Volume 616 Week 54 - Tuesday 6 April 2004 
Volume 616 Week 54 - Tuesday 6 April 2004 
[Volume:616;Page:12365] 
Tuesday 6 April 2004 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Visitors 
Republic of Ireland—Member of Joint Committee on Finance and Public Accounts 
Mr SPEAKER 
: I have much pleasure in informing honourable members that Mr M J Nolan member of the Joint Committee on Finance and Public Accounts Republic of Ireland is present in the gallery. I am sure members would wish he be welcomed. 
Local Government Law Reform Bill (No 3) 
Procedure 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I seek leave for the consideration of the Local Government Law Reform Bill (No 3) to include the consideration and adoption of amendments to the Local Government Act 1974 foreshadowed at the Business Committee meeting last week. 
Mr SPEAKER 
: Is there any objection to that course being followed? There appears to be none. 
Speaker’s Rulings 
Contempt Finding—Hon Dr Nick Smith 
Mr SPEAKER 
: On 24 March 2004 the Hon Dr Nick Smith was found to be in contempt of court by the High Court. Dr Smith subsequently wrote to me seeking from me a ruling as to his status as a member of Parliament in view of this finding. Under section 129(1) of the Electoral Act 1993 if the finding of contempt did operate to create a disqualification it is the Speaker’s duty to declare the seat vacant. I have considered the position created by the finding of contempt and have received a superb piece of work from the Clerk of the House which I will table shortly and which I would invite all members to read. I have concluded that the finding of contempt against Dr Smith is not conviction of a crime within section 55(1)(d) of the Electoral Act and that consequently Dr Smith’s seat is not vacant. Therefore no further action is necessary on my part. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I raise a point of order Mr Speaker. I am sure that I will find that that ruling is correct when I come to read it but I would be intrigued to know how you can make that ruling when the ruling on the Hon Harry Duynhoven was just as clear and you were just as able to make a decision then but in that case you referred it to the Privileges Committee and in this case you did not. I would like to know what principle you follow as to when you send things to the Privileges Committee and when you do not. 
Mr SPEAKER 
: I would invite the member to read the report that Mr McGee has presented to me which goes into that in some considerable detail. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. I think the answer to the question is that at the critical time when you would have been required by law to make a decision there was no need to make a decision and that was pointed out by me and others in this House before you made the decision. But the other question I want to ask is whether it is usual for a quasi-judicial decision to be made namely by yourself today and have people applaud it or are we going down the track of American behaviour in the courts? 
Mr SPEAKER 
: That is not a point of order. 
Points of Order 
Foreshore and Seabed—Media Briefing by Government 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I raise a point of order Mr Speaker. Can I raise another matter that I think is serious and reflects on Parliament and the nature of our parliamentary discussions and may require you to make a ruling about it. It is this. I have in my hand a media advisory that comes from the Leader of the House and it announces to the media that the Government will announce the policy that will inform its foreshore and seabed legislation tomorrow in the Beehive theatrette at 9.15 embargoed until 1 o’clock. When one goes on to read it one finds it says that the media are to be told what the Government’s foreshore policies are and to be told which principles—I do not know if that is the right word—or factors the Government will use in its foreshore legislation. But the House as one finds when one reads the advisory further will not know about the legislation until it is tabled on the Thursday. That leaves members of Parliament completely out of the debate. It becomes a discussion between the Government in secret with the media. There is no parliamentary debate. If the media come out from that lock-up and ask for comment from say the Leader of the Opposition the Leader of the Opposition will have no idea what the Government’s policies are. 
Mr SPEAKER 
: Please come to the point. 
Hon RICHARD PREBBLE 
: The British House of Commons would not allow it. The British House of Commons would point out that under our Standing Orders there is a provision for a Minister to rise in this House and make a ministerial statement; then every member of Parliament the public and the media can find out together. The Government ought to either do that or alternatively table the bill so that all members of Parliament can discuss it instead of having this procedure which I suggest reduces Parliament to an irrelevancy. 
Mr SPEAKER 
: The member may say that but I refer him to Speaker’s ruling 115/4 which is one of my rulings: “While it is eminently good practice for Ministers to make important policy announcements in the House it is not by any means a convention in New Zealand.” 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I raise a point of order Mr Speaker. I am obliged to you for pointing out your Speaker’s ruling to me. I have now had a chance to read it. You are correct that that is not yet a convention in New Zealand but I point out that the ruling refers to a policy and in this case the Government is taking it another stage—this is actually legislation that the Government will table on Thursday. I note that the Leader of the House is shaking his head; no doubt he will be careful not to give the draft legislation to the media. It would be helpful Mr Speaker if you were to make a suggestion to the Government that the parliamentary thing for it to do if it has decided the policy on Wednesday is at least to make a ministerial statement on Wednesday so that the House can also know. It really is treating members of Parliament with contempt to inform the media then to advise the House that it will not let parliamentarians know what is in the bill until Thursday just before a 3-week adjournment. Perhaps the Leader of the House who is thinking of taking a call would give an indication that he was prepared at least to make a ministerial statement on Wednesday. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 If it were a requirement that every time a policy statement was made a ministerial statement was made in the House we would spend most of our time having ministerial statements and responding to them. I invite the member in particular to check his  
Hansard 
 from the period 1984 to 1990 to see how many times he for example announced State asset sales without any announcement being made in the House before it was made in the public arena. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I am happy to. The member makes a very interesting point but he will discover that State asset sales had to be authorised by legislation—had to go through this House. We had to have approval to do them. In this particular case—[ 
Interruption 
] I think the member should reflect between now and Wednesday. Here is a major piece of legislation and the Government says that it will have a lock-up—that in secret it will inform the media—and it does not want to advise members of Parliament of the legislation until it is tabled on Thursday. Surely the Leader of the House can see that that is not parliamentary. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 A policy statement is being made on Wednesday. The legislation will not be tabled until Thursday. It will not be ready until Thursday. We want it to be considered by the Cabinet legislation committee which has power to act. I am happy to tell the member that all the policy material will be made available to members of Parliament before 2 o’clock tomorrow afternoon. A general debate time is available for people to debate that policy. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I think most members have some sympathy for Mr Prebble’s complaint excepting that it comes with a thoroughly bad precedent in his case as we well know. A good example was on 6 June 1989 when the BNZ was sold to Fay Richwhite in what was claimed by his now coalition partner to be a sweetheart deal. [ 
Interruption 
] Thirty percent was sold. Does he not remember? Thirty percent was sold under what was called a sweetheart deal with no announcement to Parliament whatsoever. 
Mr SPEAKER 
: That is an interesting piece of information but it does not actually add anything. I think I have just about had enough on this particular matter but Mr Brownlee wants to raise a point of order. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I raise a point of order Mr Speaker. Perhaps as a way through this and as a way for the Government to recognise that this is serious legislation and that the announcements tomorrow do form the basis certainly of the legislation that may come this week or some time in the future I wonder whether we could have an indication from the Leader of the House as to whether he would consider allowing one spokesperson from each of the Opposition parties to participate in the embargoed lock-up. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I would be very happy for that to happen under the usual conditions of an embargo as with Budget lock-ups. 
Questions to Ministers 
Defence—Budget 
1. CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Minister of Finance 
: Has he received any proposals for an increase in defence spending? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: New funding has been approved to address market relativity in pay for defence personnel. Yesterday my colleague the Hon Mark Burton announced the preferred tenderer for the $500 million project to equip the Navy and civilian agents with the new ships. Those proposals can be met from within prudent budgetary provisions.  
Clayton Cosgrove 
: Has the Minister received any further reports on increases in the defence budget? 
Hon Dr MICHAEL CULLEN 
: Yes. I am aware of a statement made by Mr Simon Power that we should match Australia’s defence spending as a proportion of gross domestic product (GDP). That would be an increase of about $1.5 billion per year which would certainly leave no room for cuts to the corporate or to the top tax rate. 
Simon Power 
: Can the Minister confirm that defence spending as a percentage of GDP is tracking downwards under this Government from 0.9 percent of GDP this year to a projected 0.72 percent of GDP in 2008 compared with 1.99 percent of GDP in Australia? 
Hon Dr MICHAEL CULLEN 
: The member will have to learn more about how Budget projections are done. There is a large annual contingency element in out-years that is not allocated to specific votes. Therefore we cannot possibly make those kinds of projections for any individual vote. 
Rt Hon Winston Peters 
: Does the Minister recall that in 1988 the then Minister of Defence Mr Tizard promised that the transactions in which the Government was engaged would see contracts go to New Zealand; if so how come the Burton announcement is that the $500 million contract is to go to Tenix an Australian-owned company? 
Hon Dr MICHAEL CULLEN 
: As I understand it it is anticipated that some of the work under the contract will be done in New Zealand. As I recollect in terms of the 1988 contract more was done in New Zealand than under the original agreement. 
Hon Peter Dunne 
: Does the Minister consider that the existing procedure for funding defence capital purchases is adequate or is he prepared to look at new and innovative ways of funding such purchases such as lease arrangements taking items off balance sheets etc. on the assumption that unless such a change is considered schools and hospitals will beat defence requirements every time? 
Hon Dr MICHAEL CULLEN 
: However one goes about it at the end of the day the Government is going to be paying the money. I am not terribly keen on any form of creative accounting that takes things off balance sheets by and large. One usually wakes up a few years down the track when it comes back and bites one in some form or another. 
Benefits—Future Directions Package 
2.  
Dr DON BRASH (Leader of the Opposition) 
 to the  
Minister of Finance 
: Does he stand by his statement that the Future Directions Package will “significantly increase direct income support and incentives to move from welfare benefits into paid employment”; if so why? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
:  
Yes because the statement is correct. 
Dr Don Brash 
: Why then has the head of the Labour Market Policy Group stated in written advice on the Future Directions Package that the Government’s plans would result in “lessening the incentive to paid work” and why has the Government totally ignored this advice? 
Hon Dr MICHAEL CULLEN 
: We have not. I think the documents the member has date to mid-January 2004. There was a great deal of further development to the package after that date. On Budget night the member will find that a good deal of the money he is proposing to spend on the rich will be spent on low to middle-income families. 
Hon Mark Gosche 
: What other proposals has the Minister seen regarding welfare and worker protections? 
Hon Dr MICHAEL CULLEN 
: I have seen proposals for abolishing the statutory minimum wage abolishing the unemployment benefit reducing benefit levels cutting entitlement to the pension and dismantling worker protections. We look forward to Dr Brash explaining the details of those proposals that he has put forward. 
Sue Bradford 
: Has the Minister seen any of the research on the outcomes of American workfare and time-limited benefit programmes over the last 10 years and can he confirm that a Labour Government will not move towards such initiatives? 
Hon Dr MICHAEL CULLEN 
: The Government tends very much to prefer the use of carrots to sticks. The American workfare proposal tends to shift problems from one state to another. They are also starting to run into difficulties when some of their time-limited periods run out and they do not know quite what to do about some of the people left as a consequence. 
Hon Richard Prebble 
: When looking at incentives to encourage full-time work did the Government consider the fact that it would be possible to give every full-time worker a $100-a-fortnight tax cut which would cost $4 billion—that is two-thirds of the surplus—and that that is a lot easier to administer and fairer than fiddling around with income-support payments? 
Hon Dr MICHAEL CULLEN 
: If applied immediately that proposal would leave an approximately $5 billion cash deficit this year and a multi-billion dollar cash deficit the following year. If the member went through 1984 to 1990 trying to get the deficits down and would now blow them out again he has learnt nothing from history. 
Dr Don Brash 
: For the bulk of the money in the Future Directions Package why has the Government opted to make no distinction between those in work and those not in work thus failing to increase the incentive to move off benefits into paid employment? 
Hon Dr MICHAEL CULLEN 
: The member is incorrect. The incentives have been substantially increased but unlike the previous National Government we will improve the position of working low to middle-income families without pushing beneficiary families further into poverty. 
Dr Don Brash 
: Why in its Future Directions Package has the Government chosen to ignore OECD advice that in-work payments need to be significant to create a real incentive to move off benefits into paid employment? 
Hon Dr MICHAEL CULLEN 
: As I said to the member he is relying upon one document from mid-January. He will have to wait until 27 May to find that policy has long since overcome the proposals at that time. 
Health Services—Targeting 
3.  
TIM BARNETT (Labour—Christchurch Central) 
 to the  
Minister of Health 
: What evidence has she seen to show targeting health services and funding to people with high health needs is working? 
Hon ANNETTE KING (Minister of Health) 
:  
I have seen the report from Statistics New Zealand on Maori life expectancy which shows that after years of a widening gap between Maori and non-Maori mortality rates the trend has been reversed. I endorsed Dr Tony Blakely’s comments on this report: “It is likely that the bi-partisan efforts of both the 1996-99 National-led and the 1999-2002 Labour-led governments to assist Maori development generally and more specifically in the health services have helped.” Most New Zealanders I believe will be very pleased with this outcome. 
Tim Barnett 
: When were the first steps taken to proactively develop Maori providers? 
Hon ANNETTE KING 
: The first contracts were signed in 1992. Between 1993 and 1997 the number of Maori providers increased from 30 to over 200. The policy directions were set in 1993 including “resource allocation priorities which take account of Maori health needs and perspectives”. I believe we ought to be celebrating those improvements in Maori health not criticising them as Don Brash has done. [ 
Interruption 
] 
Mr SPEAKER 
: The member knows he cannot say that. He will stand withdraw and apologise. 
Gerry Brownlee 
: I stand withdraw and apologise. I raise a point of order Mr Speaker. 
Mr SPEAKER 
: It had better not be discussing that point. 
Gerry Brownlee 
: No it is not that point at all. I simply ask that you again advise the House what our remedies are when a Minister stands up and misrepresents very deliberately and quite explicitly comments made by another member in this House. 
Mr SPEAKER 
: All I can say is that the remedy is in debate because I have never yet heard one party accept what another party has said. After all this is part of party politics. It is part of the genuine cut and thrust of debate in this House. 
Dr Lynda Scott 
: Does she agree as average life expectancy is increasing for all New Zealanders regardless of race—1.4 years for females and 1.9 years for males—that improving Maori longevity is to be expected and what is her view of the summary by Statistics New Zealand that diabetes smoking and poverty contribute to the Maori - non-Maori differential; so National’s view of targeting programmes that meet these health needs regardless of race is how to best maximise improved health for all New Zealanders? 
Hon ANNETTE KING 
: Targeting diabetes smoking exercise obesity and poverty is what is needed in health and that is exactly what this Government is doing. Unfortunately Maori are overrepresented in those statistics and I can only believe that that member then believes we ought not to provide any targeted assistance for those people because they need it more. What else does she mean if that is not what she means? 
Heather Roy 
: When she is targeting people with high health needs why will she not target individuals with high health needs rather than targeting racial groups? 
Hon ANNETTE KING 
: In New Zealand the greatest weighting in health funding is done on age not on race groups as the member said. So when we provide funding for all the under-sixes it is provided by age not by the individual young child. When we provide it to the over-65s it is to all over-65s not Mr Smith or Mr Brown because we know that young people and old people have more health needs than those who are in the middle age group. 
Rodney Hide 
: I raise a point of order Mr Speaker. I would ask you to look at how the Minister answered that question and maybe go back over the  
Hansard 
 because the specific question related to racial groups not to an age group. The Minister gave a very good exposition about why over-65s should get more money and why under-sixes should get more money but that was nothing whatsoever to do with the question. 
Mr SPEAKER 
: No the Minister addressed the question to my satisfaction. 
Peter Brown 
: Is the Minister aware there is a major dispute developing between physiotherapists and the Minister for ACC and does she share the view that if it continues the way it is going there will be a severe effect on the health services of this country and on the health budget; if so what is she doing about it? 
Hon ANNETTE KING 
: That question is best addressed to the Minister for ACC. However I am aware of the difficulty. I am also aware that the Minister for ACC is dealing with that issue. 
Dr Lynda Scott 
: I seek leave to table Statistics New Zealand data that shows that Maori - non-Maori differential partly reflects diabetes smoking and poverty. 
Document by leave laid on the Table of the House. 
Dr Lynda Scott 
: I seek to table the latest figures from 2000 of the percentage prevalence of cigarette smoking in New Zealand which show that 49 percent of Maori smoke compared with 22 percent of others. 
Document by leave laid on the Table of the House. 
Dr Lynda Scott 
: I seek to table the statistics of age-standardised death rates that show that ischaemic heart disease cerebral vascular disease hypertensive disease other heart disease and all diseases attributed to smoking are much higher in Maori. 
Document by leave laid on the Table of the House. 
Rt Hon Winston Peters 
: In the interests of fairness I seek to table evidence from Statistics New Zealand that states that 14 percent of non-Maori survive beyond 65 years and less than half of 1 percent of Maori survive beyond 65 years. 
Document by leave laid on the Table of the House. 
Border Control—Fingerprinting and Photography 
4.  
KEITH LOCKE (Green) 
 to the  
Minister of Customs 
: Does the Government have any plans to require all United States citizens visiting New Zealand to be photographed and fingerprinted; if not why not? 
Hon RICK BARKER (Minister of Customs) 
:  
No because it is not considered necessary in the New Zealand context. 
Keith Locke 
: Why is the Minister not opposing the fingerprinting of New Zealanders entering the United States when he knows that most New Zealanders see fingerprinting as being something one does to people who are accused of a crime not to law-abiding New Zealanders? 
Hon RICK BARKER 
: What the United States decides to do about its border security measures is for the United States. What New Zealand decides to do about its border security measures is for New Zealand and we respect each other’s position. 
Keith Locke 
: Why is the Government appearing to do the bidding of the Bush administration by putting a chip in our passports containing either fingerprint details or facial recognition characteristics or both? 
Mr SPEAKER 
: That does not relate to what is happening in this House or to the Minister so the question is out of order. 
Hon Peter Dunne 
: Did the Minister or his officials have any discussion with representatives of the United States Government about the implications of the changes that that Government is proposing for entry into the United States; if so what advice did his officials give or what comments did they make to the United States? 
Hon RICK BARKER 
: Normally passport documentation is governed by a number of international conventions. New Zealand is working through those international agencies to establish a new set of criteria. One of the issues for the modern era is that people are assuming other identities and we want like other countries to be certain that a person who presents himself or herself at the border is the person he or she actually claims to be. 
Mr SPEAKER 
: I might have been a bit tough on Mr Locke. I would like to give him the opportunity to restate his question and I want him to relate it to the Minister’s responsibilities. 
Keith Locke 
: Why is the Minister in the action of putting a chip in our passports appearing to do the bidding of the Bush administration in that those chips will contain fingerprint details and possibly facial characteristic details? 
Mr SPEAKER 
: The Hon Rick Barker may answer in so far as it relates to his portfolio. 
Hon RICK BARKER 
: The passports are subject to international agreements. The international agreement is changing in terms of what is required in a passport. New Zealand will follow the international trend because we want New Zealanders to have passports that are acceptable across other borders. 
Keith Locke 
: Could the Minister elaborate which international agreements he is talking about? 
Mr SPEAKER 
: Would the member please restate the question; the Minister can then make a comment. Would the member please ask the question in relation to the question that was originally asked. 
Keith Locke 
: Could the Minister explain which international agreements he is talking about and could he also guarantee that the Bush administration will not misuse the data—[ 
Interruption 
] 
Mr SPEAKER 
: I have said that every member in this House is entitled to ask a question under our democracy and to ask it in silence. The Minister is not responsible for what the Bush administration does in the way that the member phrased his question. The first part of the member’s question was in order and may be answered. 
Hon RICK BARKER 
: I thank you Mr Speaker for not making me responsible for the Bush administration. I do not have all the details with me but I will supply the member with a written answer within the next 12 hours. 
Holidays Act—Review 
5.  
Hon ROGER SOWRY (National) 
 to the  
Minister of Labour 
: Does he intend to review the new Holidays Act; if not why not? 
Hon PAUL SWAIN (Minister of Labour) 
: 
 The Government will not be reviewing the policy principles underlying the new Holidays Act—for example 4 weeks’ annual leave for all employees from 2007. However I am monitoring the Act’s implementation. 
Hon Roger Sowry 
: Why will he not review the Act given that it has now become apparent that many businesses especially those in the retail and hospitality trades will have to either close or pass on their costs to customers—in price increases ranging between 10 and 30 percent—given that many already operate on a low margin and cannot afford the extra costs that opening on public holidays is causing due to that Act? 
Hon PAUL SWAIN 
: I have seen some of the reports that the member talks about. I have seen a report from a restaurateur who is not against his employees getting a little more I have seen some reports that state some employers may close and I have seen some reports that some may put a surcharge on. It is up to the individual business owner to make that decision. 
Helen Duncan 
: Can the Minister tell the House what reports he has seen about other changes that may be in store for employees under the Holidays Act? 
Hon PAUL SWAIN 
: I have seen media reports that indicate some individuals want to repeal the 4 weeks’ annual leave provisions under the Act. One such individual is Don Brash. Clearly the message to New Zealand employees is that Don Brash wants to take a holiday—theirs! 
Hon Roger Sowry 
: Has the Minister seen the results of a survey by the Hospitality Association that shows that more than half of those who responded over the Easter holiday issue will bring in a surcharge employ fewer staff or not open at all and how happy is he with that as an outcome of his legislation? 
Hon PAUL SWAIN 
: I have not seen the full survey that the member talks about but I have seen as I say indications that there may be a surcharge. Of course that is not unusual around the world. Australia has similar kinds of surcharges not just for public holidays but for Saturdays and Sundays given that it used to have much higher penal rates. Those used to be in place in New Zealand but are no longer there as a result of decisions taken by the Government during the 1990s. 
Rt Hon Winston Peters 
: Is it a fact that 4 weeks’ holiday and more is specified in the Governor of the Reserve Bank’s employment contract; and is that consistent with some of the speeches we have been hearing around this country? 
Mr SPEAKER 
: That is a nice try but the Minister is not responsible for that. 
Hon Roger Sowry 
: What advice does the Minister have for groups such as the disability service provider IHC New Zealand which noted during the Transport and Industrial Relations Committee hearings on the bill that the legislation will cost it $12 million per annum and which simply cannot close its doors on holidays as other businesses can; and what consideration does he expect his colleagues to give to that when negotiating IHC New Zealand’s contract? 
Hon PAUL SWAIN 
: Firstly I am advised that IHC New Zealand did make a submission but indicated that the cost would be something like $1.3 million not $12 million or whatever figure the member mentioned. Secondly I have talked to my colleague the Hon Ruth Dyson who said that the IHC New Zealand contracts for example are due to expire on I think 1 July. I am sure those matters will be under consideration during the renegotiation of the contracts. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. I was hesitant to contest your decision on my question but if the IHC New Zealand question is relevant then so is mine. It is an example of an employment contract that refers to holiday pay. I was just pointing out the blatant inconsistency and incongruity of some of the speeches made in this country in respect of a contract that I would regard as epitomising the best of industrial relations in New Zealand. 
Mr SPEAKER 
: I judged that the IHC New Zealand question was directly related to the question that was originally asked but the member’s question was not. That was my judgment. 
Refugees—United Nations Convention 
6.  
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Minister of Foreign Affairs and Trade 
: Is New Zealand still a signatory to the 1951 United Nations Convention on the Status of Refugees? 
Hon JIM SUTTON (Acting 
Minister of Foreign Affairs and Trade 
) 
: Yes. 
Rt Hon Winston Peters 
: If that is the case does he not agree that Zaoui fits the description of persons deemed unworthy of international protection as per article 1(f) of the 1951 convention and will he provide me today with the up-to-date all-up costs of having Zaoui in this country? 
Hon JIM SUTTON 
: I point out to the member that the Minister in charge of the implementation of the convention in New Zealand is the Minister of Immigration. I advise him to set down a question for that Minister. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. This question has gone to the Minister of Foreign Affairs and Trade. Surely the ministry can provide me with his answer. To duck now and tell me to go to the Minister of Immigration when I am talking about a convention that has costs attached to it is unfair and I invite him to answer my question properly. 
Mr SPEAKER 
: On this occasion I agree with the member and I ask the Minister to give an answer. 
Hon JIM SUTTON 
: I would point out that the details of a particular case if that is what is required should be directed to the Minister of Immigration. 
Keith Locke 
: I raise a point of order Mr Speaker. On this question I advise the House that Mr Peters asked a similar question last week around the Zaoui case. Surely in preparing for this case the Minister should have looked at the Zaoui case in relation to the refugee convention. 
Mr SPEAKER 
: That was not what the original question talked about. 
Tim Barnett 
: Has the Minister seen any reports on New Zealand’s handling of refugees and asylum seekers? 
Hon JIM SUTTON 
: I have. The United Nations High Commissioner for Refugees said during his visit here last month that the United Nations High Commissioner for Refugees holds up New Zealand as a model for others to follow in our treatment of refugees and asylum seekers. 
Keith Locke 
: Is it not true that the Refugee Status Appeals Authority in its lengthy determination of the Zaoui case did refer back to that specific provision in the 1951 convention referred to by Mr Peters and fully cleared Mr Zaoui of being a security risk under that particular clause? 
Hon JIM SUTTON 
: If the member has a question about a particular case it should be referred to the Minister of Immigration. 
Rt Hon Winston Peters 
: I remind the Minister of his responsibility to uphold the convention and therefore answer this question: how will he be responding to the Belgium Government’s official complaint and France’s dissatisfaction with regard to the New Zealand Refugee Status Appeals Authority’s decision on the Zaoui case that made a mockery of their judicial processes even though this New Zealand authority is a much inferior authority and will he allow the farce over Zaoui to continue to cause embarrassment internationally to this country? 
Hon JIM SUTTON 
: I point out to the member that a process is under way and that will be followed through. 
Keith Locke 
: I seek leave to table the report of the Refugee Status Appeals Authority in the Zaoui case. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. My concern with regard to question No. 6 is that last week we put it to the Prime Minister whereupon they promptly referred it to the Minister of Foreign Affairs and Trade. We have sought to do that again today on this issue and now I am being referred to the Minister of Immigration. I am being given the bum’s rush and I think it is unfair. We are entitled to know the answer to this question given that he is the Minister of Foreign Affairs and Trade and it is his job to uphold the United Nations convention we have signed up to. 
Mr SPEAKER 
: I will have a look at what the member says. 
Waitangi Tribunal—Government Policy 
7.  
STEPHEN FRANKS (ACT) 
 to the  
Minister in charge of Treaty of Waitangi Negotiations 
: What principles does the Government apply when deciding whether or not to accept the findings of a Waitangi Tribunal report? 
Hon MARGARET WILSON (Minister in charge of Treaty of Waitangi Negotiations) 
:  
The Crown has a duty to act in the best interests of all New Zealanders. That is the primary guiding principle. 
Stephen Franks 
: Why should we not conclude from her non-answer to my request for principles that the Government has no principles on treaty questions or that it does have principles but it cannot tell us because they boil down to “the political need at the time”? 
Hon MARGARET WILSON 
: I did answer the question. The primary guiding principle is the principle of acting in the best interests of all New Zealanders. 
Mita Ririnui 
: When were the Crown’s principles developed? 
Hon MARGARET WILSON 
: The Crown’s principles were developed by the previous Government and have been adopted by this Government in the interests of certainty and consistency of decision making. 
Dr Wayne Mapp 
: How will the Government’s proposals on the foreshore and seabed meet the Minister of Maori Affairs’ view that Maori have co-management of all the foreshore and seabed in New Zealand and how does that meet the Minister’s statement that the Waitangi Tribunal has to consider the interests of all New Zealanders? 
Hon MARGARET WILSON 
: The primary question asked about the principle that guided the Government not the tribunal. I cannot talk for the tribunal but I can talk for the Government. The guiding principle there is the principle of acting in the best interests of all New Zealanders. Principles such as working together in co-management arrangements would seem to be ideally fulfilling that criterion of “all New Zealanders”. 
Rt Hon Winston Peters 
: What date exactly did the previous National Government develop these— 
Dr Wayne Mapp 
: We didn’t. 
Rt Hon Winston Peters 
: Oh yes it did. 
Mr SPEAKER 
: I have warned the member and that is the only warning this question time. Please start again. 
Rt Hon Winston Peters 
: What date or year does the Minister ascribe to the development of the National Party’s principles on the Treaty of Waitangi and to what does she attribute its latest road to Damascus experience on this issue? 
Mr SPEAKER 
: The member can answer for the previous Government but not for the National Party. 
Hon MARGARET WILSON 
: The previous Government published Crown proposals for the settlement of Treaty of Waitangi claims. As a result a discussion process took place. Although the fiscal envelope proposals were rejected the framework was adopted which did include a series of six principles. Those principles are contained in the document  
Healing the past building a future 
 as they were contained in the Crown proposals for the settlement— 
Rt Hon Winston Peters 
: What year? 
Hon MARGARET WILSON 
: In 1995. 
Metiria Turei 
: When was the last time the Government accepted in full the recommendations of a Waitangi Tribunal report? 
Hon MARGARET WILSON 
: I cannot answer that question. What I do know is that each Waitangi Tribunal report is considered in full. If in fact it is consistent with the principles we apply then those recommendations are adopted. 
Hon Ken Shirley 
: Aside from the general principles does her Government apply written criteria when evaluating the merits or otherwise of the tribunal’s recommendations; if so what are those criteria? 
Hon MARGARET WILSON 
: The principles that are applied are those set out in  
Healing the past building a future 
. I am quite happy to read those out if the members are interested but it would probably take longer than is normal. So I seek the leave of the House to do that. 
Mr SPEAKER 
: Leave is sought to do that. Is there any objection? There is not. 
Hon MARGARET WILSON 
: At page 28 under the heading “Crown guidelines for the resolution of historical claims” the guidelines that are followed are as follows: firstly “the Crown will explicitly acknowledge historical injustices—that is grievances arising from Crown actions or omissions before 21 September 1992”; secondly “Treaty settlements should not create further injustices”; thirdly “the Crown has a duty to act in the best interests of all New Zealanders”; fourthly “as settlements are to be durable they must be fair achievable and remove the sense of grievance”; fifthly “the Crown must deal fairly and equitably with all claimant groups”; sixthly “settlements do not affect Maori entitlements as New Zealand citizens nor do they affect their ongoing rights arising out of the Treaty or under the law”; and finally “settlements will take into account fiscal and economic constraints and the ability of the Crown to pay compensation.” 
Hon Ken Shirley 
: I raise a point of order Mr Speaker. Although that was all very interesting my question asked whether aside from the general principles her Government has any written criteria. What the Minister has just done is read the principles that the Crown generally follows but I want to know whether the Government has any written criteria it follows in evaluating the merits or otherwise of the tribunal’s recommendation. 
Mr SPEAKER 
: Did the Minister want to add any point? 
Hon MARGARET WILSON 
: We do have Crown negotiating principles that are set out on page 30 of that document and they are considerably longer than the ones I have just read out—and I am prepared to read those out as well. I suggest to the member that the document sets out the answer to the point he raises. 
Gerrard Eckhoff 
: How can the public have confidence in the Waitangi Tribunal when clearly this Government picks and chooses which reports are acceptable to it and which are not? 
Hon MARGARET WILSON 
: The Crown adopts those recommendations from the tribunal that are consistent with the principles I have indicated. 
Stephen Franks 
: If the Government holds that the principle “the best interests of all New Zealanders” trumps the Waitangi Tribunal report why not tell the tribunal now for example that it will never be in the best interests of all New Zealanders for race to decide ownership of our native plants and animals so the tribunal need waste no more time on Wai 262; or does she think race should decide that issue? 
Hon MARGARET WILSON 
: The Government considers the recommendations of each report on its merits. We do not prejudge it before we have in fact read the report. 
Youth—Training and Work Initiatives 
8.  
GEORGINA BEYER (Labour—Wairarapa) 
 to the  
Associate Minister for Social Development and Employment 
: What initiatives has the Government implemented to encourage young people into training and paid employment? 
Hon RICK BARKER (Associate Minister for Social Development and Employment) 
:  
The Government has a number of initiatives to get and keep young people in work. These include working with the Mayors Task Force for Jobs developing training and employment partnerships with industry placing young people in industry internships the Modern Apprenticeshipsscheme skills training courses specifically for young people and general support in the workplace. 
Georgina Beyer 
: What has been the result of those programmes in terms of reducing youth unemployment? 
Hon RICK BARKER 
: In March 1999 there were 46140 young people between the ages of 18 and 24 on the unemployment benefit—about a third of the total recipients. As at March 2004 that number had been reduced to 22949 which is a reduction of almost 50 percent in the number of young people on the benefit. Those are good results but the Government expects better for our young New Zealanders so Work and Income is working to intensify its focus on reducing youth unemployment even further. 
Judith Collins 
: Is the Minister aware of reports of young people entering into multiple training schemes with no realistic likelihood of paid employment at the end; if so what initiatives is he aware of to end this very new cycle of dependency? 
Hon RICK BARKER 
: Far from there being a new cycle of dependency this Government has reduced youth unemployment by a staggering 50 percent. This Government has focused entirely upon training and programmes that lead to employment such as rebuilding the Modern Apprenticeships system which the National Government scrapped 10 years ago. 
Judith Collins 
: I raise a point of order Mr Speaker. My question to the Minister was whether he was aware of reports of young people entering into multiple training schemes with no realistic likelihood of paid employment. Members got a diatribe about the Labour Government and I do not think he addressed the question. I would like him to address the question please. 
Hon RICK BARKER 
: No I am not aware of those programmes. What I am aware of is just good programmes getting young people into work and the results show. 
Peter Brown 
: Is the Minister aware that many young people are employed casually with little or no commitment from their employers and will the Minister tell the House whether he is happy with this type of arrangement? 
Hon RICK BARKER 
: Of course the Government would prefer young people to be employed in full-time positions with secure employment. That is why the Government has committed a substantial sum of money and substantial effort into securing for example the Modern Apprenticeships system. We are engaged with industry the retail sector and so on simply to gain full-time secure employment good wages and good skills for our young people. This Government will not ignore them like the last Government did. 
Judy Turner 
: Why has the number of people under 25 on the sickness benefit increased by 32 percent since the year 2000 with young people on the invalids benefit climbing by 27 percent over the same period and what is this Government doing to ensure that people who should be embarking on careers are not embarking on a life of dependency instead? 
Hon RICK BARKER 
: It is true that the number of people on the sickness benefit and the invalids benefit has gone up but it is also true that the total number of people on a benefit in New Zealand has dropped by some 45000. This Government is concerned to see that that improves even further and we have three key policies—case management innovative employment assistance and vocational service—to help those people get into employment. 
Community Service—Attendance 
9.  
Hon TONY RYALL (National—Bay of Plenty) 
 to the  
Minister of Corrections 
: What was the total muster of people on community work for the week ended 7 March 2004 and how many physically reported for community work during that week? 
Hon PAUL SWAIN (Minister of Corrections) 
: I am advised that 16954 offenders including those subject to enforcement action were serving a sentence of community work at 7 March 2004 and 5252 of those offenders reported for community work during the week ended 7 March 2004. However given that not every offender has to report every week a better indicator of reporting is the monthly figure. That shows that 9808 offenders reported in the month ended 7 March 2004. 
Hon Tony Ryall 
: What does it say about Labour’s new sentence of community work that his official documents show that the numbers reporting at centres around the country are dropping month by month to a situation where in March 22 percent of the people in Manurewa on community work turned up in the first week 33 percent of those in Manukau did 21 percent of those in Otara did 27 percent of those in Rotorua did and an appalling 23 percent of those in Masterton did? 
Hon PAUL SWAIN 
: Firstly although the member has information from monitoring reports he has to remember that they are not the official monitoring reports that come through to the department. Secondly the member has to recognise that the community work numbers are pretty much the same as—actually a bit better than—those for the old periodic detention sentence. The third thing the member should remember is the difference between sentences during the period being measured—the completion rate is the important one. The best analogy is that we never measure a rugby game by the half-time score—only the full-time score. 
Hon Tony Ryall 
: No one is on the paddock—that is the problem. 
Mr SPEAKER 
: The member will not even be in Parliament in a moment. 
Hon Tony Ryall 
: Yes I will be. 
Mr SPEAKER 
: I meant in this Chamber. 
Martin Gallagher 
: Further to the Minister’s previous answer how does community work compare with the old sentences of periodic detention and community service in terms of compliance and enforcement? 
Hon PAUL SWAIN 
: Community work is a new sentence. Early statistics show that completion rates are at least as good as those under the old sentences of periodic detention and community service. For the member’s information between 1 July and 30 December last year for example over 1 million hours of community work were completed. That means that 85 percent of sentence hours that had to be worked were worked. It is important to acknowledge however that a tough line should be taken with those offenders who blatantly disregard the sentence. I applaud those judges who are sentencing those offenders to prison. 
Mr SPEAKER 
: There were too many interjections during that answer but the answer was too long. I call the Hon Paul Swain—Mr Ron Mark. 
Ron Mark 
: Thank you Mr Speaker for the compliment! I think I will be taking the Minister’s job in the very near future. Does the Minister seriously believe that it was a good idea to abolish periodic detention a sentence that had a compliance rate of 75 to 80 percent and replace it with his soft option of community work given that on 7 March of the 476 people who should have reported to the Kingsley Street Service Centre Christchurch only one in five—that is 20 percent—actually did? 
Hon PAUL SWAIN 
: There were two things there. Firstly as the member knows it is not a requirement that everybody report every week. For example— 
Mr SPEAKER 
: I will hear the answer in a lot more silence than I have been hearing it. 
Hon PAUL SWAIN 
: For example somebody who has a community work sentence and works on a fishing-boat may not be able to be there every single week so he or she comes up with an agreement to do the sentence over time. That is the first point which was the half-time/full-time analogy that I was trying to give the member before. The second point as I have said before is that the figures relating to this new sentence are as good as the figures for the old periodic detention and community service sentences of the past. 
Ron Mark 
: Rubbish. 
Hon PAUL SWAIN 
: I am sorry but I am telling the member that they are. 
Mr SPEAKER 
: That is sufficient. 
Hon Tony Ryall 
: Can the Minister explain how Parliament can get honest information when for example the Masterton office is reporting a compliance rate of 73 percent for the week ended 7 December 2003 but in actual fact only 27 percent of the people who should have turned up actually did? 
Hon PAUL SWAIN 
: I am trying to explain to the member the difference between the reporting sheets that are used by local people for their own information as opposed to the information that comes through centrally. I also say to the member that it is the difference between the compliance rate and the completion rate. The completion rates to date show that the figures are just as good as those under the old periodic detention system. 
Hon Tony Ryall 
: Is the Minister aware of the widespread concern of the Department of Corrections staff who administer community work about the integrity of the reporting system that his ministry has approved; if he is what will he do about it in order to rectify a situation in which he can say there is a compliance rate of 73 percent when only 27 percent of people turned up in the week ended 7 December 2003? 
Hon PAUL SWAIN 
: I am not aware of “widespread concern” as the member says. There is certainly debate within the department about the issue. What am I doing about it? I am very happy to table my media statement which indicates that I have now asked the department for better reporting on compliance completion and enforcement rates. 
Ron Mark 
: When will the Minister finally realise that much of the advice he has been given from his own department is not accurate and does not in any way reflect the views and the real on-the-job experiences of Department of Corrections staff who are responsible for administering community work and are suffering on a day-to-day basis in trying to make it work; why will he not get off his backside go and talk to some of his own staff and get the real oil on the problems with community work instead of pretending that they do not exist? 
Mr SPEAKER 
: That question was far too long and there were three parts to it. The Minister can answer the first two. 
Hon PAUL SWAIN 
: In answer to the second part I already have and in answer to the first that was the reason why I issued the media statement recently. 
Child Youth and Family Services Department—Statutory Obligations 
10.  
JUDY TURNER (United Future) 
 to the  
Associate Minister for Social Development and Employment (CYF) 
: Is she satisfied that the Department of Child Youth and Family Services is capable of meeting its statutory obligations under its current structure; if so why? 
Hon RUTH DYSON (Associate Minister for Social Development and Employment (CYF)) 
: Yes in light of our commitment to implementing the comprehensive recommendations of the baseline review. It is a tragedy that this level of analysis on the structure management and function of the department was not undertaken before it was established in 1999. 
Judy Turner 
: Does the Minister agree that the department’s current emphasis on the recurrence of abuse in serious cases is coming at the expense of preventing abuse in the first place—as evidenced by the fact that 99 percent of unallocated cases are at the lower criticality levels—and does she agree that only a dual-intake process as suggested by United Future would demonstrate that the Government is serious about breaking the cycle of abuse in its infancy; if not why not? 
Hon RUTH DYSON 
: That recommendation in the United Future policy last week is entirely consistent with the recommendation in the baseline review to establish the family support services overview and leadership role within the Ministry of Social Development. 
Moana Mackey 
: What is the Government doing to ensure that Department of Child Youth and Family Services systems and front-line staff consistently deliver best social work practice? 
Hon RUTH DYSON 
: As part of the implementation of the baseline review recommendations and the $120 million additional investment in the Department of Child Youth and Family Services nearly 90 additional social workers have been employed this year and a further 56 are to be employed in 2004-05. The department’s systems and regional management are being strengthened and it is also developing a demand management strategy to ensure the safety of our children. 
Judith Collins 
: Does the Minister agree that no matter what structure she imposes on the Department of Child Youth and Family Services it is her own lack of leadership that has led to a culture of mediocrity permeating the department? 
Hon RUTH DYSON 
: No but I will continue to listen to that member’s very constructive criticism. 
Sue Bradford 
: What steps is the Government taking if any to ensure that children and young people in statutory care have a safe way of seeking help should they be subject to abuse or violence at the hands of the very people who are supposed to be caring for them? 
Hon RUTH DYSON 
: There are very tight protocols—which in my view are being complied with—in terms of the response that the Department of Child Youth and Family Services makes to any potential abuse within a caregiver situation. That allegation is immediately investigated and as was the case with the caregivers’ family recently described in the  
New Zealand Herald 
 the caregivers are immediately removed from that family home. 
Judy Turner 
: Does the Minister agree that public confidence in the Department of Child Youth and Family Services continues to be very low; if so does she agree that unless the system is overhauled in order to relocate the statutory mandate for preventive work to a separate family support service then potential cases of child abuse will continue to turn into serious cases with tragic consequences further dragging down the department? 
Hon RUTH DYSON 
: No I do not believe that restructuring on its own would help the department to ensure that public confidence was restored but I support the recommendation of the baseline review that the department focus more on its core functions and stabilise its operations. 
Judy Turner 
: Is the Minister aware that initiatives to emphasise preventive work with at-risk families through differential intake in the United States the United Kingdom and Australia have reduced the demand for crisis services; and does she concede that that approach is the best way to fulfil Mick Brown’s 2001 plea to reduce unallocated cases to zero as soon as possible? 
Hon RUTH DYSON 
: Yes I believe that that is a constructive proposal. 
Judy Turner 
: Would the Minister consider piloting a system such as that proposed by United Future that differentiates immediate child protection concerns from broader family support needs by creating the new role of family support coordinator and trialling it at a local level; if not why not? 
Hon RUTH DYSON 
: No I do not think it would be helpful to introduce yet another new system when a comprehensive review of the work of the Department of Child Youth and Family Services came up with a comprehensive range of recommendations which we have agreed to implement. 
Maori Television Service—Ratings 
11. Hon Dr NICK SMITH (National—Nelson) 
 on behalf of  
GERRY BROWNLEE (Deputy Leader—National) 
 to the  
Minister of Maori Affairs 
: What advice has he received regarding the daily percentage share of the total television audience achieved by the Maori Television Service as measured by the Nielsen Media Research Television Ratings? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
 on behalf of the 
 Minister of Maori Affairs 
: None. 
Hon Dr Nick Smith 
: Does the Minister consider it to be good value for the $45 million of public money that in the latest ACNielsen survey which was carried out during the first week of broadcast for 7 days for 24 hours a day and involving 1100 viewers not one person—zero—was found to be watching any of the Maori Television Service programmes. 
Hon Dr MICHAEL CULLEN 
: That is surprising since I have met a number of people I know who have been watching the Maori Television Service programmes. Of course other people may have been watching the nightly news to see how the member was getting on with his legal problems. 
Mr SPEAKER 
: I think the Minister should withdraw that comment and apologise. 
Hon Dr MICHAEL CULLEN 
: Apologise? He was convicted. 
Mr SPEAKER 
: Order! 
Hon Dr MICHAEL CULLEN 
: I withdraw and apologise. 
Mahara Okeroa 
: What does the Minister think about the Maori language programming that has been broadcast so far? 
Hon Dr MICHAEL CULLEN 
: The Minister of Maori Affairs is very happy with it. The Maori language programmes that he has seen such as Korero Mai are entertaining educational and informative. He says that even those people who can count to 10 in Maori on the  
Holmes 
 show will get something out of it. 
Deborah Coddington 
: On what date in respect of the Maori Television Service did the Minister first learn that there are two taxpayer-funded Maori television channels; and what action did he take? 
Hon Dr MICHAEL CULLEN 
: I am not aware of a second television channel having started up. I am aware of a special education grant to assist with the creation of such a channel. I do not know on what date the Minister became aware of that. I assume it was about a couple of weeks ago when that entered the public arena. 
Hon Dr Nick Smith 
: Noting that when the Minister launched the Maori Television Service he said it was a key part of lifting Maori culture and heritage does he believe that having spent $45 million and found that nobody is watching this is the best way in which to encourage Maori culture and heritage? 
Hon Dr MICHAEL CULLEN 
: Unlike the member I am optimistic about the future of Maori television. Unlike the member I think it is actually important to support Maori language and culture but of course there are many members of the House who do not take any interest in European language and culture either. 
Hon Dr Nick Smith 
: I seek leave of the House to table the ACNielsen survey data. 
Document not tabled. 
Westhaven Marina Auckland—Sale 
12.  
DAIL JONES (NZ First) 
 to the  
Minister of Local Government 
: Does he have any plans to stop the sale of Westhaven Marina until Parliament has passed the Local Government (Auckland) Amendment Bill which decides the new asset-holding body to replace Infrastructure Auckland? 
Hon CHRIS CARTER (Minister of Local Government) 
:  
No. 
Dail Jones 
: Why is the Minister prepared to show no leadership as Minister of Local Government on this matter given the fundamental importance of Westhaven Marina to Auckland—the City of Sails—and the region; and does it not make sense to halt the sale of Westhaven Marina given the current massive reorganisation of public assets in Auckland instead of lining the pockets of financiers lawyers accountants and consultants who will make millions of dollars from the sale with no benefit to Auckland? 
Hon CHRIS CARTER 
: Because I do not have any powers to prevent the sale. 
Dr Ashraf Choudhary 
: Does the Minister have the power to prevent the sale of Westhaven Marina by Ports of Auckland Ltd? 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. There are some people in the public who watch this televised question time. The Minister just said that he had no powers and a question has come up from the far end of the Chamber by way of a supplementary question asking him whether he does have powers. That is a total waste of Parliament’s time. 
Mr SPEAKER 
: The member can ask the question again. That is within the Standing Orders. 
Hon CHRIS CARTER 
: Further to my earlier answer my officials advise that I do not have such powers under the Local Government Act 1974 or the Local Government Act 2002. Nor would I have those powers under the proposed Local Government (Auckland) Amendment Bill currently before the House. 
Keith Locke 
: Even if the Minister does not have that power would it not be wise for him to advise stopping the sale in view of the fact that Auckland Regional Holdings has a much broader mandate than Infrastructure Auckland—that is a mandate to manage assets and own them in the long-term interests of Auckland—and Auckland Regional Holdings may actually want to purchase the Westhaven asset at very little cost because it would just be shifting the asset from an 80 percent - owned subsidiary to the holding company itself namely Auckland Regional Holdings? 
Hon CHRIS CARTER 
: I am already on record as saying that I would prefer this asset to remain in public ownership but as explained to this House already I do not have the powers to force that to happen. 
Dail Jones 
: Why does the Minister say that he has no power when he is currently changing the law under the Local Government (Auckland) Amendment Bill in order to change the ownership of Infrastructure Auckland; and why is he failing to ensure that Westhaven Marina’s owner Ports of Auckland complies with the requirements of the Port Companies Act which states that a port company is to carry out port-related commercial activities and control the ownership thereof—especially as the High Court in Auckland decided that Westhaven Marina is a port-related commercial activity and on that basis gave Ports of Auckland ownership of Westhaven Marina making it clear that no other party could carry out a port-related activity and control the ownership of Westhaven Marina? Why is he not carrying out the High Court decision to retain the ownership of Westhaven Marina in Ports of Auckland? 
Mr SPEAKER 
: That question was far too long and there were three parts to it. The Minister may comment if he wishes on two. 
Hon CHRIS CARTER 
: The member raises some good points. It is though the shareholding of Ports of Auckland that is considered to be a strategic asset not the actual physical assets as they are owned by a publicly listed company. 
Fisheries Amendment Bill (No 3) 
First Reading 
Hon DAVID BENSON-POPE (Minister of Fisheries) 
: 
 I move  
That the Fisheries Amendment Bill (No 3) be now read a first time. 
 At the appropriate time I intend to move that the Fisheries Amendment Bill (No 3) be considered by the Primary Production Committee that it be an instruction to the committee in its consideration of the bill that it divide the provisions relating to the introduction of scampi into the quota management system from the bill to form a separate bill to be reported to the House by 22 June 2004 that the remaining provisions of the bill be reported to the House by 27 July 2004 and that the committee have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House on a Friday in a week in which there has been a sitting of the House and outside the Wellington area during a sitting of the House notwithstanding Standing Orders 191 193(a) and 194(1)(b) and (c). 
The bill is in three parts and has two schedules. Part 1 provides for revisions to the 1996 Fisheries Act. The bill amends the Act to reinforce the quota management system as the preferred framework for managing fisheries resources. The quota management system provides the best framework for sustainable use and to enable stakeholders to provide for their social cultural and economic well-being. The bill removes the parts of the fisheries law that empowered the use of individual catch entitlements which are often promoted as an alternative to the quota management system but perform relatively poorly. The bill amends the Act to provide more direction as to when the quota management system will be used to manage fisheries. The lack of guidance in the current law has created uncertainty about potential management regimes. It will be replaced with sustainability and utilisation thresholds that when breached will require the Minister of Fisheries to bring a species into the quota management system unless the Minister considers the purpose of the Act would be better met by an alternative management intervention. 
The bill revises the current regime for authorising access to commercial fisheries and removes the permit moratorium which is unnecessarily impeding their use. Currently a fishing permit gives access to stocks that are in the quota management system or that are specified on that permit. Access to stock outside the quota management system has been restricted to those fishers who had access to it in 1992. A specific provision addressing non-authorised stake is due to expire on 30 September 2004. Without that provision many multi-species fishers would be unable to operate without committing offences. The bill amends the Act so that while the commercial fishing permit will remain the means of authorising access to fisheries the restriction on issuing new permits will be lifted. That may raise some sustainability risk for certain species outside the quota management system. Such species have been identified and placed on the transitional schedule that the bill inserts in the Act. Access to all species and stocks on that schedule will continue to be restricted until they are considered for management in the quota management system. 
The bill amends the Act to improve the means of allocating quota when stock is introduced into the quota management system. That improvement will be achieved by removing certain allocation mechanisms that are becoming outdated and are consequently impeding effective fisheries management. The current allocation mechanisms based on 1990-92 catch history or on an individual catch entitlement holding will be removed from the Act. When a stock is introduced into the quota management system 80 percent of the new quota will be allocated to the Crown and the remaining 20 percent will be allocated to Maori under the 1992 fisheries deed of settlement. The Crown will then tender the quota it has been allocated. The overall effect of the amendment will be that catch history as a means of allocating quota will cease with the exception of species and stocks on the transitional schedule referred to previously—tuna and highly migratory species caught outside New Zealand fisheries waters. Revisions to the 1996 Act will also extend the coverage of the quota management system to provide for the management of highly migratory species beyond New Zealand fisheries waters. It will enable total allowable catches to be set for highly migratory species prior to national shares being allocated by a regional fisheries organisation. 
Part 1 also provides for minor technical amendments to the principal Act to clarify its wording or better achieve the intent of the legislation. Part 2 provides for revisions to the 1983 Act. The revisions provide for the removal of authority to issue spat-catching permits. The existing permit access will be retained until 30 September 2006. Those steps will ensure a smooth transition from the current spat-catching regime to the quota management system when greenshell mussel becomes subject to the quota management system from 1 October 2004. In order for the associated regulatory amendments to be made prior to 1 October 2004 I intend to move that the committee report Parts 1 and 2 of the bill by 27 July. 
Part 3 provides for the introduction of scampi into the quota management system on 1 October 2004. A key recommendation of the Primary Production Committee’s report on its scampi inquiry was that scampi be introduced into the quota management system as of 1 October 2004 using catch history as the basis for quota allocation. In order to ensure that date is met it is best to use legislation to give effect to the Primary Production Committee’s recommendations. The scampi part of the bill will also define all matters consequential to a declaration to introduce stocks into the quota management system allocate provisional catch history to scampi fishers provide the capacity for fishers to appeal against provisional catch history allocations to the Catch History Review Committee and make other consequential changes as necessary. To allow time to complete the remaining statutory obligations in the quota allocation process in the months prior to scampi’s introduction to the quota management system on 1 October 2004 I intend to move that the committee report on Part 3 by 22 June. 
There are two schedules to the bill. Schedule 1 includes new schedules 4B and 4C to be inserted into the principal Act. New schedule 4B lists highly migratory species and new schedule 4C lists stocks and species for which quota is to be allocated on the basis of provisional catch history. New schedule 4C also lists those species that will remain under the current permit moratorium regime due to sustainability concerns on removal of the existing moratorium. Schedule 2 includes new schedules 13 and 14 to be inserted into the principal Act. New schedule 13 specifies quota management areas for particular scampi stocks and new schedule 14 specifies the scampi provisional catch history allocations to be allocated to individual fishers. 
In summary this bill provides for revisions to the 1996 Fisheries Act revisions to the 1983 Fisheries Act and the introduction of scampi into the quota management system. It reinforces the preference for the use of the quota management to manage fisheries resources and implements a key recommendation of the select committee report on scampi. I am pleased to commend this bill to the House. 
PHIL HEATLEY (National—Whangarei) 
: 
 First of all I would like to indicate that the National Party will certainly support the referral of this bill to the Primary Production Committee. We believe there are matters in the bill that deserve a public airing and certainly an airing within the fishing industry. There are some very significant changes to be made in the fisheries legislation not the least of them being a movement from the 1990-91 and 1991-92 catch-history years and from that arrangement in terms of handover quota to an arrangement whereby the quota is tendered right across the board. The legislating of scampi into the quota management system from 1 October 2004 is also significant. 
However I would like to indicate to the Minister that we find it unacceptable that there is a request that we sit on Fridays to consider this bill. The Minister may like to take into consideration that a select committee is already sitting on Mondays Tuesdays Wednesdays Thursdays and Fridays right across the country on the Maori Fisheries Bill. That bill under this Minister’s auspices again is before another select committee set up to consider the seabed and foreshore legislation and other special fisheries matters. I indicate to the Minister that he may recall that that is a separate select committee and it could very well be sitting at the same time as the Primary Production Committee which is soon to consider this bill. We will oppose the suggestion that we meet on Fridays firstly because we should not meet on Fridays as that is a time for MPs to be in their constituencies serving their electorates and secondly because we already have major fisheries legislation—the Maori Fisheries Bill—before another select committee that is meeting at that time. How the spokespersons for the various parties are to attend those meetings without experiencing a conflict is beyond me. 
This bill creates a transitional list of fish species that will enter the quota management system under the current system where there is handover quota based on catch-history years. It will provide for non-established commercial species to enter the quota management system with quota being tendered off without handover quota from catch history years. There is a big shift there. We understand that that is the most significant policy change in this legislation. It is recognised that the catch history years for quota allocation the 1990-92 years are becoming outdated. It is 12 years on since those dates now that we are in 2004. Commercial fisheries newly discovered in the interim have little catch history in those particular years. 
Last year I recall dealing with the paddle crab issue the pilchards issue and the butterfish issue when we had a march on Parliament from various fishers involved in those commercial fisheries. They said that it was very unfair that under the legislation the catch history would be divvied up on the basis of the 1990-92 years when the fishers had actually established and committed to those particular fisheries—in particular paddle crabs—during the mid-1990s. In effect they would get no quota handed over to them because they were not involved with those species in those particular years. It was unfair to them that they would have to bid on the open market for quota when in effect they had built those fisheries up from zero to become a substantial resource. This bill will address that issue and it is well worth debating it. I do not think the issues have been resolved about whether that is fair or unfair or whether the legislation should be changed but it is well worth having that debate. 
I concede the fairness of the Minister’s argument that there are few species left to go into the quota management system that have a significant commercial potential so not many will be affected. In fact scampi and kahawai are the only two that come to mind that are substantial exceptions. The transitional list that we see at the back of the bill covers most of the commercial fisheries with any potential that anyone can envisage—they are covered off. The National Party supports the exploration of the straight tendering concept but we will pay very close attention to the proposed tendering regime. We do not know whether there will be a preferential tendering regime whether it will be at market value at perceived market value or what the regime will be but we will explore that. 
In relation to scampi being legislated into the quota management system before 1 October 2004 we certainly encourage the goal of having scampi in the quota management system as soon as possible . At the moment there is a race on at sea to fish as quickly as possible thecommercial catch available to scampi fishers. At the moment all the boats are going out and fishing like crazy for scampi and hurting undersized resources and so on which is actually damaging that particular fishery. We encourage the idea of scampi going to the quota management system as soon possible. But there are some concerns if that measure is to be considered and reported back to this House on 22 June this year. 
Our first concern of course is that the State Services Commission inquiry into the scampi fiasco has not yet been concluded or reported on. Who knows what that State Services Commission inquiry may come up with? It may come up with new information that the select committee did not come up with because the scope for the State Services Commission to look at the scampi issues is different from that of the select committee and furthermore the State Services Commission was able to cross-examine witnesses in a manner not unlike a court system which the select committee was unable to do. So we reserve our approach on scampi because we have not yet heard from the State Services Commission inquiry. 
 Secondly we have not yet seen whether the fishers named in the Primary Production Committee’s report are satisfied with the settlement. We do not know whether there is a negotiated settlement with any of the six named fishers whether that settlement has been satisfactory in the Ministry of Fisheries’ view or how far down the process settlements are. We will hear from those fishers no doubt at the select committee. They will be reporting progress to us I am sure so we reserve judgment on that issue in view of the scampi provisions of this bill. 
There are also issues in the bill surrounding the highly migratory tuna species being put into the quota management system. That is highly contentious because tuna is a migratory fish. Tuna pass through New Zealand waters for only a short time having gone through the waters of a large number of other fishing nations and having been hammered by a large number of those countries. To argue that New Zealand can effectively manage tuna species as they pass through our waters is somewhat absurd given the reality of them passing through our waters being here only a brief time and having been hammered by other countries. So we will listen to the arguments about tuna species being put in the quota management system and this bill gives us the opportunity to debate that issue. 
In summary we do support this bill going to the select committee. The National Party is intrigued at the idea of changing the fisheries legislation to see species come into the quota management system solely through a tendering regime and not through a catch history regime. We support the idea of scampi going into the quota management system as soon as possible but we reserve judgment because of the State Services Commission’s inquiry and the Primary Production Committee’s suggestion that a settlement be made with the fishers concerned. We do understand the need to report the bill back in June and again in July with the bill to be split. But we oppose the idea of the select committee meeting on a Friday when the other select committee that is considering the Maori fisheries legislation is also meeting on that day. 
JILL PETTIS (Labour—Whanganui) 
: 
 I am pleased to rise in support of this bill and just want to mention a couple of aspects that the bill particularly refers to. Those are the revision of the current regime for authorising access to commercial fisheries and the removal of the permit moratorium that is currently in place which is unnecessarily impeding use. The bill also amends the legislation so that while the commercial fishing permit will remain the means of authorising access the restriction on issuing new permits will be lifted. There are many positives points within this bill and I think that is reflected by the member who has just resumed his seat in that there is support for it from across the House. The bill has been well considered up until this stage and the Primary Production Committee will be obviously reviewing it further and taking submissions on it. This bill is important to the industry. I am pleased to see it in the House and I look forward to its rapid passage. 
R DOUG WOOLERTON (NZ First) 
: 
 Likewise New Zealand First will be supporting the Fisheries Amendment Bill (No 3) to the Primary Production Committee and we look forward to hearing the debate upon it. I would like to put a few of these issues into simple language that a lot of people who may be listening or indeed want to read the  
Hansard  
can understand. Tendering for quota which is after all a property right is of concern to New Zealand First and we look forward to the debate around that. But one would have to assume as these measures have turned out in other sectors of society that it would favour those fishers who are somewhat larger than others. This is not always so but it is something that is a logical conclusion and it is something that has proved to be in other sectors of society—those with the deepest pockets are able to secure the quota. Once having secured it of course it is a property right and that right is there for some considerable time or in fact until that person or that firm gives up fishing. 
In the past securing a quota for fishing has been somewhat like the old West in America. We have read the history books about riders or proposed claimants to the land being sent out on a horse and told: “OK sunshine whatever you can get around in the day and as long as you return to this spot at nightfall that is yours.” It has been a little similar with quota in this country because it has relied on the fishers going out and fishing as hard as they can—and this is what Mr Heatley referred to—to get a catch entitlement and to make sure that that becomes their quota by a system that has been outlined in previous bills. 
We are concerned that there were inequities in that which also favoured the bigger fishers. There have been numerous court cases and challenges back and forth to establish the correctness of that model. 
Now because it did have flaws we are entering into another model that is straight-out tendering. It is perhaps not much cruder but I am not so sure that it will be much more sophisticated and we in New Zealand First are concerned about that and will be watching the submissions with interest. I think that perhaps they will fall into two quite distinct groups—those who think they will gain advantage and have deep pockets will say: “Yay this is us; we want this.” Those who are entering or those with smaller pockets will have some hesitation. I think we will very quickly see the differences. 
When it comes to the highly migratory species or “HMS”—and one could be forgiven for thinking that that is a ship of the Royal Navy—such as tuna which Mr Heatley said briefly pass our shores— 
Hon David Carter 
: They grab a hook on the way through! 
R DOUG WOOLERTON 
: Yes they grab a hook on the way through. These people who chase these fish—the tuna boats—are quite entrepreneurial and have in the main come from the United States of America. They have had spotter planes and they have had huge operations to track these fish by all sorts of electronic means. They go out and—“plunder” is not quite the right word—grab as many as they can on the way through. 
This bill proposes that the process be brought into line and there be quotas in accordance with agreements surrounding these migratory species. And of course the question that common folk will ask is: how is this to be implemented? Mr Heatley said that the National Party has some reservations and likewise so does New Zealand First but not of the same nature. We worry in many cases that being fair-minded New Zealanders—law-abiding New Zealanders—we may be left somewhat on the back foot in this situation. How will we monitor people in other countries who may be more rapacious than we are and who perhaps have a lesser understanding of the sea or a lesser feeling for the plundering of the oceans? 
 That is what this whole quota management system is about. It is about ensuring that those fish and that resource is there for future generations. We care about that a whole lot and so do our fishers—to give them credit—although they do take a wee bit of bringing into line with some of those new innovations as they may be called. We care about the sea and the sustainability of our oceans and it is sad but it is true that other countries do not. 
We do not want the tuna business to end up like the Rio Grande as it flows through America with various people taking water. By the time it gets to the country of Mexico there is 5 percent of darn-all left. We do not want the tuna or migratory species fishery to be like that. As well as monitoring our own fisherman New Zealand First is concerned that a solid regime is put in place. I look forward to hearing the details of this at the select committee to see that we are not being the good people while other people are plundering the resource that we care for. So that is a concern we have. 
Likewise we are happy to see the scampi part of this bill split off and put through a bit of a fast track—if one wants to put it that way. We agree that this should come under the quota management system. Dare I say it there is some evidence already that in the rush to have this catch entitlement or pre-quota catch as high as possible in some quarters there is overfishing of the scampi fishery which has been relatively newly discovered in this country. 
We need to understand and speak more about the property right that has been created as each species of fish comes into the quota management system. Years and years ago before I entered Parliament the view of many and a view that I hold was that perhaps rather than create a property right we should have a lease-type system. After all and I know that some announcement will be made later this week as far as foreshore and seabeds go we are in a situation where people are fishing the commons as it were. It is the ocean that is open to everybody and I would have thought that perhaps it would be more appropriate that those things should be done by lease rather than by an ownership title. 
However that day has passed but I do not think it would hurt to revisit it now and again to remind people that it is ownership we are talking about. It is hugely valuable to have this quota. It is completely understandable that fishers to protect their livelihoods henceforth and to protect that of some very big companies they have established will go all out to establish their right to as much quota as possible. I do not believe that the past system was perfect in that regard and I do not believe that a tender system will be perfect. I look forward hopefully to people convincing me that it is otherwise. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 The Greens will not be voting for this bill at this stage. I hope that that may still change if the select committee process and any changes that may be made there satisfies us that the bill genuinely advances the purpose and the principles of the 1996 Act. At the moment it is hard to see how it does. 
I would like to draw the House’s attention to two sections in the 1996 Act. In our view they are central to what fisheries management must achieve. Section 8 states that the purpose is to ensure sustainability. That means “(a) Maintaining the potential of fisheries resources to meet the reasonably foreseeable needs of future generation; and (b) Avoiding remedying or mitigating any adverse effects of fishing on the aquatic environment”. Section 9 states that everyone under the Act must take into account the principle of associated or dependent species which “should be maintained above a level that ensures their long-term viability” that “Biological diversity of the aquatic environment should be maintained”; and that “Habitat of particular significance for fisheries management should be protected.” Those two sections of the Act are honoured much more in the breach than in the observance. 
The quota management system is often touted as a huge advance in ensuring the sustainability of fishing. The object of this amendment bill is to reinforce further the quota management system and to introduce new species under the quota management system. There is no doubt that in theory the ability to set a total allowable catch and then allocate rights to catch within that total allowable catch ought to be a big improvement for sustainability. However the system has so many holes at the moment that I do not think anyone could argue that New Zealand fisheries were being fished sustainably. 
I shall spend a minute or two looking at the holes in the quota management system at the moment and the background as to why we are concerned at the idea of further entrenching this system in New Zealand law. The quota management system does make some attempt to sustain individual target species—the ones we want to catch. However it is hopeless at sustaining the ecosystems of which those fish are part. That is despite the sections in the Act that state that that must be an overriding concern for those exercising powers under the Act. There are no mechanisms to sustain the ecosystems of which the fisheries are part and there is virtually no science and no dollars allocated to science to really understand the relationships between the target species and the other species that they depend on or that depend on them. Of course if a marine ecosystem is not sustained then the fishery itself will eventually collapse. It may just take a little longer. 
We have good data on recruitment abundance and mortality of only 15 percent of the fish stocks that we currently catch. We do not have the information we need to start to manage them sustainably. Half of those for which we have information are currently below the biomass that would maintain the maximum sustainable yield. We know even less about the ecosystem relationships than we do about the fish resources themselves. 
The quota management system has already failed spectacularly to sustain several orange roughy stocks that before the fishery was closed sank to 3 percent of their original biomass. There are also inadequate mechanisms—admittedly there are some and they are improving—to deal with the by-catch in fisheries: by-catch of endangered species like albatross sea lions fur seals and Hector’s dolphin. We cannot call a fishery sustainable while it continues to wipe out other species on the scale that goes on at present. 
We do have overfishing under the quota management system but it is in particular areas—namely the inshore fishery. So a species may be sustainable across the whole huge quota management area but it may be wiped out in particular locations that are the most accessible ones close to the coast that also tend to be the locations where customary fishing and recreational fishing are most important. 
 Destruction of habitat by fishing methods is not really dealt with in the 1996 Act and it is not really dealt with by the ministry. We know that scallop dredging has a devastating effect on the benthic organisms where the scallops live and that bottom trawling wipes out many other species. Bottom trawling has been described by international fisheries scientists as like felling a forest in order to catch the deer in that forest. 
We know that there is illegal fishing and that that is outside the total allowable catch. Even when we set a sustainability limit it is exceeded and we do not have adequate enforcement measures to deal with that. 
The system also gives rights in perpetuity to fishers. We believe that that is a privatisation of a public resource for far too long and would prefer that there were limits on the length of time that individual transferable quotas can be held. We have also in the past strongly opposed the idea that these individual transferable quotas were given to fishers on the basis that one could say those who had plundered the most in the past got the greatest rights to continue plundering. That grandfathering of the fisheries rights sold the public short because it is a public resource. 
One thing in this bill that we are pleased to see is the replacement of individual catch entitlements for entry into the quota system with a tendering process that at least gives everybody a chance. 
Looking more precisely at what the bill does it brings scampi into the quota system. We have just had a select committee inquiry into certain aspects of the scampi fishery as some other members have pointed out. The select committee did say that scampi should be brought into the quota system but it also found that it was not appropriate to legislate to do this. So why is it that we are legislating to do it? 
An inquiry is still going on. The State Services Commission is also looking into the behaviour of the Ministry of Fisheries in relation to scampi and it does not report until the end of this month. It is possible the commission may come to a different conclusion from the select committee as to whether there was any wrongdoing. This bill sets in concrete the ministry’s decisions in relation to scampi yet they are still disputed. Those are the same decisions that the courts found were unfair and unlawful. 
The bill also changes the quota management areas for scampi. It is not at all clear in the bill why that is or even what it is. I am advised that those area changes will favour Simunovich still further. The select committee needs to study very carefully any evidence that fishers bring about the effect of those changes in quota area boundaries. 
The bill lifts the moratorium on issuing new permits for fisheries not in the quota management system. I cannot find any evidence in the bill of any sustainability provisions to cover the issuing of those permits. I have no confidence that a sustainability framework will be in place and I look forward very much to learning I am wrong in the course of the select committee process. 
The intention to join the international effort to keep the catch both fair and sustainable for highly migratory species is of course commendable but industry has real fears that the effects of this on the tuna fishery will be to wipe out the small firms with one boat in favour of the large firms. I think the committee should listen carefully to submissions on that. 
The tripartite agreement on the southern bluefin tuna fishery with Australia Japan and New Zealand has often been breached in the past. I will be interested in evidence on just how good the international enforcement will be. 
Finally I am concerned that the bill proposes to issue quota for species that are so endangered that they are subject to the convention on endangered species such as basking shark whale shark and sea horse. I wonder just what kind of conservation message it sends to the international community that New Zealand is bringing endangered species within its commercial fishery. 
GERRARD ECKHOFF (ACT) 
: 
 I am always delighted to speak on an important bill such as the Fisheries Amendment Bill (No 3). I am also rather delighted to speak after a Green member has just spoken at some length on this very subject. I cannot help but recognise that the problem with the Green Party is that its members always point out the problems that exist. Nobody denies that these problems exist out on the oceans but I listened in vain for an alternative. We do not want to go back to the open slather the plunder the days of Captain Ahab roaming the seas killing whales. We have moved on and found better systems. We are striving to achieve sustainable and sensible use of the world’s resources. It is a little upsetting—although I am getting used to it—to hear the Greens constantly bagging the industry that is striving to achieve a far better outcome than we would have had under open-slather systems. 
The ACT party supports this bill going to the select committee. As previous speakers have pointed out this bill is technical in nature and has technical adjustments that require considerable in-depth analysis by the select committee. The Primary Production Committee under the chairmanship of Mr David Carter is recognised as having good cross-party support and input into this matter. I am sure we will come up with a very sensible outcome. 
I want to spend a moment on the referral motion moved by the Minister. I have forwarded an amendment to his motion recommending that the committee not sit during urgency. It is fine for the major parties but a smaller party like the ACT party with eight members finds it very difficult to achieve its obligations in Parliament when its members are required to front up to a select committee while the House is sitting under urgency. It is a problem for us so I have put forward that amendment which I hope the House will take notice of. 
Hon Brian Donnelly 
: Should have kept Donna in the chair! 
GERRARD ECKHOFF 
: Well all things are possible. 
The bill does away with catch history and we say that is fine in a technical sense but one of the real questions is how will that transition be managed? That is a very real concern of the fishing industry—how will the catch history of the fishermen be protected until the species goes into the quota management system? 
Based on the past history I suspect that few in the fishing industry will have a great deal of confidence that the ministry will be able to address the concerns of the wider industry. We have just completed a very substantial inquiry into the allocation of scampi. It is fair to say that the ministry is not riding the crest of the credibility wave after that particular inquiry. There will be some very real issues and concerns about the ability of the ministry to meet the demands and requirements of the industry. 
There will be an increased focus in the bill on the quota management system. Despite what the Greens say New Zealand’s initiative is lauded worldwide as the best system we have to date. That does not mean that concepts that better suit the world’s requirements will not come up in the future but at this point in time it is a very substantial and worthwhile process to ensure that our fish stocks continue. 
One of the difficulties in speaking rather late on a bill is that much of it has already been referred to. At the risk of repeating those remarks—sensibly made by many members—I will make some comments about the migratory species aspect of this bill. In New Zealand we have something of a problem in that the migratory species of tuna for example is now being caught off the top end of the North Island. The quota is then taken by those fishermen from the far north area and by the time we get down to the West Coast where the tuna fishing started there is no quota left. 
That is something that the select committee will need to look at. It is the West Coast fishermen who have the catch history if I can put it that way but the migratory nature of tuna indicates that they are being caught before they get down there. So that is an issue I think we will need to address on behalf of those fishing off the West Coast of the South Island. 
Another issue of course is the catch out on the high seas. Until this international quota comes into force there will be something of a boat race to get out there and catch as much species as possible. If there is any constraint on the fishing industry from New Zealand ports it will be taken up by internationally owned boats—vessels out there fishing for the same fish. They will then receive a higher quota than would be the case if New Zealand vessels were out there getting their fair share. So that too is a very real issue. 
The problem alluded to by Mr Doug Woolerton and Jeanette Fitzsimons is to how we best allocate ownership—and that is what has to happen—of a public asset namely fish stocks. We have had that problem just recently with Project Aqua—how to allocate a publicly owned resource such as water—and it is a very real problem. The tender process seems to work extremely well when we come to allocate land. It has always worked that the highest tender receives the prize whether it is for land or artworks or whatever. 
The tender process is a fair one. The fact that somebody else has a far deeper pocket than I have if I wished to purchase a piece of land or an artwork by tender is irrelevant. That is just one of the facts of life we have accept but there is certainly no justification for excluding the tender process just because the bigger companies or those with greater knowledge or technical abilities can win. That is basically what I want to say but I do support the concept. 
As a quick overview I think it is important that bills that come before the House go to a select committee rather than get voted out. It gives the public and the industry a very real chance to have their say on a particular issue and that is as it should be. 
LARRY BALDOCK (United Future) 
: 
 I rise on behalf of United Future to support the first reading of the Fisheries Amendment Bill (No 3). United Future holds firm to the belief that processes that ensure that New Zealand’s fisheries resources are used in a sustainable manner need to be enshrined in legislation and committed to law. That is an important issue for our party and one of serious relevance and importance for us as a nation. This bill serves to organise and reinforce the quota management system specifically to achieve that end. 
Our fishing industry is a very important part of our economy. It has grown in export earnings from $17.9 million in 1975 to $1.4 billion in the year 2000 and it may have grown considerably since even that time. Domestic sales on the other hand have grown rather modestly from $114 million in 1987 to $130 million in 1999. I guess that is partly because so many people in New Zealand can catch their own fish and that is a very important thing for us as New Zealanders. But the export sales that we generate through our fishing industry are very important for our economy and for the employment of many New Zealanders. In 1975 4100 people were employed in the fishing industry. In 1999 10620 were employed directly in fishing and it is estimated that nearly 27000 fulltime-equivalent jobs were attributed directly to the fishing sector and through spin-off effects. 
While one select committee of this House is currently hearing submissions on the Maori Fisheries Bill to allocate the proceeds of the 1992 deed of settlement we can also today note that the health and sustainability of our fishing stocks are of vital importance to Maori in this country as well. This bill will do a lot to ensure the sustainability of our important fishing stocks. 
With almost $1.5 billion in export earnings fishing is very significant for our economy. United Future is concerned about how much more we could be earning by way of exports if we were not allowing so many joint ventures to operate in this country within our economic zone where they are able to lease our quota at prices that our local fishermen cannot compete with. Because the joint ventures pay very low wages and do not have to pay GST and local taxes they are able to pay for quota at a level that is unsustainable or uneconomic for our local fishermen. They take the catch from our waters and take it back to their shores where it is processed providing jobs that should be for New Zealanders. Then in many cases our fish is exported as product of New Zealand but it does not benefit our balance of payments or our balance of trade. In fact that fish has not seen the shores of this great country at all. That is of concern to us in United Future and we hope to see that concern addressed by this House at some stage in the near future. There is no point in our having a quota management system to protect the sustainability of our fish stock if it is being taken away from us progressively over the years through joint ventures. I do not believe that any other nations in the world are allowing their valuable resource to be harvested by other than their own citizens. 
This bill revives the Fisheries Act of 1996 and seeks improvements to our quota management system. We in United Future are proud of this quota management system. Although it is not perfect it is a very important part of the protection of our marine environment. I want to make this one point in general before I move on to the specific issues within this bill. When the Government states it has a plan to have 10 percent of our marine environment under protection in the near future surely we are missing the point that we already have a very good form of protection for our marine environment through the quota management system. To go into the issue of marine reserves as a means of further protection without recognising that we have protection through the quota management system is I believe flawed. The marine reserves are not going to provide the kind of protection that many believe they do and we need to be careful about how much of our marine environment we lock up in no-take reserves. 
With regard to this bill United Future welcomes the revisions that will come through it. The revisions to the Fisheries Act move to cement the primacy of the quota management system in New Zealand’s fisheries management regime. That is a prudent measure that will achieve among other things a couple of key improvements. It will improve the means of allocating quota by removing both the outdated catch history and the individual entitlement allocation mechanism. It will also rescind the redundant commercial fishing moratorium on non - quota management species which has been in place for over 10 years. Those measures will serve to enhance the process for identifying and introducing stocks into the quota management system and provide for much-needed revision of a moribund commercial fishing regime. They are progressive and practical. 
United Future commends the importance that throughout this bill is placed upon the need to manage risks. The revision of the Fisheries Act of 1996 with regard to changes to spat-catching permits will smooth the progress of a transition from the current spat-catching permit regime to the quota management system when greenshell mussels become subject to the quota management system later this year. That will eliminate the possibility of a troublesome duality of access regime once the greenshell mussels come under the quota management system. 
It is pleasing to note that this bill allows for the required flexibility in the allocation of additional entitlements to highly migratory species. This bill will allow for the extended coverage of the quota management system to permit the management of highly migratory species beyond our fisheries’ waters. Furthermore this bill will enable total allowable catches to be set for those highly migratory species in advance of national shares being allocated by a regional fisheries organisation where sustainability and management needs require it. That is a constructive and flexible approach for the allocation of additional catch entitlements for highly migratory species increases in allowable catch are realised through bilateral arrangements and the bill is revising the mechanism by which foreign licences that apply to highly migratory species have been authorised. That provides for rational and judicious management of important species such as bluefin tuna. 
United Future supports legislation to ensure that the date scampi is made subject to the quota management system is upheld. That will give certainty to the industry through the use of this legislation. United Future supports this legislation being referred to the select committee and we look forward to its reports in due course. 
MOANA MACKEY (Labour) 
: 
 I am pleased to rise to speak in support of the first reading of the Fisheries Amendment Bill (No 3). This is an important bill. It reinforces the preference for the quota management system to manage our fisheries resources as opposed to the use of individual catch entitlements which are often touted as an alternative but do not perform well by comparison. The bill provides more direction on when the quota management system will be used as the current laws lack guidance and have created uncertainty in the industry. Sustainability and utilisation thresholds will be introduced which when breached will require the Minister of Fisheries either to bring the species into the quota management system or to implement an alternative management intervention. I think those provisions are good for the industry they provide certainty and I commend the bill to the House. 
Hon DAVID CARTER (National) 
: 
 In speaking to the Fisheries Amendment Bill (No 3) I reiterate the comment of my colleague Phil Heatley the National Party spokesperson on fishing that the National Party will support this bill going to the Primary Production Committee. 
I start my contribution by taking this opportunity to thank the new Minister of Fisheries the Hon David Benson-Pope and also and probably more appropriately the Leader of the House for ensuring that this legislation will go to the Primary Production Committee. We are aware of other fisheries legislation essentially associated with Maori fishing that recently has gone to a special select committee. The Primary Production Committee over many years has been the select committee that has examined fisheries legislation. I think that over the time I have been a member of Parliament that select committee—and I have sat on it for a considerable period during my term as a member—has handled a lot of fisheries legislation. I think it is dangerous and risky to see increasingly legislation deemed to be special or somewhat risky from a political point of view being chugged off to a specially formed select committee. I know that the members of that committee will do their best to examine the issues but the institutional knowledge around the table of a select committee that has dealt with fisheries legislation over a long period of time and the institutional knowledge amongst that select committee’s support staff are factors that this House must continue to recognise. So I am pleased to see this bill go before the Primary Production Committee; I only wish the earlier legislation associated with Maori fishing was also there. 
I want to speak initially about Part 3 which is associated specifically with ensuring that the scampi fishery resource comes into the quota management system by 1 October this year. I understand that the Minister is instructing the select committee to split this parcel of the bill off into separate legislation in order to progress it very rapidly to ensure it is referred back in time for it to proceed through the House so that scampi can come under the quota management system by 1 October this year. I accept that as we are debating this bill in April of 2004 there does need to be a rushed process. I find that somewhat sad. If the Minister had been prepared to devote his energies to ensuring the legislation was before the House somewhat earlier there would have been every opportunity for submissioners to be involved in a genuine process without that rush. I hasten to add that that is not a criticism of the new Minister David Benson-Pope but a criticism of his predecessor Pete Hodgson. There is little doubt in my mind that he was relieved of that portfolio in a recent Cabinet reshuffle. 
It is necessary to have scampi in the quota management system as quickly as possible. That fish species has been the subject of huge controversy for a long period of time and it is important for the sustainability of that species that it comes in the quota management system as quickly as possible. There is little doubt that the select committee will receive many many submissions from people with whom we have become quite well acquainted over recent times. I am referring to the Primary Production Committee’s work on the scampi fishery investigation which began in October 2002. The report was released late last year in December 2003. That inquiry was a massive undertaking by the select committee. The report tabled in the House totalled 226 pages and there were 43 hours of hard work. I do not blame some submissioners for wanting to relitigate the issues that were discussed and investigated during that select committee inquiry; it is only natural that they would take the opportunity to do so. 
The select committee unanimously reported in that particular inquiry as to aspects of unfairness. As the member of Parliament who chaired that select committee I have no doubt that that unfairness occurred. What we collectively need to do as members of this Parliament and as members of the industry is now find a way forward so that the issues of unfairness in the past are put behind us and the industry can focus on trying to sustainably manage and profitably fish that particular resource. Having made those comments I acknowledge that the solution is harder than just uttering those words. 
The other thing the select committee will want to know during the examination process is how effectively the Minister of Fisheries and his ministry officials have tackled the recommendations of that scampi select committee inquiry. The unanimous result of the report was the finding of issues of unfairness that went back over a decade but more important the select committee then identified seven fishers who had appeared before the select committee with a genuine grievance that required the ministry and therefore the Minister to sit with those particular identified fishers to find a solution to their grievances. Where the select committee was not able to maintain a unanimous stance was on the issue of our giving a signal to the Minister on how best those grievances might be settled. It is well documented in the select committee report that a majority of the select committee members—namely the New Zealand First representative and the Labour Party members—recommended that six of those fishers receive quite substantial compensation. The actual compensation figures were detailed in the report and ranged from a $900000 minimum to a $400000 minimum. 
The question that I think also needs to be asked is why the select committee by a majority saw fit to agree that one company Sealord’s which is substantially based in Nelson should be identified as an aggrieved party but not be mentioned in terms of a specific figure for compensation. That question has been puzzling members of the National Party caucus. Phil Heatley recently asked the Minister whether Sealord’s having been identified as having a justified grievance he felt that the company should be receiving any form of payment. The Minister David Benson-Pope answered by saying simply that Sealord’s as a company had not been identified as requiring a specific payment. Mr Heatley knew that; Mr Heatley was a member of the Primary Production Committee. He then asked a further question and that was whether the select committee report that was presented to the Minister prevented the Minister from recognising an injustice to Sealord’s as a company and negotiating a similar payment. The response from David Benson-Pope was: “I refer the member to my earlier response.” That is not an answer and I assure the Minister and ministry officials that that issue will not go away. 
In the closing minutes I want to comment on the State Services Commission which initiated an inquiry contemporaneous to the select committee inquiry into that very issue. Now quite some time on we have not seen the results of the State Services Commission inquiry. The inquiry is being conducted by a Queen’s Counsel Helen Cull. I rang the State Services Commission office this morning to ascertain when a result might be expected. It was unable to supply that information in time for me to deliver it to the House today although I note that the Greens stated that the report would be through by the end of this calendar month—namely April. Until that report is also finalised the select committee is presented with difficulties in finalising this legislation. 
DAVID PARKER (Labour—Otago) 
: 
 The quota management system has served New Zealand well in terms of managing our fisheries resources in the last decade or two. The objectives of this bill are to improve upon that system by emphasising that it will be the preferred framework for managing the fisheries resource but also by introducing some improvements to allocation of quota when a new species is introduced into the quota management system. 
The bill is also intended to begin to try to regulate the overfishing of some highly migratory species and for New Zealand to do what it can as part of the international community. I am happy to support the reference of this legislation to the select committee. 
SHANE ARDERN (National—Taranaki - King Country) 
: 
 I rise on behalf of the National Party also in support of the Fisheries Amendment Bill (No 3). There are a number of reasons why the National Party supports this bill but mainly because it sets up a sustainable management programme through the quota management system for an industry that has grown to export earnings now of somewhere between $1 billion and $1.5 billion employs some 25000 to 30000 New Zealanders and is a major export industry in this country. 
But the National Party will not support the notion that the Primary Production Committee should meet on Fridays. The reason for that is quite simple: a number of the members of the Primary Production Committee who have knowledge of this bill are also on a special select committee that the Government has set up to look at the Maori Fisheries Bill that it would appear is running simultaneously with this bill. So National will not support that. 
Also given that the Government knew that there was a certain amount of urgency around the implementation of the scampi quota the question has to be asked why this bill has sat on the Order Paper even through an urgency motion when a whole lot of “rats and mice” stuff has been debated in the House that is of no particular interest to the economy—or for that matter and on particular occasions to anybody else in New Zealand. This very important legislation has been allowed to languish and not be put through its proper process. 
I know that the Primary Production Committee which is chaired by the very capable Hon David Carter will give this legislation the proper scrutiny it needs. I know that those listening to the debate who want to make submissions—and who will be notified through the select committee process—will come in and do so. The problem is that the committee will be working to a very tight time frame given that the report back date for the scampi part of the bill—which has to be reported back earlier than the rest—is 22 July. 
Given the industry’s size and importance to the economy I sincerely hope that the Government will give those people who have a major interest in it the proper time and respect they deserve because I am sure they will have some concerns to raise during the select committee process. Up until now there has been no evidence of that time and respect being given in any process the Government has gone through with regard to major legislation such as this so I am pleading with the Government to give them that recognition. 
This bill substantially alters the 1996 Fisheries Act which has become outdated. The history of the fishing industry in New Zealand has been a process of evolution. The quota management system has at times come under severe attack from many people who have been outside of it or who have not been in a position either financially or physically to benefit from the structure in place. The historic grievances that exist and will continue to exist around the way that that system has enabled people to have a bigger chunk of the quota are I guess something that Governments will struggle with for years to come. The reality is that this bill tries to address some of those issues and for that reason it is a very good move. 
I see a number of Ministers here and perhaps one will take a call to inform the House why given that the scampi report back on 22 July is urgent—and we know the reasons for that—the final report back is set down for 27 July. Why is there not a bigger gap between the two report-back dates given that the scampi part of the legislation because of its importance will obviously take up a large chunk of the select committee’s time? The Primary Production Committee has already gone through a huge inquiry in that regard. 
At this stage the Government has not told us what it will do in response to the report back on that scampi requirement. It would be interesting to see—either in the select committee or at some stage during the debates in the House—a Minister take a call to tell us what the Government intends to do with that issue with regard to this legislation. 
The bill will create a transitional list of fish species that will enter the quota management system. Under the current system we have a handover quota based on catch history going back to 1990-1992. That is an excellent provision. It will provide for non-established commercial species to enter the quota management system as technology and food tastes around the world alter and as new species can be harvested and exported. It takes into account the issues around migratory fish—in particular tuna. That fishery has an interesting history. The select committee process will I hope tease out some of the difficulties concerning tuna in the bill. Some of them have already been raised by my good colleague Gerry Eckhoff. 
The West Coast of the South Island is probably the area where the catch history of tuna is best established and yet catching tuna there will be now quite difficult given that the quota is exhausted. I think that is mainly because of modern technology better equipment electronic “gizzardry” and the like. That technology—I hasten to add—is now used by nations other than New Zealand to as one speaker suggested exhaust or even plunder the fishery before it reaches New Zealand waters. It will be interesting to see how the select committee deals with that and what comes forward in the way of submissions in relation to it. 
As I have said the bill legislates to include scampi in the quota management system from 1 October which obviously will be a very beneficial tool in terms of managing that fishery. Equally that fishery may have been overfished or is not being properly investigated and after the select committee has a look at the submissions there may be a need to adjust our thinking around quota management. 
The bill also brings a much more overarching approach to the sustainable management of fisheries in general and that has to be a very positive thing. I know that the fishing industry itself is keen to see some of those changes and for that reason and in light of the fact that it is a major export industry for New Zealand I ask the Government to give those people consideration. I suggest to members that the Primary Production Committee has the right people to make sure that those changes are taken into account. 
DARREN HUGHES (Labour—Otaki) 
: 
 I note that the House has been dealing with several pieces of fisheries legislation in recent times reflecting the fact that policy in that area has been progressed well and underlining the industry’s importance to the New Zealand economy. I support the passage of the first reading so that the select committee can get on with its very good work of considering this legislation. 
A party vote was called for on the question  
That the Fisheries Amendment Bill (No 3) be now read a first time. 
Ayes 110 
New Zealand Labour 52; New Zealand National 26; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata. 
Noes 9 
Green Party 9. 
Bill read a first time. 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
 on behalf of the 
 Minister of Fisheries 
: I move  
That the Fisheries Amendment Bill (No 3) be considered by the Primary Production Committee that it be an instruction to the committee in its consideration of the bill that it divide the provisions relating to the introduction of scampi into the quota management system from the bill to form a separate bill to be reported to the House by 22 June 2004 and that the remaining provisions of the bill be reported to the House by 27 July 2004 and that the committee have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House on a Friday in a week in which there has been a sitting of the House and outside the Wellington area during the sitting of the House notwithstanding Standing Orders 191 193(a) and 194(1)(b) and (c). 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I put the question on that motion an amendment has been put forward by the honourable member Gerrard Eckhoff. It is an amendment to add the words “ 
 and that the committee will not meet when the House is in urgency 
.” 
Amendment agreed to. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I raise a point of order Mr Speaker. I just want to make it very clear that we are voting separately on the ACT amendment and the Minister’s motion. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The Minister’s motion as amended will be put next. 
A party vote was called for on the question  
That the motion as amended be agreed to. 
Ayes 80 
New Zealand Labour 52; Green Party 9; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata. 
Noes 39 
New Zealand National 26; New Zealand First 13. 
Motion as amended agreed to. 
Motions 
Reserve Bank Funding Agreement—Ratification 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
T 
hat pursuant to section 161(2) of the Reserve Bank of New Zealand Act 1989 this House ratify the funding agreement entered into by the Minister of Finance and the Governor of the Reserve Bank of New Zealand pursuant to section 159(3)(a) of that Act to apply for the period through to 30 June 2004 and for the financial year ending 30 June 2005 as presented to the House on 30 March 2004. 
The amendment to the funding agreement is part of a package of measures to better equip the Reserve Bank to intervene in the foreign exchange market. The main change to the funding agreement is that any market losses sustained by the bank as a result of intervening in the foreign exchange market will not be treated as expenditure for the purpose of the funding agreement and will not cause the bank to breach the maximum allowable expenditure under the agreement. This is consistent with the intent of the funding agreement arrangements in the Reserve Bank of New Zealand Act which focus on the amount of income the bank is permitted to retain to meet its operational expenses. Market losses on currency positions are not part of the bank’s operational expenses but arise in exchange rate and interest rate movements which are generally not controllable by the bank. It is therefore appropriate that these expenses are not included in the funding agreement. However the bank will still be required to report any market losses in its statement of financial performance in accordance with New Zealand accounting practice and will still be accountable for all aspects of its financial performance in risk management.  
The other changes that have been agreed by the Government which support the bank’s ability to intervene in the foreign exchange market are the increase in the bank’s equity and the increase in its holdings of foreign currency reserves. Taken together these measures will strengthen the bank’s capacity to intervene in the foreign exchange market for two purposes. The first is to stabilise the market in periods of market dysfunction such as when the market is very liquid. This has been the bank’s intervention policy objective for many years. The Government has agreed to substantially increase the bank’s reserves for that purpose giving the bank access to around $7 billion in reserves for market stability purposes.  
The second is to reduce exchange rate variability by intervening in the market where the exchange rate is either severely over or undervalued relative to economic fundamentals. This is a new policy for the bank. Why has the bank proposed to adopt this new intervention policy and why has the Government supported its adoption? To answer that let me step back in time to the adoption of the currency exchange rate regime in 1985. New Zealand dollars floated in March 1985 after many years of unsatisfactory attempts to manage a fixed but adjustable exchange rate system. Since then New Zealand has maintained a clean float. The Reserve Bank has not intervened in the foreign exchange market in that period to influence the level of the exchange rate. In general the floating exchange rate has served New Zealand well. It has allowed monetary policy to be directed at domestic price stability with obvious success.  
 It has avoided the serious risks of prolonged exchange rate misalignment associated with fixed exchange rates. It has avoided the fiscal costs so frequently associated with maintaining a fixed exchange rate. The floating exchange rate has also provided a flexible mechanism to enable the economy to adjust to changing economic circumstances at lower costs than would otherwise have been the case. It has reduced the risk of serious financial crises often associated with pegged exchange rates. 
But as in other countries with floating exchange rates New Zealand’s currency is subject to major cycles which can be destabilising to individual businesses and to the economy at large. Hedging by companies against currency risk can only moderate not eliminate this impact. For the most part such exchange rate cycles are a fact of life that we will not be able to do anything about. However the Reserve Bank has advised that a well-timed intervention in the foreign exchange market when the exchange rate is markedly over or under valued relative to economic fundamentals can help to reduce the peaks and troughs in the exchange rate cycle. 
The bank is not expecting to intervene often and is not promising that intervention will always succeed but it considers there will be opportunities to make a small but valuable difference where that is consistent with the bank’s price stability target. Indeed it advises that to fail to take advantage of such opportunities would be to abrogate the bank’s responsibilities in the policy targets agreement to avoid unnecessary instability in the exchange rate. 
The Government weighed four issues before agreeing to provide the Reserve Bank with additional capacity to undertake foreign exchange market intervention. One obviously was the cost to the taxpayer for a mistimed or misjudged intervention. There are numerous so-called “war stories” about foreign exchange market interventions going wrong—George Soros and the Bank of England springs to mind as does our own experience in 1984. But these are examples of Governments defending an exchange rate that was not sustainable and indeed was fixed. They were trying to prevent an adjustment in the normal range of the exchange rate rather than trying to influence the extreme peaks and troughs around that normal range. The Reserve Bank will not be doing that. However as the bank has itself made clear any intervention carries some element of financial risk—but of course in economists’ language risk is both up and down both positive and negative. 
The bank will almost inevitably carry market losses on its books from time to time but these will generally be of an unrealised and non-permanent nature. They are likely to reverse as the exchange rate cycle progresses—that has been the experience in Australia. 
The second risk would be if monetary policies’ prime focus on maintaining price stability were subverted. That is why having the Reserve Bank conduct intervention under section 16 of the Reserve Bank of New Zealand Act consistent with the policy targets agreement is such an important part of the arrangement that the bank is proposing and it is vital to keep politics out of this exercise. The bank must have the capacity to make the decision not to intervene where that would be inconsistent with the bank’s statutory mandate of achieving price stability with the bank’s obligations under the policy targets agreement or when the bank does not think there is much scope to influence the exchange rate. 
The third risk is that currency speculators could be attracted to New Zealand. That is not to say that we do not see currency speculators attracted to New Zealand in any case—some indeed are attracted back to New Zealand. This is a real risk where a central bank defends or targets a particular exchange rate but the risk is much much less when the central bank merely seeks to trim the peaks and troughs in the exchange rate cycle as it is not seeking to keep the exchange rate within a target band. No target band has been set for this exercise. 
Finally there is the risk that businesses are fooled into thinking that they need no longer manage their own exchange rate risks—that the Reserve Bank will do that for them. Given the fact that exchange rate cycles are here to stay—a fact that will not be changed by the Reserve Bank’s foreign exchange market intervention—the risk of businesses being fooled into thinking they need no longer manage their currency risks is very low indeed. In fact they need to understand that they continue to have full responsibility for managing their currency risks and the Reserve Bank will doubtless be reminding them of this at every opportunity. 
All in all the change to the Reserve Bank’s exchange rate intervention arrangements is not particularly big but one that is likely to have a big effect. But any small moderation of the excessively variable exchange rate cycle would be welcome. The costs and risks are relatively small well understood and well catered for in the proposed arrangement. I therefore ask for the House’s support. I thank both New Zealand First and the Greens for their indications that that support is forthcoming and I note with some gratitude that the National Party’s position is that it will oppose it but if it should become the Government it will not change it. 
JOHN KEY (National—Helensville) 
: 
 This is one of the more significant days dare I say it in this Parliament as it relates to financial matters. It will probably go relatively unnoticed but I make the prediction that this may be a day that a future Minister of Finance will rue was ever allowed to pass in this Parliament—mark my words. Just as Frank Cicutto the chief executive of the National Australia Bank is no longer in his job if the chickens do come home to roost and there is a substantial loss by the Reserve Bank of New Zealand people will look no further than to the poor Minister of Finance who happens to be in the chair on that given day and they will seek answers to those questions. I do not wish that on the Reserve Bank or the people of New Zealand but I do hope that I am not the poor Minister of Finance in the chair on that particular day if it occurs. That is my only prediction. 
I want to say with some degree of sadness that this day is passing without proper consultation. The people of New Zealand have not had an opportunity to come before a select committee and reflect on the changes that are taking place. Indeed the largest exporter in New Zealand Federated Farmers—the people whom we would most expect to be supportive of this move—are opposed as are a great many exporters in New Zealand. National supports the increase of $1.9 billion to reserves in New Zealand. Our reserves have not been increased since 1988 and it makes sense with the size of our economy to be running slightly larger reserves. We do not support a capital injection of $1 billion into the Reserve Bank to allow it to undertake currency intervention under the conditions outlined by the bank which were to quote it “exceptionally and unjustifiably high and low”. 
In the speeches that will follow my speech a great many finance spokespeople for various parties will tell the people of New Zealand why they care more about exporters than the National Party does why they care about doing more for them. 
Rod Donald 
: You’ve read my speech. 
JOHN KEY 
: Mr Donald will come up and say that and I have no doubt that Mr Peters will as well. The argument will be that the National Party is made up of a bunch of ideological laissez-faire economists who do not understand what is going on. What a load of rubbish that is. If these parties really care about the exporters of New Zealand and making sure that the New Zealand economy operates properly and efficiently under rules that everybody can understand and where moral hazard is not interwoven within our economy they will not support this legislation because it will not work. 
I will start by making the point that this intervention will be based on the Australian style of intervention. What can we say about the Australian style of intervention? The very best we can say is that it made money for the Reserve Bank of Australia—that is the very best prediction that can be made about Australian-style intervention. Between 1984 and 1994 the Reserve Bank of Australia made $3 billion as a result of its intervention. But it has not made an iota of difference when it comes to volatility of Australia’s exchange rate. In fact last year when the Reserve Bank of Australia increased its reserves by the order of A$10 billion the Australian dollar still rose faster than the New Zealand dollar did. 
The international trend of exchange rate intervention goes completely against the grain of what the Minister of Finance is suggesting in the House this afternoon. We only need to look at the Japanese position. Japan has been arguing basically that it will cease intervention in the exchange rate. Why? Because it lost £50 billion since September of last year. It set aside US$500 million for intervention in this year alone. If the Bank of Japan with all of the reserves and might that it has cannot influence the exchange rate why on earth does New Zealand believe it can? Why on earth would we want a barrel of clean whisky—if that is the way we could look at the New Zealand exchange rate—and tip into it a quarter of a cup of mud and make it a dirty barrel of whisky? Why would we do that? 
People should not just accept my view that it will not work. We should look at the Treasury documents that were written to advise on the position that was outlined by the Minister of Finance today. I quote Treasury: “Net gains likely to be small and not without risks.” It goes on to say: “The international evidence of whether foreign exchange intervention can successfully moderate excessive movements in the exchange rate is mixed.” 
The Minister talked a little bit about when intervention would take place: on the highs and the lows. He relies of course on New Zealand sitting on a cyclical exchange rate and it is certainly true that since the float of the New Zealand dollar in 1984 the Kiwi dollar against the US exchange rate has been cyclical in nature. But if it is so easy to predict the cyclical nature why does New Zealand not just take a bigger position? 
Why do we not become the greatest currency speculator since George Soros because if it is easy and one can pick the tops and bottoms then surely we must have stumbled across a great way to make money for the people of New Zealand and why would we not become a hedge fund because— 
Hon David Carter 
: You can’t lose. 
JOHN KEY 
: The Hon David Carter says we cannot lose but he knows well and truly we can. The Treasury document talks quite a bit about this point. It states that it is very difficult to pick the turning point. It says that intervening against the economic fundamentals may prove to be ineffective and costly in both economic and financial terms. 
It is good that the Reserve Bank at least acknowledges that there are risks and that it wants to front up to those. Adrian Orr Deputy Governor of the Reserve Bank made it very clear that the Reserve Bank wanted to be operationally independent and accountable for those outcomes. I commend the Reserve Bank for that. But one has to ask the question: when the Reserve Bank writes such a ginger proposal as this one and when Treasury gives the most qualified support it possibly can why is it taking place? The answer is that Treasury is simply the messenger for the Minister of Finance who is sick of going up and down the woolsheds of New Zealand and apologising for not being able to do anything when it comes to exchange rates. He does not believe that this is going to be— 
Clayton Cosgrove 
: What would that member do? 
JOHN KEY 
: I would not intervene because for 20 years it has worked successfully. 
Clayton Cosgrove 
: What would you do? 
JOHN KEY 
: I would fix all the infrastructural issues that this Government will not fix. I want to talk for just a moment about an experience I had when I was giving a speech earlier this morning. One of New Zealand’s largest exporting hedging companies came up to me and said it was massively opposed to this move that was taking place today. 
Darren Hughes 
: Who? 
JOHN KEY 
: Roger Kerr. Why? The reason is that the company knows that the moral hazard of this position is enormous. The message this is sending to the exporters of New Zealand is that the Government can control the exchange rate when the Minister of Finance the Reserve Bank and Treasury blatantly know that that is not the case. 
This will challenge the independence of the Minister of Finance a Minister who has been saying since we were 47c against the US dollar that the New Zealand exchange rate has been overvalued. He will no longer be able to be a Monday morning quarter-back on the New Zealand exchange rate as he has been in past years. This will attract hedge funds to New Zealand that are likely to take and challenge the risk parameters of the Reserve Bank and this will not be the panacea to our problems. 
I do not have time this afternoon to go on but I want to make one final comment which is simply that although the Reserve Bank has asked for multiparty support National will not be supporting this legislation as it passes now. We will review it in time. We recognise the long-term nature of foreign exchange intervention and the 3-year cyclical nature of the parliamentary term. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I want to know when we are going to hear from the great debater. I want to know when we are going to hear from the expert on monetary policy who is the former Governor of the Reserve Bank. I want to know when he is going to speak. The speech we have just heard was the voice of utter inexperience—as Don Brash is on these matters when it comes to running the whole economy. The National Party and the ACT party do not understand that the job is to run the whole economy in the interests of the whole nation and not just for the narrow segmented sectional interests of the capital markets. The great lesson for this country since 1984 has been the disastrous experiment that the ACT party began with its founder and that was supported by the National Government over all those years. The disaster shows in a comparison between Australia’s growth rate since 1984 and ours: Australia has a growth rate that in real terms is 35 percent faster than New Zealand’s. 
And we have just heard that speech from the voice of the capital markets. That is the kind of voice I heard back in 1985 when Labour floated the dollar supported by Prebble and the acolytes of the far right. The dollar went from US44c to US72c and Roger Douglas and others were saying they would make New Zealand the capital market centre of the world. Not bad eh! When they were asked how it would happen they said it would happen because New Zealand gets the sun earlier than anybody else. It is voodoo economics the sort of economics that is thoroughly discredited in every other First World economy. But today we heard again why the National Party cannot ever be allowed to govern by itself again. Its members are narrow and shallow. They do not understand even their own history. Can members imagine Keith Holyoake making that speech? I cannot. Can they imagine Harry Lake making that speech? I cannot. But the new breed of wide boys as evidenced by their presence in this House say things such as Mr Key has just said: “We’d fix all the infrastructure in one go.” I know he has been in Parliament only 5 minutes but which politician of experience would make that bald outrageous claim and expect even one person in his caucus let alone anybody in New Zealand to believe it? 
That is what he said. He was challenged across the House to say what he would do and he said he would fix all the infrastructure in one go. It is in the  
Hansard 
 and now less than a minute later he is denying it. It is so typical of his leader who is asked time after time what his policy is. When he is asked: “Does this mean that?”; he says: “Ah I’m not sure.” When asked whether A means B or C he says: “Well we’re working on that; we have a review going on.” When will this party which has been around since 1936 with antecedents going back two centuries come to grips with itself and realise that people want policy not popularism? They want policy not opportunism. They want ideas not chance. They will not have themselves put at risk by all this inexperience. They do not want a narrow sectionist segmented interest group coming to Parliament represented by these MPs and pushing their interests over the person who matters most—the exporter he or she who goes abroad and brings more money back for the family in New Zealand. That is what we are talking about today. We are not talking about anything other than giving our exporters a fair go—the people who in a dependent economy like ours are so critical to our long-term economic interest. 
The National Party purports to represent the farmer—provincial New Zealand. No wonder it has not one more seat left apart from Whangarei in the cities of the provinces! It is because they have forgotten exactly who it is who puts life into the economy of this country and who it is the wide boys who put tens of thousands of dollars into their coffers but whose interests are not those of the mass majority of ordinary people in this country and of the women and men who go abroad and export. 
In 1985 to 1987 our dollar went from US44c to US72c and they did nothing. In 1994 to 1996 Don Brash was the Governor of the Reserve Bank. The dollar rose a dramatic 26 percent and he would do nothing. In November 1996 we changed the policy targets agreement. The dollar began to drop dramatically and as a consequence this country made a significant recovery. That is the one and only policy that one can point to for change. But what would those people in the National Party do? They do not actually know. They are opposed to it but they will not change it. 
Darren Hughes 
: They’re uncomfortable. 
Rt Hon WINSTON PETERS 
: Yes they are uncomfortable. Apparently we are going to run our economy like some sort of retreat or haven for those who are unwell—“If you’re comfortable OK; if not we’ve got something for you.” It is outrageous when one thinks about it. The party that used to stand for business for exporters and the party that is going to stand for farmers fishermen and foresters is doing nothing for those people whatsoever other than to criticise at long last something in the area of monetary change. They have no policy. [ 
Interruption 
] He says he has a policy. 
 He had the chance to speak for 10 minutes and he could not outline one element of it. I say to Mr Key that that is not good enough. No wonder they call him “Don Key”. 
Mr SPEAKER 
: Order! 
Rt Hon WINSTON PETERS 
: I am sorry I did not mean to say that but when someone describes himself as Don Brash’s “mini-me” it leads to the automatic— 
Darren Hughes 
: How embarrassing! 
Rt Hon WINSTON PETERS 
: Yes it is. He is the fill-in person for Don Brash. All I can say is that “Moga-Don” no longer has any chance of being successful in this country if people hear those kinds of speeches. It comes back to the point of which other country would tolerate a do-nothing policy. Did Greenspan do nothing? No he did not. When the sharemarket crashed in “black” October 1987 he did something as did every other economy except New Zealand. We languished for decades with the sharemarket staggering at the same level because of a lack of confidence. This country needs low exchange rates and low interest rates and they can be run in tandem. New Zealand First is the one consistent party that has argued for a currency level set to be sympathetic to exporters in a country more dependent on exporting than any country I know. 
Those are the real choices in 2005 for the New Zealand electorate and for that matter for the businessmen of this country who do real things and make real money other than those who prey like the vulture and exploit the weak the halt the lame and the maimed in the financial markets of which Mr Key obviously wants to make himself a spokesperson. 
No doubt we will hear from ACT shortly. We will hear how dynamically successful that party was when its founding leaders were in Government. They sent the Labour Party almost to political oblivion. All I can say is that the good thing about the speech the House is about to hear is that it does not matter because after the next election there will be three parties standing—that is the two old tired ones and the new dynamic one called New Zealand First. 
ROD DONALD (Co-Leader—Green) 
: 
 The Green Party supports the motion. We support the new funding agreement between the Minister of Finance and the Reserve Bank and we support the Reserve Bank taking an active role in getting the exchange rate of New Zealand’s dollar down to a realistic level. I said at the time of the announcement of this initiative that although it may have only a small influence on the value of the dollar it was an important signal to the financial markets that the Reserve Bank was no longer prepared to sacrifice exporters tourism operators and domestic manufacturers to the foreign exchange speculators who are here to make a quick buck. I have to say that I was right. Immediately following the announcement the exchange rate of the New Zealand dollar dropped by several cents against both the US dollar and the trade-weighted index. In fact it immediately dropped by 2c against the US dollar and within 3 days had dropped by 3.5c against the US dollar. It went down by 3c against the trade-weighted index over the same period. What is more the New Zealand dollar is still below the level that it was at the day before this announcement was made—that is down by 2c on the US dollar and it has not risen in the intervening period above the level it was at on the day before the announcement. It is down by 2.5c against the trade-weighted index and again it has not risen above the level that it was at before the announcement was made. 
So why on earth is National opposing this initiative? I am not suggesting that John Key read my speech but he was right to say that we the members of the Green Party are asking in this House why National is not supporting hard-working Kiwi business people why it wants farmers to earn less and why it wants local manufacturers to be put out of business because of cheap imports. Those are all questions that the National Party has to answer but in my opinion it certainly has not done so satisfactorily. Perhaps National will shortly roll out the former Governor of the Reserve Bank who will give the king hit and provide us with all the information that we need to know. The best that John Key could manage was his statement at the time when he said that currency intervention is not dissimilar to tinsel on a Christmas tree: it looks nice and makes everyone feel better but it achieves very little. Clearly he was wrong. Maybe that is because the spotlight was on that Christmas tree and the tinsel was reflecting across the markets and around the world. However the fact is that even the signal that this change would take place and that the Reserve Bank was prepared to make a currency intervention has had a beneficial effect on the New Zealand exchange rate. 
However I think the biggest irony in National’s opposition to the Reserve Bank intervening in the foreign exchange market—in addition to the one Dr Cullen pointed out that National will vote against this measure but is not committed to getting rid of it if National ever becomes the Government—is that the initiative was begun when one Dr Don Brash was the Governor of the Reserve Bank. That was revealed during the Finance and Expenditure Committee’s hearing on the Monetary Policy Statement where Alan Bollard said that Dr Brash was the chief executive of the Reserve Bank when a small study group was sent around the world about 3½ years ago to look at ways to intervene in the currency market. National cannot have it both ways. Either Dr Brash when he was Governor of the Reserve Bank backed doing something about this or he did not. If Dr Brash did back it 3½ years ago when he sent a study team overseas and then made it a priority in the annual report of the Reserve Bank why is the party that he leads now coming out against taking this initiative? 
Nor can the Labour Government have it both ways. This intervention while a worthy one and one that we support is too little and too late. Foreign speculators are still exploiting New Zealand’s vulnerable economy. The New Zealand dollar is still overvalued. At the moment it is worth 65c against the US dollar and on a trade-weighted basis. That is too high for our exporters our domestic manufacturers and our tourist operators. As Mr Peters said—and for once I have to agree with him—they will continue to suffer until the Reserve Bank significantly reduces the official cash rate to bring New Zealand in line with other economies. However the Reserve Bank will not do that until Dr Cullen takes a range of initiatives to take the heat out of the domestic economy. 
We do not have a two-speed economy as some people say. I believe we have a schizophrenic economy because while the speculative sector is growing the productive sector is shrinking. It is time for the Government to tackle that. The indicators that are coming through do not look very good. The February import figures that came out last week show that New Zealand had its worst February trade deficit in our history at $3.492 billion. That is an awfully large trade deficit; it is a massive trade deficit. It is not just a trade deficit as a result of imports growing faster than exports. For 2 years in a row we have had the unprecedented situation of export returns shrinking—down 6.5 percent for the year to February 2003 and down a further 6.3 percent for the year to February 2004. That represents a loss of $4 billion in exports over that 2-year period—or I should say a $4 billion drop in exports. The total drop is more than that but if one compares February 2004 at $28.5 billion with February 2002 at $32.6 billion one can see the impact that the high dollar has had on the New Zealand economy. To shave a bit off the top as the Reserve Bank will now have permission to do will not be enough to get our dollar’s exchange rate down to the level it needs to be at in order to bring exports back up to where they should be and to even start without the handicap of the high exchange rate for the dollar to try to get New Zealand back into a trade surplus situation. 
But it is not just the export sector that has been hit hard by the way the economy is currently being managed. The other big issue that came up when the Monetary Policy Statement was tabled was New Zealand’s negative savings rate. That issue was swamped by all the flurry around the Reserve Bank saying that it is prepared to intervene with the exchange rate. But I want to bring us back to some of the points that the Reserve Bank made. Alan Bollard’s Monetary Policy Statement contained serious warnings about the fragility of the New Zealand economy and in particular that household spending is now expected to exceed income by 11 percent from the beginning of this month. That is an extraordinary situation for this country to be in. We have gone from minus 6 percent in terms of household savings to minus 11 percent. 
The Greens would tell Dr Cullen that it is time to take some steps and the first one should be to look at introducing a capital gains tax on properties other than the family home. That would help to deflate the property boom but more important it would give the Reserve Bank the flexibility it needs to drop the official cash rate. The exchange rate of the dollar would immediately drop as speculative capital went elsewhere. Dr Cullen should also be introducing serious tax incentives to encourage people to save for their own retirement. That would take money out of consumer spending and put it into savings and therefore investment. I do not mind whether Dr Cullen wants to shift the “Ts” and the “Es” in terms of what is taxed and exempt which would have that impact nor do I mind whether he extends across the board the 6 percent savings incentive that exists for people earning over $60000 but he needs to do something. 
Dr Cullen also needs to bring in tighter controls on foreign investment both to limit speculation on property and focus the inflow of foreign capital on new productive investment. He should be looking at reorienting our economy towards self-reliance so that we boost the import substitution sector—in other words encourage Buy New Zealand Made so that we are less vulnerable to the fluctuations of the international marketplace. And quite frankly I will say another unpopular thing: he should be looking at an across-the-board tariff on imports. New Zealand’s balance of payments situation is sick and it will only get worse. Whether one looks at the Reserve Bank or the Budget Policy Statement one sees our balance of payments is getting worse. 
Dr Cullen and other parties may find those proposals unpalatable but I ask them to come up with alternatives that will get the exchange rate of the New Zealand dollar down and take our economy towards self-reliance and sustainability. 
RODNEY HIDE (ACT) 
: 
 This has been an informative debate because it has lined up the political parties in this House. On one side are the parties that support the free market and the capitalist system and on the other side are the parties that are opposed to the free market do not support the capitalist system and believe that politicians know best. Just so listeners who are tuning in are aware of which party is where the National Party and the ACT party are on the side of free enterprise. The Labour Party the Greens New Zealand First and United Future are against free enterprise. They are the parties that are prepared to take a few paltry billion dollars put them up against the world capital markets and like King Canute say: “That is as far as the New Zealand dollar will go. I command you to stop.” 
That is something we in this House should have learnt like King Canute learnt long ago. We heard the Rt Hon Winston Peters’ criticism of Mr John Key. Mr John Key had to learn that being in Government was about running the entire economy. Think about that for a moment. What kinds of people see themselves as politicians running the entire economy? What we want in this country is a framework of stable rules within which businesses can get on and be productive earn a dollar and employ people—not Winston Peters not Michael Cullen and not Rod Donald sitting in the chair over there pretending they can run the entire economy. 
The last person who attempted to run the entire economy in New Zealand—the last time that someone decided politically what level the New Zealand dollar should be at—was the mentor of the Rt Hon Winston Peters Sir Robert Muldoon. We should understand this because the Rt Hon Winston Peters says: “Everything done since 1984 was bad.” That is what he says. He goes back to the glory days of Sir Robert Muldoon when he would command what the dollar could be. He would command what a punnet of margarine would cost. He would command what wages would be. He would command the economy. It is true to say that Sir Robert Muldoon did run the entire economy—and he ran it into the ground! What a backward step it is to suggest for a moment that the Reserve Bank can somehow in a positive way over the long run manipulate the New Zealand dollar. 
I notice that Dr Bollard and the Reserve Bank are being cautious about what they can and cannot do. But I do not see that caution from Dr Cullen I do not see that caution from Mr Rod Donald and I do not see that caution from Winston Peters. Is it not interesting that Winston Peters is standing in the House saying that he should be in the position of running the entire economy? I would not put him in charge of running a taxi out to Lower Hutt with a taxi chat let alone put him in charge of a couple of billion dollars and deciding what the dollar should be in New Zealand! Who would be that stupid? We know because we have heard it in this debate that Michael Cullen and the Labour Party would be and Rod Donald and the Green Party would be. Is United Future voting for this motion? That is typical. One United Future member says “no” and one says “yes”. Are they voting for this? [ 
Interruption 
] They are voting for it. They are the parties stupid enough to put a couple of billion dollars into a political war chest to sit there like King Canute and spray it around for 10 minutes and blow the lot. That is what they are prepared to do. 
I want to explain a few technical facts. It is interesting when one is talking about giving the bank a couple of billion dollars. It sounds very expensive. But it is not as expensive as it sounds. In fact it is estimated that in holding foreign reserves which the Government has done since 1989—since the new Act came into force for “dysfunctional” markets—the holding cost is $3 million a year fixed cost and about three-quarters of a million per $1 billion held. So the actual holding costs of those reserves is not a lot. Indeed given the increase in foreign exchange dealings the Reserve Bank has suggested that it get an extra $1.9 billion over the next 4 years for its reserves so it can manage if it ever gets a “dysfunctional” market whatever that is. The cost of that is not $1.9 billion; it is estimated to be $1.6 million a year. So there is not a lot holding those reserves. But what a lot of mischief it is when another couple of billion dollars is put in and it is said that this is to take the top off if the dollar is too high or this is to lift the dollar up if it is too low. That is where the cost will go. Because that is not sitting the money in a little pocket over here for a rainy day in case we need it. That is actively trading in the foreign exchange market. 
I would like to take members back to Michael Cullen’s pronouncements on what he thought the dollar would be doing in the future. Can everyone remember when he said: “Oh well it won’t stay below 50c for long.”? It did. Every pronouncement Michael Cullen has made even about the direction that the dollar was going in was wrong. Is that truly the man to whom we would want to give a billion dollars to play on the market? What Rod Donald knows about foreign exchange markets and economics would not fill Nandor Tanczos’ tea cosy. It is next to nothing. The idea that we would put him in charge of—or having anything to say about—$2 billion bidding against the capital markets of the world is absurd. 
 Of course we all know that we would not put Winston Peters in charge of anything. Then there is John Key who has actually managed a foreign exchange dealers’ room who says: “This ain’t gonna work.” I think that this House should pay attention. 
Adrian Orr the deputy governor of the Reserve Bank gave an interesting speech on 25 March this year. He said: “Here are the principles by which we would get involved in intervening in the foreign exchange market. At times the exchange rate has varied by far more than can be justified by relevant economic fundamentals.” So that means our models are not according with reality. He is saying that if our models do not accord with reality a billion dollars should be spent to make our models work. He went on to say: “It is at these exceptional and unjustifiable levels of the exchange rate that the bank would consider buying or selling foreign currencies for New Zealand dollars in an effort to influence the level of the exchange rate.” We are going to have a bunch of bureaucrats guided by a bunch of politicians deciding when the dollar is at an unjustifiable level and entering that market to buy and sell. I have to say that that is madness. 
Members should listen to this further quote from Adrian Orr: “What we are recommending is intervening when the moment is justified and opportune with the outcome of at best trimming the extreme tops and bottoms of the New Zealand dollar exchange rate cycle. … At best intervening when the moment is justified and opportune.” Would we not all like to do that? Would we not all like to invest in the sharemarket and on the foreign exchange market when the moment is “justified and opportune”? The point is that they will not know and a great deal of taxpayers’ money is being put at risk through a foolhardy political experiment the lessons of which we should have learnt a long time ago. 
Hon DAVID CARTER (National) 
: 
 Thank you very much for the opportunity to speak to this Government Motion No. 1 that the National Party will certainly vote against. It is a sad sad day that we are here now voting on the ability of the Reserve Bank to intervene in the exchange rate. One only has to consider the way in which the exchange rate has performed over the last 4 years and I suspect that this day was inevitable. Over the last 4 years the economy of New Zealand has performed quite credibly. The reason for the initial burst of performance by our economy was the New Zealand dollar at an unrealistic level. Dr Cullen as the Minister of Finance—in fact the untested Minister of Finance—thought that that those sorts of levels would be there for a considerable time making his job easier to run or to see the economy grow at a respectable level and accrue quite sizeable surpluses. 
What he did not realise was the inevitable—that as the economy performed the exchange rate would also improve as investors throughout the world recognised the performance of the New Zealand dollar. As the dollar started to rise Dr Cullen knew then that that may put some sharper focus on the continuing performance of the dollar. So his first response was a limp-wristed attempt to talk down the dollar. Of course that failed. His second response was another attempt to talk down the dollar. Of course that made no difference at all. The only time we have seen the dollar come back from 72c to a current level of around 65c was when he and the so-called independent Governor of the Reserve Bank came up with a proposal whereby the Reserve Bank had the ability to intervene at the margins and attempt to influence the level of the dollar and that is what we have seen over the last few weeks. 
As the spokesperson on agriculture for the National Party I spend a lot of time with farmers. They as much as any sector of our economy have been hurt by the ever-increasing dollar. Not one farmer I could name would support what the Parliament is proposing to do today. Not one farmer wants to see us go back to the days when somebody attempted to influence the market determination of the exchange rate. I acknowledge that Federated Farmers today have opposed this move even though they acknowledge that an appreciating exchange rate hurts them. When one talks to the farmers they say that it is not the ever-increasing dollar that is hurting it is the volatility. It is the ever-changing exchange rate. 
Most farmers are realistic and know that New Zealand will not be wealthy through a declining exchange rate. As Rodney Hide pointed out one has only to look at the performance of a former National Prime Minister and Minister of Finance Sir Robert Muldoon. If the answer was to try to interfere with the exchange rate and force it down then frankly Rob Muldoon had all the answers. That was what he used to do. When things got tough he would come to Parliament and simply declare a devaluation of the exchange rate. What he did not seem to appreciate was that that only made things get tougher so his next response was to come back to Parliament a second time and then talk down or in fact impose a devaluation of the dollar. That never worked. That made New Zealand poorer. I can assure the House that under no circumstances do I accept that any intervention either by a Reserve Bank governor or by a Minister of Finance trying to influence the level of the dollar as opposed to market influence makes any significant long-term beneficial difference. 
The incredible thing today was to listen to the contributions made by other politicians. The Rt Hon Winston Peters took a call earlier on in the debate to lament the fact that Australia had grown 35 percent faster than New Zealand over the last 15 years. In that respect he is right. Then he tried to suggest to the House that this move today allowing the Reserve Bank Governor to intervene at the margins of the exchange rate would in some way be a silver bullet to achieve a greatly improved gross domestic product growth rate so that we did start to close the gap with Australia. Nothing could be further from the truth. 
I do acknowledge that Australia has a mechanism whereby it intervenes with the exchange rate. But if members look worldwide the efforts by various Reserve Banks of the world to intervene is on the decline. The other point that needs to be made because it has not been made in the House today is that when other countries that have the ability to intervene do intervene more often than not it is an attempt to arrest a declining exchange rate in an attempt to restore confidence to an economy. 
We then listened to the co-leader of the Greens Rod Donald. I take exception to his suggestion that Don Brash as he said wanted to do this all along. Don Brash as a previous Governor of the Reserve Bank certainly investigated whether the Reserve Bank should have the powers to intervene in the exchange rate in an attempt to line out the volatility I spoke of earlier. The conclusion of his work and the work of the Reserve Bank was that it was not advantageous to intervene. In other words the risks of intervening certainly outweighed the potential benefits of the intervention. But Rod Donald went on further to outline the sorts of policies that New Zealand wants to be aware may arise if the Greens and the Labour Party form a coalition Government. 
Pansy Wong 
: Scary. 
Hon DAVID CARTER 
: It was scary. Rod Donald said that there would be a capital gains tax. He also said we would see the imposition of import tariffs again. These are all the tactics we saw 20 years ago under the Rt Hon Rob Muldoon and Rod Donald is saying that these are the sorts of issues we need to go back to. 
An amount of $1 billion will be available with the passing of this motion for Dr Bollard and the Reserve Bank to speculate in an attempt to iron out the exchange rate at the margins. I think that is the point that needs to be made tonight. The exchange rate so far in 20-odd years has varied from 37c to 72c and the current Governor of the Reserve Bank has said that even that extreme range would not be enough for him to attempt intervention. That suggests to me that any attempts to intervene at a range wider than that will have minimal chance of making a significant difference. 
Where the risk is then for exporters is that they currently have the ability and the responsibility to take things like forward exchange contracts to cover the risk of volatility of the exchange rate. This sends a signal to those exporters that the Governor of the Reserve Bank will do that job for them. The governor will not be able to do that job. He will not have the money and the resources required to influence a world market. He knows that. The Japanese found to their surprise that they did not have the resources so obviously New Zealand does not have them. I fear we will see that exporters will not take the exchange rate cover they should that they have been accustomed to taking in the past because they will be relying on the Governor of the Reserve Bank to do it for them. I know it will not happen and sadly exporters will quickly figure out that it will not happen. I oppose this Government motion. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 84 
New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2. 
Noes 35 
New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata. 
Motion agreed to. 
Business Law Reform Bill 
Instruction to Committee 
Hon MARK BURTON (Deputy Leader of the House) 
 on behalf of the  
Minister of Commerce 
: I move  
That it be an instruction to the Committee of the whole House on the Business Law Reform Bill that it take the bill part by part 
. 
A party vote  was called for on the question  
That the motion be agreed to.  
Ayes 71 
New Zealand Labour 52; Green Party 9; United Future 8; Progressive 2. 
Noes 48 
New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Motion agreed to. 
Hon MARK BURTON (Deputy Leader of the House) 
: 
 Pursuant to a unanimous decision of the Business Committee today I seek leave for the bills divided out of the Business Law Reform Bill to be read a third time immediately following the Committee stage. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is there any objection to that course of action being taken? There appears to be none. 
In Committee 
Part 1 Building Societies Act 1965 
BRIAN CONNELL (National—Rakaia) 
: 
 I have been waiting for some time for an opportunity to speak to the Business Law Reform Bill and the whip insisted I take it. The whip was begging for the opportunity himself and I am sure that as the night progresses he might take a call and demonstrate that he like myself has a very great knowledge of this legislation. I am a little surprised at the outset that the Government wants to go through this bill part by part because this is legislation that I think most members of the Commerce Committee of which I was a member agreed to. I was prepared to ease its passage through the House as quickly as possible. But having now insisted on taking the bill part by part we will do just that and will pick up some of the issues that are of importance. 
The first component in Part 1 is the Building Societies Act of 1965. The area that is of most interest to me is the statement in section 93(1A) inserted by clause 5 that “Summary financial statements prepared under section 91A must—(a) give a true and fair view of the matters to which they relate;”. When we think it through that is entirely sensible. I can think of a situation I was in in one of the corporates I worked for where there was an issue of a statement that proved not to be correct; it misled investors. There was an action taken against the corporation I was working for. Of course I want to make it clear that I had no responsibility for that component. In fact the reason I was brought into the business was to try to clear up some of these reporting matters. 
Pansy Wong 
: What were you trying to do? 
BRIAN CONNELL 
: I was clearing up the mess that had been created as a consequence of a financial statement that had misled investors. 
The other relevant point in section 93(1A) is that summary financial statements must: “(b) comply with generally accepted accounting practice as defined in section 3 of the Financial Reporting Act 1993; and (c) be in the form and contain the information that may be prescribed.” Again I have to say that this is sensible legislation. When we discussed this aspect in the select committee the Law Society and the accounting bodies that were represented were of an opinion that this was necessary and of course we agreed with their direction. 
Clause 6 “New section 95 substituted” deals with the signing of financial statements and summary of financial statements. In particular it states: “(1) The financial statements required by sections 91 and 92 and any summary financial statements prepared under section 91A must be signed on behalf of the board of directors by 2 directors of the society.” The reason for that is simply to signal that what was being signed was the intention of the board and that no one member of the board could sign any declaration or any statement that was not covered off by two directors. This is really a security issue. 
 Subsection (2) states: “The financial statements referred to in subsection (1) must be approved by the board of directors before they are signed on their behalf.” Again this is just a good management and good governance issue and one would expect this sort of activity to take place. Subsection (3) states: “If the financial statements referred to in subsection (1) have not been signed and a copy of them is issued circulated or published the society and every officer of the society who is in default is guilty of an offence.” 
Of course this is an issue that captured the select committee’s interest because this is very significant. It has implications across the industry generally. The Law Society in particular took an interest in this component and was at pains to point out that this had to be drafted in this way to send clear signals to directors and officers of building societies that if they engaged in a practice whether deliberately or otherwise there would be consequences of their actions. So it is a component that the select committee supported. Again I personally supported it and I was able to refer back to an incident when I had been involved in a corporate. 
This is the type of thing that really does focus one’s attention. It galvanises people’s attention to make sure that the activities that people are engaged in and the undertakings that they are employed to undertake are done in a lawful way and that they are protecting investors’ investments. 
PANSY WONG (National) 
: 
 Part 1 of this bill amends the Building Societies Act 1965. As that Act was passed quite some time ago the National Party supports an amendment to update it. I can imagine the intention of updating that legislation but I am slightly concerned about how building society members will be communicated with in terms of their rights and entitlements to receive financial statements. 
So—and since the Minister does not seem to be showing any interest—I would like to take this opportunity to go through some of the provisions and ensure that members of building societies get a fair go in terms of understanding their entitlements. After all Parliament is using time—as my colleague pointed out the Minister wants us to go through the bill part by part—and I think we should use this opportunity to see whether we can better inform the people. 
The effect of one of the amendments in Part 1 is that if members of building societies do not want to receive the full financial statement—which I take it includes profit and loss accounts cash flow statements balance sheets notes to the accounts auditor’s report etc.—they can elect to receive a copy of a summary of the financial statement. As I do not sit on the Commerce Committee I wonder whether my very informed hard-working colleague Brain Connell would like to take another call and tell me whether select committee members discussed how much detail has to go into this summary of financial statements. 
Brian Connell 
: We went into a lot of detail. 
PANSY WONG 
: I am assured by my very hard-working colleague that they spent a lot of time discussing how much detail should go into this summary of financial statements. Each member of the building society can elect to say: “I do not want to receive the full set of accounts because nowadays believe me some of those full sets of financial statements could be up to 100 pages long.” So they might elect to receive just a summary of that material. 
I am also happy to see the provision that spells out quite clearly the responsibility of the directors. It states that the financial statements must be signed by two directors and also be approved by the board of directors. As my colleague Brian Connell mentioned just now it is very important to make sure that the board of directors takes responsibility for approving those financial statements and eventually two of them must put their signatures on them. 
I also understand that there is a time line in this provision. The financial statements must be tabled within 4 months of the end of the financial year. I think from memory that that is probably a shorter time frame than was previously allowed. The financial information and accountability report has to be produced in a timely manner for it to be useful and I think that members should receive that information as soon as possible. The provisions also cover how many days of notice have to be given for an annual general meeting to be held and how long a time the building society has to send out the financial statements. 
So when I look through these three pages of amendments to the Building Societies Act 1965 it seems in general that they are spelling out more the responsibility of the directors. They also lay out quite clearly the time frame within which those financial statements have to be prepared and in what format. 
JOHN CARTER (National—Northland) 
: 
 I am pleased to see that the member Rodney Hide is here with us. I will raise a couple of points with regard to this legislation and I will ask some questions which Mr Hide when he has a moment to look through this will also want to ask. I have listened with interest to my colleagues Brian Connell and Pansy Wong as they explained what this legislation is about. I have just had the chance to read through Part 1 and that brought to my mind an article by Rodney Hide I read just recently. I think it was in relation to workplace safety. 
Rodney Hide 
: Oh yes. 
JOHN CARTER 
: Rodney Hide asked some questions about whether the wording in the legislation was correct and whether indeed the people who were being asked to comply with the legislation actually could—because it left out a couple of important parts a couple of tests that were really important. It said things like: “We shall all do our utmost to ensure that there is safety in the workplace.” Well that is good but the fact is that there is a limit to how much a business can afford. One cannot absolutely guarantee total safety. 
When I read through this part of the legislation the same sort of question comes to my mind. I wonder why we are being so prescriptive. Maybe the Minister will take a call and say: “Look it’s the history of how building societies operate.” I do not know. Maybe they are so dysfunctional that Parliament has to prescribe that they dot the i’s and cross the t’s in whatever they have to do. When I look at this legislation I wonder why we are passing legislation like this. Surely these organisations are smart enough and good enough to run their own operations? Yet here we are in Parliament prescribing things with regard to a summary of financial statements. We are telling these organisations how they must set them out when to do them how they do them who they have to give them to and if they do not do that they have to do this. I seriously ask— 
Pansy Wong 
: Where is the penalty? 
JOHN CARTER 
: My colleague is asking whether there is a penalty. I go back to my point: why is this Parliament spending time and taxpayers’ money on being so prescriptive? I do not understand that. We have a colleague in this House Ross Robertson who is known as “Red tape Ross Robertson”. He is always saying that we pass too much law and most of us on this side of the Chamber agree with that. Yet here we are— 
Rodney Hide 
: He had the Paper Reduction Bill. 
JOHN CARTER 
: The Paper Reduction Bill. This is classic legislation that Ross Robertson’s bill would cut right across if it could become law but it is not law. I ask the Minister seriously why this legislation dots the i’s and crosses the t’s. Who does it help? Does it help the building societies? [ 
Interruption 
] It helps the building societies. 
Hon Judith Tizard 
: Members of building societies. 
JOHN CARTER 
: It helps the members of the building societies. 
Hon Judith Tizard 
: Are you a member of a building society? 
JOHN CARTER 
: No I am not a member of a building society. But then I ask myself this question: why can the members of the building societies not go along to the meetings and set out the criteria the prescription or whatever it is themselves? Are they not able to do that? Maybe they cannot. Maybe the law we have passed in this country prevents them from doing so. 
Then one has to ask the question: if that is the case why is that so? Why do we not change the law so that they can make rules to suit themselves rather than members sitting here telling them how they can or cannot run their organisations? Surely they have far more interest in them and far more knowledge of the detail than members do. I would have thought so. 
I do not even know which building society we are talking about so how do I know whether it is right or wrong? Does anyone else know which building society it is? We are talking about building societies generally but seriously which member can tell me which law and which building society this bill will directly affect and do the members of that society agree? Do we know? 
Brian Connell 
: The Minister will take a call and tell us. 
JOHN CARTER 
: The Minister may be able to take a call but I just raise the point. 
Rodney Hide 
: Do we still have building societies? 
JOHN CARTER 
: That would go back to the fundamental question then—do we have to have building societies at all? Why do we have those sorts of things? 
RODNEY HIDE (ACT) 
: 
 I too have some questions for the Minister in the chair because it is not often that we find ourselves amending legislation that was passed before Craig McNair’s mother was born. This is true. This is the Building Societies Act of 1965 so this legislation has stood the test of time in parliamentary terms and in New Zealand terms—it is nearly 40 years old. So the building societies legislation has been trucking along for 40 years and then suddenly we have to change it. What are we changing it for? 
Clause 4 in Part 1 of the Business Law Reform Bill will insert a new section 91A in the Building Societies Act which will allow building societies to prepare summary financial statements. Forgive me but presumably those building societies have been getting along since 1965 without needing to put in summary disclosures and financial statements. All of a sudden they are needed. Why? 
I want to draw Mr Carter’s attention to something that quite disturbs me about our building societies. The new section 93(1A) to be inserted by clause 5 of the bill states: “Summary financial statements prepared under section 91A must—(a) give a true and fair view of the matters to which they relate;”. I ask the Minister does that mean that since 1965 financial statements that did not give a true and fair view of the matters to which they related have been able to be prepared? See? The Minister does not know about the Building Societies Act of 1965. How is it that we are passing legislation after nearly 40 years to allow summary financial statements and having to say “… give a true and fair view of the matters to which they relate;”? 
I ask the Minister whether that is not a requirement already. I look across to Government members in this Committee and ask is that not a requirement now? I look across to United Future the great party of common sense whose members know about financial matters and I ask Mr Paul Adams whether it is not already a requirement for building societies to “give a true and fair view of the matters to which they relate” when they provide a financial statement? It is. So why are we passing this legislation now? 
Mr Adams says: “I don’t know. I just got told to come down here by Peter Dunne to vote for it.” New Zealand First does not know either because those members are busy trying to tidy up the foreshore and seabed legislation but I doubt whether they will be voting for it. I look forward to hearing Jill Pettis who once again will not take a call but chip chip chip—she knows all about how building societies work. 
Jill Pettis 
: Yes I used to work for one. 
RODNEY HIDE 
: Oh she used to work for one. What did the member used to do for that building society? 
Jill Pettis 
: Arrange people’s mortgages. 
RODNEY HIDE 
: Very very good. Well when that member was arranging people’s mortgages and preparing financial statements was it a requirement that she gave a true and fair view of the matters to which the documents related? [ 
Interruption 
] She says it was so again I ask the member who has worked for a building society—which puts her ahead of everyone else in this House—why are we doing this? Why is this change necessary? 
Maybe Mrs Jill Pettis who is in a position to know could finally take a call to explain something of which she has experience. I ask her to take a 1-minute call to explain why summary financial statements are needed why we need to be worrying about building societies giving an untrue and unfair view of matters and why we might be worried under proposed section 93(1A)(b) that they might not be complying with “generally accepted accounting practice”. Why on earth would we be putting that into legislation 40 years after the original bill? 
I do not mean to be rude but I think Mrs Pettis was around in 1965. 
Jill Pettis 
: Just. 
RODNEY HIDE 
: Just—so she was just around unlike Craig McNair’s mum. 
JILL PETTIS (Labour—Whanganui) 
: 
 I move  
That the question be now put 
. 
BRIAN CONNELL (National—Rakaia) 
: 
 Madam Chair thank you for your generosity. When you were good enough to call me on Part 1 before I was developing an argument that went along the same lines as Mr Hide’s contribution and I really want to get back to that in some degree. Section 95 “Signing of financial statements and summary financial statements” which is proposed to be substituted in the Building Societies Act by clause 6 of the Business Law Reform Bill states: “(1) The financial statements required by sections 91 and 92 and any summary financial statements prepared under section 91A must be signed on behalf of the board of directors by 2 directors of the society.” The same question that Mr Hide was posing with a slightly different slant is what was happening prior to this legislation. Do members know? 
Hon Members 
: No. 
BRIAN CONNELL 
: Why not? If it has been happening— 
John Key 
: We weren’t listening to the question. 
BRIAN CONNELL 
: Members were not listening to the question! 
John Key 
: What was the question? 
BRIAN CONNELL 
: I would like to repeat it. If a board was signing information prior to this legislation were board members really of a view that they did know what they were signing and they should not be signing it now? What is different? Were they acting illegally prior to this? What were they doing for the last 40 years? Well not all the members of those boards were acting illegally I am sure. But what were they doing? 
The other issue is in the proposed section 95(2): “The financial statements referred to in subsection (1) must be approved by the board of directors before they are signed on their behalf.” The same question arises. What were those boards doing prior to this? Would the Minister please take a call and explain to me what the difference will be? Were boards of directors prior to this legislation having financial statements sent out on their behalf before they signed them and knew what was in them? That seems to me to be highly irregular. We have already touched on section 95(3): “If the financial statements referred to in subsection (1) have not been signed and a copy of them is issued circulated or published the society and every officer of the society who is in default is guilty of an offence.” Were boards of directors not guilty of an offence prior to this? Why not? What has changed? What is the difference? Were they acting illegally prior to this? 
If this provision is designed to sheet home responsibility then OK that is fine but it is a bit of a slur on the good people who held those offices prior to this legislation being enacted. I am sure that over the last 40 years there have been boards of directors of building societies that have conducted themselves ethically. 
Debate interrupted. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Amended Answers to Oral Questions 
Question No. 8 to Minister 
Hon RICK BARKER (Associate Minister for Social Development and Employment) 
: 
 I seek leave under Standing Order 343 to make a personal explanation concerning the answer I gave to question No. 8 today in the House. I need to make a correction. In answer to the question I said that the number of people under the age of 24 who were in receipt of an unemployment benefit was 22949. I overstated the case considerably. There are only 20146 such people and I am sure that members are delighted at that improvement. 
Business Law Reform Bill 
In Committee 
Debate resumed. 
Part 1 Building Societies Act 1965 ( 
continued 
)  
Hon MARK BURTON (Deputy Leader of the House) 
: 
 Following discussions with parties I seek leave that following the part we are about to conclude the remaining parts of the Committee stage of the bill be taken as a single wide-ranging debate following which we move on to the third reading as the House has already agreed; and that following that we take Government notice of motion No. 2 and at that point if it is before 10 p.m the House rise. 
JOHN CARTER (Senior Whip—National) 
: 
 We have to take the leave relating to Government notice of motion No. 2 when the House is resumed. We can take leave for the wide-ranging debate now. 
Hon MARK BURTON (Deputy Leader of the House) 
: 
 I am just explaining to the Committee what the intention is once the House is resumed. 
JOHN CARTER (Senior Whip—National) 
: 
 The member is advising the Committee of what the House will do when it resumes. 
Hon MARK BURTON (Deputy Leader of the House) 
: 
 Indeed. 
The CHAIRPERSON (H V Ross Robertson) 
: I am advised that members can seek leave in relation to the Committee stage but the Government notice of motion is another issue. 
Hon MARK BURTON 
: If I can clarify I am indicating to the Committee that once we return to the House I will seek further leave from the House to complete that intention. 
The CHAIRPERSON (H V Ross Robertson) 
: Is there any objection to that course of action being taken? There appears to be none. 
BRIAN CONNELL (National—Rakaia) 
: 
 Prior to the dinner interval I drew the attention of the Committee to the signing and distribution of financial statements and I read the section that said that if that did not happen then the society and every officer of the society who was in default would be guilty of an offence. That is really the notion of vicarious liability and I pose the question of how fair and reasonable it is. I can understand that senior officers of the society and the boards of directors have to shoulder that responsibility but to make every officer liable seems to me a little tough. I put it to the Committee that some officers in junior positions working in such a society would have very little idea about the financial management of the society and for them to be penalised in that manner would be unreasonable. 
I also turn my attention very briefly to the proposed section 97A of the Act “Distribution of copies of financial statements and reports”. I agree that they need to be distributed but I pose the question of why we think we need to legislate that. I would have thought that was sensible commercial practice in the first instance. I know that there would be a defence in that some depositors or members could claim that they did not know about the financial structure of the organisation they were investing in and I can understand that they might have an action if this measure was not done but I fail to see how this section will change the practice that has been taking place prior to this legislation concluding its passage through Parliament. 
DAIL JONES (NZ First) 
: 
 New Zealand First has no intention of delaying the passing of this bill. We were criticised in the very preliminary stages for doing just that. Now other parties seem to wish to delay it. As far as New Zealand First is concerned this bill has had more than enough deliberation and consideration. We intend to support it and we have no further contribution to make to this debate other than to see the bill proceed expeditiously. 
STEPHEN FRANKS (ACT) 
: 
 As this debate has been converted to a wide-ranging debate I have three areas on which I believe it would be helpful to have some comment from the Minister in the chair. In Part 9 “Personal Property Securities Act 1999” clause 59 states: “(c) a government department knows or has knowledge of” a matter when it “has been brought to the attention of a senior employee …”. I am concerned that— 
The CHAIRPERSON (H V Ross Robertson) 
: We are on Part 1 Mr Franks. 
STEPHEN FRANKS 
: I am sorry. I had not realised that the wide-ranging debate has not commenced. 
The CHAIRPERSON (H V Ross Robertson) 
: It is not until after the next vote. Then we have that debate. We are on Part 1. 
STEPHEN FRANKS 
: I will not waste the time of the Committee. Part 1 is not something that troubles me. 
The question was put that the amendment set out on Supplementary Order Paper 201 in the name of the Hon Margaret Wilson to clause 6 be agreed to. 
Amendment agreed to and Part 1 as amended agreed to. 
Clauses 1 and 2 and Parts 2 to 13 
STEPHEN FRANKS (ACT) 
: 
 The point that I hope will be clarified is why a Government department would be regarded as having knowledge of a matter when it has been brought to the attention of a senior employee in circumstances in which a reasonable person would take cognisance of it. I would think that a third party—an outsider—would expect a Government department to have knowledge of a matter if it had been given notice in writing and if a reasonable person would expect the notice to have been brought to the attention of such a senior employee. In other words clause 59 seems to allow a department to deny knowledge through its own failure when it should require that a department is deemed to have knowledge if it has been given notice irrespective of whether the notice has been drawn to the attention of the senior employee. I would like to know whether I have misunderstood the purport or whether a department would have a privilege that no other person would have. This clause essentially provides for a subjective test of knowledge instead of an objective test of when a third party that had tried to inform a department should be able to rely on the assumption that the department has knowledge. 
I suggest that “notice” should be something that has been notified in such a manner that a reasonable person would expect it to have been brought to the attention of a senior employee so that it does not just catch someone who sends an email to or rings and tells a junior officer. “Notice” could even be a notice in writing. But it seems to me that clause 59 needs at least to explain that we are not creating a situation whereby a department can deny knowledge by merely not drawing something to a senior employee’s attention. 
More significantly I will move amendments to clause 90 in Part 10. They will be amendments to the Securities Act designed to cut the costs of raising capital. One thing that has not been possible in securities markets is for someone with a bright idea or someone with a project that he or she needs equity for to go out and shop it around to test the market for a float. 
 It is possible to go to the brokers and the experts and ask them what they think but new subsection (2CA) in section 5 inserted by clause 90 addresses a continuing problem for people who want to raise equity capital. There has been a very feeble exception from what is called the “ban on pre-prospectus publicity” but it has not allowed people to go out there and do what happens in every other market; that is start to offer what they have see what the response is modify it and go backwards and forwards until they know they have a product that people want. 
The relaxation in the bill is utterly pathetic. It provides that pre-prospectus market testing can occur but only if no information can be given other than the name of the issuer a description of the securities the rates of interest the number the intended use the terms of the offer and the people to whom it will be made. In other words it does not allow the perfectly natural process of going out with a trial balloon putting it at its most attractive and seeing whether it flies—developing a product that suits the people one wants to offer it to. 
The Fair Trading Act applies in securities markets. if anything misleading and deceptive is put out there is liability. Why should a person not be able to go out there and test the market in any way he or she likes provided that person is not misleading and deceptive? Of course it does not override the normal securities law requirement that someone cannot sign up until he or she has the formal offering documents. 
The current law betrays a deep lack of confidence by securities regulators in their own efforts. It states that they do not believe their prospectuses and investment statement requirements are worth anything because they will not trust people to withhold commitment until they have them. Even when they are required to have them before subscription the securities regulators still believe that they should not let anyone go out and talk to the market unfettered before the documents can be distributed. In other words the cart has to be built and pushed out before we have the horse—before we know that there is a demand that will drive the offering. 
My amendments propose that the only restriction on pre-prospectus publicity should be that it does not circumvent the requirement that people not be signed up and locked in before they have the investment statement and the other documents and that the material that is circulated by way of pre-publicity not be misleading or deceptive so far as the promoter or issuer knows or ought to know. That is just a repeat of what is required under the Fair Trading Act but it is included to reassure the “nervous Nellies” in the securities regulation industry that it will not be open slather. 
The second amendment I have suggested is an opt-out from the offering restrictions so that people can choose not to force someone who is looking for equity capital through the costs of a prospectus and investment statement if they wish to take the risk. Again that does not circumvent the Fair Trading Act—misleading and deceptive conduct is still out. In my amendment I go further and make it clear that it would not exclude liability or allow an opt-out for people who would then be at risk of fraud. Fraud will say that an opt-out simply does not work and neither would deceptive or misleading conduct. It would mean that the whole exemption did not work. 
The proposal in this amendment is simply that people in investment markets have the freedoms that every person has if he or she wants to buy property. Why should property investment be open to anyone without prior warning disclosure statements or all the sign-offs and audits? There are many property investments that would be far more risky than the traditional securities investment in the securities and capital markets. People are allowed to gamble away their entire fortunes on the horses on Lotto or on anything else without disclosure statements. Participation in capital markets at least is usually not an all-or-nothing game. People who gamble can lose their entire investment. It is rare that one loses one’s entire investment when one puts money into even a foolish investment in an initial offering. Any investor can also go into the secondary market without a prospectus or investment statement. 
This amendment provides for people who deliberately opt out—who sign a statement that states: “In effect I am not going to complain if I end up buying something that I don’t want because I want to take the risk and I acknowledge that I am doing so without the benefit of the offering documents required by Part 2 of the Securities Act.” 
I realise that at this stage it is unlikely that the Minister in the chair Mr Cunliffe will feel willing to approve the amendment and get the Labour Party to vote for it but I would be very interested to know whether he has any significant reasons to oppose it in principle. It is what the Government should have been bringing forward. It is the kind of reform that would ease burdens. In my second reading speech I calculated that the offering document industry might cost $100 million a year. Much of it is a completely wasted cost to New Zealand business and capital raising. We could have an opt-out market that would test whether people really thought all that stuff was valuable. If people choose to opt out of the protections of the securities regime without repealing it we would then know we had a revealed preference which would tell us whether all the regulations are worth anything. I suspect that for reputable issuers they do not add any value; they only add cost. 
BRIAN CONNELL (National—Rakaia) 
: 
 I want to start on the unusual basis of commending Mr Franks’ amendments to the Committee. I think they have been well argued. If members read them carefully they will see how they would add value to the legislation. The Minister in the chair David Cunliffe should consider them very seriously. I am quite happy to yield my call to the Minister in the chair if he would like to take the opportunity to respond to Mr Franks because I think the amendments are very noteworthy. 
I will be very quick in picking up another issue because while the Minister is on his feet he might be able to answer another question for me as well. I am intrigued as to how we arrived at the definition of “wealthy” in new subsection (2CD) in section 5 inserted by clause 90. I see that a person is wealthy if “an independent chartered accountant certifies no more than 6 months before the offer is made that the chartered accountant is satisfied on reasonable grounds that the person—(a) has net assets of at least $2000000; or (b) had an annual gross income of at least $200000 for each of the last 2 financial years.” If people meet those qualifications it seems that they can determine their own investment strategy. 
That seems to me to be a pretty arbitrary line in the sand. I was wondering why someone who has a salary of $180000 a year and assets of say $1.5 million is determined not to be able to make his or her own investment determinations. When you are on your feet I would be interested in whether you could let the Committee know how that definition was arrived at. As I said it seems awfully arbitrary to me. I also see a contradiction of sorts in play here. In some ways it is a double standard. For taxation purposes we are considered wealthy in this country if we earn $38000 a year yet under this definition “wealthy” is $2 million in net assets or $200000 of income. Whilst you are on your feet Minister if you could get your head around those issues as well— 
The CHAIRPERSON (H V Ross Robertson) 
: You need to address the Minister through the Chair. 
BRIAN CONNELL 
: I apologise. If the Minister is on his feet and is taking a call and could take some time to answer that question too I would be extremely grateful. 
John Carter 
: I raise a point of order Mr Chairperson. It is just a point of clarification. I did not understand that last comment that you made to my colleague Brian Connell. It has been a habit in my observation that a member can refer directly to a Minister to say: “Would the Minister respond to my questions?”. You may be able to point to a ruling but I am unaware where it is written that members have to say: “Mr Chair can you ask the Minister to respond.” I cannot recall it. Normal practice has been to say: “I hope the Minister will respond to my questions.” but if you are telling us that this is a direction that I am unaware of and that the Committee should know about then we would be pleased to know about it. 
The CHAIRPERSON (H V Ross Robertson) 
: It was a direction in relation to the use of the word “you” when referring directly to the Minister rather than through the Chair. 
John Carter 
: I seek clarification. If I remember my colleague’s comments he was saying: “Minister I hope that you will make some comments.” That is actually quite correct English and he should not have to say: “Minister I hope the Minister will …”. I do not want to be pedantic here but I just think we need to be careful on how we are ruling. Anyway let us get on with it. 
The CHAIRPERSON (H V Ross Robertson) 
: Every time the member uses the expression “you” the member is referring to the Chair. The member must refer to the Minister or another member as that Minister or member in the third person. The member can look at Standing Order 103. 
John Carter 
: I raise a point of order Mr Chairperson. I know well the ruling that you are making which has been repeated many times but I want to make the point again. When the member said “Minister I hope you will take a call or answer my question …” the fact is that he had to say “you Minister”. It is quite correct English for him to make that statement—to use the word “you” in those circumstances. He has prefaced it by saying “the Minister” and then follows by saying “Minister I hope you will take it.” You are quite correct in that members cannot say: “You will take the call” because that does refer to the Chair—that is very clear. But if he says: “Minister will you take this question …” then that is quite correct English and we have to allow that to happen. 
The CHAIRPERSON (H V Ross Robertson) 
: The member should say: “Will the Minister take this question?” in future. That is what needs to happen. In other words the member should not address other members directly. The member should be addressing the Chairperson and referring to other persons in the third person. 
BRIAN CONNELL 
: I respect your ruling and I accept it but it has been a practice since I have been in this House to refer to the Minister in the chair and in this case I prefaced my remarks by saying: “I hope the Minister will take a call and answer the question and whilst you are on your feet I hope you will also deal with the other question that I posed.” So— 
The CHAIRPERSON (H V Ross Robertson) 
: It is my understanding that you said: “You will take the call”. That is the way that I saw it. As the Chair I have ruled and I refer the member to Speaker’s Ruling 20/3. Members are entitled to raise points of order and that is quite correct but once the Chair has ruled that is the end of the matter. To persist would lead to Standing Order 85(1) and that would mean the first yellow card for the member. As the member has been a member of the parliamentary rugby team he knows what a yellow card is. 
BRIAN CONNELL 
: Thank you Mr Chair. 
Hon DAVID CUNLIFFE (Minister of State) 
: 
 It is always a pleasure to have the opportunity to respond to questions raised on matters such as the Business Law Reform Bill. This is one of the exercises that Parliament undertakes that is typically relatively bipartisan which allows members to discuss technical matters that are embedded within the bill. They are typically preconsulted between the parties and discussed quite fully at select committee so this discussion on the floor of the Chamber in Committee allows us to draw together some of the threads of that discussion. 
I want to turn briefly to two related amendments that have been proposed by Stephen Franks from the ACT party. The first is the amendment to clause 90(2). He has expressed the view that the Government is unlikely to support it and I can confirm that the Government will not be supporting the amendment. The reason is pretty clear. The proposed amendment would be a profound departure from the scheme of the Securities Act which draws an appropriate balance between investor protection and promoting a vital securities market. The amendment would in our view tip the balance too far away from providing uniform and reliable information to investors. 
I now turn to the second amendment to clause 90. Again I am afraid the Government cannot support that amendment. The bill sets up objective tests for when an investor may not need full disclosure. The amendment proposed would enable an investor essentially to opt out of Securities Act disclosure meaning that the investor could be subject to undue pressure to do so or could sign away his or her rights on a pro forma basis without realising the full implications of doing so. It is the Government’s desire to reasonably protect investors by ensuring that they have a range of information available to them. 
In closing I take the opportunity afforded by Mr Connell to comment on section 5(2CD) in clause 90(2) which is the definition of “wealthy”. He has raised the perfectly valid question of whether that definition is an arbitrary one and what basis lies behind it. I can confirm for the member that the test matches the test that is applied in Australia. As the member knows we are attempting to harmonise our business and commercial law and regulation where prudent so as to allow businesses to operate relatively freely and with minimum compliance costs on both sides of the Tasman so it is in keeping with that objective. It follows from his question that while the bill has implanted a specific figure—$2 million of assets or $200000 in income for each of the last 2 years—one might ask whether that figure is frozen for all time and what happens if inflation erodes the real value of that figure. I can confirm for the member that the bill provides for the Governor-General to be able to increase by Order in Council those amounts in keeping with inflation so that problem is dealt with. 
I invite the member in closing to take a common-sense view of it. The counterfactual must surely be the question of whether someone with $2 million worth of assets or an annual income of above $200000 for each of the last 2 years is not wealthy. I can assure him that my constituents in New Lynn my colleague Ms Mahuta’s constituents in the Waikato and probably his constituents in Ashburton—perhaps with the exception of one or two of the landed gentry out there on the plains—would probably be of one mind that the $2 million threshold would meet that test. 
In closing I commend the bill to the Committee. It is part of a regular update process to ensure that our commercial law does keep up with the times that any remedial matters are taken care of expeditiously and that business has an environment to work in that is as smooth and as low-compliance-cost as possible. I commend the bill to the Committee. 
The question was put that the following amendment in the name of Stephen Franks to clause 90 be agreed to: 
to amend section 5(2CA) by omitting paragraph (c) and substituting the following paragraph: 
(c)contains no information which is misleading or deceptive so far as any promoter or issuer knows or ought to know; and 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 33 
New Zealand National 24; ACT New Zealand 8; Independent: Awatere Huata. 
Noes 84 
New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Stephen Franks to clause 90 be agreed to: 
to amend proposed new section 5(2CC) of the principal Act by adding the following paragraph: 
(d)persons who affirm in writing to the promoters and the issuer separately from their subscription that they accept the risks that they may have inadequate information or skill or experience to assess the merits of the securities but not the risks of fraud or deceptive or misleading conduct by or on behalf of the issuer or the promoters if no promoters not the issuer have reason to believe that the person so opting out of Part 2 of this Act is not competent to make a rational decision to do so. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 33 
New Zealand National 24; ACT New Zealand 8; Independent: Awatere Huata. 
Noes 84 
New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 201 in the name of the Hon Margaret Wilson to Parts 2 to 13 be agreed to. 
Amendments agreed to and clauses 1 and 2 and Parts 2 to 13 as amended agreed to. 
The Committee divided the bill into the Building Societies Amendment Bill the Commerce Amendment Bill (No 2) the Companies Amendment Bill (No 2) the Co-operative Companies Amendment Bill the Distress and Replevin Amendment Bill the Financial Reporting Amendment Bill the Friendly Societies and Credit Unions Amendment Bill the Life Insurance Amendment Bill the Personal Property Securities Amendment Bill the Securities Amendment Bill (No 2) the Securities Markets Amendment Bill (No 2) the Superannuation Schemes Amendment Bill and the Unit Trusts Amendment Bill pursuant to Supplementary Order Paper 196. 
Bill reported with amendment. 
Third Readings 
Hon DAVID CUNLIFFE (Minister of State) 
 on behalf of the 
 Minister of Commerce 
: I move  
That the Building Societies Amendment Bill the Commerce Amendment Bill (No 2) the Companies Amendment Bill (No 2) the Co-operative Companies Amendment Bill the Distress and Replevin Amendment Bill the Financial Reporting Amendment Bill the Friendly Societies and Credit Unions Amendment Bill the Life Insurance Amendment Bill the Personal Property Securities Amendment Bill the Securities Amendment Bill (No 2) the Securities Markets Amendment Bill (No 2) the Superannuation Schemes Amendment Bill and the Unit Trusts Amendment Bill be now read a third time 
. 
The key public policy objective of this legislation is to ensure that the law affecting business operation is clear efficient and effective. The amendments are part of a programme of regular incremental reforms to improve our business law. When taken together these amendments have a significant and positive impact on the body of law under which businesses must operate. In particular they remove unnecessary compliance costs provide business—especially small and medium enterprises—with easier access to capital clarify and update various statutory provisions and achieve consistency between different legislative requirements. 
The legislation resulted from close and ongoing consultation with the business community. It addressed what that community indicated as being some of its concerns with business-related legislation. These are generally the cumulative costs of complying with legislation and the difficulties in reconciling different legislative requirements. The amendments reduce some of those costs and promote the efficient use of economic resources enterprise and innovation in the economy. One example of a compliance cost reduction contained in the legislation is the extension of the exemption from the prospectus requirements of the Securities Act from small employer superannuation schemes to all employer superannuation schemes. This will not only lower compliance costs but support the broader and widely held economic objective of providing for workers in their retirement and increasing the national savings rate. 
A number of submitters at the select committee said that complying with the disclosure requirements of the Securities Act imposes significant compliance costs on employer-based schemes and these costs have to be passed on to members. Extending the exemption will reduce those costs and remove a disincentive to the starting of new schemes. 
Another of the legislation’s key aims was to improve the clarity of our existing commercial law statutes in order to allow both businesses and regulators to proceed with certainty. Many examples of clarification were contained in the original bill two of which I will mention briefly. The first amends section 196(1)(a) of the Companies Act of 1993. This section provides that at each annual general meeting a company must appoint an auditor to hold office until the end of the next annual general meeting. It is not clear in the statute whether an auditor may resign before then. The bill contains a clause clarifying that of course an auditor can resign between annual general meetings. The second example is contained in amendments to the Superannuation Schemes Act of 1989. The amendments allow prospective members to look at or receive certain information. An obligation is placed on the scheme’s trustees to ensure the provision of information to prospective members. For consistency and clarification the trustees’ obligation extends to the provision of information to existing members. 
The legislation aims to remove anomalies in the law that have emerged over time. These inconsistencies can result in for example similar investment products being treated differently when there is no sound reason to do so. This inconsistency is seen in the Securities Act. Section 53E of the Act provides that issuers of equity securities debt securities life insurance policies unit trusts and superannuation schemes must have their financial statements audited annually by a qualified auditor. In the case of participatory securities annual audits are carried out only if the statutory supervisor so requires. The Securities Amendment Bill (No 2) contains a clause requiring that all arrangements or schemes to which participatory securities relate should be audited annually to remove that inconsistency. 
Another inconsistency in the law was found in the Superannuation Schemes Act. The Act confers on members the right to look at certain documents yet this right is not supported by any penalty provision and was therefore not enforceable. To correct this anomaly an amendment has been made to the Act’s offence provisions so that a penalty attaches if the member is denied the right to look at the documents. 
Lastly the legislation aims to update the law—a necessity in a rapidly changing business environment. Up to date statutory provisions allow businesses and regulators to take full advantage of technology and there are many examples of that. The Commerce Amendment Bill (No 2) contains an amendment that will allow the Commerce Commission to take advantage of technology to convene meetings. 
In conclusion I commend the third readings to the House of the various bills that have been split from the Business Law Reform Bill that came before the House. I am commending the various bills in this legislation because it helps to ensure the law affecting business operation is clear efficient and effective. In particular I want to thank the Commerce Committee and other members for the contribution they have made to the passage of these bills. 
BRIAN CONNELL (National—Rakaia) 
: 
 These bills amend 13 pieces of legislation and I think we have canvassed a fair debate on them over the course of the first and second readings and the Committee stage. I note that the legislation as it is now framed was sought and supported by the New Zealand Law Society and by the commercial sector generally. I believe it will make a positive impact on the business sector. Accordingly the National Party strongly supports it. 
As the Minister pointed out there are three broad aims and I will touch on those briefly. The first is to remove unnecessary compliance costs and I will come back to that. The second is to clarify ambiguities and uncertainties. I think the bill has gone a good way along the path to accomplish that. The third is to update law and remove conflict within and between legislation and I think that component has been dealt with rather well also. 
 The issue of compliance is what I want to discuss in a bit more detail. The Minister’s comments were commendable but I also have to say that he and his colleagues really struggle to get their heads around this issue of compliance. Under this Government compliance costs for the average sized business have soared to record highs. They are standing at $52000. I am sure members understand that for every dollar one spends one has to create about $7 worth of revenue to pay for it. That is the ratio that most businesses work on. It is a huge imposition to place on businesses. Whilst the Minister has said that he wants to see compliance costs reduced I do not see any evidence of that happening. New Zealand is drowning in red tape and compliance costs. That is OK when times are good. Most businesses can get thumped on the back shake their shoulders and deal with impositions of compliance costs when their revenue line is strong. However when times get tough as they are about to and when these costs have been institutionalised as they have been at record highs margins will get squeezed. I am not suggesting that many businesses will go belly-up but it will stop businesses from growing. That is the true cost of compliance—the havoc it is wreaking on New Zealand businesses. 
I also have to say that dealing with compliance is more than what this legislation purports to do. It is more than just amending this form or that form—playing around the margins as I call it. One has to stop doing things. The Employment Relations Law Reform Bill demonstrates that the Labour Party has a lack of empathy with New Zealand business when it starts to deal with these issues. In particular new subsection (2CD) of section 5 inserted by clause 90 of the Business Law Reform Bill which I addressed in the Committee stage is interesting. Whilst I am grateful to the Minister for taking a call and giving me some clarity around the definition and how it was arrived at as to who is wealthy in this country and who is not I think even he would say that his constituents in New Lynn would agree that people who earn $150000 a year and have net assets of $1.5 million are also wealthy. I wonder why there is a double standard in play and why those people who have in excess of $2 million of net assets those people who earn $200000 or more a year do not have the same protections as the people of New Lynn who have assets of $1.5 million. 
The other issue that I thought the Minister might have touched on—but I see he avoided it; he was very quick on his feet—was the inherent contradiction in the definition of what is wealth and what is not wealth when it comes to taxation. I am sure this is an issue that he has thought of. There is a contradiction in that earning $38000 means someone is wealthy. My constituents in Ashburton the many thousands of them who earn less than $38000 a year do not think they are very wealthy and those who earn $37000 $38000 $39000 or $40000 a year do not think they are particularly wealthy either. They want to know why on an income of $39000 they get taxed at the marginal tax rate but on $37000 they do not. They will be asking the question—and I think it is a very fair question—of the Minister as to why it is that someone who is wealthy when it comes to investor protection is not so wealthy when it comes to taxation. 
I am also concerned that many of the “landed gentry” as the Minister referred to some of my constituents might have farm values that have gone beyond the $2 million mark but I know that a lot of them have very poor cash flow and they really struggle. They are not necessarily financially wise. I cannot see why they cannot get some of the protections that those who have equally poor cash flows will now get under this legislation. I say to the Minister that double standards apply here. 
The other issue I want to touch on specifically is Supplementary Order Paper 152 which deals with void and voidable allotments. The Securities Commission has granted exemptions from the disclosure requirements of the Securities Act to Australian registered managed investment schemes and Great Britain collected investment schemes. It was discovered that a number of overseas issuers have breached conditions of the exemption notices under which they were operating. Most of these were minor breaches and more clerical in nature. The select committee moved rapidly and sensibly to deal with this. In most situations investors receive the required disclosure documents allowing them to make informed investment decisions yet some investors try to blame the poor performance of the funds that they invested in on the lack of disclosure or the clerical error that had not seen them registered. It is quite bizarre that some investors who were beneficiaries of funds that performed above the investment expectations were also caught in a situation where they were potentially being asked to repay some of those gains. The reality is that failure to file documents with the Registrar of Companies had no bearing on the performance of the fund and issuers found themselves in an impossible situation. 
As I have already noted the select committee moved to address this concern by introducing a procedure that grants relief to issuers similar to the Illegal Contracts Act but specifically designed for securities law. This will enable issuers to seek relief by going to the courts and will apply retrospectively. I have to say that generally I am strongly opposed to retrospective legislation but in this case it is sensible and it carries my support. As I said at the outset this legislation is sensible law. It is well supported by the commercial sector and the Law Society and accordingly it carries National’s support. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I call the next member I say to members that I heard a cellphone during Mr Connell’s speech. I urge restraint on honourable members to respect the contributions of another. It is good conduct common sense and good form in this Chamber. I refer members to Speaker’s ruling 16/2. 
I also urge members to give their full attention to the proceedings of the House. We should eliminate all unnecessary distractions from our duty. Cellphones should be switched off within the hearing of the debating chamber. All members can be alerted to urgent messages by messengers or via the party whips. 
DARREN HUGHES (Labour—Otaki) 
: 
 I rise to support the third reading of the various bills that have come out of the Business Law Reform Bill. The Commerce Committee did a very good job on this legislation and reported it back in a way that improves the business regulatory framework. It has the support of a number of the key stakeholders and I look forward to its rapid passage through the House. 
STEPHEN FRANKS (ACT) 
: 
 I rise for the ACT party in the third reading and final debate on the bills that have come out of the Business Law Reform Bill. First I want to say that ACT supports the idea of Business Law Reform bills—that is bills with a whole lot of miscellaneous amendments that are regarded as largely technical and that are the kind of amendments that ordinarily might languish for a long time before the Government decides to use up some of its House sitting time to get them through. They are often matters that business people or others have been asking for for some time. As has been said they are tidy-up matters but are not exactly the same as those dealt with in Statutes Amendment bills which traditionally have only things that are entirely non-contentious. There can be some dissent on matters in Business Law Reform bills but there has to be substantial consensus before they go through. 
The ACT party has supported and will support all the bills that have come out of the Business Law Reform Bill even though we consider that some of the matters dealt with are dealt with poorly. We have decided that the changes are better than the status quo but in some respects only just. It is a great shame that the fact that those issues have now been dealt with will mean that the Government will not return to them for some time. This Government is unlikely ever to return to those issues because it will not be here. Even so in bidding for priority for change an incoming Government may find it is hard to go back and look at matters such as the Securities Act and the changes that should have been made—but have not been made—in this bill. Instead the changes are half-hearted. 
 I will deal first with the void and voidable allotment question. That is really the “Australian bank rescue” provision. It is the provision that will allow WestpacTrust Bankers Trust and a few other Australian fund managers to apply to the New Zealand courts to get transactions validated that otherwise would entitle New Zealanders to refunds of some very large sums of money. They were even larger a few months ago before markets rose which would have made it slightly less expensive if New Zealanders had decided to exercise their rights. 
What concerns me about this retrospective law change is that the Commerce Committee reported on the bill without ever really identifying to the people who might be losing their right to pull their original investment out of the investments run by WestpacTrust and Bankers Trust just how much they might be giving away and without alerting anyone including the business press. Think of the irony of that in a Business Law Reform Bill. There are rules that force businesses to disclose—in the colloquial term to spill their guts—the most untidy and unwelcome facts in a prospectus. But here we have essentially the Labour Government colluding with the Australians who had this unfortunate lapse that they now want to have remedied to avoid actually indicating to the New Zealand investors who could take advantage of it just what they might be giving up. 
That is not to say that it is not a proper change. It is the retrospectivity that really raises eyebrows. If the Government had really adopted a principled approach to the issue—if it had said: “We will apply the same standards of disclosure and warning that we force business to apply”—it would have been upfront and explained to the investors in the Bankers Trust WestpacTrust and the other affected funds just what it is that they may forgo when those retrospective changes come in. If the Government had done that it might have been able to justify the retrospectivity with more than the begrudging approval that it got. 
The other concern about these provisions is that there is no indication the Government has secured from the Australians any kind of understanding for reciprocity. I have very little doubt that the hard-nosed ruthlessness that the Australian Government applies in matters concerning its own businesses—the sort of attitude it displayed in 1996 when it unilaterally abrogated its open skies agreement and the sort of attitude it showed to Ansett when there were two mysterious groundings and then Ansett collapsed which the Australians laid at the door of the New Zealand management—would not have resulted in the kind of consideration that the New Zealand Government has given to the Australian banks over the retrospective change to rescue the allotments. 
Indeed it almost looks as if it has gone the other way: that this is a change forced out of the New Zealand Government because of its supplicant role. I suspect that behind this change is the Hon Dr Michael Cullen’s arm right up his back. I suspect that it is part of a pattern whereby we want to throw Air New Zealand to Qantas whereby we want to adopt the same insolvency law as the Aussies and whereby the Government says that it is going to have the same insider trading law which is already in force in New Zealand—continuous disclosure rules that even Australia does not live by. The New Zealand Government is rolling over and asking not to be growled at in almost every transaction it has with the Australian Government. 
It is true that we should be humble. We reneged on immigration arrangements. We created an open flapping back door to the Australians at a time when they were very worried and rightly about the risks of open-slather immigration. We reneged on the Skyhawk deal for training and exercises with the Australians and we have not pulled our weight in defence arrangements. So maybe the Government has to sacrifice the interests of a whole lot of New Zealand investors to placate the Australians and maybe that is what accounts for the retrospective change to the voidability provisions in the Securities Act. 
I want to move now to some of the things that have been done sensibly and commend the removal of the foolish extension of prospectus requirements to company or employer superannuation. It was predicted when they came in that that would kill a lot of superannuation. Belatedly the regulators have recognised that and this bill sees a very sensible rollback of a stupid extension of regulation 10 or 12 years ago. 
I have already mentioned during the Committee stage debate that the timidity of the change to the pre-prospectus publicity rules is patently ridiculous. Pre-prospectus publicity rules have been fatuous in every regime. They are simply to make sure that the uselessness of the primary offering requirements in law are not shown up by people flooding in to offers without the benefit of all the expensive documentation that the law prescribes. 
Similarly the sophisticated investor exception which the bill now extends could have been extended in a way that respected the genuine risk that people want to take. The notion that an independent financial service provider will have to certify that the person who is exempt can assess the merits the value the risks in the offer the person’s own information needs and the adequacy of the information is patently ludicrous. I wrote hundreds of offering documents over my career. I did not rely on them to assess the offer. I would never have thought of relying on the offering documents to know the value of the security or the adequacy of the information. I would write a document and then ring a broker and ask what it meant. I once surveyed the lawyers in my firm—more than a hundred—and asked whether any of them ever relied on the offering documents that the law requires to be produced. The answer was “None”. This is an area of law that could have been swept away to everyone’s advantage. 
GORDON COPELAND (United Future) 
: 
 I want to take a brief call on the third reading of what was the Business Law Reform Bill and is now split into 13 different bills that amend various pieces of legislation. I would like to pick up a little bit on the big-picture issue that Stephen Franks has alluded to. I think it is a good thing that in this bill we are attempting to roll back and limit some of the more excessive compliance costs that we have put on the business community with the very best of intentions. 
Our intention has been to protect what we see as vulnerable people from being sucked into fraudulent or less than honest business schemes. In some ways we have gone too far in places and it is good to see as Stephen Franks alluded to—and I mentioned this in my second reading speech—that we are loosening the rules a bit for employer superannuation schemes. I think we need to do that because there is a maxim in public policy and that is that if the Government wants more of something it should encourage it. On the other hand if the Government wants less of something it should discourage it. In some ways we have been discouraging savings through employer-based superannuation schemes rather than encouraging them. 
There is a lot more work to be done in that area because New Zealand and its economy—coming off a dis-savings base of about minus 11 percent per annum according to the Reserve Bank’s projections—desperately need the saving rates of New Zealanders to increase and to increase significantly. But at some point we need to take a step back and wonder why it is that every time there are scandals in the business community—and I am referring here to some of the recent United States examples; Enron and the securities companies in New York and so forth—we always have to react by putting in place more and more legislation and more and more information in prospectuses and other issue documents. 
 In that context I draw the House’s attention to the fact that in my opinion a better way for us to address those issues would be to give a lot more emphasis in our society to high ethical values. A lot of what we do is in terms of writing endless law. Stephen Franks has just mentioned and I agree with him entirely that we have huge documents that cost megabucks to provide—and no one reads them and no one has much regard for them when making investment decisions. We are trying to shut the door after the horse has already bolted because somebody down the line somewhere did something dishonest. It would be much much better if we approached this issue on two levels and that is firstly to encourage—insist really—the business community to give much more emphasis to ethical values and standards and secondly to put people in jail for a long long time when they do something crooked and fraudulent. I think we would then get back to the good old days when economies prospered on a handshake because people trusted one another and trusted the standards of honesty and integrity in the business community. We have lost that to our detriment and I hope that at some stage we as a Parliament can think about that and ask whether that is the right way to go—whether we could start at the right end of the whole problem and insist on better standards in our communities. With those few remarks I signal United Future’s support for the third readings of these bills. 
Bills read a third time. 
Business of the House 
Hon MARK BURTON (Deputy Leader of the House) 
: 
 Pursuant to an agreement I reached with members of parties earlier on as I indicated during the Committee I now seek leave for the House to move to Government notice of motion No. 2 and at the conclusion of that should the time be before 10 p.m. for the House at that point to rise for the evening. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is there any objection to that course of action being taken? There appears to be none. 
Offices of Parliament—Address to Governor-General 
Hon MARK BURTON (Deputy Leader of the House) 
 on behalf of the 
 Leader of the House 
: I am pleased to commend to members of the House Government notice of motion No. 2 in the name of my colleague the Hon Dr Michael Cullen. I move  
That a respectful address be presented to Her Excellency the Governor-General commending to Her Excellency the alterations to the appropriations for the 2003-04 financial year in respect of Vote Audit Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment and the appropriations for the 2004-05 financial year in respect of Vote Audit Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment 
. 
JOHN CARTER (Senior Whip—National) 
: 
 Just very briefly I point out that these matters of course have been considered by the appropriate select committees. Although one or two issues were raised by members from the National Party to a large extent they have been addressed. There are some issues with regard to one or two of the votes but of course it is recognised that they need to be passed prior to the Budget being presented so the National Party will support their progress. 
Motion agreed to and Address agreed to. 
The House adjourned at 8.37 p.m.