Volume 655 Week 17 - Tuesday 30 June 2009 
Volume 655 Week 17 - Tuesday 30 June 2009 
[Volume:655;Page:4707] 
Tuesday 30 June 2009 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
By-Election 
Mt Albert 
Mr SPEAKER 
: I have been advised by the Chief Electoral Officer pursuant to section 185 of the Electoral Act 1993 that the name of the member elected to the House of Representatives for the Mt Albert Electoral District is David James Shearer. 
Questions to Ministers 
Greenhouse Gas Reduction—2020 Target 
1. 
METIRIA TUREI (Co-Leader—Green) 
 to the  
Minister for Climate Change Issues 
: How much if at all will the Government’s climate change emissions target for 2020 be influenced by the  
Synthesis Report 
 published last week to inform the December 2009 conference of the parties at Copenhagen? 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 The  
Synthesis Report 
 published by the University of Copenhagen brings together the views of 2500 scientists who gathered in March in Copenhagen to advance the science on the global issue of climate change. It is not an official Intergovernmental Panel on Climate Change report under the United Nations Framework Convention on Climate Change so has not been subject to the same peer-review process. The  
Synthesis Report 
 is still useful in that the fourth Intergovernmental Panel on Climate Change report is now 2 years old. It is one of many streams of advice and many reports the Government will be considering in determining New Zealand’s 2020 emissions target. 
Metiria Turei 
: What account will his Government’s target take of the report’s findings that climate change is tracking at above the Intergovernmental Panel on Climate Change’s worst-case scenarios for both sea level rise and the loss of Arctic sea ice? 
Hon Dr NICK SMITH 
: It is true that a number of reputable scientific reports have raised issues about both polar ice and sea level rises that are greater than those projected in the Intergovernmental Panel on Climate Change’s fourth assessment report. That is of concern and it will be one of the factors that the Government takes into account in setting a 2020 target. 
Metiria Turei 
: Does the Minister think that our Kyoto partners will accept a modest target at Bonn in August when the UK has set an emissions target of 34 percent the German Bundestag has set a target of 40 percent and just last Wednesday the Scottish Parliament set a target of 42 percent all by 2020? 
Hon Dr NICK SMITH 
: It is well recognised in the international negotiations that national circumstance will be taken into account. I note that all three countries the member has mentioned—the United Kingdom Scotland and Germany—were all countries that had a very large portion of their electricity produced from coal. They converted to gas in the 1990s and that has actually made it substantially easier for them to achieve more impressive targets. New Zealand needs to have a credible target: one that is realistic and one that lives up to New Zealand’s environmental reputation. 
Craig Foss 
: What opportunity will the Government give New Zealanders to have a say on New Zealand’s 2020 emissions target? 
Hon Dr NICK SMITH 
: Nine public meetings have been organised all over the country during the July adjournment at which my Government colleagues and I will be consulting the public on this important decision. Meetings have also been organised with business with iwi with scientists and with academics. There is also the opportunity for those New Zealanders who live in more remote parts of New Zealand to be able to engage through an online chatroom and of course we will be receiving email and written submissions on the issue. The Government will make a decision on a 2020 target policy in time for the next round of negotiations in Bonn in August. 
Jeanette Fitzsimons 
: Why does the Minister persist in suggesting that cutting New Zealand’s greenhouse gases is really difficult when half of them come from burning fossil fuels in energy transport and industry and when in terms of energy efficiency we are so far behind those other countries in adopting energy efficiency that there is still plenty of low-hanging fruit that we could be picking? 
Hon Dr NICK SMITH 
: The reasons I think it is very challenging for New Zealand are that 48 percent of New Zealand’s emissions come from agriculture and the fact that New Zealand has one of the highest levels of renewable electricity in the world. I also note that we have a very spread-out population. In a country about the same size as the UK we have but a fraction of the number of people which makes providing public transport services more difficult. The other point I bring to the member’s attention is that despite very big and bold goals New Zealand’s emissions have increased by 24 percent over the last 18 years with very little sign of abatement which I think is a warning about being too bold and big in an area where others have failed. 
Rahui Katene 
: Does he agree with the findings of the synthesis reports that no climate change policy will receive the support it needs either formally in the political arena or at the pragmatic day-to-day level unless cultures values and world perspectives are taken into account from the outset; and how does he believe these perspectives will be addressed in a meaningful way through the Government’s work on climate change? 
Hon Dr NICK SMITH 
: The member rightly points out that different perspectives on climate change need to be brought to the decision-making table and she should be reassured that the Minister of Maori Affairs and his officials are taking a very strong interest in climate change policy particularly as it relates to the fishing forestry and farming sectors as well as to the process of Treaty settlements. The Government is also organising jointly with the Climate Change Iwi Leadership Group a specific hui to consult Maori on New Zealand’s 2020 target. 
Metiria Turei 
: Will the Minister consider splitting New Zealand’s target between agriculture and energy adopting a strong 40 percent target for the half of our emissions that come from energy transport and industry and a softer target for agricultural methane and nitrous oxide while we invest in further research and development? 
Hon Dr NICK SMITH 
: It is an interesting idea that New Zealand in its 2020 target could perhaps set a target for carbon dioxide and separate targets for nitrous oxide and for methane in that I think most people would accept that New Zealand does actually have a pretty challenging job around those emissions from the agricultural sector. There is no provision for annex 1 countries under the existing framework convention to differentiate between different sorts of gases but it is an idea that the Government is open to. 
Craig Foss 
: What arguments has the Minister heard for New Zealand to take a modest 2020 target? 
Hon Dr NICK SMITH 
: The European Union has presented some work at the negotiations on factors that should be taken into account when setting targets. These factors include setting GDP per capita in terms of which I would note that New Zealand’s sadly is amongst the very lowest levels of the developed annex 1 countries. A further factor is the opportunity for emissions reductions. It is noted that with both the agricultural issue and aspects of our transport system New Zealand has fewer opportunities than some other countries. Those are not the only factors. We need to carefully balance what is needed from us to make a fair contribution to this global problem while also ensuring the target is both realistic and achievable. 
Charles Chauvel 
: Is an emissions trading scheme the financial tool that the Minister identified last week at the estimates hearing for Vote Climate Change as his preferred primary instrument for reducing emissions; if so does he agree that it is important to finalise a new entry date into the emissions trading scheme for the stationary energy and industrial processes sectors that entails as little delay as possible on the current deadline of 1 January next year? 
Hon Dr NICK SMITH 
: Yes. The Government does consider that an emissions trading scheme is the best and the most sensible way forward. I am advised by officials that the 1 January start date for both the stationary energy and the industrial processes sector is not achievable and never was achievable. We need to work as effectively as we can as parliamentarians in coming up with a modified emissions trading scheme that will work for New Zealand. 
Jeanette Fitzsimons 
: With reference to the Minister’s statement that reducing transport emissions is difficult will the Government take the easiest most cost-effective route to that end and set fuel economy standards for vehicles coming into the country as soon as possible given that the fuel economy of our fleet in New Zealand is roughly twice as bad as it is in Europe? 
Hon Dr NICK SMITH 
: It is true that New Zealand vehicles are both old and dirty. It is also true that an emissions trading scheme applied to the transport sector would provide some incentives. The new Government has taken the initiative to provide a tax incentive for electric car technologies which is a step forward. The new Government tends to favour financial instruments that provide incentives rather than getting excessively regulatory about the choices that different New Zealanders have in choosing a vehicle. 
Metiria Turei 
: Can the Minister confirm whether the Prime Ministers of Great Britain or Australia have personally contacted his Government regarding the setting of a 2020 target after his Government’s failure to do so in Bonn this month? 
Hon Dr NICK SMITH 
: I am aware that Prime Minister John Key had discussions about climate change with Prime Minister Rudd and that he set both myself and my equivalent in Australia Penny Wong on working more closely together. I have discussed with officials the question that has been raised by the Greens and they have not had any concern expressed to them about the timetable for New Zealand setting a 2020 target. I would note that this is the first time that a Government has consulted the public about this issue. I also say the forest satellite data from the Land Use and Carbon Analysis System is critical to New Zealand making that decision. We will receive that information next month. 
Job Summit—Prime Minister's Statement 
2. 
Hon PHIL GOFF (Leader of the Opposition) 
 to the  
Prime Minister 
: Does he stand by his statement last week that “the Government has to tighten its belt and get on top of the issues. We are doing that in a responsible way …”? 
Hon JOHN KEY (Prime Minister) 
: 
 Yes. 
Hon Phil Goff 
: What action will the Prime Minister take to help the iconic Line 7 clothing company given his inconsistent approach when he did nothing to help another iconic clothing company Lane Walker Rudkin but he boasted last week in the House that the Government had saved an iconic company in reference to Fisher and Paykel Appliances Ltd? 
Hon JOHN KEY 
: I am glad the Leader of the Opposition raised the last bit of his question because when I stood up and tried to do something for Fisher and Paykel Appliances the Leader of the Opposition bagged me. It is actually a company that went on the 9-day working fortnight and has managed to sort out its financial position from there. In relation to Line 7 I say that the Government has had no approach from the company. 
Hon Phil Goff 
: What about Line 7? 
Hon JOHN KEY 
: The member should pay attention; I am giving him the answer if he wants it. If the company wants to approach us we are quite happy of course to look at the circumstances but it is worth remembering that 19 years ago Line 7 was brought out of receivership. If this company is to continue I hope that it can be brought out of receivership as well because it employs 100 people and we do not want to see it lost. 
Hon Phil Goff 
: Why did the Prime Minister Bill English and Paula Bennett all refuse to front up to the Television New Zealand programme  
Sunday  
last week to explain why they had axed Enterprising Communities given the fact that Enterprising Communities has a proven track record of success in getting young people into work and training? 
Hon JOHN KEY 
: I am not aware of the requests I get on a daily basis from media. 
Hon Clayton Cosgrove 
: Oh come on! 
Hon JOHN KEY 
: Well I am not because I get a lot of them. What I can say in relation to the Enterprising Communities scheme is that by and large it was set up for 3 years of funding. At the end of that the schemes were meant to be sustainable. The vast bulk of them have not been. In the case of Otorohanga that has been successful; we acknowledge that. It got an additional year’s funding and in all likelihood it will be funded in the future when its funding matures in November. 
Hon Phil Goff 
: Why did the Prime Minister axe Enterprising Communities which had a proven track record of success yet he has found $35 million for boot camps which have a proven track record of failure? 
Hon JOHN KEY 
: Firstly I would not agree with the Leader of the Opposition in relation to the first statement he made. It was 3-year funding that was meant to be sustainable and it did not prove to be sustainable. I am interested in the Leader of the Opposition saying that he does not think that boot camps or programmes that have a bit of structure and discipline to them are any good because funnily enough in 1996 Phil Goff said that “Labour would also encourage young offenders into the armed services to gain discipline self-esteem and trade qualifications.” Excellent idea! 
Chris Tremain 
: What other reports has the Prime Minister seen about Government responses to tough economic conditions? 
Hon JOHN KEY 
: I have seen a report from a Minister of a previous Government facing debt and the threat of credit downgrades who supported the decision to impose a surtax on older New Zealanders: “It is true that the Labour Party said that a Labour Government would not cut superannuation. Frankly to have sustained that point of view against all the evidence would have been totally irresponsible.” That statement was from none other than Phil Goff. Well we are facing tough international times but unlike when that member was a Minister older New Zealanders can know that their superannuation is safe under this Government. 
Hon Phil Goff 
: If I can bring the Prime Minister back into the 21st century—[ 
Interruption 
] 
Mr SPEAKER 
: I want to hear the Leader of the Opposition’s question. 
Hon Phil Goff 
: Why did the Government cut $2.5 million designed to provide therapy assistance to the most disabled kids in our community while providing $35 million to help the most advantaged kids in our community going to private schools when he claims that this Budget was about helping the most vulnerable? 
Hon JOHN KEY 
: We cut the $2.5 million I suppose because we put in an additional $51 million which is the greatest increase that has been seen in funding for special-needs kids. You see the trouble with the Leader of the Opposition is that one cannot rely on any of the figures he uses in this House. Just last week he said in this House that a third of all new money—and I quote from him—going into tax cuts applies to just 3 percent of taxpayers. He said it was just the top 3 percent. Well I thought that that sounded a bit odd so I went off to the Inland Revenue Department and asked what the real number is. The real number is that 3.2 percent of taxpayers— 
Hon Darren Hughes 
: I raise a point of order Mr Speaker. The Leader of the Opposition’s question was about education matters. The Prime Minister is now giving us a recitation on revenue policy. There is no connection between the question and the answer. 
Mr SPEAKER 
: The honourable member will note that the primary question is very wide in what it asks. I accept the point that he made though that the Leader of the Opposition’s question was specifically about education matters. I think the Prime Minister should probably conclude his answer right there. I take it that he has concluded. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. The question was very specific: why did he cut $2.5 million from funding for disabled kids. He went on at length about other matters and he never answered the question. 
Mr SPEAKER 
: Actually as I heard the Prime Minister he disputed the allegation in the honourable member’s question. I recollect that the Prime Minister told the House in his answer that more money had been added to that funding. So by disputing the allegation made by the honourable Leader of the Opposition I believe that is a very fair answer a real answer to the question. 
Hon Phil Goff 
: We will have the $2.5 million back then. Does he stand by the statement made by his Associate Minister of Education Heather Roy that cutting $2.5 million—which she acknowledged had been cut even if the Prime Minister will not—from funding for severely disabled children would “have no adverse effect on the children” and has he asked her why she has refused to front up to the parents of those severely disabled children to explain why those cuts have been made and to listen to the vicious effect that those cuts will have on those vulnerable children? 
Hon JOHN KEY 
: Yes because the Associate Minister knew that the Government had put in $51 million extra. That is why she was confident. She was a lot more confident than these numbers from the Leader of the Opposition who just cannot get it right when it comes to tax and should be honest enough to admit that he got it wrong and misled New Zealanders. 
Hon Phil Goff 
: How does the Prime Minister justify the budget for ministerial support and staffing services jumping by more than $1 million a month—from $1.844 million in December 2007 to February 2008 to $2.955 million a month in December 2008 to February 2009—when elsewhere in the Public Service he has cut staffing numbers by more than 1400? 
Hon JOHN KEY 
: I am glad the Leader of the Opposition asked that question because back in 2004-05— 
Hon Phil Goff 
: Maybe you’ll answer this one unlike the others. 
Hon JOHN KEY 
: Well back in 2004-05 the Ministerial Services budget was $45.518 million. In the last year of Labour’s term in office which would be 4 years on it rose to $63 million and this year it will be $61 million. We have value for money on this side of the House. 
John Boscawen 
: How do the costs of his travel compare with the previous Government’s entrepreneurial excursion into the train business? 
Hon JOHN KEY 
: I can report that it is cheaper to go by plane than by train because under Labour the Government paid I am advised the better part of $1 billion to buy KiwiRail which is valued at $388 million today. That would be a reduction in value of over $600 million. 
Question No. 1 to Minister 
METIRIA TUREI (Co-Leader—Green) 
: 
 I seek leave of the House to table the  
Synthesis Report 
 referred to in question No. 1 today prepared by members of the scientific steering committee for the International Alliance of Research Universities congress and released on 19 June 2009. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is none. 
Document by leave laid on the Table of the House. 
Question No. 2 to Minister 
Hon JOHN KEY (Prime Minister) 
: 
 I seek leave to table a briefing note from the Inland Revenue Department that shows that the Leader of the Opposition’s claims that 3.2 percent of taxpayers are receiving one-third of all benefit is in fact quite incorrect; 3.2 percent of taxpayers are in fact getting 16.6 percent of the benefit. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Jobs—Initiative Compared with Other Countries 
3. 
CRAIG FOSS (National—Tukituki) 
 to the  
Minister of Finance 
: How do the Government’s initiatives to support jobs compare with other countries’? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The Government has focused on a stimulus programme that protects people from the sharpest edges of recession in the short term and raises our economic performance in the long term. The Government is borrowing an extra $30 billion over the next 4 years to support the economy and to support jobs. The effect of this is that while the rate of unemployment is 9.4 percent in the United States 7.2 percent in the United Kingdom and 9.2 percent in the eurozone in New Zealand it is 5 percent which is why it is intriguing that the Opposition finance spokesman should be telling us to copy Australia whose unemployment is higher than ours at 5.7 percent. 
Craig Foss 
: What is the underlying cause of the rise in New Zealand’s unemployment rate? 
Hon BILL ENGLISH 
: New Zealand is dealing with two recessions. One is the coordinated global recession. The other is the New Zealand recession that started in early 2008 which was caused by 10 years of unbalanced policy under the last Government. Many of the people who are losing their jobs today are the unfortunate victims of policy that built economic growth on borrowed money and big Government spending. Those were never sustainable jobs and it is unfortunate that those individuals and families are now feeling the pain of losing jobs that were not sustainable. 
Hon David Cunliffe 
: Is the Minister aware that the 2009 Australian Budget is forecast to save 210000 jobs—the equivalent of some 40000 jobs in New Zealand terms—and to reduce the unemployment rate in Australia by 1.5 percent below its forecast level; if so why will he not now admit what every other New Zealander knows: that National has failed to construct a credible systematic plan for jobs and that New Zealanders are sick and tired of gimmicks charades and “party central” instead of a substantive plan. 
Hon BILL ENGLISH 
: The Opposition finance spokesman might want to explain this simple conundrum: our unemployment rate is 5 percent; Australia’s is 5.7 percent. Its rate is higher so why should we copy its policies? 
Craig Foss 
: What is this Government doing to create sustainable employment? 
Hon BILL ENGLISH 
: Because of a decade of economic mismanagement the Government has a huge job in creating sustainable employment because we cannot base jobs on extensive borrowing and big Government spending. We are setting out to create an environment for business to thrive and have the confidence to retain and create jobs. In the long run those businesses need to be in the export and tradable sector rather than in the Government and domestic sector. 
Hon David Cunliffe 
: How can it be that when the Minister is discussing the 5 percent annual unemployment level that currently exists it is all his Government’s fault but when he is discussing the 60000 extra unemployed yet to arrive it is all the previous Government’s fault? 
Hon BILL ENGLISH 
: The Government has put together a programme designed to deal with two major problems: a decade of economic mismanagement which is one of the reasons so many New Zealanders are losing jobs and a global recession which is another reason New Zealanders are losing jobs. No amount of strategies and press releases can create jobs; only the nitty-gritty of infrastructure investment an improved business environment and getting Government finances and debt under control can do that. We are proud that New Zealand has one of the lowest unemployment rates in the developed world. 
Craig Foss 
: Has the Minister seen any reports that take a realistic view about unemployment during a recession? 
Hon BILL ENGLISH 
: Yes. I have seen one such report which states: “There is in some quarters a temptation to address the problem of unemployment with simplistic answers. In reality there are no quick-fix solutions … Unemployment has to be addressed at a number of levels. By far the most important are macro-economic policies aimed at achieving sustainable economic and employment growth.” That is a quote from a previous Minister of Employment Phil Goff. 
Child Abuse—Child Youth and Family Jobs 
4. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Prime Minister 
: Does he stand by his statement at question time last week that “Members on this side of the House care about abused kids.”? 
Hon JOHN KEY (Prime Minister) 
: 
 Absolutely. 
Hon Annette King 
: Does the Prime Minister stand by his statement made last week: “We are going to do something about abused kids”; if so why did he allow the termination of the community liaison social worker role a role that is front-line in educating others to recognise child abuse raising awareness and promoting early detection of child abuse? 
Hon JOHN KEY 
: Yes. I think it would help if I explained some facts to the member. Child Youth and Family is closing— 
Hon David Cunliffe 
: His nose is growing again. 
Hon JOHN KEY 
: It looks as if the problem is spreading actually across the front benches but that is OK—diseases often can. Child Youth and Family is closing 12 administrative service centres which affects 80 positions. The majority of those administration support or management roles will be absorbed into four existing Child Youth and Family regional offices. The other positions are the 18 community liaison social workers which the member mentioned whose work involves promoting awareness of child abuse. The chief executive has decided that this educational role should be performed by a wider range of staff from across all 60 Child Youth and Family offices and that the priority for qualified social workers should be front-line social work. Savings from these positions are to fund extra front-line social workers on top of the 90 front-line social workers that Child Youth and Family is currently looking to hire. In other words some people who were employed to promote awareness are being replaced by a much greater number employed to promote prevention. 
Hon Annette King 
: Does the Prime Minister agree with Christine Rankin the newly appointed Families Commissioner whom he described as having an incredible record in the area of child abuse who said last week that the children and young persons service is already too busy and cannot respond for 6 weeks; if so can he guarantee that the already busy social workers who are required to pick up the extra work will not end up facing rising numbers of unallocated cases? 
Hon JOHN KEY 
: I do on this occasion find myself agreeing with Christine Rankin which is exactly why the Government is putting 90 extra people into front-line services. This is what this Government is all about: increasing the front line and reducing the back office. 
Hon Annette King 
: If the Prime Minister is so keen to do something about abused kids why has he sanctioned cuts to parenting courses budgeting services 12 Child Youth and Family service centres around New Zealand and the community liaison social worker role as well as sanctioning the future demise of the family violence task force to name just some of the cuts to services that help to reduce child abuse in New Zealand while at the same time he has enough money to spend on a big party in Auckland during the Rugby World Cup? 
Hon JOHN KEY 
: I do not agree with the assertions made by the member. I will say this because I think it is worth noting: notifications of child abuse and neglect have increased hugely in recent years. [ 
Interruption 
] That is the point. The problem is not awareness any more; the solution is prevention and doing something about it not promoting more awareness of it. 
Health—Cooperation Between Private and Public Sector 
5. 
Dr JACKIE BLUE (National) 
 to the  
Minister of Health 
: What announcements has the Government made in relation to increasing cooperation between the public and private health sectors? 
Hon PETER DUNNE (Associate Minister of Health) 
 on behalf of the  
Minister of Health 
: I am happy to report that yesterday the Government announced that it had amended the protocols for district health boards to allow them to make better and smarter use of private hospitals so they can take pressure off waiting lists and get better value for money. Specifically the providers’ selection protocols have been amended to better enable district health boards to enter into longer-term arrangements with private hospitals to complement their own services. The district health boards will be able to contract with private providers to deliver a set number of procedures over several years to complement their own delivery and to negotiate a better price and more operations. These changes reflect both the National Party’s election policy and the provisions of its confidence and supply agreement with United Future which ensure greater utilisation of private hospital capacity to reduce elective surgery waiting lists. 
Dr Jackie Blue 
: What has the Government done to ensure that viability of the public health system is not weakened through smarter use of the private sector? 
Hon PETER DUNNE 
: A couple of things are important to note in this regard. Firstly a special protocol is being developed that says that district health boards are free to use the private sector to complement their own service delivery provided the long-term viability of their resource and delivery is not undermined. Secondly the Government has already announced that it will build 20 extra dedicated elective surgery operating theatres and train extra nurses and doctors in the public sector to staff them. 
Hon Ruth Dyson 
: Does the Minister agree with comments from Jeremy Cooper an anaesthetist at Auckland Hospital that senior staff in the public hospital build the system teach and look after emergencies and see their interesting work and the work which has remuneration attached to it go to the private system; if so what is the Minister going to do about it? 
Hon PETER DUNNE 
: It is worth putting into context the number of total procedures that are carried out at the present time. Between 2005-06 and 2007-08 an additional 12000 elective surgery procedures over and above the baseline were carried out. Under the previous Government over half of those were already carried out in the private sector. The argument that the member is referring to simply does not hold water. 
Dr Jackie Blue 
: Why did the Government consider it necessary to increase the cooperation between the public and private health sectors? 
Hon PETER DUNNE 
: The simple reason is that although there has been a significant increase in health expenditure—in fact it has doubled in the last decade—we still have rising waiting lists massive waiting lists in the public sector underutilised capacity in the private sector and a lot of New Zealanders who are desperate to get operations. This is a step towards fulfilling that objective and making the system work more effectively so that the patients of New Zealand become the winners for a change. 
Primary Health Care—Access 
6. 
Hon RUTH DYSON (Labour—Port Hills) 
 to the  
Minister of Health 
: What guarantees can he give of continued access to primary health care? 
Hon Dr JONATHAN COLEMAN (Associate Minister of Health) 
 on behalf of the  
Minister of Health 
: The guarantee this Government gives is that it will be working hard to improve access to primary care despite inheriting a major shortage of health professionals including general practitioners in many parts of the country. That is why the Government has announced the voluntary bonding scheme which already has 115 doctors registering interest and has announced 50 extra general practitioner training places over the next 2 years and 60 extra medical training places next year as the first tranche towards an extra 220 medical student training places. We are also conducting a line-by-line review so that we can move money into front-line services. 
Hon Ruth Dyson 
: What response does the Minister have to the concerns expressed by Dr Gay Keating who says that the Government has focused on the wrong area and that more money should be spent on primary health in order to keep people out of hospital? 
Hon Dr JONATHAN COLEMAN 
: Well there will always be a variety of approaches and views on where the money should be spent. I note that in the last Budget this Government has committed $750 million of new spending on health care and I think people will find that that will produce greater outcomes and better results for New Zealand patients. 
Michael Woodhouse 
: What reports has the Minister seen recently in relation to health funding including primary health funding? 
Hon Dr JONATHAN COLEMAN 
: The Minister has seen reports that show that last year Labour planned to cut over $110 million allocated to health projects across the sector. That included cutting $13 million for primary health care $10 million for people with disabling chronic medical conditions and $24 million for public health services. Those are strange actions indeed for a party that pretends to be horrified by line-by-line reviews. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. The Minister has quoted a number of figures about reported “cuts” to public health. He has not made clear whether those— 
Mr SPEAKER 
: No no. The member cannot litigate an answer by way of a point of order. If members do not think the Minister has given accurate information they can drill into that with further supplementary questions but they cannot do it by way of points of order. 
Hon Ruth Dyson 
: Why did the Minister refuse to give the Health Committee any assurance that this year’s increase in general practitioners fees of 6.5 percent will not be repeated in the future? 
Hon Dr JONATHAN COLEMAN 
: There is a well-established framework which was set up under the last Government for changes in doctors fees and this Government is adhering to it. 
Hon Ruth Dyson 
: What link does the Minister think there should be between the rate of inflation and the increase in general practitioners fees or are his actions confirmation that his view is that general practitioners and the market should set the fees? 
Hon Dr JONATHAN COLEMAN 
: It is tight financial times. General practitioners are having difficulties maintaining financial viability just as anyone else is. They are trying to provide a service—and I am sure they will continue to do so—in very straitened financial circumstances. 
Early Childhood Services—Funding 
7. 
LOUISE UPSTON (National—Taupo) 
 to the  
Minister of Education 
: What recent decisions have been made about funding for early childhood services? 
Hon ANNE TOLLEY (Minister of Education) 
: 
 Yesterday Cabinet agreed to increased funding rates for early childhood education services using funding set aside in a tagged contingency at Budget 2009. The funding will provide an inflation increase of 1.95 percent to funding rates and maintain the value of existing subsidies in line with pre-election commitments. The additional funding over 4 years is $27 million. 
Louise Upston 
: What other changes has the Government made to increase the access to early childhood education services? 
Hon ANNE TOLLEY 
: Yesterday Cabinet also agreed to the policy changes necessary to include 5-year-olds kohanga reo and playcentres in the 20 hours’ early childhood education scheme from July 2010 and to remove the 6-hour daily limit from 2011. These changes give parents more flexibility about how to use their 20 hours and acknowledge the quality care and education that whanau-led and parent-led early childhood education services provide. 
Sue Moroney 
: Has the Minister forgotten about her other recent decisions about funding early childhood education services where she axed planned improved staff-child ratios put a stop to centres of innovation and canned the ECE Advisory Training/Education Fund and other professional development programmes all aimed at ensuring the quality of our early childhood education services? 
Hon ANNE TOLLEY 
: At a time of economic recession which that party seems to have forgotten about tough decisions have to be made and expenditure redirected into priority areas. In early childhood education actually this Government’s priority is increased participation amongst the target groups. I know that that is anathema to the party opposite which while in Government had millions of dollars to spray around but this Government believes that increasing participation amongst Maori Pasifika and children from low socio-economic areas who are the least likely to get it now is a top priority. That is where we are directing our funds. 
School-level Assessment Information—Publication 
8. 
Hon TREVOR MALLARD (Labour—Hutt South) 
 to the  
Minister of Education 
: Will she support a law change to ensure that school-level test data is not made available for publication; if not why not? 
Hon ANNE TOLLEY (Minister of Education) 
: 
 I do not intend to express my support or lack of it for hypothetical legislation. I note that the member asked a very similar question over a month ago on 27 May and I told him that I would consider something if he put it in front of me. I have yet to receive anything. 
Hon Trevor Mallard 
: Will the Minister be prepared to support the reference to a select committee for the select committee to decide whether to do it? 
Hon ANNE TOLLEY 
: I repeat: this is hypothetical legislation. It is not before a select committee and is not before this House. It is impossible to give that member any answers unless he actually fronts up to me with a suggestion. 
Hon Trevor Mallard 
: Does the Minister support the principle expressed in my primary question? 
Hon ANNE TOLLEY 
: I remind the member that we are currently seeking feedback from both the education sector and parents on national standards. Part of that feedback is about the reporting mechanisms. I will consider all the options that are put before me all of the information that comes out of that consultation process. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. It was a very direct question about whether she supported the principle not about whether there was consultation. Although I cannot insist on a yes or no answer and I understand that I think that at least having the question addressed would be useful. 
Mr SPEAKER 
: I think the member makes a fair point. His question was very directly related to the primary question. If the Minister would please answer it as far as she can. 
Hon ANNE TOLLEY 
: I will not pre-empt a consultation process. 
Colin King 
: What reports has the Minister received on parents’ desire for clear information on their children’s performance? 
Hon ANNE TOLLEY 
: The reports I have received from the consultation with parents is that they are embracing the standards and are excited about getting clear information about their children’s performance. I have spoken to and heard from a large number of frustrated parents who feel that currently they have not been given a clear idea of their children’s progress and that this lack of clarity is a barrier to their getting involved in their children’s education. I am very proud of the fact that this policy will break down that barrier and give parents the information they should have about their children. 
Rahui Katene 
: Is the Minister aware that education inspectors are bringing in tougher standards for England’s schools including a new emphasis on raw exam results a move that teachers’ leaders are saying will make things harder for schools in deprived areas; and what influence have these developments had in the New Zealand setting? 
Hon ANNE TOLLEY 
: I say to the member that comparisons with the United Kingdom are not particularly helpful because we deliberately decided not to proceed with a national testing system. In fact I can say to the member that the draft standards currently out for consultation do not rely solely on raw exam results. Instead they encourage the use of formative assessment. 
David Garrett 
: Can the Minister see anything wrong in principle with parents knowing how their children’s school is performing compared with other schools in the country? 
Hon ANNE TOLLEY 
: I can say to the member that if the feedback that I receive from the consultation with both the sector and parents is that they overwhelmingly want this information then I am happy to consider how these comparisons could be made without compromising the intention of national standards which is to raise student achievement. 
Hon Trevor Mallard 
: I seek leave to table a draft bill to implement the principles outlined in my question. I indicate that I will seek leave tomorrow to have that draft bill—or something very similar following feedback—referred to the select committee for consideration. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
KiwiRail—Valuation 
9. 
DAVID BENNETT (National—Hamilton East) 
 to the  
Minister of Transport 
: What recent valuations has he seen of KiwiRail? 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 I have seen a report from PricewaterhouseCoopers valuing KiwiRail’s total operations at $388 million. I have seen another report that Treasury has updated that figure to $369 million. Those figures compare unfavourably with what the previous Labour Government spent on KiwiRail which included $690 million on purchasing the company’s operations $210 million on loans and $90 million on operational subsidies. It is quite obvious to anybody looking at those transactions that the previous Labour Government significantly overpaid for KiwiRail. Paying that much for KiwiRail has handicapped its future. 
David Bennett 
: What shape was KiwiRail in when it was purchased? 
Hon STEVEN JOYCE 
: The rail company as a whole has a significant backlog of needed expenditure to pull it back into shape. Work done last year by the previous Labour Government’s Rail Development Group estimated that it would take approximately $1 billion worth of further expenditure to make the company work properly. That is obviously a very large financial burden which the public was not told about before the KiwiRail purchase was completed. 
Hon Jim Anderton 
: Would the valuation of KiwiRail be substantially higher if it had not been sold by the previous National Government for less than the value of the wooden railway sleepers and it had not been asset-stripped by Fay Richwhite; if so can the Minister assure the House that the National Government will not again support the privatisation and disastrous management of New Zealand’s public transport infrastructure? 
Hon STEVEN JOYCE 
: I am afraid that for somebody as new to the House as I am a lot of that is very much ancient history. The second part of Mr Anderton’s question is hugely theoretical because sadly nobody in their right mind would pay the sort of money for KiwiRail that the previous Labour Government paid. 
David Bennett 
: What financial capacity does KiwiRail have to expand its operations? 
Hon STEVEN JOYCE 
: What is apparent is that although KiwiRail has a part to play in New Zealand’s transport future it will need more money to do so. Any investments must be made sensibly and with the backing of its key customers. Those who advocate a wholesale shift of freight from road to rail are caught up in some romantic notion of rail’s role that bears no resemblance to any sort of financial reality. Our focus must be on making sensible and pragmatic transport decisions that reduce costs overall and help the economy grow. 
Hon Darren Hughes 
: If the Minister is unhappy with the valuation of KiwiRail and therefore Crown ownership of that operation does he support the scenario known as plan B in which there is no Crown ownership and many provincial rail lines would have to be closed? 
Hon STEVEN JOYCE 
: Sadly it is not as simple as that. Just about every line that KiwiRail has does not make a lot of money currently so to suggest that there is a plan B in that respect is about as valid as the valuation the previous Labour Government placed on KiwiRail before it purchased the company. 
Wellington—Memorial Park Development 
10. 
Hon RICK BARKER (Labour) 
 to the  
Minister for Arts Culture and Heritage 
: What is the status of the New Zealand Memorial Park project in Buckle Street Wellington? 
Hon CHRISTOPHER FINLAYSON (Minister for Arts Culture and Heritage) 
: 
 The project is in the planning stage. The New Zealand Transport Agency is working with both central and local government to investigate Memorial Park improvements and will be undertaking full public consultation as part of the Basin Reserve improvement investigations. This Government is also taking the time to consult with Mt Cook School the RSA and the local community. This approach contrasts with that of the previous Labour Government which wrote to Mt Cook School in August 2008 saying that it did not consider it appropriate for the school or the wider Mount Cook community to have any input into the decision-making process. 
Hon Rick Barker 
: Does the Minister accept that seeing what resembles an abandoned tip immediately after placing a flower on the Tomb of the Unknown Warrior is a national disgrace and what action is he taking to complete the work for a respectful memorial to those who gave their lives for this country—and now I say to the Minister is the right time to do the right thing? 
Hon CHRISTOPHER FINLAYSON 
: I agree with the member that that is a national disgrace and that is why last week for example when I met with the representative from Mt Cook School I discussed some preparatory work like asphalt removal. I agree with what the member said in that we have to get on with the development. But as I have said before to that member we are not going to do it in some half-baked manner. It will be done properly. 
Hekia Parata 
: Tena koe e te Mana Whakawa. What reports has he seen about the development of Memorial Park? 
Hon CHRISTOPHER FINLAYSON 
: I have seen reports in which the previous Government said it was not appropriate for the local school or the Mount Cook community to have input into the decision-making process. I have seen reports that the Labour candidate for Wellington Central in 2008 Grant Robertson tried to get the Government to reconsider that decision but that he was told where to go. I have seen correspondence stating that the previous Minister refused to sign off on the design of the park and wanted to revisit the options. 
Grant Robertson 
: Can the Minister confirm that a design for the park that was acceptable to the Wellington City Council central government and the local school was agreed on late last year and that his reason for not taking up that option was simply as he told one person that he did not want to do something just because it was Helen Clark’s idea? 
Hon CHRISTOPHER FINLAYSON 
: That would be a very good reason not to do anything. I can confirm that there was a plan. The plan is not acceptable. Further work needs to be done further consultation needs to be done and it will be done. 
Grant Robertson 
: I seek leave of the House to table Cabinet minute 09/13/8(62) which says the Memorial Park project has been cancelled. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Meat Industry— 
Meat: The Future 
11. 
SHANE ARDERN (National—Taranaki - King Country) 
 to the  
Minister of Agriculture 
: What recent reports has the Government seen on the meat sector? 
Hon DAVID CARTER (Minister of Agriculture) 
: 
 Last week I had the pleasure of launching  
Meat: The Future 
 a comprehensive meat sector study published by the Ministry of Agriculture and Forestry. This study lays out the challenges and opportunities confronting our $4.6 billion a year meat sector and maps out the potential shape the sector may take into the future. The report will play a key role in developing a shared vision for New Zealand’s meat sector. 
Shane Ardern 
: What has been the Government’s response to the study? 
Hon DAVID CARTER 
: The Government has welcomed the report and the various challenges that it presents. We have made it clear that industry players and farmers need to work together to improve the sector and that doing nothing is not an option. Very simply we see this report as a call to action that cannot be ignored. As such following the launch I convened a meeting of industry leaders to look at ways of progressing reform and to address the issues that currently hinder this important sector. 
Hon Jim Anderton 
: In the recent Ministry of Agriculture and Forestry report on opportunities and challenges for the New Zealand sheep meat and beef sector over the next 10 to 15 years was the top priority after “overall farm profitability” investment in research and development; if so how was that helped by cutting the $2 billion public and private sector Fast Forward fund and replacing it with a puny $70 million annually appropriated primary production fund? 
Hon DAVID CARTER 
: Research and development was certainly recognised in the meat sector report as absolutely critical and at the meeting I had later with industry leaders they congratulated this Government on its vision in promoting the primary growth partnership—an initiative that is substantially bigger than the previous Government’s Fast Forward fund. 
Shane Ardern 
: Why is the Government not doing more to progress meat sector reform? 
Hon DAVID CARTER 
: Change in the meat industry will last only if it is driven from within the sector. It is not the Government’s job to tell the sector what to do. I have very strongly urged industry players and farmers to work together to deliver the higher returns to the sector and as I have already said the status quo is not acceptable. I am now working closely with major players in the sector to discover and establish exactly how the Government can constructively facilitate this change. 
Hon Damien O’Connor 
: Following the release of the report does the Government intend to honour the $200 million suspensory loan promised for meat industry reform by the leader of the National Party John Key and supported by his finance spokesman Bill English in February of last year before the election; or was that just another promise that they had no intention of ever keeping? 
Hon DAVID CARTER 
: I thank that member for his question and take this opportunity to welcome Labour’s fresh blood back to the House. Under no circumstances did this party ever promise a $2 million suspensory loan to the meat sector. However we are prepared to entertain proposals that are put to us that constructively move the sector forward. 
Hon Damien O’Connor 
: I seek leave to table a report from the  
Southland 
Times  
dated 15 February 2008 where John Key quickly told Mr English— 
Mr SPEAKER 
: Is this a press report from the  
Southland Times 
 that the member is seeking to table? From when? 
Hon Damien O’Connor 
: Yes it is. It is from 15 February 2008. 
Mr SPEAKER 
: Leave is sought to table a  
Southland Times 
 press report from 15 February 2008. Is there any objection? There is objection. 
Hon Jim Anderton 
: Has the Minister seen in the Ministry of Agriculture and Forestry report the finding that the No. 1 issue for meat farmers is farm profitability; if so how is farm profitability helped by the total exposure to overseas-owned banks of $44000 million and will he support a select committee inquiry into bank profits in order to hold the banks to account for refusing to lower their interest rates on that debt by anywhere near as much as the official cash rate has dropped? 
Hon DAVID CARTER 
: Yes I have seen the No. 1 concern being ongoing farm profitability and I am aware of the significant growth in farm debt over the last 5 years. It is something that this Government is concerned about. On two occasions of our regular meetings with the bank industry we have discussed that issue. 
Pay and Employment Equity Unit—Closure 
12. 
SUE MORONEY (Labour) 
 to the  
Minister of Labour 
: Does she stand by her statement to the Transport and Industrial Relations Committee at the estimates hearing for Vote Labour on Thursday 25 June that she decided to close the pay and employment equity unit because “it had completed its work”? 
Hon KATE WILKINSON (Minister of Labour) 
: 
 Yes. The pay and employment equity unit was established in 2004 with a 5-year plan of action. It has been 5 years and the plan of action has been carried out. Sixty-five reviews were completed and the research and resources remain available but a broader approach is still required to close the 12 percent gender gap. 
Sue Moroney 
: Is the Minister aware then that her Government stopped pay equity investigations for 24000 school support staff and for social workers that were being supported by the unit and that the unit has yet to complete pay equity reviews for thousands of staff at 15 polytechnics Te Wananga o Aotearoa the Waitakere City Council HortResearch one university and the Teachers Council? 
Hon KATE WILKINSON 
: The member should be well aware that the investigations were of staff in the Public Service and came under the responsibility of the Minister of State Services. The member should direct her questions to the relevant Minister. 
Amy Adams 
: What should people do if they are paid less for doing the same work for their gender? 
Hon KATE WILKINSON 
: They should provide that information to the authorities so that unscrupulous employers can be prosecuted. The law is clear: people cannot be discriminated against because of their gender. The standard is equal pay for equal work. If Labour members have evidence that women are being paid less only because they are women as those members claim they need to bring that evidence forward. It is a breach of the Equal Pay Act 1972 which was enacted by a National Government and the Human Rights Act 1993 also enacted by a National Government. 
Darien Fenton 
: Why did the Minister’s Government take credit for the work of the pay and employment equity unit in the presentation to the International Labour Organisation (ILO) this month without disclosing that she had just closed the unit down and the Government had scrapped its ongoing pay investigations? 
Hon KATE WILKINSON 
: That member should have more information; she is incorrect. The Government reported to the ILO on the work that had been undertaken in the past year as required. And can I say to that member that if equality or equity is of such concern to the member opposite why did Sue Moroney not replace Moana Mackey on the select committee who asked no questions whatsoever in relation to this issue—no questions whatsoever? And Sue Moroney was not even there! 
Mr SPEAKER 
: The Minister has no responsibility for whether a member asked questions at a select committee. That is out of order. 
Hon Darren Hughes 
: I raise a point of order Mr Speaker. I say just to support your ruling that the member also made reference to the absence of a member from a select committee which is completely out of order quite apart from it not being correct in the context of her question. She should have to withdraw that reference to a member which was unparliamentary. 
Hon KATE WILKINSON 
: Speaking to the point of order— 
Mr SPEAKER 
: I have not called the Minister. I will ask the Minister though: did you make reference to the absence of a member from a committee? [ 
Interruption 
] You did? I therefore ask— 
Hon KATE WILKINSON 
: But the reference— 
Mr SPEAKER 
: Order! 
Hon Gerry Brownlee 
: She’s trying to clarify. 
Mr SPEAKER 
: It is very simple; there is no clarification required. A Minister may not refer to the absence of a member. If the member did do that— 
Hon KATE WILKINSON 
: I made no reference to the absence of a member on the select committee. She was in the select committee room but she was not on the select committee. 
Hon Darren Hughes 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: Let me deal with this matter first. I warn the Minister that she does not make statements to the House without my asking her to do so. I asked her a moment ago whether she had referred to the absence of a member and she said she did; now she is saying she did not. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think the explanation is relatively simple and the Minister got close to it at the end of her statement. The member was not a member of the select committee and therefore she could not ask questions; she was sitting in the public area listening to the Minister’s responses. 
Mr SPEAKER 
: I have heard sufficient. The Minister should not refer to questions being asked or not asked by Opposition members. They are not her responsibility. 
Sue Moroney 
: I seek leave to table the document “Pay and Employment Equity Reviews” which outlines the several reviews that have not yet been completed by the unit closed down by the Minister. 
Mr SPEAKER 
: Sorry I missed where the document is from. 
Sue Moroney 
: It is called “Pay and Employment Equity Reviews”. It details the reviews that have not been completed by the pay and employment equity unit. 
Mr SPEAKER 
: Who prepared the report? 
Sue Moroney 
: It came from the Minister’s office. 
Mr SPEAKER 
: Leave is sought to table a document from the Minister’s office. Is there any objection to that course of action? There is none. 
Document by leave laid on the Table of the House. 
Hon Pete Hodgson 
: I raise a point of order Mr Speaker. I respectfully suggest that you take a close look at the video of question No. 12 and draw your conclusions accordingly. [ 
Interruption 
] Do you want me to spell it out? 
Mr SPEAKER 
: I have dealt with question No. 12. Forgive me but I do not know what the honourable member is talking about. 
Darien Fenton 
: I seek leave to table page 22 of the 9 June 2009 report of the ILO committee on gender equality where the New Zealand Government says that gender equality and non-discrimination must be at the core of decent work. 
Mr SPEAKER 
: Leave is sought to table that document from the ILO. Is there any objection to that? There is no objection. 
Document by leave laid on the Table of the House. 
Questions to Members 
Banking Practices—Inquiry 
1. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Chairperson of the Finance and Expenditure Committee 
: Will the Finance and Expenditure Committee give consideration to the proposed banking inquiry at its meeting this week? 
CRAIG FOSS (Chairperson of the Finance and Expenditure Committee): 
 The committee is scheduled to spend time this week considering whether to initiate an inquiry into the relationship between the official cash rate and short-term interest rates. This matter is scheduled to be considered from 10.50 a.m. to 11.45 a.m. 
Hon David Cunliffe 
: Does the chair anticipate that this will provide sufficient time to consider whether to proceed with an inquiry during the meeting this week? 
CRAIG FOSS 
: I am sure that depends on all the other business before the committee but we will try to give it our due consideration. 
Urgent Debates Declined 
Ministry of Social Development—Job Cuts 
Mr SPEAKER 
: I have received a letter from the Hon Annette King seeking to debate under Standing Order 380 the Government announcement today that the Ministry of Social Development is cutting up to 200 jobs including a team of social workers dedicated to child abuse education. Standing Order 380 requires that the matter for debate be a particular case of recent occurrence and involve the administrative or ministerial responsibility of the Government. For there to be a particular case of recent occurrence the event upon which an urgent debate is sought must be an event that has occurred when the application is lodged. The member’s application indicates that a proposal was revealed in May and that the media have indicated that the Government is set to make an announcement today. An urgent debate cannot be granted on the basis of media speculation. An event occurs at the point in time when a decision is publicly announced. The member has provided no authentication of an actual announcement by the Government today. Every statement in a letter seeking to debate a matter of urgent public importance must be authenticated. Therefore in accordance with Speaker’s ruling 170/5 the application is declined on that ground. 
Hon ANNETTE KING (Deputy Leader—Labour) 
: 
 The announcement has subsequently been made. I seek leave for the debate to be held forthwith. Bearing in mind that the Prime Minister has said how important child abuse is in New Zealand I would like this House to address the matter forthwith. 
Mr SPEAKER 
: Leave is sought for that course of action. Is there any objection to that? There is objection. 
Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill 
Second Reading 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 I move  
That the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill be now read a second time 
. I first thank the special select committee the Emissions Trading Scheme Review Committee chaired by the Hon Peter Dunne for at short notice giving consideration to this bill. I also thank the members of the select committee who have made constructive changes to the bill and also members of the House for agreeing to allow this bill to progress through the House today 30 June. 
I want to quickly recite what this bill does in respect of the broader debate around emissions trading the forestry sector and the huge issue of climate change. There are three particular provisions in this bill. The first amends the date on which foresters are able to report deforestation and to surrender units. The intent of this bill is to put forward the dates by which that reporting and the surrendering of the relevant units are required. In the original Act it was required on 31 January this year. It is intended to push that out to 31 January next year because the level of awareness of the obligation is not high—I am embarrassed to say that even some Government agencies did not meet their requirements to do so by 31 January and I am sure that many other New Zealanders who own forests that may have been removed last year did not meet that reporting requirement. To give another year given the complexity of emissions trading makes good sense. 
Two further substantive dates are changed as a result of this bill. The first is the date by which the Government is required to provide for an allocation plan of units under the emissions trading scheme for owners of forests that were planted before 1990. The reasons that it would be unwise to publish an allocation plan at this time are that there has been a formal review of the emissions trading scheme there have been many topical issues around forestry before the Emissions Trading Scheme Review Committee and it would be somewhat contradictory and confusing for the Government at the very time when those key provisions are being reviewed to proceed with an allocation plan. The bill that I introduced provided for that date to be extended by Order in Council. I note that an amendment for the date to be 1 July which was advanced by Labour and Mr Charles Chauvel has been included in the bill as it has come back from the select committee. I think that is a reasonable timetable. I also think it is good to have the flexibility whereby it could be done earlier than that. In my view the timetable will provide a sensible transition for the issues around the allocation plan. 
The third issue that is developed and addressed in this bill is in respect of the timing by which owners of forests of a smaller area—fewer than 50 hectares—apply to have them exempted under the emissions trading scheme. It was to be a requirement that all applications for an exemption be lodged by today. Again it is the view of the Government that given the review that has taken place in the select committee and the low level of public awareness of that obligation it makes sense for that date to be put out into the future. Members opposite propose that the deadline for applications for exemptions be extended to 1 July 2010. Again that is a sensible change and one that I am happy to support. We will bring that amendment through into the final bill. 
I stress to the House that none of these three changes being made affects any requirements and obligations that foresters have under the emissions trading scheme. It is only a shifting of the dates by which they are required to report and a shifting of the dates by which the Government is required to provide for an allocation plan. It is the Government’s view that introducing forestry into an emissions trading scheme is a very complex and challenging task. We are the first country in the world to attempt to bring forestry into an emissions trading scheme and it needs to be done in a considered and careful way. 
We should note that in recent years the loss of significant areas of forestry has contributed to quite negative numbers for New Zealand around the issue of climate change. We should acknowledge that the emissions trading scheme has proved successful in stopping a large increase of deforestation since the scheme came into effect on 1 January 2008 but we need to work through these detailed issues in a considered way to ensure that it works. 
This is a minor bill. The House will need to consider later this year a more substantive emissions trading amendment bill to make it into a scheme that is workable and that can carefully balance New Zealand’s environmental and economic interests. The Government awaits with great interest the work being done by the Emissions Trading Scheme Review Committee. When that work is complete our intent is to bring in a bill that will enable New Zealand to introduce and to get up and running the other parts of the emissions trading scheme. 
Again I thank members of the House. I thank the select committee for its work and the officials who have supported that select committee work. I commend the bill to the House for its second reading. 
CHARLES CHAUVEL (Labour) 
: 
 As noted by the Minister for Climate Change Issues the Hon Dr Nick Smith the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill as reported back from the Emissions Trading Scheme Review Committee includes two changes recommended by the select committee. The first change is to new section 168(1)(ca) which is to be inserted in the Climate Change Response Act by clause 4 of the bill. This provision deals with the forestry sector. The committee has recommended that rather than having a final date for the deadline under that section to be set by Order in Council there ought to be a firm date set by legislation as to when the actions required under the clause should be taken. Those actions cannot be taken any later than that date. 
There is a similar amendment to new section 183(3)(a) which is to be substituted in the Act by clause 5(2) where the plan put in place in the original bill to allow a deadline to be set administratively is replaced by the firm deadline of 1 July 2010. This amendment is an appropriate exercise in parliamentary oversight. Rather than allowing these sorts of things to run on at the pleasure of the Minister Parliament is asserting its right to set a final deadline in the legislation. I think members of the select committee were unanimous in agreeing to that amendment so the bill has been reported back on that basis. 
As the Minister said the bill by agreement of the parties in the House will be advanced through its stages today to meet the deadline of 30 June. I will address a few comments on the Minister’s assertion that there are deadlines in the Climate Change Response Act that could not have been met in any event and that this bill would have been necessary no matter what had happened whether or not we were having an emissions trading review. Unfortunately I do not think that the facts bear out what the Minister has said. The industry’s reaction is quite telling. When those in the forestry sector were asked about this legislation last week they said they were not surprised by the delay because of the state in which climate change policy currently sits in New Zealand. However they were disappointed. The Forest Owners Association chief executive David Rhodes said: “The market depends on supply and demand and if we don’t have demand we don’t have a market and that follows on into forest investment.” That comment has been echoed by the forestry sector throughout the history of the emissions trading scheme. 
It is as well to remember that forestry as the Minister said was bound by this scheme right from the beginning. Yes we were the first country to bring forestry in but we have not done well by the foresters in this Parliament. That is why we have 8 million seedlings rotting in the ground. There may well be a halt to deforestation as the Minister has suggested but we need to look to whether that is as a result of the recession we are currently in rather than because of any benign effect of Government policy. The truth probably is that because of the uncertainty in the sector with the lack of incentives to plant and the lack of profitability—because there is no ability to trade carbon credits which the foresters all hold—there is no incentive for those foresters to be able to maximise the value of their plantings. 
We might have had an end to drastic deforestation. We always expected there would be a bit of deforestation before the coming into force of the emissions trading scheme legislation. Hopefully that is over but let us not suggest that that is anything to do with anything other than economic conditions. Let us not suggest that it is a legislative consequence or a consequence of the actions of Parliament. 
I will now say a word about the wider state of climate change policy. The Minister rightly says that we can probably look forward to further legislation in this area. I said on the introduction of this legislation that we were trying to assist the Government to get to a position where it could go to Copenhagen at the end of the year with an emissions trading scheme bill intact with proper targets in place not only for the longer term but for 2020 and with the ability to look forward with confidence to a scheme that would have integrity and would internally hold together well for the sectors to be included—all sectors and all gases. That is still the aim of members on this side of the House but we must avoid making excuses for not complying with the law. 
If officials had been told back in November when the Minister took office that they were to get on with the requirements of the law—because it is open-textured legislation; it is an Act that says the Minister and his officials are to get on and make rules for the various sectors that are bound by the legislation—I do not think we would be in the position we are in now; I think we would be in a position where departments would have been compliant with the law and the sectors would have been doing what they should have been doing under the legislation. But of course they have had this false sense of security—insecurity perhaps—about the reality of the forestry sector. They believed that because there was a review by the select committee somehow there would not be a requirement to comply with the law. This has been a top-down belief; it has come right down from the Minister’s office and through into the industry and of course it is wrong. When the legislation says that administrative action is required then administrative action has to be taken. It is a completely unnecessary exercise for this Parliament to now be stepping in and rescuing the Minister his Government and the departments involved let alone the forestry sector for non-compliance with the legislation. The legislation should have been complied with from day one. Had it been complied with we would not be spending time in Parliament applying this fix. 
The lesson that has to be taken from the situation we are in now is that we cannot let this happen to the further sectors that are to come under the legislation. We have the stationary energy and industrial processes sector due to come into the emissions trading scheme on 1 January next year. It is well known that no allocation plans are being put in place in that sector. No work is being done on the thresholds at which the members of those sectors are to come into the scheme and have units allocated to them. Those sectors have to plan their businesses on the basis that they will be bound by the law on 1 January next year because that is what the law says but continual statements by the Minister and others are leading them to believe that we are going to have to pass some sort of legislation to give them some comfort that that will not be the deadline. That puts industries in an impossible situation as submitters told the Emissions Trading Scheme Review Committee. They cannot plan their businesses on this basis they cannot make decisions about whether to build new generation plants and that is very serious for the country. 
We have been in situations of electricity shortage before we have planned assets in the pipeline in the generation sector and we want those assets to continue to be built so that we can keep the lights on. But in the climate that those in the industry are in at the moment they do not know whether they are going to be bound by the emissions trading scheme on 1 January or 1 July next year. The Minister cannot give them that certainty because there is not the political agreement that he thought there was. They are in a real bind. 
It is interesting that New Zealand Steel when it heard of today’s delay said that it was surprised to hear about it. It has been proceeding on the basis that the scheme would come into force on 1 January and although there is this uncertainty it is just getting on and doing the best it can. I know that members around the Chamber will reflect on the fact that although the ACT Party supposedly stands for certainty and private property its contribution to policy in this area is the Emissions Trading Scheme Review Committee which has destroyed property rights for the forestry sector and created huge uncertainty elsewhere. There is a huge irony there. But here we are: we are where we are and the legislation is what it is. We will do our best to get on and make a good job of it. 
CRAIG FOSS (National—Tukituki) 
: 
 I rise for a short speech on the second reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I agree with the point the previous speaker Charles Chauvel noted regarding deforestation. I agree wholeheartedly and totally and I hope that deforestation has in fact ended. There are many reasons why it may have ended—the member alluded to some of the possibilities it is true—and the consequences of deforestation for New Zealand our obligations and the larger economy are very very serious indeed. So I acknowledge and agree with that particular point from the previous speaker. 
I am a member of the Emissions Trading Scheme Review Committee and I take this moment to thank all the members of that committee who I believe will be participating in the debate in its various stages tonight assuming the bill passes each stage. I was also on the Finance and Expenditure Committee last year when the various emissions trading scheme bills came through and I think that it is fair to acknowledge that all participants have moved on a fair bit from some of the debates of last year to the point we are now at. We are here discussing an amendment to some detail of existing legislation and not actually debating the need for the legislation full stop. Many submitters who submitted a second time around—admittedly not on this bill but on the emissions trading scheme bills themselves—have also moved quite a long way and are debating and submitting on implementation and execution of the scheme rather than on whether we should have it. Of course there are some exceptions and I am sure I will be receiving emails from many of the submitters as I speak but I am very encouraged that across Parliament the debate is I think down to the details. Yes there may be some political points to be made as the previous speaker did a little but there is a very good focus on the greater good. So I acknowledge the genuine effort and cooperation in getting to where we are now with regard to all things in this Parliament to do with emissions trading and climate change. 
I acknowledge that in relation to the bill we have before us much discussion was had leading up to the time the bill came into the House and before it went to the select committee. I also acknowledge the initiative of the Opposition and Mr Chauvel in regard to the Supplementary Order Paper he brought in which the committee discussed and accepted without amendment. The bill we have before us is slightly different to the one that arrived before the select committee which is a credit to the work of the committee and an acknowledgment of the Supplementary Order Paper from Mr Chauvel. 
This is the first piece of legislation to go through the Emissions Trading Scheme Review Committee albeit a somewhat small piece of legislation about moving some dates out as the Minister for Climate Change Issues alluded to. But it gives worth and value to the work of the committee. We have heard from many many submitters on all things to do with emissions trading but particularly as both the Minister and the previous speaker noted on very very contentious issues on and around forestry: pre-1990 and post-1990 forest land; land less than 50 hectares or 50 hectares or more; and the issues that many Maori landowners forestry owners and managers have raised. I note also that the Minister has signalled there may well be a more substantive piece of legislation towards the end of the year. I am hopeful of a continuation of the cooperation across Parliament that we have seen thus far. 
To pick up on one point of the previous speaker I note that the National-led Government put before the electorate last year its intentions and principles on the emissions trading scheme. There was nothing too controversial about those. They provided some certainty as to where a National Government would go and about the framework with which the National Government might review or have a look at issues around climate change and emissions trading. Again I celebrate and acknowledge that point. I just cannot say enough about the buy-in and cooperation across the parties. 
I make one final point before I close. The previous speaker also noted that some things have changed and that there is existing legislation of which this bill amends a small part—although a very important part of course. But we are moving towards the Copenhagen conference and there is a need for New Zealand to confront and really address some of the harder issues and to supply some certainty where there is uncertainty which is not just around forestry but also on where the Crown and all the other participants such as liquid fuels and stationary energy—you name it—sit in relation to the emissions trading scheme as the previous speaker alluded to. It is very important that by the time we get to Copenhagen and appear on the international stage we can hold our heads high and stand proud because we are making substantive sensible and pragmatic solutions and doing our bit for the world and for climate change and we are doing it right here in New Zealand with a constant look at what our competitors are doing. We compete with our friends just across the Ditch in Australia but on many things we can sit together and perhaps start to align as to where we will end up and where we will be by 2020. 
Much information came out of question time today. There was even a new discussion arising from a question from the Greens which again points to the fact that we are now taking the debate much further than the question of whether we should have an emissions trading scheme. There has been some quite sensible considered and pragmatic thought as to how New Zealand can do its bit have an emissions trading scheme and fit with the unique features of our economy. I look forward to the Committee stage and to hearing other speakers on this bill and I acknowledge again the cooperation of all parties so far. Thank you. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I will give just a wee reaffirmation that Labour members will be supporting the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. We consider it to be minor we consider it to be sensible and we consider that the firm deadlines that the Emissions Trading Scheme Review Committee has put into the legislation are the appropriate things to have. And we signal the obvious—that this legislation represents for part of the emissions trading scheme a delay of 12 months or thereabouts. 
I say a little acerbically that it needs to be put on the record that had there been the necessary cooperation during the 9 years of the Labour Government—cooperation that we think we might be starting to see now—we would not be in this position. We would not be in this position if we had matured earlier. But we did not. We got off to a great start even before then in the days of Simon Upton who by the very nature of the man was inclined to want to reach out across divides and to have chats about this and that. And those were the days when we signed the Kyoto Protocol. We did not ratify it in that time of course but we signed it and got started. Simon Upton never did get to make a lot of progress because of his own Cabinet and its opposition to the things he was seeking to do. But under the 9 years of the previous Labour Government—and I remember some of these matters well—the National Party routinely opposed everything. It opposed every piece of legislation and it engendered opposition in society as a whole. It declined to promote alternative plans with any detail. It even had one of its idiot members of caucus ride a tractor up the steps of Parliament. It was only 3 years ago that the Prime Minister—today’s Prime Minister—said he was not sure of the value of the Kyoto Protocol and indeed he was not sure whether climate change was a real matter. 
But you see in 2002 the Kyoto Protocol was ratified and at that point an environmental issue became an economic one. That is what the Kyoto Protocol does to climate change. It takes it from being an environmental issue and turns it into an economic issue—at least for those countries that have targets. If we look a little further along we see that it immediately becomes a fiscal interest and therefore at the point of ratification as soon as Treasury has woken up to that in whatever jurisdiction one is in then the Minister of Finance wakes up to that and a bit of go-forward is created because of that. But we did not get it right even then. People did not like the carbon charge and after the 2005 election that was voted down and we went straight to an emissions trading scheme not via a carbon charge but directly. My predecessor David Parker put in place an emissions trading scheme with support from many parties in this House but not including the National Party. 
National could have supported the emissions trading scheme and then gone and amended it later on but it did not. 
Hon Dr Nick Smith 
: We voted for the first reading. 
Hon PETE HODGSON 
: It did at the first reading—I do apologise. But the fact of the matter is that the National Party in my view wasted those 9 years in Opposition. That is not to say that all of its members did; there would have been some members within the National caucus who were busy on that and maybe the current Minister was one of them. But generally speaking we are looking at lost opportunities there. None the less that is where we are at. 
At the last election we had a change back to a National Government along with the “4 percent environmental vandals” in the form of the ACT Party. Its members basically said “We are 4 percent; you’ll listen to us. We’re off to a select committee to find out yet again whether the issue of climate change is a real one or whether it isn’t.” So the months have gone by. But National I would think can no longer rely on the ACT Party for any reliable support on an emissions trading scheme even though the Minister of Finance knows that until the allocations are done and until the obligations are farmed out there is an impost on the accounts to be paid by the taxpayer not by the polluter. The ACT Party—the party that stands firmly as my colleague Charles Chauvel has said for business certainty—came into this House helped to form a Government and immediately created huge uncertainty around a huge issue. In my mind those ACT members stand condemned for that because they are truly the Luddites of the land when it comes to this issue. 
None the less this the point at which we find ourselves. We have made hesitant progress three steps forward and two steps back—some would say two and a half steps back—but none the less we have made progress. Now we come to a point where we run the risk of there being an outbreak of peace at least between the two major parties on climate change legislation and I certainly reaffirm our support for this bill. I think this is necessary legislation; it is good legislation in the sense that it has had something forced upon it and it should proceed through the House without too much further delay. 
JEANETTE FITZSIMONS (Green) 
: 
 By tonight the Government will be in breach of the law and so will some foresters unless we pass the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. As I indicated in my first reading speech the Greens will help get the Government off the hook here. We will support this bill. That was conditional initially on the Government agreeing to put firm dates for the obligations in the bill rather than open-ended opportunities to pass dates by Order in Council. The select committee has done that and the Minister responsible for Climate Change Issues has agreed so we are supporting this bill and we are also offering our support to the process of giving leave for the bill to go through all stages today. 
We had an interesting debate at the select committee about the “no later than 1 July” clause. Some of us wanted to know why we did not just set a firm date of 1 July and reduce uncertainty even further. It was pointed out to us that if in fact that date can be moved forward then the allocation plans can get under way earlier as well and that is entirely a good thing. We are comfortable with the degree of flexibility that “up to 1 July 2010” gives us. 
However the forestry industry is still not very impressed with what is happening under the emissions trading scheme. Foresters have no one to sell their credits to and many of them are not convinced that they ever will have. Charles Chauvel and Craig Foss have expressed the hope that deforestation has now ended but I do not think we can guarantee that. Those who own forests but are interested only in dairying are pushing extremely hard for rules that make it as easy as possible to deforest and convert their land to dairying. They are expecting to get the ability to offset on to different land from this Government even if it is not accepted under Kyoto. Many people hope that the whole thing will just fall over and go away because it is not clear how the Government will proceed in terms of getting a majority in the House for whatever it wants to do. 
In Opposition National attacked Labour—justly in my view—for taking 9 long years to get any economic instrument in place. Now the National Government itself has delayed and created new uncertainty for 7 months and counting and we may be counting for a while yet. As the previous speaker said this has been going on since the mid-1990s when the Cabinet of the day first tried to get an in principle decision about an emissions trading scheme or a carbon charge and for God’s sake either would have been better than neither by a very long way. But the fact is that nothing happened for a very long time. If this Government goes to Copenhagen at the end of the year with no clear plan or agreed majority of the House for a way forward New Zealand will be a laughing stock. It would be extremely bad for our trade and our international relationships. 
These last 7 months when officials should have been able to get busy writing the rules and the allocation plans for the emissions trading scheme they have instead been spending countless hours servicing a select committee going over old ground and writing yet another summary of the science for the disbelievers showing that yes climate change is real yes the Intergovernmental Panel on Climate Change has done its job properly and yes climate change is a real and present danger. I think that is a huge waste of the valuable time of our skilled officials and of many of us on the committee as well. 
Meanwhile just today my colleague Metiria Turei tabled in the House the summary report that will be used by many countries as the latest authoritative statement on the science even if it is not an official Intergovernmental Panel on Climate Change document during the Copenhagen conference showing that on many measures we are already above the worst scenario ever put forward by the Intergovernmental Panel on Climate Change. It put forward a range of scenarios showing that it could be this bad or this much worse or even if things are really bad this much worse and we are already worse than that particularly on predictions of sea level rise and predictions of the rate at which Arctic sea ice is melting. 
There is no sign so far that the Government actually intends to reduce New Zealand’s emissions by very much and I find that a tragedy for us and for our descendants. First of all the Government would like to align with Australia. Of course it makes some sense if we could have similar rules with the country with which we trade so much across the Tasman Sea but the Australians have just failed to get a majority in their Senate for a scheme that was so weak it was worse than useless. The Australian proposal was worse than useless and that is why the Green members of the Senate did not support it; not because they are against emissions trading but because they are against a scheme that gave billions of dollars to the worst polluters and was going to have very little effect on emissions. There may never be anything to align with in Australia so we need to develop our own scheme. 
We know that the Government is looking seriously at softer rules than the existing emissions trading scheme which was only just strong enough for the Greens to agree to its support last year. We know that the Minister said this afternoon that we do not really need complementary measures like standards because we will have a pricing signal instead. We know that transport behaviour is extremely sticky when it comes to following pricing signals because it takes an awfully big increase in the price to induce a little bit of change in transport behaviour. By far the most cost-effective measure for the whole economy for transport is to set some standards as other countries have done. 
Although fuel efficiency standards for the average of the vehicles coming into the country from now on is part of the Energy Efficiency and Conservation Strategy I cannot see any sign that the Government intends to proceed with it. I hope the Government will think again about that because our vehicles use on average about twice as much fuel to go 100 kilometres as the European fleet will use when it moves to the new standard already announced. US cars will not meet the fuel economy standards in China because China has set its horizons higher than what the US is doing. We are left taking what every other country wants to dump because they no longer meet their standards and it is not the old vehicles that are the problem; it is the new ones because they are bigger thirstier and release more carbon than the old ones. There are many areas where a price on carbon will not be enough to solve the problem. It is an important first step and it is a vital first step but we have to have complementary measures as well. 
Returning to this bill it deals with the timing of coming into force of various parts of the emissions trading scheme but it deals only with forestry. A number of people are now pointing as I did myself in the first reading debate to the fact that the coming into effect of the rules for the energy sector on 1 January poses some difficulties because there are no allocation plans and there will not be by 1 January. The sector is just automatically assuming that the Government will legislate a big delay in that and I am concerned that Labour appears very willing to help it do that. That is not the only way of doing it and I urge people to think about the fact that companies should have been preparing for the 1 January date for a long time and that there is no reason why the scheme cannot still come into force on 1 January provided that by that time the Government is in a position to announce its intentions in terms of allocation plans and the companies do not become liable to pay for those units until well into the following year. So it would be possible to start without an allocation plan provided the Government can make its intentions clear by 1 January and those companies can still comply with the law when the time comes. Let us not fall over backwards to delay even longer doing something about climate change. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena tatou katoa. In December last year the Government told the United Nations climate change conference in Poznań that far from stepping back from the Kyoto Protocol the emissions trading review was “a means to find a more politically durable way of moving forward by building a wider policy consensus.” This bill then is the first stage of building that wider policy consensus. 
Consensus was never a given. For Maori there are two key issues at hand. The first is related to the emissions trading scheme. We know that many iwi wanted a Treaty provision to be included in order to protect the value of their settlements and that they were happy for the introduction of the scheme to be delayed in order to achieve that. The second issue is related to the forestry sector. Settlement of the “Treelords” claim has meant that the iwi involved have settled on a price value for their carbon trading units. Delay through the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill will mean there will be a delay in those credits being transferred to them which means they cannot commence trading and that by the time they do the market value of those units may well have decreased. This bill therefore potentially penalises them but there has been agreement given to it because there has been an assurance from the Crown that they will be no worse off. 
We always supported the need to review the emissions trading scheme while at the same time supporting the need to address climate change. But we are also mindful of the views of iwi who from all accounts supported this decision to delay the implementation date. Although the emissions trading scheme was passed into legislation in September 2008 its application was effectively backdated to 1 January 2008. The forestry sector which is already a significant store of carbon was the first sector to enter the scheme effective as of 1 January 2008. So for iwi with forestry interests it became a complex picture as they faced the challenge of emissions trading scheme compliance. For some iwi the bottom line was to achieve an undertaking that whatever the reason for the delay they would not be worse off. So in the context of uncertainty for those directly and immediately affected by the emissions trading scheme we held on to that commitment. 
This bill in its most basic form delays the reporting requirements and the publication of an allocation plan while the review process in the Emissions Trading Scheme Review Committee is still under way. As the current law stands foresters would have been required to report any deforestation during 2008 by 31 January 2009 and to apply for exemptions for small forest blocks by today 30 June 2009. During the process of the select committee hearings the iwi leaders group told the committee that the bulk of Maori forest land is pre-1990 forest and is subject to significant deforestation liabilities. To give an idea of the scale of those they suggested that Kai Tahu could face deforestation liabilities of between $40 million to $120 million while Morikaunui Incorporation in my electorate would be faced with a liability of $16 million for 11000 hectares. The major milestone in this bill therefore is that it delays the timing of the Government’s obligation to transfer carbon trading units to pre-1990 forest owners who include iwi. Although we are aware that many iwi are comfortable with the delay because it comes so late in the piece groups such as Ngai Tahu have already invested considerably in preparing for the 30 June compliance date. 
I return to the focus from iwi: that nothing should be included in this bill that would make them worse off in relation to setting the eventual date of the first emissions returns. Morikaunui Incorporation established over 50 years ago near Ranana on the Whanganui River road spoke on behalf of its 5500 shareholders about the impact of the emissions trading scheme on their holding which includes 2000 hectares of native bush and two small blocks of exotic forest. Morikaunui Incorporation submitted that Maori land should be excluded from the bill and that a timetable should be set to consult with Maori in order to develop a robust framework within which Maori land can fit without transgressing the basic principles set out in Te Ture Whenua Maori Act 1993. The incorporation stated that whatever was proposed in the bill should require no greater contribution or sacrifices from the owners of Maori land than from the owners of privately owned non-Maori land. That would after all represent justice being seen to be done in legislation that will have significant impacts for Maori. 
The Wairongomai Incorporation from Ruatoria took the “no worse off” concept to its natural conclusion and suggested that there needs to be a clause included in the bill that confirms that nothing in the legislation is to be inconsistent with the Treaty of Waitangi. That recommendation was endorsed by the full support of the Federation of Maori Authorities. 
Te Runanga o Ngati Awa devoted considerable thought to how the expression of due justice would be demonstrated for those iwi who have already signed Treaty settlements without the impacts of the emissions trading scheme being taken into account. Te Runanga o Ngati Awa acknowledges that there was no consideration of any impacts of an emissions trading scheme during its settlement negotiations because the scheme did not exist then nor was it contemplated. The runanga’s submission advised the select committee that back in 2001 the worst assumption one could have made would be based on general knowledge at that time which was that forests absorb carbon dioxide and therefore any impact would be positive. Based on those instructions Ngati Awa therefore paid full market value in the expectation of an unfettered property right. 
If the bill is passed in its current form restrictions will be placed on the choices that Ngati Awa can currently make thereby resulting in significant devaluation in that iwi’s asset value. It was Ngati Awa’s guidance that those iwi that are in the same position as Ngati Awa should be eligible for a one-off adjustment to choose how they wish to use their land in the future without reference to the emissions trading scheme. Such an option would mean that they can make the choice that they originally envisaged they would have when they purchased the forest and thereafter they would be required to comply with the emissions trading scheme. 
The process of guaranteeing stability and allaying the concerns of iwi will be critical in assuring iwi that they will be no worse off as a result of this delay. We were pleased to see the range of iwi that made submissions and representations to the select committee and to see the advice put forward by both the iwi leaders group and the Central North Island Iwi Collective. We continue to believe that the liability for emissions should be shared fairly across all contributing sectors at each stage with all starting at the same time and with free carbon credits being allocated to sectors on the basis of need. We will continue to support these important dual goals: to advocate for a Treaty clause to be included in the bill and to protect the integrity and the durability of settlements for iwi affected by the emissions trading scheme. It is never too late for change to occur and it is on that basis that we will continue to support this bill. 
NICKY WAGNER (National) 
: 
 I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill at its second reading. As we have all heard today this bill is mostly a technical bill to deal with the timing of emissions trading scheme provisions as they relate to forestry. At the first reading I was extremely heartened to see the support across the House for this bill. All members of Parliament appreciate the need to get the climate change emissions trading scheme right and the reason to postpone the dates for these forestry requirements. We all know that the cross-party special Emissions Trading Scheme Review Committee is still debating the issues and that the process is not yet complete. We have heard much debate from foresters and about forestry in that committee. We look forward to presenting that report in the coming few weeks. 
It would not make sense for foresters with pre-1990 forest land to have to meet legal obligations before the completion of the final allocation plan for the sector. As today is 30 June the requirement is unreasonable considering that the Emissions Trading Scheme Review Committee is still in session. We do not want forest owners to find themselves acting in breach of the law nor will the Minister so we are passing this bill today. 
I acknowledge also the Supplementary Order Paper from Charles Chauvel that sets the date for foresters to register deforestation and to apply for exemptions and the requirement for the Minister to produce an allocation plan by as 1 July 2010. It is an absolute date and it is now set rather than as in the original bill which allowed the date to be set by Order in Council. This date will give more certainty to foresters although it is an end date and it is possible for the chief executive to bring it forward. 
Including forestry in an emissions trading scheme is an interesting challenge. New Zealand is the first country in the world to attempt it and it is a very complex process. We must take the time and do the work to get it right. We are all well aware of the enormous financial and environmental importance of forestry to New Zealand and our economy and we must understand that these decisions are critical. 
There are roughly 1.8 million hectares of plantation forest in New Zealand and about 650000 hectares were planted post-1987. We know from looking around us that the vast majority of those forests about 90 percent are  
Pinus radiata 
 but we also have increasing amounts of other varieties the most common being Douglas fir. Foresters are becoming even more innovative in their choice of species. I was surprised to see recently in North Canterbury just south of Kaikoura that a redwood forest is being planted. It is good to see trees being planted again after years of dramatic deforestation and it is important for the industry that we get some certainty around emissions trading scheme policy so that more planting can get under way. Of course we are working towards a substantive climate change amendment bill later in the year and that is where the final shape of the forestry scheme will be spelt out in detail. 
It was very interesting to listen to speakers on the bill last week. There is a strong understanding of and commitment to New Zealand’s “clean green” brand. Like most New Zealanders parliamentarians are enormously proud of our beautiful natural environment and we want to make sure that New Zealand does its bit when it comes to dealing with climate change and reducing our greenhouse gas emissions. We understand the importance to our economy and environment of getting this right. We want to be good international citizens and to make a valuable contribution to the global response to this issue. We want to work closely with other developed countries so that we can all deliver for the environment. 
New Zealand’s most important industries are agriculture and tourism and the success of both is predicated on a clean green and beautiful natural environment. Tourists come to see our “100% pure” country and overseas buyers of our food want to be very sure it is grown in a safe clean environment. So it is clear to all of us that environmental and economic health go hand in hand. Forestry contributes significantly to the health of our economy and to the well-being of our environment. It is a significant part of our response to climate change. This bill will ensure that we have time to get the forestry policy right so that it becomes an integral part of an effective long-lasting and sustainable emissions trading scheme. 
Hon MITA RIRINUI (Labour) 
: 
 It is my intention to take only a brief call on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill and to reiterate the position of the Labour Opposition by saying that we will support this bill. I listened very carefully to the previous speakers and I heard the Minister for Climate Change Issues describe this bill as being a minor bill and one of his Government colleagues describe it as being a technical bill that deals with time frames. That is essentially the case. But it is also important to point out that although the Government is discussing issues around amendments and is describing the bill as being minor and technical in nature this bill has the potential to create considerable uncertainty for the forestry sector given that for a number of weeks there has been considerable to-ing and fro-ing on the future of the emissions trading scheme. I put that down perhaps to a lack of information being circulated throughout various communities. 
I want to talk about the issues for Maori foresters and particularly Maori landowners. Maori Party co-leader the Hon Tariana Turia highlighted a number of key concerns for Maori who are already involved in forestry or considering the utilisation of multiple-owned Maori land for forestry. As the Emissions Trading Scheme Review Committee works its way through the review and considers the wider issues on which I am sure the Minister will report back to the House it will be interesting to see just how much certainty there is around the emissions trading scheme. As the House is aware a number of Treaty settlements have included vast areas of forestry particularly in the central North Island and we will see the same in Northland on the East Coast and in other areas of the country. The issue for many of those settlement groups that are looking at forestry really is the balance between economic opportunity and environmental protection as they invest in forestry. 
As the House is aware Maori have assets of somewhere around $16.5 billion and about 52 percent of that is in the primary sector. I do not think it will take much of a calculation to determine the percentage of forestry in the primary sector that is under Maori control. So there are issues around certainty and whether Maori are satisfied that investment in forestry in the future will be a worthwhile investment particularly as there are issues around Maori land. I picked up on Tariana Turia’s comments around Te Ture Whenua Maori Act but there are issues around unlocking the potential of Maori land so that it could be developed in a number of ways whether it be for forestry farming horticulture or agriculture. There is a smorgasbord of options. 
This leads me to the point regarding the barriers to Maori land development. Although forestry might be one potential avenue for development in my view and in my experience most of the main barriers are in the Te Ture Whenua Maori Act itself: in attempting to comply with the Act’s requirements in terms of reaching consensus and agreements on investment in Maori land—in other words in unlocking that land. We have seen that in many parts of the Bay of Plenty of Northland and of the East Coast—and I am sure many of other areas—large areas of Maori land are underutilised. I look forward to the debate on the wider issue of unlocking Maori land for future development. 
As I said earlier on I really do not intend to take a long call on this particular matter. This bill described as being minor or technical in nature has created quite a high level of uncertainty as to where the Government is heading in terms of the emissions trading scheme. I have some questions that I would like to put to the Minister and I will do so during the Committee stage. His responses to those questions will be very important. 
I was in the Taranaki region on the weekend and I spoke to one particular group about Maori land development and suggested the issue of forestry. I was surprised at the quick response to my suggestion. The group said there is too much uncertainty around the future of forestry and the emissions trading scheme and that being the case there is too high a risk in terms of investing in forestry where Maori land is concerned. As the Minister said a wider review is taking place and in time there will be a report back to the House. I along with a lot of Maori landowners and forest owners will be looking forward to what the select committee reports back to the House. 
That is all I have to contribute to this particular part of the discussion but I will certainly put some questions to the Minister during the Committee stage of the bill. Thank you. 
NIKKI KAYE (National—Auckland Central) 
: 
 I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. Climate change is very important to many young New Zealanders. In terms of the numbers of letters and emails I have had from young people one of the highest-priority issues that comes through is the environment. A lot of young people have written to me regarding the environment and I acknowledge them in the House this afternoon. 
Our Government is very committed to reducing our greenhouse gas emissions and to coming up with sensible climate change policy. Many members today have noted that this legislation is a technical change and it is supported by most members in the House today. I acknowledge some of the comments made from members on the opposite side of the House that hopefully this is a new era for New Zealand in terms of climate change policy and that we will be able to work across different sides of the House on the issue. Many people are watching this debate—both young and old—who are very keen for us to work in a cross-party way on climate change. 
The key purpose of this bill is to amend the Climate Change Response Act 2002 in order to delay a number of requirements including reporting requirements for foresters allowing applications for exemptions for certain land holdings and the publication by the Government of an allocation plan for pre-1990 forest owners. The requirements are applicable to the forestry sector under the New Zealand emissions trading scheme. As a result the sector with pre-1990 forest land would have had to meet legal obligations before the completion of the final allocation plan for the sector. It is very positive that we are here today introducing these three amendments because it would not have been right to allow a situation to occur whereby the final allocation plan for the pre-1990 forest land would have had to be passed by 30 June 2009. 
I acknowledge the work at this point in time of the Emissions Trading Scheme Review Committee which has been reviewing climate change in this area. Some good work has happened but part of the reason we are here today is that the work has taken longer than expected. I think part of the reason for the work taking longer than expected is that there is quite a bit of complexity in terms of some of the issues around the forestry sector. But if we look at some of the issues we have had around calculating our Kyoto liability then we start to see some of the complexity in terms of determining some of the issues on climate change. 
The review has taken longer than we expected and the committee is likely to report back to Parliament in early August but one thing we have made very clear is that the use of a financial instrument to introduce a price on carbon is central to our climate change policy. The adoption of an amended emissions trading scheme is our preferred financial instrument. We believe that it will be important for our future efforts to ensure as far as possible that any amended emissions trading scheme is harmonised with the Australasian Carbon Pollution Reduction Scheme. It is really important to make that point. There has been a lot of debate recently particularly in the media about what our target will be in the future. We should ensure that we are not moving at a pace that is out of step with other nations but we should also ensure that when we have a discussion around what our targets may be we first consult with the public. That is exactly what we are doing. I am pleased we are holding nine public meetings on our target. 
The second thing that is quite crucial in my view about that target is being very clear about how we will get there. It is all very well to talk of having ambitious targets but if we do not have a plan about how we will get there then in my view it is just hot air. 
I am very pleased that we are here today to pass very sensible legislation. Some people are calling the bill a technical bill but from my point of view I think it is an opportunity to raise the issue of climate change and recognise that many New Zealanders out there care about our environment and about our target in this area. It is important to realise that unless we have a plan as to how we will achieve that target then it is hot air. 
We should also recognise that for any target we must make sure that we are very clear on the impact on our economy. I think it was my colleague Nicky Wagner who made the point that our economic health and environmental health are very closely aligned. 
The final point I will make regarding climate change is that we as a country are recognised for our expertise and research and development ability in the agriculture and forestry sectors. In my view apart from the discussion about targets one of the key areas of focus we need to get right is on agricultural emissions. I know that our Government has moved forward and I am very pleased that we have established a Centre for Agricultural Greenhouse Gas Research. We are leading the development of an international research centre that will be focused on greenhouse gas emissions from the agricultural sector. I believe that it will be crucial for us in making headway in the area of climate change moving forward. 
I will just touch on a couple of other things we are doing because I think we can get a little bit lost in some of the academic debate around things like targets. It really is important to recognise what we are doing now to reduce emissions in New Zealand. In the Budget we announced the home insulation fund for which we have allocated $323 million. That will assist us in terms of moving to reduce emissions particularly in our homes and making sure those homes are the most energy efficient. 
We have also allocated $36 million to a biodiesel grants programme. We are introducing changes to streamline the Resource Management Act processes including the renewable energy consent process. We are working on a national policy statement for renewable electricity generation. And also in terms of transport which is another key area where are emissions are high we will be introducing legislation to exempt light electric vehicles from road-user charges. 
I support this legislation. It is technical legislation but it has given me the opportunity to recognise the many New Zealanders particularly young New Zealanders who care about this issue and to really send a message to them that we want to have a target we want it to be achievable and we want to make sure we have a good plan behind it. But at the moment at this time we will have to delay some of these provisions because we cannot move forward until we get good sound policy right. That will be partly through the Emissions Trading Scheme Review Committee but it should also be recognised that we are doing a number of things to reduce emissions. I am grateful for the opportunity to speak on the bill. 
STUART NASH (Labour) 
: 
 I rise in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I speak in favour of the bill because there absolutely needs to be some certainty in the forestry sector. This industry requires 30 years of certainty in order to get anything done. Without that certainty we will have no investment. That is what this bill provides. 
I heard the Minister stand up and say this amendment to the principal Act needed to happen because the forestry industry was not ready for the emissions trading scheme to come into place when it was scheduled to this year. I do not agree with that. I think the Minister undervalues and underestimates the professionalism of the industry and the people who are involved in it. Those people have been ready for a long time. The Minister heard them speak about that at their annual conference which I attended. The theme of the annual conference of the New Zealand Institute of Forestry which is the premium professional body for foresters was forestry in a climate of change. It dealt with the issues and questions that are salient to this very issue. For example the institute had a 1-day workshop on the emissions trading scheme and it included things like “Procedures for Applying and Registering for the ETS”; “Applying for an NZEUR Holding Account”; “ETS Mapping Standard and Mapping Guide”; and “Use of Carbon Look-up Tables and Filing Emissions Returns.” 
There was a very large attendance at the conference. The Minister was there and he spoke to the attendees. The people at the conference were the consultants the investors and the people who know the forestry industry. They were industry leaders and they were students—a whole range of people. The institute is the professional body that represents foresters right across New Zealand. Its members are ready for the emissions trading scheme. When the Minister announced that the scheme was going to be delayed for another year there were howls and cries of “Oh my God! Here we are again.” I personally think the industry was well ready for it. I think the Minister and the ministry were not ready for it because they had not done the work. The forestry industry wanted the scheme and all the people in the industry understood it. The questions and the discussion at the 1-day workshop were informed. It was an intelligent debate and intelligent questions were asked. The people whom I spoke to all walked away saying “We want the emissions trading scheme. Thank goodness for this scheme because it will allow the forestry industry to refocus and revalue its value proposition for the whole of the country.” 
Now as a consequence of the delay and as my colleague Mr Chauvel noted 8 million seedlings are rotting in the ground at the moment—8 million seedlings that have had to be ploughed in. The nurseries are in huge trouble. It will be interesting to see what Mr Key and Mr English will do for those companies because they will be very very important going forward. This delay is a huge disservice to the forestry industry. This bill may be technical in terms of the legislative change that it makes but its impact on the industry is significant. 
We all know that Labour developed a programme of global leadership on climate change and we did that for a number of reasons. First and foremost as Nikki Kaye mentioned climate change is vitally important to the people of New Zealand. But the reason Labour developed the emissions trading scheme and the reason Labour took a global overview of and a leadership role on climate change is that we were aspirational. Instead of just talking about the issue we decided to do something about it I say to Nikki. We decided to go out there lead the world and promote our clean green image. We went out there and told people what we wanted to do. The Labour Party tells New Zealanders what it wants to do and it does it—it goes and does it. We were in the process of doing that when we were in Government. Labour was acknowledged as a global leader on this issue I say to Nikki—and she knows that. 
I completely agree with Nikki Kaye when she says there has to be a plan. That is why I am standing here with a sense of disappointment because there was a plan in place. The forestry industry had a plan in place. It was ready to go. Come June 2009 the industry was ready to be off: its marketing plans were in place and New Zealand was going to become the carbon-farming nation of the world. The plan was there and it was ready to go. All it required was sign-off. But the Government has delayed the emissions trading scheme for a year. The industry is saying “Oh my God! Why didn’t we vote for Labour? We need Labour back to implement a very strong forestry sector.” Finally the industry has realised that Labour is the party of the agricultural sector. It has taken a while but finally people have opened their eyes and are saying “We need Labour back. Labour had a plan and the Nats haven’t got a plan. There is no plan.” 
Nick Smith was asked a question at the institute’s conference about why he had cut the East Coast reforestation scheme. He said it was because it was undersubscribed. About 50 people jumped up and said it was oversubscribed. Labour knows about forestry the foresters know about the forest industry and the foresters were ready for the emissions trading scheme. I can say that is true without a question of doubt. 
Let me look at some of the initiatives Labour put in place such as carbon neutrality. What a fantastic programme that was. I heard the head of a Kiwi wine company a really innovative company say it had gone carbon neutral. The company’s products were sold overseas in Marks and Spencer and were gaining a huge competitive advantage because the European market loved the fact that the wine was carbon neutral. This is an example of New Zealand leading the world. Why do we lead the world? We need to understand where our competitive advantages lie in the 21st century. I will tell members where one of them lies. 
Nikki Kaye 
: 13 percent increase in emissions. Is that leading the world? 
STUART NASH 
: It is in international tourism. Every time that member opens her mouth the emissions go way up because a lot of hot air comes out. Let me tell members about international tourism. I know that Kelvin Davis is the Opposition spokesperson on tourism; I know that and the whole of the tourism industry knows that. I keep forgetting who the Minister of Tourism is. Do any of my colleagues know? I ask Pete Hodgson whether he knows who it is. 
Charles Chauvel 
: Jonathan Coleman? 
STUART NASH 
: Is it Jonathan Coleman? Jonathan Coleman the Minister of Tourism—[ 
Interruption 
] It is John Key is it not? I cannot remember who it is. I would have thought that the Ministry of Tourism and the Minister of Tourism with this amazing portfolio had a real opportunity to bank on the great work that the previous Labour Government did on promoting our “100% Pure New Zealand” campaign and growing tourism to become our highest export earner. Do members know that tourism makes up 20 percent of the economy? Do members know that one in 10 New Zealanders have jobs related to tourism? This is where our competitive advantage lies. It lies in tourism. 
I will tell members the basis of the tourism industry. It is our wonderful clean green image and the whole emissions trading thing was building on that. We were on our way. The flow-down effects of this scheme were just fantastic yet here we are delaying it again and again. The delay not only erodes the confidence that the forestry sector has in the National Government but it erodes the international perspective—the way that people overseas view our country. The flow-down effects are dreadful; I find this delay difficult to believe in. I ask Nick Smith whether it is a joke. Is he really doing this? Is he going to pull something out of the hat and say “No I made a mistake. The forestry industry is ready for this. Let’s go with it now.”? I suspect not. 
The other point is that in this time of recession we need to do everything we possibly can to promote New Zealand overseas. Carbon neutrality is fantastic. The emissions trading scheme is fantastic. Getting the forestry sector on board is fantastic. Growing an industry for carbon farming—how 21st century is that? That is the way forward for this country; it is one of our amazing competitive advantages. But one of the paradoxes of New Zealand’s competitive advantage is agriculture. As we all know agriculture is one of the largest emitters of greenhouse gases. We have agriculture emitting gases and we have forestry soaking them up. It is a fantastic way to best use our land. It is about sustainable land use. It is about the best use of land and we had it all there. The forestry industry was ready and set. It has been told to wait—to hold it a second. It has been told to take 12 months delay the investment delay the marketing and maybe the scheme will be ready to go next year. Who knows I say to Nick Smith maybe it will be. 
Let me tell members a little about the forestry industry. Foresters grow trees—funny that; they grow trees. In the past the forestry industry has cut down those trees. Fantastic! The industry grows them then cuts them down and turns them into timber pulp or whatever else the product may be. But here is something new: we can grow trees for carbon. Fantastic! We do not have to cut them down because of course every time we cut down a tree it releases carbon into the atmosphere. If we have carbon credits then every time we cut down the trees and do not replant them we have to pay back the money we have earned on those carbon credits. But now there is a fantastic opportunity to grow trees for carbon. The forestry industry is worth $3.2 billion and in 10 years’ time it will be worth $6.4 billion if not more than that. It employs 32000 people. Carbon farming is now an option for forestry. It now provides an option for the industry to plant trees in areas where in the past forestry would not have been considered. This is a new way forward for New Zealand. It is a new way forward for the forestry industry and the Government has set that back for a year. 
I do support this bill; I really do. The forestry industry does need to have certainty—it is a good thing—but that needed to happen a year earlier than this. Investment in forestry—goodness me! How do I know about this? Because I have a master’s degree in forestry science around investment in forestry. When I read about this—planting trees and farming them for carbon credits—I know it is to New Zealand’s competitive advantage. 
CHRIS AUCHINVOLE (National—West Coast - Tasman) 
: 
 Following the previous speaker in speaking to the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill I say that I am not sure we will be able to manage the same degree of commercial expertise in terms of promoting the aspirations of the previous Government. I am afraid it did stay just at the aspirational level. I cannot match that member in his master’s degree in forestry science but I used to plant a hang of a lot of trees. I think the most significant point he made was that we are talking about an industry with a 30-year economic turnover. That is very very significant because what happens today will not have an effect for some considerable time. I understand that this is the first piece of legislation that has gone through the Emissions Trading Scheme Review Committee. I congratulate the committee on it. 
There is something here that I gain great confidence from. When I prepared for this speech I read through all the first reading speeches that were given on this particular piece of legislation and I sensed something that is very important. It is a technical bill; it is not a bill of huge consequence people say but it is part of something— 
Stuart Nash 
: Huge consequences! 
CHRIS AUCHINVOLE 
: —it is very very important and it has huge consequences—Stuart has not let me finish. Come come we did not interrupt that member when he spoke so he should give us a fair go. 
Let me get to the point. This bill is inextricably interwoven with a huge piece of legislation the emissions trading or carbon control legislation—whatever one likes to call it. It is about the whole prospect of climate change. The great confidence that I gain from it having read the first reading speeches is that there is a real sense that people recognise its importance. People recognise its significance and are preparing to work together on this issue. That might be nice for us in the House but it is particularly significant for the rest of the people of New Zealand. I welcome the speeches that I have heard today particularly those that talked about all the parties. I think without any exception every representative has said that their party is supporting this bill and that is significant. I think it is very significant that the two major parties are preparing discussions and moving towards working in harmony on this. That does not mean that the views or beliefs of individual parties will be compromised; it is just a matter of getting the best that we can out of this legislation. 
The purpose of this bill is very important. It amends the Climate Change Response Act 2002 to delay a number of requirements including reporting requirements for foresters allowing applications for exemptions for certain landholdings and the publication by the Government of an allocation plan for pre-1990 forest owners. To give a little bit of background the Emissions Trading Scheme Review Committee was set up as a consequence of the confidence and supply agreement between the National Party and the ACT Party. Due to the thoroughness of the work that has been done and the significance of the current work this committee has now indicated it will report back by the end of July or early August which is a little later than anticipated. Without this bill the unfortunate consequence would be that a business with pre-1990 forest land would have to meet the legal obligations before the completion of the final allocation plan for the sector. 
Hence I consider this to be an uncontroversial bill. Its primary purpose is one that I cannot imagine a sensible person being against. It is simply allowing the law to continue smoothly. The Government sensibly in my view wishes to consider introducing offsetting or another mechanism for pre-1990 forest land. To finalise this policy and ensure that there is compliance the 30 June 2009 date in the Climate Change Response Act has to be changed. This bill passed its first reading on 23 June and went to the select committee. As a result the recommendation was made that 1 July 2010 would be the new deadline date for applications to be made for exceptions for landholdings with less than 50 acres of pre-1990 forest land. This particular date or the setting of it was a subject of discussion in the first reading speeches. It has now been established that it is the latest possible date by which applications may be made. I understand that the committee has agreed that the chief executive of the Ministry of Agriculture and Forestry should have flexibility to set the date earlier than the 1 July 2010 deadline if that is suitable. Good law needs a little flexibility so this is a very positive development indeed. 
I say as other speakers have that New Zealand is a country that identifies closely with a clean green image. I include myself when I say that some of us are fortunate enough to live in parts of the country where we are indeed very very close to the natural environment. It is important that we work hard to reduce greenhouse gas emissions. That is why we are doing so much work to cut our emissions and that is why in principle we support the idea and intentions of an emissions trading scheme. We have a large amount of work to do. Emissions are increasing on a high percentage basis in spite of the aspirations of the previous Government. In early August the Emissions Trading Scheme Review Committee will produce its report for the Government from which the Government can make substantive decisions around the emissions trading scheme. That will enable us to move forward in a very positive way towards producing the kind of high-quality legislation that one comes to expect from this Government. 
To conclude I say that I am very confident that we will pursue sound practical environmental policies to achieve emissions reduction. We want to reduce emissions in balanced ways that result in the least cost to society and to the economy. The final legislation will be based around good incentives and improving the environment and the economy in combination with each other and through good science based on sustainability. I am very happy to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill and the long-term goals and efforts of this Government in the area of climate change. Thank you. 
Bill read a second time. 
In Committee 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 I seek leave of the House for the first and second parts and the title of the bill to be taken as one question. 
The CHAIRPERSON (Eric Roy) 
: Leave is sought for that purpose. Is there anyone opposed to that course of action? There is no opposition. Leave is granted. 
Parts 1 and 2 and clauses 1 to 3 
STUART NASH (Labour) 
: 
 The title of the bill is the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I suggest that it should perhaps be the “Climate Change Lack of Response (Emissions Trading Forestry Sector) Amendment Bill”. The one thing about this bill and I alluded to this in my speech on the second reading is that the forestry industry was ready for this bill. The only party that was not ready for this was the National Government. If I look through the bill I see that the major changes have been made as we all know to the dates. The thing about this bill is the Labour Party had sat down and consulted the industry. There were changes that the forestry industry wanted; there were changes that the previous Labour Government wanted. They sat around a table which was made of wood to talk about the changes. The table was probably native wood it could have been radiata pine but it does not really matter. It was New Zealand - grown wood that had not been farmed for carbon because it had been cut down. There were many of these meetings because one of the things the previous Labour Government did the whole time was consult back and forth with the industry. It came up with a bill that was perfect. It fitted the expectations and the aspirations of the forest industry and it fitted the expectations and the aspirations of the previous Labour Government’s emissions trading scheme. It was going brilliantly. It was ready. The forest industry was ready to get out there and start marketing this. The forest industry had all these seedlings ready to plant. We had international investors. 
But let us get back to the bill. If we look at Part 1 clause 4 we see that it says that we are changing the date to 1 July 2010—2010! That is a delay of 365 days. For those who do not know much about forestry I say that 365 days is a growing year. There are four seasons in a growing year and that constitutes one growth ring. In fact when we are talking about a cycle of 30 years every year is important because one does not know what is going to happen in the industry. But the most important thing that this bill does is delay the potential investment in this industry. 
As I have said I support this bill. The reason I support it is that it provides certainty. I support the recommendations based on the fact that it provides certainty. Let us look at some of the other clauses. Clause 5 is called “Applications for exemption of land holdings of less than 50 hectares of pre-1990 forest land”. Where does “50 hectares” come from? I mean it is an arbitrary amount. It is a good amount but it takes it out to July 2010 again. What is it with 2010? Why could we not just go ahead with it straight away? This is the really disappointing thing for me as a past forester for the forest industry for the investment community—in fact for everyone who is passionate about emissions trading. 
Nikki Kaye I heard you wax on in Ethiopia where you gave a very impassioned speech about the importance of climate change. It was a wonderful speech and we all sat up and applauded. I come back and stand in this Chamber which is an amazing wood-lined hall—members should look at this fantastic wood—and I hear you speak about delaying this bill. It says here it will be delayed until 2010. You are delaying it! 
Nikki Kaye 
: You support it! 
STUART NASH 
: Of course you support it; of course I support it. 
The CHAIRPERSON (Hon Rick Barker) 
: The Chair is not delaying it; the Chair is not supporting it. 
STUART NASH 
: Sorry Mr Chairperson. I did not mean you were delaying it. In fact I know you would not delay it—you have a lot more sense than that. What I mean is that when I look at all these clauses I see that all the amendments are about dates. We have such an important industry here that cannot afford to wait another week let alone another year. 
Let us look at Part 2 “Miscellaneous technical amendments”. Goodness me! I am astounded. Nick Smith is a Minister who coming from Nelson I would have thought knew a lot about emissions trading and a lot about forestry and about the importance of the forest industry. He must have known what this was going to do to the forest industry. What it has actually done is not provide certainty; it has taken away certainty. When we look at new section 183(3)(a)(ii) in clause 5(2) there is again another date: 1 July 2010. It is another delay and another potential delay of $700 million for this industry. So although this bill provides a level of certainty it is not the sort of certainty the forest industry was after. 
There is a misconception out there that in fact the emissions trading scheme had been put on hold. It had not been put on hold at all; there was just no certainty. The industry was out there it was waiting for certainty and it knew it was going to get that certainty on 1 July 2009 until this amendment bill. We talk about this as a technical bill. I hear members on the other side of the Chamber say it is a technical bill. It is not technical; it is very very important. 
CRAIG FOSS (National—Tukituki) 
: 
 Before I speak on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill I acknowledge the officials who have been part of it. It is a small bill but of course they have been part of the greater review of all things emissions trading. I pick up from the previous speaker Stuart Nash who has a master’s degree in forestry or something and shared with us that foresters plant trees. I thought it was very interesting that it took 4 years of studying to learn that whereas one of my colleagues here actually planted trees so perhaps he may know a fair bit more. I note that the bill had its first reading on Tuesday 23 June and went to the Emissions Trading Scheme Review Committee on 25 June. I acknowledge the fact that members considered and deliberated on the bill on the same day which needed a lot of cooperation and leave applied for and granted from the members of the select committee to allow it to report back to the House to get us to this stage. As I noted previously—it is right in the Committee stage to acknowledge all those who have helped get us to this point—we may well go through all stages of the bill tonight or perhaps this afternoon. 
The bill is a good model. The previous member was talking of various clauses about delaying dates changing dates and things like that. That is the whole point of the bill: to provide certainty. It is not providing uncertainty. As I noted earlier prior to the election National put out its expectations of the emissions trading scheme which were to provide certainty and not put New Zealand’s economy at risk. This is actually part of those expectations. When we look at the clauses in the bill we see that quite simply the rules are not changing. Yes dates are changing but the rules of afforestation and deforestation are not changing. The need to measure is not changing. The problem as identified by the Minister for Climate Change Issues in his second reading speech earlier—and he acknowledged that even some ministries and Government agencies actually had not done their job as well as they could have—is to let those that are directly impacted by the existing legislation know what their obligations are how they should be measured when they should report and how they should report. Of course from that would come any allocation decisions etc. But we have to do this bit first. The clauses in this bill that change dates far from providing uncertainty and delay actually provide a much more robust framework for not only forestry but also all of the other facets of the emissions trading scheme and the various climate change bills that have come through the House over the last year. 
The preparation I suppose is everything. I want to talk to that uncertainty that the other member was talking about. There is so much uncertainty in and around implementation in other countries where New Zealand is where our friends and competitors in Australia are going to be where the rest of the world is as we march towards the Copenhagen conference. Well this actually starts—with I fully acknowledge cross-party support so far—to get New Zealand as a country to be able to speak when we are at Copenhagen. We have been able to measure our smaller holdings. We have a facility in place and it is preparation for the emissions trading scheme however it is finally implemented in this country subject to the select committee review and where the Minister ends up with the various facets. This bill starts to put things through—not in a rush; it is pragmatic—and it takes a reality check. Right now not only is all the measurement not available quite yet but also those who are financially and economically impacted those who are doing the various measurements for many reasons are not quite up to speed. So quite simply the clauses in this bill—yes it is a small bill—simply change reporting dates subject to the amendments from Mr Charles Chauvel which I acknowledge were made at the select committee. Certainty is provided so that we can move on to at least put the larger discussions about how and when our climate change response and emissions trading scheme are implemented. This bill can sit with those discussions. 
CHARLES CHAUVEL (Labour) 
: 
 I take just a brief call in this compressed Committee stage. I comment first on some of what we have just heard from the previous speaker Craig Foss. I think it is a long bow to draw to suggest that this amending bill is somehow the result of the design principles that were set out by the National Party in objection to the emissions trading scheme that was passed by the previous Government. 
It is interesting to have a quick look at those design principles. The first one is that an emissions trading scheme “must strike a balance between New Zealand’s environmental and economic interests. It should not attempt to make New Zealand a world leader on climate change.” Well the world has moved on. The latest news from the Australians today is the Liberal Party saying that it will propose constructive amendments in the Senate rather than simply trying to block the legislation as it has done to date. 
Legislation is about to go through some crucial stages in the United States Congress to set up a “cap and trade” scheme—the mirror image of the sort of scheme that was passed in our last Parliament. We have the European response mirrored in domestic legislation of member nations of the European Union such as the UK most notably for our purposes. There are also countries like Japan. No way could we be described as a world leader any more even if that was an accurate description back in September last year which I do not think it was. 
We have the principle that the scheme should be fiscally neutral. Well it was always Labour’s intention to recycle revenues gained from for example the auctioning of permits to pay for the vital complementary measures that are the other equation in dealing with climate change. We have the emissions trading mechanism—the financial mechanism that puts a price on carbon at the margins so that we do things like disincentivise people who put an inappropriate dairy development on a marginal land and we incentivise them instead to afforest that land which is much more in the national interest and is the logical consequence of putting a price on their pollution and their emissions rather than having the taxpayer bear it. But we need those complementary measures as well and it was certainly always going to be the case under Labour’s scheme that they would have been paid for from revenue from the scheme. 
Then there is the principle that there should be close alignment with the Australian Carbon Pollution Reduction Scheme with where possible common compliance regimes and tradability. Well that outcome is entirely feasible as far as technical harmonisation is concerned without waiting for Australia to develop every last detail of its scheme. It is feasible under the legislation as it is designed at the moment. In respect of the principle that technology should be encouraged to improve efficiency and reduce emissions’ intensity nobody could argue with that; it is the motherhood and apple-pie principle that again is consistent with the scheme as it currently exists. 
Then there are the final two principles. First with regard to the principle that we need to recognise the importance of small and medium enterprise to New Zealand again no one would argue with that but the Minister needs to get on and decide issues like thresholds so that small and medium sized businesses know where they sit in the scheme and what their allocation regimes will be. Second in respect of the need to have flexibility to respond to progress in international negotiations the scheme is designed to do exactly that. It is basically a set of broad legislative principles that allow the Minister and his officials to get on and fill out the detail. As far as the international developments are concerned it is a ground for review under the existing scheme. Those principles have to be treated with a great degree of caution and I would remind the previous speaker Craig Foss of that. 
The other thing I will say is that there was a comment in the second reading speech made by the Green member Jeanette Fitzsimons. I think she made some assumptions about what Labour might or might not be willing to do in respect of dates and compromise for other sectors coming into this scheme. All I would say in response is that we have been scrupulous about not discussing in public our talks with the Minister and I intend to continue that course. The member should not speculate—neither should anybody else—on what we might or might not be willing to agree with the Minister. 
I wonder in the time remaining whether I could ask the Minister in the chair the Hon Dr Nick Smith to respond to two quick questions: one relates to clause 4; the other relates to clause 5(2). The amendments to the clauses are recommended in the committee’s report to the House. The questions are simply these: given that the committee has recommended firm deadlines as opposed to dates to be set by Order in Council for the doing of things that are required under those paragraphs I ask whether there is a prospect in his view that those things might be done sooner than the statutory deadlines which are set out in both cases on 1 July 2010. If so I ask whether he has a view as to when those things might be done on an earlier date than 1 July 2010 and I ask what the conditions are under which those things might occur. These are my questions and I would be very grateful if the Minister took the opportunity to address them. Those are my comments at this point. 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 Firstly I thank both sides of the House for their contributions to and consideration of the bill. I will quickly respond to the fair question raised by the Labour spokesperson on climate change Charles Chauvel in respect of clauses 4 and 5 and on whether there are any potential scenarios where we might bring forward dates prior to the deadline that has been set at 1 July 2010. I acknowledge the initiative Mr Chauvel has taken in putting that firm date of 1 July 2010 into clauses 4 and 5 to require the two actions to be taken by then. I think that is a reasonable time frame I think the debate is moving on and I think a mood is developing across Parliament that for New Zealand’s sake we need to resolve the key features of the emissions trading scheme in a practical way that can move forward. 
I think the key question here is firstly in respect of the allocation plan and whether there is a process by which the date for that could conceivably be brought forward. One of the factors we would want to take into account is the fact that these units are expected to be traded but as a number of speakers have noted we cannot have a market unless we have buyers and sellers. At the moment we have only sellers and there is not much of a market. In relation to the point of obligation for those sectors that have liabilities I note in passing—and I am sure previous Ministers found this—that there is a great deal of enthusiasm from those people who are to receive credits to get a market up and going but there is not quite the same level of enthusiasm from those people who are paying. Even in the forestry sector where there are both payers and sellers I know that that view applies. I think it would be helpful—and I particularly note this in respect of the central North Island forestry settlement in which there is a very substantive allocation for the allocation plan—there may be merits in bringing that date forward to provide some liquidity to the market. So yes I do see a scenario where that would be conceivable. 
In respect of the exemption provision I want to be quite upfront with Parliament in saying that there is a huge number of small forest owners in New Zealand and that the exemption provision is really in my view aimed at those thousands of forest owners who own small blocks. I think—and it was in the Budget—that substantial funds were provided for the implementation of the emissions trading scheme. To bring forward that date prior to 1 July 2010 in my view we would have to run quite a substantive information and advertising campaign to inform people out there to do that. There will be left just the pragmatic question for me as to what is a good timetable to do that. 
Given the fact that we will be dealing with a substantial emissions trading scheme amendment bill my hope would be that we can have that completed prior to the Copenhagen negotiations. That would in my view be a credit for this Parliament and for New Zealand. But it would keep the systems of Government pretty busy and I do not see any advantage in running an advertising campaign around the exemptions or that campaign resolving that long-term issue. Perhaps 1 March next year might be a possibility and I think that having the flexibility of the special select committee that considered the bill was a worthwhile provision. 
So yes there are scenarios where those dates could be brought forward; there are issues of liquidity and issues of getting an advertising campaign up and running. I will want to work with officials and I will be happy to consult with the Opposition around what is the shortest conceivable but practical time frame in which we can get on with that important work. 
NIKKI KAYE (National—Auckland Central) 
: 
 I am a little bit gutted that Mr Nash has left the Chamber because I wanted to respond to a number of things that he said. 
Hon Steve Chadwick 
: I raise a point of order Mr Chairperson. 
The CHAIRPERSON (Hon Rick Barker) 
: I can anticipate what the point of order is. The member should not refer to the absence of another member from the Chamber. It is a quaint custom we have here but it is for good reason. 
NIKKI KAYE 
: Thank you Mr Chair. I think it is very important that whilst we are talking about this legislation we also touch on the point of New Zealand being a world leader in climate change response. In order for us to really look at that statement we have to look at New Zealand’s record in that area. In particular it is very interesting to note that under 5 years of Labour we lost 50000 hectares of forest. Under 9 years of National there were 600000 more hectares of forest. It is important to acknowledge that when Labour members talk about being world leaders in climate change their record is appalling. Labour holds the New Zealand record for the worst record since forestry records began in 1921. When members on the other side of the Chamber start talking about being world leaders in climate change it is important that they look at Labour’s record. 
Another emissions record we should look at is that during Labour’s term of Government emissions grew by 14 percent. In fact of 38 countries—the annex 1 countries—New Zealand did not lead the world. We were not even halfway down the list; we were the worst out of 38 countries. When we talk about emissions it is important that we do not caught up in Labour’s hot air in this area because it does not have a good record in terms of forests emissions and also consultation. We are about to move forward with consultation for the target and we are holding a number of public meetings on that. But we should ask how much consultation Labour did when it decided that New Zealand would become a carbon-neutral country. In my view it was totally unrealistic and totally unplanned. That is why there was an appalling climate change record over the period of the Labour Government. 
I am very pleased that although we are here this evening delaying some provisions relating to the forestry sector we have a climate change policy. We are not trying to say that we are world leaders because ultimately one’s record matters and the record of the last Labour Government was appalling in terms of climate change. I am all for moving forward with cross-party cooperation in this area and I would welcome Labour members to stand up and defend Labour’s record in that area. We have to look at our history because other nations will be looking at us and our history in terms of climate change. This can be a new era but members opposite have to be very careful when they start talking about being world leaders because our climate change record is unfortunately not good. I look forward to a new era in climate change in New Zealand but I hope that we have a more realistic way forward with planning around climate change. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I was not going to take part in this debate but I do not think that that contribution can go unanswered. I am going to do so gently but I am going to do so firmly. Nikki Kaye got up and told us how during the Labour Government emissions went up and she is right. She told us how Labour was not very effective on climate change and she is wrong. The member is a new member; the member does not understand I do not think the history of climate change policy in this country. She does not understand it. For the last 15 or 16 years— 
Nikki Kaye 
: What have you done? 
Hon PETE HODGSON 
: She is going to interrupt now. I sat in silence while listening to that insolent ignorant abusive speech and that member is now going to get a towelling because she has invited it. Normally one says of a young member a new member: “That’s fair enough. They are still learning the ropes.” We have all done that before. But I am not about to put up with that. 
The Labour Government ratified the Kyoto Protocol against the wishes of the National Party. That Government not only ratified the protocol but before ratification it had put in place a policy that was consulted in a draft form and was then announced in its final form over months and months and months. In fact it did not come out until about September 2002 as I recall. That is something like 2½ years of activity and 2½ years of consultation. That is the beginning. 
Under a Labour Government wind energy got going because of the projects to reduce emissions. Under Labour when we became the Government there were no insulation standards in this country except for some temporary ones that had been put in in 1978 by—guess who—Sir Robert Muldoon. They had not been improved during the course of the fourth Labour Government they had not been improved during the 9 years of the Bolger-Shipley Government and they were put in place by me as Minister of Energy. They were then improved twice and are about to go through their third improvement. 
All of the foundation policies were put in place by that Labour Government with support from the Greens. The Energy Efficiency and Conservation Authority which everyone now thinks is great because it is about warm homes and all of that was sitting surrounded by cobwebs in the Ministry of Commerce in 1999; it was completely demoralised. It was taken out given special legislation and put in with the Ministry for the Environment etc. Now everyone knows what “EECA” means; it is all very very ragey. 
We had a biofuels target under the Labour Government. Unfortunately—and I still think it is a sad mistake but we will not go on about it—one of the first actions of this Government was to get rid of it. A lot of the research and development effort that is now we hope starting to come to fruition was begun under Labour although much of it was begun before then. You see there is some history here there is some effort here and some people have done some hard yards. The member who has just resumed her seat ought to become a student of history before she takes a call again. 
HEKIA PARATA (National) 
: 
 Tena koe e te Heamana. Huri noa i to tatou Whare i tenei po tena koutou kia ora tatou katoa. 
[ 
Greetings to you Mr Chairman and to you throughout our House this evening greetings to us all. 
] 
I am delighted to seek a call to speak in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I am a new member of this House; I am therefore a new member on the special Emissions Trading Scheme Review Committee that has been put together to look at the wider issues on climate change and the emissions trading scheme. 
I acknowledge the extreme complexity of this area and the very steep learning curve that has probably been vertical if not backwards for me in getting to grips with the vast range of issues that bear on this topic and the numerous organisations and people who maintain a very strong interest in this area. I acknowledge that our present is built on the past and on those who have contributed to it in order that we can have a strong future. I am delighted to be a part of that select committee and to acknowledge the hard work of the people on it and the learning that I have received from many of them who have been engaged in this area of work for some time and certainly for a lot longer than I have been. I have become very sensitive to how sensitive the range of factors and variables are that need to be balanced in order for us as a small country to navigate our way forward from this point knowing that what we do impacts not only on those of us here today but also on the generations that come after us and knowing that we are a part player in the greater global community and that what we do and what they do will form the history and herstory of what we confronted and what we did about it. 
I acknowledge the colleagues from whom I have learnt in the select committee. In considering the bill that is here before us here today I acknowledge my colleague Mr Chauvel for the amendment he brought to the committee. 
The forestry sector is an extremely important part of the New Zealand economy. It is important that we provide certainty to it while acknowledging that its role is part of a greater picture. This bill which is a technical bill allows us to defer the time line by which considerations occur and Mr Chauvel’s amendment has established the date of 1 July 2010. But decisions have to be made by that date and we have heard our Minister in the chair the Hon Dr Nick Smith respond to the question put to him in the Committee tonight on whether there might be an opportunity for these decisions to be made somewhat earlier. In his response he has indicated that that might be possible but that a number of factors would need to be considered before it was finalised. 
This bill gives to the forestry sector not only certainty of the date by which these considerations will occur but also an indication that it might be possible for them to occur earlier. It has also indicated to those many thousands or perhaps hundreds of small forest owners that they will have the opportunity to hear in more detail the information that will be necessary for them to be able to play their part in this very complicated chess game I suppose that New Zealand is engaged in not only within our own country and the number of sectors that contribute to it but also in terms of what we need to be balancing in terms of our contribution to the wider world. 
It is very technical. As we have learnt not only is there a number of different kinds of forests but also there are different kinds of plantings different times at which those plantings have occurred and therefore different impacts upon them. We have heard about the aspiration for there to be a market established in which carbon credits can be traded and we have heard that there is a preponderance of sellers and a very minimal number of buyers. Thus the notion of a market has been rendered—a notion at its best at the moment although we hope that it will achieve some reality over time. In the meantime we are looking to ensure that while the select committee continues its considerations we are able to give some certainty to those members of the forestry sector. 
LOUISE UPSTON (National—Taupo) 
: 
 I rise to speak in the Committee stage of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill and I firstly acknowledge the work done by the members of the Emissions Trading Scheme Review Committee. I was not involved directly but I am aware of the hours that have been put in by the members of that select committee so I start by acknowledging the hard work done by that committee. 
In speaking to this bill I reiterate the importance of forestry to the Taupo electorate. Over 1000 people are employed in forestry in my electorate and one of the concerns they have been speaking to me about for many months is the ongoing uncertainty around the emissions trading scheme and in particular around the date in the legislation. I know that foresters are very pleased that the Minister has taken a pragmatic approach and that the select committee has been working hard to ensure a workable solution for them because that date has been causing them a lot of angst. 
One of the impacts of that which I will spend a moment talking about is the fact that there is wonderful fertile land in my electorate but it is doing nothing right now because forestry owners have been unsure about what would happen and have not known whether to plant on it or put it into dairying. So it is sitting there doing nothing. As we are in a country that is in the grips of a recession we cannot afford to have wonderful fertile land sitting doing nothing. So that is why I am really pleased that there has been a great deal of cooperation across the House on this particular bill to make sure we provide some certainty for the forestry sector in making this technical change—of changing the dates on which requirements are made of the sector—so that it is able to get some certainty without things being rushed or without having ongoing concerns about the future. We have been able to change what the current requirement is in terms of reporting deforestation so small-block owners will get an extension. It is not a case of today being D-Day and I know the sector will be extremely relieved about that. 
What is really important in terms of looking at this legislation is having a pragmatic approach to something that is achievable. I know that I want to be part of a New Zealand that has ambitious environmental goals but at the same time I do not want to set up my children and grandchildren to fail. I think that it is really important on an issue like climate change that we collectively as a Parliament come up with something that is achievable—not just for our generation but for our children and grandchildren. I sure as hell do not want to leave them with a debt in terms of the environment that they will not be proud of. What I think has to be at the heart of this debate is making sure that the changes we make in this legislation are enduring. We do not want to have a situation where we throw these changes out all of a sudden and put the industry into turmoil again because there is a change of Government. That is why it is really important that the work that has been done in the select committee has some consistency about it. 
I know that the forestry companies in my electorate that I have been dealing with—and that the Minister and I have met with—want certainty. They want something that is workable; they want something that is achievable. They have great aspirations in terms of what they see they are able to do in forestry. I was excited this morning to meet with members of the Central North Island Iwi Collective who of course have their agreement coming into effect tomorrow 1 July. There are fantastic possibilities for forestry in that particular area and we want to make sure there is certainty for those members in going forward so that in terms of their setting big goals they can get out there and achieve them. I do not see that as a Government we want to be getting in the way of organisations that see great potential in forestry and that have great ambitions in terms of nurturing the environment so that it is there for generations to come. When we talk to iwi we find that that is what they say time and time again. They want to protect their assets they want to make sure they are there for their children and mokopuna and that is what members on this side of the Chamber are interested in as well. So it is really important that we provide that certainty. 
Parts 1 and 2 and clauses 1 to 3 agreed to. 
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 I move  
That the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill be now read a third time 
. I firstly acknowledge the thoughtful contributions that were made by members during the Committee stage on this bill and the inevitable commentary about the broader issues that we face around the huge issue of climate change and more specifically the complex issues of implementing an emissions trading scheme. 
I note that New Zealand is attempting to be the very first country in the world to include forestry within an emissions trading scheme. That is a very challenging exercise. Things that are man-made technologies—such as the burning of fossil fuels—or non-natural processes are relatively easy to measure. It is a lot more challenging in the area of climate change to be including natural processes—like the growth of trees agricultural emissions or many other elements of the natural sector—in an emissions trading scheme. To some degree the complexities we found around issues in respect of forestry are some of the underlying reasons for this delayed bill. 
The first thing I emphasise and I will emphasise it again is that this bill does not change the time frame by which any of the different parts of forestry will come into the emissions trading scheme. The bill is a technical bill that tries to provide some greater time frames in which the various requirements of bringing forestry into the scheme are able to be met. 
I will note specifically the different provisions. First up is the issue of the allocation plan for pre-1990 forest owners. The truth is that the forestry sector is not of a single mind. The truth is that there are different parts of the forestry sector that are impacted upon in different ways. On the part of pre-1990 forest owners there is actually not a huge amount of enthusiasm for the emissions trading provisions in respect of forestry because those provisions will put limits on their capacity to change the land use and that would have a substantive impact on land value. The previous Government responded quite pragmatically to that and said “Look we’re going to allocate some units to you to compensate you in some way for the way in which you are disadvantaged by those provisions.” 
At the core of this bill is the time frame in which that allocation plan is set out. Given that there is a select committee review it is proper that that be delayed for some time. Members opposite have said “Yeah that might be fair enough but not for too long.” They have introduced amendments that have resulted in the date being changed to 1 July next year. I think that is a pretty fair date and I am confident that we can resolve that issue by then. 
The second issue operates at the other end of the spectrum; that is rather than some of the very big forest owners there are some very small ones. The compliance costs of including very small forest holdings within the emissions trading scheme exceeds the benefit of doing so. The original emissions trading scheme provided for an exemption for blocks of trees that are fewer than 50 hectares in size. The issue is that unless quite a bit of money is spent on publicising those provisions a whole lot of people will not comply with them. We have made provisions in the Budget this year for money to advertise and to make sure that people are able to meet that requirement. If we insisted on it being required today a whole lot of New Zealanders out there would be disadvantaged. We have quite pragmatically taken a view that we will give people another year to apply for that 50-hectare exemption. 
The third part of this bill deals with the issue of where people have deforested and have obligations. Technically by 31 January this year they were required to report any deforestation that occurred during 2008. I know of public and private sector organisations that did not do that. Given that that legislation came into effect only late last year and it is quite an onerous obligation I am not completely surprised about that. I do not believe that anybody’s rights are adversely affected by extending that date for a year. The legislation further extends for a year the period in which those forest owners or those owners of land where there has been deforestation have to surrender the units associated with that deforestation. Again I do not think any party will be disadvantaged by that. If anything it will provide for a smoother transition of the entry of forestry into the scheme. 
I want to briefly touch on the history of the debate between carbon taxes and emissions trading schemes because it is relevant as we move forward. If we go back to the mid-1990s during Simon Upton’s time as Minister for the Environment we see that he said we should go ahead with a low-level carbon charge so we went along that track for about 3 or 4 years. It was almost said in this way: “Industry tidy your act up and get emissions under control. If you do we will not touch you but if you don’t we’ll put a low-level carbon charge on you.” When emissions did not move an iota the crunch came and it was time to implement a carbon tax. However the decision was made that theoretically an emissions trading scheme would be the better option. In March of 1999 the National Cabinet made a decision in principle to set officials in train to work on an emissions trading scheme. When the new Labour administration came into office it said that it was a bit suspicious of emissions trading and it did not want to proceed down that road. So for 5 or 6 years it worked on a carbon tax. After the 2005 election Labour abandoned its work on a carbon tax and went on with an emissions trading scheme. 
I am not trying to be precious here; I do not think parties on either side of the House come out of this shining with a great glow. There is a bit of a chequered record on both sides but that is also a commentary on how difficult this stuff actually is. In the debate on this bill I have welcomed the growing consensus that an emissions trading scheme is the right way forward. There is a pretty good consensus that it should include all sectors and all gases. We have a really important job to do over the next few months of this year to nail down the detail of what an amendment will require. An amendment bill is needed. The reality is that in this bill we picked up three of the main little mistakes that were made in the main emissions trading legislation and officials tell me that there are probably about another 20 errors that were made in that legislation that will need to be fixed up in a substantive amendment bill. 
From here we need to carefully consider the work of the Emissions Trading Scheme Review Committee and we then need to get a further amendment bill before the House. If we can build on the spirit of cooperation that we have developed on this minor bill there is a little twinkle of hope that we may be able to move New Zealand forward and have an emissions trading scheme that gets that right balance between this very challenging environmental issue and the huge issue of our economy our jobs and our certainty. 
I again thank members for their contributions to the debate on this bill. It is a bill that is required in order to be able to provide for a sensible transition of the forestry sector into the emissions trading scheme and I commend the bill to the House. 
CHARLES CHAUVEL (Labour) 
: 
 The Minister for Climate Change Issues has given a very fair summary of the provisions of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill and I do not intend to repeat what he said. I will take a few moments of the House’s time to follow his lead and speak on some of the wider questions in this area that face the House and the country going forward. 
I will start with the science because it is after all—ironically perhaps—one of the first terms of reference the special select committee the Minister referred to the Emissions Trading Scheme Review Committee has had to contend with. I was interested in the gracious remarks made by Hekia Parata on the select committee’s deliberations. It was refreshing to hear that it was an educative experience for new members of the select committee. I do not know whether those of us for whom it was at least the second time round could go quite that far. Certainly the three or four members of the committee who participated last time in the Finance and Expenditure Committee’s deliberations on the current legislation I think take the view that by and large most of the submissions we heard were fairly reiterative of what was heard last time. It was interesting however to learn that most of the larger emitters have moved from what was generally an implacable opposition to the idea of emissions trading in New Zealand to an acceptance that it is the best way to go given our current circumstances and world developments. The submissions they made to the Emissions Trading Scheme Review Committee tended to concentrate much more on trying to contend for amendments to the scheme that would be in their individual best interests. 
Perhaps one great advantage of the current select committee process is the fact that the science is on the table. One of the good things about the select committee is that we heard from reputable scientists including representatives of the Intergovernmental Panel on Climate Change and we have been able to form a view—pretty much around the table perhaps with one exception—that that science is reputable. The fact that the Intergovernmental Panel on Climate Change reports its concerns and its finding that sea levels will rise between 18 and 59 centimetres by 2100 is something we should be concerned about. The fact that its findings are endorsed by reputable academics and scientific organisations the world over is something that will be useful to see likely recorded in the committee’s report back to the House. 
Earlier today during question time in the Chamber we heard reference to the International Scientific Conference on Climate Change. Given its report if anything it is clear that the Intergovernmental Panel on Climate Change has been conservative in its findings. Rather than sea level rises of between 18 and 59 centimetres we might be looking at something like rises of between 50 and 100 centimetres. There was also World Health Organization research in the International Scientific Conference on Climate Change report about 150000 extra deaths 85 percent of which will be of young children occurring in low-income tropical countries as a result of the effects of climate change. Some of those countries are in our neighbourhood in the Pacific an area we have always expressed concern for. That is something we should be very worried about. 
Some of the members present in the Chamber today were also present at a recent science forum. I think the Assistant Speaker Mr Roy was there. We heard a presentation from an eminent academic at Otago University who talked about a phenomenon that was new to me: the increasing acidification of the oceans thanks to human-related climate change. Obviously it is a good thing that the oceans absorb carbon dioxide. They have acted as an effective sink to date and global warming would be a much worse phenomenon were it not for that propensity. But no system is closed and one of the results as we heard of the ability of the oceans to absorb carbon dioxide is that their pH has been decreasing. From 1751 about the time of the Industrial Revolution and also coincidentally about the time when records started to be kept to 1994 the pH of the ocean is estimated to have decreased from about 8.179 to 8.104. We heard that in about 30 years we might reach a tipping point. It is not a uniform tipping point because different parts of the ocean acidify at different rates but the concern is that those organisms that require calcium carbonate to construct their cell coverings or skeletons will not be able to do that any more in an acidified ocean meaning that a cascade effect up the food chain seems inevitable. 
I will respond to the observations that have been made about the special select committee by saying that a lot of the material that we heard was the relitigation of line call judgments. Perhaps it would be interesting to recall the Minister’s recount of history over the last 15 years on this matter. We have relitigated a lot of that history. It is now down to a number of line calls. I really hope at least for selfish personal reasons but also in the national interest that we do not have another select committee where we rehash these questions because I think it is becoming clear what we need to do. It has also become very clear that the science has to be treated as being beyond dispute. 
Looking forward we have to get over the problems we have with climate change policy at the moment. The ACT Party and the National Party in their coalition agreement—or their support agreement or whatever the correct term is these days for such agreements—said they would put the emissions trading scheme on hold then there would be a special select committee and then perhaps there would be legislation depending on the findings of that exercise. Well as one of the ACT members at the select committee remarked ironically one day—in terms that I will not repeat in the Chamber—that is not quite what happened. The bit about putting the emissions trading scheme on hold did not happen so what we have is the problem that we now face in the House whereby the legislation has been allowed to run on as it is unamended yet we have the select committee looking at broad questions as to the design of an emissions trading scheme not as it happens at the detail of the substantive legislation. 
For some reason that is not a term of reference of the select committee. But the broad questions around design as well as the science and whether to have a carbon tax or an emissions trading scheme are the things we have been debating in Parliament while at the same time the foresters truck on with no one to trade their credits with. The stationary energy sector and the industrial processes people have no allocation plans and no certainty about how they will be affected by the scheme except for the fact that the law tells them they will come into the scheme on 1 January. They are having to try to plan their businesses on that basis. 
We cannot go on like this. It is absolutely clear that this is a policy fiasco. It is up there with in my view the tax breaks that have been put in place for offshore minerals exploration; the repeal of the moratorium on future construction of baseload thermal generation plants; the rescinding of the phase-out of the energy-inefficient incandescent light bulbs; the failure to promote the allocation plans that I have referred to as required by law; and the scrapping of the Fast Forward fund and the research and development tax credit. That after all was how the country was going to pay for the technological adaptations that everybody knows that agriculture needs to undergo in order to get into the scheme and get its emissions down after 2013. It will be through the technological advances that we need to fund that farmers will be in a position to do what we all know they need to do. The fiasco is also up there with the repeal of the biofuels obligation. 
Labour has made an offer as is now public knowledge to try to get on reach some common ground and get out of this policy fiasco that has become climate change and energy policy in New Zealand. I am very optimistic that with goodwill on all sides we will be able to get out of this mess. Certainly Labour will be devoting its efforts to that end. 
LOUISE UPSTON (National—Taupo) 
: 
 I rise in support of the Climate Change (Response Emissions Trading Forestry Sector) Amendment Bill in its third reading. We have heard from Minister Nick Smith and Charles Chauvel who have had a conversation looking at the wider issues of climate change but I want to take the discussion back to the bill and what it will mean to have it passed. Having forestry in the emissions trading scheme is a world first so it is critical that we get it right. 
The bill delays the reporting requirements under the emissions trading scheme and publication of the allocation plan by the Government because the Emissions Trading Scheme Review Committee process is yet to be completed. As previous speakers have said it is critical that we get it right. It is really important that the select committee completes its important work and does not rush it and the bill allows the industry to take a breath. The current law under the Climate Change Response Act requires foresters to have reported any deforestation during 2008 by 31 January 2009 and for those owners who have small forestry blocks to apply for exemptions by today—30 June. We have spoken about the fact that those dates are unreasonable given that the select committee review has not been completed and there is a lack of public awareness of what they are required to do. It is important that we protect the public from being in breach of the law or being adversely affected. That is why it is really important that this bill is passed to change the date so that those forest owners are not breaking the law and it is great to see widespread support in the House for this bill. 
I want to recap the three main elements. First the existing law requires any deforestation to be reported by 31 January 2009 and we are extending that to 31 January next year. Second the select committee has recommended 1 July 2010 as the last possible date that can be set as a deadline for applications for exemptions. That is for the small forestry blocks of fewer than 50 hectares of pre-1990 forest land. Of course if the date could be achieved earlier then there will be intentions to see whether that can be achieved prior to 1 July. Third the forestry allocation plan for owners of pre-1990 forest land is the compensatory mechanism for the forest land owners who will be subject to liabilities for deforestation under the emissions trading scheme. 
I want to highlight that New Zealand punches well above its weight in what we achieve in the forestry industry and it is really important that we remind ourselves about that. The New Zealand forest industry supplies 1.1 percent of the world’s forest product trade but we have only 0.5 percent of the world’s forest resource and it is really important that we allow our forest owners to do the best they can. They are already doing better than most countries in terms of forestry. It is really important that we protect that competitive advantage that New Zealand forest owners are already delivering. The forestry sector contribution to GDP is 4 percent and forestry makes up 12 percent of all New Zealand’s export earnings. It is of course a large employer in many areas across New Zealand. We have to make sure that we change the bill in the context of how important the forestry industry is. Proportionately New Zealand has one of the largest areas of protected natural forest in the world with nearly 6 million hectares. The forestry industry also contributes significantly to Maori employment and economic advancement. Ten percent of the Maori economic asset base is in the forestry sector so it is important that the forestry sector is on board with these changes. 
National believes that New Zealand as a responsible international citizen and as a country that values its clean green environment must act to reduce its greenhouse gas emissions. I want to talk for a moment about the actions that this Government has been taking. We have allocated $323 million to the home insulation fund and $36 million to the bio-diesel grants programme. We will be introducing legislation to exempt light electric vehicles from road-user charges. I am involved with the Local Government and Environment Committee that is making changes to the Resource Management Act including the renewable energy consent process as well as working on the national policy statement for renewable electricity generation. So we can see that this Government is working hard to forward what we need to do in terms of protecting our clean green environment for our generation and for those to come. I am delighted to support the third reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. It is important that we get it right and get it done well. I commend this bill to the House. 
Hon MITA RIRINUI (Labour) 
: 
 I rise to take once again a short call on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill and to reiterate the Labour Opposition’s support for the bill. However Labour is supporting this bill provided the Government replaces the provisions with the dates set by Order in Council with the dates specified in the legislation. 
This bill will provide some certainty for the forestry sector which is quickly losing confidence in the National Government because of its lack of direction on the emissions trading scheme. The future of the scheme is still uncertain. The legislation is still before the Emissions Trading Scheme Review Committee and the Government has failed to outline a clear plan of how it will amend the emissions trading scheme legislation. We need to ensure that the scheme has real integrity. 
Labour has taken the responsible approach and sought to find common ground with the Government. Labour is taking this responsible stance because it recognises the importance of consensus around the emissions trading scheme. It is a crucial part of ensuring New Zealand moves towards a path of long-term low carbon economic growth and uncertainty cannot be allowed to continue. The Labour Party has offered to have talks with the Government about whether we can achieve bipartisan certainty on the wider questions around the emissions trading policy and Labour will approach this task in good faith. We do so with the desire to achieve a system that will be durable and in the best interests of not only New Zealand industry but also the New Zealand environment. The National Government’s policy has been to stall and delay and it has cost New Zealand certainly in terms of confidence. This complete lack of direction and inability to provide any form of credible leadership is costing New Zealand dearly in terms of its reputation. 
The Government has made New Zealand the laughing stock internationally for its constant hand-wringing and flip-flops on the emissions trading scheme. Just the other day Minister Nick Smith came up with another excuse to further delay any progress on climate change policy. The Government negotiator told representatives at the Bonn Climate Change Talks that New Zealand would not confirm any 2020 pollution reduction target until it had undertaken public consultation. This announcement continues the parade of other excuses that he has used for not setting a target and amongst those excuses have been that the Government is awaiting new data harmonisation with Australia and investigation of a carbon tax. The list goes on and it becomes less credible and less consistent. 
New Zealand needs certainty over how the Government will respond to the threat of climate change and greenhouse gas emissions. There is no economy-wide plan to deal with climate change and the challenges it presents. Instead the National Government has caused haemorrhaging of jobs and investments and uncertainty. The Government’s policies have brought the emerging carbon market to a halt. A major opportunity for our country to maximise our geographic skills base and our language and time-zone advantages were thrown away when the emissions trading scheme was put on hold. The same policy has cost us enormous international investment in the forestry sector along with hundreds of new jobs while 8 million seedlings rot into the ground as stated by previous speakers. 
Thanks to the Prime Minister’s failure to lead and his surrender to climate change extremists—in this case the ACT Party—there is no prospect that National’s promise of passing the amended emissions trading scheme within 9 months of taking office will be kept. Due to the National Government’s failure on climate change policy Labour has offered to assist to make some responsible amendments to the scheme. There needs to be certainty around the timing of the scheme instead of the current situation of confusion caused by the Government. 
I have heard previous speakers in the House today make reference to the interests of Maori foresters and landowners in general. A major event will take place this weekend when a number of Ministers and Labour MPs attend the hand-over ceremony in Turangi of the CNI Iwi Holdings assets. I am sure that part of the discussions that will take place on the day will be on the uncertainty around the emissions trading scheme. While in Government Labour provided a high level of confidence that it had a clear pathway ahead on the scheme. That is no longer the case and I am sure that question will be put to Ministers of the Crown when they attend the hand-over ceremony this weekend. 
That is my contribution to the third reading of this bill. The fact that there is a high level of uncertainty amongst our foresters and landowners particularly Maori needs to be made clear in this House. Thank you. 
NICKY WAGNER (National) 
: 
 I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill in its third reading. It is great to see so much support for this bill. It is extremely positive to have support right across the House and this consensus is a really important step towards a new reshaped emissions trading scheme bill that will be introduced into the House later this year. 
The cross-party Emissions Trading Scheme Review Committee is working hard and tonight we have heard my colleague Hekia Parata tell us how complex the discussions have been. We are all very well aware that this work is taking time but we believe that it is time well spent if it means we get an intelligently-thought-out and well-supported sustainable emissions trading system. 
Climate change is a pressing complex global issue and the cost of getting the legislation wrong is high. Governments around the world are struggling to find the best way to cope with greenhouse gases and global warming without crippling their economies. In a time of international recession finding workable solutions is even more difficult. We want to make sure we get a good emissions trading scheme but we do not want to get it at the expense of our economy. New Zealand is committed to making emissions reductions but we want to reduce those emissions in ways that result in the least cost to our society and the least cost to our economy. We need to capitalise on the Kiwi can-do attitude and to focus on New Zealand’s creativity and innovation in order to develop new ways to manage our lives our organisations and our businesses so that we can reduce our greenhouse gas emissions and we can protect our environment. 
As we know New Zealand has a very unusual greenhouse gas profile. For a developed country it has a uniquely high percentage of agricultural emissions. Almost 50 percent of our greenhouse gases come from the farm in comparison with other developed countries which usually have only 12 to 15 percent of their emissions from agriculture. Unfortunately our emissions profile is particularly difficult to manage. We will of course be using all our expertise and New Zealand has a good deal of expertise in research and development in the agricultural and forestry sectors. We will use this expertise to try to reduce these levels. New Zealand will lead the development of an international research centre focused on greenhouse gas emissions from the agricultural sector. This will be a great contribution from our country to the global issue. 
We will also be doing everything we can to tackle the other major areas that produce greenhouse gas emissions in our society: energy use and transport. One of the most vital things we need to do is cut back on our use of fossil fuel energy generation and we can do that; we can do it in several ways. 
Last week the Prime Minister announced the new home insulation fund Warm Up New Zealand: Heat Smart. I have to say that it has been particularly enthusiastically received in my home town of Christchurch. The combination of a cold climate old housing and an air pollution problem makes Christchurch a prime suspect for more insulation. Christchurch people will enthusiastically support the insulation fund and its clean-heating capacity. It is lucky that the Government has announced in the Budget that it is spending $323 million over 4 years to retrofit 180000 homes with insulating and clean-heating devices. The amazing thing is that over half a million New Zealanders will benefit from the scheme. They will benefit by using less energy and by keeping themselves warmer and drier. Insulation and clean heat will also cut greenhouse gas emissions from those homes and improve the carbon footprint of our cities.  
The Government is also focusing on renewable energy by working on the national policy statement for renewable energy generation and by streamlining the Resource Management Act processes. I have been working hard on that committee the Local Government and Environment Committee and we are convinced that the new processes will also improve the renewable energy consent process. Increasing renewable energy will allow a decrease in the use of fossil fuels to generate power which will cut our emissions. The bigger the percentage of renewable energy the smaller our greenhouse gas footprint.  
To help curb greenhouse gas emissions from transport the Government is supporting alternative fuels and transport options by allocating $36 million to a bio-diesel grant programme. We are also introducing legislation to exempt light electric vehicles from road-user charges. Electric vehicles are becoming increasingly more common and much more cost-effective. Their exemption should make them even more attractive. I have to say that my blue electric scooter is a fabulous vehicle for an inner-city electorate. 
Hon Steve Chadwick 
: It’s not a mobility car? 
NICKY WAGNER 
: It is an electric scooter. It is fun to drive it is almost silent in a noisy city and I never have any problem finding a park. 
New Zealand is a country that values its “clean green” brand. Our two major industries are predicated on having a quality environment. Tourism and agriculture lean heavily on our natural environment and we must understand that tourists are the first to appreciate clean green beautiful New Zealand. If one is buying food from a country one wants to make sure that the country is a safe place in which to produce food. 
New Zealanders identify closely with the natural environment and want to be responsible when it comes to climate change. Managing climate change and creating an emissions trading scheme is a complex difficult task. New Zealand has had a chequered past in trying to develop a successful response to managing greenhouse gases. The consensus that is developing in the House augurs well for the development of a long-term sustainable and successful emissions trading scheme. 
Getting back to the bill forestry is an important part of our environment our economy and our response to climate change. Thank you Mr Assistant Speaker Roy. 
STUART NASH (Labour) 
: 
 I rise in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I agree with the previous speaker Nicky Wagner: we all value the “clean green” image of New Zealand. It is part of our competitive advantage. I spoke a little bit about that in my previous speech. But I remember standing here about 6 months ago debating legislation to build thermal power plants. Am I wrong? Have I forgotten something? Have National members forgotten that legislation? We talk about clean green New Zealand and an emissions trading scheme is a very important part of that. Forestry is a very important part of it but this bill delays the scheme so I am not too sure whether that was a speech from us or from National. 
Mr Foss was right when he stood up and said that this bill provides certainty. No one doubts that. This bill does provide certainty which is what any industry especially an industry with a 30-year growing cycle requires. The forestry industry requires certainty. Is that not right? The people of Tauranga require certainty and I am sure they will get it in another 2½ years. But what is certainty when the industry believed it already had certainty? The message the forestry industry formerly had was that the deadline was 1 July 2009. That was the reality. That was the industry’s certainty but suddenly National blew it out of the water with this bill. Certainty is good; members should not get me wrong. At least now the industry can take a deep sigh and as I said before it can say “At least now we know that Labour is the true friend of the forestry sector and they will give us certainty. They had given us certainty but I suppose we have got to make do with these characters for another 2½ years.” 
One thing I will comment on is the fact that Nikki Kaye stood up and said that emissions had grown by 14 percent. But she did not talk about the fact that the economy had grown by 50 percent. Amazing! I like Nikki Kaye. Nikki and I went to Ethiopia together. We were both very privileged to visit a country and an economy that was so far away from New Zealand in every single aspect. We went with Mr Bridges as well. It was a great trip a wonderful trip. I almost converted them to cross the House and join us in Labour actually. In fact I thought I had. Nikki Kaye stood in front of parliamentarians from about 170 countries and gave an impassioned speech about the wonderful things we were doing in New Zealand about climate change. She stood up there and said what global leaders we were in terms of climate change what a fantastic country she came from how she represented the younger generation and how climate change was going to be part of our competitive advantage. It was inspiring. It was not quite a Lange speech because she is a Tory and she will never reach that stage. No Tory can speak like Lange with the passion he delivered about nuclear ships. But hers was a speech from which one might have stood there listening and thinking that there was a future leader. In fact when Richard Worth went south I went down to the TAB and put on a sly ten bucks that Nikki would make it into Cabinet. She is good. The new guys should watch out; she is on her way up. Her speech was fantastic. 
After Nikki’s impassioned speech in Ethiopia about what we are doing for climate change in New Zealand I thought she was right onside. I do not know whether Nikki is on the Emissions Trading Scheme Review Committee but I am sure that when Dr Smith said to Nikki—he would have consulted her on this matter I have no doubt because she is a global spokesperson on it—that National was going to delay the scheme by 1 year I am sure she would have said “You cannot do this because I stood up in front of 170 members of Parliament from around the world and said we are global leaders.” But Dr Smith would have said “Nikki I am sorry. I am going to have to overrule you on this one.” I would not have liked to be in that room. Nikki Kaye had said we were global leaders but then I heard her say that we cannot take a global leadership position on global change. I almost fell down because I recalled Nikki’s speech about global leadership— 
The ASSISTANT SPEAKER (Eric Roy) 
: Use the member’s full name. 
STUART NASH 
: —and with regard to Nikki Kaye the emissions trading scheme forestry and the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill I tell members that it played into Nikki Kaye’s hands. Nikki talked about global leadership and then stood here and said we cannot take a global leadership position. I was very disappointed in Nikki Kaye—very disappointed. 
I will tell members what Labour did. We prioritised. Nikki Kaye—let me say Ms Kaye—said that emissions had grown but I will tell members what Labour did. Labour came in and prioritised and said we had inherited a shattered economy. We had inherited an economy in the doldrums. It was diabolical to the point where we raised taxes and people said “Thank goodness! We will have a decent health system and a decent education system.” Well of course the economy was shattered because Bill English had been the Minister of Finance. It is like history being repeated is it not? It is like déjà vu. Oh my goodness me! But Labour took our economy which was in a state of disrepair and rebuilt it. 
Then we stepped back and asked what was important for New Zealand. How did we define ourselves? We had done it for nuclear ships because Labour is always the party that raises identity questions. We stood up and said that on emissions trading greenhouse gases and carbon zero we could be world leaders. Once again we grabbed that mantle with both hands and took it forward to the world stage. We rose above everyone else and we were leaders. We were global leaders and people knew that. People looked at Helen Clark and said she was a woman destined for global leadership. What happened? She has fulfilled her ambition; we were on our way to fulfilling our potential. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
STUART NASH 
: It is good to come back after dinner and get straight back into this debate. I was saying how disappointed I was because I had been overseas with Nikki Kaye and she had stood up in front of MPs from all around the world and said how great it was that New Zealand was leading climate change. She had said that we were global leaders. Yet about an hour and a half ago as I sat here I heard Nikki Kaye say that we cannot lead global climate change that we are not leaders in emissions trading and that we cannot do that. I was so disappointed. I had thought that here was a young National MP who was a person of her word but true to form she could not say what she had said earlier. 
But the worst thing was when Louise Upston stood up and said that there were people in Taupo who did not know what to do with their land because of this legislation. She said they did not know whether to put their land into dairying or forestry. Goodness me with all due respect to Louise— 
Amy Adams 
: Ms Upston! 
STUART NASH 
: —I am sorry Ms Upston—I think that she should go and talk to the landowners in Taupo because I have no doubt that they know what to do with their land. In fact if the emissions trading scheme had been introduced when it was supposed to be introduced those landowners would have had a lot more certainty and they would have been doing what they are supposed to be doing now which is making the best use of their land. It was all a shame really; she showed about as much energy as everyone else over that side quite frankly but that is OK. 
But I would like to say what forestry can do for New Zealand. I am a huge fan of forestry. Forestry is the way forward for this country because it is so innovative. 
Amy Adams 
: Because it is so wooden! 
STUART NASH 
: I say to Ms Adams from the  
The Addams Family 
 that we can actually farm for carbon. Gone are the days when we planted trees to cut them down for timber or pulp—we farm for carbon. In fact every time that member opens her mouth the emissions trading scheme goes through the roof because so much hot air comes out as I think Mr Hughes would agree. I fully support this bill; I just wish we had been a lot bolder in doing what we said we would do—in fact not “we” but what those guys opposite said they would do but did not. 
I used to write forestry plans for farmers in Taranaki. I used to advise them on the best use of their land because that is what it is about in our country. We have to optimise the use of our land. I can tell members that the plans I would write today would be completely different from the ones I wrote 10 years ago because there are so many different uses for forestry these days. Not only do we plant for timber which is what we have done for 140 years but now we can also plant in order to farm for carbon. It is absolutely fantastic. That is a viable part of the industry and in a way it could be the saviour of the industry because with marginal land in the past— 
Amy Adams 
: How many people does it feed? 
STUART NASH 
: —as Ms Adams would know—we would plant forestry out in the backblocks but now we can plant for carbon. I tell members that if this bill had gone through when it was supposed to then people could have started to plant for carbon in a month’s time. It will now be in 13 months’ time and that is a shame. This is a Government of inaction but that is OK because it has only 2½ more years. 
One of the great things we can now do as well is get an economic rent for marginal land. It is a wonderful opportunity. I personally believe that forestry will undergo significant growth due to the emissions trading scheme. I for one as Labour’s associate spokesperson on forestry will be looking at that in partnership with the industry. Labour is a party that goes out and talks to industry groups. We find out what they want and we work closely together so that we can come up with schemes that work. There are some great innovative schemes when thinking outside the square in which we can really drive forestry growth. 
So I say “Well done!” to the Labour Government for getting the emissions trading scheme up and running in spite of ACT and Mr Hide. Can members imagine Helen Clark going into coalition with someone who is a global-warming doubter? I just wish that this Government had been bolder. As Mr Chauvel said there is another broken promise but I do support the bill because at least now the forestry industry will have a little bit of certainty. It is a pity this certainty will not arrive next month it is a pity that it will arrive only in 13 months’ time but I support the bill and so I commend it to the House. Thank you. 
Dr KENNEDY GRAHAM (Green) 
: 
 I rise to address the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill which pertains to forestry. I begin by reaffirming that the Green Party will vote for the bill but let our vote not in any way mask our dissatisfaction with the Government’s climate change policy and this country’s recent record on climate change. Last week and again this afternoon my colleague Jeanette Fitzsimons critiqued the proposed bill for what it was. For over a year now the foresters of this country have cried out for predictability to assist them in their business decision-making. For the past 8 months the Government—this party of business—has failed to provide that. Tonight with barely 2 hours of parliamentary time remaining the Government seeks a “get out of jail free” pass. It has pressured itself into passing a hasty amendment to narrowly avoid being in breach of the current emissions trading scheme law that was enacted last year. This simply reflects the disarray the Government has worked up for itself in climate change policy and the resulting shameful mess that passes for New Zealand policy on climate change in 2009. In fact it is a tough call to apportion relative weight of liability between Labour and National Governments in this respect. Each gets the “Fossil of the Year” award. 
The purpose of my intervention tonight is to place our broader climate change policy in the context of the latest scientific findings of the International Alliance of Research Universities. The alliance’s report is not just the work of the University of Copenhagen as the Minister seemed to believe; it represents the combined work of the Australian National University Yale and the universities of Oxford Cambridge California Peking Tokyo and Singapore. It involves the contribution of Dr Pachauri Director-General of the Intergovernmental Panel on Climate Change of Lord Nicholas Stern whose economic report of 2007 gained global attention and of the Prime Minister of Denmark which will be hosting the Copenhagen conference in December this year. It is as a result of the work of 2500 researchers from 80 countries many of whom are part of the Intergovernmental Panel on Climate Change. And contrary to the assumption of the Minister it has been properly peer reviewed by the Earth System Science Partnership. The Minister tended to be slightly dismissive of the report in question time this afternoon but he was gracious enough to say that the report would be “taken into account” in the Government’s future deliberations. This is just as well as the report is destined to form the basis on which the Copenhagen meeting will rest its decisions. 
So let me highlight the main points in that report which my colleague Metiria Turei tabled this afternoon for the benefit of the Minister his Government this House and our country. Let me cover excerpts from the executive summary and the conclusion. In the executive summary the report states: “Recent observations show that the greenhouse gas emissions and many aspects of the climate are changing near the upper boundary of the IPCC range of projections. Many key climate indicators are already moving beyond the patterns of natural variability within which contemporary society and economy have developed and thrived. These indicators include global mean surface temperature sea-level rise global ocean temperature Arctic sea ice extent ocean acidification and extreme climatic events. With unabated emissions many trends in climate will likely accelerate leading to an increasing risk of abrupt or irreversible climatic shifts.” The report states: “Temperature rises above 2oC will be difficult for contemporary societies to cope with and are likely to cause major societal and environmental disruptions through the rest of the century and beyond.” In its conclusions the report states: “Climate change is fundamentally different from the environmental problems humanity has dealt with until now. The risks scales and uncertainties associated with climate change are enormous and there is a significant probability of a devastating outcome at the global level. The nature of the climate change challenge demands visionary and innovative thinking. The planetary boundaries concept which aims to define the ‘safe operating space’ for humanity draws on the earlier experience of societies that regulated their own behaviour when knowledge of undesirable consequences became available. Planetary boundaries are defined with respect to biophysical thresholds of the Earth the crossing of which would lead to catastrophic outcomes for societies … The scientific evidence strongly suggests that there is an upper limit to the concentration of greenhouse gases in the atmosphere or a ‘climate change boundary’ within which humanity should operate to reduce the risks of catastrophic outcomes. Although the precise position is not yet known current evidence indicates that humanity is fast approaching or may have even succeeded the boundary. Thus the need for rapid and drastic reductions in the emissions of greenhouse gases is urgent if serious climatic impacts are to be avoided.” 
It is clear from this report that humanity is facing the greatest challenge of all time. It is not a matter of simply balancing our economic opportunities with our environmental responsibilities as the Government reiterates in a trance-like fashion. This afternoon Craig Foss and Nicky Wagner spoke of New Zealand doing its bit playing our part and being a responsible global citizen. Nikki Kaye identified the concerns of our young people but cautioned that we should not get out of step with other nations. Alas our worst fears are confirmed. We are not leading the field; we are lagging behind. In answer to our questions this afternoon the Minister for Climate Change Issues effectively said that Scotland the United Kingdom and Germany all of which have identified targets from 34 percent to 42 percent simply had it easy. By switching from coal to gas New Zealand in contrast had it tough because of our 48 percent methane component and incredibly because our GDP per capita was relatively low in the OECD. He failed to cite the most relevant statistic of all so let me do it for him. For greenhouse gas emissions per capita Australia had 26 US tons per capita per year the United States had 23 US tons per capita New Zealand had 19 US tons per capita the United Kingdom had 11 US tons per capital and Germany had 9 US tons per capita. The Minister said those countries had it easy and that we had it tough. That is ridiculous. We are the ones that are polluting disproportionately per capita. We are the ones that have the obligation to reduce our emissions. 
Let the Minister’s lament simply be set aside. Let his Government take the lead by getting up to speed with where the rest of the Governments are in setting targets within the next month at at least 40 percent carbon dioxide emissions and 30 percent carbon dioxide equivalent emissions in time for the climate conference at Copenhagen. Thank you. 
HEKIA PARATA (National) 
: 
 Tena koe e te Mana Whakawa. Huri noa i te Whare tena koutou katoa. 
[ 
Greetings to you Mr Assistant Speaker and to you all throughout the House. 
] 
I rise to speak on the third reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I would like to reiterate some of the points that I made earlier this evening about the complexity by which this issue is characterised and the opportunity afforded me as a member of the Emissions Trading Scheme Review Committee which has a number of members who have dealt with these issues one time before and have brought that experience to the table this time. 
One of the abiding features of the process this time round as mentioned by Mr Chauvel was the fact that the select committee agreed by and large on the science. That allowed us to move forward to the set of policy responses that this Government might settle upon in dealing with an emissions trading scheme for New Zealand. A lot of hard work has been done in the select committee and more has yet to be done before that work is finally reported back. 
In the meantime a number of issues have to be dealt with prior to the conclusion of that work. One of those issues relates to technical matters that are the substance of the bill before us tonight. It is noteworthy that New Zealand is the first country in the world to attempt to bring the forestry sector into an emissions trading scheme. Therefore it is important that we provide certainty to a very big player in our economy. The bill provides for a deferral of up to 1 year. This amendment was brought to the select committee by Charles Chauvel and it was supported by the select committee. It allows the allocation plan for pre-1990 forests to be made by 1 July 2010. This allows the forestry sector the opportunity to be more certain about the kinds of proposals that it wants to have considered as part of the allocation plan. 
A second element of the bill is that the tens of thousands of small forest owners people who own forests of 50 hectares or less are required to put their proposals before the Minister for Climate Change Issues. In the Budget this year we made provision for moneys to allow for advice and information to be made available to those small forest owners so that they are able to comply with the bill. The bill before us this evening provides for those two technicalities of timing. None of the rules have changed but the time in which these rules can be met has been extended and it has been done in a way that provides certainty for all those players. 
I do not have a lot to say this evening because much has been said already. But I want to comment a little on some of the concerns that have been raised in the House this evening and to say that I am confident that our Minister is seized of both the science and the range of policy responses that are available to us. He is aware of the many variables that must be weighed and balanced. Contrary to the previous speaker’s view we have to find some balance between our environmental challenges and our economic challenges. This Government is set upon a course of finding that balance. Our Minister is navigating us through the complexities that characterise this area. However it is a challenge that confronts us all whatever side of the House we sit on. In the end we all need to sit on the same side to ensure that what happens is best for New Zealand as a responsible global player. 
This bill is but one small facet. It is one that comes before us now because of timing issues. We are concerned to see that players in the market are able to comply with the law. This bill gives them greater time in which to do that. I am pleased to rise to speak on the third reading of this bill. I commend to the House the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. Kia ora tatou. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 Thank you for the opportunity to speak on the third reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. Unfortunately I was not able to partake in the first or second reading— 
Chris Hipkins 
: Why? 
Hon Clayton Cosgrove 
: Partake? 
Dr PAUL HUTCHISON 
: I detect chicken-like eructations coming from Clayton Cosgrove. Has he got something wrong with him? Or was it from Chris Hipkins? 
Hon Member 
: Call a doctor! 
Dr PAUL HUTCHISON 
: Perhaps we should. He undoubtedly needs help. As I was saying I was not able to partake in the first and second readings of this bill but it is excellent to notice the history of this legislation. The bill was introduced on 18 June. It had its first reading on 23 June then on 25 June it had its select committee deliberations. Today on 30 June we have had the second reading the Committee of the whole House and we are now speaking on the third reading debate. This shows two things: firstly it shows that there has been collaboration between the parties which is obviously good and augurs well for the future of the emissions trading scheme legislation; and secondly it shows the excellent efficiency of the new National Government in getting on with the job. 
I want to refer to one of the points that Dr Nick Smith Minister for the Environment made in his first reading speech. It was that the particular issue around the forestry allocation plan is that it would be nonsensical for the Government to continue to develop and consult on the detail of an allocation plan when such key issues as offsets and other provisions around forestry participation in the emissions trading scheme are being openly debated. It would just create confusion and that is why the Government has gone down this path. It is highly unlikely that the thousands if not tens of thousands of small-lot forest landowners are aware of their obligation to apply for an exemption by the end of this month so it would be unfair on foresters for this oversight to result in their being adversely affected. This is why the bill sensibly provides for that date to be pushed out. 
I also draw the attention of members to some of the comments the Hon David Parker made in the first reading. In my view the previous Labour Government was overdramatic both in 2002 and later in 2008. I recall that in 2002 the Hon Pete Hodgson in the first reading of the Climate Change Response Bill introduced the now infamous carbon police that were described by Professor Joseph of Canterbury University as State-sanctioned trespass. That is just how over the top the members of the previous Labour Government were. They were almost like Templar knights charging out into the semi-darkness trying to save the world. 
Again in 2008 a bill fraught with problems which we all know had many thousands of amendments to it was introduced. They just did not get the balance right. But I note with regard to this bill that Jeanette Fitzsimons in her first reading contribution openly declared that “calculating deforestation carbon losses is a fiendishly difficult … thing to do.” There is no doubt in my mind that from both a scientific and an economic point of view the National Government has done the right thing in reviewing Labour’s emissions trading scheme. The forestry sector is absolutely no exception in that respect. 
Earlier today I gave the opening address at the New Zealand Institute of Agricultural and Horticultural Science forum on behalf of the Hon Wayne Mapp. I mentioned National’s commitment to a centre of excellence on greenhouse gas mitigation research and the development of technology to reduce emissions and improve on-farm efficiency and productivity. If ever there is an area of the climate change issue that New Zealand should lead in it is in on-farm reduction of greenhouse gases. Our potential to both contribute and benefit is enormous in that respect. 
To end I say that this is a technical bill. There has been inter-party collaboration over this bill. Hopefully this collaboration will augur well for agreement on the fuller emissions trading scheme legislation when it is ready for debate later this year. I commend this bill to the House. Thank you. 
Bill read a third time. 
Motor Vehicle Sales Amendment Bill 
First Reading 
Debate resumed from 25 June. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I think when I was interrupted by the adjournment at the end of last week I was in fact responding to an interjection from the member for Tauranga. We were discussing at that stage the benefits of a variety of cars and from memory he was promoting a Mercury Cougar. I have looked at the— 
Hon Clayton Cosgrove 
: What does Christine think of this? 
Hon TREVOR MALLARD 
: Well it was based heavily on discussions that the member has had privately and publicly about the things that are hot and the things that are not. In this particular case it has become clear that that member is cougar bait. He is bait for a cougar. I am very very surprised that when there was a discussion about his favourite cars he did not promote the Cougar in the way that he appears to promote it in its Wellington form as opposed to its United States form. 
I had forgotten about Mercury Cougars. I was never a great expert on cars but I spent a bit of time looking them up on the Internet. Do members know the problem with a Mercury Cougar? The problem as far as Simon Bridges is concerned is that it is a two-seater. It is a coupé. It is not particularly useful for the sort of activity the member was contemplating in his discussions with a number of people about things that are hot and things that are not. [ 
Interruption 
] Does the member want examples of cars that I have had? I have had a wide variety of cars none of them particularly flash. I am not sure anything other than the old Monaro— 
Hon Dr Jonathan Coleman 
: Tell us about the red van you keep in the basement. 
Hon TREVOR MALLARD 
: The red van I understand is one of two Volkswagen Caddies in the country. I have an absolute assurance from the licensed motor vehicle dealer who has since gone broke that this particular one was imported entirely by accident. He did not know. He knew he was getting a Volkswagen van but did not understand about Caddies. He brought it in from Singapore. It is actually useful because it can take three bikes in the back. I very rarely want to have more than three bikes in the back of my van. Because like the member’s Mercury Cougar there are only two seats in the front three bikes is generally around the limit. 
Does Mr Quinn have any other questions about the van? It is well marked up; it is well known around the Hutt. People think it is— 
Paul Quinn 
: You only bring it out once every 3 years. 
Hon TREVOR MALLARD 
: That is not true. I drive it back and forth to work every day. 
Chris Hipkins 
: The member never spends any time in the Hutt! 
Hon TREVOR MALLARD 
: If the member went to the Hutt Valley occasionally and observed cars out there he would see that— 
Paul Quinn 
: I didn’t see you; I was there yesterday. 
Hon TREVOR MALLARD 
: Were you out there today? 
Paul Quinn 
: Yesterday. 
Hon TREVOR MALLARD 
: The member was out there yesterday. Well I was out there all day yesterday mainly in Petone and Naenae. I did not see him but then no one notices Paul Quinn. Well that is not entirely true. They notice him but if he is around a corner they disappear pretty quickly because they hear him coming. They hear him coming and they take off. I heard that the member has an office. But when is his office ever open? I have been sending everyone who says to me that I cannot help them but asks whether the Government could help them— 
Paul Quinn 
: I raise a point of order Mr Speaker. I am not quite sure what the last 10 minutes have had to do with the bill. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I think the member makes a fair point. The member speaking has been subjected to some interjections and has responded to them. But I think we should come back to the Motor Vehicle Sales Amendment Bill which is before the House. 
Hon TREVOR MALLARD 
: I am not going to dispute your ruling Mr Assistant Speaker but I think a discussion around the relative merits of Mercury Cougars and Volkswagen Caddies is quite relevant to the bill especially when one goes to the fact that some licensed motor vehicle dealers—in fact a lot of them in Wellington—have gone broke and when this legislation passes into law some people who should not be in business will not be in business. 
It is a good bit of legislation—most of it. The amendment to the Act means that it will become more obvious that crooks—the people who should be banned—are banned under this legislation. There is also a further requirement to put the consumer information notices or CIN notices—something that Mr Bridges might know about as well—in the windows of the cars or at least to attach them to the vehicles. That will also be useful. The bill gives additional powers to the registrar. In fact it gives powers that I am quite surprised the registrar did not have already. None of it is illogical; it will help get the industry into line. But if there is one thing that I will remember this debate for it was the timely interjection of Mr Bridges last week. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Kia ora tatou. It was a very good choice of yours to let me speak to the Motor Vehicle Sales Amendment Bill Mr Assistant Speaker if I may say so with no disrespect to Amy Adams who is also seeking the call. For the new members of the House I say that on a couple of occasions in the last few years or so I have mentioned that there is a very important link between car salespeople and politicians. I did some research on this and found that every year without fail car salespeople take up a lower ranking than politicians in the readers’ surveys on the most trusted professions. 
Hon Clayton Cosgrove 
: The  
Reader’s Digest 
. 
TE URUROA FLAVELL 
: In the  
Reader’s Digest 
 survey—that is right—of the most trusted professions for 2009 car salesmen were rated 38 out of 40 professions. Only sex workers and telemarketers were rated lower. Politicians however scored a much more positive rating of not quite as low as 38 or 39 but 37. So we did all right. 
There is another important association between politicians and car traders. I am told that the very first cars in New Zealand arrived in 1898 when a member of Parliament by the name of William McLean who is well known in Maori circles and an engineer by the name of Edward Seager imported two Benz automobiles from France. Under the law at the time the cars had to be treated like traction engines travelling at a walking pace with men walking ahead and behind. But to overcome that problem William McLean sponsored a new Act of Parliament. It was called the McLean Motor-car Act 1898 if members did not know that. The new Act specified I say for the member’s information a speed limit of a massive 12 miles per hour. A century later here we are. We could be considering the “Heather Roy Motor-car Bill” of 2009. Instead this bill aims to promote and protect car buyers. 
Hone Harawira 
: And sex workers? 
TE URUROA FLAVELL 
: No not sex workers. It is an interesting aim one might say in the context of the perceptions of New Zealanders in respect of the levels of trust that one can expect from the profession. 
My understanding is that the Motor Vehicle Sales Amendment Bill would protect car buyers in a number of ways. The bill amends the process for motor vehicle traders to renew their annual registration making it quicker and simpler and thereby reducing compliance costs. It adds a new obligation on trading companies to notify the registrar if a new person becomes involved in the management of the company. 
Hone Harawira 
: The management of the company? 
TE URUROA FLAVELL 
: That is right. Many of the changes proposed in the bill are to improve the operations of the Motor Vehicle Sales Act 2003. That Act introduced a new registration regime for car traders and new disclosure requirements for used cars. It also established the Motor Vehicle Disputes Tribunal to hear consumer complaints against traders. This new bill the Heather Roy bill in effect refines the processes introduced 6 years earlier and tries to improve upon them. The bill requires that car market operators take reasonable steps to ensure used-car traders display the consumer information notice and as other members have talked about the bill removes car market operators from the definition of motor vehicle traders if they provide only a car sales venue and do not sell cars themselves. All of these steps we hope will achieve much needed improvements to protect the safety of car buyers and increase the transparency of transactions between buyers and sellers. The Maori Party has two important points that we want to bring to the discussion. The first point is that overall the number of cars in New Zealand has dropped. New car sales have decreased in number and value both of which impact on the car sales industry. 
Hone Harawira 
: Five votes for. 
TE URUROA FLAVELL 
: Not quite. There has been a 28.7 percent decrease in new-car sales in New Zealand between 2005 and 2008. On the profit side there has been a 17.4 percent decrease in car sales value over the last year. That means that the general age of cars used in New Zealand has declined dropping from an average of 11.28 years in 1999 to the highest yet average of 12.55 years in 2008. Those are all relevant statistics. The need for appropriate practices and transparencies in the interactions New Zealanders will have with used-car traders is therefore even more important as more and more older cars come on to the market. The consequences of the shift are obviously significant when we consider energy efficiency as discussed in the bill concerning climate change which was debated prior to this one. Newer cars are generally more efficient and emit fewer emissions due to engineering improvements. We believe therefore that additional consideration could be given to the introduction of a fuel efficiency emissions standards regime as part of the buying and selling of motor vehicles particularly given that the mean age of cars in New Zealand continues to rise. We support any intervention that will improve vehicle fuel efficiencies and reduce emissions. 
The policy issue that we hope officials give further thought to relates to cost-benefit arguments around new versus second-hand cars which Mr Harawira has quite a lot of. Older vehicles tend to have higher exhaust emissions of harmful pollutants—again the honourable member Mr Harawira is well aware of that—such as carbon monoxide and hydrocarbons. This is partly due not only to the deterioration of the engine’s efficiency as we know but also to the older technology used in earlier engine designs. Older vehicles may also have poor efficiency and therefore create more greenhouse gas emissions for each kilometre travelled than similar new vehicles. All of this needs consideration. 
In closing I say that the second big issue for the Maori Party is the removal of the requirements for private sellers to display the consumer information notice. The Maori Party questions whether this move may raise concern with safety issues in the Heather Roy bill. We will be interested to learn the views of the Minister of Consumer Affairs about this particular amendment bill given that there is a pretty comprehensive review under way of the consumer information notice. Perhaps this amendment may be put on hold pending completion of the review. Despite the barracking from my colleague Hone Harawira tonight there are some important issues emerging from this “Heather Roy Motor-car Bill” of 2009. Such issues relate to transparency and the need to decrease oil dependency in the face of peak oil and efforts to reduce emissions. There are substantive issues requiring further work but despite all of that the Maori Party will certainly support this bill through the first reading in order for that further work to be done. Kia ora tatou. 
AMY ADAMS (National—Selwyn) 
: 
 I also rise to support the Motor Vehicle Sales Amendment Bill. As we have heard already in this debate this bill amends the Motor Vehicle Sales Act 2003 the principal Act. When that Act was brought into force it was designed to focus on consumers: to ensure that their interests were protected that they could operate with some confidence and that they could make informed choices. The principal Act recognised that often we are dealing with consumers who are naive and who are not experienced business people and that particular safeguards needed to be in place. 
The Minister of Consumer Affairs the Hon Heather Roy talked in her speech at the opening of this first reading debate about the necessity for proactive assessment of the relevance and effectiveness of legislation and that is where this amendment bill has come from. I certainly commend her for saying that because I agree with her that it is important that we review our compliance regimes on a regular basis and ensure that they continue to meet our needs. From the 2006 review of the principal Act we now have this amendment bill which does three things. Firstly it reduces compliance where the Act has been shown to be causing unnecessary time and cost to business; secondly it removes loopholes that were found to have put weakness into the consumer protection regime; and thirdly it enhances the power and jurisdiction of the Motor Vehicle Disputes Tribunal ensuring that consumers have efficient and effective low-cost remedies available to them in the instances of disputes. In all three regards I think the bill is to be commended. It has shown up useful ways that we can improve the operation of the law and I commend the Minister for bringing it to the House. 
I just want to talk in a little detail about the reduction of compliance; this is something I have spoken about in the House on many occasions. [ 
Interruption 
] Thank you for that I say to my dear friend. The National-led Government is always focused on removing compliance. Where we can get the cost of doing business down without decreasing the protections for consumers we will support that. This bill has identified a number of key areas in which that can be done. It can be done through getting rid of some double-up in the annual certification and it can be done by getting rid of the consumer information notices in situations that they were never meant to apply to and that they have proved to be of no use in. This bill does those things and I commend it to the House. 
Bill read a first time.  
Bill referred to the Commerce Committee. 
Anti-Money Laundering and Countering Financing of Terrorism Bill 
First Reading 
Hon SIMON POWER (Minister of Justice) 
: 
 I move  
That the Anti-Money Laundering and Countering Financing of Terrorism Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be considered by the Foreign Affairs Defence and Trade Committee that the committee present its final report on or before 15 September 2009 and that the committee have authority to meet at any time while the House is sitting except during oral questions and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
Like the recently enacted Criminal Proceeds (Recovery) Act 2009 the Anti-Money Laundering and Countering Financing of Terrorism Bill is an important part of the fight against organised crime. This Government recognises that those who reap profits from crime are not always the ones who are arrested and held to account by the courts. Conservative estimates put the proceeds of domestic crime at between $500 million and $1 billion every year. This bill will work in concert with the Criminal Proceeds (Recovery) Act by giving law enforcement agencies the right tools to detect and trace criminal profits. Organised criminal groups in New Zealand use sophisticated commercial and financial tools as part of their criminal offending. 
Every member of this House is aware of the destruction caused by the production and sale of methamphetamine—P. This bill will reduce the impact of drug-related crime on our communities by giving authorities more stringent powers to deal with money-laundering in the illegal drug trade. Some may argue that money-laundering is not a problem in New Zealand but unfortunately this is not the case. Last year I am advised New Zealand was used by an offender to launder almost $120 million from Australia through New Zealand and into Vanuatu. 
The Anti-Money Laundering and Countering Financing of Terrorism Bill is also about enhancing New Zealand’s standing on the international stage and increasing confidence in our financial system. As a member of the Financial Action Task Force New Zealand is committed to having a world-class anti - money-laundering and counter financing of terrorism system. Now more than ever our trading partners are looking for stable safe economies. The G20 leaders stated in February that they expected countries around the world to implement adequate anti - money-laundering and counter-terrorist financing systems. 
The bill’s new powers penalties and law enforcement improvements will allow our law enforcement agencies to tackle sophisticated transnational organised crime head on. We are also able to contribute to international intelligence gathering by reporting suspicious transactions through the global network of financial intelligence units. The bill works by requiring businesses that deal with the public to put in place systems that prevent or detect transactions made by those seeking to launder crime-related money. It sets out a number of “know-your-customer” requirements and record-keeping obligations for financial institutions and casinos and obliges the financial sector to report all suspicious activity to the Financial Intelligence Unit. 
For the bill to be a true success New Zealand’s financial institutions and casinos need to work alongside law enforcement agencies to fine-tune their anti - money-laundering systems. The bill provides a flexible and risk-based set of obligations so that businesses can use their discretion to direct resources to the greatest risks. The Government recognises as I know the previous Government did that the bill will place additional costs on New Zealand businesses at a time when many are coming under strain. However without this bill we could face increased costs for Crown borrowing and higher thresholds for New Zealand businesses trying to access international capital as well as the higher interest rates that may follow such increased scrutiny. 
The Financial Action Task Force has been given a new strong mandate by the G20 and is aggressively pursuing its goal of compelling compliance from reticent States. New Zealand stands in real danger of being publicly criticised for its lack of progress to date. This bill will demonstrate New Zealand’s dedication to global anti - money-laundering and counter-terrorism financing efforts. The obligations set out in the bill are based on international best practice and standards developed by the Financial Action Task Force and the Basel Group of bank supervisors. This bill will help protect and enhance New Zealand’s reputation as a stable and preferred place to do business. I commend this bill to the House. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I welcome the introduction of the Anti-Money Laundering and Countering Financing of Terrorism Bill. I thought I would begin with a little story about a bank in the UK and it begins with headline news over a weekend from I think  
The Times.  
One of  
The Times 
’ reporters had managed to undercover the fact that this particular bank had sought assistance from the Bank of England and was receiving that assistance. Instead of having the story led by the bank itself and the fact that that assistance was shoring up the bank because of the headline news it was a bad story for the bank. So then began the weekend from hell for the bank where everyone went online and tried to withdraw as much money from that bank as possible. Of course the server crashed; it was not used to coping with that amount of traffic over a weekend. On Monday morning people went down to the bank and began to queue. This was a very small bank and it had only two tellers in each of its branches so it did not take very long for the queue to form. That queue formed because of the Financial Action Task Force requirements; the anti - money-laundering question the bank had to ask everyone who wanted to pull their money out of their account took a considerable amount of time. 
I raise that example with a certain degree of humour in what I am saying but I think it raises a substantial issue; that is that a combination of events led to what we all now know as the Northern Rock debacle. But part of the problem was the perception of a queue that was created by the questions that had to be asked at the counter. I would like to ask customers—not the customers who turned up to take out their money but the ones who did not turn up—why the hell they did not turn up because people were terrified that they would not be able to get their money out. All I am saying is that when the Labour-led Government contributed to the development of the policy in this area a huge issue was compliance costs and the impact that that would have on the market—and I will leave a lot of that to my colleague the Hon Clayton Cosgrove who was the Minister in charge of that. 
Hon Simon Power 
: A lot has changed since then. 
Hon LIANNE DALZIEL 
: I am pleased that the Minister of Justice is saying that a lot has changed since then. 
I want to put on record that I fully accept the need for New Zealand to meet its obligations even though they are not legally binding in a strict sense. We are a member of the Financial Action Task Force on Money Laundering and we voted in favour of the revised recommendations in 2004. In my view we are absolutely obliged to proceed down that pathway. The approach we adopted when we were in Government though—and I think the Minister has really picked that up in his contribution—concerned those three guiding principles we developed. One was cost effectiveness. The industry should bear the minimum cost necessary to facilitate the effective detection and deterrence of money-laundering. The second was best fit for New Zealand and I think that that is a huge issue. The regime should reflect New Zealand’s unique economy and the actual anti - money-laundering and countering financing of terrorism risks. The third is one near and dear to my own heart: concordance as far as possible with the Australian regime. New Zealand and Australia obviously have a close economic partnership and there should not be unnecessarily disparate obligations. 
One of the things that my colleague Clayton Cosgrove will talk about is the question of cost. The Deloitte’s report was commissioned in order to ensure we had the best possible take on the cost of compliance. That report was developed in probably a slightly more unusual way because we were so concerned to try to get to the bottom of how those costs might pan out but it was intended to provide a guide to key areas of cost sensitivity and also to try to draw from industry itself an indicative response to what the compliance obligations might be. We were flying a little bit blind in that we were not going out there and saying specifically where we were going to end up. We put out some recommendations and some overseas models for people to draw on and some preliminary thoughts on policy direction. Deloitte then solicited costing estimates through a series of interviews with the private sector and again it was asked to work with a hypothetical regime which I think creates an issue about the robustness of the result. However it was quite a significant result and the figures are mentioned in the regulatory impact statement which I will come to in a minute. But essentially the first phase of the reforms relating to bank and non-bank financial sectors and casinos was estimated to cost those industries a total of $96.84 million in establishment costs and $20.67 million per year in ongoing costs. Of the affected sectors the banking sector was expected to bear 84 percent of the start-up cost and 75 percent of the ongoing cost. But again when we look into the trans-Tasman issue we know that the fact our banks are Australian banks means they are already having to comply in some of those jurisdictions. Therefore that does reduce the cost and that was something we took into account when we were considering those facts. 
One of our concerns though was that we wanted to have this bill introduced into the House just a little bit earlier than this. We had the idea that it would be before the Foreign Affairs Defence and Trade Committee when the Financial Action Task Force on Money Laundering team came here. We thought that March or April would have been a really good time to have it there but obviously the Minister is just a little bit behind where we had hoped to be. 
Hon Simon Power 
: I’ve had a bit on. In fairness I’ve had a bit on. 
Hon LIANNE DALZIEL 
: I tell the Minister that he has had that portfolio for what is it 7 long months now? 
Hon Simon Power 
: That’s right; I’ve had a bit on. 
Hon LIANNE DALZIEL 
: Give it back! 
Anyway I want to raise a serious question because I think this is the first time that I have ever seen in a regulatory impact statement as part of the bill’s explanatory note the words: “information deleted in order to maintain the effective conduct of public affairs through the free and frank expression of opinions between officials and Ministers”. I do not think that I have seen that phrase specifically used in that context before. Sometimes when it is used and it is used several times in the regulatory impact statement I can kind of weigh up the sorts of things that maybe officials are providing advice on and that maybe the Minister and Cabinet would not want to have on the public record particularly in relation to some of the options that may have been looked at. 
The one thing that I find really really difficult to understand concerns the question of cost. I refer to page 28 of the explanatory note where the regulatory impact statement states: “The reform is estimated to entail a significant net direct quantifiable cost across industry and government in each of the 2 establishment years of approximately [information deleted in order to maintain the current constitutional conventions protecting the confidentiality of advice tendered by Ministers and officials] per year. However while difficult to quantify the benefits of introducing and passing legislation in 2009 are substantial particularly in terms of protecting New Zealand’s international reputation and associated medium-term trade and other economic objectives.” I think that at some point the Minister will have to explain why that information is being withheld even from the select committee. It may well be that that information will be made available to the select committee in private or in secret but I feel very uncomfortable looking at a regulatory impact statement that provides so little information. That is particularly so when it is followed by a paragraph that refers to “the net quantifiable benefit of the proposed reform” which “could range substantially” so we are told “between a net cost of $17 million and a net benefit of $59 million …”. In my view that is just too wide a breach. I think there has to be some substantial debate in the select committee and again in this House over the cost of the proposals that have been brought before members. With that comment in mind I tell the House that we are happy to support the passage of this bill to the select committee. 
JOHN HAYES (National—Wairarapa) 
: 
 I rise to speak to the Anti-Money Laundering and Countering Financing of Terrorism Bill. As the Minister of Justice has set out this bill will help to protect New Zealand’s financial systems from money-laundering and the financing of terrorism. As a member of the Financial Action Task Force New Zealand is committed to having a world-class anti - money-laundering and counter-financing of terrorism system. It is very important that New Zealand continues to meet international standards and that we do our part in the international fight against money-laundering and terrorism financing. People can be inclined to be a bit offhand about that but I can tell members that time as a bureaucrat in this country taught me that these issues are very alive and well including those in some of our territories like Niue where the Panamanian-based bank Mossack Fonseca and Co. operated at will beyond New Zealand’s control and certainly beyond the Niue Government’s control. 
Hon Lianne Dalziel 
: And the Cook Islands. 
JOHN HAYES 
: It was not only there; it was also in the Cook Islands—and in Vanuatu where these issues have been very very real. The Anti-Money Laundering and Countering Financing of Terrorism Bill will place a number of obligations on the financial and casino sectors. Many of these obligations such as reporting suspicious transactions record-keeping and carrying out due diligence are not new. There is also a necessity to ensure that the telephone system is tied up in this arrangement because it was very easy to set up a company in Niue for example with an 0900 number and talk to a hot voice or something in a recording. A call could be made on a Friday afternoon and the phone left off the hook until Monday morning. The caller would invoice himself or herself via the company in Niue send the cheque to Niue and launder the money that way. It is quiet-intelligence reporting of suspicious activity that is crucial in the fight against crime. We know that the reporting of the Financial Intelligence Unit works. It is used to unravel complex organised corporate crime as well as drug-related crime. 
What is new in this bill is that it uses the intelligence of financial institutions to assist in the fight against crime and that is very very important. Businesses understand the risks of their services being abused by money-launderers and terrorism financers and this Government understands that financial institutions are best placed to manage those risks. This bill harnesses the knowledge of businesses. It asks businesses to undertake an assessment of the money-laundering and terrorism-financing risks and once those risks are understood it asks financial institutions and casinos to prioritise those risks. The response is documented in a well-structured anti - money-laundering and counter-financing of terrorism programme. This way the bill applies an effective risk-based approach in a carefully prioritised and deliberate way. It achieves quiet intelligent suspicious-transaction reporting and it will focus on the highest priorities for detecting and prosecuting crime. If this bill had been in place I suspect a lot less money would have flowed in the direction of the conflict in Sri Lanka over recent years. 
This risk-based approach is the key to a successful and cost-sensitive anti - money-laundering and counter-terrorism financing system. Not only does the risk-based approach provide better intelligence but also it allows businesses to direct resources to the areas of highest priority or greatest risk. Financial institutions and casinos can focus their resources on the products situations and customer types that are the riskiest for the fight against crime. 
We recognise that this bill will cost the financial and casino sector but the risk-based approach means that it will not cost any more than is strictly necessary. This Government also understands that the sector is willing and able as a partner in fighting crime. The bill does not over-regulate this sector through prescription. It primarily sets out the risk-based approach and any other minimum requirements to meet our international obligations. Regulations will flesh out any further requirements that need to be responsive to risk. However the framework will also provide for safe harbours for situations in which risks may be too uncertain. Flexibility is built in to allow related entities to organise themselves efficiently. The bill allows related businesses to collaborate to manage their money-laundering and financing of terrorism programmes. They may join together to form a designated business group with not just members within New Zealand but also with parent or subsidiary companies overseas. 
The overall structure of the regime is one of self-management flexibility and light-handedness with the supervisory support brought by Government through constructive interaction. Let us not forget what my honourable colleague the Minister of Justice was saying earlier: the costs of not proceeding with this bill are high not just in terms of borrowing for businesses and the Crown. The obvious cost of not implementing this bill is that we allow organised crime to profit from criminal activities and our financial banking and investment markets will be awash with criminal proceeds from across the globe. This bill will help restrict the destabilising flow of criminal proceeds through the New Zealand economy and although the bill will not stop the proceeds of crime being generated it will empower financial institutions and casinos with the ability to quietly report any suspicious activity they come across. [ 
Interruption 
] Mr Cosgrove may well be their first target. I commend this bill to the House. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 After that riveting speech made by John Hayes I say I share with the Minister of Justice our support for the Anti-Money Laundering and Countering Financing of Terrorism Bill. In my role as the previous Minister I was initially in charge of shepherding the bill through so I commend him for bringing it to the House. He was right when he said it has taken a long process and period of time to get the bill to this point. I want to touch on one of the reasons for that tonight. It is one that I think the Minister and my colleague Lianne Dalziel also touched on: the issue of compliance costs. 
One of the dilemmas we faced in Government and one of the reasons why we delayed this bill coming to the House was that although we were presented by officials with what I think was a good model I had visited the equivalent anti - money-laundering agency in the US which is chopped up between a number of Government agencies and that had created I have to say a bureaucracy with huge resources to deal with this problem. In New Zealand we took the view that we would use existing Government agencies. We decided not to create another department or agency but to use the existing agencies and as my colleague Lianne Dalziel said to try to minimise the costs. One thing I said to stakeholders at the time was that we did not want a “Rolls-Royce” solution. It is not the case that we could get around this obligation; it is an international obligation and we must take action in order to comply with it. There are international reputation issues if we do not comply with it and I think business accepted that. But business also told us not to put another zero on the invoice. 
It was interesting to talk to some of the Australian banks when we said we wanted to minimise the costs of compliance. It was interesting to note that those Australian banks said to us that if we went below the level of compliance in Australia they would have—because our banks are Australian owned bar one—a trans-Tasman compliance cost. I thought that was an interesting point of view. The officials could not at the time tell us the cost of what they were proposing. I had a high degree of discomfort with that. As I was also the Minister for Small Business at the time I thought it was appropriate that Government agencies should tell us that so we could tell stakeholders what the costs of these proposals would be. The difficulty was about trying to elicit the information from the stakeholders because there was competitive information at stake and many of the stakeholders did not want to disclose their costs. Equally of course if one is trying to consult stakeholders but does not want to pre-empt that consultation by coming up with a rigid framework or a proposal it is difficult to cost what one does not know will occur. 
We put up a draft framework and submitted it to stakeholders but I asked that we get independent advice. We obtained that from Deloitte. As I recall events we met in this building with stakeholders and put it to them that the level of assurance that we wanted to give them was encompassed in the independent costings that Deloitte would carry out for us. My objective was that we could go to business and say that we must do this but that we agree not to “Rolls-Royce” it and to provide business with independent advice that says the compliance cost is as minimal as we can get it substantial though as my colleague Lianne Dalziel has pointed out the dollars are: some $96.84 million in the first phase alone. Ultimately those costs will be passed on to consumers. 
Deloitte did a very good job and looked very closely at the framework of the proposal that the Ministry of Justice had put up and Deloitte provided that level of assurance. In some ways that is quite a good model because Governments Ministers and agencies get accused of ramping up costs. To some extent our joint experience I suspect would be that it is self-evident in many cases that agencies do put another zero on the invoice. But in this case this bill arrives in the House with the confidence of the business community. 
I will not reiterate in the time I have available the points that other members have made; they are valid. Some would ask why little old New Zealand at the back end of the Earth is concerned about anti-terrorism money-laundering and organised crime. It is the case and Mr Hayes pointed this out in his contribution that the smaller a country is often the greater the target it is. There is a perception—and some of it is the truth historically with regard to our Pacific Island brothers and sisters in some countries that Mr Hayes mentioned—that the jurisdictions in small countries are slightly more loose in their rules and that those who wish to prey on their Governments and agencies and launder funds for criminal reasons or for more nefarious reasons in respect of terrorism can actually do that. Although New Zealand is robust in our regulatory framework because of our size we can present a target. 
In the light of my visit to the US last year I commend the unit within the New Zealand police force small though it is for the work that its members do. They are world renowned not only because they have limited resources but also because in a good old-fashioned Kiwi way they are very innovative flexible professional and extremely effective in how they investigate and prosecute the crimes associated with this proposal and this bill. The Americans were particularly complimentary about that unit within the New Zealand Police. 
There was a fear and I have to say it bordered slightly on paranoia on the part of some in the Ministry of Justice that if we did not meet the mark somehow our financial position would be in jeopardy. I am sure the Minister may share the view that the gentlemen and women from the Financial Action Task Force on Money Laundering who came over and audited us would maybe give us a slap across the wrist because the previous Government did not present a bill to the House but we were well on the way towards doing that. I do not share the view that our financial position is in jeopardy. 
Hon Simon Power 
: I toughed it out for you. 
Hon CLAYTON COSGROVE 
: Thank you very much Minister. He toughed it out for us. The Minister shares my view obviously given his support for it. 
I recall that the Canadians were visited by the Financial Action Task Force on Money Laundering folk a couple of years ago when they were within I think a couple of weeks possibly even days of passing their legislation through their Parliament. The eminent men and women from that task force knowing what was going to be passed and knowing that it was certain to be passed gave the Canadians a negative vetting. I know the Canadians were particularly upset about that. I have to say I feel that sort of process is a little over the top. 
I do not believe that war will be declared in a financial sense against New Zealand because this bill has arrived slightly later in the piece. I think we have the advantage unlike some countries historically—countries that Mr Hayes referred to—of having a robust banking financial and legal system with a highly professional and world-class police force to back it up. The intent is made clear by this legislation; it has been brought into the House. I believe it will be passed and I hope that will occur without a great deal of time-wasting being associated with it given that we are bipartisan I believe—at least the major parties—on this issue. This measure is something we must take. Perhaps some people will be of the view that we do not need to do this but it is an international obligation that is visited upon us. 
In this day and age certainly since the infamous time of September 11 it is true that the criminal fraternities and the terrorist organisations have become very very sophisticated in how they can launder and dispose of funds. Indeed when I was the Minister I recall the police made the claim that some in the terrorism sector as it were had found it particularly lucrative to use the generic schemes that organised crime has to launder funds and inject funds into the system and cleanse them so they could be used for nefarious means. We have to fight against that every day. The technology improves and the deviousness of those who want to penetrate our system improves. It is incumbent upon us if we want to preserve the good name of New Zealand as a sovereign State and also to preserve the good name of our financial institutions and the associated stakeholders to ensure that we not only meet our obligations but meet them in a robust way while balancing against that trying to minimise the compliance costs that are visited on business and then ultimately on consumers. 
I commend the Minister for getting the bill to this stage. We support the bill and look forward to its passage. 
JACQUI DEAN (National—Waitaki) 
: 
 I rise to speak to the Anti-Money Laundering and Countering Financing of Terrorism Bill. Intelligence gathering has played a paramount role in every war: the war against money-laundering has been no exception. It started around 20 years ago as an extension of the battleground on the war on drugs and also in the aftermath of September 11 2001. It became fused with the new fight against terrorism of which the fight against the financing of terrorism has become an integral part. With the increasing importance of intelligence in this war the scope for financial intelligence-gathering has grown as well. Legislative developments in this field have therefore risen to unprecedented levels of information collection allocation and dissemination. 
Particularly critical in the arsenal of Governments internationally has been the global network of financial intelligence units fed by a host of auxiliary—that is primary—financial institutions required to report suspicious transactions. This quiet reporting of financial intelligence is crucial in detecting money-laundering and the financing of terrorism. In today’s world one does not need huge sums of money to fund a terrorist attack. Indeed £15000 was all it cost the July 7 London bombers to wreak havoc. 
Tracing terrorism financiers across the globe requires a globally consistent approach to attaching customer information to wire transfers alongside reporting expectations. This bill will place New Zealand in line with the international standards of the Financial Action Task Force on Money Laundering as well as better equipping the New Zealand Police with financial intelligence about our own domestic organised criminal organisations. This bill is important. It is needed and as the House has already heard it will bring in a number of obligations for private businesses. 
The bill will also bring about some changes to Government agencies. This bill will enhance the existing supervisory roles of the Securities Commission the Reserve Bank of New Zealand and the Department of Internal Affairs by making them supervisors of the anti - money-laundering and countering financial terrorism framework. Although the focus of these roles may be new these agencies are all experienced supervisors in their own right having complementary supervisory roles under existing legislation. In recent years both the Reserve Bank and the Securities Commission have had their supervisory roles expanded to better address the needs for responsible and considered regulation throughout the financial sector. This bill is another aspect of the proper and responsible regulation that these agencies find themselves leading. 
Anti - money-laundering and countering financial terrorism supervisors will work with not against the businesses they regulate. Their role is to facilitate businesses putting in place sound and proper anti - money-laundering and countering financial terrorism programmes. However where a financial provider or a casino is being reticent the supervisors are there to spot the gaps in their industries and work to ensure that all the entities under the supervisor are complying with their statutory obligations. Because there are three supervisors there is a need to ensure that there is consistency across supervisors and that the supervisors work together with the Financial Intelligence Unit and each other to support a successfully implemented anti - money-laundering and countering financial terrorism regime. This bill sets out a national coordination committee which led by the Ministry of Justice will ensure that the system beds in effectively and efficiently and will be the forum that all the Government agencies involved in the running of the Anti-Money Laundering and Countering Financing of Terrorism Bill will work through together. 
Money-laundering and the financing of terrorism know no borders. The flow of money through global financial systems is the main focus of this bill. However the flow of cash across borders is also an area of concern. So this bill also addresses the carrying of cash across the border. The bill increases the penalties for failing to declare if one is carrying large amounts of cash across the border. Informal cash couriers are an internationally recognised method of financing terrorism and that is why people coming into or going out of New Zealand must declare if they are carrying more than $10000. As the enforcers of cross-border cash requirements this bill also allows the New Zealand Customs Service to use its pre-existing already scrutinised powers for questions search and if necessary seizure of undeclared or mis-declared cash. 
This bill will help New Zealand tackle domestic organised crime allow New Zealand to meaningfully contribute to global counter-terrorism financing efforts and help ensure that those who are ripping off the New Zealand taxpayer are caught and held to account. I commend this bill to the House. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 I rise in support of the Anti-Money Laundering and Countering Financing of Terrorism Bill. Labour will support the referral of this bill to the Foreign Affairs Defence and Trade Committee. The purpose of this bill is to enhance New Zealand’s anti - money-laundering and countering financing of terrorism framework and in doing so to progress compliance with the Financial Action Task Force recommendations and ensure the robustness of New Zealand’s financial system. 
The Financial Action Task Force recommendations have widespread support and they were established in 1989 by the G7 countries in response to the threat that money-laundering posed to the international financial system. The Financial Action Task Force is a strategic inter-Governmental body. Its broad purpose is to develop international standards and New Zealand with other nations is a member of this organisation. The International Monetary Fund and the World Bank in addition to many other non-governmental bodies work cooperatively with the task force. 
The Anti-Money Laundering and Countering Financing of Terrorism Bill was originally the previous Labour Government’s bill. It was the previous Labour Government that approved the basic framework to underpin New Zealand’s anti - money-laundering reforms and there were compliance obligations in two phases. In the first phase the framework would extend to financial institutions and casinos and in the second phase to certain types of non-financial businesses and professions. It included a regime for supervision monitoring and enforcement of the entities new civil and criminal offences and a set of core requirements including customer due diligence reporting and anti - money-laundering and countering financing of terrorism policies and practices. It also included a set of objectives and criteria to guide ongoing development and implementation of the regulatory framework. The main objectives of the proposed reforms were and remain the effective detection and deterrence of money-laundering and terrorism financing maintaining and enhancing New Zealand’s international reputation and contributing to public confidence in the financial system. 
The New Zealand approach to the reforms is guided by three key principles. The first one is cost-effectiveness. The industry should bear the minimum cost that is necessary to facilitate the effective detection and deterrence of money-laundering. The second is “the best fit” for New Zealand which means that the regime should reflect New Zealand’s unique economy and the risks. The third is concordance as far as possible with the Australian regime. New Zealand and Australia have a close economic partnership and there should not be unnecessary disparate obligations. 
Why did the previous Labour Government delay this bill’s introduction? It was delayed simply because it was necessary to undertake detailed analysis of the costs of compliance. That is what drove the Deloitte report and I am sure that previous speakers on this side of the House have outlined that before me. The bill was planned to have been introduced earlier this year in time for the April 2009 visit by the Financial Action Task Force but the National Government did not meet that timetable. Public input will almost certainly be about the cost of compliance and how it can be minimised. 
Money-laundering is an important issue. It involves transforming money from crime or dirty money into money that has the appearance of coming from a legitimate source and makes the criminal origin of the money difficult to trace. Effective money-laundering is damaging as it allows criminals to mask their activities and makes it harder to prosecute those who undertake it. There are many ways to launder money some of which are sophisticated and complicated. The most common examples include “smurfing” or “structuring” which is depositing cash at various institutions in amounts less than the amount that must be reported to Government and subsequently transferring them to a central account. Another example is currency smuggling or moving funds across borders to disguise their source and ownership by mail courier or body packing often to countries that have strict bank secrecy laws. Others include exchanging transactions or buying foreign currency that can be transferred to offshore banks; purchasing assets with bulk cash which involves purchasing cars boats or real estate in someone else’s name selling the assets and depositing the funds; and gambling which involves buying gambling chips and after placing a few bets redeeming the chips for a casino cheque. 
Money-launderers are very creative at masking their activities as the list I have just mentioned illustrates. The people who engage in these activities do much harm to communities and those who work hard. Looking at this bill compliance with the Financial Action Task Force minimises the threat to business communities from money-laundering and terrorist financing. The overall objective is to reduce crime in New Zealand and therefore to make our communities safer. After September 11 money-laundering became a major concern of the United States’ “war on terror” and here in New Zealand most money-laundering takes place in relation to drug crime organised crime and fraud. Labour welcomes laws that strengthen and prevent the use of such measures. 
Effective anti - money-laundering laws make it easier to detect and investigate money-laundering activities by establishing links between criminal activity and the funds generated by that activity. Restricting the ability of criminals to profit from crime is important and I look forward to further discussion on this at the select committee. Making it hard to engage in organised crime can only be advantageous to New Zealand communities. Here in New Zealand we are fortunate that we do not have organised crime syndicates such as those mafia gangs that include the Russian Mafia the Chinese Triad the Albanian Mafia Japanese Yakuza the Neapolitan Camorra and the Mexican Mafia. 
Hon Simon Power 
: That’s a pretty good sweep. 
CLARE CURRAN 
: Hopefully we do not have many of those here. This bill represents the new international standards that have been put forward by the Financial Action Task Force to prevent and deter money-laundering and terrorist financing. The new legislation will replace the Financial Transactions Reporting Act 1996 which according to the Minister’s press statement no longer reflects international best practice. 
As I said before New Zealand joined the Financial Action Task Force in 1991 and was one of the original members. Domestically a weak regulatory framework in the area of money-laundering and terrorist financing increases the prospect that organised criminals and terrorists will exploit New Zealand’s financial system for criminal ends. This bill attempts to achieve to provide a regulatory framework by offering to undertake due diligence on customers or any person transacting on an account undertaking transaction and account monitoring reporting any suspicious transactions to police and requiring reporting entities to have an anti - money-laundering and countering financing of terrorism compliance programme. I look forward to further discussion on these at the select committee and on how the reporting entities will achieve those obligations. Those reporting entities include banks credit unions currency dealers issuers money transmitters life insurers and stockbrokers and they will be invited to make submissions to the select committee. In a post-9/11 world this bill importantly prevents the financing of a terrorist framework. There is a demonstrated need to pass laws that prevent the financing of terrorist organisations and deter money-laundering. I support the Anti-Money Laundering and Countering Financing of Terrorism Bill at its first reading and its referral to select committee. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 Thank you Mr Assistant Speaker for the opportunity to speak on the Anti-Money Laundering and Countering Financing of Terrorism Bill. Like many other speakers before me I note that the purpose of the bill is “to enhance New Zealand’s anti-money laundering and countering the financing of terrorism (AML/CFT) framework and in doing so progress compliance with the Financial Action Task Force’s (FATF) AML/CFT Recommendations and assure the robustness of New Zealand’s financial system.” I note that Minister Simon Power pointed out that this bill is part of the important fight against crime both in New Zealand and internationally and it goes right through the Pacific itself. I understand that the estimates of losses in New Zealand alone are between $0.5 billion and $1 billion a year. That is pretty significant money. 
Undoubtedly organised criminal groups are using more and more sophisticated methods to launder money particularly in relation to the drug trade. I cannot recount all those different types of organisations that Clare Curran brought up. She might go through them again. Fortunately the Russian mafia the Scandinavian mafia the Triads and the Mexican mafia are not here in New Zealand as far as we know. 
Hon Parekura Horomia 
: Yes they are—over there. 
Dr PAUL HUTCHISON 
: They are over here says Parekura Horomia. Well behind every desk there could be a potential Mexican mafia but we hope not and we hope that this bill will act towards countering that possibility. 
There is no doubt that money-laundering involves transforming money from crime known as dirty money into money that first has the appearance of coming from a legitimate source and second makes the criminal origin of the money difficult to trace. It is then known in the vernacular as clean money. 
Paul Quinn 
: Parekura’s going to tell us about the gangs. 
Dr PAUL HUTCHISON 
: Hopefully he will. Hopefully there will be a contribution from Parekura. 
Fraud and financial crimes have changed and increased as rapid technological development means that our laws become easily out of date and this type of crime becomes increasingly easy to commit. It is very important not to underestimate just how sophisticated money-laundering is becoming through the new technologies as Mr Hipkins is readily agreeing across the Chamber. The bill responds to developments in this area and ensures that New Zealand’s anti - money-laundering and countering financing of terrorism laws are up to international standards. These protections are a very powerful tool in the area of drug trafficking and money-laundering where we have previously struggled to trace and confiscate the proceeds of drug trafficking. I understand that this bill will work in conjunction with the domestic Criminal Proceeds (Recovery) Act 2009. 
Some very important international obligations relate to the bill. The National-led Government is committed to maintaining and enforcing effective anti - money-laundering and countering financing of terrorism laws known as AML/CFT laws. As an active member of the Financial Action Task Force New Zealand has spoken out strongly in support of this commitment as did the previous Labour Government which did not quite get round to culminating the enactment of the legislation along with many other things that it failed to do. We must do our part in the international fight against money-laundering and financing of terrorism. The dominant view is that the strongest anti - money-laundering and countering financing of terrorism laws are those based on the Financial Action Task Force recommendations. We stand at risk of being criticised for our lack of progress in this area to date. That is a serious concern as the G20 has recently given its explicit support to the Financial Action Task Force. The United Nations Security Council recently strongly urged nations to comply with the Financial Action Task Force recommendations. 
I note that my colleague John Hayes mentioned just how realistic the problem is in the area of the Pacific. He specifically mentioned the Panamanian bank Mossack Fonseca and Co. which apparently was operating in Niue for up to 10 years. I understand that they were not quite aware of what was going on and how much it benefited them is not clear but it is a great worry when countries close to us that are so intimately involved with New Zealand are involved. It is very important as this bill goes to the select committee that we think of other Pacific countries—the Cooks Tokelau and the wider Pacific. 
There are a variety of benefits of taking action which include the fact that terrorism is a threat to domestic and international business communities. The measures in this bill protect our business communities against those threats by reducing crime and making New Zealand a safer place. Non-compliance would result in costs to our domestic business sector. That aspect is very important to be aware of. Increased costs of borrowing overseas for both the Government and the private sector would result as overseas lenders perceive the non-compliant country as a greater financial risk. There would be difficulties in the form of increased costs or lost business opportunities overseas for companies from the non-compliant country and difficulties in trade negotiations at a Government to Government level as foreign Governments may be reluctant to extend trading privileges to non-compliant countries. 
Other benefits of taking action include impacts on relations with international organisations such as the World Bank the International Monetary Fund and the United Nations. There is the possible perception that the non-compliant country may be seen as a soft touch for money-launderers and terrorism financers. 
I will end my speech by making a couple of comments on Part 2 “AML/CFT requirements and compliance” which deals with standard customer due diligence simplified customer due diligence enhanced customer due diligence and ongoing customer due diligence and account monitoring. Clearly there will be a balance—there was always going to be a balance—between individual privacy and how far the mechanisms associated with the bill can go. 
The very final point I will make is regarding the cost-benefit analysis. I agree with the Hon Clayton Cosgrove and others who have mentioned that the Deloitte independent cost estimation although it talks about start-up costs of financial institutions and casinos is $97 million to be spread over 2 years but the data indicate an upper cost of $249 million for start-up costs. That is pretty wide. We hope it would be more accurate than that. However this bill is a very important bill and I certainly commend it to the House. 
JOHN BOSCAWEN (ACT) 
: 
 The Anti-Money Laundering and Countering Financing of Terrorism Bill is a bill I was not intending to speak on but I have come back into the House and picked up the previous two speeches—in particular the speech from Clare Curran but also that of Dr Hutchison. 
Hon Trevor Mallard 
: A very good speech. 
JOHN BOSCAWEN 
: It was a very good speech. Clare made three or four key points that came across to me. She talked about the robustness of our financial system she talked about enhancing our reputation as a country and she talked about terrorist organisations and transferring money. I pick up her first point the robustness of our financial system. I have only just come back into the House after spending 40 minutes on the phone talking to a Mr Bruce Graham in Tauranga. Mr Graham is coming up to his 70th birthday. We talked about an issue that a lot of members I speak to have had correspondence on. Some members will have some understanding of the issues but others will have just a cursory acquaintance with them. 
Mr Graham is one of some 13000 to 14000 mainly elderly investors who have lost money through investing in the ING Diversified Yield Fund or the ING Regular Income Fund. The point that Mr Graham made to me is that he has lost part of the proceeds that had been built up over 80 years—30 years of income from the work that his father did that he inherited and 50 years of income from the work that he did himself. He said that his father spent most of his life in England apart from the time he fought in the Second World War. When he came to New Zealand with his young son he said to him: “You’ve got to be able to trust your bank. If you’re in a country where you can’t trust your bank it’s time to find a new country.” So when Clare Curran talked about the robustness of our financial system it challenged me to give this speech this evening. 
Earlier this afternoon I spoke to Mrs Liz Brown the Banking Ombudsman on this issue. I was fascinated to learn that of the 14000-odd people who lost money invested in ING New Zealand Ltd through ANZ some 2800 were advised by advisers employed by or in some way linked to the ANZ bank. Those 2800 people have an advantage over the other 11000 people who were not. They are privileged because they get the services of the Banking Ombudsman. The Banking Ombudsman is someone who can listen to them hear their complaint and adjudicate on it. In that regard they are very lucky because some 11000 people who invested in those two funds do not have that right. As I understand it they might have been able to apply to the Insurance and Savings Ombudsman for consideration but because ING is I understand a subsidiary of ING Australia and the Australian company is not covered by that system they do not have that protection. 
Clare Curran also talked about enhancing our reputation—the reputation of New Zealand—and although I realise that I am drawing a very long bow between terrorism and money-laundering and the situation in which 14000 investors find themselves I think it is an important issue to raise. In some cases these people face the loss of significant parts of their life-savings. They have had an offer made to them by ANZ and ING that they have to accept prior to 5 p.m. next Friday. If they accept that offer of 60c or 62c in the dollar they sign away their rights. Right now there is a Commerce Commission investigation into the activities of those two companies. I am told that it has been going on for more than 6 months and that the Commerce Commission advises that it is likely to continue for at least a further 6 months. It is quite possible that the Commerce Commission will find after more than a year of investigation that there was misleading conduct and deceptive conduct—it may not happen but it is a possibility—and if that were to happen it might give rise to those people being able to claim back their money in full. But anyone accepting the offer by 5 p.m. next Friday is signing away his or her rights to get that upside. Mr Graham said to me this evening that that is blackmail. This bank is saying to its investors: “Sign up take this money take 60c in the dollar and sign away your rights.” I ask today whether that is right. 
Most of us in this House have received emails from the Frozen Funds Group concerning ANZ and ING. It has called upon parliamentarians to speak out against this situation. I have given a number of speeches on the issue of finance companies. I have never discussed this particular issue because I have not had the chance to properly investigate it. The Banking Ombudsman said to me that of the 2800 cases she is entitled to investigate she has had 450 complaints. So about one-fifth of the people have lodged a complaint. Of those 150 have been referred back to the ANZ bank which gives her a file of 300 complaints. Of those 300 complaints 150 have been decided—approximately 50 percent have been decided and 50 percent are yet to be adjudicated on. So we have a sample of 150 cases. What I found fascinating in what Mrs Brown said to me is that she has found in favour of the complainants in two-thirds of those cases. So in rough numbers of the 150 cases that have been decided on 100 have been found in favour of the complainant. Two-thirds of the cases have been found in favour of the complainant and one-third of the cases has been found against the complainant. 
So a person lodges a complaint with the Banking Ombudsman because that person is not happy with the answer he or she has had from the ANZ bank that independent ombudsman looks into it and in two cases out of three she says that the bank has been wrong and the complainant is right and awards the complainant all or part of what the complainant has claimed. Let us imagine for a moment that we had consumer protection law that allowed all 13000 people affected to have the benefit of the Banking Ombudsman; on that rough calculation maybe 8000 people would have a genuine complaint and 4000 would not. 
However it is actually worse than that. Mr Bruce Graham is one of those 50 people whose complaint was declined by the Banking Ombudsman. Liz Brown’s office spent many many months looking into Mr Graham’s case and he was declined. What I found interesting was the circumstances in which he was declined. He was declined because apparently some 30 pages of fine print were attached to his document. He read only the first four pages. Because he had been given 30 pages the Banking Ombudsman was able to point to the fact that he had been given notice—he was on notice and therefore he had no claim. That was despite the fact that he had made it quite clear to his financial adviser at the ANZ bank that he wanted an investment that was safe an investment where he would not lose his capital. He did not need the income but he wanted his capital to be safe. That was the one thing he stressed. He raised it with his investment adviser who I understand was an employee of the ANZ bank. He said “Is this safe?” and she said “It’s as safe as the bank.” His wife witnessed his financial adviser saying that. But one of the reasons he was declined was that apparently the ANZ bank had said to Mrs Brown that its advisers would never have said that. So despite the fact that he is prepared to swear that that was said Liz Brown appears to have favoured the bank. 
I make this point: the KiwiSaver system has default providers. I joined as a member of Parliament and I am with the AXA New Zealand provider. The ANZ bank has privileges as a result of that system. I believe that the ANZ bank and the ING group owe these investors a lot more than what they are giving them. Thank you Mr Assistant Speaker Roy. 
RAYMOND HUO (Labour) 
: 
 I rise to support the Anti-Money Laundering and Countering Financing of Terrorism Bill being referred to the Foreign Affairs Defence and Trade Committee. In the era of globalisation no country is immune from issues such as money-laundering terrorism financing and tax evasion etc. For countries like New Zealand there is often initial scepticism in some quarters that money-laundering or financing of terrorism even exist here. That scepticism may pose a question as to whether this is legislation in search of a problem that will incur additional compliance costs. A straight answer to that question is no and yes; like any other measure legislation will inevitably incur compliance costs. 
Many financial institutions are very concerned about those compliance costs. Earlier this evening I briefly scanned the 132-page Deloitte report that was commissioned by the previous Labour-led Government. The front page of that report unlocked the true cost of compliance. It suggested compliance costs of $111.8 million for initial start-up costs and $42.7 million potential incremental costs per annum. A breakdown of the compliance costs into the two phases shows that the first phase of the reforms that relates to the bank and non-bank financial sector and casinos is estimated to cost those industries a total of $96.84 million in establishment costs and $20.67 million per annum in ongoing costs. Of the affected sectors the banking sector is expected to bear 84 percent of the start-up cost and 75 percent of the ongoing costs. Across most sectors the compliance programmes for account and transaction monitoring and anti - money-laundering and countering terrorism financing are expected to account for around 90 percent of start-up costs and 80 percent of ongoing costs. Phase two of the reforms that covers the New Zealand Racing Board and professionals such as lawyers and accountants is estimated to cost those industries a total of $14.96 million in establishment costs and $22.03 million per annum. 
On the other hand some experts believe that a number of participants surveyed by Deloitte had a moderate view. They thought that the actual compliance costs could be more than double those amounts given in the report. The complexity of the costs of compliance was one of the main reasons why the introduction of this bill was delayed in the first place—if the honourable member Dr Paul Hutchison who spoke previously wishes to know. However it was slightly disappointing that the bill could not be introduced earlier this year in time for a scheduled revisit of New Zealand’s compliance by the Financial Action Task Force on Money Laundering of which New Zealand is a member. 
Currently New Zealand has limited compliance with a number of its recommendations on anti - money-laundering and countering of financing of terrorism. On my take of this bill I see two aspects. On the one hand this bill is largely driven from offshore multilateral party nation efforts to eradicate money-laundering which is led by the Financial Action Task Force on Money Laundering. This was founded in 1989 by the G7. The Financial Action Task Force on Money Laundering issued 40 recommendations in 1990 and completely revised them between 1996 and 2003. The 2003 version of the 40 recommendations among other things requires countries to implement relevant international conventions criminalise money-laundering and enable authorities to confiscate the proceeds of money-laundering along with requirements to implement customer due diligence record-keeping and suspicious transaction reporting. Subsequent to the September 11 terrorist attacks in the United States the Financial Action Task Force on Money Laundering issued nine special recommendations on terrorist financing in October 2004. It broadly extended the application of the 40 recommendations to terrorism financing and introduced new requirements relating to services such as alternative remittance transfers cash couriers and non-profit organisations. Therefore the current financial sector reform encouraged by the 40 recommendations plus the nine special recommendations will now involve measures in detecting and deterring money-laundering and terrorism financing on a scale of intrusiveness not seen before in New Zealand. On the other hand the bill is an essential component in New Zealand’s ability to investigate organised crime to follow the money trail through financial systems and to enable the police to use the Criminal Proceeds (Recovery) Act passed in April to attack those profits. In order to do so the affected sectors including banks finance companies casinos professionals etc. will have to consider some immediate issues such as implementing anti - money-laundering reforms including enhanced due diligence enhanced reporting and fuller record-keeping measures. 
Money-laundering and terrorism financing undermine the economy and creates instability in the financial sector. It is very important for the private sector that New Zealand meet the Financial Action Task Force on Money Laundering standards but more directly failure to comply with those recommendations could result in the Financial Action Task Force on Money Laundering declaring New Zealand a high-risk country for money-laundering and terrorism financing. This would potentially impact on our credit rating and on the cost of borrowing for New Zealand. 
Australia has had anti - money-laundering laws for over a year now. It is now our turn to implement similar measures to enhance New Zealand’s anti - money-laundering and countering the financing of terrorism framework thus strengthening New Zealand’s international reputation and reinforcing public confidence in the financial system. Thank you. 
TODD McCLAY (National—Rotorua) 
:  
I rise to speak on the Anti-Money Laundering and Countering Financing of Terrorism Bill in its first reading. This bill will ensure that New Zealand’s laws against money-laundering and its laws to counter the financing of terrorism are up to international standards. 
We have heard from other speakers tonight about what money-laundering is. It involves transforming money gained from crime into money that appears to be legitimate. It is a process whereby funds gained illegally are cleaned to gain the appearance of having come from legitimate sources. It means that money gained from criminal origins is often difficult to trace. But there is another part to money-laundering; it directly includes legally gained funds of money that are channelled to illegal bodies or organisations or that are channelled for illegal intent. In particular this part is directed towards those people around the world who are involved in terrorism. Not all money that is spent by terrorists is gained illegally. In many cases if one reads the newspapers or looks at the news one will see that there are legitimate companies that pay their taxes but that support unworthy causes that harm and kill people. In 1996 the International Monetary Fund (IMF) said that the aggregate size of money-laundering in the world could be somewhere between 2 percent and 5 percent of the world’s GDP. Those 1996 statistics would indicate that money-laundering ranged in the size of NZ$1 trillion to NZ$2.5 trillion. Let us put this in context. The lower figure of NZ$1 trillion roughly equates to the value of the total output of an economy the size of Spain. 
Fraud and financial crime have changed significantly and increased dramatically as the world’s economies have come closer together. They have come closer together largely because of international agreements and technology. This in turn means that in particular as a result of rapid technological development our laws have become and continue to become quickly outdated. Criminals and terrorist organisations are increasingly becoming technologically competent and increasingly harder to track. 
We have heard in this House the horror stories of the increase of the P trade in New Zealand. It is a trade that harms too many of our people young and old and that does devastating damage to far too many of our families. P is a huge business and it seems to be awash with money in this country. This drug—as with other harmful and illegal drugs and the precursors to manufacture these drugs—is largely imported from countries overseas. The moneys gained from this disgusting trade must moreover move across borders and therefore they must be laundered so that these horrible people can pay others overseas to have these drugs sent to them. 
In August 2005 the IMF put together a report based upon observing the standards and codes in place in New Zealand. This of course was the Financial Action Task Force report which others have spoken about to some degree. I notice when it came to the general situation of money-laundering and financing of terrorism particularly in New Zealand it said that “The main sources of illegal proceeds are considered to be the cultivation manufacturing or dealing in illicit drugs traditionally cannabis but more recently methamphetamines. Fraud offences have also produced significant proceeds.” Well there is money-laundering in New Zealand. I am not sure of the size and scale of it but any that comes from the illegal drug trade is too much and we must do much more about this. 
This legislation is a powerful tool to combat drug trafficking and drug money that is laundered. I think it will add an extra tool to the box that our law enforcement and customs agents can use as they trace and confiscate the proceeds of drug trafficking. Many other countries of the world and blocs of countries have implemented similar legislation to counter terrorism and money-laundering. The European Union countries of the Council of Europe the Caribbean Asia other parts of Europe and South Africa have all created regional task forces or similar organisations to combat money-laundering. Pacific Island countries have also worked closely together on this important issue and the US administration has had laws in this area for many years. 
My colleague John Hayes who has great experience of the Pacific region has raised the issue of a number of small countries. A number of Pacific countries—Cook Islands Niue Vanuatu and a few others in particular—were criticised by the IMF and others as far back as the year 2000. Largely the issue was I think a lack of accountability and not having the proper procedures to control some of the bodies—the companies or banks—that they allowed to be established for use overseas. For example I will look at the issue of Niue. With the help of the New Zealand Government and support from the IMF Niue put in place a number of changes to its domestic laws to outlaw offshore banks and to change their companies’ regimes. At the time one could not—and still to this day one cannot—establish a company in Niue. In fact if one wants to trade in Niue and one wants a company one must establish a company under New Zealand law. But Niue did allow overseas companies—offshore companies and banks—to be in place. When I was the Niue Ambassador to the European Union some years ago the Belgian police called me — 
Hon Member 
: What? Niuean ambassador? 
TODD McCLAY 
I was the Niue ambassador as well as the Cook Islands ambassador but that is not the best part of the story; that bit is coming now. The Belgian police called me and said that somebody had contacted them purporting to be a Niue diplomat. It was not me. When we looked a bit closer we saw that in fact the person seemed to be involved with offshore companies and the money-laundering trade. Through some swift work on the part of the Niue officials and with help from the New Zealand Government and of course Niue’s ever-diligent proper ambassador based in Brussels this man was arrested and is now one hopes in jail. In the case of Niue it was not that the country had any particular intent to flout laws; it was just that as a small country it was difficult for it to control the overseas companies that it had put in place.  
I want to draw to a close because I believe the sooner we get this report to the Foreign Affairs Defence and Trade Committee the better it will be for all of us and the sooner those who see New Zealand as a place where they may be able to launder their illegally gained funds will realise that we are taking this issue seriously. I want to touch just for one moment on another part of the report from the IMF that I raised earlier. In 1989 the then G7 countries came together to create the Financial Action Task Force. This was in response to the threat that they perceived to countries of the world. In that report the task force evaluated New Zealand and said that there was more work to be done. Generally our laws in place were reasonable but in particular to make sure that we were meeting international standards we needed to put in place additional measures. This legislation will do that. I support it and I cannot wait until it gets to the select committee. Thank you. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Kia ora Mr Assistant Speaker Roy. Kia ora tatou katoa i tenei po. I have to say that when our caucus looked at this bill on the Order Paper today the two phrases that stuck out were “Anti-Money Laundering” and “Terrorism”. We were trying to work out what the hang the link was between the two. Be that as it may we suggest that the Anti-Money Laundering and Countering Financing of Terrorism Bill is a pretty formidable title and it is obviously for a fairly formidable area of work. A key strength of this bill is to put in place a process by which we are implementing recommendations from some fairly hefty global documents. Support for this bill will enable Aotearoa to be compliant with three documents as I understand it: the United Nations Convention Against Transnational Organized Crime; the International Convention for the Suppression of the Financing of Terrorism to which New Zealand is a State party; and also to progress compliance with the United Nations Convention Against Corruption signed in December 2003. It also sets in train a process to adopt and implement the Financial Action Task Force recommendations which are widely regarded as the international standard. 
So if the three conventions I mentioned are not significant enough this task force to all intents and purposes is a body that no one would want to mess with. I understand that it has fairly wide membership: some 32 jurisdictions are involved including the European Commission and the Gulf Cooperation Council. We—Aotearoa—have been a member of the task force since 1991 and our performance will be on the line in October 2009 just 3 months from now. In fact it is more than a matter of manners and simple courtesies between countries; the compliance has a slightly more serious shade to it. 
The Reserve Bank in its briefing paper identified that countries that are non-compliant or partially compliant will be considered by a regional subgroup for inclusion on the Financial Action Task Force International Cooperation Review Group which can formally blacklist non-compliant countries. The same briefing paper revealed that New Zealand is yet to be assessed and our level of compliance is significantly below that of other nations with which we typically compare ourselves: Australia the United States and Canada all of which have made substantial progress in implementing the recommendations. So the question of reputation is at stake. If our response to the Standard and Poor’s credit rating is anything to go by reputation is indeed everything. 
The stage is set to take this bill seriously by virtue of the fact that we take our international responsibilities seriously as well. If only that were the case in all aspects! The Government’s inaction and in fact wilful disregard of the Declaration of The Rights of Indigenous Peoples has often been commented on in this House in indigenous forums and in international human rights hui right across the globe. The Maori Party as one would expect places considerable priority on enhancing our international reputation through showing respect to indigenous peoples to tangata whenua and to human rights and in the commitment to the global call for action to end poverty. We will continue to speak out as one would expect about the need to be compliant and to respect our international obligations. 
However we make the point that there needs to be a more robust process so that the Government signs up to such arrangements—indeed like a Treaty-based process. An important variable in any discussion about domestic and international agreements from the Maori Party perspective is the priority of Crown consistency with the Treaty of Waitangi. This is not just a Maori Party commitment; the relationship in the confidence and supply agreement between the National Government and the Maori Party states up front that both parties will act in accordance with Te Tiriti o Waitangi yet this bill is another example of New Zealand’s gaining membership in a forum without Treaty partner dialogue. 
The cost of achieving compliance with Treaty justice is a cost that appears to be left out of the costings included in the preparation of this bill yet we have every detail and more about other costs involved in the implementation of this bill and Mr Huo spoke about that earlier. An independent cost estimation undertaken for the Ministry of Justice in 2008 assessed that the start-up costs for financial institutions and casinos were $97 million over a 2-year information period with ongoing costs of $21 million per year after that. The question of how these costs will be met is expected to be within the banking sector which will bear 84 percent of the start-up costs and 74 percent of the ongoing costs. 
But other costs to the Crown require further attention. There are questions around monitoring and supervising reporting entities the assessment of money-laundering risks at national and sector levels the analysis of an increased volume and variety of suspicious-transaction reports and ensuring adequate coordination of regulatory functions across multiple supervisors. 
As I said earlier this bill and the framework proposed are formidable in their scope. This is where it gets relatively tricky because the costs that banks will pick up will come not just out of the corporate office in Wellington or more to the point Sydney. Adopting the recommendations in this framework will increase business costs to consumers which will be passed on to all ordinary bank customers—all this when banks have already been shown to be overcharging their customers. 
Rahui Katene the Maori Party member on the Finance and Expenditure Committee shared with me some of the extremely critical comments made about the banking sector in its June 2009 report. In the report on the financial stability of the Reserve Bank of New Zealand the select committee noted its surprise that despite the severe impact of the current recession on business and household liquidity bank profits declined only marginally in the past year. The comment concluded: “Some of us consider it vital that banks neither insulate their profit margins nor charge excessively high interest rates at the expense of the real economy and the taxpayers because of the potential adverse consequences for business and households.” 
These sorts of things are very timely reminders to focus on as we think about the downstream effects of compliance with the Financial Action Task Force’s recommendations on anti - money-laundering and compliance financing of terrorism. We clearly have many questions about the bill its impact on Aotearoa and the status or need for complying with the international framework in the first instance. We do however extend the benefit of the doubt to enable a full and frank response to the issues apparent in this bill and it is for that reason that the Maori Party will support this bill to its first reading. Kia ora tatou. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 It is good to beat the member Nikki Kaye to the call and I hope that later in the year the experience can be repeated in a bike race although I am not quite as confident about that as I was about the call. 
I want to have a discussion about money-laundering about the widespread practice that has been well canvassed here whereby money changes from dirty money into clean money through laundering. That is the usual understanding of the term but occasionally clean money turns into what we might describe as disguised or dirty money. A number of members opposite have some experience of this. I think the Waitemata Trust was probably the most widely used money-laundering vehicle within the New Zealand political system. Over $1.2 million in 2005 was laundered through that trust in a very similar way to international money-laundering. The trust was seen as a way of moving cash without identifying the original owners or the intermediate owners. 
Clare Curran 
: Secret money. 
Hon TREVOR MALLARD 
: Well it is not a secret and it is not surprising. I think Buddle Findlay did one such transaction for Labour before the practice stopped; from our perspective transparency and sunlight were very very important in this particular area. I see that as we move forward National seems to be accepting the fact that that sort of money-laundering is inappropriate. It is unlikely to continue in the future and I think that is a good thing. 
Early in my time as Associate Minister of Finance Labour members looked at this area pretty extensively and it is fair to say that we came to some different conclusions from those that we have come to now. 
Hon Simon Power 
: A lot has changed! 
Hon TREVOR MALLARD 
: A lot has changed. The world has changed substantially over that period. The whole electronic banking system has developed in a way that is enormously different from where it was at that time. At that time people who looked at us internationally said that we had a problem in theory but not in practice and to a certain extent that was right; we did not quite fit with the international models. We had a prudential system around our Reserve Bank and the supervision of our banking system was a lot better and that would not have been acceptable in the United States and in the United Kingdom at the time. Clearly times have changed. There is a lot of transparency of the United Kingdom’s banking system as far as the British Government is concerned; it owns just about all of it as a result of the changes that have occurred there over the last 12 months or so. Therefore I presume that it would not have any problems around transparency. 
As a member has said there has been a movement a growth in sophistication both amongst terrorist groups—and that has become very clear—but also amongst drug dealers. Those of us who have slightly more time now were able to watch a television series recently on Terry Sinclair—the Mr Asia series. It was an Australian series that apparently had some relationship with the truth and— 
Clare Curran 
:  
Underbelly 
. 
Hon TREVOR MALLARD 
: The name was  
Underbelly 
; I am never good on the titles or names or things like that. But it showed that 20 years ago there was not the sophistication in the money-laundering system at that particular time. In fact there was a lack of sophistication in quite of few of the approaches taken by Mr Sinclair and a number of other people in that period! But since that time organisations that were there 20 years ago have become much more active and sophisticated—in particular drug gangs. My view is that the ability to follow the money as far as the drug gangs are concerned is very very important. We know from the assets that through even casual observation within our electorates we see accumulating that they cannot have been developed through honest means by the individuals who now own those assets. It is important that we have the ability and as much strength as possible in the regulatory system to dive down under a lot of the fronts that exist and thereby push back against drug dealers in particular but clearly there is the question of terrorists as well. 
Without revealing too much of the previous Cabinet’s secrets I can say that some really interesting debates occurred around proscribed organisations around who should be on the list of international organisations to be regarded as terrorist organisations and who should not. There were some very strong views about organisations that some of us had had dealings with over many many years. Certainly the fronts were very peaceful and the individuals who were involved in them were seen by a lot of people to be making a big contribution to New Zealand. But there were some international suggestions that money being raised for those groups and those communities was finding its way to terrorists of a wide variety of hues—without getting on to the sides of particular debates and battles that are happening in nations around the world. That goes to the question of whether New Zealanders have knowledge of where their money will go when they make donations to seemingly innocent and good organisations because sometimes behind them—sometimes quite a long way behind them and quite well-hidden—are organisations that when we know what they get up to are in fact organisations we should have nothing to do with and certainly should not be financing. 
This is a good bill. It is an indication that times have changed. There is an acceptance of that I think around the House now. There are some things that I would have probably 7 or even 5 years ago regarded as an infringement of individual rights or as a breach of civil liberties but on balance I have changed my view. I think that the majority— 
Hon Clayton Cosgrove 
: True! 
Hon TREVOR MALLARD 
: I have not changed my view about Mr Cosgrove. 
Hon Clayton Cosgrove 
: Nor I about you Mr Mallard. 
Hon TREVOR MALLARD 
: Well I think there is a mutuality there. Our view is that the world has changed we have to stay up with modern methods and that involves some sacrifices as far as our civil liberties are concerned and I think it will be a very good debate to have within the select committee. I do not want to signal automatic support for the bill when it comes back until we have had that debate and heard what the views on it are. Thank you. 
Bill read a first time. 
Hon SIMON POWER (Minister of Justice) 
: 
 I move  
That the Foreign Affairs Defence and Trade Committee consider the Anti-Money Laundering and Countering Financing of Terrorism Bill 
 that the committee report finally to the House on or before 15 September 2009 and that the committee have authority to meet at any time while the House is sitting (except during oral questions) and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
Motion agreed to. 
Road User Charges Amendment Bill 
First Reading 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 I move  
That the Road User Charges Amendment Bill be now read a first time. 
 It is my intention to move at the appropriate time that the Road User Charges Amendment Bill be referred to the Transport and Industrial Relations Committee for consideration; that the committee report to the House by 27 July 2009; and that the committee have the authority to meet at any time the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday of a week in which there has been a sitting of the House and outside the Wellington area during a sitting of the House despite Standing Orders 187 189(a) and 190(1)(b) and (c). 
The road-user charges system has been reviewed recently and I am currently considering the 32 recommendations made to me by the independent Road User Charges Review Group. A separate bill to accommodate any changes that arise from the recommendations of that group is scheduled for introduction later. This short bill before the House tonight deals with two immediate matters that need to be dealt with in a timely manner. 
International opinion is now in agreement that the world faces a climate change problem. The problem of increasing global temperatures is caused by excessive emissions of greenhouse gases including carbon dioxide. Although technology has revolutionised transport and given us the opportunity to grow our economies it has come with a cost: carbon dioxide emissions. 
Technology continues to revolutionise the transport sector. In an effort to stem greenhouse gas emissions Governments are channelling billions of dollars into the development of low-carbon vehicle technology which includes efficient vehicles that run either partly or wholly on electricity. Electric vehicles are cheaper to run use little or no conventional fuel and are more efficient at converting stored energy into motive power. Significant sales of electric vehicles will reduce our reliance on imported fossil fuels and increase the energy security of our transport and electricity systems. Electric vehicles emit little or no toxic substances such as particulate matter and oxides of sulphur and nitrogen. 
In the normal course of events owners of electric vehicles have to pay road-user charges. Although it is an important principle that all road users pay for the costs they impose on the roading network providing an exemption from road-user charges is a way to encourage the change to electric vehicles. This bill gives the Government the ability to create regulations to exempt owners of light electric vehicles from paying between 3.6c and 4c per kilometre in road-user charges. Regulations to bring about an exemption that continues until 2013 are anticipated as soon as the bill is passed. This incentive is consistent with the Government’s intention to support fuels that assist climate change and energy security objectives. The Government has already announced that New Zealand producers and importers of bio-diesel will receive an advantage of up to 42c per litre over petrol and diesel until 2012. 
The second matter in this bill is the issue of giving notice of increases to road-user charges. In July 2008 each of the main centres of this country was brought to a standstill by truckdrivers protesting against increases to road-user charges that were made with no notice. It is reasonable to give notice of road-user charge increases that impose a significant cost on commercial transport operators. This bill proposes that the Road User Charges Act be amended so that operators are given 6 weeks’ notice of any increase to road-user charges. The proposal is supported by the Road User Charges Review Group in its report to me on the road-user charges system. 
This bill also contains a measure to minimise the potential loss of revenue through large-scale pre-purchasing of road-user charges once the notice of an increase is given. 
Hon Darren Hughes 
: More bureaucrats! 
Hon STEVEN JOYCE 
: Good on you! The bill provides that road-user licences for heavy vehicles expire 1 month after an increase comes into effect. Heavy vehicle operators would be required to purchase a new road-user licence at the new rate within the month and would be able to seek a refund for any unused portion of their previous licence. 
The licence expiry provision is a reinstatement of a similar provision in the Road User Charges Act that was repealed by the previous Government in 2002. Its repeal was in response to administrative difficulties caused to 400000 or so light vehicle owners who had the inconvenience of having to relicense their vehicles 1 month after an increase in road-user charges. The licence expiry provision in this bill avoids that administrative burden of relicensing a light vehicle fleet because it applies only to heavy vehicles. Owners of light vehicles under 3.5 tonnes including sport utility vehicles and vans will be able to pre-purchase road-user charges at the lower rate—because this is a very practical Government—but they are unlikely to do so on a large scale. 
This bill deals with two specific issues on road-user charges. The proposed amendments are straightforward and I would like them to be dealt with speedily by this House particularly so that the statutory requirement to give notice of road-user charges increases can be in force before the next scheduled increase to road-user charges on 1 October 2009 which is in regard to the smaller national increases in road taxes to replace the regional fuel tax system. I commend this bill to the House. 
Hon DARREN HUGHES (Labour) 
: 
 I rise to speak to the Road User Charges Amendment Bill moved by the Minister of Transport who also subtly made reference to the fact that he intends to move an instruction to the Transport and Industrial Relations Committee that it report the bill back by 27 July. That date is not too far from today but we heard no explanation or justification from the Minister as to why the bill has to be dealt with as quickly as he intends. That is a constant theme of this Government. The few bills that are sent to a select committee are sent with a cut-off time for referrals. We are not seeing the proper scrutiny of legislation that one would expect to see from our Parliament because we are constantly being told that bills have to be reported back faster than would ordinarily be the case. However that is how the Minister wants to run it. 
In the one minute that remains before the House rises for the night I say it concerns me enormously that we have had no explanation from the Minister about how the system he is proposing will be administered. We are now told that when an increase is announced people who buy road-user charges will be able to apply for a refund after the point has come for that increase to take place. One can only imagine the bureaucracy involved in giving those refunds. Moving staff from the front line to the pump line seems to be the National Government’s new theory when it comes to this bill. I look forward to addressing more issues of substance. 
Debate interrupted. 
The House adjourned at 10 p.m.