plan to design the big truck permit system in a way that does not undermine more sustainable modes of freight transport such as rail and coastal shipping recognising that according to the Government’s report on surface transport costs and charges trucks currently pay only 56 percent of the costs they cause to the economy while rail pays over 80 percent? 
Hon ANNETTE KING 
: As I explained to the member the reason for carrying out a trial and doing the work before we have a trial is to ensure that we look at the impact such a system would have on other modes of transport. We are very aware of the need to ensure the use of rail and the growing use of coastal shipping. Part of developing a project like this is to do it carefully and to ensure that all the data is gathered before we decide whether to put this system permanently in place. 
Jeanette Fitzsimons 
: As part of that very thorough study that the Minister proposes when will she be consulting road users such as cyclists pedestrians the Automobile Association and other ordinary motorists rather than just the private trucking company stakeholders that form 55 out of the 61 agencies consulted so far? 
Hon ANNETTE KING 
: As I said in my first answer the Ministry of Transport will be working with a wide range of key stakeholders in the development of this permit system and I expect that the ministry will consult widely on it. I want the best possible system put in place with all the safety considerations as well but I am also very aware that we have to make some progress in this area for economic reasons in New Zealand. We have to balance those two imperatives. 
Schools—Children not Enrolled 
10.  
KATHERINE RICH (National) 
 to the  
Minister of Education 
: What is the Ministry of Education’s most recent estimate of the number of primary intermediate and secondary school aged children under the age of 16 who are not enrolled in any school? 
Hon CHRIS CARTER (Minister of Education) 
: 
 I am advised that the Ministry of Education’s new ENROL electronic enrolment register estimates that currently 6334 students are potentially non-enrolled. This figure will include students who have emigrated before July this year who may be in the process of shifting to another school or who may have left school at age 16 without giving the school the proper notification. ENROL has been fully available only since October 2007 and without a full year of records it is not possible to say accurately just how many students are not currently enrolled. 
Katherine Rich 
: Can the Minister confirm that that number is the largest number of non-enrolments this country has ever seen; and that although he is pretending that the issue has arisen only after the implementation of ENROL the trend has been a disturbing one since 2000 and the number of enrolments has increased year on year at the rate of 8 percent each year? 
Hon CHRIS CARTER 
: No I cannot confirm that because for the very first time ever we have an accurate system that all schools are on and that is up to date. We have never had that before. 
Katherine Rich 
: Why cannot the Minister confirm that when that information comes from information supplied by his own officials who point out that since 2000 the number of non-enrolments under this Government has grown by 8 percent each year and his Government has ignored that trend? 
Hon CHRIS CARTER 
: The member failed to listen to my earlier answer when I said that this is the first time we have ever had an accurate up-to-date electronic system with everybody on it. Previously we had a paper-based system that was notoriously inaccurate. 
Katherine Rich 
: Why is the Minister’s Government suddenly promising a crack down on truancy now when it has been well aware that between 2002 and 2006 there was a 41 percent increase in the truancy rate and nothing has been done about it? 
Hon CHRIS CARTER 
: Lots has been done about it. But I remind the House again that for the first time ever we have accurate figures. 
Hon Dr Nick Smith 
: It’s got worse. 
Hon CHRIS CARTER 
: So for the member to suggest that it has got worse is simply not true. 
Katherine Rich 
: Why does the Minister keep saying that this is the first time we have had accurate data when information from his own officials shows that ever since 2000 the number of non-enrolments—some of those confirmed in parliamentary questions—has grown year on year by 8 percent and the ENROL system now shows that things are far worse than anybody ever expected and these kids are not getting an education? 
Hon CHRIS CARTER 
: What I can say to the House—and again I say this is the first time ever—is that we have a completely accurate system that all schools are on and it is instantaneous. We do not have the duplications we had with the paper system. We do not have schools failing to pass on the data properly as we had with the paper system. We do not have a system where schools do not keep proper records which we had with the paper system. Now we have an accurate system. We may potentially have over 6000 children not enrolled but that number will have to include of course students who have emigrated students who have failed to notify a school that they have gone to work or students whose parents are moving from one district to another. After 1 year we will be able to tell this House and the country exactly how many students are not enrolled. We do not want any students not enrolled and at last we have a tool to find them. 
Katherine Rich 
: How can the Minister stand in the House and wax lyrical about the accuracy of his system when even if we look at just the gross numbers we know that we are talking about enough kids to fill 25 primary schools and five secondary schools—kids who have somehow fallen between the cracks and who are not getting an education? 
Hon CHRIS CARTER 
: We may or may not be talking about that number. After 1 year we will know. When we have deducted students who have emigrated students who have moved from one district to another and students who have gone to work and failed to notify schools within a year we will know that. The member should be complimenting this Government on the $5.5 million we have spent—the National Government never did that—to set up a system that is accurate up to date and enables us to deal with the problem. 
Conservation Support—Businesses and Tourism 
11.  
MOANA MACKEY (Labour) 
 to the  
Minister of Conservation 
: What reports has she received about businesses and tourism operators supporting conservation? 
Hon STEVE CHADWICK (Minister of Conservation) 
: 
 A new conservation trust has just been launched to further protect New Zealand’s busiest national park. The Abel Tasman Birdsong Trust is a new approach where tourism operators contribute to local conservation projects. I applaud this initiative; it is a wonderful example of local businesses supporting the Labour-led Government’s commitment to preserving our unique identity. 
Moana Mackey 
: How will the trust support the Abel Tasman National Park environment? 
Hon STEVE CHADWICK 
: The trust will work to support the preservation of this beautiful and unique park environment by restoring birdlife and expanding pest control. The trust will help to ensure that this park remains one of the best places in the world to visit. 
Maramarua School—Bus Services 
12.  
Dr PAUL HUTCHISON (National—Port Waikato) 
 to the  
Minister of Education 
: Does the Ministry of Education intend to cut free bus services to the rural Maramarua School; if so why? 
Hon CHRIS CARTER (Minister of Education) 
: 
 No we do not. A free school bus service will continue to be available for eligible families next year. The Ministry of Education recently reviewed school bus services to the school and found that some students using the bus were not eligible for a free service. The parents of those children can of course elect to pay for their children to continue using the school bus next year or make alternative arrangements such as car pooling to get their children to school—just as parents do all over New Zealand. 
Dr Paul Hutchison 
: Why would the Minister and his ministry even consider cutting bus services to a school on the edge of New Zealand’s most dangerous highway—known as the “highway to hell”—where there are no footpaths no grass verges and where children have been killed in the past? 
Hon CHRIS CARTER 
: We are not intending to cut bus services. Some children no longer qualify for a free ride. Their parents can of course pay for them to go on the bus if they want to. 
Sue Moroney 
: What support does the Government provide to assist families to get their children to school? 
Hon CHRIS CARTER 
: In National’s last year in office it spent about $90 million a year on school transport assistance; today the Labour-led Government is spending in excess of $120 million per year—an increase of $30 million. Free buses are available to primary school students who live more than 3.2 kilometres from the nearest school and to secondary school students who live more than 4.8 kilometres from the nearest school where an alternative public transport system is not available. These regulations have been in place for many years under both Labour and National. 
Dr Paul Hutchison 
: Will the Minister give an assurance that full bus services to Maramarua School will remain at least until such time as a four-lane expressway and safe footpaths are built or does he wish to be recorded—as suggested on  
Campbell Live 
 last evening—as New Zealand’s most stupid Minister of Education? 
Hon CHRIS CARTER 
: I remind the House for the third time today that we have no intention of cutting bus services to Maramarua School. The parents of children who do not qualify for a free bus ride—and some parents’ children do not qualify—will be able to purchase a place on the bus if they wish to. These are the same regulations that operated under National. I remind the House again that the Labour-led Government has increased funding for rural school bus services by over $30 million. 
Peter Brown 
: What will the effect be of this school bus carrying non-eligible children and what will the effect be if they are turfed off the bus—a saving of a few dollars or a second bus or what have you? Perhaps the Minister would care to tell the House what he would say to the parents if one of these non-eligible children were killed on the road while walking to school. 
Hon CHRIS CARTER 
: What I will say is that the Government is committed to supporting parents whose children need to get to a school where there is not a public transport system. That is why we have increased funding for rural bus services by $30 million. 
Dr Paul Hutchison 
: Is the Minister prepared to heed the advice of Grahame Smith the former principal of Maramarua School who writes: “The thought of children of any age walking even a short distance along this road is mind blowing. I know from personal experience as I lost a 15-year-old son on that road near the school.” or will he risk more children’s lives? 
Hon CHRIS CARTER 
: Everybody would have deep sympathy for anybody who lost a child in a traffic accident. But the bottom line is that there has to be rules about how funding is applied and about which parents qualify. We are not taking any services away from that school. Some children do not qualify for a free ride; others do. There has to be a formula and the same formula that is used under this Labour Government was used under the National Government. I remind the House again that we have increased funding for rural school bus services by $30 million. 
Hon Tony Ryall 
: Big deal! 
Hon CHRIS CARTER 
: I hear Mr Ryall saying that is a big deal. I bet it is a big deal for his constituents who live in the country who are grateful for that support. 
Dr Paul Hutchison 
: Why have the Minister and the previous Minister Steve Maharey refused despite four formal requests from me to give me a briefing on this recklessly dangerous policy or is this yet another example of his Government’s plan to shut down the democratic process? 
Hon CHRIS CARTER 
: I have never refused to give the member a briefing; if he wants to come with me after question time I will give him one then. 
Dr Paul Hutchison 
: I seek leave to table a  
New Zealand Herald  
article dated 12 November 2007 entitled— 
Madam SPEAKER 
: Leave is sought. Is there any objection? There is. 
Questions to Members 
Environment Ministry—Financial Review 
1.  
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Chairperson of the Local Government and Environment Committee 
: Has the committee concluded its consideration of the 2006-07 financial review of the Ministry for the Environment; if not why not? 
MOANA MACKEY (Chairperson of the Local Government and Environment Committee): 
 No; if the member had bothered to turn up to last week’s meeting he would know why. 
Hon Dr Nick Smith 
: What explanation has she or the committee clerks received from the Ministry for the Environment for its failure to respond to the committee’s 14 questions on communications contracts involving Clare Curran and Erin Leigh for which a response was required by 5 p.m. last Friday—or is the material so embarrassing that the Government intends to hold it until after the last question time so it does not have to address those issues? 
Madam SPEAKER 
: That moves out of process questions into substantive matters. So the chair has no responsibility for that; the committee does. 
Rt Hon Winston Peters 
: This is a supplementary question— 
Madam SPEAKER 
: No there are no further supplementary questions. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. My question was: “What explanation has she or the committee clerks received … ” under the agreement? A specific agreement was reached between the committee and the Ministry for the Environment that these answers would be provided by a particular date. The question was quite specific. It was about whether the committee clerk or the chair had received any explanation since that deadline had passed. Surely that is within the Standing Orders in terms of questions that are appropriate to go to chairs of select committees noting that this is likely to be one of the last question times in the House this year. 
Hon Dr Michael Cullen 
: Unfortunately of course the member went on and added a great deal more to the question including asking something about the Government’s intention. The chair of the select committee has no responsibility for that. 
Madam SPEAKER 
: No. If the question is confined to whether the committee has received a response then that can be addressed but nothing else. 
MOANA MACKEY 
: As the member well knows any correspondence that has been received by the committee is confidential to the committee until it is tabled. I invite the member to grace us with his presence on Thursday so that we can discuss the matter. 
Hon Dr Nick Smith 
: I seek leave to table the 14 questions from the committee and the email I have received from the committee clerk stating that no response had been received. 
Madam SPEAKER 
: Leave has been sought. Is there any objection? Yes there is objection. 
Voting 
Correction 
GORDON COPELAND (Independent) 
: 
 I have determined that my proxy vote on the two votes that followed the second reading debate on the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill was invalidly given as a “No” instead of an “Aye”. I now request that the vote be changed in order to validate and record the correct position. 
Madam SPEAKER 
: Leave is sought. Is there any objection? There is no objection. The record will be corrected accordingly. 
Electoral Finance Bill 
In Committee 
Debate resumed from 6 December. 
Clauses 1 and 2 ( 
continued 
)  
Hon DAVID CARTER (National) 
: 
 As the debate around the Electoral Finance Bill enters its final stages in the Committee the arguments still remain the same. This bill has been cobbled together by the Labour Government and supported by New Zealand First and the Greens and the only purpose behind the bill is to rig the electoral system in order to give the gasping dying Labour Government another chance. That is the only thing behind this bill and Winston Peters knows it well. That is what is behind this bill. 
The bill is fundamentally flawed—fundamentally flawed. There has been a convention around electoral finance legislation in the past whereby legislation like this bill is developed on a consensus basis. 
Rt Hon Winston Peters 
: Rubbish! 
Hon DAVID CARTER 
: It is developed on a consensus basis and Winston Peters knows that. He knows that very very well. 
But on this occasion Jill Pettis said it all. She said that there are people around New Zealand today who want to write cheques for the National Party because they want to see the end of the corruption that exists at the moment within the current Government. That is what is going on with this legislation. Winston Peters knows it but I would tell— 
Rt Hon Winston Peters 
: I raise a point of order Madam Chairperson. If Mr Carter wants to talk about corruption then I am sure he is looking in the mirror but he will not make that allegation about any member of this Government or for that matter a Minister. He has just mentioned my name. If he wants a rundown on corruption then he should tell members what is going on in the Rakaia selection process right now where there were five candidates and now there is only one or he can give any other example. But he cannot make that accusation. It is outside the Standing Orders. 
The CHAIRPERSON (Ann Hartley) 
: I would just like to draw members’ attention to the fact that the member was on a point of order. There should have been silence and there was a lot of talking. It was actually quite hard to follow. [ 
Interruption 
] I am ruling on a point of order. Members know that that is a term that is not to be used against a member or against a party as per Speakers’ rulings so I just caution the member. 
Hon DAVID CARTER 
: If Helen Clark thinks that this bill will save her Government then she has another think coming because the public of New Zealand know what is going on with this legislation. Winston Peters knows what is going on with this legislation Helen Clark knows Doug Woolerton knows—they all know. This legislation is about screwing the scrum. It is about making sure the Government gets an advantage in putting its message out using taxpayers’ money after it got caught last year taking $850000 off the taxpayer. After Winston Peters’ party got caught taking $50000 off the taxpayer Winston Peters said he would pay it back and the cheque was in the mail—yeah right! That money has never been paid back. That is what this legislation is about; it is about any mechanism the dying parties of New Zealand First and Labour can find to screw the scrum take money off the taxpayers to sell their message and in the meantime attempt to slow down the National Party in getting its message out to the public. 
DAVID BENSON-POPE (Labour—Dunedin South) 
: 
 I would like the opportunity for a brief call; I will be more expansive later on in the debate. 
I think it is important that we consider these matters in the wider context. Most people in this country know that we are here because of what the National Party—not the Exclusive Brethren not the racing industry but the National Party—got up to in 2005. I think it is important in the wider Australasian context that we think about the wider social context. We live in a time of substantial proliferation of the so-called independent thinktanks. We are only too aware of the extent of the covert flow of funds in our communities. 
We have in terms of the media reporting a lack of objectivity about this issue. There was the extraordinary position recently of so-called independent commentators such as David Farrar a National Party staffer and ACT bagman Mr Boscawen being characterised as having some degree of independence and objectivity. That is clearly not the case. 
But there are some glimmers of hope—more in the Australian media I must say than here. I refer members to the excellent ABC documentary  
The Brethren Express 
 which contains fascinating New Zealand material. It is yet to be shown on our television. One can assume that the decision to show it here will be made shortly but it is available to members and to listeners by way of the ABC website. 
There are also some other local resources about the Australasian socio-political scene that are extremely informative and useful as a resource to our whole community. The first one I refer to is some wonderful work by an academic called Marion Maddox an Australian who is now in the department of religious studies at Victoria University in this very city. Marion Maddox is the author of the book  
God Under Howard 
 and her exposé of the marginalisation by the former Australian Prime Minister of the traditional churches and his encouragement of the fringe churches is an extraordinary read. When I have finished these comments in a few moments I will ask leave to table her Ferguson Lecture given in New Zealand in 2006 which makes extraordinary reading. 
I close by referring also to another most important resource; namely the evidence given to the select committee by Nicky Hager which is not contained in his book and is quite new material. I refer members to that document—in particular pages 2 to 7 of the transcript of his evidence—and I would like to make one direct quote. Mr Hager stated on page 4 of the transcript: “I suspect that the National Party helped to draft the Exclusive Brethren ads but I don’t have proof of that. What I am absolutely sure of what I have absolutely confident knowledge of is that the people who the Exclusive Brethren liaised with and informed of their plans completely were the leader Don Brash the finance spokesperson John Key and the campaign manager Steven Joyce and that a very short period after that the whole campaign team—people like McCully and Brownlee—also knew. The subsequent denials were not correct. They were untrue.” 
Thank you Madam Chair. I seek leave of the House to table the 2006 Ferguson Lecture  
God and New Zealand Public Life 
. 
The CHAIRPERSON (Ann Hartley) 
: Leave is sought to table that. Is there any objection? There is an objection. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I am grateful for the opportunity to speak on this perfidious Electoral Finance Bill and I say “perfidious” in the true sense of the word because it is a breach of faith by this Labour Government to the people of New Zealand and it is treacherous because indeed it is totally in the self-interest of this Labour Government. 
When we talk about the title of this bill we can think of it as the “Labour Government Suppression of Democracy and Human Rights Bill” because Helen Clark on Labour’s now infamous 1999 pledge card said: “Labour will build a future in which everyone has a stake and a chance.” Here we are 8 years later and the  
New Zealand Herald’s  
front page said it all: “Democracy under attack” and “a dramatic assault on human rights.” I could hardly believe that the Human Rights Commissioner felt so strongly that she would describe the chilling effect that this bill caused regarding the regulated periods. 
Even further to that if one looks at the footnote regarding the chilling effects this is what the Human Rights Commissioner said: “ ‘Chilling effects’ refers to the stifling effect that vague or over-broad laws may have on legitimate speech and activity.” That is the indictment on this Labour Government and that is the indictment on that interjector over there. She goes on to say: “This term has been used in the United States for several years when William J Brennan the first Postmaster General referred to the chilling effect on the exercise of First Amendment rights.” This is indeed a great indictment on this Government. 
But another title suggested to me by the Hon Georgina te Heuheu was the “Labour Government’s Sticky Pink Hands in Ordinary New Zealanders’ Pockets Bill” because here again is this socialist Government that just cannot help itself in controlling the rights and freedoms of ordinary New Zealanders. This week the House will debate the third reading of the Education (Tertiary Reforms) Amendment Bill and there again the Government is attempting to trample over universities’ freedom of expression and autonomy. Again there is a chilling connection between that and of course the very same bill that we are speaking about. 
There is no doubt that Bill English’s amendment should be taken up by this Government so that at least the regulated period does not cover a full third of the electoral cycle but instead goes from April onwards. 
R Doug Woolerton 
: This member is degenerating at an alarming rate. 
Dr PAUL HUTCHISON 
: I suggest to that interjector over there who is so keen on suppressing fundamental human rights that he listen to this very very sensible suggestion that extends from April and on to the election. Even yesterday when I attended a bus protest at Maramarua one of the ordinary parents of these children whose lives the Labour Government is putting at risk said to me: “Will I be able to protest next year under this Labour Government?”. Ordinary people do not understand what this Government is placing on them. 
Finally a third fitting title for the bill might be the “Helen Clark Legacy to Suppression of Free Speech Bill”. She is the lady who said back in 1999 that everyone would have a stake and a chance. I can tell Ms Clark that on the streets of Pukekohe and on the farms of Port Waikato people are saying that this time her arrogance has gone just too far. The Law Society has it absolutely right in the conclusion of its submission when it states: “Rather the bill in its current form is a flawed attempt to achieve a legitimate social objective.” It should be thrown out. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I will tell the good doctor what perfidy is: it is deceit—saying one thing whilst acting the very reverse in terms of one’s behaviour. That is what perfidy is. To get up and talk about this side of the Chamber being responsible for it is really a disgrace. The National Party now gets over $7 million from the New Zealand taxpayer every year. Next year it will get $7 million more plus it wants the $2.2 million cap. That is over $9.2 million dollars all in the one year and National members have the effrontery to argue—and be supported by the  
New Zealand Herald  
and other commentators—that this system is somehow unfair. That is disgraceful. 
How much money does the National Party need? It now gets $7 million from the taxpayer every year. It will get that amount in 2008 and it will have a cap of $2.2 million as well. That is almost $9.5 million for the 2008 election year. The National Party is running around with the mealy-mouthed  
New Zealand Herald  
correspondents saying that somehow it is being unfairly treated. That is disgraceful. 
I will tell members what is unfair about politics. What is going on in the Rakaia electorate right now is apposite to this debate. National had five candidates many of them dominion councillors and long-serving members of the party. One was a nephew of Don McKinnon. 
R Doug Woolerton 
: Where did he go? 
Rt Hon WINSTON PETERS 
: He was told by National Party headquarters that he should not stand and that he should pull his name out because David Carter is the preferred candidate—David Carter who could not win any seat ever and is now carpetbagging not in Lyttelton but in Rakaia. With all his money he got told by the hierarchy that that was the choice and other worthy souls were told “No.” This is how the National Party organises elections. 
R Doug Woolerton 
: Outrageous! 
Rt Hon WINSTON PETERS 
: It is outrageous. I challenge anyone who wants to persist with this silly scurrilous argument to explain this: do members recall the Campaign for Better Government in 1993 with one Mr Peter Shirtcliffe and his family members? It was a thoroughly stuffed-shirt affair as the English would say. He claimed to have thousands of members but they turned out be his wife and his daughter—that was it. And who was it that paid all their money? A foreign-owned company called Telecom. It had the effrontery to come into the New Zealand system and seek to organise the shape character and form of New Zealand’s democracy. How outrageous! Did members see “Granny Herald” writing editorials about this affront? Did members see any New Zealand newspaper prepared to say that it is outrageous that a foreign-owned company now thinks it can organise New Zealand’s democracy? There was not a syllable not a sound and not a word. Nothing whatsoever came from these horribly concerned lips in 2003. That is the National Party’s record when it comes to democracy. It knew what Fay Richwhite were doing in the New Zealand market place. Did National members ever criticise Fay Richwhite? No. They spent hundreds of thousands of dollars on criticising an MP who was taking on this activity. That is National’s record. All of a sudden National members are out there saying that this legislation is heinous. 
They should tell me this: which businessman will be disallowed excluded disbarred or ruled out of taking part in the 2008 campaign? They should name one. They should name one business interest who will be denied being included or involved in any way he or she may wish to be—legally of course—in the 2008 campaign. National Party members should tell me now. They have been telling everybody else around the country and boring Rotary Club members silly with this argument but they cannot tell Parliament. They save up all these arguments for the local RSA meetings I suppose as though its members are concerned to hear that sort of deceit. But National members cannot name one business interest who is ruled out cannot participate or is not able to be involved in the 2008 campaign. They cannot name one. 
Then again some of the members of that party know nothing about what fair democratic traditions are about. Unlike people like Holyoake this is a new breed who think that just getting money is all they have to do. It shows in their behaviour—the Ryalls the rat pack the brat pack. They are so powerful that even though they have a new leader called Key they can get Carter—who is a hopeless member of Parliament and was a hopeless Minister—a nomination in a blue-rinse seat not by way of debate challenge and vote but by being the one candidate in Rakaia of all places. Now ain’t that the truth! 
LINDSAY TISCH (National—Piako) 
: 
 In 1943 Winston Churchill said in the House of Commons: “Everyone is in favour of free speech. Hardly a day passes without its being extolled. But some people’s idea of it is that they are free to say what they like but if anyone says something back that is an outrage.” That is what the Electoral Finance Bill is about. It is a self-serving bill. It is a bill about keeping a Labour Government in power. It is a bill designed to give the incumbents a gravy train of funding and limit everyone else’s rights of expression. 
This is a Government that purports to support human rights in Zimbabwe and Fiji yet at the same time wants to limit Kiwis in having their say. Last night I attended a citizenship ceremony in Te Aroha. It was a citizenship ceremony in which some folk from Zimbabwe and from Fiji wanted to become Kiwis. They had earned that right to become Kiwis. They came here because of our values our opportunities our free speech and our free expression. I wonder what they will say when this bill comes in on 1 January and denies them and limits those opportunities. 
This is Draconian legislation. We have seen dictators in the past. I tell members that those who interfere with their constitutions will rue that day. At the end of it they all fail. This Government is going down the road. This Government is failing New Zealanders and New Zealand as a whole. This Labour Government has become obsessed with power. It is arrogant. It will not listen. It knows best. Everything we see today is designed around keeping this party and this Government in power. 
The editorials television media and marches are all coming out against the bill. We saw that the Law Society has very strong comments about how abusive this legislation is. The Human Rights Commission described the bill as “a dramatic assault on the freedom of expression”. It does not come much stronger than that. The commission said the bill was “a dramatic assault on the freedom of expression”. New Zealanders are incensed with this Government which wants to run their lives. This Government will rue the day it decided to push ahead with this self-serving legislation. 
The Government recently passed the Appropriation (Continuation of Interim Meaning of Funding for Parliamentary Purposes) Bill. That bill legitimises the illegal spending from the last election. The Auditor-General made the rules very plain and Labour had to pay back $800000-odd. That is why New Zealand First has a bill—because of its illegal spending. So what does this Government do? It changes the law. It comes out and legitimises that illegal spending. 
Now we have parties and candidates within Parliament being able to use taxpayer money to pay for their campaign. Of course that should be considered election advertising. Election ads could be run during the election campaign and the costs of those ads will not count towards the party’s and the candidate’s election expense cap. 
That is what is so wrong; there will be one rule for the incumbents one rule for MPs but other parties will be locked out. This is de facto State funding of political parties. That is what it is. It is de facto funding of these operations. It gives a huge advantage to the parties already in Parliament and a huge advantage to the candidates already here but everyone else is locked out. 
This bill makes a mockery of free expression of speech and it makes a mockery of the whole funding regime. MPs should be subject to the same definition of electioneering as other people or third parties as they have been described. Otherwise it is manifestly unfair and undemocratic. I subscribe to what Voltaire said—or what is attributed to him: “I disapprove of what you say but I will defend to the death your right to say it.” That is National’s position. 
Hon ANNETTE KING (Minister of Justice) 
: 
 Seldom has so much cant been heard from a political party than that which has dribbled out of both sides of National’s mouth in the debate on this bill. We have heard nothing but mock outrage from speaker after speaker. Those members do not believe what they say but they are saying it for political purposes and that is the cynicism of this National Party. Its members have constantly misquoted the Human Rights Commission. 
When the bill was introduced to the House and was referred to the Justice and Electoral Committee the Human Rights Commission made some very important points about the bill as introduced. The commission worked closely with the select committee. It gave advice it worked alongside the committee and it ensured along with the committee that changes were made to the original bill. The bill as reported back to this Parliament and the amendments made in my name which have improved on even what the committee did have led to the Human Rights Commission saying that it is largely happy with this bill and I will stake my reputation on that comment. 
The National Party is constantly saying that the Human Rights Commission is still very concerned. That is not true. It is time that was put on the record because one would think that those National members live in a time warp and that absolutely nothing has ever changed. You see they really believe that there is not a place for a select committee and that there is not a place for a debate like this in this Parliament. That is what they truly believe. We believe that this is the place to debate the issues. This is the place to put amendments on the Table— 
Christopher Finlayson 
: Yes and we were shut down prematurely! 
Hon ANNETTE KING 
: I am sorry that Chris Finlayson is interjecting because I was going to say that at least he has attempted to put forward amendments that could improve this bill unlike his leader and unlike his deputy leader who I believe have done nothing but stand up in this Chamber and address it in a verbally abusive manner—a manner that I have not seen for many many years. I believe Bill English’s contribution to this debate on Thursday—when he stood up and abused me in a way that has led to people phoning my office to say that that was absolutely disgusting—is the mark of the man. This is a debate of ideas this is a place where we can have robust debate and I believe in robust debate. When a person has to get down to personally denigrating people when a person has to call them every name found in one’s small brain then I believe that that person is not prepared to debate the issues and that he or she wants only to make a political point. 
Mr Carter said that the ordinary people do not understand. I can tell this Committee that the ordinary people understand only too well. They understand that at the last election National Party members tried to buy an election. They were doing it secretly they were doing it in an underhand manner and it was only because the Green Party caught them out that what they were doing was exposed. It would not have been known if that detective work had not been done by the Green Party. We may have had a different result. They were not prepared to own up. In fact Mr Brash could not remember meeting the Exclusive Brethren. John Key still does not remember receiving the email about the money that was being spent. Is it not amazing that he cannot remember it but he can remember not receiving it? That must be amazing—being able to remember not receiving an email. 
I say to the members opposite that this bill sets out to make it fair for all New Zealanders; that we cannot buy an election in a democracy; and that there is nothing wrong with being honest and transparent about what money we have and where that money comes from. I think Winston Peters raised a very good question indeed. He said “Name one business”—and I would say one person—“one organisation that will not be able to participate in next year’s election process.” National members could not name one because people and organisations are able to participate they just have to be transparent about it. 
RODNEY HIDE (Leader—ACT) 
: 
 We are debating the title and the commencement date of the Electoral Finance Bill. We are discussing two big principles here today with this bill and I think we are confusing them and doing rather a poor job of it. The two big principles are democracy and freedom of speech. In this debate this Committee and I am afraid this Government are confusing two quite different things. Freedom of speech is the ability to speak our minds. It is the ability to state our opinions whether they are right or wrong and whether or not people find them offensive. Of course there are limits on freedom of speech. We cannot defame someone we cannot be offensive and we cannot cause distress in the public theatre by calling out “Fire!” when there is no fire. But we are very careful about limiting freedom of speech. 
We have a view that we can express any idea on politics that we care to. We particularly guard those people who want to speak out and whom we oppose because that is the test of freedom of speech. That is why I have always stood up and said that the Exclusive Brethren should be free to express their political views. The issue is not whether I agree with them; the issue is whether they are free to express it without Government regulation or Government sanction. If we have to get Government recognition or sanction in order to express our political opinion it is not free speech. That is the point. We should not have to go to the Government and sign up and register with the Government to express our point of view. 
The second great principle that we are discussing here is democracy. Somehow the two have become confused; in order to have a functioning democracy we have to hobble people’s ability to spend their own money to express their views and how they might go about it. We do not. The way we have a democracy is we have one person one vote and everyone’s vote counts. The people can vote and change the Government. That is what the definition of a democracy is—a functioning democracy. We do not achieve a democracy by saying: “Oh those people over there are too smart. We need to somehow reduce their IQ.” or “These people over here are too fit and they could knock on too many doors. We need to somehow slow them down.” or “This party over here has too many members. We have to restrict it.” or “This party over there has too much money.” or “This church group is too organised and is putting out too many pamphlets. Therefore we have to restrict it to somehow level the playing field to achieve a democracy.” No. We achieve a democracy by having each person with one vote and we achieve freedom of speech by allowing people to express their political views freely. 
I say that it is a shame that we have conflated those views. It is a shame that this bill has been developed in the most partisan manner possible with abuse being hurled from one side to the other. I think it is a great shame that the Government and the supporters of this bill have launched into personal attacks on those people who oppose the bill whether they be individuals organisations or indeed the news media. We do not normally see that from the Minister Annette King. 
Hon Annette King 
: You haven’t seen it now. 
RODNEY HIDE 
: I hope that Annette King will stick to the policies. No I say to the Minister. I heard her attack John Boscawen. 
Hon Annette King 
: I didn’t mention him. 
RODNEY HIDE 
: I absolutely heard the Minister attack John Boscawen and I say to her that this is what chills New Zealanders. Citizens should be able to express their view. Newspapers should be able to editorialise and if we disagree with them I say to the Minister—and I say to this Government—let us have the debate not the abuse. 
METIRIA TUREI (Green) 
: 
 I appreciate the passion in Rodney Hide’s speech but I think it is important to note that the Electoral Finance Bill is not about stopping people from talking. This bill is about applying the same principle—that there should be limits as to how much is spent in a campaign. There are currently limits on political parties and on candidates. The royal commission 11 years ago said there should be limits on others as well and we are simply enacting that recommendation. This bill is not a breach of freedom of speech. It does not prevent people from being engaged. It makes sure that the rules are sound and apply equitably across all the players in the campaign. 
This afternoon I want to specifically mention the amendment in the name of Christopher Finlayson of the National Party to change the date on which this bill comes into force from “the day after the date on which it receives the Royal assent.” to 1 April 2008. The Greens have never been 100 percent committed to a start date of 1 January. We understand why it is necessary to extend the regulated period and we need only look at the “Iwi/Kiwi” billboard campaign—the racist campaign of the National Party—to realise how early political parties will begin their election campaign and how easily they can avoid their spending caps by campaigning early. So we do believe there should be an extension of the regulated period. 
Our preference would be for around say 1 March. We investigated what it would take in this part of the debate to make that change so that the bill would not apply until 1 March and the regulated period would not apply until 1 March. We found that if a provision such as that written by Chris Finlayson was put forward and passed it would undermine every aspect of the bill and this is for quite technical and legal reasons. The amendment would mean that the bill would not come into force until—in National’s amendment—1 April. But that would not stop the regulated period. It makes no difference to the regulated period. What it does do is make the bill inherently inconsistent in its provisions. Then the only option is for the law courts to determine whether a regulated period of 1 January applies whether a regulated period applies retrospectively whether a regulated period applies only from the date that the bill comes into force—which would be 1 April—or whether in fact the regulated period would apply at all because of that inherent inconsistency. 
If passed Chris Finlayson’s amendment would mean that there may not be a regulated period at all. That would mean that the caps would not apply for third parties for candidates or for political parties. The National Party would be able to spend anything it liked because no regulated period would exist if this provision put forward by Chris Finlayson was passed and the law courts found the bill was so inherently inconsistent that they could not apply the regulated period. 
It does beg the question: if I got that advice and I found that out with relatively junior experience as a lawyer then what advice did Chris Finlayson receive? He must have received the same advice. I talked to the Office of the Clerk. I got independent advice about this issue. Chris Finlayson is a much more experienced lawyer than I am and he is much older than I am. He must have got the same advice—that if his provision passed into law the regulated period as a whole would be at risk and there may not be a regulated period at all and that would allow the National Party and indeed any political party to spend any money it wanted over the whole period right up until the day of the election. 
That is certainly not a risk that the Green Party would ever be prepared to take. We believe that the reasons behind the regulated period are to help maintain a level playing field and to help ensure an equitable spending regime for political parties candidates and third parties and that that is an important thing to do. We do not believe in eliminating the regulated period. 
It concerns me a great deal that this might be the covert purpose behind Chris Finlayson’s amendment to shift the date on which the bill comes into force to 1 April. I would be very interested to hear what his advice was and whether he got the same advice that I did from a variety of sources that this could indeed be the impact. Perhaps he does not know. Perhaps it was not the advice he got. Perhaps his intention is perfectly innocent. That may well be the case. Certainly there is no way surely that the National Party could possibly support eliminating the regulated period so that it could spend whatever it liked. 
PANSY WONG (National) 
: 
 At least the Green Party member is prepared to reveal some of her real intentions about supporting the bill. Somehow this bill is all about not allowing the National Party to do x y and z. It is very strange to pass legislation that targets one political party and say one wants a level playing field. But at least the member is trying to tell us some of the real intentions in ramming through this legislation. The Minister in the chair the Hon Annette King has been talking about our deputy leader Bill English who happens to be accepted in the public and in the media as being about the only person who really understands the Electoral Finance Bill and all he did was ask some questions about the meaning of— 
Hon Judith Tizard 
: I raise a point of order Madam Chairperson. I am terribly sorry to interrupt the member but the sound is so loud that it is actually hurting my ears. Could we have it turned down? 
PANSY WONG 
: That is a compliment coming from the Hon Judith Tizard. 
The CHAIRPERSON (Ann Hartley) 
: There is not a lot I can do. It is the system. 
PANSY WONG 
: What a way to complain! Certainly some of us have voices that can be heard and that is some consolation to me. I hope the Minister will hear this properly. 
At least we can tell that there is some consistency among the Labour Government. When the Hon Annette King the Minister in the chair cannot answer the questions she blames and attacks the Hon Bill English. All he did was ask some questions about the interpretation of the legislation. The consistency from the Hon Annette King is the same as that from the Prime Minister Miss Helen Clark. She hit out at the  
New Zealand Herald  
when that paper dared to run an editorial asking questions as to why the Labour Government is trying to rush through the legislation. She criticised it as being shallow error-prone media. She went on to lament that journalists in New Zealand are not taking more interest in the effect of international foreign affairs on New Zealand and the only reason is that the media outlet did not send enough journalists to cover her photo-opportunity overseas trip. 
In fact I did question why right now this House is debating the Electoral Finance Bill when we take into the wider context today’s  
Dominion Post  
headline “5000 children ‘slip through the cracks’ ” of not enrolling in any school. In the House today all the Minister of Education could do was ask “How accurate is 5000?”. Well whether it is 4000 or 5000 children the public should be very concerned about that. Also in today’s  
Dominion Post 
 was a statement: “Courageous neighbours are being praised for saving the life of a mother who was being stabbed repeatedly in the middle of the night.” I would suggest that the wider context out in the public is about law and order education and the health system falling apart because of too much bureaucracy and not much attention paid to the real issues. Here we are with the Labour Government continuing to engage in pushing through legislation with the help of the New Zealand First doormats that the public does not want passed. Ten thousand people marched in the street and the Labour Government will simply not take notice. Well actually I can see why MPs like Doug Woolerton from New Zealand First want to rush through this legislation. I understand he wants to support this legislation because the existing MPs and political parties in the Parliament actually have the right advantage in passing this legislation. Candidates who are not in the Parliament from 1 January would have only $20000 to spend until whenever election day is but MPs and elected political parties right now in Parliament can spend whatever they like. Why do we have this benefit and privilege? It is because the Labour Government rushed through legislation to do that. 
JACQUI DEAN (National—Otago) 
: 
 As David Benson-Pope noted earlier this afternoon it is important to look at the Electoral Finance Bill in its wider context. This is the second time in this term of Parliament that we on this side of the Committee have listened to the Labour-led Government defending the indefensible and the public know it. The public can see right through what is going on in this Committee. At about this time last year the Government introduced the Appropriation (Parliamentary Expenditure Validation) Bill. 
R Doug Woolerton 
: Was that a year ago? 
JACQUI DEAN 
: It was a year ago and the appropriation legislation was updated earlier this month as well. The Appropriation (Parliamentary Expenditure Validation) Bill was of course to retrospectively make legal that which was illegal. I never thought I would see the day when I would sit in the House of Parliament debating a bill that had as its core purpose to make legal that which was illegal. My forebears will be spinning in their graves. This Labour-led coalition Government passed legislation at about this time last year to cover its butt after spending $800000 of taxpayers’ money—not party money not money it had raised itself but taxpayers’ money our money our taxation money—on its air-brushed pledge card. 
The Auditor-General Kevin Brady wrote a report about the time of that bill and he made several points in it. The first thing that the Auditor-General noted was: “I thought there was little doubt that it was not permissible to use public money from the Party and Member Support appropriations for electioneering. I expected MPs and parliamentary parties to be especially careful in that area.” But not the Labour Party which is why about this time last year we had the Appropriation (Parliamentary Expenditure Validation) Bill to make it legal. I say that is shameful in this House of Parliament. So what do we have now? The Labour Party was shamed—some parties in this House have not been—into eventually paying that taxpayer funding back and now it is broke. The Labour Party is broke and that is the truth about what is behind this current bill in front of us. The Labour Government is broke and so it wants once again to screw the scrum with the Electoral Finance Bill. This bill—the second piece of reprehensible legislation we are debating today—is all about Government funding by stealth by a broke Government. 
This bill is purely about screwing the scrum in favour of the Government. This bill is not about providing a fair playing field—those claims are nonsense. This bill is openly about Labour trying to win another election. Well how noble is that? I would suggest to members that this is the second shameful piece of legislation brought to this Committee by this current Labour-led coalition Government. Every mention we hear in this Committee of this bill nobbling National’s rich mates reeks of tall poppy envy. Well guess what? This Parliament should be better than that. We should be passing law in this Parliament better than that. The Minister Rick Barker in his speech openly acknowledged that this bill is about nobbling National’s supporters while protecting those who support this bereft Government. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I was not going to take a call until the member alluded to the Appropriation (Parliamentary Expenditure Validation) Bill that we passed last year in this Parliament. I know that we are debating the Electoral Finance Bill but I want to clarify a few things that went on with regard to the other bill. The member alluded to documents like the pledge card that are meant to be illegal such as this National Party pledge card which was put through the letterboxes of just about everybody in the country in 2002. The rules did not change between 2002 and 2005 and I cannot see for the life of me any difference between this card and the Labour Party’s pledge card. But I can see a lot of difference between both of those cards and this. This is a policy document that outlines New Zealand First’s policies and the Auditor-General would ping us for $159000 in large measure over it. 
I just happened to meet the Auditor-General on the plane last week. He came up to me and we had quite a cordial discussion which in some way surprised me. 
Phil Heatley 
: Did he know who you were? 
PETER BROWN 
: Yes he did. He knew exactly who I was. I asked him one or two questions. He said that he is very very pleased that Parliament has passed the Appropriation (Continuation of Interim Meaning of Funding for Parliamentary Purposes) Bill. The Auditor-General told me personally that he is very pleased that we passed that bill because it sets down in law what we have been doing under Speakers’ directions for many a year. That party over there the National Party has taken more advantage of the rules and regulations in this place than any other political party has by a country mile. 
We need the Electoral Finance Bill. New Zealand First will support this bill because we are well on record as saying that we want politicians to be honest. We are honest and we want to keep politicians honest. That used to be our campaign slogan. This bill makes the process honest and we are going to support it. I know what is upsetting the National members: they cannot get their mates as they did in 2005 to invest in brochures in a de facto way. There was $1.2 million spent on producing brochures in support of the National Party. 
Chester Borrows 
: Is that OK? 
PETER BROWN 
: It is not OK and the member knows that. It is a long way from being OK. 
New Zealand First has no opposition at all to third parties—people who do not want to be part of a political party—getting involved in the process. It has no objection to that at all. But we want there to be controls. There are caps on individuals. There is an election campaign cap of $20000 per candidate and of $1 million for a party. It is only right and proper that other parties—not political parties but other outside organisations—that want to play a part in the election process should be financially capped as well. The debate should have been about whether that limit is adequate too much too little or what have you. I think that the amount was $60000 in the original version of the bill and it was doubled when the bill came back from the Justice and Electoral Committee. The National members should have argued about whether that was enough or not enough. I could see some merit in doing that but I cannot see merit in saying we are going to have an uncapped system and let an outside organisation put as much money as it wants into influencing the way that New Zealanders vote. That is why New Zealand First is supporting this bill. 
I have said before in this Chamber that that issue was recognised by the Royal Commission on the Electoral System which stated: “It is illogical to limit spending by parties if other interests are not also controlled. Supporters or opponents of a party or candidate should not be able to promote their views without restriction merely by forming campaign organisations ‘unaffiliated’ to any party. … Nor should powerful or wealthy interest groups be able to spend without restriction during an election campaign while [the parties] are restricted.” That was stated by the Royal Commission on the Electoral System. Members opposite may not like MMP but we have got it. The public voted for it we have got it and it will be honest. 
PHIL HEATLEY (National—Whangarei) 
: 
 I would like to challenge the statement made by Annette King earlier which came as quite a shock to this side of the Chamber and certainly it would have come as a shock to those listening. She said there is not a third party across New Zealand—any lobby group or one of those groups interested in the political environment or in laws passing through Parliament—that is in any way stopped or prevented from freely expressing its view in election year. If she is saying that such third parties are not impeded in any way that tells us in the National Party that Annette King and the Labour Government just do not get it. There used to be a time when Plunket Women’s Refuge the Royal Forest and Bird Protection Society or any one of a myriad of organisations in New Zealand could just put ads in the paper or could picket or pick up a megaphone or send out pamphlets and freely criticise what any political party was saying in election year. Members of those organisations could just get up in the morning and go out and protest or they could run an ad in the  
New Zealand Herald 
. Members of the Littlies Lobby Plunket Women’s Refuge or the Royal Forest and Bird Protection Society could get up in the morning and deliver pamphlets. 
That is what they used to be able to do before this legislation. Now those organisations or any other organisation have to fill in forms and go through some sort of bureaucracy. They have to send those forms into the Electoral Commission saying everything they want to do and what ads they will run—whatever. That is the first thing. They have to go through all this bureaucracy just to have a view. Secondly they have to employ a financial officer to oversee what little money they have to spend in an election year putting forward their view. 
So first they have to go through all this bureaucracy; secondly they have to start employing administrators in order to submit their spending returns their advertising and their pamphlets. So what we have is these organisations across New Zealand which by far in the majority are voluntary and which struggle to raise funds for women’s refuges for the Royal Forest and Bird Protection Society for Plunket or for whatever it might be having to spend time money and resources on bureaucracy on the one hand and on administrators on the other hand just to have their say as Kiwis as New Zealanders. 
New Zealand First does not care about that for two reasons. One is that there is no private citizen in New Zealand who wants to give it any money any more to help its campaign. New Zealand First is bleeding votes and no one wants to send it a cheque. Secondly it does not care whether the Royal Forest and Bird Protection Society Plunket Women’s Refuge or any other organisation in this country wants to have its say because those organisations speak against New Zealand First. New Zealand First is against freedom of speech and of course those organisations want freedom of speech. That is why New Zealand First opposes that and it is why Winston Peters is now sniffing out Tauranga again. It is because the vote for New Zealand First is way down at 2 percent and for the Labour Party the vote is way down at about 30 percent. 
Here is how absurd this legislation is. The Minister who promoted this legislation did not realise that it does not relate just to cash given to political parties. It could be timber for signage. It could be crayfish for some sort of fund-raiser. When that was pointed out to her by the Electoral Commission itself she was shocked to find that a lot of people give donations in kind not just cash to political parties. She had arranged that all those donations whether they were cash signage crayfish or whatever would have to be sent to Wellington and put through the system. 
Hon ANNETTE KING (Minister of Justice) 
: 
 I want to correct one thing that Phil Heatley said. Although he said many things that were total garbage there is one thing that I want to correct. He constantly used the Royal Forest and Bird Protection Society as his evidence against the Electoral Finance Bill. I assure the member that all the concerns raised in the society’s submission have been addressed and met and the society is happy. 
KEITH LOCKE (Green) 
: 
 I thought I would take a short call on behalf of the Green Party to talk a little bit about the free speech issue from another direction. I think the Electoral Finance Bill will improve the free speech of people like my colleague Chris Finlayson and others who I know have an independent mind. I would not like them to have to suffer the restrictions on their free speech that come with big bucks being poured into political campaigns. 
I sympathise with the right to free speech of the National Party and the ACT party etc. because I do not want us to go down the track the United States has clearly gone down. If one reads the lead-up to the nominating conventions of the Democratic and Republican parties one sees that the discussion in relation to the contest between Hillary Clinton and BarackObama is all about who has the most money—who has the most millions of dollars. That is the key thing in the campaign. People know that the result of the Democratic nomination will be decided largely by who has the big bucks who can put the adverts on television and who can swamp the places where the primary elections are held. That is what it is all about. 
There are articles all over the American press on this issue. Take for example Hillary Clinton who even though she has personal views that are quite liberal—a bit like Chris Finlayson in our Parliament—has been pushed towards what is called the centre or we could call it the right because that is where the interests of big money are. That is a pattern across America. We need only look at the senators and Congress people. The senator from Washington state is often called the “Senator for Boeing” because Boeing is the big company in that state. Boeing gives money and it determines who gets the senatorial position in Washington state. So although the “Senator for Boeing” might have different views from Boeing he or she has to suppress those views. That is the way American democracy works. 
Even with the little bit of gifting we get in this Parliament today we have to be careful—and it is happening as we move towards Christmas; I think all MPs have received a half-dozen pack of beer from Lion Breweries recently. We in the Green Party have to work out some way of shifting that on without being bought off by it. But psychologically all those gifts have an impact. We do not want to offend people who are friendly towards us and who might give us things when it is only on a minor scale. But if this bill is not passed and the funding of political parties goes really out of control then we will move more and more down the track of the American situation. 
I would not like people like Chris Finlayson to be under that pressure of big money too much. I have found I have quite a lot of common ground with Chris Finlayson on issues of democratic rights and things like that. I am trying to save him by opposing National’s amendments and the direction the National Party is taking on this bill. 
The Electoral Finance Bill is not a perfect bill. Everyone knows that and that is why the Green Party is putting forward the idea of a Citizens’ Assembly assisted by experts to have a look at this whole question and to a large extent to take out of the hands of politicians the control of how election financing is determined. We do have self-interests and I think it would be good if the public could play a greater role in determining the restrictions on election funding—how they take place and how they take place in the best way to enable free speech. That is my view. We have a model in the United States of what happens without that. Thank you. 
CHESTER BORROWS (National—Whanganui) 
: 
 Thank you for the opportunity to take a call on clauses 1 and 2. I suggest that maybe the title of the bill should be “We Lost and We Just Can’t Accept It Bill” because in our area most of the noise has come from Labour MPs who lost their seats to National Party people—now members of Parliament. They cannot accept that they lost because they did not do the work. They want to believe—and they truly believe in their illusion—that their seats were stolen from them by the Exclusive Brethren. Well if we look at the pamphlet put out by the Exclusive Brethren we see that the one naive mistake they made that separates what they did from whatever the unions did was to put a false address on it. They thought they were so smart that they could get away with putting a false address—or an empty section should I say—on the form authorising the pamphlet. But the guts of the pamphlet was exactly the same as what the unions had put out. So we have the naive Exclusive Brethren and we have the unions. 
It is really interesting to consider exactly how the unions go about raising their funds. I have a mate in the Dairy Workers Union who prior to the election went along to a meeting where somebody stood up and moved that the union give $10000 to the Labour Party. With his best mate standing for National in the electorate my mate said: “Only if we give $10000 to the National Party.” What happened? Two bloody great big union delegates got out of their seats up the front and came and sat down one on either side of him—tipping out the people who had been sitting there—and put their hands on his knees. It was not that they were snuggling up to him; it was to make sure he would not get up and say anything else. What that says to me is that the Labour Party is quite happy to accept extorted money. It is quite happy to accept money that is extorted but it is unhappy when in an election campaign other people accept support that is freely given—or so we were told in a television documentary that was done soon after. 
To have the address of an empty section on a pamphlet is naive but it reminded me very much of a couple of things the Labour Party did— 
Hon Annette King 
: It was deceit. 
CHESTER BORROWS 
: Deceiving? Deceiving like what? Well it was deceiving for instance to have certain dead people vote in the Wairarapa election in 1987. Labour was caned for that. Another little deception was the misuse of the Privacy Act whereby in the last election campaign Labour got the names and addresses of State house tenants from Government records wrote to every one of them and put out its propaganda. No Labour Party members have ever stood to justify that action of Labour as part of its strategy for that campaign. It just goes to show that their morals are lopsided. 
Then they talk about anonymous donations. They cane the National Party for apparently receiving anonymous donations without their ever accepting or explaining that in 1999 they accepted $800000 worth of anonymous donations. And what do you know? They did it again! In 2002 they accepted $350000 worth of anonymous donations. But hey that is OK! And what do you know? They did it again! In 2005 they got just about $300000 in anonymous donations—and that was OK! The only thing that really winds them up is that they did not get as much as National. Well what do you know! The reason for that is the tide is going out; the tide is going out for Labour. Its members understand that. 
Another thing they have never explained is the $800000 worth of taxpayers’ money they took from their leader’s office budget to use for their pledge card and for other parts of the campaign—$400000 for that. Did they explain that? No they did not nor will they. They accept that they were wrong. They have even paid it back. Well that is not so bad. Maybe New Zealand First could take a leaf out of their book. So they have paid the $800000 back but have they moved through this legislation to make sure that that cannot be done again? No they have not. Why not? Apparently they are as pure as the driven snow; they are the only ones on the right side of anything. 
They cannot accept that they lost those seats because they did not do the work or were seen as useless. They never showed up. Throughout the 7-month campaign run in Whanganui I twice saw one of the most vociferous critics of the Exclusive Brethren. She did not have it in her! 
JO GOODHEW (National—Aoraki) 
: 
 It would be really easy to stand up here in the Chamber this afternoon during the debate on the title and commencement clauses of this bill and suggest a few alternative titles. But the first thing I want to do is to assure the Minister that on this side of the Chamber she is not seeing mock outrage at all. There is no mockery in what we are debating here today. I can assure her that we are responding to the many many New Zealanders who have told us how much they dislike this bill and who have said they do not want their freedom of speech shut down. I have replied to them that I will be vigorously opposing this bill—and I have done so—and that I will be doing it with the support of my colleagues. 
This bill could well be relabelled the “Bill of Wrongs” and if we did relabel it with that title we would need to attribute that good idea to the  
Listener 
 which is widely thought of as a left-leaning publication. But back in August they already knew at the  
Listener 
 that the assertion of former Minister Mark Burton that the Government was “seeking to encourage full and open expression from a diverse range of interests in the run-up to a general election” was bogus. As a  
Listener  
editorial said this bill could hardly be less likely to achieve that. 
Peter Brown told us that New Zealand First wants controls and that it wants this bill to supply the controls on the way that election campaigning is undertaken. That would be absolutely fine if we had cross-party support and if in fact it did not result in a lessening of the freedom of speech—a lessening of the democracy that we have come to rely on in this country. Similarly the bill could be retitled the “Shut Down the Voice of New Zealanders Bill”. This bill seeks to dissuade New Zealanders from making comments during the course of the election period through registration processes. The bill could be labelled the “Last Gasp for Labour’s Future Bill”. Unashamedly this Government is using the bill to shut down debate to shut down criticism and to make it very difficult for anyone to participate in debates. 
But—and this is a very big capital-letters in-bold “but”—at the same time this Government will authorise millions of taxpayer-funded advertisements to promote its policies in order to flood the minds and consciousness of the public as it makes decisions about New Zealand’s future. The description in the  
Dominion Post  
last month of this attitude by the Labour Government—one of attempting to elevate ambition over ethics—is very apt. 
Hon Annette King 
: Gosh you’re great at mock outrage. 
JO GOODHEW 
: And this is not mock outrage; I am outraged and I can tell the Minister that I have waited a long time to stand and represent the outrage of the people of Aoraki as well. Next year the courts will determine how this bill is interpreted. Lawyers will grapple with this ill-conceived ill-drafted shambolic bill and New Zealanders will further develop their unease. That unease is currently showing in polling. This is an unprincipled desperate unethical abysmal apology for legislation. It is a disgrace to this Parliament. 
The commencement date of this bill is a sham. The legislation seeks to control debate for a period unprecedented in New Zealand's history—11 months. There is no need to wonder why; this desperate Government is clinging on to power and seems oblivious to the scraping of its fingernails on the blackboard of power. New Zealanders are cringing as they hear that sound. They are recognising the antics that smack of an anti-democratic process. Thousands have marched in the streets to protest the rigmarole they will be put through to participate in the democratic process. Many of those people have never participated or openly criticised the Government or any other political party in the past but they are affronted by this apparent attempt to stifle the freedom of speech in next year’s election. 
But worse still this Government is not just desperate. It is not even dateless. Unfortunately on its date it is carrying with it New Zealand First the Progressive party United Future and the Green Party. No it is not dateless but certainly on this occasion the minor parties are not discerning in their choice of a date. They too are being recognised by the public of New Zealand for their partnership in this sorry saga. A healthy democracy should not tolerate this attempt to rort the democratic process. The Law Society has trumpeted the failure of this bill and the Human Rights Commission has added a strangely cautionary note given that this is a Labour Government bill. 
R DOUG WOOLERTON (NZ First) 
:  
I did not actually intend to speak on this part but I feel I have to. I have to tell people who are listening about all of these people in New Zealand who are rising up against this bill. I will talk about something I read in the newspaper. I am not slagging off John Boscawen or anything like that but to get the 5000 people to the march in Auckland that the whole of New Zealand was worried about he had to enlist the services of a secretary. Then he had to enlist the services of telephone survey people—from a foreign telemarketing organisation—and have them ring 82000 Aucklanders to get 5000 to a march. That is what he had to do. 
Let me tell members what the National Party had to do in order to get even a modicum of dissent over this bill. Through its membership it had to put out an email campaign the likes of which we have never seen before. It put out through an email campaign to all its members a directive telling every member to go to another member etc.—like a pyramid-selling scheme—in order to bring awareness of this bill to the forefront. This was to raise National members’ anger against this bill. 
But do members here know what? It has not done that. Outside the National Party and outside the 5000 people who went to John Boscawen’s meeting after 82000 phone calls numerous ads in the newspaper and numerous radio ads the public of New Zealand is actually reasonably relaxed about this bill. I have had people say to me—National Party people mainly because I still know a lot of them from the old days—“Doug you’ll rue the day that you voted for this bill.” Well I can tell members that we do not give a damn that those National Party people have been rarked up. National Party people do not vote for us. A few might after this election I might add but by and large National Party people do not vote for us. 
So National members have been rarking up their own people and John Boscawen has been working diligently to get 5000 people to a march. This has all been organised to a degree that the New Zealand union movement could only envy. The union movement would envy the organisation the money and the friends enlisted to get this level of concern in New Zealand about this bill. 
I tell members that average New Zealanders are not concerned about this bill. They do not want their elections bought and they do not want their elections corrupted by people who have a really strange view of the world—people who are mainly intent on pushing their own views. 
I can tell members that John Boscawen came to see me; I invited him to come to have a chat. I will not quote what he said to me but it is suffice for the Committee to know that he really means what he says and that he does not understand the electoral system completely. So intent is he on spending in excess of the limits prescribed by this bill that he said he would set up his own political party in order to achieve that. I said: “Great! That is precisely what the bill intends. If people want to participate as citizens they spend so much—no problem. If they want to spend more than that they register as a third party. If they want to extend all those limits they list as a political party.” That is what the bill intended yet so intent is he that he sees it as his cunning little plan—he says so in the newspaper. 
The bill allows what John Boscawen intends. The bill understands that people will want to spend different amounts of money. But in the future such people will be known; they will not be able to run some sort of subversive campaign to help another political party break its spending limits. 
Dr JACKIE BLUE (National) 
: 
 I am proud—absolutely proud—to oppose this Draconian Electoral Finance Bill. This is a dark day for democracy; it is a black day. I attended those marches the two in Auckland and the one in Wellington and I can assure the Committee that the people in the marches were very concerned about the implications of this bill. There were many banners. There was a big banner saying “Democracy under threat”. Other banners said things like “I live in New Zealand not Zimbabwe” “New Zealanders should not be gagged” and “Labour—thieves of democracy”. Banners were held by war veterans that said “Our soldiers did not die for this”. 
I read the  
Hansard 
 record where the Rt Hon Winston Peters had made belittling remarks about members who stood up and affirmed those banners that said “Our soldiers did not die for this”. He has no regard for our soldiers and what they fought for. I say he insults their memory quite frankly. I am wearing my father’s medals from World War II during which he fought in the Middle East. I am really proud to wear them today. He was the first person to sign up in the South Island town he grew up in. He did not hesitate to fight for his country and for human rights. He would be insulted by and appalled at this bill if he were alive today. 
The Prime Minister and the small parties who support this bill have badly underestimated the depth of feeling out there in New Zealand. I say to those parties they have got it wrong—they have read the people wrongly. They have been blind and they cannot see how the bill has impacted on people. This bill has gone beyond the Wellington beltway; it is an issue all over New Zealand. With regard to the first march in Auckland when there were 2000 people the Prime Minister said that they were just ACT and National supporters. Two weeks later there was a march of 5000 people. What did the Prime Minister say about that? She said it was a relatively small number of troops. That was a patronising arrogant comment from the Prime Minister. Those 5000 people were not dragged out of their homes to come to the march. They were not coerced in any way; they got there under their own steam. There were children mums and dads. There were ordinary New Zealanders from all walks of life. Those people had never marched before. At the end of the protest involving 5000 people the marchers were asked to put up their hands if they had never protested before. Members should have seen the hands go up; they shot up in the air. Those people were not protesters; they were ordinary New Zealanders. 
This Government has been arrogant and dismissive of ordinary New Zealanders and it will pay the price for that at the election in 2008 mark my words. I say shame on Helen Clark and this arrogant Government which is so desperate to get a fourth term that it has come to this. The Government has spurned the advice of such organisations as the Law Society and the Human Rights Commission. It is ignoring the sentiment feeling and passion of New Zealanders. It is arrogant and dismissive of the depth of feeling against this bill. I will give Government members one piece of advice: this issue is registering way beyond the beltway. Those members will get the message loud and clear come election day in 2008. 
This is an anti-democratic bill. In a democracy people should be free to voice their opinions. They should be free to criticise the Government they should be free to criticise the Opposition and they should be free to put their point of view—that is a sign of a healthy democracy. This legislation will not allow them to do that. The media which is the traditional watchdog of public opinion distilling information and reporting it has come out in an unprecedented move. Editorials up and down the country are slamming this bill for what it is. If that does not give members on the other side a clear message I do not know what will. The people the press—everyone is against this bill. And all that the Prime Minister can do is to criticise the media—as she did recently at a journalism conference. There was a particular editorial in the  
New Zealand Herald 
 that said that if this bill is passed it will become Labour’s epitaph. That is true; come 2008 that will be the epitaph on Labour’s coffin. The Government will be out on its ear. The people will vote—they will vote with their feet their minds and their hearts and the Labour Government will be out. 
It is crazy that nobody understands this bill. Even the Minister of Justice does not understand it. She says the law of common sense will prevail. 
Jacqui Dean 
: What? 
Dr JACKIE BLUE 
: The law of common sense. We are told we need to talk to lawyers but I tell members that the only winners will be the lawyers. The loser will be democracy in New Zealand which will die. National has had very grave concerns right from day one about the process. 
ERIC ROY (National—Invercargill) 
: 
 I am compelled to take a call in what will be the final debate in the Committee stage on the Electoral Finance Bill on its title and commencement. I wish to make some comments on both. In regard to whether the title is appropriate my suggestion to the Committee would be that the title of the bill would more appropriately be the “We Will Find Another Way Bill”. 
The Labour members of this House—and to some extent the New Zealand First members—have been standing up and saying this is a principled argument and that they do not believe in having for example anonymous donations. But as one of my colleagues—I think it was Chester Borrows—pointed out significant amounts of anonymous donations were going into the Labour coffers going back over the various elections as far as we can see. Government members think the issue is not that we have anonymous donations; it is that National got more than they got. So therefore they said we needed to move to a State-funding model. Having not been able to get agreement to a State-funding model they then changed the rules so that Government expenditure kind of counts in an indirect way. 
A example from a little story may illustrate the point. You see George Bernard Shaw the playwright of Irish descent was dining with a notable lady of his time. During the course of the meal he said to her: “Will you sleep with me for £10000?”. The lady thought for some time and then said: “Yes.” Later on during the course of the evening he said to her: “Will you sleep with me for £5?”. Her response was: “Goodness me! What do you think I am?”. He said: “We’ve already established what you are and we are now bargaining.” 
I say there is a parallel exactly with what Labour has done here. It does not believe in anonymous donations but it has found another way and it will use the Parliamentary Service money to endorse its members as candidates. I say there is no principle in that for which those members can hold up their hands. Labour at the last election—and we have had plenty of examples of this—broke the rules and it continued to break the rules even after the Auditor-General warned it that what was happening was indeed outside the spectrum of what was allowed. What did we get after that? We got some kind of retrospective fix-it-up. So again we have the “We Will Find Another Way Bill”. If Labour could not change the rules retrospectively it is to change them right now so that Government members can find another way to use resources in order to endorse themselves. 
I now make a comment about the commencement date. A number of submitters have said that this bill is not easily understood and that they do not know what its implications are. If we move on from the Committee stage without changing that commencement date and pass this bill we are locking ourselves into a starting date after the bill gets the Royal assent and that will be pretty close to immediately in the new year—maybe on 1 January. If we do that we will be starting with a set of rules at a time when Parliament is not sitting and when it is impossible to discern exactly what some of the provisions actually mean. We have given examples of those provisions asking what this clause or that clause means and we still do not know what those clauses mean. Yet we will be starting to work with legislation that is seriously flawed in interpretation and flawed in clarifying exactly what the rules are. 
So there needs to be a shift in terms of the commencement date. If we do nothing else we need to set the date back so that we have time to get some discernment and clarification. It is all very fine for the Minister to say we will come up with an explanation later determine matters later or do whatever else he may say. But we are actually entering an election year and we need to know whether our behaviour our expenditure and the way that we conduct ourselves are captured—we need to know what is inside or outside the rules. To start the commencement of this bill immediately on 1 January 2008 because that is an election year would bring a great deal of litigation I suggest throughout the whole process of the election. It can have no other outcome because there is such a lack of understanding of this legislation. Parts of it are completely incomprehensible. 
ALLAN PEACHEY (National—Tamaki) 
: 
 I was particularly anxious after days of trying to get a call on the Committee stage of the Electoral Finance Bill because I want it recorded for all time in the annals of this House that I am one of those members who spoke against and voted against this attack on the democratic tradition of this country—and that is what this bill is. I ask the members opposite—the Labour members and the members of Labour’s coalition partners—to lift up their heads and listen to what is being said in this House and in this country. 
I will focus just for a moment on the commencement date of the bill. What is the rush? No sound democracy rushes this sort of change through its legislative process. If the Government is determined to pass this bill then what does it matter if it is delayed a little while in order to give New Zealanders a little bit more time to pause and reflect on it? 
Goodness gracious me! The United States Constitution—that brilliant document of democracy—was not rushed through almost in the quiet of the night by a desperate Government and its coalition partners. I have a message for those coalition partners. I say to those members of New Zealand First the Greens and United Future that they should understand very very clearly. This bill is progressing through this Parliament only because those members are voting for it. If it were not for the minor parties voting for this legislation then it would not be passing through this Committee at the moment. 
We know that it is part of the New Zealand tradition that on major matters of such significance the big parties talk and thrash it out. The reason the Government is not being required to thrash it out with the National Party is that the Government is calling on the votes of minor parties—[ 
Interruption 
] There he goes: the list member from New Zealand First. What is his name? Mr Woolerton is screeching and shouting and screeching and shouting instead of just stepping back and thinking about the harm he is doing to the electoral future of his party by supporting this socialist Government on legislation that undermines the democratic traditions of this country. 
In rushing the commencement date of this legislation what does the Labour Government and the screeching member from New Zealand First not understand? Let me tell members what Government members’ problem is. Their problem is that they are control freaks. They want to get control of every aspect of New Zealand life and they could never do that more effectively than by taking control of a nation’s democratic processes and using them in a way that brings them absolutely no credit at all. It brings no credit at all to the Government no credit at all to New Zealand First and no credit at all to the Green Party. It staggers me that representatives of small parties have been prepared to stand up in this Chamber and advance arguments that do no credit to them at all. 
New Zealand is paying a high price for the Labour Government’s need to control and dominate every aspect of New Zealand life. When will Labour members understand that just because things in a democratic process do not go their way and just because New Zealanders stand up and demand to be heard it need not be the case that it somehow becomes legitimate in their minds for them to use their majority—slim as it is—in this Chamber to undermine the democratic traditions of this country? 
R Doug Woolerton 
: What a load of hokum! 
ALLAN PEACHEY 
: Oh there he goes again—the boring member from New Zealand First. 
CHRIS AUCHINVOLE (National) 
: 
 What we have here is desperate attempt to litigate the last election not the next election. It is a desperate attempt to re-litigate the last election in 2005. We could almost call this the “Look Back in Anger Bill” because that is what Labour is doing. Those members are looking back in anger. Let us see the constructs of this bill. What was it that inspired it? Well there were technicalities that needed correction. I do not think that anybody has disputed that. Doing that is a good idea. It is a good idea but there is a mind in Labour—and I do not think that mind is present in the House—that thought: “Let us use this to some advantage. Let us leverage on it.” What was it that really hurt those members in the last election? Let us think about that. It was the early demonstration of National’s hoardings. “We are not having those again.” said the mind. “How can we stop it?” asked the others. The mind said: “Bring the date forward. They have that in England. Bring it to the beginning of the year. That will stop National’s hoardings which did us so much harm.” So we have an early programme and an early date. It is borrowed legislation. The trouble with borrowed legislation is that it fits only where it hits. 
If we look at the English situation with due respect to Labour it does not seem to be working over there because I believe there have been fingers in the till in spite of that Government’s having policy that Labour thinks is so suitable for us. I would suggest that it was not the genesis of the parliamentary wing of Labour that developed this. 
R Doug Woolerton 
: Who did it? 
CHRIS AUCHINVOLE 
: Well the mind is somewhere in there but also it started to get clever. Again we look at the constructs. The mind said: “Let us ask the Greens to help us. If we have enough of a majority then we do not have to involve bipartisan discussion.” What position were the Greens in after the last election? Someone a dogma-driven idealist-structured and single-minded group of people had produced a pamphlet—a pamphlet; how dreadful! So that must be stopped and these groups must be stopped. The Greens were happy fodder for the clever clever constructs. One could say that they were sucked in. What inspired them to do that? I guess it is a case of recognising in others that which one sees in oneself because if we were to ask which party in Parliament was principally dogma-driven idealist-structured and single-minded then I think the Green Party would qualify for those meritorious points. Those members saw in others that which must be stopped because they know it works against them. 
New Zealand First with its vociferous spokesman on this issue— 
Hon Member 
: Squawking. 
CHRIS AUCHINVOLE 
: No I would not call him squawking; he is vociferous. I am put in mind of some of those geographic films on television about the animals where the main contestants are fighting away and there is always someone lurking around the edges waiting for some advantage. That is what I am reminded of with New Zealand First members. And United Future members will simply wait and see although I understand they said that they would not support this legislation in the event of urgency being used. 
Let us spend a minute looking at the process. I sat through I think the majority of the Justice and Electoral Committee meetings and I would suggest the process could be described as a shameful sham. Lynne Pillay who is in every other respect a pleasant person was the same every day—she had nothing intelligent or constructive to say. She used to say: “It has been decided. The Greens have agreed.” and when we considered discussion she said we had no need. I have heard her say in this Chamber in response to one of the remarks made by my colleague Mr Finlayson that there was very little considered discussion on this bill. She said that Labour had the majority—in other words ipso facto there was no need for discussion. I thought this was supposed to be a Parliament. That is what I came here for: a discussion for consideration. 
CHRISTOPHER FINLAYSON (National) 
: 
 I want to speak to clause 1 “Title” and I suggest that a better name for the Electoral Finance Bill would be the “Let’s Shoot Ourselves in the Foot Bill”. I was talking to a lefty friend of mine—not being tribal like members of the Labour Party I have lots of lefty friends; poor misguided souls that they are—and this person was telling me about all the campaigns in which he was involved in past years. He was involved in Save Manapouri. He was involved in anti - Viet Nam War campaigns. He was involved in anti - Springbok Tour campaigns. He was involved in antinuclear campaigns. 
Chris Auchinvole 
: He was a serial protester. 
CHRISTOPHER FINLAYSON 
: He was a good friend of Mr Hughes. The point made by him and I think a very good point was that this could not happen in 2008—a person could not run a campaign like Save Manapouri in 2008. 
I ask Mr Duynhoven to take a good look at clause 5(1)(a)(ii) because it does not talk explicitly about political parties but it talks about “a type of party or … type of candidate that is described or indicated by reference to views positions or policies that are or are not held … (whether or not the name of a party or the name of a candidate is stated);”. This is one of the big misconceptions on the part of the Labour Party and its support parties when dealing with this legislation. Indeed there was a very interesting answer given by Mr Dunne the member for Ohariu-Belmont to a person who posted something on a United Future website a few days ago. This person said: “If the opinion can be seen as encouraging or persuading people to support or not support a party or candidate or class of party or candidate it will be limited. If you want to run a campaign which says ‘Support parties which support Kyoto’ then that is captured.” Mr Dunne responded by saying that was wrong. He said to this fellow who was called Dave: “To be caught a group has to be spending more than $120000 in support of a particular party”. Mr Dunne like the Labour Party members and like Mr Woolerton has not taken a good close look at clause 5(1)(a)(ii). If those people had they would have seen that my lefty friend was right and that it would not be possible to run a “Save Manapouri” or anti - Viet Nam War campaign in 2008 under the Electoral Finance Act 2007 because it will prevent that kind of argument. 
The second point I make is a very interesting point which has been raised by MetiriaTurei—and I think she is too concerned and I do not think it is a problem—relating to the amendment to clause 2 which states that the Act shall come into force on 1 April. I listened very carefully to what that member said because obviously there are implications for the definition of “regulated period”—and I particularly refer to subparagraph (a)(i) of that term in clause 4 because there are a number of periods that are specified in that clause. It seems to me that if the Act comes into force on 1 April there are a number of options. Either the regulated period is going to be the period that commences 3 months before polling day and ends with the close of polling day—a proposition that would not please MetiriaTurei one little bit—or one would give a purposive interpretation to subparagraph (a)(i) and say that if the Act comes into force on 1 April in order to make sense of the definition of “regulated period” the regulated period shall be the longer of the following periods: either the period that commences on 1 April or the 3-month period. The other option if one wanted to be clear beyond peradventure would be to seek leave so that the House could debate the definition of “regulated period” again. But I do not believe that any judge would have a problem with that particular definition and I think MetiriaTurei makes a mountain out of a molehill. 
Finally let me say I am delighted that Mr Hughes is so strongly in favour of some controls on anonymity because I have just checked the amount of anonymous donations he received in the 2005 general election. 
Chris Auchinvole 
: How much? 
CHRISTOPHER FINLAYSON 
: $13821.78. 
CHARLES CHAUVEL (Labour) 
: 
 I move  
That the question be now put 
. 
NATHAN GUY (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. 
The CHAIRPERSON (H V Ross Robertson) 
: I am prepared to take a point of order only if it is to do with the reason why the motion should not be put. 
NATHAN GUY 
: I was calling just before you put the vote. We are talking specifically about the title and we have members here who have been seeking a call over the last week. I ask you to consider Standing Order 137(3) on whether you consider it reasonable for the closure motion to be put. This is an important bill. We know it is very contentious and members on this side of the Chamber wish to raise some very important points around the specifics of the title. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member for the contribution that he has made. I have listened considerably to this debate. I suggest that the member look at Speakers’ rulings 73/1-3 and Speaker’s ruling 73/3 by the Hon Doug Kidd in 1998 in particular. I therefore put the question. 
A party vote was called for on the question  
That the question be now put. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1. 
Noes 56 
New Zealand National 48; Maori Party 4; ACT New Zealand 2; Independents: Copeland Field. 
Motion agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 166 in the name of Christopher Finlayson to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 56 
New Zealand National 48; Maori Party 4; ACT New Zealand 2; Independents: Copeland Field. 
Noes 65 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1. 
Noes 56 
New Zealand National 48; Maori Party 4; ACT New Zealand 2; Independents: Copeland Field. 
Clause 1 agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1. 
Noes 56 
New Zealand National 48; Maori Party 4; ACT New Zealand 2; Independents: Copeland Field. 
Clause 2 agreed to. 
Hon ANNETTE KING (Minister of Justice) 
: 
 I move  
That the Committee divide the bill into the Electoral Finance Bill the Broadcasting Amendment Bill (No 3) and the Electoral Amendment Bill  
divided into Electoral Finance Bill Broadcasting Amendment Bill Electoral Amendment Bill  
pursuant to Supplementary Order Paper 164 
. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1. 
Noes 56 
New Zealand National 48; Maori Party 4; ACT New Zealand 2; Independents: Copeland Field. 
Motion agreed to. 
Urgency 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That urgency be accorded the third reading of the Education (Tertiary Reforms) Amendment Bill; the passing through their remaining stages of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill and the Dairy Industry Restructuring Amendment Bill (No 2) and any bills into which those bills may be divided; and the first readings of the Climate Change (Emissions Trading and Renewable) Preference Bill the Real Estate Agents Bill the Reserve Bank of New Zealand Amendment Bill (No 3) the Public Health Bill the Waka Umanga (Maori Corporations) Bill the Affordable Housing: Enabling Territorial Authorities Bill the Dog Control Amendment Bill (No 2) the Companies (Minority Buy-out Rights) Amendment Bill the Mauao Historic Reserve Vesting Bill the Injury Prevention Rehabilitation and Compensation Amendment Bill (No 2) the Maori Purposes Bill (No 2) the Electricity Industry Reform Amendment Bill the Customs and Excise Amendment Bill (No 3) and the Financial Service Providers (Registration and Dispute Resolution) Bill.  
This motion is moved so that the Government can complete its legislative programme for the year by the end of this week except for the third reading of the Electoral Finance Bill and the adjournment motion incorporating the timetable for next year. 
A party vote was called for on the question  
That urgency be accorded. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1; Independent: Field;. 
Noes 55 
New Zealand National 48; Maori Party 4; ACT New Zealand 2; Independent: Copeland. 
Motion agreed to. 
Education (Tertiary Reforms) Amendment Bill 
Third Reading 
Hon MARYAN STREET (Associate Minister for Tertiary Education) 
 on behalf of the  
Minister for Tertiary Education 
: I move  
That the Education (Tertiary Reforms) Amendment Bill be now read a third time 
. This bill gives legal effect to the Government’s reform of the system for planning funding and monitoring tertiary education. The objectives of the reforms are to support the Government’s focus on quality relevance and value for money in the tertiary education system in order to ensure that the system contributes to the country’s social economic and environmental needs. 
The bill aims to streamline the system for funding tertiary education by providing a set of key planning instruments for steering the tertiary education system. The set of instruments includes first a single tertiary education strategy setting out the long-term strategy and current to medium term priorities for tertiary education which replaces the tertiary education strategy and the statement of tertiary education priorities; second investment guidance published by the Tertiary Education Commission which replaces charters and profiles; and third a 3-year plan prepared by tertiary education organisations in consultation with their stakeholders which is aligned with national and regional priorities and will form the basis of funding decisions made by the Tertiary Education Commission. The new process will lead to reduced compliance costs for tertiary education organisations. 
The Tertiary Education Commission will play a key role in ensuring the success of the reforms. The commission will work with tertiary education organisations to develop plans and ensure that the qualifications that are funded are relevant to students and stakeholders. Investing in a plan will ensure that the tertiary education system delivers the skilled graduates we need to secure a prosperous economic future for New Zealand. 
The tertiary education sector has acknowledged that change is needed. This came through in the consultation process and in submissions to the Education and Science Committee. It is clear that the system of demand-driven funding although contributing to increases in participation in tertiary education is not the most appropriate way of supporting tertiary education’s contribution to national goals. Taking a strategic approach to the funding of tertiary education by funding quality over quantity will support the Government’s objectives for a broad and inclusive tertiary education system while at the same time ensuring that the long-term needs of stakeholders are met. 
The new investment system will also safeguard taxpayers’ contribution to tertiary education. This is because instead of funding tertiary education organisations simply on the basis of enrolments the Government will be making wiser and more considered decisions on how taxpayers’ money is invested. The changes introduced by the bill will therefore lead to greater returns on the Government’s investment in tertiary education and will increase public confidence in the tertiary education system. 
The investment system emphasises collaboration rather than competition through a differentiated but complementary network of provision. This means that instead of competing for enrolments organisations will be collaborating and building on each other’s strengths as they work towards meeting national goals. They will also work in concert with industry to ensure that the needs to stakeholders are met. It is expected that taking a collaborative approach will contribute to greater outcomes from the Government’s investment in tertiary education. 
Through better more strategic longer term and collaborative planning involving organisations stakeholders and the Tertiary Education Commission this bill will be a boon to everyone involved in the tertiary education sector. The flow-on benefits of this new planning funding and monitoring regime will be widely felt. It will bring certainty to everyone with a stake in our tertiary education system—certainty to students about their course of study certainty to organisations about security of funding certainty for the public about the coherence and quality of our tertiary system and certainty for Government in its funding and monitoring roles. 
As we near the final stages of the passage of this bill I take this opportunity to again express my own and the Minister for Tertiary Education’s appreciation to the members of the Education and Science Committee for their role in this process. I look forward to the bill passing into law to enable the reforms to be introduced on 1 January 2008. I commend the bill to the House. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I am grateful for the opportunity to speak on the third reading of the very important Education (Tertiary Reforms) Amendment Bill. The bill is very important because there is no doubt that tertiary education is pivotal to the future of New Zealand. It is pivotal to driving economic growth and to improving our productivity which is something that has been absolutely stalled under this Labour Government over the last 8 years. 
It is interesting that this Government has said that this bill is about achieving high trust low compliance relevance quality and value for money. Nobody would disagree with those sentiments but we have seen even before this bill has been implemented the very opposite. We have seen a model that has demonstrated an ever-growing creeping bureaucracy and jackboot-like central control. That is exactly what has been going on. 
Twenty-three submissions were received on this bill and the major issues arising were those of academic freedom institutional autonomy and the removal of charters and profiles—something the Hon Steve Maharey said in 2002 would be the ultimate achievement of tertiary reforms. How wrong that has proven to be because he is doing away with them and instead bringing in these so-called investment plans. 
The other important issues were procedural fairness—something that is clearly somewhat foreign to this Labour Government—the treatment of sensitive information and adult community education issues. I want to give just two examples of when this Labour Government has shown low trust and poor management and has rewarded failure and punished success. 
There could be many many more examples than the two I am going to give but I want to start firstly with the headline from the  
Independent Financial Review 
 “Foul-up costs unis millions”. The article states: “Tertiary institutes face paying millions in top-up fees next year because of an ill-timed government policy which caps funds and threatens penalties on those that grow.” So much for high trust! The article continues: “Auckland University’s vice-chancellor Stuart McCutcheon says it will have a short-fall of millions because of funding cuts an increase in the student achievement component and a cap on fees.” It goes on to state “the timing of TEC’s investment plan meant it came too late to limit student numbers for next year.” So much for good management! In fact this is abysmally poor management. 
Here in Wellington at Victoria University Chief Financial Officer Wayne Morgan said: “There have been threats of financial penalties from TEC if student numbers exceed the new quota.” There we see bullying and poor management. 
The second example is that of the Southern Institute of Technology which is an institute that has done remarkably well in showing lateral thinking innovation quality relevance and value for money. It is the only tertiary institution in this country that by stint of innovation and hard work provides a policy of having no student fees. But that is at risk. Why? Because the Tertiary Education Commission plans to take $8 million from this good-performing institution and with this money prop up institutions that are failing. That might help pay for the $2000 a day that is going to the Crown controller at the Western Institute of Technology or the $2600 a day going to one of the accountants who is helping there. So there is another example of where this Labour Government is punishing success and rewarding those who do not do well. 
It is almost unbelievable the way this central-control model is behaving. First of all the Government has started on the polytechs; next will it go to the universities? Who knows! Will the new Vice-Chancellor of Massey University Steve Maharey be told that the Government does not believe in regionalism and that it will remove Massey University from the North Shore of Auckland so the university will have to retreat to Palmerston North? Is that the sort of headache the Government is going to put on Steve Maharey? Let us wait and see. 
We know that the Government just does not understand the concept that quality and value for money should underlie an efficient effective system—no matter who the provider is. Even though I was prepared to help this Government and provide it with a well-thought-out Supplementary Order Paper it ignored those constructive suggestions. That makes me wonder why the new Minister for Tertiary Education the Hon Peter Hodgson failed to be present at the second reading stage of this bill a bill that he claimed in this House was critical for tertiary education. He just did not turn up. 
Hon Maryan Street 
: The Assistant Minister was there. 
Dr PAUL HUTCHISON 
: The only person who turned up was the Hon Maryan Street and I must admit she made a valuable contribution. But no one else from the Labour-led Government made any contribution whatsoever. 
Hon Marian Hobbs 
: Excuse me! I was on the select committee the entire time. 
Dr PAUL HUTCHISON 
: Maybe apart from a minor contribution from Marian Hobbs Labour just wanted to get on with it and ram through this bill. The succession planning to carry this bill through has been abysmal and appalling. Firstly we had the resignation of the Chair of the Tertiary Education Commission Russell Marshall; secondly the Chief Executive Officer of the Tertiary Education Commission Janice Shiner is off to the UK next year; and thirdly there is the reshuffling of the deckchairs by Helen Clark. Steve Maharey’s huge mistakes had to be fixed up so she wheeled in Dr Michael Cullen and now we have the Hon Pete Hodgson the man who presided over the $5 billion increases in funding for the health system even though we saw no increase in surgery whatsoever. 
In this third reading debate it is important to emphasise again just how arrogant and out of touch this Labour Government has become. It was the New Zealand vice-chancellors who said that in no other Western democracy has the State sought this degree of control over a university’s teaching and research. The vice-chancellors would not have made those statements without a great deal of thought. It was Dr Cullen who belittled their submission and said: “No. Universities have for at least 40 years in my personal experience been complaining that academic freedom is under threat and that they are losing autonomy.” 
So it has been with considerable relief that finally the Labour Government was shamed—absolutely shamed—into changing this bill so that academic freedom and autonomy would remain. It gives us a great degree of satisfaction because undoubtedly this shows— 
Colin King 
: It came at the eleventh hour. 
Dr PAUL HUTCHISON 
: It did come at the eleventh hour. It was a victory for the select committee process. It was a victory for the submitters. It was a victory for the National Party. And it was an absolute indictment on this tawdry Labour Government which has become so out of touch tired and worn out. 
The tertiary education system needs stabilising and simplifying but Labour has provided the very opposite. As Professor McCutcheon said we have moved quickly from an open system to a closed system. There is no doubt that up until now the new Minister for Tertiary Education Pete Hodgson has been too afraid to show himself. The task of the next National Government will be to sort out the mess the Labour Government has left behind. 
Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 Sometimes when I hear the member Paul Hutchison—who has just resumed his seat—speak on tertiary education I have the feeling that he is interested only in personalities whether it be the chair of the Tertiary Education Commission or the wonderful Janice Shiner who has spent 4 very productive years in New Zealand. He does not talk about policy nor does he talk about the system which this bill will ensure is improved and lasts regardless of the personalities of Ministers heads of departments or heads of commissions. 
The other fallacy that that man always brings up is the fallacy around academic freedom. Academic freedom was never challenged in this legislation for the reason that this bill is an amendment bill. It amends the Education Act 1989 and academic freedom is spelt out in a section of the Education Act. People got so nervous about this issue that we restated the definition of academic freedom in this amendment bill. It is rather tautologous; it is in the amendment bill and it is in the Act that this bill amends. It is in there twice. 
I rise to support the third reading of the Education (Tertiary Reforms) Amendment Bill. Earlier speeches on the bill have outlined many of the improvements to the tertiary education sector that will be enacted through the legislation. In particular we have heard that the bill initiates a set of more streamlined steering instruments than previously existed to assist the Tertiary Education Commission to invest specifically in the Government’s and the country’s priorities and to respond to key stakeholder interests. 
Do we need more engineers? Are we short of scientists? Do we need to invest there or do we need to keep on producing lawyers for the National Party? 
Sue Moroney 
: Not just for the National Party. 
Hon MARIAN HOBBS 
: I have just realised that I say to my colleague. I am very very sorry. I just skipped blissfully over that. There are certain lawyers who are absolutely wonderful; there are others whom we have an abundance of. 
This approach will assist tertiary education organisations to realise Government expectations for the funding they receive while also allowing greater certainty for those organisations due to the Government’s commitment to finding its priorities over a longer term. I will say that again. For too long tertiary organisations have had a 1-year funding window. This bill gives 3 years. In short the funding for and the outcomes sought from tertiary education will be more firmly geared towards achieving strategic benefit for all New Zealanders. As the Minister for Tertiary Education has expressed in his speech this new approach towards investing in tertiary education provision will enable a high-performing tertiary education sector one that is vital for our country. 
In the joined-up tertiary education system we have in this country a high-performing sector is one that meets the needs of all New Zealanders regardless of the type of education they engage in. I would suggest that the joined-up nature of the tertiary education sector is one of the sector’s major strengths. Rather than elevating particular levels or forms of study above others we have a system that encompasses industry training post-graduate university study adult and community education—which is often the way people re-enter training—and other areas of study. All these areas of provision provide benefits for this country and its people and they will be enhanced by the bill providing for more considered planning across the tertiary sector. I give members an example. I often hear people complain about how our workforce is not able to be as productive as one would like it to be. One of the reasons for that is the high level of inability in reading and in mathematics—literacy and numeracy. This factor is as much a part of this tertiary planning as the need for scientists or accountants is. 
The bill will facilitate the distinctive contribution of all areas of tertiary education provisions partly by requiring that tertiary education organisations work closely with stakeholders to ascertain their needs and to respond to those needs through the plans proposed to and approved by the commission. The collaborative aspect—not a competitive one for a change—put in place by this change will lead to a step change in the responsiveness of organisations to those with the most interest in the kinds of teaching and research available. It is exciting to know that the link between investment plans Government long-term strategy and medium-term tertiary priorities will mean that each part of the tertiary sector can be confident of the role it has to play in achieving those priorities. 
The move towards an outcome-focused system will also enhance the confidence of sub-sectors such as the polytechs which play an extraordinary part and role here. They are not something to be run down and neglected as is portrayed. They are vital. They found the demand-driven system problematic with the competitiveness and uncertainty that came with it which had polytechs trying to poach from other polytechs up and down the country. Instead they are for example able to serve the needs of the energy industry in New Plymouth and do not have to make up strange courses in order to get the numbers. That was a system that was put in place by the National Party. It was “bums on seats”. 
Dr Paul Hutchison 
: It was Maharey. 
Hon MARIAN HOBBS 
: No I am sorry. It was absolutely “bums on seats” and it was particularly led by Lockwood Smith. I remember it very clearly as a member of the education movement. 
A statement of the Government’s long-term strategy and medium-term priorities will be essential in helping the sector plan for the future. It provides a transparency and a clarity that will let tertiary organisations see what the system as a whole needs to provide and what role they play in the fulfilment of that whole. I am also confident that the changes proposed by the bill around quality assurance of adult and community education will solidify a far better approach to approving the course offered by these providers. I would find it very strange if the Opposition disagreed with that given the noise it created on these issues some years ago. These changes recognise that many of these providers do not have the critical mass of established tertiary education institutions to deal with undue levels of scrutiny and compliance. 
This bill is a comprehensive bill that does not improve planning just for universities or wananga or industry training; it is a bill that works to improve planning across the whole tertiary education sector. It means that individual tertiary organisations can plan better but it also means that we can plan better across the whole tertiary education sector. It is not about just making sure that Victoria University or the Southern Institute of Technology continues to meet society’s needs; it is about the whole sector. It is not about competition; it is about collaboration. In that way it is efficient; it saves us money and resources that otherwise could be spent in a most frivolous way. 
Finally I would like to emphasise that this bill will act as a significant enabler of stakeholder-driven change which in itself will lead to better investment of Government funding. This approach is not top-down. [ 
Interruption 
] This approach is very much—as that member would know if he knew anything about the adult and community education sector—from the bottom up. 
Furthermore the explicit connection between investment and meeting Government priorities through plans reinforces the particular relevance of each sub-sector of the tertiary education system so that all students—wherever they are—can be confident that they are entering study that is worthwhile for themselves and for New Zealand and that they will have jobs. 
ALLAN PEACHEY (National—Tamaki) 
: 
 I appreciate the opportunity to express the opposition of the National Party to the passage of the Education (Tertiary Reforms) Amendment Bill. I have been sitting here thinking about what sort of contextual framework this bill needs to be put in. It has not been lost on me that just half an hour ago I was speaking against the Electoral Finance Bill and talking about the defence of democracy in New Zealand. Now just half an hour or so later speaking on this bill something is right at the forefront of my mind and it is this. Just as a socialist Government is seeking to control the democratic processes of this country and is using its numbers in this House to drive through legislation so we have this same Government that clearly understands one thing. One of the features of all socialist society is that control of the vitally important educational establishment is paramount. This bit of legislation seeks to extend that control—Government control—over the lives of New Zealanders and our institutions. 
It should not be lost on New Zealanders listening to the debate this afternoon and watching it on television that when the Associate Minister got up and spoke the words that rolled off her tongue were “plan” and “monitor”. It took me back to the Committee stage when the Associate Minister—new as she was to her role then—was in the chair and every second word was “plan” “plan”. Then the word “commissariat” was thrown into the conversation. What great socialist terms they are: “commissariat” and “control”. When those members have their private meetings and caucuses and they are talking about this sort of stuff I wonder whether they call each other comrade and refer to themselves as the commissariat of New Zealand—not the Labour Party but the commissariat of New Zealand. 
We need to reflect very very carefully about what some of the most intelligent well-educated people in New Zealand—the vice-chancellors of the universities—had to say to the Education and Science Committee about this proposed legislation. The Minister in her speech made a lot of the role of the Tertiary Education Commission. It seems to me that where the Government wants control plan control and plan we should really be trying to create the environment in which the tertiary education sector—in particular the universities—can actually achieve the best for New Zealand. When I look at this legislation— 
Hon Maryan Street 
: Ah! 
ALLAN PEACHEY 
: Oh the Associate Minister can sigh but National knows that in 12 months’ time we are going to be cleaning this mess up. When one thinks about the message that the vice-chancellors gave us about academic freedom and about the autonomy of their institutions one needs to ask oneself a couple of questions. Whatever happened to the days when tertiary education in this country was run by half a dozen men and women meeting occasionally around the table in Wellington? Now we have multimillion dollar bureaucracies. How does this legislation this massive expansion of bureaucracy and the environment of control plans commissars and commissariats produce the world-class universities that New Zealand will need if it is to survive as a prosperous modern market economy in the world? How will this bureaucracy and these plans produce that? It will not. The reason it will not is that the Government is so obsessed with control that it does not understand how one creates environments to get the best out of people. 
The other question I have is how this massive expansion of bureaucracy and control will produce the higher quality research-led teaching that our students need if they are going to be competitive in the world. It seems to me that they should be the two significant objectives of any legislation on tertiary education in this country. Not about control—[ 
Interruption 
] Can I just say to those members opposite that if the Leader of the House wanted to come in and hear what I had to say he would have been here to hear it. He actually does not need that member to give him a garbled version so I suggest that member just reflect and think about some of the things I am saying. The great challenge in tertiary education in New Zealand is not how it is controlled—not which Government can create the biggest bureaucracy expand the Tertiary Education Commission the most and cut back on the ability of universities and polytechs to make good decisions—it is the interface between the economic development of this country the quality of its social fabric research and development and learning. I do not see anything in this legislation that pulls all those things together and in any way lets us see ahead. 
What I see in this legislation is an attempt by a Minister to clean up a mess foisted on this country by a previous Minister. It has to be of concern to New Zealanders that twice in 8 years this House is debating and passing this sort of legislation. This Government did not get it right the first time. If New Zealanders reflect back to the environment of 2000-01 when the Government thought it knew everything and off it went and rushed into it they will see we now have to clean it up. The tragedy is that this is not a clean-up; this is an extension of Government control where Government control is not needed because nothing in this legislation strengthens the autonomy of our universities. Nothing in this legislation protects and extends academic freedom. It is about plan and control. It does not address the issues of the interface between research-led teaching and the economic development of this country. 
Like so much socialist legislation that has been passed in this country this bill when it is passed will have an unintended consequence. Universities beginning with Auckland are saying that as a result of this legislation open entry will come to an end. Now I am one of those people who happens to believe that New Zealand needs an outstanding restricted entry world-class university that attracts the best intellectuals in the world to this country. I do not think it was the Government’s intention to create an environment in which entry to university will be closed off. It is interesting is it not that those Government members opposite may be responsible for creating an environment in which New Zealanders lose free entry to university. That stigma will stay with the Government for a long time. 
KATHERINE RICH (National) 
: 
 I too am glad to speak in this third reading debate on the Education (Tertiary Reforms) Amendment Bill. It was very interesting to hear some of the speeches on this subject from members opposite because many of them fell into the same kind of pattern—the same kind of jargon—and they basically went along the lines of “Blah blah stakeholder engagement. Blah blah transparency.” Marian Hobbs was a fine one. She talked about stakeholder-driven change and she said that this was not top down but bottom up. I sat there and thought that if anybody criticises the education sector for its own jargon and meaningless bumf he or she should have listened to that speech because it had all the categories and all the words but it did not actually mean anything. 
One of the things we find with the whole tertiary reform debate is that there is a lot of high-level discussion but if we distil it down it does not make a lot of common sense. That was certainly something that Paul Hutchison and I found as we were part of a presentation about what the changes might be. After about an hour and a half of worthy and earnest questions on our part we were struggling to understand exactly what the impact would be for certain tertiary organisations. Finally my colleague Paul Hutchison said: “Look just give us one example. What difference will this bill make to Auckland University?”. After some “ums” and “ahs” the officials with whom we were discussing this said: “Oh actually it is not going to make terribly much difference to Auckland University.” So after all this there is no difference. How can that be when we saw on television last night that Auckland University is now moving away from open entry with some of its courses? 
Hon Dr Michael Cullen 
: They have been planning this for about 5 years! 
KATHERINE RICH 
: Dr Cullen is exercised by my bringing this up. The Labour Party which purports to be the party of the workers is now being accused of shutting out students from disadvantaged backgrounds and creating an elitist institution. This is one of the examples that we will see more and more of whereby some institutions say they will limit the number of people coming into their courses because they will not offer spaces for students for whom they receive no funding. These institutions will understandably offer courses if they are funded for them but if they are not why would they bother? Why would they offer spaces for the benefit of the community if they are not funded to offer them? 
Sue Moroney 
: What’s National’s policy? 
KATHERINE RICH 
: As usual Sue Moroney is chipping in with her inane little utterances. She does not have a blind clue what difference this will make to tertiary reform but she will focus her mind when the likes of her local university says: “We’re cutting this course that course and we’re not going to offer spaces for courses that young people want.” 
It is the same for certain sectors. We spend a lot of time talking about other aspects of education. At the moment the early childhood sector is crying out for trained early childhood teachers. This is another area where the Tertiary Education Commission will ensure that there are fewer spaces than there have been in the past. 
One of the other points made by the Hon Marian Hobbs was that this legislation will move tertiary providers away from competition. Competition is not actually a bad thing. If members opposite think that students do not understand what competition is then they do not understand the students they are hoping to improve the tertiary sector for. Students know exactly which courses are quality courses. Students will often travel to work or study with someone with a particular area of expertise or with someone who has a PhD or has carried out research in a certain area. 
Sue Moroney 
: And then be disappointed. 
KATHERINE RICH 
: Sue Moroney says that students will be very disappointed if they travel to work with specific people. What kind of comment is that to make? How would it be for our hard-working professors researchers and people who are internationally renowned to know that some little minion on that side of the House thinks that their skills training and research amount to nothing and that they are interchangeable like cans of baked beans because they are all the same? 
On this side of the House we believe that the tertiary sector is about quality. It is about having skills in a certain area and it is about an understanding of that quality and competition. People will travel to study in certain areas and that is one way of ensuring that we have an excellent offering in our polytechs and tertiary providers. 
The Hon Marian Hobbs also said that we are moving away from a “bums on seats” mentality. I find that interesting. Which Government was it that put all the bums on the seats for the radio sing-along courses or the bums on the seats for the pendulum swinging for beginners classes? Pendulum swinging for beginners may have been big in Sue Moroney’s area but I would like to hear her take a call and explain how that particular course contributed to the Government’s overall goal of economic transformation because on this side of the House we cannot see how that kind of course contributed to that goal. Neither can we see how twilight golf or some of those other shonky courses which apparently were moving away from a “bums on seats” mentality to some other method of applying funds contributed to that goal. 
The big buzz word is of course “transparency”. As Dr Cullen knows our universities in particular have a long history of transparency and quality and they do not need this particular bill to be able to offer that. Certainly when it comes to introducing a streamlined approach and less bureaucracy I think that those who are involved in the sector will be desperately disappointed. One of the things that this bill introduces is more bureaucracy. There is a requirement to do more planning to put together more documents and to undertake more stakeholder engagement whatever that means. From listening to members opposite stakeholder engagement seems to involve hanging out with anybody talking about anything—preferably if there is food there. But in terms of the enhancement of the process we cannot see how that will have an impact on tertiary provision in this country. 
National is looking at how we get better results out of the investment we make as a country. We still have to allow students to make the decisions they need to make to invest in themselves and to do courses that reflect their interests. We are concerned about some of the impacts of this bill and about what will change within some regional areas. We have already seen some discussions come to the surface in Southland—certainly in Otago—and last night in Auckland. We will see more of those stories. There will be more students who are not able to do the courses they want to as the rubber hits the road with this kind of reform. 
Here we are 8 years down the track and the reforms are being put in place now. Eight years down the track! The Government has spent over $400 million to get this far and it has very little to show for it apart from a big stack of glossy brochures about so high a big bill as a result of stakeholder engagement and a number of offices that have been opened and closed as the Tertiary Education Commission decides what is fit for purpose and what kind of organisation it will be. We have certainly seen a large number of bureaucrats added to the public purse. We have gone from an organisation that had no staff to one that has well over 300 and certainly most of us are trying to work out exactly what value they add to this process. 
In terms of reforms the jury is out about whether it will make a positive difference. National thinks it will make a negative difference as a lot of this rhetoric does not transfer into change that is good for students. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
KEITH LOCKE (Green) 
: 
 The Green Party supports this bill. We are very strongly in favour of good tertiary education. I think it is useful to point out though that we are very concerned about what is being done up at Auckland University which seems to be spreading a little bit throughout the country—that is restricting the entry of students to tertiary institutions. That is a dramatic change for New Zealand where we have had open entry for so many years making us a more egalitarian society. In more recent years open entry has enabled people in all age ranges to go to university perhaps more so than in the past. People who missed going to university the first time around for whatever reason—not having enough money not being born of the right parents not getting the initial encouragement they perhaps should have or going into other jobs—have been able to go on to university. We are a bit concerned—very concerned in fact—and we support the criticisms of various members of the community including university staff who said that this restriction of entry should not be allowed to happen. So with those few words the Green Party supports this bill. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
Tena koe Mr Assistant Speaker. It is timely indeed to be thinking of tertiary reforms the day after the University of Auckland confirmed its decision to eliminate open entry into the university from 2009. From the communication we have had with tangata whenua associated with the university consultation has been at a bare minimum if at all. We learnt from the University Students Association that the proposal was rammed through in 3 short weeks without due regard either for the consultative process or for consideration of the possible impacts such a decision might have. So the decision of that university to restrict entry to core disciplines leads us to ask how in this bill the Government through the Tertiary Education Commission actively recognises its obligations under the Treaty of Waitangi to protect Maori language ways of being and traditional and contemporary knowledge. 
What mechanisms are in place in this bill to give honour to a central premise of the Treaty of Waitangi that Maori could continue to live as Maori? In Ka Hikitia the draft Maori education strategy Wally Penetito gives life to this aspiration eloquently stating: “If there is an emerging educational vision among Maori it is the desire for an education that enhances what it means to be Maori: so simple and yet so profound.” 
The Maori Party brings to the Education (Tertiary Reforms) Amendment Bill a knowledge of the simple and profound and an understanding of the aspirations and concepts that establish a very clear foundation for both ensuring Maori student engagement and enabling Maori student success. The ultimate question however is whether there is sufficient provision in this bill to ensure that both the Crown and the institutions uphold the principles of the Treaty of Waitangi through the planning the funding and the monitoring functions of the tertiary education system. Our analysis of the bill found it seriously lacking on two fronts. One related to the consultation and the other to the guidance for the Tertiary Education Commission. 
What we learnt from the select committee process was absolutely fundamental to our concerns around Treaty justice in this bill. The Association of University Staff of New Zealand advised us that the Government had received over 400 submissions relating to the omission of the Treaty from the tertiary education strategy and the statement of tertiary education priorities. We learnt from reading over 23 submissions received on this bill that numerous concerns were raised around consultation. Specifically there is no requirement for the Minister the Tertiary Education Commission or the tertiary education organisations to consult with Maori in the development and monitoring of a proposed new institutional plan document. One has to wonder then whether there should be any surprise about the fact that Auckland University chose the lighter end of the consultation continuum. 
As a party always willing to put forward new ideas and solutions we in the Maori Party came to the Committee stage of the bill with two useful recommendations. We as Maori Party MPs are not limited by the constraints of abiding by the party line or being subdued into silence when we identify an issue of Treaty injustice. We are proud to be a strong and independent Maori voice and to be able to raise our concerns without fear or favour. We bring the House back to section 181 of the Education Act 1989 in which institutional councils are required to acknowledge the principles of the Treaty of Waitangi in the performance of their functions and exercise of their powers. Councils are therefore required to acknowledge the principles of the Treaty of Waitangi. 
How is that done? Well it is not as difficult as some of our parliamentary colleagues think it is. The system needs to support Maori aspirations and achievements including the revitalisation of te reo Maori nga tikanga and Maori knowledge. The education system needs to work in partnership with whanau hapu iwi and Maori communities. The education system needs to provide opportunities for educational success which will enable Maori to live as Maori to have the authority over Maori knowledge and to validate Maori ways of being and seeing the world—indeed to enhance what it means to be Maori. So simple yet so profound. 
Yet what does this amended bill say? It states that the mandate for the Minister of Education to address the development aspirations of Maori is tied neither to the Treaty relationship nor to a requirement to consult. It is for this reason that at the Committee stage of this bill my colleague Te Ururoa Flavell introduced two amendments to sort this out once and for all. The first amendment specified consultation with local hapu iwi Maori staff and students by tertiary institutions in the preparation of proposed plans. Under the bill’s current provisions an organisation can choose not to consult with Maori in the preparation of a proposed plan. We in the Maori Party therefore proposed an amendment to specify that in the preparation of a proposed plan tertiary education organisations would be required to consult with Maori. 
The other amendment sought to insert the phrase “acknowledge the principles of the Treaty of Waitangi” into section 159G of the Education Act which determines the principles guiding how the Tertiary Education Commission operates. The Education Act 1989 requires in section 181(b) that a council of a tertiary education institution acknowledges the principles of the Treaty of Waitangi in the performance of its function and in the exercise of its powers. However there is no corresponding requirement on the Tertiary Education Commission to also acknowledge the principles of the Treaty of Waitangi in the performance of its functions. Our amendment required the commission to do so. It is all very straightforward—indeed so simple yet so profound. 
A significant number of submissions to the select committee told us that for a Treaty relationship to be meaningful it needs to be at all levels of the tertiary education system. Our two amendments were exactly that proposing ways of making the Treaty and the Treaty relationship visible. Instead Labour along with National New Zealand First United Future and the Independents chose to act in ways that clearly reflect the lack of value they place in Te Tiriti o Waitangi as the foundation document for Aotearoa. 
Seventy-five years ago the very first successful Ratana candidate ErueraTirikatene tabled a petition here in Parliament known simply as the Ratana petition. It was a very weighty petition literally so; it contained some 45000 signatures and weighed 16 pounds which is 7.25 kilograms. The petition requested that the Treaty of Waitangi be entered into the statute book in an effort to “preserve the ties of brotherhood between Maori and Pakeha for all time”. 
Twenty years ago in 1987 the Court of Appeal described the Treaty as “part of the fabric of New Zealand society” and as “the country’s founding constitutional instrument”. This is our history: Maori and Pakeha tangata whenua and tangata Te Tiriti peoples united in the promise of partnership. At its very heart the Treaty is an exchange of promises between sovereign peoples giving rise to obligations for each party. As with any partnership the Treaty partnership is forever evolving. This bill the Education (Tertiary Reforms) Amendment Bill provided us with an excellent opportunity to honour those aspirations of our ancestors throughout our history. It offered up a chance to make right the expectations of TahupotikiWiremuRatana ErueraTirakatene Matiu Rata the New Zealand Maori Council the Court of Appeal and the more than 500 rangatira who signed Te Tiriti o Waitangi back in 1840. 
It provided a means by which Maori could continue to exercise rangatiratanga over nga taonga which in the context of education may include te reo Maori tikanga Maori and Maori knowledge. It gave us all a moment in time in which legislation could be consistent with the statutory requirement of institutions to acknowledge the principles of the Treaty of Waitangi by which the Treaty could truly flourish. 
For some unknown reason the members of this House other than those in the Green and Maori Parties chose not to have the courage to let the Treaty talk. They chose not to support our amendments and in doing so chose to deny shut down and limit any practical ways of actually letting the Treaty guide this nation forward in a meaningful direction. 
We in the Maori Party are profoundly disappointed that such a golden opportunity for Treaty justice was overlooked and that the bill will proceed without allowing our practical pragmatic proposals to be considered of value. Our vote against this bill is therefore a vote that registers our consistent opposition to any bill that fails to acknowledge and recognise the impact of the Treaty in its deliberations. Tena koe Mr Assistant Speaker. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 I stand on behalf of United Future to speak in support of the third reading of the Education (Tertiary Reforms) Amendment Bill. When this bill was reported back the first thing I did was to go to the commentary provided by the Education and Science Committee to read the minority view of the National Party because I remembered very clearly particularly in the last Parliament that that party especially during question time railed against the Minister for Tertiary Education. That party highlighted courses like the twilight golf course and sing-along courses and it was particularly scathing about and mocking of Te Wananga o Aotearoa and some of the other tertiary providers that were really making a genuine effort and doing some very creative things to attract back into tertiary education adults who had given up on their education and their futures. But the National Party did raise the issue of quality and it became blatantly apparent—whether the courses that National chose to highlight were flawed has never been determined—that we were lacking quality assurance in the tertiary sector and that the “bums on seats” policy had created some perverse outcomes. 
This bill is an attempt to rectify that situation. So I was really keen to see why the National Party having done all that would be so concerned about the intentions of this bill and the provisions within it that that would cause it to oppose something that those in the sector—from the reading that I have done in educational publications—have been warmly supportive of. I have come to the conclusion that the National Party’s minority view reflects some of the concerns that submitters had but that it does not reflect the work that the committee then did to rectify those concerns. They were not big concerns; they were small concerns. 
The first concern was around the issue of commercially sensitive information. Under this bill of course the Tertiary Education Commission and education providers will work more collaboratively together and that is a great thing. They are also required to have long-term 3-year plans which I know the sector is thrilled about. It was sick of existing year by year and it likes the opportunity now to develop 3-year plans. Those plans are allowed to be amended and adjusted as the situation demands. The bill also requires the commission to work in a mutually collaborative way with education providers right from the word go as they develop their courses and the potential of their facilities. But there was some concern that during that process commercially sensitive information would be required to be disclosed. The committee was right to look into that but it discovered however that currently tertiary education institutions and the commission are obliged under the Official Information Act of 1982 to respond to any queries. So the need to disclose information is already built into the system and is an issue that providers have been addressing for some time. 
The second concern was around procedural fairness. There was concern that there was a lack of procedural safeguards to protect providers from a misuse of power by the commission in regard to its new statutory powers. There was also concern that there was no right of appeal for providers should they not agree with a ruling of the commission. I suspect we need to keep an eye on that matter. But it was made clear that providers are allowed to take a complaint to the Ombudsman or to seek a judicial review if the process that is being undertaken is unsatisfactory. 
The third concern—and I think that this was the most important concern raised by submitters—was that this legislation would restrict academic freedoms and institutional autonomy. I think there was a submission from some fairly significant academics who talked about the fact that institutions particularly universities have always been allowed to have an autonomous status in developing the content of courses and pursuing academic freedoms. There were some real concerns about that. However the committee then recommended an amendment to clause 3 to make it explicit that the new functions conferred on the responsible Minister and the commission are to be exercised in accordance with the principal Act. And the principal Act makes provision for the preservation of academic freedom and institutional autonomy. Problem solved. So therein lies the problem. Those were the main concerns raised; those are the only things outlined in the National Party minority view. 
I was reminiscing about the fact that some years ago I had read an interesting article—I am pretty sure it was about Singapore; I stand to be corrected if I have the wrong country—about a country that had taken some really strong steps to align both secondary and tertiary education more closely to economic development and the goals of economic development within that country. 
Ron Mark 
: It was Singapore. 
JUDY TURNER 
: Mr Mark has assured me that I have the right country. And there were some fantastic outcomes from that. The alignment of those two sectors meant that young people with a tertiary education were pretty much assured that they would come out into real jobs that would really advance the direction that Singapore was focused on. That is what I believe this bill is trying to do here; it is trying to make sure that any lack of quality that may have been present under the “bums on seats” policy is addressed and that the commission starts to be much more consultative and much more collaborative with those who work in the sector. 
I have had a lot of contact with private providers of tertiary education and one of their great frustrations has been that they were constantly second-guessing the commission and hoping that when they put in their charters for reapproval and applied for funding for the next year somehow that would match up with standards that they were never very clear about. This bill—and this is why we welcome it—does away with all that uncertainty and makes provision for everybody involved in the tertiary education sector to talk together to have long-term plans that are collaborative and to be able to adjust those plans whenever that is needed and the circumstances demand it. For that reason United Future is very happy to support the third reading of the bill. 
COLIN KING (National—Kaikoura) 
: 
 In speaking on the Education (Tertiary Reforms) Amendment Bill I would like to address just a couple of comments the previous speaker made—that is that effectively private training establishments are not protected by the Official Information Act and that they are exposed by the request for information. It is worth my noting at the commencement of my speech on this third reading that the concern is with how that is perceived on the outside as far as the declaring of sensitive information about whether research relationships will be entered into. We know that confidentiality is a very sensitive matter where there is alignment between universities and research institutions. 
I will address the issues that the bill presents from the point of view that at this time while we listen to the rhetoric of this Government which assures us that everything will sail off swimmingly into the sunset and that we will not have any more problems with tertiary education I can inform Government members that they are dreaming. 
We have a situation whereby one of our polytechs is already unsure of its future. The Open Polytechnic has a lot to contribute in my view and it has a lot to contribute from the point of view of the Industry Training Federation. Yet The Open Polytechnic will have to again re-establish its quality and relevance. Most of my qualifications were done around that organisation and from my point of view as a member I found its quality and relevance to be outstanding. I would be horrified if the implementation of this bill was in fact the death knell of that institution—The Open Polytechnic—which has some 32000 people enlisted and undertaking education of a high quality of whom two-thirds are in employment. 
It is a bit rich when this Labour Government talks about itself as though it is as white as the driven snow because we can see that it was presiding over the tertiary education sector while we witnessed the most outrageous rorts ever brought upon the sector. Come the eleventh hour of this Government in its state of paranoia it brings in this centralised-management overly prescriptive model of micro-management. But when we look at it from the point of view of other areas—say the industry training area—we find that the Government turns a blind eye. 
The Government is still loading up the Modern Apprenticeships programme with no sense of discipline and no sense of management. We are finding that with this so-called flagship policy of the Labour Government now in total disarray it is an absolute shambles. Yet the Government is still talking about increasing the funding to 14000 places by December 2008. We see situations where Modern Apprenticeships coordinators are not being held to account. They are costing the taxpayer hundreds of thousands of dollars with just one completion or millions of dollars with a handful of completions. So I would lay the claim back at the feet of the Government. When will it rein in this outrageous behaviour around the Modern Apprenticeships programme? 
On a basis of consistency it should be holding those people to account. In fact a number of Ministers for Tertiary Education have said that in the near future they would change and strengthen the policy and hold those Modern Apprenticeships coordinators to account. But we do not see any result of that. 
Can this Government be trusted? I do not think so. We can look back on another incident which I will take the opportunity to have recorded in  
Hansard 
 during this third reading of the Education (Tertiary Reforms) Amendment Bill. It is related to the commencement of a good policy in 2002 through to 2004-05—that is the programme for enrolled nurses. But the Government butchered that as well. There were 240 students who undertook that training. They were the very best in the aged-care sector and they took on the training to reach the qualification of enrolled nurse. However when that last class sat their qualifications and graduated their qualifications were taken away the day after. 
It is under that sort of climate and environment that this side of the House is extremely sceptical of the Government’s way of managing the tertiary education sector. The sector has been seriously rorted all the way through. It is far too much about institutions and not enough about quality and relevance. It is an absolute shame. 
We see in front of us further complexity. We have not seen any reduction in the number of staff of the Tertiary Education Commission—in actual fact we find that it is now increasing. We are seriously concerned about the complexities that are emanating from this bill. The Tertiary Education Commission has presumptuously rolled ahead and is using the bill as if it is now law. As my colleagues on this side of the House have explained we are already seeing the unintended consequences of the issues. 
There is a lot of work to be done in the industry training situation. We still have issues around the overlapping provision—that is where the polytechnics mimic the behaviour and training of the industry training organisations and are able to access equivalent full-time student funding. When a question of that nature was directed to the previous Minister for Tertiary Education Michael Cullen he said honestly—I must give him that—that the Government had not thought that one through and did not have an answer. 
We are still living in a very fluid situation which this bill does not address. When we stop to think about the situation those enrolled nurses encountered we find that it does nothing to give the public confidence that the Government will back people up on what they go into institutions to receive. For the Modern Apprenticeships programme and for those enrolled nurses this Government should hang its head in shame. Those are just two examples of some very very poor management of the tertiary education sector over the last 7 years. 
Turning to the situation of this bill coming into law I say that we have so much more work to do. When we look at section 195 of the Education Act which was reviewed this year and which empowers the Tertiary Advisory Monitoring Unit to look at the financial basis of tertiary educations—basically the institutes of technology and polytechnics section—we see that only three were on their knees at this time. However it is a very volatile situation. The institutes of technology and polytechnics effectively have got themselves into a problem whereby they are coming to Wellington about every month begging for money. Yet the problem at the other end is that there is no quality. The report on section 195 stated that in future we should look at the quality coming out of the institutes of technology and polytechnics section because that along with financial viability is hugely important to this country. 
In conclusion I would like to give an award to the Labour Government. I believe that in the last 7 years you— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
COLIN KING 
: —have qualified in butchery. It gives me great pleasure to award the Labour Government a Modern Apprenticeship in butchery level 4. I award this certificate to those members on the other side— 
Nathan Guy 
: What does it say? 
COLIN KING 
: It states: “The Labour Government. Modern Apprenticeship in Butchery Level 4. This is to certify that for 7 years the Labour Government has butchered the tertiary education sector. Awarded on 4 December 2007.” Thank you Mr Assistant Speaker. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just by way of explanation every time the member uses the word “you” he is referring to the Chair. In future the member must refer to a Minister or another member as “the Minister” or “that member’’—that is in the third person. 
RODNEY HIDE (Leader—ACT) 
: 
 I rise to say that the ACT Party will be opposing this bill and to explain why. This bill means more interference with the people who are actually doing the work. It means more State direction of how our universities should function and it means less diversity. It means more bureaucrats and it means more taxpayers’ money being spent on collaboration talkfests and planning but not on education. That is why we are opposing it. 
MOANA MACKEY (Labour) 
: 
 I am very happy to take a call on the third reading of the Education (Tertiary Reforms) Amendment Bill. I say to the National Party that it cannot have it both ways. I say to the member Colin King that the certificate he held up can stay firmly where it currently is which is with the National Party. National uncapped the numbers and left us with the mess that we are now having to clean up. 
I say to National members that year after year Labour members have been criticised by them in question time in this House for the kinds of courses being provided by an unregulated tertiary sector with a “bums on seats” model that did not work and that promoted low-quality low-cost courses. They said that the people who went on those courses assumed they were going on quality courses but they were not. Now we have this complete about-face from National members who are apparently saying they did not mean any of that that they quite like the old system and that they oppose this one because it means more State control. 
I ask National members whether they will repeal this legislation if they become the Government. There is silence. I ask whether they have any policy in this area. No. 
Christopher Finlayson 
: You’re speaking. 
MOANA MACKEY 
: They say that it is my turn to speak now. Well I say to them that they have made a number of speeches tonight and Colin King for example did not mention it at all. Again I say to National members that it is very very easy to criticise. It is far easier to do that than to come up with a plan for the tertiary education sector that ensures that the institutions have more secure funding that they can plan for the longer term and that they can react far more quickly to the needs of their community and the needs of the regional local and national economies. This bill does that. 
I was a member of the Education and Science Committee that heard the submissions. I ask National members where all the outraged opposition to this bill was when it came to the submissions. Where was it? It was not there. A number of very good points were raised during the submission process particularly by the universities and we took them on board and we made amendments to the bill. Certainly most of the submissions were on the issue of academic freedom and the select committee took them very seriously. But this bill had a surprisingly small number of submissions on it given the incredible scope of what it is doing and how significant it is and I believe that that was because the sector it wants more long-term security. It was ironic that for all that the universities were going on about not wanting the Minister to be involved a number of the universities that came along to the committee said that they wanted to keep the charters which are signed off by the Minister. They did not want to get rid of them—and of course they can keep them if they want. But they wanted to put in the bill that all the tertiary institutions should have to have these charters. 
Just before I sit down I want to raise one other point which is the issue that many members have talked about tonight—that is the decision made by Auckland University to restrict entry to its courses. Going by some of the speeches I have heard tonight it would seem that there are no restricted courses in New Zealand at all. I would love it if anyone who wanted to go to university to become a doctor and who could pass all the relevant standards in order to become a doctor was able to do so but as we know our universities that provide medical schools work within a budget and what this Government will be saying is that here is the budget. Let us be clear: since 2006 we have not been restricting numbers. There has been a 19 percent increase since 2006—$1.2 billion—in the money going into this sector. 
John Hayes 
: Foreign students. 
MOANA MACKEY 
: Mr Hayes who is sitting way up the back of the Chamber—he is not sitting down here with all his colleagues—says it is all going on students. Well students are actually a very important part of the tertiary education sector. That reminds me of another point I wanted to make which is that not only has the Labour-led Government invested in the tertiary sector from industry training—which Mr Colin King was talking about—through to universities but also it has made university more affordable for students made paying off student loans more affordable and at the same time it has increased access to student allowances. This Government cannot be accused of restricting access to universities. 
I say to the provincial tertiary institutions and to our private training establishments around the country that they should step up to the challenge that Auckland University has put out there. It has said that it may not want to provide certain courses any more. Well we have some very good tertiary institutions around the country that could step up and provide those courses to students and those students would not have to move away from home which they always have had to do in the past. I think one of the worst things about our tertiary sector was that 10 years ago university was considered to be the only area worth going to. If one wanted any sort of future one went to university even if university was not necessarily the best provider of what one wanted to study. 
This bill also says that we value our polytechnics we value our institutes of technology and we value our private training establishments. We are saying that where there is a need that should be delivered within the tertiary sector then it should be delivered. Again I say to the provincial polytechnics and the private training establishments that they should step up. Auckland University has said that it may be at near capacity and it may not want to have unrestricted access to all its courses any more. Well that is an opportunity for other tertiary institutions to step up and say that they are willing to offer those courses and maybe students and their families would be saved a little money because the students would not have to move to Auckland Wellington Christchurch or Dunedin in order to study those courses. 
I believe that this bill is a very good bill. I am disappointed that the National Party is not supporting it given how much those members have gone on about the unregulated access to money in the tertiary sector over the last 5 or 6 years. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 I would be very happy to explain to that member why National opposes this legislation but let me say first that when it comes to tertiary education reform never have so many people who thought they were so smart been so wrong for so long with so much of a waste of taxpayers’ money as the Labour Government in its 8 years of tertiary education reform. This Education (Tertiary Reforms) Amendment Bill is what the Labour Government said it would do in the year 2000. Here we are in the year 2007 before this Government has got around to getting the bill in— 
Nathan Guy 
: Under urgency. 
Hon BILL ENGLISH 
: —under urgency at the end of the year to apply in 2008. We did some rough calculations on what this reform has cost: $400 million. The Labour Government has spent $400 million thinking about tertiary education reform. There have been a few fundamental flaws in that thinking. One has become apparent today and I would have expected the Government to explain its policy. Here is a simple question: does Labour believe in restricted entry to university? 
Hon Marian Hobbs 
: To medical schools to architecture schools to law schools? 
Hon BILL ENGLISH 
: No I ask whether Labour believes in restricted entry to all university courses as Auckland University is proposing. Well those members are caught on the horns of a dilemma because the direct implication of its funding system is that all universities will restrict entry to their courses. 
Hon Marian Hobbs 
: It’s a shame you just thought of it Bill. 
Hon BILL ENGLISH 
: But of course the Government’s supporters are against that which is why that member is so concerned. What will Labour members say to the Maori and Pacific Island communities in Auckland? I ask how they will explain to those communities which have the same aspirations as everyone else in New Zealand for a high level of education for their children that entry to Auckland University courses across the board is now restricted. The big question is how it will be restricted. Well it will be restricted according to secondary school qualifications. That is obvious. 
Hon Marian Hobbs 
: Is it? 
Hon BILL ENGLISH 
: It is because how else could one do it? What it means is that if one did not do too well at National Certificate of Educational Achievement (NCEA) at secondary school which a lot of Maori and Pacific Island students do not then one will never get to go to university. That is determined by the time one is 15. If there was any more of a fundamental breach of Labour’s apparent crocodile tears about equity then that breaches it. 
Hon Marian Hobbs 
: You got it wrong again. 
Hon BILL ENGLISH 
: Where does the member think all the new university students have come from over the last 15 years? They did not come out of a huge increase in the number of secondary school students; they came out of an increase in the number of mature students. There are more secondary school students than there were but by far the biggest increase has been in the number of mature students. If we stand at the enrolment line at Auckland University with the mature students and ask them what they got for NCEA level 3 they will ask: “What is NCEA? I did School Certificate and I failed it. Here I am aged 30 realising that there is a second chance and I am going to university.” and many of those people succeed very well. 
Labour members have found that after 8 years of tertiary education reform $400 million worth of thinking about it and endless damage—particularly to the polytechnic sector—they have achieved one thing. It is the one thing that most of them do not want; that is restricted entry to university. We could argue for and against the merits of it and we will have that discussion. But the question is whether this is what Labour wanted and the answer is no. 
I will just take members through some of the history and my colleague Dr Lockwood Smith will agree with this. The “bums on seats” system that Labour members so roundly condemned was never as open-ended as they say it was. It had a series of controls under National. Half a dozen people sat around the desk with the Minister and they gave the institutions the opportunity to grow. But they had some fiscal control and they certainly had plenty of flexibility. They did not have a long complicated bill like this one that dictated all the processes. They did not have 400 bureaucrats—they had about six. Then what happened was that Steve Maharey got in. Well what a disaster that was. He took his eye off the ball and the tertiary institutions went crazy because while Labour was busy constructing this complex and elegant sociological model of tertiary education the institutions were flat-out breaking all the rules exploiting the loopholes and running up hundreds of millions of dollars of wasted taxpayers’ money. Not all of them did that but quite a few of them did that while Labour members faced the other way. Their whole theory about tertiary education was something they were in love with and they had no idea what was going on in the real world. 
I was pleased to be a spokesman who helped embarrass them about that: about the fact that they spent a billion dollars over 4 years on diploma-level courses that no student finished. It was the biggest single waste of public money ever that I have come across apart from maybe Think Big. A billion dollars was spent on diploma courses that no student finished and the Government did not know anything about it. So then the Government cracked down because it was such a political embarrassment. But when it cracked down it cracked down with the most complicated system one could ever come up with: there were charters profiles investment managers and 400 bureaucrats. I can recall reading a stack of documents; there used to be about a dozen different versions. I would read a stack of documents about the Government’s plans for tertiary education and do members know the one thing it left out in all those documents? 
Hon Member 
: Students. 
Hon BILL ENGLISH 
: Students never got mentioned. This was office-tower middle-class well-paid secure risk-averse New Zealand telling our 19 and 20-year-olds what their future was going to be. I conducted a few informal student surveys— 
Hon Marian Hobbs 
: You really cared about students! 
Hon BILL ENGLISH 
: The member should listen to this. I conducted a few informal surveys of students and I said to some students: “Have you read the statement of tertiary education priorities and do you know the eight principles of relevance equity blah-blah-blah and all that sort of rubbish and the strategic outlook”— 
Hon member 
: And they all said “Yes”. 
Hon BILL ENGLISH 
: They all said: “Yes”. And then they all used four-letter words that indicated that they did not feel that the views taken by a bunch of middle-aged bureaucrats sitting in an office tower were very relevant to their decisions. 
Hon Marian Hobbs 
: They also used the same four-letter words about student fees. 
Hon BILL ENGLISH 
: Well this is the point. Who takes the risks about making a decision for tertiary education? I will tell members who takes the risks. One example is a 19-year-old student who does not really know what he wants to do who sees some programmes on TV that makes some occupations look attractive and who listens to his parents who make other occupations look attractive. His friends are all going in one direction his girlfriend is at the other end of the country and he has to make up his mind. He does and he manages to do it without Dr Cullen or the vet who thinks he can run the place. 
Another example of someone who takes the risks is the 34-year old woman with a husband in a low-paying job who has a couple of kids who has capabilities that she has never really explored and who decides she really wants to be back in the workforce. She is willing to live hard to work hard to look after her kids and to do her study to get a tertiary education. In this new world that Labour has planned she does not fit because she will not meet the criteria for restricted entry to university. The plan that was cooked up between some 27-year-old PhD graduate and a general manager at the polytech to try to get their negotiation sorted so they could get their cash happens to stop her course from running. 
So a group of people who have no idea about the real world are trying to write plans for the knowledge economy and I just say to the House that it will not work. It is too complicated it is too refined it is called “strategy” but it has none of the content of strategy and in the end it treats young New Zealanders as if they were mindless automatons willing to go shape their lives on the musings of people like those members opposite. Who would make life-changing decisions on the basis of what that rag-tag front bench says is important for New Zealand? Nobody! And that is why National is voting against his legislation. 
A party vote was called for on the question  
That the Education (Tertiary Reforms) Amendment Bill be now read a third time. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1; Independent: Field. 
Noes 55 
New Zealand National 48; Maori Party 4; ACT New Zealand 2; Independent: Copeland. 
Bill read a third time. 
Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill 
In Committee 
Part 1 Annual rates of income tax amendments to Income Tax Act 2004 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 This bill will be debated in four parts: the three parts of the bill plus the title. Part 1 which we debate now contains a number of key issues that National wishes to draw to the attention of the Committee of the whole House. The first issue relates to the setting of the annual tax rates. Some of my colleagues will focus on that issue because there is in fact a golden opportunity tonight for the Government to prove that it cares about the income tax rates. There is the opportunity tonight if the Government believes in reducing the tax rates to do so right now with this legislation because it sets the rates for this year. So if the Government is serious about reducing personal income tax rates it has the chance to do that right now. 
But I want to draw to the attention of members of the Committee the other issues that we will focus on in respect of Part 1 which contains a number of serious issues. The Government is about to introduce Supplementary Order Paper 167 in the name of the Hon Peter Dunne which will introduce new arrangements for the taxation of redundancy payments. Now that is a new proposal and it has not been to the Finance and Expenditure Committee. If it had been to the select committee there would have been submissions around such matters as why redundancy payments had been chosen and why lump-sum payments for accident compensation had not been included even though a person may receive a lump-sum payment for loss of income that covers more than 1 tax year just as is the case with redundancy payments. There is an even stronger argument for accident compensation lump-sum payments that cover more than 1 tax year to have tax relief in the same nature as that being given to redundancy payments. But no a Supplementary Order Paper was marched in at the last minute. We saw it only today. It has not been anywhere near a select committee. All of the issues that should have been covered before a Supplementary Order Paper comes to this Committee will not have been covered. Again colleagues of mine will discuss that issue. 
Supplementary Order Paper 167 also covers the vexed issue of finance leases. The Government sneaked into the select committee a while back Supplementary Order Paper 119 in the name of the Hon Peter Dunne. Government members did not even tell us it was retrospective and to do with finance leases versus operating leases; they tried to be all quiet about that. The Supplementary Order Paper caused a hell of an uproar because it would have put a whole lot of existing finance leases out of business and caused major problems for certain businesses in New Zealand. After the select committee heard submissions on Supplementary Order Paper 119 the Government withdrew it. What happened then? Government members marched into the Chamber today bringing Supplementary Order Paper 167 in amongst all the other papers. 
Supplementary Order Paper 167 sets out a new attempt to handle those leases. When I talked to the businesses involved I was advised that there are still major problems. There has not been adequate consultation. The provisions in Supplementary Order Paper 167 are a compromise I know but there is no need for that compromise. The Government could close the loophole going forward and not put existing deals out of business. But there is no doubt that if the proposals in Supplementary Order Paper 167 to do with finance leases go through tonight there will be business deals that are put out as a consequence of that. It is bad lawmaking when through retrospective legislation we interfere with deals that have been done in good faith under existing law. That is another issue we intend to debate in relation to Part 1. 
Then we get on to all sorts of other issues in Part 1. The issue of the research and development tax credits is covered in Part 1 and we will be making some comment about that. There is the issue of raising the threshold limit for charitable donations. We support that proposal; it was National Party policy. We will be covering that. There are also the issues about the change of name for Working for Families tax credits and of course the new KiwiSaver provisions for setting up the tax credit provisions for employers. 
We wish to cover in some detail all of those specific issues in Part 1 tonight. In fact we will be moving amendments on some of them tonight because they are so outrageous. The provision to change the taxation treatment of redundancy payments in isolation and in an ad hoc fashion has had no consideration by the select committee. It is just absurd to bring in a provision like that. The industry out there today is gobsmacked that there has been no chance to make submissions on that. Other issues could have been covered much more sensibly with a generic provision such as that. As I mentioned a moment ago my advice on new clause 78BB and the provisions on finance leases on Supplementary Order Paper 167 is that they will actually kill existing deals. There will be litigation. The Government should not be doing this. When the select committee looked at that issue in relation to Supplementary Order Paper 119 the Government withdrew that Supplementary Order Paper because it saw that it was a poorly thought through provision with far greater implications than the Government had assumed. As a consequence the Government withdrew that Supplementary Order Paper. 
It is not good enough to now march Supplementary Order Paper 167 into this Committee without scrutiny. The provisions on that Supplementary Order Paper will cause existing deals to be destroyed and for that to happen without the chance for scrutiny by the select committee is not good enough. That is what the provisions on Supplementary Order Paper 167 will do. I want to draw the attention of the Committee in particular to the new clause 78BB which is the bit that handles the finance leases; to new clause 85B which is the bit that handles the redundancy payments; and to new clause 155B which includes the tax administration amendments in respect of those redundancy payment provisions. None of those measures have been to the select committee and no submissions have been heard on them. They will have a major impact on New Zealanders businesses and ordinary taxpayers alike. There has been no chance for people to make submissions on that Supplementary Order Paper. 
This is no way to implement tax law. It actually undermines the good work I acknowledge that the Minister has done. The Hon Peter Dunne has put out a discussion document and gone through a reasonable process then undermined it at the last minute with Supplementary Order Papers containing provisions that were not adequately consulted on and that no submissions have been heard on. I appeal to the Minister. We will be proposing a number of amendments tonight one of which will be in relation to the redundancy payment provisions on Supplementary Order Paper 167. I would like the Minister to seriously reflect on the fact that there has been no chance for submissions to be heard on them. Thorough consideration should be given to them tonight. 
CHARLES CHAUVEL (Labour) 
: 
 I would like to speak briefly on new clause 85B which Dr Smith has just mentioned. New clause 85B appears in the Minister’s Supplementary Order Paper 167. It is the provision that will give tax relief for redundancy payments. I am sad to hear that the National Party will vote against another tax cut that this Government is bringing before the House. But there it is. 
Let us just have a look at the scheme of this tax relief measure which will be introduced for employees who are in a difficult situation and who deserve some sort of relief. The legislation that is set out in Supplementary Order Paper 167 will make the taxation of redundancy payments fairer to low and middle income New Zealanders. Clearly redundancy payments are employment income so it is fair that they are taxed. Some members who have practised in the employment field will remember that in the 1980s and prior redundancy payments were subject to a specialist and favourable tax regime whereby they were taxed at a very low rate. Under the current law which has remained—as far as I can recall—since the early 1990s low and middle income people can be pushed into a higher tax bracket if they receive redundancy pay. If that happened it would come at a very difficult time for most people. Clearly it would be a terrible thing for someone to have to contemplate on top of losing his or her job. 
The Supplementary Order Paper will introduce a simple tax rebate to apply to redundancy payments received on or after 1 December 2006. This rebate will allow low and middle income New Zealanders to retain more of their redundancy pay and will keep complexity and compliance costs to a minimum. The rebate will be based on the flat rate of 6c per dollar up to $60000 per redundancy. Let us think of an example. It means that somebody who receives a redundancy payment of say $20000 will be able to claim a tax rebate of $1200. Someone who receives a $60000 redundancy payout will be able to claim a rebate of $3600. There is a maximum redundancy payout provided for in the Supplementary Order Paper. The maximum payout that qualifies for a rebate is $60000 so the rebate itself would be capped at $3600. 
I am sad to hear members opposite announce the intention to vote against this tax relief measure for low and middle income New Zealanders. These changes will make the taxation of redundancy payments fairer and give certainty and more security to an issue that has been of concern to workers and unions for some time. I am very pleased to support the measure. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise tonight to speak on various parts of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill but for starters I will focus on Part 1. As my colleague Lockwood Smith said we will be canvassing various clauses of the bill clause by clause and taking it issue by issue as it comes along. In particular I will focus tonight on three areas. Firstly I will deal with clause 3 and the rates of income tax for 2007-08. Later on tonight I will have a look at the changes to the charities legislation in clauses 27 and 85. Clause 85 deals in particular with rebate in respect of gifts of money. Later on I will look at the new sections KJ 6 through KJ 12 which introduce changes to the KiwiSaver employer tax credits. So there is a fair bit to cover. I know that other colleagues will deal with the various issues tonight. 
In rebuttal of the chairman of the committee in regard to Supplementary Order Paper 167 the issue here is a matter of process. This particular issue did not come before the committee but has ended up in a Supplementary Order Paper before us in the Chamber tonight without a wider consideration of other matters such as accident compensation payments which my colleague pointed out could have been brought into consideration along the way. Once again a Supplementary Order Paper has been thrown on the Table without due consideration and without coming before the select committee and in our opinion that is not good enough. 
I focus on clause 3 “Rates of income tax for 2007-08 tax year”. Taxation rates in this country have been far too high for far too long. Under this Labour Government we have seen tax rates climb not fall. Since 2000 the number of people in the 39c tax rate has increased and as a result of that we have seen taxation collected in this country like never before. For the year ended 30 June 2007 $56.5 billion in tax was collected from this country. If we take a step back to the year 2000 $34.4 billion was collected in taxation. That is a total increase of $22.1 billion over 7 short years—$22.1 billion. That is a whopping 5525 additional tax dollars per every man woman and child. It is a 64 percent increase in direct taxation on the basis that this Government knows best how to spend taxpayers’ money—not its own money but the taxpayers’ money. 
How have we ended up in this position? There has been absolutely no movement in tax rates over the course of this Government except in this latest bill that we see before us. I call it the “Too Little Too Late Bill”. There are some tax deductions now but we have not seen that over the course of this Government until this stage. What have we seen? Taxes are up the thresholds have been unchanged and we saw the “chewing gum tax cut” threshold proposed and then taken out by this Government. We have seen tax bracket creep as people have moved into higher tax brackets. When we started out there was the proposal by the Government that no more that 5 percent of the country would be above a 39 percent tax bracket. Now we see nurses policemen tradesmen and wharfies all creeping up into that 39 percent tax bracket through bracket creep. They are paying more and more tax. We now see 12 to15 percent of taxpayers in that higher tax bracket. 
One has to ask whether we are going to see personal tax cuts over the next year? We have seen Dr Cullen out there proposing it having his arm twisted by the Prime Minister. I come back to a Cabinet paper signed by Michael Cullen in 19 April 2007. There will be Ministers on the other side of the House for example Mr Shane Jones who were not present when this paper was signed off. What it shows is the determination of this Government to keep tax rates high. Clause 23 states the commitment from Dr Cullen: “To maintain our commitment to the long term fiscal objectives”—that is Cullen-speak for building the kitty—“I may need to make some adjustments to future Budgets. These are likely to be that we do not adjust tax thresholds in the medium term thereby retaining fiscal drag and potentially allowing tax to GDP ratios to rise slightly. Accordingly this paper seeks Cabinet agreement to rescind our previous decision to adjust income tax thresholds.” 
There we go. It is a paper no doubt signed off by the Minister sitting in the chair tonight Peter Dunne. It is a paper that is going to rescind on any future tax increases. It goes on to say: “Within the projection period i.e from 2011-2012 we will adjust tax thresholds for inflation.” 
TIM GROSER (National) 
: 
 I address clause 3 in Part 1 and I will read it out in a slightly reconstructed way. What it says is that the income tax imposed by section BB 1 of the Income Tax Act 2004 will once again apply in the 2007-08 tax year. If we actually sit down and interpret what that means in more technical language used by economists we see it means that once more we are doing absolutely nothing about bracket creep—absolutely nothing. This is the meat and potatoes of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill. We have here a huge bill of great complexity—it is 409 pages not counting the other Supplementary Order Papers—and there are various parts of it that move the game forward in the right direction. For example if we look at business taxation we see that the cut in the corporate tax rate is something that makes some sense. But on the other hand what we see even in that area is the lack of a coherent overall strategy to drive business taxation down to where New Zealand actually needs it. In New Zealand there were 44000 partnerships as at February 2006. There are 74388—let us round that up to 75000—individual proprietorships. None of these will benefit from that cut even though the cut itself makes a contribution in that general area. 
This is the heart of the matter. We have been looking for 7 or 8 years to this Government to come forward with a coherent strategy. This was its opportunity and what do we see? We see that it just wants to deal with it by repeating the rates set out in the schedule of the Income Tax Act 2004. This is against the background of some central statistics that are absolutely crucial to the political debate between the two major parties. These will form the basis of a vigorous contest between the two parties and will explain why in the minority report of this vast bill the minority view of the National Party simply stated: “The National Party recognises that the company tax rates will be dropping to 30 percent but we believe that personal income tax rates should also be lowered.” We cannot have a clearer statement of intent on a central issue than that. 
As recently as 2 years ago we looked at the statistics and we saw that $20 billion more in tax had been accumulated by Dr Cullen since he took over as the Minister of Finance in 2000. That figure will be well in excess of $20 billion today. The OECD revenue statistics recently quoted a very interesting comparative study of Australian and New Zealand economic performance. The total percentage of revenue collected at all levels in Australia namely provincial state and federal levels was 30.9 percent in 2005—say 31 percent. In New Zealand it is six points higher than that. That is one of the margins that explain why New Zealand has fallen so rapidly in the last 7 years behind the comparative economic performance of Australia. The punitive rate of 39 cents in the dollar when it was introduced for reasons that made no sense at all—we all understood what it was about when it was introduced; it was the politics of envy—was explained away at the time as attracting only 5 percent of taxpayers. But because of the bracket-creep phenomenon and because there has been no systematic attempt to address the issue of comprehensive income tax reform we now find 14 percent of New Zealand taxpayers are paying that rate. This includes basic professions. It includes schoolteachers nurses and junior accountants. No wonder we are seeing the exit of 75000 New Zealanders across the Tasman or to other parts of the world—80 percent of whom are under the age of 40. We are losing our best youngest most innovative New Zealanders and part of the reason but not the whole reason is this almost unbelievable unwillingness to use the massive accumulative surpluses to actually deal with the problem. 
GORDON COPELAND (Independent) 
: 
 I am delighted to take a call on Part 1 of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill because 17 December 2007 just 6 days away is the 20th anniversary of the start of my long campaign to advocate for a far fairer and more generous tax rebate scheme in respect of gifts made to charities and churches in this country. Over those 20 years I have been involved in advocating this to every single successive Minister of Finance. Oddly enough the only one I missed out was the Hon Peter Dunne who is the Minister in the chair tonight. 
I think this is a day not only for me to celebrate this achievement but also more important for churches and charities to come to grips with the reality that the rebate that until now has been only $630 per annum following a gift of the massive sum of $1890 maximum will now be entirely uncapped for both individuals and companies. Now even a $1 million gift made by an individual will receive a full 33.33 percent rebate or in that case $333333.33. Companies will go from just 5 percent of net income to potentially 100 percent of net income and that is something that as I say is to be celebrated. 
I am also delighted that the business tax reduction from 33c to 30c which is reflected in Part 1 only because of the consequential amendments that follow from it is occurring. I remember taking part in the debate in the 2005 election—when of course I was a member of the United Future party—among all the financial spokespersons of all the parties. There were only two spokespersons in that debate who were advocating for a reduction in the business tax rate: myself and Rodney Hide. No one else was. No other party in this House had that as its policy and I say that because the commentary always refers to this legislation as a confidence and supply win for both United Future and New Zealand First. Well if New Zealand First was in favour of business tax cuts at that stage it certainly kept it a very well-kept secret from the rest of us. 
I also applaud the KiwiSaver changes that are made in Part 1. I have long been an advocate for tax credits which this bill now provides for both employees and employers to encourage savings. It always seemed to me to be an anachronism that whereas such incentives to encourage savings apply in virtually every other Western jurisdiction that I know of in the late 1980s and the early 1990s we became purer than pure in attempting to have a system that was supposed to encourage savings by having absolutely no tax breaks whatsoever. I think that was a ridiculous step and I am very glad to see it is now being changed. 
So far I have been praising Part 1 but I want to say as the Southern Man said it is a hard job to find the perfect income tax bill. There is a great failure in this particular bill and that is that of the Hon Michael Cullen who contrary to the undertaking he gave in Budget 2005 did not adjust personal income tax rates for fiscal drag. Even the very small movement which Michael Cullen promised in Budget 2005 and reneged on in Budget 2007 was in itself in any event totally inadequate. If we adjust for inflation from the year 2000 the 33c tax bracket should now move from $38000—which is now well below the average full-time wage income of about $44000—to $46000 which indeed would be above the average income figure. That means a great deal for hundreds of thousands of middle-income New Zealanders. Likewise the 33c bracket should have moved in this bill from $60000 to $73000. 
I say tonight that in respect of my new party Future New Zealand we are committed to regularly adjusting personal income tax rates in this country to reflect inflation. It is unconscionable to do otherwise. For many many years not just Michael Cullen but other Ministers of Finance have allowed fiscal drag deliberately to work in favour of the Crown and against the taxpayers of New Zealand and that is unacceptable. The taxpayers of New Zealand should come first. 
PANSY WONG (National) 
: 
 It is actually quite coincidental that my call is following that of Gordon Copeland who is one of the three members including myself and Katrina Shanks who are members of the Institute of Chartered Accountants. I am sure that the three of us are delighted to see the media release put out by the very sensible members of the institute which said the Government’s latest move to introduce this special provision for tax relief on redundancy payments does nothing to fix the more fundamental problem of New Zealand’s progressive tax rate structure. This Labour Government complicated the tax structure even more by introducing the 39c rate so I am quite sure that at the last minute there was a backroom deal somewhere whereby the Government brought in a flat rate of tax rebate for redundancy payments. I heard the compassionate speeches made by the Labour member who said how wonderful it was and how considerate it was that that move was made for the lower and middle income workers of New Zealand. 
I thought that while we are in a compassionate mood I would put forward a Supplementary Order Paper and invite the Minister in the chair the Hon Peter Dunne to comment on whether he sees fit to support it. Personally like members on this side I cannot see why on the one hand we gave special consideration to redundancy payments but on the other hand we exclude people who receive lump sum compensation payments for permanent impairment. So if the Minister sees fit to give relief to workers who face the unfortunate situation of redundancy and to give a rebate on their lump sum payment I really think that the Minister needs to take a stand as to why individuals who are unfortunate—usually in circumstances not of their own making—suffer permanent impairment and receive lump sum compensation should not be entitled to have the same relief as is offered in the late Supplementary Order Paper put forward by the Labour Government. I say to the Minister that many individuals who are injured whether they incur injury at work or outside the workplace would be of working age and that permanent impairment would lead to hardship that I would say in comparison with the situation with redundancy payments is of a more extensive and permanent nature. Why should those individuals be punished on top of their physical injury? The fact is that they suffer from permanent impairment so why financially can they not get the same relief? I am sure that the Hon Peter Dunne will be looking very hard at this very sensible amendment I have put forward. 
My colleague the very hard-working Dr Wayne Mapp is less positive. He has cast doubt on the compassionate nature of the Minister of Revenue the Hon Peter Dunne but at this stage I have not decided to concede that. I hope that the Minister will in the next while start to look at my amendment. I think he will owe the public an explanation if he turns down this very sensible amendment. 
The other provision I will comment on—and it is one I actually support because it is basically National Party policy—is in terms of the tax rebate and removing the cap for deduction for contribution donations made to charity. I just want to say that it takes the National Party to really get Labour and United Future into the modern day after all where donors should be rewarded and charitable organisations should be recognised for the good work they do. I think this is a great initiative. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 I am totally bemused by what I am hearing from the National Party. You see the National Party has said for example that as far as the totality of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill is concerned it supports cuts to the business tax rate. It supports for example the new research and development provisions. National has always said that. Then I heard Pansy Wong say that she has long campaigned for and supported the provisions that allow tax incentives for people and companies to make charitable donations. She said all that. If one listened to such speeches one would not believe that National is going to vote against the bill. 
Hon Mark Burton 
: What are they voting against? 
Hon PAUL SWAIN 
: I am not sure. What I think would be a useful thing for National members to do— 
Hon Mark Burton 
: They always just vote against it. 
Hon PAUL SWAIN 
: Well they do; they just oppose oppose oppose. 
What National members could do is say: “We don’t like Labour’s tax policy generally. We don’t like the differentials in the tax rate even though the Government has indicated there might be some changes coming in but we think this is generally a good move and we should vote for it.” That would be a sensible thing for National to do and it could campaign on the bits that it does not like. But no National is going to vote against the bill. It is completely and utterly bemusing and I simply do not understand it. Pansy Wong said she strongly supports tax incentives for people and companies to make charitable donations and Gordon Copeland said he has campaigned on this issue for a long time. Everybody thinks it is a good idea so why does the National Party not vote for it? It is a very very simple matter. 
I want to talk about the redundancy provision. Once again this is taxpayer-friendly— 
Craig Foss 
: Declare your interest! 
Hon PAUL SWAIN 
: Well no this does not apply to the fact that redundancy provisions are not in our particular contract—more is the pity I say. The truth is that this will have a positive impact on low and middle income earners. 
Pansy Wong 
: What about accident compensation sufferers? 
Hon PAUL SWAIN 
: I am interested to know from Pansy Wong whether this is taxpayer-friendly. 
Pansy Wong 
: What about accident compensation lump-sum payments? 
Hon PAUL SWAIN 
: Yes but is this particular issue taxpayer-friendly? One has to say that it is. Therefore I ask why the National Party is voting against it. What has National got against helping out people who through no fault of their own get redundancy payments and getting better tax treatment for them? 
I want to speak now on behalf of the workers of South Pacific Tyres. Fortunately this legislation is effective from 1 December 2006 so it will be able to take into account redundancy payments that were made to those workers. What happens now is that people will be entitled to a rebate which will be based on a flat rate of 6c per dollar up to $60000 in redundancy. That means for example that if a worker gets a $60000 redundancy payout—and some people who have worked for 17 or 18 years in a particular place might be entitled to something like that—that worker is entitled to a tax rebate of $3600 which he or she applies for. If for example a worker is entitled to a $20000 redundancy payout then he or she is entitled to a flat-rate rebate of 6c which comes out at a $1200 rebate. This is money going back into the hands of those workers. I say to the National Party that this is a good thing. 
In the old days up until 1992 the tax rate on redundancy was 5 percent. Then the National Party changed that and introduced a system whereby people got taxed on their normal rate. The problem now is that workers can be earning during the year then get laid off and receive their redundancy payment and that takes them into the highest bracket because the total income is assessed for tax purposes in that tax year. What we are trying to do is say that in fact the redundancy payment is different from so many other things. It is compensation for loss of earnings and it will enable workers to try to put a bit away when they are out of a job until they get a new one. In this situation we should tax people more fairly and I say that is a good thing. People should be able to get some tax relief when they have lost their jobs through no fault of their own. 
I come back to my fundamental question. If the basic argument is to help these people out a bit because it is no fault of their own why is the National Party opposing this? It just does not seem— 
Pansy Wong 
: What about accident compensation? 
Hon PAUL SWAIN 
: Members are saying: “What about this? What about that?”. Why do they not support this legislation? 
CRAIG FOSS (National—Tukituki) 
: 
 I think it is polite first of all before we enter the Committee stage to thank those who have been involved in the formulation of this bill those who sat around the Finance and Expenditure Committee table and the officials who helped us wade through it. I have a problem though in that since the bill first arrived at the select committee there has been a change in the chair of the committee; also the bill has changed radically from the one the select committee first considered. We had submissions on it and changes from officials etc. but the bill that has arrived here today has parts to it that are substantially different from the bill that the select committee spent probably over 6 months on in consideration deliberation and taking submissions. That is totally unacceptable. 
I could talk about clause 3 of Part 1 which is the bit that deals with income tax rates and addresses the $20 billion extra per annum in personal tax that has been taken by the Government every year since 1999—$55 billion - odd. Over $1 billion a week now is taken in personal tax. I could compare the tax rates in New Zealand with the Australian tax rates and their thresholds that have been changed to the benefit of the taxpayer every year for last 5 years. I could talk about the 14 percent of taxpayers who are now in the 39c tax rate bracket rather than the 33c tax rate bracket—the 5 percent that Labour said would be on the high rate in 1999. I could talk about all those who have been dragged up through fiscal drag—the pumping of inflation from this current Government to drag them into higher tax brackets. I could talk about all those things but I will not; I will leave that to colleagues. 
What I would like to do is particularly look at the amendments to Part 1 on Supplementary Order Paper 167 which deal with amendments to the Income Tax Act 2004. Supplementary Order Paper 167 in the name of the Minister the Hon Peter Dunne is interesting in that we have 22 pages of last-minute amendments that arrived at lunchtime today. That replaces three pages of amendments on Supplementary Order Paper 119 dated earlier this year dealing with finance leases. Supplementary Order Paper 119 had a kick-off date of 20 June 2007. We note here that the dates affecting finance leases on the new Supplementary Order Paper are backdated to and include 20 June 2007. That is actually significant. Many submitters—many learned professionals—submitted on Supplementary Order Paper 119. The Finance and Expenditure Committee had many discussions and was very concerned about the retrospective nature the catch-all drift nature of the original Supplementary Order Paper to the point where the Minister agreed and pulled the Supplementary Order Paper. 
I point out that in the commentary on the bill one entire page is given to the select committee’s reasons on why the finance lease rules in the original Supplementary Order Paper were pulled. Then just a few hours ago this new Supplementary Order Paper 167 was launched on members of the House. That is absolutely outrageous. There has been no consultation no discussion and no discussion paper. All and sundry believed there was further work to be done around finance leases. I just do not understand quite why this Government is trying to bulldoze through legislation such as this which confronts Sir Ivor Richardson’s taxation accord process of 1992 where there was open consultation and open discussion and where we get buy-in from those who participate in and need to enforce taxation law. 
My colleague Dr the Hon Lockwood Smith referred to new section 78BB. In my second reading speech I also raised issues about this part in relation to Supplementary Order Paper 119. It is a drift-net because it seems to be law written for discovery. Many questions were asked of officials and advisers. We asked what the problem was who the problem was what the quantum was and what the risk was. Basically those questions were met with blank stares. We constantly asked for further quantifiable information but very little was forthcoming. Thus the original Supplementary Order Paper was pulled in order to discover more information. I do appreciate that discussions were made outside of the select committee between various officials from the Inland Revenue Department Treasury and so on but the Finance and Expenditure Committee was totally blind to the changes that were made. 
Some of the original problems with Supplementary Order Paper 119 and Supplementary Order Paper 167 were their retrospective nature. The public relations from the Minister responsible for Treasury and the Minister of Revenue today started to push away that this measure is still retrospective in its nature. It will still be subject to litigation. At the end of the day the parties caught in the crossfire as I read this will actually be New Zealand entities—New Zealand financial institutions—which will be sued at both ends from an offshore party and an onshore party because the terms of the original leases have changed. 
I have a few questions to ask of the Minister in the chair the Hon Peter Dunne that I will go through over the night but one question I would like to ask him is what the fiscal risk is here. It was explained to us that the future value of all lease payments is unchanged. It is only the present value that is at risk here. It is the time value of money. I recall that someone mentioned that about $200 million was at risk but we were not told whether it was per annum over 5 years or over 10 years. If it is over 5 years that is about a $3 billion notional problem. What is it? How can we be putting it into legislation of a retrospective nature like this when the quantums are not given? 
I would argue that Supplementary Order Paper 167 is actually punishing those New Zealand companies that are trying to minimise the impact to New Zealand of the high interest rates that are a result of this current Government. These are mostly capital-intensive large notional infrastructure projects I believe but again we were never told. I look forward to the Minister describing some of the leases if he could. Under the Fiscal Responsibility Act I presume—and I am open to be corrected—there should be some costings around the Supplementary Order Paper. What are the costs? What are the benefits? Under this new Supplementary Order Paper the parties involved have to pay back one-sixth or read another way 16.666 percent—call it 17 percent—of the depreciation claimed over the life of the asset. So why should these companies in New Zealand be singled out like that? There are some assets at 48c depreciation. Essentially the depreciation for them is now 31c in the dollar. I ask the Minister to clarify that point further. 
The Finance and Expenditure Committee spent much time and expressed much concern particularly about the retrospective nature of this legislation. I am sure that we have not heard the end of it. Quite frankly I am sick and tired of the fact that every time I get up to talk about a KiwiSaver bill or a bill in relation to these taxation issues we have yet another Supplementary Order Paper thrown at us at the last minute. I find that embarrassing for this House and I think a lot of explaining needs to be done. Thank you Madam Chairperson. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I want to respond to a number of the points that have been raised so far by members who have taken part in this debate. I will start by talking about the issue of finance leases. I note incidentally that the report of the Finance and Expenditure Committee stated: “The majority of us accept that a change was necessary because a small number of cross-border leases have been classified as operating leases for tax purposes even though they are financial transactions and treated as such in the financial accounts of the taxpayers.” And further on the committee stated: “We asked officials to consider further the application of the legislation to existing arrangements. We understand that officials have since been working on alternative transitional options for existing leases” etc. That is precisely what has been happening since the decision was taken to withdraw Supplementary Order Paper 119. The amendment on Supplementary Order Paper 167 in my name reflects the work that has been done and the solutions that have been reached. 
I ask members to let me go through precisely what Supplementary Order Paper 167 says then I will come to some of the questions that Mr Foss has raised. Under the proposal on Supplementary Order Paper 167 the leases to be affected by those rules are those that were entered into after 20 May 1999 and in which the lease asset is used mainly overseas and a person other than the lessor is earning income that is not subject to New Zealand income tax from the use of that asset and a person other than the lessor has substantially all the risks and rewards incidental to ownership of the asset. Leases that do not satisfy those requirements which in effect are most leases will be unaffected by the amendments that I have tabled as part of this bill. If the lease is affected the consequences depend upon the date that the lease was entered into. For leases that were entered into prior to 20 June 2007 the lessor will have to pay back one-sixth of the depreciation previously claimed and to reduce future depreciation deductions by one-sixth. That treatment is a pragmatic compromise that deters aggressive tax minimisation schemes and recovers some lost revenue while limiting the negative effects on existing commercial arrangements. For all other leases the taxpayer will be required to reclassify the lease as a finance lease and to recognise additional income or expenditure in the year when the lease becomes a finance lease. 
Mr Foss asked some questions relating to the likely cost of the proposal. The advice I have is that from known leases the likely cost is around $92 million and that the cost as a result of these amendments will reduce by $16 million. I need to advise the Committee that there is some sensitivity around this point. It is a net present value calculation. We are aware of only two leases at the moment that come within this broad contention. Therefore it is not appropriate for me to discuss taxpayer affairs further. But I can say to the Committee that in developing the solution set out on Supplementary Order Paper 167 there have been consultations with affected parties and others and the solution that has been arrived at is one that seeks to deal with the particular problem. It is a much narrower solution than was proposed on the original Supplementary Order Paper. 
If I can turn to some of the other issues that members have raised I think it was Mr Groser and one or two other speakers who made reference to clause 3 which relates to the personal income tax rates issue. I am someone who has been on record for a very long time as being a strong advocate for personal income tax reductions. I think I have that reputation. I note that this year— 
Dr Wayne Mapp 
: Prove it! 
Hon PETER DUNNE 
: The last time we had personal tax reductions in this country I was also in the position that I am in now. My record speaks for itself; it is not just words. The reality is that in this term we have done significant taxation reform. The business tax reform package was a United Future initiative as part of our confidence and supply agreement. It was the first business tax reduction in this country in 20 years. I am committed to seeing personal tax reductions. I know that the Minister of Finance is as well and I can assure the Committee that we are working on those reductions at this moment. Members will just have to wait and see what transpires from that. 
One of the previous speakers referred to the charitable donations regime. That again arose contrary to what Ms Wong said from the confidence and supply agreement with United Future that was signed in October 2005—long before the National Party released its policy. I welcome National’s support for the policy we set out to achieve from October 2005. I think it is a good policy and I am glad National agrees with it. 
I also want to say some words about Ms Wong’s proposed amendment with regard to the redundancy provision in so far as it affects accident compensation payments. There are some problems with the amendment she proposed and I need to advise the Committee of those. The amendment proposed by the member actually amends the 2004 Income Tax Act. The difficulty with that is that that Act has been repealed with effect from 1 April 2008 under the rewrite bill which brought in the new Income Tax Act 2007. So the member seeks to amend legislation that does not exist. But beyond that her amendment does not have any impact beyond 1 April 2008. It would apply to accident compensation payments for the period from December 2006—so presumably from the commencement of the 2007 calendar year—through that little window that ends in April 2008. So in that sense the amendment is unworkable. I understand the sentiment behind the amendment but I say it is unworkable. 
I think those are the major points that members have raised to date and I have sought to comment on them. If other matters are raised I will comment on them as the evening progresses. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to take this call to speak to the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill tonight. The area I would like to speak on tonight is research and development tax credits. Research and development is fundamentally important to New Zealand if we want to progress our country increase our productivity and be at the cutting edge of what we do. New Zealand is a small country and is quite boutiquey in what it produces so it is important that we invest and encourage investment in our research and development so that we stay at the cutting edge so that we can produce things in the global market that other countries cannot produce and so that we can demand premium prices for those products. When we do that we will find that our productivity will increase and that we will become wealthier and because our companies are doing so much better our country as a whole will become wealthier. 
The question really is how to encourage companies to do research and development to take their products to the next level by investing in their technologies and to be at the cutting edge in their industries. How do we actually encourage our companies to do this? It is quite a commitment especially as companies are struggling as it is to get ahead to pay employees and to go out to global markets because it is a big step to go from a domestic market to a global market. So how do we encourage our companies to reinvest back into themselves through research and development? 
It is really important when we look at these tax credits to go very slowly and look very carefully because there can be a downside to producing research and development tax credits in our country. It has been shown overseas that there have been major pitfalls when research and development credits have been put in place. The vehicle by which this bill is looking to increase the productivity of our businesses and to encourage our companies to invest in themselves is this research and development tax credit. 
I was not on the Finance and Expenditure Committee that considered this bill. Shane Jones the previous chair of the committee was in the Chamber but has lost interest and wandered off but I see that Charles Chauvel is here tonight. He is the present chair of the committee. He is sitting across the Chamber and has taken one call tonight I do believe. 
How do we know this is actually the correct vehicle to use in research and development? Officials from the Inland Revenue Department I believe came and briefed the select committee. As this policy is based essentially on the Australian tax credit policy in relation to that country’s Inland Revenue Department Shane Jones the chair of the committee at the time asked our Inland Revenue Department officials who came in to brief the committee on this part of the legislation whether there was any evidence that the research and development credits in Australia were making a difference and actually working. The officials said that they did not know whether they were making a difference. I do believe reading through the minutes that Shane Jones asked that question of the officials more than once and each time they came back and could not say that these research and development credits were actually making a difference. Yet we have still gone down this path which is really interesting. 
We are all keen to get research and development moving along in New Zealand and we are all keen to invest in research and development but it is actually about finding the correct vehicle. It is about ensuring that we have enough submissions in that enough research has been done and that the officials have the answers to the questions we ask when putting this type of legislation together. This is what we need in order to put together the right type of legislation with the right vehicle in it for our companies and for New Zealand so that we do this very precious research and development. That is what this is actually about. We have to remember that in New Zealand research and development is currently 100 percent deductible for tax purposes so already companies are getting 100 percent back. This legislation basically gives a credit at 15 percent tax rebate on top of the 100 percent deductibility already.  
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I appreciate the Minister taking a call a moment ago and I would like to follow up with him on a couple of the issues he responded to. The first is the issue of the proposed new tax treatment for redundancy payments contained on Supplementary Order Paper 167. The Minister ruled out Pansy Wong’s amendment on technical grounds saying that it covered only a certain time period. I put to the Minister in the chair and to the Government that what they are trying to do here with redundancy payments has some logic to it because a redundancy payment is a lump sum paid in recognition of a number of years’ work. Therefore it covers more than 1 tax year. I can see that the Government’s argument is that it is unfair that it should be taxed at the additional marginal rate of the year in which the payment is made because it puts the person up into a higher tax bracket when if it was spread over all the years of employment involved it may not put the person into the higher tax bracket. But the issue of compensation for injury where a person gets a lump-sum payment because he or she has been injured at work and can no longer be involved in full-time work is a similar issue. 
The lump-sum payment can cover more than 1 year’s work. All we are asking the Government and the Minister in the chair to do is to be rational. If they are going to make this provision for redundancy payments there is an even more powerful argument to make it for compensation payments because the poor person receiving the compensation payment may never be able to work again. Such people have been injured at work they get a lump sum covering more than 1 year’s payment they are put into a higher tax bracket and exactly the same arguments apply. It should not be beyond the wit of the officials in the Chamber tonight to change the provision on Supplementary Order Paper 167 to also include accident compensation lump-sum payments that cover more than 1 income tax year. I would really appreciate the Minister’s advice as to why that obvious anomaly is being ignored. 
Secondly I would like to raise with the Minister the matter of finance leases also covered on Supplementary Order Paper 167. The Minister told the Committee that the cost of these operational leases which are really finance leases is roughly $92 million—I think that is what he is saying—and the provision on Supplementary Order Paper 167 reduces that cost to the Crown down to $16 million. 
Hon Peter Dunne 
: By $16 million. 
Dr the Hon LOCKWOOD SMITH 
: It reduces it by $16 million; I had misheard. The Minister says that the department is consulted. I have talked directly today to some of the key players involved in these transactions because of course they made submissions to the select committee. I wanted to check whether the Government had reached agreement with them on this new provision. In fact it turns out that it has not. What I want the Minister to respond to is this. The margins involved in these kinds of transactions are obviously not great. If the Government is taking away $16 million in only two deals—the Minister acknowledges that it is only two deals—that predate 20 June 2007 there is no issue about closing this loophole going forward. There is no issue about that at all; the issue relates to the deals already done under existing law pre - 20 June 2007. If the Minister is recovering $16 million from those two deals there is no question that those deals will be marginal if not put under. Is it right—[ 
Interruption 
] Dr Cullen shakes his head. He talked to the players involved. They will probably put the deals under. The language they shared with me today was that it will sink the issue. What was the language used? Here it is: I wrote down that this will “put this deal under water and as a consequence there will be litigation.” I ask the Minister on what basis was this—true depreciation loss is divided by six—arrived at because some of the players say it will put them under? 
My third question for the Minister relates not to Supplementary Order Paper 167 but to clause 64 in Part 1. There has been no discussion of this tonight. That is the amendment to the fair dividend rate in respect of offshore portfolio investment holdings. This is my question to the Minister. New clause 64 the new majority provision put in by the select committee has provisions for the commissioner to determine under subclause (3) the attributing interest for which the fair dividend rate may apply and under subclause (4) the attributing interest of a person for which the fair dividend rate may not be used. There is a lot of concern about this and controversy around the fair dividend rate. This is changing the provision somewhat so my question asks how taxpayers will know specifically what the commissioner declares will be allowed for as attributing interest for the fair dividend rate provisions and what will not be allowed for by the commissioner. 
If the commissioner does not allow certain attributing interests and the person is a provisional taxpayer I ask whether people will be caught under the penalty provisions—use of money interest provisions—through not getting provisional tax payments correct if they cannot foresee what the commissioner will declare is allowed for the 5 percent fair dividend rate or is not allowed for the 5 percent fair dividend rate. The provisions here as I understand them will allow a higher tax assessment than the 5 percent fair dividend rate. If people as provisional taxpayers have based their provisional tax payments on a 5 percent fair dividend rate and the commissioner says: “Oh no this attributing interest will not be allowed for under the 5 percent fair dividend rate; another method has to be used here under the new clause 64(4).” what happens if that is a higher tax assessment and people being significant taxpayers have paid their provisional tax incorrectly because they could not foresee what the commissioner was going to declare there? 
All I am asking is for the Minister to satisfy us that that is not possible and he could tell us I guess that the commissioner will make clear at least a year in advance what payments can be covered by the fair dividend rate and what he will not allow under that rate. As long as that determination is made sufficiently far in advance I can see that my concerns will not in fact come to bear. But I would appreciate the Minister advising on that because there is some concern around the industry in this general area. So with those three issues aired I will let other colleagues follow on. 
RODNEY HIDE (Leader—ACT) 
: 
 The ACT party rises to oppose the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill in its entirety. 
I will make some overview points and I ask first why we are confirming these annual rates. It is clear to everyone in New Zealand and to the majority of parties in this House that New Zealanders are overtaxed. It appears to the majority of New Zealanders that this Government has taxed New Zealanders poor and made itself rich. 
It is clear to the overwhelming majority of New Zealanders that they should keep some of their hard-earned tax money and that they should spend it themselves rather than allow the Government to accumulate it—particularly heading into an election year where the Government will spend money not for a good purpose and not for general welfare but to secure the extra votes it needs. And why are we confirming the 39c rate? Dr Cullen marched into office in 1999 saying “Oh well we will just tax the rich. We will just tax the 5 percent who are earning too much and we need the extra estimated $400 million to fund what the Labour Party has planned.” 
Hon Rick Barker 
: Superannuation cuts. 
RODNEY HIDE 
: Well I tell Mr Barker that the economy was growing so strongly and tax revenues were so good that that member cannot point to any one year when that extra $400 million was actually needed. He cannot and he has just admitted that he cannot. That tax was nothing but a “spite tax”. That is what it was. The money was not needed by the Government and of course now we find that 12 percent or 13 percent of taxpayers are paying this new “spite tax”—a tax that was never needed other than to penalise those who earned more than others those who worked harder than others and those who had been more successful. 
Although we might agree that it is reasonable for people who have earned twice as much as other people to pay twice as much tax it is hard to see it as reasonable that they should pay three times as much tax four times as much tax five times as much tax or six times as much tax as their neighbour as readily happens nowadays. More particularly those taxpayers are the ones who do not put out their hands for help from the State. They are taking out health insurance they are taking responsibility for their children; and they are working. But I tell the Minister in the chair Peter Dunne that they are the ones whom he represents who do all the work. 
We find with a bill like this—and this is something that has been consistent for years and years in New Zealand—that a great swathe of New Zealand has been overtaxed and overlooked. So I do not understand—at all—why we are confirming these tax rates. They are too high. New Zealanders do not want to hear the Hon Michael Cullen talk about tax cuts; they want to see him actually deliver them. Tonight is the night. Thank you Madam Chair. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I will respond to some of the points that have been made. I go first to the comments made by Katrina Shanks about research and development. 
I think it is worth rehearsing where the research and development changes arose. When the  
Business Tax Review 
 discussion paper was released in 2006 and put out for consultation a range of options were identified other than changing the tax rates in terms of providing assistance to business. Changes to the research and development regime or a more aggressively attractive research and development regime came in as the top priority from that consultation process and that was introduced in this year’s Budget. We have made the point that we are acting cautiously. We are deliberately following some of the lessons learnt from Australia. We are not going to have the pitfalls that they have in some areas but we are going to be guided by their experience. I take this opportunity of commending to Ms Shanks a speech made by her deputy leader during the second reading of this bill on the issue of research and development that I thought was a remarkably constructive contribution. 
As far as the issue of finance leases is concerned let me go back to what I said in response to the original questions. The exposure potentially at the moment is around $92 million. That will be reduced by some $16 million as a result of the measure contained on the Supplementary Order Paper. I indicated earlier that we get into difficult territory here because there are two individual cases we know of—I underline “that we know of” and I do not want to start being too taxpayer-specific because I cannot be. However it is fair to say that since the original Supplementary Order Paper was tabled officials have consulted all of the affected parties. Consultation does not mean an agreed solution necessarily but it does mean that the sentiments that are expressed on the Supplementary Order Paper are seen as a reasonable solution to the difficulty we face. Obviously others will make a judgment in reaction to those but it is our responsibility to secure the New Zealand tax base and also to ensure that we have a robust regime moving forward. I think the changes that are contained on the Supplementary Order Paper which I can assure Dr Smith have been the subject of wide discussion provide that pragmatic balance. 
I cannot remember whether it was that member or Pansy Wong—I think it may have been Dr Smith—who raised the issue of accident compensation in the context of the redundancy changes. We can make an argument that accident compensation payments deserve a similar form of treatment but we could make the same argument in respect of a number of other areas of social policy assistance. The redundancy changes arose as a result of a particular problem. The member’s analysis of the difficulties we face at the moment in terms of redundancy payments earned in a particular year even though they might be compensation for many years’ work is entirely accurate. What this bill seeks to do is correct that anomaly. I indicated before that the amendment that his colleague had moved had some technical difficulties; it amended legislation that actually no longer exists. At this stage we are focusing only on the redundancy change. I think that other issues will have to be considered at another time. 
Finally I will make a comment about the changes the member commented on in respect of the fair dividend regime. This is an area of huge technicality and I will not profess to be sufficiently expert to give him a comprehensive ruling on it. But I will make this point which I think goes to the heart of the point that he was raising. These changes are intended to be applied prospectively rather than retrospectively. So the issue he was expressing concern about—a square-up being applied by the Commissioner of Inland Revenue in an instance where the taxpayer may have made a wrong call—should not apply. This is a prospective consideration rather than a retrospective one. 
I also observe with regard to the fair dividend regime that only just over a year ago we had a very intense debate in this Chamber about the entire approach to the taxation of offshore investments. All sorts of dire predictions were made as to what would happen on 1 April. I can recall—and I am sure that my colleague the Minister of Finance can recall—the representations we received from a range of investors and investment institutions that the end of the world was nigh. It is interesting that a lot of the prospectuses and correspondence now laud the portfolio investment entity regime that we introduced as being very positive. We are seeing adaptations of those regimes being introduced all the time by various savings entities that are good and positive and that are benefited by some of the changes that were announced in this year’s Budget. 
R DOUG WOOLERTON (NZ First) 
: 
 I think it is good that I follow the Minister because regarding the fair dividend tax situation I was concerned that our tax adviser Robin would be really worried that some form of policy that he had put up had been very handsomely and widely embraced by the financial community. I was wondering whether Robin would want to revisit that matter with the idea of somehow bringing down a harsher regime because he had been too kind to those people all over the place. 
I will talk briefly in general terms about a statement that Rodney Hide made versus statements I have read. Whether it is  
Time 
 magazine the  
Bulletin 
 or whatever the financial literature is that one picks up it will tell one that around the Western World in the last 10 years the top 5 percent of wealth has never ever in the history of humankind grown at such a rate—never ever. The growth in wealth of the top 5 percent of people in the Western World is absolutely unprecedented. Yet we have National and ACT coming in here and saying that in fact we are taxing those people out of existence—that we are taking away all of the incentives that drive them on to greater productivity. 
That is nothing less than absolute bunkum. Those people have never done as well in the history of humankind as they are doing today. They have never done as well as they are now doing. 
Dr Wayne Mapp 
: In 1999 it was 5 percent; today it’s 20 percent. 
R DOUG WOOLERTON 
: I hope that the people who are listening to this debate can hear that member raving on. He never makes any sensible contributions. He is voting against tax cuts which National has done consistently since 1960 and he sits there bellyaching on about the difference between 5 percent and 20 percent. 
Dr Wayne Mapp 
: How about fiscal drag? 
R DOUG WOOLERTON 
: Oh the fiscal drag! That is a Muldoon term if ever there was one. Do members remember how Muldoon used to bellyache about fiscal drag? There was a man who did not understand economics if ever there was one. Contrary to what Rodney Hide was saying I say the top 5 percent of wealth creators in the Western World have never had it so good in the history of humankind. 
We in New Zealand First support the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill and we support the tax reductions encompassed within it. We support the KiwiSaver scheme obviously because we need to save more in this country—and New Zealand First has said that right the way through for many years. And we support what we see as a return—or a slight dipping of the toe in the water as Dr Cullen explained it as being—to incentivising the taxation system around research and development. Unlike Katrina Shanks whom I admire and whose expertise I respect we in New Zealand First believe that it does make a difference when one gives a tax incentive. It helps when we give a message in the only meaningful way that matters that we want people to enhance their businesses and to enhance our industry by adopting better machinery and providing more productive workplace opportunities. The only way to tell them show them and encourage them to do that is to give them a tax incentive. 
I turn to the minority view of the National Party which is essentially about a philosophical belief it has that personal tax cuts across the board will do something magical to our economy. Personal tax cuts did not do that in America and they have not done it anywhere else where they have been applied but all of a sudden National believes that they will do wondrous things for New Zealand. That of course will be what the debate at the next election is all about. It will be about personal tax cuts versus personal services delivered by the Government be it in health in education or in all the other sorts of things. 
John Hayes 
: So you’re a socialist at heart. 
R DOUG WOOLERTON 
: It is not a matter of being a socialist. This legislation is actually a very very mainstream measure and only a party that has moved to the extreme right like the National Party would suggest that these were left-leaning policies. 
We in New Zealand First have said unashamedly that we do not favour across-the-board tax cuts. We support tax cuts that incentivise businesses that export and encourage exports and we encourage tax cuts like the Working for Families package which gives money to those who need it and does not reward those who do not need it. That is why we support this bill. That is why we have supported the Labour Government and its support partners through this entire enterprise. We believe it is heading in the right direction and we are encouraged by that. 
CHRIS TREMAIN (National—Napier) 
: 
 That was Doug Woolerton from New Zealand First who brought to us his perception of wealth creation among the top 5 percent of wealthy people in the world. 
But I think we need to be clear about what the debate has been around I say to Mr Woolerton. It has been around the number of people in New Zealand who have moved into the top tax bracket and who now pay 39 percent. It is no longer just the 5 percent of New Zealanders who were originally there; we have got to the point where 12 to 15 percent of New Zealanders are in that top tax bracket. People in my own electorate and other members’ electorates—teachers and policemen—have moved into that top tax bracket. I ask Mr Woolerton whether they are rich and whether nurses are rich. 
R Doug Woolerton 
: No. 
CHRIS TREMAIN 
: They are not. Are policemen rich? I believe that they are in the wrong tax bracket. That is what the debate has been about tonight and that is one of the key reasons that members on this side of the Chamber are not supporting the legislation. 
The second point I want to make is to refer to the Minister in the chair Peter Dunne who put on record tonight his reputation around tax cuts. I ask that Minister whether he was in Cabinet on 19 April when Dr Cullen put up a paper. Clause 23 stated: “To maintain our commitment to the long term fiscal objectives I may need to make some adjustments to future budgets. These are likely to be that we do not adjust tax thresholds in the medium term”—meaning in 3 4 5 years—“thereby retaining fiscal drag and potentially allowing tax to GDP ratios to rise slightly… Accordingly this paper seeks Cabinet’s agreement to rescind our previous decision to adjust income tax thresholds. Within the projection period (ie from 2011/12 onwards)”—so we are looking out a fair way ladies and gentlemen—“we will adjust tax thresholds for inflation but some portion of fiscal drag might need to be retained to finance our decisions.” 
The Minister in the chair put on record his position on tax. I would suggest that he was part of Cabinet on the day that it signed that particular minute and I believe that that does not accord with his record on taxation. 
I will finish by making a comment on Dr Paul Swain— 
Hon Dr Michael Cullen 
: Dr Paul Swain? 
CHRIS TREMAIN 
: —well he is a learned member—and some of the comments that he has made tonight. The member wanted to know why National was not supporting the wider taxation provisions even though parts of the legislation may have some merit. Well we do not like Labour’s tax policy. We do not like it specifically or generally. We do not like where the economic direction of the country has gone under this Government and that is why we are not supporting the legislation. If National supported this legislation it would be the equivalent of our standing up here and supporting the general direction of the Labour Government. We do not buy into Labour’s vision and on that basis we do not support this legislation. That is the answer the member is looking for. 
We have learnt something tonight though with regard to Supplementary Order Paper 167 which Mr Swain is very keen on. It brings about some redundancy payment advantages. I have not looked at the fine print of that Supplementary Order Paper but I wonder whether there are any lower tax rates for silver platters given as redundancy payments. Mr Swain who is very learned and has had a long career in Parliament is moving on to better things. 
Hon Dr Michael Cullen 
: In that case you get 3 months’ severance pay when you lose. 
CHRIS TREMAIN 
: I thank the member; I will be looking forward to that. 
Christopher Finlayson 
: Is he standing against you in Napier? 
CHRIS TREMAIN 
: He is not standing against me in Napier. We put that challenge out there but Dr Cullen would not take it up. He was quoted in the newspaper as saying that Labour would be choosing an excellent candidate in the seat of Napier that that candidate would have his 100 percent support and that that candidate would win Napier in the next election. It will be interesting to see whether the candidate who was chosen was the candidate whom Dr Cullen was actually thinking about at the time. Never mind; that remains to be seen. But I am not being arrogant about it; it will be a hard campaign in Napier and I am looking forward to it. 
Hon MARK BURTON (Labour—Taupo) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Maori Party 4; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Motion agreed to. 
The CHAIRPERSON (Ann Hartley) 
: The amendment in the name of Pansy Wong to insert new clause 85C is out of order as it was lodged with fewer than 24 hours’ notice and may have an impact on the Government’s fiscal aggregates. 
The question was put that the amendments set out on Supplementary Order Papers 167 and 168 in the name of the Hon Peter Dunne to Part 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Maori Party 4; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to. 
Ayes 65 
New Zealand Labour 49; New Zealand First 7; Maori Party 4; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Part 1 as amended agreed to. 
Part 2 Amendments to Tax Administration Act 1994 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Part 2 of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill refers to amendments to the Tax Administration Act 1994. Before I get into the detail I have to say that I hope the Government has a serious look at the Tax Administration Act 1994. It is a shambles. It is an absolute shambles. 
Hon Dr Michael Cullen 
: It’s a National Party Act. 
Dr the Hon LOCKWOOD SMITH 
: It is not a shambles because of the provisions of 1994; the problem is that the Act has been amended so many times since that time that any practitioner would require a PhD to find his or her way around it. 
Hon Dr Michael Cullen 
: Well you’ve got a PhD—no problem. 
Dr the Hon LOCKWOOD SMITH 
: I tell the Minister he should try to find his way around that particular Act. It is just a shambles. 
What this bill does though is deal with some of the compliance and penalties provisions in that Tax Administration Act. There are three particular issues that the Opposition wants to focus on. One relates to the issues around unacceptable tax positions. They start with clause 184. Then there is an issue around voluntary disclosure provisions. They are particularly relevant to clause 188. Then there is an issue in relation to simple mistakes or errors made in the filing of tax returns. The clause that most closely relates to that is clause 191. 
I will start with the unacceptable tax position provisions. If we look at the commentary made by the Finance and Expenditure Committee we see that what the select committee has to say is quite revealing. The select committee heard a number of submissions on this issue. Before I go on to discuss what the select committee said let me make very clear what the provisions in this bill do in respect of unacceptable tax positions. The unacceptable tax position provisions have caused a real problem for taxpayers. Back in 2006 an attempt was made to remedy that problem to give the Commissioner of Inland Revenue discretion to not apply tax penalties when certain unacceptable tax positions were taken because it would simply be unfair to do so. But the problem was not fixed. The effort in 2006 to fix the problem did not fix it. 
What this bill is doing—and I move specifically to the provision—in clause 184 is clarifying the position in respect of unacceptable tax positions. It makes it clear that where the new international financial reporting standards lead to someone developing an unacceptable tax position that person will not be penalised for that which is quite proper. Most particularly clause 184(2) makes very clear that from now on unacceptable tax positions can apply only to income tax and the tax shortfall arising from the taxpayer’s position and it sets out the thresholds. What that subclause is doing is making it very clear that the unacceptable tax position provisions can no longer apply to GST or to withholding tax payments. What is interesting about this is that the Government has recognised that the attempts to fix up the unacceptable tax position provisions in 2006 did not work adequately. I believe that that is why the Government is now making it very clear that in fact GST filings and withholding tax filings are no longer covered by the unacceptable tax position provisions. 
If we go from there to the select committee’s report we see that the issue now becomes the date on which this new clarification applies. The select committee commentary states that the majority believe: “The amendments to the unacceptable tax position penalty in the bill have not been made retrospective because the discretion enacted in 2006 (and repealed in this bill) was backdated to 1 April 2003. The majority of us consider that this dealt with the cases where the imposition of that penalty may have been unfair.” What is inconsistent about that comment made by the majority of the select committee is that if the changes made in 2006 had fixed the problem we would not need the amendment now being made to clause 184. We would not need further clarification that GST and withholding tax payments are no longer covered by the unacceptable tax provision penalties. If in fact we need clause 184(2) to make clear that those unacceptable tax position provisions will not apply to GST and withholding tax why can we not in the interests of fairness backdate it? The majority of the select committee said that backdating should be unnecessary because the issue had been fixed in 2006 and there was discretion for the commissioner to deal with the issue back to 2003. If that were correct we would not need this subclause. The fact that we have got this subclause shows that the issue was not fixed in 2006 and therefore this subclause should be backdated to avoid any doubt that issues to do with GST and withholding tax payments are not covered. 
I have put an amendment before the Committee to amend clause 184(3). It backdates it to at least 2006. I accept that maybe the fiscal consequences of backdating it to 2003 could be significant but there should be some backdating to at least recognise that the 2006 effort to fix this issue failed. If it did not fail we would not be doing this provision now. That effort did not produce the outcome expected by this Parliament; therefore it should be reasonable to backdate this remedial legislation to at least the time that we tried to fix it and that was 2006. That is why I have laid an amendment on the Table to backdate this provision—to have it apply from 1 April 2006 instead of from 1 April 2008. It does not take it right back to 2003; it takes it back to when this Parliament tried to fix it up but failed to do so. That is why it is being fixed up now—because last time round the House did not achieve the outcomes. 
What the practitioners the professionals tell us is this: although the Inland Revenue Department policy people were supportive of the change although the policy people advised that the changes made in 2006 would pick it up Inland Revenue Department operations did not deliver what this Parliament had expected to be delivered by those 2006 amendments. That is why clause 184(2) is required and it should be backdated to 2006 to make sure that what this Parliament intended in 2006 is now delivered. 
That is the first issue in respect of Part 2 that the Opposition wants to cover. There will be other issues but that is the particular provision in respect of the unacceptable tax position. I want to make clear—and I am sure this speech will be called to an end very soon—that the other key issues relate to clause 188. That clause is in respect of voluntary disclosure of tax shortfalls. Again we previously tried to fix that up. Everyone in Parliament agrees that it is really important to encourage voluntary disclosure because in that way we collect more revenue. I want to come back to that clause because I think that with its current wording we are not going to get voluntary disclosure to the extent that we should. The Opposition wants to put forward further debate on that. 
The other part in Part 2 that I give notice we want to focus on is clause 191 which repeals section 141KB. Section 141KB deals with only section 141B of the principal Act. Section 141A deals with simple mistakes made by people filing tax returns. I want to come back to the issue which I think is very real that where people make simple mistakes they should not be penalised. There are issues around clause 191. There is a classic example which I should mention where a person filed a tax return used the wrong return to file it paid the right money and was penalised. 
Debate interrupted. 
Sitting suspended from 10 p.m. to 9 a.m. (Wednesday)