Volume 695 Week 61 - Thursday 5 December 2013Text is incorporated into the Bound VolumeVolume 695 Week 61 - Thursday 5 December 2013[Sitting date: 05 December 2013. Volume:695;Page:15285. Text is incorporated into the Bound Volume.]Thursday 5 December 2013Mr Speaker took the Chair at 2 p.m.Prayers.Business StatementHon ANNE TOLLEY (Deputy Leader of the House): When the House resumes on Tuesday 10 December the Government will look to progress the Subordinate Legislation (Confirmation and Validation) Bill (No 2) the Consumer Law Reform Bill and the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. With the agreement of the Business Committee the House will sit in extended hours on the morning of Wednesday 11 December to progress two Government motions the Royal Succession Bill and theMokomoko (Restoration of Character Mana and Reputation) Bill and to hold a debate on the Health Committee inquiry on improving child health outcomes and preventing child abuse with a focus from preconception until 3 years of age.CHRIS HIPKINS (Labour—Rimutaka): I wonder whether the Deputy Leader of the House could tell us whether the Government intends to progress legislation relating to the establishment of the Education Council of Aotearoa New Zealand or any legislation to do with Chorus prior to Christmas.Hon ANNE TOLLEY (Deputy Leader of the House): I have just read out the Business Statement. I suggest the member looks at it.Questions to MinistersEconomy—Reports and Forecasts1.Hon TAU HENARE (National) to theMinister of Finance: What reports has he received showing progress in lifting economic growth and creating new job opportunities?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: The Minister has seen several reports pointing to steady job growth as the economic momentum created by a combination of Government policies and the hard work of New Zealanders bears fruit. The OECD is now forecasting that New Zealand will be one of the fastest-growing developed economies next year forecasting a growth rate of 3.6 percent in calendar year 2014. The stronger economy is being reflected in employment indicators. For example the Ministry of Business Innovation and Employment’s Medium-Long Term Employment Outlook shows employment growth averaging about 1.6 percent a year or about 36000 new jobs each year on average up to 2016. In the same period it projects unemployment to fall to 4.8 percent.Hon Tau Henare: What other reports has he received confirming improvements in the job market?Hon STEVEN JOYCE: The Government’s economic programme and especially the Business Growth Agenda is creating the conditions for businesses to invest for jobs and growth and that is exactly what is happening. The most recentANZ Job Ads survey reveals that total advertising for jobs rose by a seasonally adjusted 4.5 percent in October building on rises in the previous 4 months. That came from a rise in newspaper ads of 6.1 percent and internet ads rising by 4.2 percent. The ANZ noted that this was the first time in 4 years that internet job advertising had increased for 5 consecutive months. The ANZ said: “It is very encouraging that the labour market is finally lifting more markedly. Given already-high household debt levels income growth is the key toa more sustainable consumption upturn not selling houses to each other at ever-higher prices.”Hon Tau Henare: How is New Zealand’s improving economy and labour market affecting trans-Tasman migration?Hon STEVEN JOYCE: It is affecting it very positively. I have seen a report from Hays recruitment agency saying that New Zealand’s buoyant economy is attracting the attention of an increasing number of Australians. Hays reports that there has been a 25 to 30 percent increase in inquiries from Australians about taking up permanent roles in New Zealand. That trend is supported by the latest migration data which shows that the net loss of people to Australia has fallen every month since last December. In the October 2013 year New Zealand had a net gain of 17500 migrants compared with a net loss of 2300 in the previous year. The latest figure is above the average annual net gain of 11300 migrants over the last 20 years and is almost certainly attributable at least in part to our favourable growth rate compared with many other developed countries.Hon David Parker: If the economy is going as well as he claims why are 150000 people unemployed just as many as there were 3 years ago in the midst of a recession and why are average and median wages growing at the slowest rate in 13 years?Hon STEVEN JOYCE: The member I know is pretty unaware of this event that occurred that was called the global financial crisis. I appreciate that it has not really permeated his understanding of economic life but the reality is—Hon David Parker: It was 5 years ago.Hon STEVEN JOYCE: He says that it was 5 years ago. He should pop out and go and have a look at what is happening in the US he should have a look at what is happening in Japan he should have a look at what is happening in Europe he should have a look at what is happening in the UK and then he should thank his lucky stars that he lives in New Zealand.Hon Tau Henare: What other indicators show that the economy is performing better than it was 5 years ago?Hon STEVEN JOYCE: Other than employment rising unemployment falling and inward migration increasing we are making considerable progress as a country in reining in debt. Before our first Budget back in 2008 Treasury warned that if the Government continued on the previous Labour Government’s spending track we would run deficits forever and net debt would soar to over 60 percent of GDP by 2023 and never come down. So under our careful and prudent policies we are now on track to achieve a surplus in 2014-15 and net debt is expected now to peak below 30 percent of GDP despite dealing with the $15 billion expected cost to the Crown of rebuilding Christchurch. Back in 2008 the current account deficit was around 8 percent of GDP and New Zealand’s net external debt was 84 percent of GDP. The current account deficit is now below 4 percent of GDP and net external debt is 71 percent of GDP. The economy is in much better shape than it was 5 years ago but there is more work to do and this Government is doing it.Schools Partnership—Assets and Student Achievement2.TRACEY MARTIN (NZ First) to theMinister of Education: Does she stand by her statement “We know that great teaching and learning goes on in our schools but having modern learning environments just makes the whole process of raising achievement for all our young people that much easier”?Hon HEKIA PARATA (Minister of Education): Yes and that is why this Government is investing over $300 million to support specific schools with major developments; nearly $700 million on the roll-out of a managed network through Network for Learning which is the schools network upgrade; the roll-out of ultra-fastbroadband; and over $1 billion to rebuild the education network in Christchurch. There is much to do because the neglect we found the education system in when we came into office was substantial but we are making progress.Tracey Martin: Does she stand by her statement from 14 November 2013: “Raising student achievement and assuring that all young people can access high quality teaching in modern educational environments is one of the Government’s main priorities.”?Hon HEKIA PARATA: Yes and that is why we are spending $300 million over 6 years to better support 21st century learning environments and improved outcomes for all children. There are 18 new schools to be constructed and 400 new school buildings. In Christchurch $1.137 billion over 10 years is being spent to restore and renew schools. We are building 1200 new classrooms and repairing a further 1200 classrooms. Eighty percent of classrooms are to be modern learning environments. We are spending $211 million for a managed network in schools with 21 schools to be connected before the end of the year. Seven hundred schools are to be connected to the managed network in 2014. More than $200 million will be spent connecting schools to ultra-fast broadband. We have spent $157 million to date on school network upgrades. A further $136 million—Hon David Parker: I raise a point of order Mr Speaker.Hon HEKIA PARATA: —over the next—Mr SPEAKER: Order! I can anticipate the point of order.Hon David Parker: Well no I would like to make my point of order.Mr SPEAKER: OK the member can make his point of order.Hon David Parker: The last two answers that we have had from this Minister and prior to that from the Prime Minister were speeches not answers to questions.Mr SPEAKER: Order! I am conscious of the point of order the member is raising. I think it is a valid point. Ministers are required to keep their answers to the questions relatively brief.Tracey Martin: Is the Minister aware thatTeKuraHouruakiWhangaruru a charter school being set up by theNgāParirauMātauranga Charitable Trust has received over $1.6 million from the Government which it has spent on 81 hectares of farmland in Northland and it now finds itself without enough funds to build the school itself so it is looking at placing portable accommodation andPortaloos in a paddock and would she consider this to be a modern learning environment?Hon HEKIA PARATA: Could the member tell me again what the name of that school is so that I know which one she is talking about?Mr SPEAKER: Would the member please assist the Minister by just naming that school again?Tracey Martin:TeKuraHouruakiWhangaruru.Hon HEKIA PARATA: Thank you Mr Speaker. No I am not aware that that is what has occurred in terms of those details. I would have to check that with the Ministry of Education.Tracey Martin: Can the Minister confirm that the agreement between herself as the Minister and the sponsor shows that the nearly 100 hectares of farmland purchased with taxpayers’ money now belongs to the trust regardless of whether they build a school or not?Hon HEKIA PARATA: I do not have that detail to hand. I would be very happy however to answer those questions and deal with the member on every one of those details.Tracey Martin: Should the trust not build the charter school it claims it would will she as the Minister take steps to recover the $1.6 million of taxpayer education money it has received; if not why not?Hon HEKIA PARATA: Although I do not have the particular details to hand of that particular contract what I can tell the member and assure the House of is that there are significant performance and accountability requirements of each and every one of the five partnership schools. All of that detail is up on the website and available to anyone who wishes to look at them. In terms of the specific assertions that the member is making about one particular school I am happy to get the detail of that and work with the member.Tracey Martin: Is the Minister able to confirm with her knowledge of the contracts to date whether there are any clauses inside of any of the partnership school contracts whereby should the schools close the assets purchased with taxpayer dollars can be claimed back by the State?Hon HEKIA PARATA: It is my expectation that school properties that are to be disposed of will follow the Public Works Act. That is the usual practice.Tracey Martin: I raise a point of order Mr Speaker. I am sorry but I did not ask about the Public Works Act or schools in the disposal. Charter schools and partnership schools do not enter that area. I asked whether—[Interruption]Mr SPEAKER: Order!Tracey Martin: —there was a clause inside the contracts—Mr SPEAKER: Order! I am sorry but I am going to have to ask the member to start again. I am getting so many interruptions from my left-hand side.Tracey Martin: The question was whether the Minister is able to tell the House whether inside the partnership schools contracts—Mr SPEAKER: Order! I think that the quickest way forward is to actually allow the member to repeat the question. Thank you.Tracey Martin: I will try to bring it back. So is the Minister able to tell the House whether inside the partnership schools contracts she has knowledge of there is any clause that allows the State—the ministry—to take back the assets purchased by those partnership schools should they close or fold for any reason?Hon HEKIA PARATA: I do not have that detail to hand and I am happy to work with the member.State-owned Assets Sales—Criteria and Progress3.Hon DAVID PARKER (Deputy Leader—Labour) to theMinister of Finance: Has the asset sales programme met all five tests he set in Budget 2011; if not does he accept responsibility for any of its failures?Hon TONY RYALL (Minister for State Owned Enterprises) on behalf of theMinister of Finance: Yes.Hon David Parker: How can he say that he met the test for widespread and substantial New Zealand ownership when his rushed sale of Air New Zealand shares rammed through in advance of the referendum had only 6500 retail investors—just 0.1 percent of the New Zealand population?Hon TONY RYALL: I think that the Air New Zealand sell-down was a remarkable success for the New Zealand taxpayers. It certainly provided us with I think well over $360 million of cash and New Zealanders still retain 53 percent of the company in terms of the Government’s shareholding.Hon David Parker: I raise a point of order Mr Speaker. My primary question was about the five tests my supplementary question was about the test for widespread and substantial New Zealand ownership and the answer did not address that.Mr SPEAKER: Order! The answer did address that in my opinion.Hon David Parker: How can he say that the capital will be used to fund “schools and hospitals” when he and his colleagues have promised the asset sales money manytimes over to projects including subsidising irrigation Minister Guy; rebuilding Christchurch Minister Brownlee; capitalising Kiwibank Minister English; KiwiRail recapitalisation Mr Joyce; paying down debt Mr Ryall; paying for the war memorial Mr Finlayson; paying for the City Rail Link Mr Key; and of course the bailout of Solid Energy?Hon TONY RYALL: Well when you have $4 billion of proceeds in the Future Investment Fund the Government has a number of options. That is why we have always said that the benefit of the mixed-ownership model programme as part of our wider economic plan is to help us to control debt and use those proceeds for important infrastructure. There is no need therefore to borrow those funds from overseas bankers as the party opposite would do.Hon David Parker: How can he say that the asset sales programme is a success when he is now $2 billion short on the proceeds he promised?Hon TONY RYALL: I can say that the mixed-ownership model programme is a success because the Government has achieved the five objectives that it set. The main one of course is the fact that we have money—$4 billion—that we can use as part of the Future Investment Fund for important social investments. If that party is so confident in its own position we are awaiting its pledge to buy back those assets.Hon David Parker: Does the Minister take any responsibility for the collapse of Solid Energy given that he has been the shareholding Minister since 2008 and it was him who told Solid Energy to expand take on more debt and pay higher dividends thereby turning a billion-dollar company into something that is insolvent and had to reach a compromise with its creditors?Hon TONY RYALL: The Minister of Finance is not responsible for the 40 percent collapse in world coal prices nor is he responsible for the business path that that company was put on by the Hon Trevor Mallard.Hon David Parker: How can he claim that the asset sales programme is a success when he is billions of dollars short of the minimum $5 billion he promised he has failed to achieve widespread ownership and those who have invested have suffered losses and now have less confidence in capital markets rather than more as shown by the decreasing number of retail investors who have invested in each of these companies as they have been flogged off?Hon TONY RYALL: I think it is very straightforward why the Minister of Finance would have confidence in the success of the programme. However I have got to say that the people who will not have confidence or success in their own programme is the party opposite because if it did believe what it is saying it would commit to buy back these assets. Mr Cunliffe was sort of: “Oh we might do or we might not”. It is all over the show.State-owned Assets Sales—Government Financial Position and Ownership of Meridian Energy Shares4.Dr RUSSEL NORMAN (Co-Leader—Green) to theMinister of Finance: Is he confident that more than 85 percent of Meridian Energy remains owned by New Zealanders?Hon TONY RYALL (Minister for State Owned Enterprises) on behalf of theMinister of Finance: The Government’s successful float of Meridian Energy resulted in New Zealand ownership of 86.5 percent exceeding the Government’s target. I have had no updates since then but I am aware that the New Zealand shareholding in Mighty River Power has actually increased and there is no reason to think that the same will not happen with Meridian Energy.Dr Russel Norman: Is he aware that one overseas investment bank BNY Mellon bought 5 percent of Meridian Energy in the days following its float on the stock market and is it not likely that that single overseas buyer has taken New Zealand ownership below his 85 percent limit?Hon TONY RYALL: I do not have the specifics on who that company bought its shares from but I have received some advice that as far as Meridian Energy can tell it believes that that purchaser was purchasing shares from offshore investors.Dr Russel Norman: Given that the Minister is not exactly sure where the shares have come from is it not a fact that by taking ownership of an extra 5 percent of Meridian Energy BNY Mellon may well have reduced New Zealand ownership to as low as 81 percent well below his 85 percent limit?Hon TONY RYALL: No.Dr Russel Norman: Did the Minister not know all along that once the shares in Meridian Energy were sold they would quickly start to fall into foreign ownership just as happened with Contact Energy and that the 85 percent New Zealand ownership limit that he talked about at great length was simply spin a bit like the mums and dads spin he talked about?Hon TONY RYALL: No. I have already indicated to the member that information has been made available to the Minister that makes it clear that the New Zealand shareholding in Mighty River Power has increased since it was floated. We know that in another mixed-ownership model - type company the Port of Tauranga Ltd it is the New Zealanders buying out the overseas interests. The only question I would ask is whether the member is suggesting that he himself is buying Meridian Energy shares. Then I suppose foreign ownership would be increasing.Dr Russel Norman: A bit more immigrant bashing from the Minister—wonderful.Mr SPEAKER: Order! I would say that the score is about one all.Dr Russel Norman: Is he comfortable with the fact that at its current level of investment BNY Mellon will receive $18 million in dividends from Meridian Energy next year paid for by the power bills of New Zealand families?Hon TONY RYALL: I am comfortable that those people who have bought shares in Meridian Energy are entitled to receive the dividends they will qualify for. It would be interesting if the Greens were promising not to allow those people to receive their dividends and we are still awaiting Mr Norman’s pledge to buy back the shares. He was rather all over the place this morning on the radio I thought.Dr Russel Norman: Does the Minister accept that it is difficult for the Greens and others to promise to buy back the shares because the Government has completely crashed the books by borrowing $60 billion and when this Government borrows $60 billion and we have no idea what a catastrophe it might leave us next year that makes it difficult to make that kind of a promise?Hon TONY RYALL: Well that is a new position. Having spent most of the time for the last 2½ years saying that the books of the country go backwards through the assets sales process he is now trying to stand up and say he cannot project what is going to happen. He cannot have it both ways. If he thinks that the Government’s books go backwards because of this then he should make the pledge to buy these assets back.Dr Russel Norman: Has the Minister actually read Treasury’s Budget Policy Statement 2012-13 which shows that the deficit the operating balance excluding gains and losses—and for the Minister’s benefit that is how Treasury measures it—increases as a result of his asset sales programme? Treasury projects that it will increase by $180 million over 5 years but given the poor showing by this Government it will probably—Mr SPEAKER: Order! That is getting to be a very lengthy question.Hon TONY RYALL: Over the period the matter is relatively balanced. What the member fails to appreciate is that there is risk associated with these businesses and the fact is we have converted some of that risk into cash for New Zealand taxpayers—$4 billion that we do not need to borrow from overseas bankers. If that party opposite truly believed what he just asked in his question it would promise now to buy back those assets. It would promise to borrow that money because it would be better for New Zealand according to his logic. But I notice—Mr SPEAKER: Order! Now the answer is getting very long.Corruption Perceptions Index—2013 Ranking5.Hon KATE WILKINSON (National—Waimakariri) to theMinister of Justice: What recent report has she received on New Zealand’s ranking on the corruption index?Hon JUDITH COLLINS (Minister of Justice): I am pleased to report to the House that Transparency International has for the eighth year in a row ranked New Zealand as the least corrupt country in the world. Out of 177 countries—[Interruption] Well I know that the Labour Party finds that amusing but—Mr SPEAKER: Order! Just continue with the answer; I would be grateful.Hon JUDITH COLLINS: Out of 177 countries New Zealand and Denmark are ranked first equal as having the lowest perception of corruption in the public sector. New Zealand’s reputation for being corruption-free is one of its biggest assets internationally. People who do business and invest in New Zealand know they can trust our laws and our Government to protect their rights and freedoms. New Zealand’s ranking byForbes as the best country for doing business is in part due to the high trust in our public sector. Well done New Zealand.Hon Kate Wilkinson: What further steps is the Government taking to maintain this reputation?Hon JUDITH COLLINS: We cannot rest on our laurels. This year the Government has announced a range of initiatives to combat corruption and further enhance transparency. These include development of the organised crime and anti-corruption legislation which will strengthen bribery and corruption offences and I expect to introduce this legislation next year; development of a national anti-corruption strategy to address the prevention detection investigation and remedy of bribery and corruption across both private and public sectors; joining the Open Government Partnership which is an international partnership committed to promoting transparency and open government; increasing the transparency of the judiciary by making all court decisions available to the public online; and the recent coming into force of the Anti-Money Laundering and Countering Financing of Terrorism Act which will significantly improve the ability to detect and investigate crimes like corruption.Chris Hipkins: Will perceptions of corruption in New Zealand be enhanced or diminished by those who actively seek donations pretend they are anonymous fail to declare them in their electoral returns and receive John Key’s endorsement in the process?Hon JUDITH COLLINS: Well there are many actions that might well start to diminish the perceptions of corruption in New Zealand whether it is forging paintings breaching electoral rules on election days or saying that someone has 70 people living in their home so that they can actually breach the Electoral Act. There are lots of things that could diminish the perceptions of corruption in New Zealand and I think that member should just think of his own history in it.Child Poverty—Government Initiatives to Address and Unicef Report6.JACINDA ARDERN (Labour) to theMinister for Social Development: How many children has her Government lifted out of poverty since 2009 if any?Hon PAULA BENNETT (Minister for Social Development): There is no one measure of poverty. However according to the latest Ministry of Social Development household incomes report child poverty rates were flat between 2009 and 2012 on all standard measures. I think that is pretty remarkable considering the global financial crisis and what the country went through at that time. In addition between 2011 and 2012 inequality as measured by theGini index fell significantly. In fact the report shows that the widest gap in incomes actually occurred in the mid-2000s and peaked in 2004.Jacinda Ardern: I raise a point of order Mr Speaker. I may have missed this in the—Mr SPEAKER: Order! Can I just understand what the point of order is?Jacinda Ardern: I asked quite a direct question and I am not sure that the Minister—Mr SPEAKER: Order! No very definitely the Minister answered the question immediately.Jacinda Ardern: If her Government is measuring and acting on child poverty and child well-being why did the United Nations make the criticism in this report that “Budgetary processes did not enable identification of the children in greatest need.” and that more is needed to be done to lift children out of poverty or is she claiming that the UN is wrong?Hon PAULA BENNETT: What I am aware of is that because of when we reported back on the United Nations Convention on the Rights of the Child to Unicef it had not actually taken into consideration the Vulnerable Children Bill or the Children’s Action Plan so that work was not in place. The Vulnerable Children’s Board was not there. There is a whole lot of work that has actually gone on and is not being considered as part of the report. I do not think that anyone denies that there are children living in this country at a standard that we do not find acceptable but that would be why we have put such a range of things in place that make the biggest difference. We are warming up their homes we are getting them immunised we are getting them into early childhood education and we are making sure that we wrap support around those children who are most vulnerable and that is making a difference.Jacinda Ardern: How many children will the Vulnerable Children Bill lift out of poverty and how?Hon PAULA BENNETT: The work of the Vulnerable Children Bill goes beyond just those children in poverty. It is working with those most vulnerable who are at serious risk of harm and neglect in this country. We see that that will affect actually thousands of children. You just need to take the number of notifications that we get to Child Youth and Family which is around 150000. Of them 60000 require further action. That means that we have nearly 90000 that do not. We need to work with those children at a different response so we are getting in earlier so that they are safer and grow up and have a happier and healthier life.Jacinda Ardern: I raise a point of order Mr Speaker. My question was quite explicit. It was “How many children will the Vulnerable Children Bill lift out of poverty and how?” and the Minister said that it was doing something else entirely. In her first answer though she claimed that the UN had not taken into account the impact of the Vulnerable Children Bill on poverty so I am left quite confused by that response.Mr SPEAKER: I acknowledge the point that the member has made. In my opinion on this occasion the Minister basically was saying it is impossible to give an exact number. She then talked about thousands being affected. I do not think the way forward is to repeat the question because in this case I think it has been addressed—I accept it was not to your satisfaction—but I am happy to allow the member an additional supplementary question.Jacinda Ardern: Will the Vulnerable Children Bill lift children out of poverty?Hon PAULA BENNETT: It is one part of what is a much bigger piece of work for these children. Actually they are not getting beaten hurt and sexually abused because their parents are poor. That is an ongoing complex piece of work that needs to take in and address more than just the income of that family. Actually poverty is relative. We have many many thousands of people who do not have enough money but they do not treat their children as appallingly as what we have seen. That is where our attention is at and I am unapologetic about it.Jacinda Ardern: Does she accept that the last time Unicef acknowledged that New Zealand had made progress on lifting children out of poverty was when Labour introduced Working for Families which John Key called communism by stealth?Hon PAULA BENNETT: No I do not. What I accept is that during the years 2009 to 2012 what we saw was that child poverty rates were flat. What I see is that more than 300000 homes have been warmed up thanks to this Government. What I have seen is that actually free health care for under-6-year-olds has been extended thanks to this Minister of Health. What I am seeing is an increase in the number of children in early childhood education thanks to that Minister of Education. What I am seeing is an absolute emphasis on those children who are being abused and neglected. It is a comprehensive piece of work for something that there is no easy answer to but we are willing to put a plan in place and tackle it.Jacinda Ardern: I am going to try one more time Mr Speaker. [Interruption]Mr SPEAKER: Order!Jacinda Ardern: Can the Minister explicitly name what policies her Government has introduced—Hon Dr Nick Smith: She just did.Jacinda Ardern: —to try to improve the economic well-being of children who are living in poverty—and not policies on insulation or early childhood education—because their parents do not have enough to survive?Hon PAULA BENNETT: I could quite happily talk about the 16548 fewer people on benefits now than there were 1 year ago. I could quite happily talk about the 7258 sole parents whose children are now better off because their parents are in work thanks to the policies of this Government so those children are actually in families where there is a better income than what they would get on a benefit and they are able to get ahead. I could talk about the economic policies of actually putting that money back into the schools which helps them. I could talk aboutKidsCan and the money that we are putting there. I could talk about the money that we have put into breakfasts in schools—Mr SPEAKER: Order! Supplementary question—[Interruption]. Order!Jacinda Ardern: What does she say then to the two out of five children who are living in poverty but whose parents are in work?Hon PAULA BENNETT: What I could do is actually quote the United Nations Development Programme Director Helen Clark who pointed out in August that “We have poverty here in New Zealand but it is relative poverty. No one lives below the $2.25 a day. No one even lives under $5 a day.”Jacinda Ardern: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! A point of order has been raised and I will hear it.Jacinda Ardern: I asked explicitly what the Government is doing for working families living in poverty.Mr SPEAKER: Order! The member asked “What would the Minister say to children living in poverty whose parents are in work?”. The Minister then responded and said what she would say.Oil and Gas Exploration—2013 Block Offer7.JONATHAN YOUNG (National—New Plymouth) to theMinister of Energy and Resources: What recent announcement has he made about Block Offer 2013?Hon SIMON BRIDGES (Minister of Energy and Resources): This morning I was very happy to award 10 new exploration permits in the Reinga-Northland basin offshore Taranaki the Great South Basin onshore Taranaki and the East Coast. The competitive block offer approach allows us to award exploration permits to the best bid based on the quality of its proposed work programme. Three of the permits go to international companies new to New Zealand and I welcome their strong interest in Block Offer 2013. This interest is testimony to the continuing work we have put in to put New Zealand on the map as a key destination for investors and oil and gas exploration.Jonathan Young: What does Block Offer 2013 mean for the sector and New Zealand generally?Hon SIMON BRIDGES: Collectively the permits awarded today have committed work programme expenditure of around NZ$62 million which is a significant boost in investment in New Zealand. If the work is successful it could lead to further expenditure of more than $700 million within 5 years. This adds to historically high expenditure last year when nearly $1.5 billion was invested in exploration and development. Block Offer 2013 will also open the previously unexplored Reinga-Northland basin one of our promising frontier basins. These results are another important and substantial step in the right direction for New Zealand’s exploration industry.Student Achievement—OECD Report and Impact of Government Strategies8.CHRIS HIPKINS (Labour—Rimutaka) to theMinister of Education: Is she satisfied that the Government’s policies are providing every student with the opportunities they need to achieve to their full potential?Hon HEKIA PARATA (Minister of Education): I am satisfied that we are making progress in many areas but I will not be fully satisfied until five out of five young New Zealanders are getting the opportunities to achieve their full potential. That is why our Government has been investing in and delivering on a plan to better engage with parents report on achievement data value and strengthen the teaching profession and support 21st century learning environments.Chris Hipkins: Is she satisfied that all students in New Zealand are being given a fair go at education given the OECD study released this week that showed that 32 percent of the decline in our maths scores 72 percent of the fall in our reading scores and 41 percent of the fall in our science scores can be linked to demographic change and particularly increasing inequality?Hon HEKIA PARATA: The analysis of the OECD report the elements of which the member has referred to culminates in a final result that says that of all of the factors that contribute to our rankings 18 percent is linked to socio-economic status and 82 percent is linked to the quality of teaching and leadership to the presence and engagement of students and to factors such as tardiness. So yes New Zealand does have a correlation between underachievement and low socio-economic status. Itamounts to 18 percent based on the OECD results. As AndreasSchleicher the designer and the manager of the Programme for International Student Assessment said on Radio New Zealand National this morning New Zealand does have this challenge but it also has a record of schools teaching past that challenge. Other countries also face this challenge and in the Programme for International Student Assessment study it is clear that they have become better at teaching to change this situation. As he said poverty is not destiny.Chris Hipkins: Given her acknowledgment that inequality does play a role in educational inequality is she satisfied that all students in New Zealand are being given a fair go at education given the study released this week that shows that the number of students defined as having a low economic social and cultural status had increased by 34 percent during this Government’s watch?Hon HEKIA PARATA: I am satisfied that our over 2500 schools are doing their very best to meet all of the challenges including those students who come from homes that face difficulties. My colleague who has already spoken comprehensively in the House this afternoon has indicated the wide range of initiatives that our Government is investing in out of school. In addition within schools we have Social Workers in Schools. We have nurses in schools. We offer breakfasts to those schools that wish to take them up and 536 schools have taken up that breakfast in schools offer but not all have. But the sheer fact of the matter is that it is education that can moderate that background and our challenge is to raise the quality of teaching across all schools so that every young person gets the chance of a better education.Chris Hipkins: Given that answer is she satisfied that all students attempting the National Certificate of Educational Achievement (NCEA) are given a level playing field given that 2169 students with special learning needs in decile 8 decile 9 and decile 10 schools—our richest schools—received additional assistance with their NCEA exams last year while only 73 students at decile 1 and decile 2 schools received the same level of assistance?Hon HEKIA PARATA: I am not satisfied with that and that is why I have asked the New Zealand Qualifications Authority to investigate how we can ensure that there is greater equity of access for all schools. The obstruction to this is the psych report that is required in order to have access to the tools that will assist. That is exactly the process that we are in the middle of doing and I expect that this will be available for all schools next year. No school is precluded from applying for access to that tool. What is clear is that we have to give greater assistance to those schools in order for them to take up the application process and we are working on that.Chris Hipkins: How many additional students in low-decile schools low socio-economic areas received that level of support for the NCEA exams this year as compared with last year?Hon HEKIA PARATA: I do not have that detail to hand but I am happy to find it for the member. What I do know is—[Interruption]Mr SPEAKER: Order!Hon HEKIA PARATA: No one is barred from applying for these tools but schools are not applying for them because they are unable to meet the entry requirements and now that we know that we are working with those schools to overcome that obstacle. So this—Mr SPEAKER: Order! Order! The question has been adequately answered.Offenders Sentencing and Rehabilitation—Community Work9.MARK MITCHELL (National—Rodney) to theMinister of Corrections: What recent announcements has she made on the number of hours worked by offenders on community work?Hon ANNE TOLLEY (Minister of Corrections): Today I announced that offenders have undertaken a million hours of community work so far this financial year.Hon Member: How much?Hon ANNE TOLLEY: A million hours. Community work is a sentence for lower-end offending that holds offenders accountable for their crimes by undertaking unpaid work in their communities. The types of work undertaken by offenders includes cleaning up graffiti gardening clearing litter from public places and assisting communities to clean up after storms such as the recent flooding in Whanganui. This is not only a suitable punishment of offenders but also allows them to give something back to the communities they have offended against.Mark Mitchell: How does community work help reduce reoffending?Hon ANNE TOLLEY: Offenders are less likely to reoffend if they have the skills to find a job. Community work provides an opportunity for offenders to gain new skills and work experience and to develop employment habits. The recently passed Administration of Community Sentences and Orders Act also allows probation officers to direct that up to 20 percent of a community work sentence can be spent in training on basic work and living skills if it will reduce the offender’s risk of reoffending. The Department of Corrections has already reduced reoffending by over 11 percent and this change has been important in helping the department further reduce reoffending and reach its goal of a 25 percent reduction by 2017.Finance Associate Minister—Management of Contract with Chorus10.CLARE CURRAN (Labour—Dunedin South) to theAssociate Minister of Finance: Does he still have responsibility for the “Day to day responsibilities functions and powers of the Minister of Finance in relation to Chorus Limited” as Associate Minister of Finance?Hon STEVEN JOYCE (Associate Minister of Finance): Yes.Clare Curran: Does he accept any responsibility at all for Chorus’s current predicament and the troubled roll-out of the ultra-fast broadband programme?Hon STEVEN JOYCE: Well there are a couple of problems with that question. One is that the member says that Chorus has a predicament when I noticed that only a few weeks ago she was saying that there was no predicament and it was crying wolf. The second thing is that this is the member who also told us that copper broadband prices were going to go up hugely. The Commerce Commission has made a decision. We know that. That has made it difficult for Chorus to proceed with its part in ultra-fast broadband. We know that. The Government and its agent Crown Fibre Holdings are now working through solutions with Chorus. It is no more simple or complex than that Ms Curran.Clare Curran: How is the potential renegotiation of the Chorus contract fair to other ultra-fast broadband contractors who are fulfilling their contractual obligations without the need for corporate welfare?Hon STEVEN JOYCE: Well the member is quite wide of the mark in terms of my responsibilities in that matter. If she has read the day-to-day responsibilities functions and powers of the Minister of Finance in relation to Chorus she will know that that does not come into that category. But nevertheless I am sure that a satisfactory solution will be found for this. The reality is that the Minister has got Crown Fibre Holdings working with Chorus as would be appropriate.Clare Curran: Is not the verbal Ernst and Young report political justification to send Crown Fibre Holdings to the table with Chorus?Hon STEVEN JOYCE: Well shock horror probe! The reality is that Crown Fibre Holdings did the original negotiations and deal with Chorus in the first place. It would be the logical organisation irrespective of whether there were one three five or seven reports produced.Clare Curran: Does he still stand by his statement that “This Government’s ultra-fast broadband project is seen worldwide as a success.”; if so what world was he referring to and does he mean “success” in the same way that the asset sales are a success?Hon STEVEN JOYCE: Ah—Mr SPEAKER: Order! The Hon Steven Joyce.Hon STEVEN JOYCE: Sorry I was rushing. I thank the member for her question. Yes absolutely. And let us compare it with a jurisdiction not too far from here called Australia. I think the member was quite enamoured with the approach in Australia where it has spent something like 30 to 60 times the amount of taxpayers’ money to achieve fewer houses passed and fewer houses connected on both a comparative and an absolute basis than New Zealand. So absolutely I stand by that. I know that the member has hated it the whole way through. I know that she has hated the legislation—Mr SPEAKER: Order! I thank the Minister. It is clear that he stands by his statement.Child Poverty—Government Initiatives to Address and Unicef Report11.JAN LOGIE (Green) to theMinister for Social Development: Does the Government intend to respond to the question in UNICEF’s reportKids Missing Out “why has such a low priority been placed on implementation of children’s rights” in order to protect vulnerable children; if so how?Hon PAULA BENNETT (Minister for Social Development): Yes I do intend to respond. In fact I am happy to respond right now. I do not agree that it has been a lower priority.Jan Logie: Why does she think thatUnicef’s Deborah Morris-Travers said today that New Zealand has failed to incorporate the United Nations Convention on the Rights of the Child into its domestic law or given priority to addressing child poverty?Hon PAULA BENNETT: Because she has her own perspective on that.Jan Logie: Why has she spent so much time and money taking benefits off struggling families instead of focusing on the real ways to lift children out of poverty?Hon PAULA BENNETT: I have not. Actually fewer benefits are being cancelled now than they were in 2008—that is a fact. We are actually working more to support people. We have put more money into wrapping support around people earlier and that is a fact. We are seeing results for it; more than 7000 are going into work. We are seeing really positive results and I stand by them.Jan Logie: If the Government is doing so much why do Unicef the Child Poverty Action Group and the Children’s Commissioner all say that you cannot fix child poverty until you measure it and deliver a comprehensive strategy for eradicating it? [Interruption]Mr SPEAKER: Order! It is the privilege of the Hon Paula Bennett to answer.Hon PAULA BENNETT: That is from the party that is against us measuring national standards in children. It now wants to have one absolute measure for poverty. We have a number of measures. We do measure it. We are making progress. We put a lot of emphasis on these children on the economy on how we get people into jobs and on how we warm up their homes. That party can have whatever perspective it likes.That is its right. It is independent. That is the beauty of living in a democracy like New Zealand.Housing Affordable—New Developments in Auckland and Christchurch12.Peseta SAM LOTU-IIGA (National—Maungakiekie) to theMinister of Housing: What new developments in Christchurch and Auckland is the Government progressing to increase the supply of housing?Hon Dr NICK SMITH (Minister of Housing): Last week I announced a new $12 million 44-unit social housing complex in Hornby involving the New Zealand Housing Foundation the Salvation ArmyAbbeyfield and the Housing Plus Charitable Foundation with financial support from the Government and the Canterbury Community Trust and the Christchurch City Council contributing the land. I have also announced today the Government’s approval for a further $31 million investment by the Government in the Hobsonville Land Co. to enable the next stage of this project to be brought forward. The combination of this funding and the fast-track development approval process from the Housing Accords and Special Housing Areas Bill will enable 1000 new homes to be built earlier at Hobsonville and will contribute to the housing accord goal of 39000 homes over the next 3 years.Peseta Sam Lotu-Iiga: What specific measure included in these developments will help middle and lower income New Zealanders access good quality housing?Hon Dr NICK SMITH: The Housing Foundation development of new homes in Christchurch is specifically targeted at families struggling to replace homes lost in the earthquakes and at first-home buyers. The complex also includes homes for vulnerable families to be provided by the Salvation Army and it further includes Christchurch’s firstAbbeyfield house a British model of elderly housing that is focused on low-income older people who benefit from shared living but who do not need rest home care. The Hobsonville development includes a specific requirement for 10 percent of homes to be under $400000 and a further 10 percent to be under $485000. I am pleased to report that these targets are being met with 248 sales at Hobsonville to date.Dr Megan Woods: Does he think his Government’s response to the housing crisis in Christchurch of 44 units is sufficient 3 years on from the earthquakes given that the number of multi-family households in Christchurch has increased by 36.5 percent there is a report in today’sPressof 30 people living in a four-bedroom home there are 5000 to 7000 people estimated by the Ministry of Business Innovation and Employment to be in insecure housing in the city and there are 15000 to 25000 workers arriving for the rebuild?Hon Dr NICK SMITH: The new initiative announced in Hornby is just one of many. In fact Labour is now complaining that I am making too many housing announcements. In Christchurch Housing New Zealand is building a new house every single day—700. It is committed to repairing every one of its 5000 damaged houses in Christchurch by the end of 2015. The Canterbury Earthquake Temporary Accommodation Service has provided four villages. But I do accept that no amount of work will ever satisfy the whingers in the Opposition.Points of OrderVoting—Kaipara District Council (Validation of Rates and Other Matters) BillBARBARA STEWART (NZ First): I raise a point of order Mr Speaker. I seek leave for the following votes on the third reading of the Kaipara District Council (Validation of Rates and Other Matters) Bill to be recorded in theJournals: New Zealand First 7 votes for the Noes; Mana Party 1 vote for the Noes. [Interruption]Mr SPEAKER: Order! I am fully aware that there was no vote taken. Leave is now sought to effectively amend that record. So leave is sought as read by Barbara Stewart for some votes opposed to that legislation to be recorded. I am putting the leave. It is available for members to decide. Is there objection? There is objection.Judicature Modernisation BillFirst ReadingHon JUDITH COLLINS (Minister of Justice): I moveThat the Judicature Modernisation Bill be now read a first time. I nominate the Justice and Electoral Committee to consider the bill. A well-functioning justice system is an essential part of any healthy democracy. Society and technology are changing rapidly and it is increasingly clear that we now have a 20th century court system that should be modernised to deliver in the 21st—The ASSISTANT SPEAKER (H V Ross Robertson): Order! Can we have some courtesy please.Hon JUDITH COLLINS: —century world. We live in an era when people can shop bank and pay bills online and it is about time we looked at how routine court matters can be handled more efficiently to bring justice up to speed. This bill will help modernise our court system by increasing the transparency of court arrangements and streamlining processes and procedures. This will make the courts more efficient while maintaining public confidence in our justice system.The bill implements the Government’s response to the Law Commission’s review of the Judicature Act 1908. It contains six parts five of which will result in new Acts. Part 1 repeals the Supreme Court Act 2003 and the Judicature Act 1908 and it will replace them with a single Senior Courts Act. This Act will set out the constitution and jurisdiction of the High Court Court of Appeal and Supreme Court in modern and easier to understand language—[Interruption]The ASSISTANT SPEAKER (H V Ross Robertson): Order! I should not have to ask twice. Can I just say to members leaving the Chamber to please show some courtesy to the member who is trying to address the business of the House. It is good conduct and it is being considerate of others. Thank you.Hon JUDITH COLLINS: —thank you Mr Assistant Speaker—than that in the 1908 Act. The bill improves judicial transparency by requiring final written judgments to be published online. It also requires the judiciary to publish information about the delivery of reserved judgments and to publish guidance on judicialrecusal from cases and when it is appropriate for a judge to hold other employment or office. The Attorney-General will also be required to publish the process he or she follows when making judicial appointments.The High Court will gain more effective powers to deal withmeritless court proceedings brought by parties. The High Court will be able to issue three progressively stronger orders limiting parties from continuing or commencing civil proceedings. Similar powers will be granted to the lower courts to make less restrictive orders. This provides greater flexibility for dealing with problem litigants. I expect this to better target the small group of people who use up valuable court resources to pursuemeritless proceedings time and time again.The bill will allow for the establishment of a specialised judicial panel in the High Court for commercial matters. This will increase the responsiveness of the court system and its focus on court users. A panel judge may be allocated to hear a commercial case if either party wishes this to occur. Judicial independence will be maintained through judicial control of case allocation and judge assignment to the panel.Part 2 of the bill repeals and replaces the District Courts Act 1947. The District Court will be constituted as a unified body just like the High Court is rather than as 59 separate courts as it is today. Having District Courts as separate entities is outdated and reflects an age when towns were physically more difficult to travel between than they are today.We are also proposing to increase the monetary limit at which civil claims can be brought before the District Court from $200000 to $350000. This has not been updated since 1992 and it will provide more choice for litigants as to whether the District Court or the High Court is the most appropriate forum for their case. The bill amends provisions applying to the District Court so that they are more closely aligned with like arrangements in the senior and other courts including for example appointment panels and age limits for acting judges and the various requirements on the judiciary to publish information and guidance.Part 3 of the bill enacts the Judicature Amendment Act 1972 as a stand-alone Act the Judicial Review Procedure Act. The new Act will continue the existing process and procedure for judicial review applications but expresses this in updated language. Part 4 introduces a single statutory scheme the Interest on Money Claims Act for the award of interest on financial claims before the court. I expect the scheme will provide greater certainty and fairness for court users. This in turn will improve the efficiency of litigation by encouraging cases to settle more expeditiously.Part 5 of the bill will greatly assist courts to move into the 21st century by allowing the use of electronic processes. At the moment many court activities such as the filing of documents can be legally performed using paper-based formats only. Legislation has not anticipated more modern ways of working. This change will help remedy that deficiency.The last part of the bill makes amendments to a number of Acts. It strengthens the presumption for the use of audiovisual links in court so that remand prisoners are more likely to appear before a judge without all the upheaval of travelling to court. This will increase the uptake of audiovisual technology promoting more efficient use of the courts’ and parties’ resources.Finally several small amendments are made to the Arbitration Act 1996. These extend which bodies can appoint an arbitrator when parties fail to agree on an arbitrator. It recognises the use of emergency arbitration procedures to provide interim relief prior to the full arbitration.The Judicature Modernisation Bill is the culmination of a considerable amount of work. I acknowledge the Law Commission for its work on reviewing the Judicature Act and associated legislation. I would like to thank the judiciary for its valuable input. I would also like to thank the Attorney-General and the Ministry of Justice staff who worked so hard on this. I look forward to the results of the select committee’s examination of the bill. The changes to this bill will play an important part in improving the efficiency accessibility and day-to-day functioning of New Zealand’s courts. I commend this bill to the House.Hon DAVID PARKER (Deputy Leader—Labour): The Labour Party supports the referral of the Judicature Modernisation Bill to the Justice and Electoral Committee. Can I thank the Minister of Justice for the work that has been done on this bill. It is largely administrative. Before I address some particular provisions in the legislation—and could I also thank the Attorney-General for he has probably had a pretty significant role in relation to changes to the court rules—can I set out what the Labour Party’s view is as to the problems that we have in some of our civil court processes.We have courts so as to enable people to resolve disputes without resorting tostandover tactics. Essentially courts exist to resolve disputes that parties cannot resolvebetween themselves. Sometimes the cause of those disputes is intransigence or unreasonableness on the part of one party and indeed I would think that a good proportion of the cases that come to trial are of that nature. In some cases it is because there is legal uncertainty as to a principle that has to be resolved by the court system. In either case the mechanism that we have set up in civilised countries to resolve these disputes is to have independent arbiters who are free of corruption and undue influence to determine the disputes and then litigants have the opportunity to put their case before the arbiter. Litigants might not be happy with the outcome that they get because they all want to win and some of them lose but 99 out of 100 litigants are satisfied that the process is fair and that they can put up with the solution that is imposed upon them by the courts because the courts impose solutions and then they can get on with their lives. So we do not have ongoing rancour and neither do we have violence or corruption as the means to settle disputes.The problem that we have got in court systems around the world and in New Zealand is that access to that form of justice which is so admirable is largely a function of cost. If the cost of process becomes so high that most ordinary New Zealanders cannot afford to use the court system then it fails to meet the social purpose that the courts are there to fulfil. It is all very well having a perfect outcome but if that perfect outcome cannot be accessed because the cost of the process is so high then we should be looking at what is wrong with the system in order to make the court system more accessible.In that regard the changes in this bill make some good changes. One in particular will I think cause an increase in the speed of decisions and perhaps make them a bit briefer than they sometimes have been. Decisions over the years have become longer and longer and longer so that some of them read like an academic treatise rather than a fair summary of the facts and an application of the most central legal principles in order to reach a conclusion. Instead we have ever-longer judgments which take ever-longer to prepare which lead to evermore complex forms of process during the trial and therefore cause cost delay and frustration to all those involved.One of the ways in which this is being pushed against is this requirement on District Courts to have information regarding reserved judgments. The Chief District Court Judge must now—once this legislation is passed and assuming that it is—in consultation with the Chief Justice publish information in relation to the process by which parties to proceedings before the court can obtain information about the status of any reserved judgment. It is a good change. Litigants who are facing undue delay ought to be able to raise their concerns and put a bit of pressure upon the decision maker to make a decision.But I am left with the sense that although these changes are good—and I agree with the standardisation of rules in the superior courts and I agree with a lot of the other changes here—I am still not convinced that we have tackled the nub of the problem which is the efficiency of especially civil court processes which remain beyond the pale for most people to settle their disputes through. Let us take the example of the Christchurch earthquakes. We have got this unprecedented level of claim and risk for the insurers. Where we have got insurers who have a practice—and I know this from my own practice and I am sure that the Attorney-General will be able to say what his experience in practice in respect of this was too—insurers in respect of legal issues that are contested face a class action risk in that if a decision has precedent value that goes against the insurers then they might have 100 cases over time that would have financial consequences for them as a consequence of that legal decision.Because of the enormity of the Christchurch earthquake event some of those legal principles that are contested would have effects on thousands of other claims that are on their books. The response of the insurance company faced with that possible classaction risk which is what I will call it—I do not mean litigants joining together in a class action but I mean that a lot of claims of the same class would line up behind those test cases—is that they are very reluctant to get a court decision that is adverse to their interests because of the class action risk that follows.The best way through that conundrum in the response to the Canterbury earthquakes in my opinion has been for some of those court cases to be brought through and have legal determinations made as to what the legal principle is. Whether that goes for or against the insurer or for or against the insured we would have more legal certainty for those advising the insured—the people who have suffered losses and who are having claims that are being declined or that they cannot settle. We would have desirable legal certainty which would enable the parties to that litigation to have their claims resolved but it would set a precedent for the thousands of others who follow.Because the cost of processes is so high because the insurance companies know that they can elongate these processes and because they face class action risk there are legal impediments put in front of those who are trying to resolve those disputes and when they get close to court I bet that so many of those cases are settling on terms that are confidential and that do not result in a legal precedent that would be useful to resolve all of the other thousands of insurance disputes that there are in Christchurch.My problem with this legislation is that I do not think it fixes that problem. There are two ways that that problem could have been fixed. First I believe that the Crown should in the public interest be selecting 100 or 200 cases that the Crown will fund—not funded by the insured—because of the public interest in legal certainty in respect of the hundreds of thousands of claims that we have in Christchurch. The Crown should have funded some test cases which it could have established through a panel of wise advisers as to what the legal principles and legal disputes were that needed to be resolved. The Crown should have funded it in the case of Christchurch but in the absence of the Crown funding them those legal processes should be affordable—and they are not in New Zealand. This legislation does not fix that.I am a lawyer. I know that the propensity of lawyers is to strive forever towards perfection. This striving towards perfection in respect of civil processes has gone so far that it has become the enemy of the good and the courts are not meeting their function which is to provide an accessible means for the resolution of disputes.In closing this is good legislation. It does make progress in that regard. But the fundamental problems I think are not going to be resolved until we have what judges—or some judges and some lawyers—would see as pretty Draconian rules. This applies particularly in the District Court where a proportion of cases have to be set down for a hearing within—I do not know—say 60 days of the filing of a statement of defence where there are limits on the number of interlocutory proceedings where judges take control of their courts where there are quotas on the number of judgments that have to be delivered orally and where there are restrictions on the number of trials that are allowed to extend beyond a certain time period. This is necessary so that we drive responsibility on the part of lawyers and on the part of judges to control their own courts and provide access to justice.Hon CHRISTOPHER FINLAYSON (Attorney-General): I agree with the previous speaker David Parker that themercantilisation of the civil justice system is something that we should be very concerned about. Many of the problems that he correctly identified are with respect matters that I think can be dealt with by rules of court or judges actually taking control of a proceeding at an early stage. I do not know that statutory reform is necessarily going to deal with those issues. Having said that however there are a number of matters set out in this legislation the JudicatureModernisation Bill that I believe will go some way to addressing that dreadful problem ofmercantalisation and the Minister of Justice has already referred to them.I want to begin by acknowledging the outstanding contribution of the Minister of Justice in this monumental reform. That is no hyperbole. This is the most important review of our court statutes in over 60 years. Indeed the Judicature Act has not been reviewed comprehensively since 1908. So she deserves the praise of every member in this House for what is a truly outstanding piece of work. I want to also acknowledge the Law Commission and the Minister’s excellent officials in the Ministry of Justice. Frankly it should have happened in 2003 after the Supreme Court was created but I regret to say that the previous Government was not up to it. But we have now a real Minister of Justice who understands these things and the importance of this work hence this reform. Much of this reform deals with the issue of judges. I just want to say a thing or two about our judges. As Lord Bingham a now deceased but great former law lord in England once said: “the public entertain a range of views [about judges] not all consistent (one minute they are senile and out of touch the next the very people to conduct a detailed and searching inquiry; one minute port-gorged dinosaurs imposing savage sentences on hapless miscreants the next wishy-washy liberals unwilling to punish anyone properly for anything) although often unfavorable.”I want to put on record that this country is very lucky to have a world-class judiciary although sometimes it is subjected to unwarranted criticism. Some criticism most recently in one of the Sunday papers attaches to judges’ remuneration which is particularly unfair given that it is set independently. One can criticise judgments but we have always got to be very careful to avoid personal attacks on judges which are unacceptable.I also want to say that year after year the vast majority of complaints to the Judicial Conduct Commissioner are found to be groundless. I want at this moment to acknowledge Sir David Gascoigne and Alan Ritchie for the tremendous work they do as the Judicial Conduct Commissioner and the Deputy Judicial Conduct Commissioner. Many of the complaints to those two gentlemen are indeed malignant and vexatious; still more are ill conceived. Lately we have seen vexatious litigants attempting to draw the courts in as parties to their own litigation making targets of the judges. I want to say something about vexatious litigants in a minute because that is a very serious problem this country faces.There are a number of matters that the Justice and Electoral Committee will need to look at very carefully—for example clause 93 which says that the Attorney-General is to publish information concerning the judicial appointments process. In fact I have done that in relation to High Court procedure. It is transparent but it is not well known but now as a result of the work that the Chief Justice and I have done it will hopefully be much better known. The select committee is going to have to have a very good look at clause 161 which deals with contempt of court. Contempt of court is set out in clause 161 and there is a cross-reference to the other courts—for example the District Court and the Employment Court and so on. It deals with a particular subclass of contempt contempt in the face of the court. That is a very serious issue. Other work on contempt needs to be undertaken. The Law Commission is looking at that issue now. There is also existing law—for example on the breach of suppression orders something Mr Goff knows a lot about because he was recently warned by the police about breaching suppression orders.I also want to say something very important on the issue of vexatious litigants. There are so many more now than there were. Once upon a time in Wellington there was one person who was sort of the Albert Haddock of the Wellington District Court—Le’aufa’amulia Asenati Lole-Taylor: A former National member of Parliament.Hon CHRISTOPHER FINLAYSON: The New Zealand First member will remember that programme from the late 1960sA. P. Herbert’sMisleading Cases. What we now have is almost an epidemic of vexatious litigants which is why clauses 162 to 165 are so very important because they will replace the existing rule for vexatious litigant and insert these rules which deal with restrictions on either the commencement to a limited extent of a proceeding an extended effect or a general effect. I hope that the select committee takes a good look at this because vexatious litigants are a problem and we really do need to do our homework on this particular issue.Mrs Collins has also referred to clause 166 dealing with reserved judgments. That is in the context of the senior courts. It will also apply in other courts. That is designed to ensure that the judges of all courts are able to ensure that judgments are given as quickly as possible because sometimes the delays can be rather lengthy. The other part that I certainly hope that the select committee takes a good look at is the rules relating torecusal of judges. Many of these provisions set out in what will be the Senior Courts Act are replicated in Part 2 which is dealing with the District Court.I do want to refer simply to clause 214 in Part 2 which deals with the appointment of acting judges. Again this is an area where the Chief District Court Judge and I have recently agreed on a protocol. When I came to office there were quite a number of acting judges. What I have tried to do in conjunction with the Chief District Court Judge is narrow that number down because there have been a number of attacks on the appointment of acting judges. The allegation is basically that in order to get a further acting warrant they have to do what the executive wants so it is inherently what one Scottish judge once called a cheap and nasty form of justice. So I believe we should have acting judges only in very special circumstances. That protocol on acting judges has now been approved.There are a number of consequential amendments to the Employment Relations Act and the Resource Management Act. The honourable Minister has also referred to the recasting of the Judicature Amendment Act one of the most critical pieces of legislation passed by this Parliament in many years which sets out the rules for judicial review. We have rewritten it in modern English and it too requires a good hard look on the part of the select committee.There is a lot in the bill. I would not simply characterise it as mere administrative reform; it raises a number of very important constitutional issues. But I do end by saying that the Minister has done a fantastic job. We can be really proud of this effort and I do hope that the select committee will turn this legislation round because the package will be very good for the administration of justice in our land.RAYMOND HUO (Labour): It is a great pleasure to take a call following the Attorney-General. I would regard it as a privilege to take a call on the Judicature Modernisation Bill. This is the second-largest bill I have ever dealt with. The first-largest bill I have dealt with was in 2009 which was a taxation bill nicknamed the “Telephone Book Bill”. This bill I think has just broken the record and is more than 1000 pages long. I rise to support this bill. Labour will support this bill being referred to the Justice and Electoral Committee because it makes a number of necessary updates to the court system. However the provisions will need to be robustly tested to ensure that there are no issues with these reforms.Labour’s vision is of a just society and safe communities. We must strike the right balance between civil and human rights and justice and precautionary principles for instance. We must ensure equal and full access to justice and achieve justice and real public safety. Access to justice empowers citizens and resolves disputes fairly and finally. We must modernise our courts and the court structure in a principled manner with the aim of making them more effective efficient and responsive.It has now been 10 years since Labour disestablished the Privy Council and set up the New Zealand Supreme Court—following the UK approach I should add. It is timely to update our legislation to apply the experiences and lessons we have learnt since then. The Judicature Act is over 100 years old and is seriously out of date. The Law Commission’s recommendation to consolidate it into a single modern clear courts Act with the Supreme Court Act is a long-overdue change.This bill broadly reforms the court system and implements two reports of the Law Commission namely theReview of the Judicature Act 1908: Towards a New Courts Act andAspects of Damages: The Award of Interest on Money Claims. I would like to take this opportunity to thank the Law Commission for its thorough analysis and comprehensive reports. The first report—theReview of the Judicature Act 1908: Towards a New Courts Act—is divided into four parts dealing respectively with issues relating to (a) the structure of new courts legislature (b) judges (c) courts and (d) miscellaneous matters.The primary purpose of the review was to clarify and modernise the laws under which New Zealand’s primary trial and appellate courts are constituted. These laws determine how the courts are set up how judges are appointed their jurisdiction their rule-making powers and the procedures by which they administer justice.The bill introduces certain measures with regard to judicial appointments. It is important that there is a clear and publicly known process for judicial appointments. Although there are currently clear and transparent processes for the appointment of District Court judges the same cannot be said of the higher courts. The proposals under this bill will enhance transparency in that regard. Certain provisions are designed to address the issues concerning judicial conflicts of interest.What are particularly worth noting are the provisions dealing with the issues around the commercial list. The High Court commercial list is less relevant than it was because of the general improvements in case management. Many practitioners consider that there is still a need to improve the way in which commercial cases are managed and disposed of. Consideration of what should be done with the commercial list raises the issue of whether there is a need for greater specialisation in the High Court. Allowing judicial panels for specific commercial cases is a welcome change to the justice system allowing real expertise to be developed by judges in what can be thorny and complicated areas of legislation.The court system is still too paper based and allowing a much greater proportion of material to be electronic is a welcome change bringing the court system into modern times and cutting down on waste—and it probably will help save more trees. It is somewhat with a sense of oxymoron that this comes in a bill that is 1182 pages long. Conveniently the bill introduces a presumption that all written judgments will be published online unless there is a good reason not to. The bill enables the use of electronic technology in courts and tribunals allowing court documents to be filed held and issued electronically. This bill introduces a presumption that audiovisual links will be used in criminal procedural matters where statutory criteria are met and removes unnecessary geographic restrictions on its use.The Northern Island court service has recently introduced some electronic changes and its experience is valuable to us. Its courtroom technology programme for example will be helpful in enhancing efficacy by using technology such as the electronic presentation of evidence. It will help improve both the quality and speed of information for those involved in complex court cases where documentary evidence can amount to many thousands of pages just like this bill. Thank you.DAVID CLENDON (Green):Tēnā koe Mr Assistant Speaker. We begin the rather significant task of working our way through this document the JudicatureModernisation Bill—a mammoth document I think. In fact my Labour colleague Raymond Huo is somewhat mistaken in his count. If one actually looks at the total number of pages they number 1238 including the preamble. So it is a little bit of homework for us over the holiday break I suspect.This significant document—significant not only in size but in scope and indeed in what it sets out to do—began its journey and is an output of a process that began around 3 years ago. The Law Commission was given the task of looking at our court system and reviewing that system and out of that came an excellent document in November 2012 which was the review of the Judicature Act. That has clearly provided the basis to a large extent for the development of this bill that we are looking at today. The task essentially that the Law Commission was given was to consider the consolidation amendment and modernisation of the various pieces of legislation and processes that have found their way into this bill. Clearly there was a need for that. The point has been made that the Judicature Act itself is well over 100 years old. That almost pre-dates radio and definitely pre-dates television. The world has moved on and of course the legislation needs to catch up.It is interesting that in the terms of reference the task that was given to the commission specifically directed it not to consider major matters of policy and the structure and character of existing trial and appellant courts. I think that is interesting. I do not suggest that it ought to have had that included in this task. I think it had a sufficient task. But to me that is shorthand for suggesting that it was not required—in fact were required not—to consider for example whether our courts should move from an adversarial basis through to a more inquisitorial model recognising that you seldom get pure models of either. But I think it is a conversation that is happening abroad. Increasingly we are starting to hear the discussion evolve—that perhaps it is time to consider whether we ought to make a transition from what is predominantly adversarial through to a more inquisitorial structure or process for our courts. Putting that aside there is some comfort I think in the fact that this bill is clearly focused and all of the documents have contributed to its preparation.The one word that consistently jumps out is “accessibility”. I think everybody sees value in increasing the accessibility of our courts and accessibility to the law and to legal processes. That has got to be a primary objective and a driver of all that we do from here on in. The point is also made that clarity is a necessary precursor to achieving that level of accessibility—clarity about such things as jurisdiction the operating characteristics of the court and the processes. Clarity is an important subset of accessibility and to the extent that that is also addressed I think it will help deliver a very good outcome and a better overall model for us to operate within.To speak briefly to a number of the specifics of the bill it of course creates a single statute that will cover arrangements to all senior courts and similarly a single statute to look after the District Courts and within that the tribunals. One of the interesting things it proposes to do is that it will impose a duty on judges—a requirement—to do things such as publish information relating to the delivery of reserved judgments andrecusal from cases and the suitability of judges holding employment or other office while operating as judges and that all final written judgments unless there is good reason not to will be published. That is a point I will return to.There is also a requirement for the Attorney-General to publish the processes followed when making judicial appointments and I think that is a very healthy contribution to transparency. The extra obligations placed on the judiciary do inevitably raise the perennial question of where the line is between requiring accountability from our judges but also protecting the independence of the judiciary. We know there is a very bright line between the role of this Parliament and the role of the judiciary and weneed to preserve and maintain that bright line. I am aware that in the review document there was a proposition that perhaps judges should present annual reports in a sense of their various actions and the push-back from the judges—I think quite fairly—was to suggest that given that those reports would be to Parliament that might be perhaps compromising the bright line between the relative jurisdictions of the courts and Parliament. So I do foresee some rather interesting conversations. In fact the Law and Order Committee has recently had some useful dialogue around the issue of judicial independence compared with parliamentary jurisdictions and I think that will contribute to that indeed.We are particularly interested in the move towards enabling the use of technology—the proposition of electronic courts and tribunals. I made the point earlier that yes 1908 is a very long time ago and it is time that we caught up with the 21st century. Like all technologies we agree in principle obviously with moving to an electronic-based—e-based—system. It is simply inconceivable that one would not make some moves in that direction. But the adoption of any technology or making any technology more pervasive always carries with it a level of risk—the risk of unintended outcomes unintended consequences some of which could be negative. I think we do have to be aware of that and I have no doubt that the Justice and Electoral Committee will think that one through very carefully.It is interesting that in the bill itself it suggests that the following principles need to apply in terms of the use of electronic technology generally. It states: “(a) all persons should be able to deal with courts and tribunals in a technology-neutral way:”. I think that is quite an interesting phrase and one that we will no doubt unpick at the select committee. The principle is that “(b) electronic technology should be used”—and “should” is quite a strong word clearly—“where it—(i) reduces costs: (ii) speeds up the delivery of services: (iii) makes information more accessible:”. Those are all good things but I would also say that I think reducing costs at any cost would not be desirable. The final point made in that part of the bill goes on to say that “(c) access to justice should be preserved for all persons including those without access to electronic technology.” I think that is a necessary protection to put in there because all of us on a day-to-day basis probably have more electronic toys and tools than we can comfortably use on some days but that is not necessarily the norm. As we shift to enabling more use of technology the electronic filing of documents and all the rest of it—I think those are positive things—we do need to be aware that they could come with some fish-hooks.One of the potential fish-hooks that the Greens will be particularly interested in given that we will be requiring judges to post all judgments online is that we just wonder how that will rest with the provisions of the Criminal Records (Clean Slate) Act which was one of the legacies of former Green MP Nandor Tanczos who is unfortunately often best remembered for his appearance but who made some significant contributions to this place. The Criminal Records (Clean Slate) Act is legislation that enables people to leave their pasts behind them. If people make a mistake and fall foul of the justice system but then go on to lead good and positive lives it is appropriate that they should be able to leave that past in the past and that they should be able to just let it sit there. As soon as one puts anything online of course you know there will be serious difficulties about erasing that electronic trace. So we will be looking very hard at requiring that the legislation ensures that posting judicial decisions online does not compromise the intent or the letter of the clean slate legislation as it now stands.I would like to say that I look forward to the select committee wholeheartedly working on this bill. Perhaps it is because of this time of year when we are all feeling rather tired that the task is looking larger than it will be. But it will be interesting it isnecessary it is a good time for it to happen and we look forward to that ongoing work. We will be supporting this legislation. Kia ora.Hon CHESTER BORROWS (Minister for Courts): I wish to take a short call in support of the Judicature Modernisation Bill. I want to endorse the comments of my cousin Chris Finlayson in endorsing the work of the Minister of Justice in respect of the hard work that she has done on pulling this bill together but also acknowledge the work that he himself has done.As someone who has come to the law fairly late I do not get my buttons pushed by the weird and strange things that those addicted to the law and judicature do. But what I am pleased to talk about are some changes that have been made more recently where we have made the most significant changes to criminal procedure in 50 years. These took effect in July and they were well supported across the House. It is expected that they will remove 30000 unnecessary court events each year and save about 10000 sitting hours. A number of new experiences are involved here with the filing online of a number of actions before the courts. Police will now file their 200000-plus criminal charges a year electronically instead of using paper files.I want to just quickly focus on two particular aspects of this bill and how they enhance our modernisation programme. The Government has moved to take advantage of the huge benefits of video links—audiovisual links—and a number of appearances before the courts now occur by audiovisual link saving the Department of Corrections the police and the courts time and money and it improves safety. Even the prisoners themselves enjoy the prospect of being able to stay involved in the programme in the place where they are imprisoned rather than having to travel in a prison van sometimes for several hours and sit in a cell in somewhere they are scared of or just do not like for a 10-minute appearance before repeating the whole process in going back to prison later on. Earlier this year the Minister of Corrections Anne Tolley and I announced a $27.8 million expansion to audiovisual links in 14 more courts and nine more prisons. The first of the new courts is due to come online next week.The second change I want to focus on is moving to a single unified District Court. Previously our District Courts were 59 individual registries. Each operated in its own little world in its own little fiefdom. In a modern New Zealand where you can wake up in Invercargill make it to Wellington for afternoon tea and then get toKaitāia by dinner time it all seems nuts not to have one court that covers the whole registry of New Zealand. Making good use of our court resources is an essential challenge for our court system. No one benefits when a courtroom sits empty.I want to finish by saying that the changes and provisions within the Judicature Modernisation Bill will make the use of our courts easier for those who are engaged in them as professionals as members of the judiciary or as members of the public who have to appear—probably not by choice—as a witness or as a defendant. An open free and transparent justice system is what we are all aiming for. This bill will make it an awful lot simpler and easier to achieve. Thank you.DENIS O’ROURKE (NZ First): New Zealand First supports this huge 1238-page Judicature Modernisation Bill to the select committee stage for scrutiny.Hon Phil Goff: 1182.DENIS O’ROURKE: Sorry?Hon Phil Goff: 1182.DENIS O’ROURKE: I think it is 1238 but we can debate that at another time. Until then anyway as you can see it should make a good doorstop. I would have to disagree with the Attorney-General by the way about the old television programme featuring Mr Haddock withAlastairSim as the judge. Haddock may have been anexpert vexatious litigant but I got a lot of my legal education from him. A damn sight more—[Interruption]Hon Members: It shows.DENIS O’ROURKE: If it shows then it shows that it was a good television programme because it was good quality stuff and better than some of the incompetent law lecturers that I had to endure in those days. Anyway the bill has a lot of merit. It implements the Government’s response to the Law Commission’s reportReview of the Judicature Act 1908: Towards a New Courts Act and accepts 71 of the 89 Law Commission recommendations. They fall into four areas: firstly the court structure and legislation; secondly judges’ appointment and how they operate; thirdly court administration; and fourthly non-party participants and of course vexatious litigants. These revisions are generally welcome and will be welcomed by the profession. They are needed to update the courts using 21st century technology to allow better use of resources and to improve administration. There is a need to make the courts more people-friendly more accessible more understandable and especially more transparent.Part 1 of the bill repeals and replaces the Supreme Court Act 2003 and more particularly the Judicature Act 1908. It is high time for that. The old legislation was outdated and rather Dickensian. The new court is intended to be more people-centred modern and accessible by improving transparency flexibility and relevance of senior courts. Those are very good objectives.Some of the main features of Part 1 are the creation of a single statute for the senior courts and it will also streamline the current arrangements as to who can be appointed as non-permanent judges including limiting appointment to former or current judges rather than directly from the bar and generally setting more consistent appointment periods and age limits across the courts. Those changes will be very welcome. Existing ways of appointing judges otherwise remain but published guidelines and protocols are sorely needed and I see that these are now proposed.Similarly the bill codifies restrictions on judges’ other appointments employment and issues relating to potential pecuniary conflicts of interest. There is quite a lot of public pressure for that as well. The bill establishes a judicial panel in the High Court from which judges can be allocated to hear specified types of commercial cases. That will match recognised judicial expertise to cases where parties wish to have a panel judge assigned. That is going to ensure better use of judges’ expertise and again is a very welcome new provision.The bill will also work towards more transparency and that is particularly welcome. The judiciary is to publish information relating to the delivery of reserve judgmentsrecusal from cases the suitability of judges holding employment or other office and all final written judgments unless there is good reason not to do so. The Attorney-General is to publish the process that he or she follows when making judicial appointments. The public will welcome that.Part 2 deals with and replaces the District Courts Act 1947 and establishes a unitary District Court. That is also to be more people-centred modern and accessible. The bill reconstitutes the District Courts as a single court with divisions for a Family Court a Youth Court and a disputes tribunal. It increases the monetary limit of the court’s civil jurisdiction from $200000 to $350000 and I might say that is well overdue. It also provides the District Court with the power to stop vexatious civil litigation and there are to be the same transparency requirements as I have already mentioned for the senior courts.Part 4 of the bill implements the Government’s response to the Law Commission’s report on aspects of damages the award of interest on money claims and that is very long overdue and will be particularly welcomed by the profession. It produces a singlestatutory system for the award of interest. It will provide a greater degree of certainty for the court in awarding interest on money claims; it will promote clarity simplicity and consistency; and it is again likely to deter vexatious litigation. These are very good provisions and ought to be supported by us all.Part 5 is also important. It provides for the legislation to enable and govern the use of electronic technology in court and tribunal proceedings while protecting access to justice for all people. This is very important. People expect these days for the courts to be up to date in terms of modern technology. I only regret the recenteBench failure at stage three after the expenditure I understand of something like $18 million. That is quite unacceptable and it is an area in which the Government must do much better.Part 6 amends 17 other statutes. There are amendments to the specialist courts legislation covering the Employment Court the Environment Court and the Māori Land Court by applying a number of provisions contained in Parts 1 and 2 as mentioned to the specialist courts. There is to be an amendment of the Arbitration Act 1996 as well to replace the definition of an arbitral tribunal and to permit the Minister of Justice to appoint a body to resolve certain matters relating to an arbitration. I think these are very welcome changes as well.Overall New Zealand First welcomes the bill and will vote for it to go to the Justice and Electoral Committee where we will all need to spend a great deal of time ploughing through that huge statute. I think that people who are not on that select committee will be glad that they are not.Hon Phil Goff: We’ll be competing to sub on to it.DENIS O’ROURKE: Well of course you will Mr Goff. We look forward in any event to scrutinising the bill at that stage in detail and to the report back to the House but I am sure in the end this will be pretty much of a very important leap forward for the court and justice system in New Zealand.SCOTT SIMPSON (National—Coromandel): As chairman of the Justice and Electoral Committee it is a pleasure to rise to take a brief call on the first reading of the Judicature Modernisation Bill which by any measure is a weighty piece of legislation. In 1907 New Zealand became a self-governing dominion and that meant that in the following year 1908 we had passing through Parliament an enormous amount of legislation much of it forming the very cornerstones and foundations of our civil government. Amongst it was the 1908 Judicature Act and it has served us all those years for over a century. It has never actually been completely reviewed in the past. It has been tinkered with a few times but never completely reviewed. So it is a great pleasure I think to be sitting on the Justice and Electoral Committee when the Minister of Justice brings to the House this piece of legislation which will modernise our court system and see us through the next 100 years with the same kind of effectiveness that we have had from the previous legislation.I took particular note of the Attorney-General’s contribution earlier on in the debate when he mentioned that the committee would want to focus on several clauses in the bill. Although it is a very weighty piece of legislation clause 93 which deals with the judicial appointment process and exactly how the Attorney-General explains his process for appointment will be a matter that the committee wants to pay attention to. The area of vexatious litigants is a matter of increasing concern as they increase in numbers and clog our court system. Clauses 162 to 165 address the area of concern relating to vexatious litigants and I for one will be very keen to spend some time focusing on those clauses. Clause 166 deals with reserve judgments and the timeliness of the delivery of those judgments. That has been a topical matter in recent times. And then there are therecusal rules which will be another area that the committee will want to look at closely.I am looking forward to reading the legislation in great detail over the summer adjournment and coming back to the committee with a full and intimate understanding of its minute detail. I commend it to the House.Debate interrupted.Speaker’s StatementsRetirement—Deputy Serjeant-at-Arms Grant BamfieldThe ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the Hon Phil Goff I would just like to advise the House that today will be the last day in the House for Grant Bamfield sitting here on my right as he is retiring.Judicature Modernisation BillFirst ReadingDebate resumed.Hon PHIL GOFF (Labour—Mt Roskill): I have been trumped by Grant Bamfield but I would like to personally wish Grant every best wish for the future and thank him for his many years of service in this place. It is always sad to—I was going to say “see an old face go”—I mean it is sad to see a face that has been around for a long time leave this establishment. But to you and to all of your fellow workers who make this Parliament function as it can thank you very much for your dedication your commitment and your service.I was interested in Scott Simpson saying that he was going to take this Judicature Modernisation Bill home to read over Christmas. Good luck! We will give you a test on 25 January and see whether you have thoroughly absorbed it.It has been my habit in this House when talking about justice bills to describe the National Party’s bills as lightweight political flimflam. Well I cannot really sustain that particular argument on this piece of legislation. This is not a party political pamphlet as so much of the National Government’s justice legislation has been. In fact it is based on two very serious reports by the Law Commission. My experience of the Law Commission is that it does its homework that it does its work well and that we can be confident that the basis of this legislation will be sound.The debate on the short title will be fairly easy because—unlike other bills I think—we could agree that this is a judicature modernisation bill. It amends a bill passed in 1908. That is 105 years ago. That is not to say that the Judicature Act has not been modified many times—it has been—but when you modify and you make ad hoc changes you lose some of the coherence to the piece of legislation. So it is good to have this piece of legislation and I am so sad that I will not be on the Justice and Electoral Committee and be required to read it page by page. Of course Geoffrey Palmer would have already absorbed this before breakfast and would have given you a scholarly account of what is in it but I fear that some of my colleagues on the Justice and Electoral Committee might be hard pressed to treat it as it ought to be treated. It is 1182 pages long. It could be called the “Forestry Destruction Bill” by its pure weight.I want to say that although the bill has been I am sure thoroughly drafted through the Law Commission I have taken the time to read some of the regulatory impact statements. The regulatory impact statements suggest that the select committee cannot simply take this as a given and that it will have work to do. I am looking for example at the regulatory impact statement on the Judicature Modernisation Bill—the second paper—and it has caveats on the work that the Ministry of Justice has been able to do on it: “Limited consultation has been undertaken in relation to the options in this paper …We do not have reliable data to assist in considering a number of the proposals in this paper. … We have not been able to model the operational impacts of the proposals …”.So although the base and the work that the Law Commission has done are sound the ministry constantly complains through the regulatory impact statements that it has had to be rushed in the work that it has done on it. Indeed if I look at one of the other regulatory impact statements on the Judicature Act and the consolidation of courts legislation it says: “limited consultation has been taken in relation to the options which go further than the Commission’s recommendations”. The work that the ministry has done on this by its own admission has not been fully consulted and has been a bit rushed in the time available and the select committee will therefore need to consider carefully the proposals in it.I want to begin my discussion on the substance of the bill with Part 5. I am taking it out of order because Part 5 of this bill stands out like a sore thumb. Let me read what Part 5 does. It “sets out legislation to enable and govern the use of electronic technology in court and tribunal proceedings” including all current paper-based requirements to be replaced with electronic processes. I read that with some degree of amazement because last Friday the Minister for Courts stood up and said that an $18 million project on producing a paperless court which he had earlier boasted would mean that processing would be 70 percent faster and save 93000 man hours—this wonderful paperless court and theeBench proposals that the Government had invested $18 million in—has been scrapped. It has been scrapped. This from the Government that brought us the electronic wonder ofNovopay and whose predecessor the less than illustrious National Government before we came to power had brought us INCIS which wasted $100 million.Well I have got some questions to ask of the hapless Minister who introduces a bill promising that this will be an electronic miracle and that it will save all of this money and all of these hours and who had to admit just days before this bill was introduced that everything that the Government had done oneBench had come to nothing that the promises had not been delivered upon and that actually Part 5 of this bill is therefore meaningless and does not do what it promises to do.I think that in the course of debating this bill and for Scott Simpson and the select committee looking at it some hard questions have to be asked. How did the Government stuff up converting the paper-based bench to an e-bench in such a way that it spent millions of dollars and failed to deliver? I want to know how the Government got it wrong. I want to know how it intends to fix it. I want to know what the timetable is before Part 5 of this bill will have any meaning at all. And I want to know exactly what it cost the taxpayer in wasted funding because this Government once again stuffed up and failed to deliver on what it promised. So that certainly is a very controversial part of the bill.We were promised that the judges could open digital files in court. They could input changes including future appearance dates. They could input bail conditions—and you and I Mr Assistant Speaker sat in the court and watched the laborious way the papers appeared on the judge’s bench. All of this was going to be digitalised and it has come to nothing. What is the explanation for that? Can anybody on the National bench act as an apologist for their Minister and say why the Government stuffed this up? It is a serious matter. The taxpayer does not mind paying their taxes if the money is spent wisely. But when you spend $18 million you make big promises and you fail to deliver then this House deserves an explanation for why the Government got it as badly wrong as it did.That leaves me with 2 minutes to deal with the other five parts of the bill. I want to say that there is some quite sound stuff in the rest of the bill. Part 1 repeals the SupremeCourt Act which is not that old—2003—and the Judicature Act of 1908 and it creates a Senior Courts Bill. This brings together the High Court the Court of Appeal and the Supreme Court under one system. I think that is sensible. It streamlines the appointment of non-permanent judges. It establishes a judicial panel under clause 18 of the bill to hear certain types of commercial cases. These are incredibly complex and specialised cases and I think we should be developing the specialist expertise of judges and panels to deal with them properly. They can take a lot of time. They can be very expensive. They can be very complex. I think this is a move in the right direction.I note that there are more powers given in this part and in the second part to restrict vexatious civil litigants. If it is indeed vexatious I am quite relaxed about that. But we must also honour the right of people to have their time in court and we should not use that power lightly. Part 2 creates a unitary District Court system. We have got 59 separately mandated District Courts at the moment. This brings them together. The Family Court the Youth Court and dispute tribunals will all become divisions of that court. It also increases the threshold of the claims that can be heard from $200000 to $350000. I think that is sensible. I will not go into the details of the award of interest on money claims but it is sensible to preserve the real value of those claims. We will support this bill but the Government must give an explanation of how it managed to so monumentally stuff up the digitalisation of the courts system.ALFRED NGARO (National): I do not rise to give an answer to that speech by Phil Goff. Rather than nitpicking I would rather lavish praise on a very good bill the Judicature Modernisation Bill which has a little bit of substance to it. May I first of all just acknowledge Grant Bamfield. Grant thank you very much. Your friendly smiley face has always been very important. I am sure you will have to go home now and do some of the domestic chores you have been avoiding.Like anything as you have said all good things come to an end and there is time for change. It is time for change for the Judicature Act 1908 with this bill. It is time to renew the Act. As the bill says it is about the modernisation of our courts system. I look forward to our time in the Justice and Electoral Committee with this bill—all 1182 pages of it. But I think more important is the opportunity to hear submissions and to thoroughly debate the critical issues of importance that are here. I do not have the wealth of knowledge or the legal experience but what I do have is an understanding of the systems. I think that this bill will help to ensure that we have a modern courts system. We had Andrew Bridgman who is the Secretary for Justice show us that we have a system that works very well and isfutureproofed as well. I cannot speak for very long—I had wished to—but I commend this bill to the House.CLARE CURRAN (Labour—Dunedin South): I will take a short call on this first reading of the Judicature Modernisation Bill. Labour supports this bill going to the Justice and Electoral Committee but can I just point out the irony of a piece of legislation that is 1182 pages long—here it is; I do not know how much it weighs but it is pretty difficult to carry—that has a part in it Part 5 devoted to making the courts system electronic and yet we have a bill that is 1182 pages long. I have to say that at the select committee it is going to be an interesting process to see just how feasible it actually is for that to occur particularly in light of this Government’s inability to manage its ultra-fast broadband scheme. If you cannot roll out ultra-fast broadband which is an extremely important programme—Labour is absolutely committed to fibre—without having a huge debacle which is what we have ended up with then how are you going to create a new system that is going to make the courts system run on an electronic system and move it away from a paper-based system?That is a pretty important point that we need to make given the current situation where day by day we have seen a new development happening that has seen the value ofChorus halved between this year and last year. We have seen three Ministers embroiled in a debacle that is essentially about a system of fibre that is going to underpin an electronic-based system for our judicial system—well supposedly going to—and we have seen the threat to legislate to overrule Commerce Commission decisions. We have seen that taken off the table. And then we have seen a report commissioned by a financial company that is then given a verbal report that is now used as the basis to go in to do a renegotiation. This is just going from one debacle to another debacle.The ASSISTANT SPEAKER (Lindsay Tisch): Order! We are not talking about that.CLARE CURRAN: It is a very big bill. It is a very big bill and it is a very big debacle. Certainly there will be select committee discussion on Part 5 of this bill which comprises the provisions where the documents used in the courts system are going to be transferred to an electronic system which is ultimately about bringing the courts system into modern times and cutting down on waste. That is what this bill is intending to do. It is a pretty significant part of the bill. It has a whole part devoted to it. This is a huge irony and I think it is important that we acknowledge that and that the select committee looks very closely at the Government’s ability to actually deliver on what it says it is going to do.Hon KATE WILKINSON (National—Waimakariri): Can I first take this opportunity to wish Grant Bamfield all the very best for his retirement. Some may not know that Grant used to be a scratch golfer. So Grant happy golfing and happy retirement. Who knows; maybe I will come and get some golfing lessons in my own retirement.In terms of the first reading of the Judicature Modernisation Bill I think this bill is exciting stuff. I used to be a lawyer for 26 years and to be given the opportunity to not only speak on this bill albeit briefly but actually be part of the Justice and Electoral Committee which is going to be scrutinising it I think is a fantastic opportunity to look at modernising our court systems to bring justice up to the 21st century. I will look forward to reading this bill over the next wee while and I will certainly look forward to the submissions and the scrutiny of the select committee. I have listened to the speeches. I have heard the Attorney-General raise references to clauses 93 161 and 162. They will get special scrutiny. I hope that at the end of this process an apolitical process we really will have a suite of justice bills that as a House we can be particularly proud of. I commend this bill to the House.Bill read a first time.Billreferred to the Justice and Electoral Committee.Speaker’s StatementsRetirement—Assistant Serjeant-at-Arms Alan HusheerThe ASSISTANT SPEAKER (Lindsay Tisch): Members there is another messenger who is retiring as well as Grant and that is the assistant Serjeant-at-Arms Alan Husheer. I should not refer to someone who is not in the House. He is not in the House at the moment but he is on the premises and he is going to be farewelled tonight along with Grant. Maybe the House would like to acknowledge him too.Taxation (Annual Rates Foreign Superannuation and Remedial Matters) BillSecond ReadingHon JO GOODHEW (Minister for the Community and Voluntary Sector) on behalf of theMinister of Revenue: I moveThat the Taxation (Annual Rates ForeignSuperannuation and Remedial Matters) Bill be now read a second time. Ours is a good tax system governed by good tax rules. It is good because it strives always to ensure fairness. The system also aims to ensure that taxpayers understand their obligations and that those obligations are simple and not unduly onerous as that ensures a greater rate of compliance. The bill before us aims to make the rules for taxing foreign superannuation simpler and fairer for New Zealanders returning after working overseas and for migrants who have contributed to overseas superannuation schemes before coming to New Zealand.The current rules for taxing New Zealand residents on their foreign superannuation are complex and can be difficult to understand. Under the proposed changes from 1 April 2014 lump sums from foreign superannuation schemes will be taxed only when they are withdrawn or transferred to a New Zealand or Australian scheme. The tax would depend on the gains made while the person has been a New Zealand resident using one of two calculation options. Not being taxed on accrual under the foreign investment fund rules is a major simplification. The taxation of periodic pensions will stay the same.Transitional and practical matters arising from the proposed new rules are dealt with in the bill so that taxpayers will not be disadvantaged. These include making it easier to meet tax obligations by allowing those transferring their foreign superannuation scheme interests into KiwiSaver to make a withdrawal from the KiwiSaver scheme to pay their tax bill and by allowing people who complied with their tax obligations using the foreign investment fund rules before 20 May 2013 to continue using these rules in relation to that interest after 1 April 2014 when the new rules are proposed to come into effect.Those who made a lump sum withdrawal or a transfer to another superannuation scheme between 1 January 2000 and 31 March 2014 but failed to meet their tax obligations at the time will have the option to pay tax on 15 percent of the lump sum amount. Alternatively the individual could apply the rules that applied to their interest at the time of transfer and pay any associated back-tax. The 15 percent option would not impose any new tax liability beyond the existing law. I must stress that this is an option.These measures are designed to help people comply. The Government is simply keen to help people who may have been unsure of their tax obligations to get back on track. The Finance and Expenditure Committee has supported these proposals and made several recommendations. In particular the Finance and Expenditure Committee recommended that the rules be limited to taxpayers who acquired their foreign superannuation while they were not New Zealand residents. This will make the new rules more robust and is more consistent with the original policy intention.Other changes will make the rules easier for taxpayers to use. I said before that the tax system aims to ensure fairness. I would like to draw members’ attention to another notable feature of this bill which is the proposal to rationalise the rules as they apply to the taxation of miners of specified minerals such as gold and silver and also iron sands. Such miners currently enjoy a highly concessionary tax treatment. Mining is an important component of our economy but that does not mean that any one industry should be advantaged over others in tax. At the same time we acknowledge that the industry does have its unique aspects which must be taken into account.The bill therefore proposes a range of measures including that immediate tax deductions for prospecting and exploration expenditure will continue. However on the establishment of an operational mine exploration expenditure on items used for the extraction of minerals will be clawed back and be deductible over the life of the mine. Tax deductions for development expenditure will be deferred and allowed over the lifeof the mine. Expenditure incurred in the extraction of minerals will be subject to ordinary capital/revenue tax rules. So-called revenue account treatment will apply to land acquired for specified mineral mining—that is sale proceeds will be taxable and the cost of acquiring and disposing of the land will be deductible. General tax depreciation rules will apply to expenditure on assets with a useful life independent of the life of the mine.The bill also contains a number of amendments to ensure that the income tax rules cater for the rebuilding activity now taking place in Canterbury. I would like to thank the members of the Finance and Expenditure Committee for their valuable recommendations on this bill which have helped to improve and clarify the rules. It is therefore with pleasure that I commend the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill to the House.Dr DAVID CLARK (Labour—Dunedin North): Labour will be supporting this bill the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill with some reservations and I want to echo MinisterGoodhew’s sentiment in thanking the Finance and Expenditure Committee for the constructive work it did. It was certainly my observation that around the table there was a spirit of wanting to make this legislation as fair as it could be. The Minister raised the issue of fairness many times and talked about how our tax system was good because it had fair obligations and then she helpfully linked this to compliance. All of these are issues that I would like to cover in my contribution.It certainly has been the case historically that we have had good voluntary compliance in New Zealand but what the Minister did not point to was the fact that that compliance is dropping. That voluntary compliance that we rely on in our tax system is dropping. That is inevitable in part because businesses are struggling under this Government. We know that there are 2500 fewer small businesses being created every year under this Government. It is in part because people are struggling and we know that inequalities are at the highest that they have ever been in New Zealand in recorded history under this Government. We also know that people who cannot afford to put food on the table are going to struggle to meet their child support obligations and the other tax burdens that are upon them.This Government is doing very little to help those people. Those record figures for inequality are something that should be regarded as a national shame. We have a history of being and a pride in being a country of fairness and equity and that reputation is going down the tubes. So the contribution made on behalf of the Minister of Revenue by Minister Goodhew begged a question about whether these changes and the future changes that the Government wants to make will contribute towards that understanding of our tax system as being fair and equitable and will contribute towards the voluntary compliance that we actually rely on in order to have a functioning and efficient tax system that collects revenue to fund our schools and hospitals which I am sure most members across the House would want to see continue.We heard yesterday in the financial review hearings about the fact that the Inland Revenue Department is not meeting its new target—its new revised target—of answering three out of four phone calls which I found shocking frankly. That three out of four phone calls is the target in the first place is pretty shocking and that the department is not meeting that target is I think unacceptable. That points again to the kinds of frustrations that people are experiencing with the tax department which is under-resourced and is struggling with an outdated computer system.We on this side of the House worry that these proposed changes might come back to the House for revision when the Government tries to implement them. That has certainly happened before with legislation in my time here. It has been passed throughthis House and has come back for revision because the department has found that it is not able to implement it.Hon Anne Tolley: You don’t think in 9 years that Labour knew that system needed upgrading? You did nothing about it.Dr DAVID CLARK: The Minister opposite raises the 9 years that we were in Government. That is an interesting point because when this Government came in 5 long years ago it was stated in the briefing to the incoming Minister that this problem of the computer system urgently needed addressing. In fact her Prime Minister acknowledged 2 years ago now that changes to our tax system were being held back because the system had not been repaired. I am very glad that the Minister is bringing this up because that problem is growing. It is a shocking problem that needs to be addressed and taxpayer money has been spent on it with very very very little progress. We heard yesterday in the select committee Ms Tolley that $50 million has been spent so far on the computer system and what do we have out of it so far? We have out of it unfortunately an agreement from Ministers that it should proceed in theory. We have an in principle agreement to make some change—$50 million.Moana Mackey: $50 million?Dr DAVID CLARK: Yes $50 million. Now we have an in principle agreement to make the change that the Inland Revenue Department recommended to this Government 5 years ago and that the Prime Minister acknowledged 2 years ago was urgent—$50 million has been spent and now we have an in principle agreement to do something about it.That is why on this side of the House we are worried about whether this legislation can actually be implemented by this Government. It has been making excuses. It is getting nowhere with fixing the tax system and New Zealand is suffering because every Western democracy needs an effective and efficient tax system to collect the taxes so that we can have schools and hospitals. It will not do to just flog off every asset that the Government owns. Eventually we will run out of assets to flog off to fund those kinds of projects and we have seen that the Government is no good at doing that anyway. It has failed to meet its target.We do need a reliable tax system that collects the revenue fairly as the Minister indicated at the start and we need voluntary compliance which involves having the people out there getting a satisfying experience with the tax system as they hand over their dues voluntarily. It is not one that faces having three out of four phone calls unanswered and it is not a tax system that releases information willy-nilly as well. We had the privacy breaches with the Inland Revenue Department tax system that were widely reported last year. Last year it was reported that over 6000 people’s details—their most private details—were released by the Inland Revenue Department because that tax system is burdened and is squeaking at the seams. And you would expect that because it is 21 years old for goodness’ sake! Not many people rely on 21-year-old computer systems in their everyday work—10 years before Facebook for goodness’ sake! That is an outrage. It needs to be updated.The $50 million spent so far to get an in principle agreement to proceed ought to lead us somewhere. In fact we also learnt at the select committee yesterday that the tenders for the development of the first stage of the business case which is the next stage are out at the moment and that they will be reporting back in June next year with an updated business case. June next year—there is some hope. They will get there eventually. They will have an in principle agreement then they will have an in principle business case—Hon David Parker: Peter Dunne will probably be Minister of Revenue again.Dr DAVID CLARK: Mr Dunne may well be back as Minister of Revenue by then. I am sure that he has got nothing to fear and nothing to hide or that is what he will be claiming—goodness knows. This Government does not seem focused on that task. It is not resourcing it and so that is why we have got these worries about whether these actual measures will be able to be implemented.There is one equity issue that remains important with this legislation and that is the foreign superannuation changes. If we take for example two young New Zealanders who go on their overseas exchange and one of them heads off to England and one of them heads off to Australia they will find if they are saving there in a foreign superannuation scheme that when they return to New Zealand one of them will have a whopping great tax bill and the other one will not. At some level that does not feel very comfortable at all and the problem quite simply would not arise if we had a proper capital gains tax in this country. A proper capital gains tax is something that again this Government has been avoiding because it is very interested in protecting the interests of those who have money and it protects their interests above fairness.That is why the voluntary compliance level is dropping in my view. People no longer regard the system as being as fair as it was once upon a time and nor is it easy to interact with. With the privacy breach concerns on top of that we have a department that is struggling and that the Government is clearly not focused on and clearly is not interested in and we have growing non-compliance.Part of that non-compliance as I mentioned is due to tax avoidance which others see as unfair and then they feel that they should not themselves be paying their tax burden. We know that this is a growing problem worldwide. A recent edition ofThe Economistreported that now very close to 200000 individuals have assets of $30 million or more. That is a 6 percent increase on last year. There is a growing inequality of wealth around the world. The problem in New Zealand is growing faster than elsewhere and that level of inequality is driving the non-compliance as I explained at the beginning of my address.Unfortunately this department is not even able to be focussed very much on pulling that in. We heard in the Finance and Expenditure Committee yesterday that there is no estimate of the size of tax avoidance in New Zealand. The department finds that it is too hard and it does not have the resources available to it to actually estimate it properly.So here we have another bill going through that we will be supporting because it makes some steps in the right direction certainly with the tax on mining. We agree that some of those things that have been clarified in the select committee needed clarification. They are sensible changes and the committee was well chaired and worked through the issues thoroughly. I congratulate Mr Goldsmith on his work in that regard. We have made some good changes here. The equity issues between those coming from Australia as opposed to those coming from the rest of the world still stand out as unusual and difficult and I am sure that we will hear of many people out there listening who have concerns about that—The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member. His time has expired.PAUL GOLDSMITH (National): I would like to thank the previous speaker David Clark for his kind and generous remarks about the work of the Finance and Expenditure Committee which was conducted in a collegial manner as we worked our way through this piece of legislation the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill.There is no doubt that the tax system in New Zealand is in pretty good shape. I am just looking at the financial statement that the Finance and Expenditure Committee examined this week which showed that the Inland Revenue Department has collectedabout $58.6 billion in core Crown taxes. This is $3.2 billion more than last year and that represents about 27.8 percent of GDP. So there is no question that the Government is a very skilful and indefatigable collector. However this Government has reduced the overall burden while still being on track to return to surplus. This is a singular achievement of which the Minister of Finance Mr English must be very proud. It is worth recalling that tax as a percentage of GDP peaked at about 31 percent in 2006 under that most rapacious tax-gatherer Michael Cullen. We have managed to get it back to a more reasonable level.Of course the driver of tax is Government spending and this Government has made good progress after the blowout during the global financial crisis and after the Canterbury earthquake when core Crown spending peaked at about 35 percent. We are now down to 33 percent and on track to be at about 30 percent in a few years’ time. There is no question that in terms of collecting tax we are very good at it.This Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill is the latest piece of tax legislation aimed at making the tax system fairer and simpler and strengthening our economy. The Government aims to raise the revenue that it needs not through hiking tax rates but by ensuring that the existing tax bases are applied fairly are defended stoutly and are updated every year in order to deal with changes to the economy and the way that taxpayers react. An important aspect of fairness in the tax system is that taxpayers must be able to understand and comply with the rules. It is necessary for the tax rules to be cohesive fair and applied consistently.I suppose the biggest area that we dealt with in this piece of legislation is related to foreign superannuation. There is no question that the current settings have been very untidy. We had heard that about three-quarters of people who were liable for foreign superannuation tax were not complying with that liability so any situation like that did require reviewing. The committee went through this in quite some detail. We made several recommendations to improve and clarify the rules—in particular recommending that the rules be limited to taxpayers who acquired their foreign superannuation while they were not New Zealand residents. That makes the new rules more robust and more consistent with the original policy intention.Other changes were introduced to make the rules easier for taxpayers to use. I think the key thing that the committee came up with in the process was how important a good education scheme or set of arrangements particularly with tax advisers is in this area. There is no question that it is a complex area of law. If you are going from one jurisdiction to another the tax complications relating to superannuation are always going to be detailed not just in New Zealand but in any country around the world. I think what we have come up with in this piece of legislation—although it is not perfect and there are certain situations where people are dealt with differently—gives options for taxpayers to deal with being non-compliant in a straightforward way and offers a reasonable mix.The other area is in specified mineral mining. Again the Finance and Expenditure Committee made several recommendations to improve and clarify the rules there—for example a new definition of “operational expenditure” has been included to ensure that such expenditure remains deductible and is distinguished from development expenditure. The committee heard a lot of submissions on that. I think we have fallen in a space that is reasonable to the mining companies that have situations where they are dealing with about 30 or 40 years and trying to project a long way out and wanting to ensure that they are not left with an inability to get expenditure deducted. I think we have fallen in a reasonable space there. On that basis I am very happy to commend this bill to the House. Thank you.Hon DAVID PARKER (Deputy Leader—Labour): One of the notable matters in respect of this legislation the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill which was not unduly delayed at the Finance and Expenditure Committee—indeed it was reported back within a reasonable time by the select committee and has been put on the Order Paper by the Government reasonably promptly thereafter. Yet between the time of its first reading and now a lot of political events have happened. It was introduced by the Hon Peter Dunne whose dishonour was later highlighted by the Prime Minister who removed him—John Hayes: Don’t be uncharitable—it’s Christmas-time.Hon DAVID PARKER: “Don’t be uncharitable at Christmas-time” I have heard from Mr Hayes. Well charity should go only so far and the National Government is always talking about how there should be limits to the beneficence of the Government. To see it being contemplated that Peter Dunne having been forced to resign for having leaked theKitteridge report—according to the Prime Minister there is now the possibility that to keep his shaky coalition going and to maintain some sort of prospect however slim of winning the next election he will shoehorn Peter Dunne back intoŌhariu. The Prime Minister is now saying that Peter Dunne is a person whom he might reinstate perhaps back into revenue which I would think would be a diabolically low standard.In respect of the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill I note that we are voting for this legislation because it does have some good remedial provisions. But I would also note that that should not be taken as acceptance by us that the annual rates of income tax for the 2013-14 year which are effectively set by clause 3 of this bill and include the tax cuts of the National Government in the last term were fair. Forty percent of them went to the top 10 percent of income tax earners and this bill entrenches the effect of that by continuing that circumstance into the future.Of course that is one of the reasons why New Zealand has the highest rate of inequality that we have had since good records began. It is one of the reasons why that inequality continues to grow. And if people were already worried about the effects of inequality they would have been doubly concerned when the report came out with the international measurement of educational performance this year which showed a dire decrease in the educational performance of 15-year-olds. That is not all the fault of this Government but some of it is the fault of this Government given that 5 years into this Government those results are poorer than they were the last time they were reviewed most significantly in maths and science. Of course according to the report that is in part driven by increasing inequality. That is not the only reason for it but an important part of the reason for declining educational performance in New Zealand schools according to that report is increasing inequality. Of course the tax rates that are referred to in clause 3 of this bill are one of the causes of that rising inequality.My colleague David Clark referred to the remedial matters that are addressed in this bill and then started to list some of the remedial matters that ought to be in the bill and are not and that threaten our tax base and undermine the strength of our economy. I want to mention a couple more. We have now known for more than 5 years—admittedly it would have started before the end of the last Government but it has become far more prevalent a problem—that revenue is being taken out by overseas companies from the New Zealand economy without their paying tax on the effective profits they make in the New Zealand jurisdiction.In the last 5 years since this Government has been in power we have seen the explosion of the internet as a source of commerce and we have seen increasing advertising revenues being garnered from the New Zealand economy by Google and byFacebook to name but two. Virtually no tax is paid by those entities on the revenues that they take out of the New Zealand economy. That is wrong both in a tax fairness sense in terms of the loss of revenue to the Crown but also perhaps more important in its effect on New Zealand - based businesses that employ people in New Zealand and that do face a tax burden. Whether it is the Fairfax Group or the APN group which employ journalists—including the journalists whom we rely upon in the press gallery here to keep democracy honest and to present to the New Zealand public the differing policies that different parties stand for—or other groups they are being severely and I do mean severely disadvantaged relative to groups that do not pay taxation in New Zealand but compete with those newspapers radio stations and television for advertising revenue and do not pay tax on it.I think it is very very lax of the Government to have done nothing effective to control that tax avoidance. This bill does not do that. This is a complaint I hear from New Zealand businesses in Auckland including big businesses successful business people and men and women who complain that it is not fair that there is so much multinational tax avoidance. Transfer payments are being made to overseas jurisdictions in order to limit New Zealand profits and therefore taxes.John Hayes: Table the evidence of what you’re saying.Hon DAVID PARKER: Mr Hayes might not understand this but he should pay attention because it is happening not just with Facebook and Google; there are transfer payments that are being made in respect of intellectual property transactions for example. Trademarks and things are being used to take revenue out of New Zealand to overstate New Zealand expenses so as to decrease notional profits and taxable profits in New Zealand and therefore to decrease taxation in New Zealand. Again that is not fair to other taxpayers because those other taxpayers have to effectively pay the taxes that the Government needs in order to fund pensions education and health services. That burden falls on other taxpayers; it does not disappear. Neither is it fair to the New Zealand - owned companies that do not play the same tricks and do pay a higher effective rate of taxation.The hollowing-out of New Zealand’s corporate tax base in this way is something that I am not surprised that National does not pay much attention to. We know that National makes lots of unprincipled decisions in this space whether it is for RioTinto paying a $40 million subsidy in order to get the Meridian Energy sale off the books—John Hayes shakes his head but he seems to have missed that one as well. That happened—John Hayes: Christmas Grinch aren’t you?Hon DAVID PARKER: What is that?John Hayes: Christmas Grinch.Hon DAVID PARKER: I am the Christmas Grinch according to John Hayes. Actually no. You know if that $40 million sat in the Government’s accounts the Government would be able to do $40 million worth of good things for New Zealanders—quite the opposite of being the Christmas Grinch. Another example where we have had poor practice which in effect wastes taxes is in the corporate welfare that we are seeing and have seen in respect of other corporates from the big end of town whose interests are preferred by National.I want to say some positive things in respect of the bill because we are voting for it. There are two notable things for me. I do think that the prior rules that related to the taxation of foreign superannuation funds were wrong. They were discouraging people from transferring money in. They were so complex that most people could not understand them and a lot of people accordingly ignored them. There was therefore a difficult policy decision to be made. Because the rules were so arcane at one level we had a bit of sympathy for people who were not meeting those rules. On the other handwe ought not to be rewarding people for not voluntarily complying with their tax obligations. This bill tries to strike the right balance collect some tax get people into the tax system but not unduly penalise them and not make them too well off compared with the people who did despite complexity meet their tax obligations. I think we have got to the right position there.The other point that I would support is some of the other changes made to ensure that if someone says that they have got a right of mining expenditure at the exploratory phase because the mine was not going to proceed but then miraculously finds that they can develop the mine then the tax deductions that they have had at the exploratory phase ought to be written back. They ought to have to amortise them over the period of the mine rather than just keep the money that they have had the benefit of from the earlier tax deduction.Dr RUSSEL NORMAN (Co-Leader—Green): I rise on behalf of the Green Party to speak to the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. The Green Party will be supporting this bill because it does make some significant and important changes even though there are parts of the bill that we do not agree with. It is the bill of course that sets the annual rates and in a sense that is the bit that we disagree with the most. That is because this Government has introduced tax changes that are essentially very large tax cuts to upper income earners and increasing GST on everyone else. The cost of this Government’s tax changes to income tax rates are about $1 billion a year to pay for the tax reductions for the top 10 percent of income earners. So the top 10 percent of income earners in New Zealand were given a tax cut by this Government that is costing everybody else about a billion dollars a year. There is a $1 billion a year hole in the Budget as a result of the tax cuts that were introduced by this Government.If you think about it what that means is that the entire proceeds of the asset sales so far $4 billion is eaten up by 4 years of tax cuts for upper income earners so those cuts put a big hole in the Budget as a result of the rates that are set in this bill. That meant that it had to come from somewhere else and of course has had a significant effect on the amount of money that the Government has had to borrow and has also had a significant impact on what becomes of the money from the asset sales. Basically it is as if we did not sell the assets because we have chewed through that $4 billion. By the time of the next election we will have chewed through the lot. So the Government is actually selling assets in order to pay for tax cuts for the top 10 percent of earners in New Zealand. You only have to think about that for a second to realise the inequity of the scheme that it has introduced.Beyond that I think some of the missing elements of this bill are remarkable as well. If you think about whether the bill is truly to rationalise the tax system as the Government has said in its speeches—and there are elements of that that are undoubtedly true—what about a capital gains tax? New Zealand has at the moment a very complicated system for taxing capital gains. A lot of the complication comes from intent when you trade houses shares or other capital items was it your intent when you were engaged in that buying and selling to make a profit out of it or not? The tax system the Inland Revenue Department is required to interpret the intent of the buyers and sellers of capital items to determine whether they are traders or not. If they are traders then they are liable for the tax. If they are not traders then they are not. This creates a very complex and subjective taxation system.When the OECD did a review of New Zealand’s tax system aside from saying that it is ridiculous of course or it is extraordinary that New Zealand does not have an overarching tax on capital gains the other part that I think people do not realise is that it means that we have a very complicated system of taxing capital gains which is basedon subjective decisions about the intent of the people who make the capital gains. So if the tax official decides based on some kind of measure of behaviour that in the case of the person who made the capital gains by buying or selling their house or buying or selling their shares the intent was that they were a trader who was making money out of this then they will go and say that you have got to pay tax. But if you are not a trader then you do not have to pay the tax. It is of course very difficult and subjective for the Inland Revenue Department to establish this. Why do we not have a consistent rule for taxing capital gains like pretty much every other OECD country? That would be a much simpler tax system for dealing with capital gains than the very complicated system that we operate at the moment.But complexity seems important to the Government so it has developed this very complicated system of taxing capital gains the effect of which is to protect the income of upper income earners. We know when we look at the taxation from other jurisdictions how much income comes from capital gains and what you find is that the top 1 percent of income earners make a big proportion of their income from capital gains. They are able to avoid paying taxes on most of their income because most of their income comes from capital gains which is untaxed whereas in most other jurisdictions that income is taxed. So not only does the Government maintain a very complicated system of taxing capital gains in order to protect the tax-free income of the top 1 percent which is the effect of the current capital gains tax rules but on the other hand it also introduced tax cuts that meant that upper income earners got given a billion dollars a year by having big tax cuts and of course that has got to come from somewhere. Where that comes from is other taxpayers through increased GST which we know disproportionately affects those on low incomes and where it comes from is by selling assets. So effectively the Government has sold the assets of the people in order to fund the tax cuts for the top 10 percent of income earners for 4 years. What will happen after those 4 years? Well obviously they will run out of things to sell and they will turn to other things to sell.The other part that I think is interesting about the New Zealand tax system is the treatment of foreign trusts. New Zealand has a very unusual foreign trust system which basically means that foreigners can place assets in New Zealand in foreign trusts and as long as none of the income from within those foreign trusts comes from New Zealand there is no requirement to pay tax on the income earned by those foreign trusts. So they are tremendously effective tax avoidance mechanisms for foreigners offshore. New Zealand now has quite a significant industry of offshore people who are trying to avoid paying tax offshore putting their money into foreign trusts in New Zealand which are then not visible to their home Governments. This is part of the international problem of tax avoidance. If we take the example of a Mexican drug lord who has illegally and illicitly earned many hundreds of millions of dollars they can place that money in New Zealand and the Mexican Government will never know that that asset is in a foreign trust in New Zealand and it would effectively get no tax. There is no way for the Mexican Government to ever know the identity of the person who is the beneficiary of this foreign trust because under New Zealand foreign trust rules there is no requirement to identify the beneficiary of that trust to the external world. You need somebody in New Zealand who is the front for the trust but you do not have to identify who the beneficiary of that trust is. That is why New Zealand is now being tagged as one of the places in the world where it is safe to hide money and avoid paying tax. We have become part of the international network of tax avoidance by people who are trying to avoid paying tax internationally.This bill was a great opportunity—it is a remedial matters bill—to fix up a big hole in the New Zealand tax system around the treatment of foreign trusts. The change thatcould have been made is actually not that hard; it could have simply been transparency. No one is saying that we should apply New Zealand tax to this income that was earned offshore though you could have a debate about that. But even if you just had transparency about who the beneficiaries of these foreign trusts are then immediately those who are trying to use the New Zealand foreign trust regime to avoid paying tax internationally would become visible. It would then become immediately available to the Mexican Government or any other Government to see who is hiding money using the foreign trust rules in New Zealand which is one of the big holes in the current New Zealand system.The other part that I think it is useful to talk about a little bit is around the IT system. I think David Clark talked about this earlier because we had the Inland Revenue Department in front of the Finance and Expenditure Committee just a couple of days ago. What is interesting here is the scale of the expenditure on this new IT system. We are talking about ballpark figures of at least $1 billion on an IT system. What the New Zealand IT industry is saying is “Will IRD as part of its programme of building this system make sure that the New Zealand IT sector can bid for parts of this contract?” and essentially it is finding that the Inland Revenue Department is not being particularly facilitative towards the development of the New Zealand IT industry as it goes about building this giant new system. If anything the department seems to have given the inside running toCapgemini which is a big offshore IT company that is renowned for avoiding paying its tax. It is a renowned tax avoider in the United Kingdom and it has been given some of the inside running to get these big contracts on the IT system. It seems to me that this is not a really good way to go about it. Obviously the Inland Revenue Department wants a system that works really well which is fair enough but in the process we also need to keep an eye on economic development opportunities for New Zealand when we have these giant New Zealand Government procurement projects—and this is a giant project.None the less there are some good elements in this bill such as tightening some of the concessionary regimes around mining. Even though they are minor improvements we certainly support those improvements around mining. The tax system is very concessionary towards mining so tightening it ever so slightly is progress but New Zealand still has one of the lowest royalty regimes in the Western World when it comes to mining. Basically we say to foreign mining companies “Come in help yourselves we are not going to tax you much and if there is any mess we will pay to clean it up.” which is a bit sad. This bill tightens up some of those concessions around mining which is a good thing. There are a few other good things in there so we will be supporting this bill. Thank you.MAGGIE BARRY (National—North Shore): I rise to speak on the second reading of the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill sponsored by our Minister of Revenue Todd McClay. We have known about the elements of this bill since the Budget; it was foreshadowed then. This is a bill that really protects the tax base and aims to make our tax system fairer and of course the economy stronger. Of course an important part of fairness in the tax system is that taxpayers understand it: that it is clear simple and transparent. They must be able to understand what the rules are if they are to comply with those rules. So it is necessary for the tax rules to be cohesive fair and applied consistently. This is a bill that does just that.There are a couple of elements that I would like to draw to the attention of the House in this call. They include the changes to the taxation on foreign superannuation. It is a very complex and traditionally very troubled area. People coming from different countries to New Zealand and New Zealanders returning home do not really understandwhat the implications are for their superannuation and the taxation around that. This is a bill that actually makes that much clearer.It also brings the tax treatment of mining of specified minerals—gold silver and ironsand in particular—into line with general business tax principles. There is—as you have gathered from listening to this debate this afternoon—widespread support for this bill. Even the Greens who typically never support very much that is going to make this a competitive and stronger economy have supported the bill. This is a bill that I certainly support and I commend it to the House. Thank you.ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. New Zealand First will also be supporting this legislation through the House. It is basically an administrative bill in terms of tax in order to amend the Income Tax Act 2007 the Tax Administration Act 1994 and the KiwiSaver Act 2006. In so doing it replaces some existing tax rules for New Zealand residents with interests in foreign superannuation schemes. It also changes the tax rules relating to the mining of specified minerals clarifies the rules for Working for Families tax credits addresses a mismatch in the tax rules relating to imputation credits and Australian dividends refines the rules for the deductions available to holders of bad debt and also includes the granting of donee status to three charitable organisations. We are all in agreement with these being correct legislative changes to be passed.The bill proposes a much simpler regime for taxing New Zealand residents who receive foreign superannuation interests in their previous country of residence. The bill proposes a simple way for people to remedy their previous positions and start afresh under the new regime and a concessionary approach encourages them to do so.We also note that in terms of KiwiSaver there are proposed changes to the KiwiSaver Act 2006 to allow taxpayers who transfer from a foreign scheme to a KiwiSaver scheme to withdraw sufficient funds from the KiwiSaver scheme to pay the tax that arises on that transfer. Again that is a sensible thing to encourage those KiwiSaver funds back into the country. Also in terms of student loan obligations it allows a taxpayer to withdraw funds from KiwiSaver to cover their student loan repayment obligations arising from such a transfer as well as the tax obligation.Those are just a sampling of some of the things in this bill. There are a great many other facets to it but it is basically a good piece of legislation in terms of tidying up some of the tax aspects in particular to do with foreign superannuation and aligning us with many of our overseas partner countries. New Zealand First commends this bill to the House.Hon KATE WILKINSON (National—Waimakariri): I rise to take a very short call on the second reading of the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. Much has already been said about this bill and what is in it. I do not really need to repeat that. We have heard about the four main proposals. They relate to foreign superannuation to mining to amendments to ensure that the tax rules cater for the rebuilding activity now taking place in my home province of Canterbury and to the framework for company financial reports. This is a good bill and I commend it to the House.Hon SHANE JONES (Labour):Tēnātātou katoa. It falls to me to take each of the 10 minutes to its full. Sorry I just want to test this—is there an actual Minister in the House? Oh there is Mr Foss perilously close to the departure door but there is a Minister in the House. We will support the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. We will support this bill. The particular part that we look forward to supporting is mineral mining. We will be supporting that portion that provides for a new regime in respect of the taxation of mineral miningwhich is an important sector in the economy providing that there is a robust environmental framework. In the event that that remains the case investors should not worry one iota about being able to bring their capital to our country. But they must know as this bill contributes towards that there has to be social licence for such sectors to thrive and prosper in New Zealand. They may very well find a place in the north. I refer here to Tai Tokerau. In the event that they do this bill will provide for a more lucid—I would not say “favourable”—set of processes in terms of how they treat their investments over a period of time and whether or not they continue to gain access to an opportunity to spread the costs in such a way as is appropriate and also take account of any obligations in the event that they have to tidy up.I want to come back to what is probably the major reason—for the time I sat on the Finance and Expenditure Committee—that interests us in this bill. It actually makes some changes to foreign superannuation but more important it reminds us that it is this side of the House as we support this bill that is the superannuation party. It is this side of the House that is prepared to grasp the nettle and ensure there is a viable long-term scheme in terms of a State-based pension scheme. In doing that from time to time it will be necessary—because both parties should support taxation legislation like this. Naturally the regime is coming to an end and we will be sitting over there at this time next year. So we will look to them to support a variation of this type of legislation because irrespective of who sits over there or here the broad main parties know that the revenue-gathering capacity of the State must be allowed to continue unhindered.Of course things will improve at the end of the next year because that side over there will be much thinned-out—much thinned-out—and a host of people whom I actually find to be quite good company will be doing other things with their lives. They will not be politicians. Neither will they be Ministers. We will have our friends sitting down that side of the House sitting over there on the Government side enabling us to bring to pass a KiwiSaver scheme which is a key contributor to superannuation that actually provides an additional platform for New Zealanders to save. In addition to that it builds a reservoir of capital. If we can actually improve the prospect of foreign superannuation schemes contributing to the livelihood of people beyond the age of 65 as well there is nothing wrong with that.There have been a host of difficulties with foreign superannuation changes. In some respects if you are in the enviable position of having a handsome foreign-based superannuation scheme it does seem a tad unfair that you will be doubly penalised. So in that sense the bill does actually make a set of changes that the great hoi polloi probably do not know about. But this side of the House knows that superannuation and saving are going to be key features going forward not only in the election campaign but at this time next year when we are running the country.A key problem that the bill does touch on is the absence of a domestic reservoir of savings. Why is that? Well firstly the current Minister of Finance in a Dickensian-like way sort of swiped aside any obligation to continue to contribute towards the Cullen fund and stood up only several months ago boasting how well it had done. Secondly he has really turned the thumbscrews onKiwiSavers. He has lessened the contribution that the State makes in an incentivising way. He has not put the pressure—as it deserves to be—on employers. But more important he is yet to strip KiwiSaver of its unnecessary red tape.Of course I should make reference to the originator of this bill Peter Dunne who is someone who will also not be back here by the end of next year.Su’a William Sio: He’s done—done like a dinner.Hon SHANE JONES: Yes well he will be done. Whether he was done before—I do not know that. I do not want to intrude into those matters. All I know is that he is aleaker. And all I know—Su’a William Sio: He’s a “Dunne-r”.Hon SHANE JONES: My Samoan tuakana here is advising me to stray into territory that could be a bit treacherous for the Dalmatian Māori fromKaitāia to actually venture an opinion on. But he has shepherded the legislation—Simon O’Connor: Oh come on. That’s never stopped you Shane.Hon SHANE JONES: Oh! I have to acknowledge the member forTāmaki. He actually reminded me yesterday that the words “turgid” and “turd” both apply to that particular parliamentarian. He had the dreadful manners to challenge this side of the House that we would not know what the word meant because we were not possessed of a fine education. The people ofTāmaki do not want that kind of superciliousness. They want a very earthy member. They want someone who will stand and acknowledge talent and acknowledge skills across the House. I can actually suggest that some sitting beside the member Simon O’Connor may resemble turnips and are not turgid but that would bring an element of disorder to this debate.I want to come back to Mr Dunne. Mr Dunne has served as the Minister of Revenue and brought this bill forward etc. and his days are over. Just as he goes Rodney Hide wants to come back. And as if things could not get any worse in the space of those people who might sit on that august body known as the Finance and Expenditure Committee the prospect of Rodney Hide coming back and joining that committee diminishes the status of Parliament even as I speak. So the less said about that the better.The Inland Revenue Department if I could just digress but in the broad context of the bill gives a very good service to the Finance and Expenditure Committee. Indeed the Commissioner of Inland Revenue its leader was at our committee meeting yesterday. We made the point that although a great deal of high-quality work happens to do with obscure elements of policy there is an area where the department could serve the public better if only it were able to increase its visibility and give it more profile and that is the treatment of the tax affairs the tax restructuring of foreign-owned companies. I was heartened to hear from the man in charge of policy saying that with some additional resourcing they will be able to do that because if we are going to meet the full costs of Christchurch and meet the full costs of superannuation we need at all times to broaden the base from where the State finds its revenue. There is far too much opaqueness and there is far too much clever tax planning being driven to leach the revenue base not to enhance it.I actually want to give a bouquet to the commissioner and to the head of policy who saw the immediate wisdom in what the Labour members were saying and identified that without a doubt if they could find an egregious case they would be tempted to follow that great tradition of British military pedigree which the member forTāmaki professes to know a thing or three about: one field execution can motivate 100000 troops. So where there is an egregious case of a foreign entity not meeting its full tax obligations without a doubt the Inland Revenue Department should restore a greater level of confidence to the community that everyone is paying their fair share. Of course from time to time businesses strike difficulties and those difficulties can be managed through. But it is not acceptable as we further internationalise the ownership of our economy for those entities to not meet their fair share. We support the bill.JOHN HAYES (National—Wairarapa): Before I speak in support of this bill the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill I would like to offer my colleague across the House Shane Jones the loan of a bow tie to gowith his dinner jacket that he is wearing here this afternoon. It is a slightly unusual time of the day to be wearing it but never mind.The other point I would like to make this afternoon is in respect of the comments from our Green colleague Russel Norman around capital gains tax. I want to say to the people of New Zealand that this is really good tax legislation and one thing it does not do is impose a capital gains tax on productive businesses and farms. That will not happen from the National Party.The third point I would like to make is that having a big gap between the company tax rate and the top personal income tax rate would only encourage tax avoidance. This bill sets up a structure that taxes everybody fairly and encourages people to pay their tax. I think that as a result of that it is a particularly good piece of legislation. Thank you. I support this bill.BRENDAN HORAN (Independent): In taking a call on the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill I want to say that on this side of the House we are well aware of and alert to the Government’s tricks. Earlier we saw at No. 2 on the provisional Order Paper the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill and we were expecting robust debate on the terrible provisions in that bill. But when the final Order Paper was published the bill we are now debating the second reading of the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill was the replacement for Government order of the day No. 2. They are two bills with very similar names but different content and they are at different stages in their progress through the House. So I say to those members opposite that they will have to do much better than that if they think that can confuse the Opposition. It was like a magic card trick a typical “now you see it now you don’t and now you see it again.”But anyway what I would like to say is that when I came to this House it was with the intention of being able to do good things for New Zealand. This remains my position and I look at the legislation that is proposed Government bills and members’ bills on that basis. I talk to parties members and yes I talk to Ministers as well.The Minister in charge of this bill the Hon Todd McClay is a good one. I have talked to him about legal highs—the drugs being reined in by his good Psychoactive Substances Act. I have talked to him about the plight of workers in the now closedTachikawa sawmill in Rotorua and we were able to get some good work done there and a number of problems sorted for thoseTachikawa workers. But I have not needed to talk to the Minister too much about this bill because the report of the Finance and Expenditure Committee is written very well and very clearly and it is obvious that this bill is going to do good things for New Zealand in the areas of taxation treatment foreign superannuation withdrawals ensuring Working for Families tax credits function as intended and Canterbury earthquake damage.But as we have seen onCampbell Live not all is well in Christchurch where the Government’s Southern Response company is failing homeowners. I was contacted recently by a woman who has a quantity surveyor’s assessment that her home will cost $785000 to repair yet Southern Response is offering just $471000. That is leaving this constituent over $300000 out of pocket and the Government must address what Southern Response is failing to do. However overall I can support this bill.I will be paying attention in the Committee stage of this bill because I want to hear what the Minister has to say about the provisions on foreign superannuation schemes and overseas social security schemes. I want to hear what he has to say about New Zealanders working in South Korea. I would say happy birthday to that member over there who in South Korea by that country’s law must pay into the South Korean national pension scheme. New Zealanders are losing a lot of money there becausealthough Australia Canada and the USA have reciprocal agreements with South Korea we do not. So I would be interested to hear about that in the Committee stage.I would just like to foreshadow the problems with the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill which I expect we will be debating next week. In that terrible bill the Government is adding insult to injury by allowing offshore drilling at extreme depths and with little safety equipment. I wonder whether theNoble Bob Douglas can cope with anything bigger than one 200-litre barrel of oil being dropped on its deck with our Government rapid oil response unit consisting of only three 8-metre dinghies. Rubbing salt into the wound National is planning on making this deepwater drill ship exempt from New Zealand taxation until 31 December 2019. That is an outrage and my vote on that bill will be entirely different from the vote on this one. I support this bill. Thank you.Mr SPEAKER: Julie Anne Genter—5 minutes.JULIE ANNE GENTER (Green): I rise to speak on the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. The Green Party is supporting this bill and I must speak up because one of the previous speakers from the Government benches stated something that I think is quite erroneous which is that the Green Party is opposed to everything. That is not true at all.The Green Party is for creating a sustainable economy that is going to look after all New Zealanders in the long term. We take a long-term view and that is where we differ from this current Government. The truth is that we do not support many of the things this Government is doing because this Government strategy is very short term: dig it drill it mine it sell it. That is not going to create a long-term future for our children and grandchildren. But the Green Party does support the minor changes contained in this bill because they do make some very tiny tweaks. They improve the rules around foreign superannuation schemes and the taxation of those.We particularly support the very tiny moves to remove some of the unnecessary concessions to the mineral mining industry. This is really really important because we see a pattern of the National Government trying to give special tax breaks to the oil gas and mineral industries and that is not fair. That is not going to result in a truly economic investment in a sustainable New Zealand. If you give companies tax breaks that encourages them and gives them a leg-up on other industries. Why would we want to give a leg-up to an industry that results in pollution or the exploitation of non-renewable resources when in fact it should be competing fairly with other businesses that are more sustainable? That is all we are asking for: fair and equal tax treatment that leads to a fair more equal New Zealand and one that is more sustainable in the long term.Everybody knows that we can dig up minerals if they exist and we can sell them and we get a one-off cash hit perhaps—at least the foreign-owned companies do. It is completely unclear whether New Zealand benefits from that because we do have one of the lowest royalty regimes in the entire world. But OK someone is going to make some money off that in the short term. But in the medium and long term our “clean green” brand is damaged we have got nothing left once any royalties we do get from that have been spent and what is our long-term strategy there? There is no long-term strategy.The Green Party is for a long-term approach and we are absolutely for simplifying unnecessary complexity in the taxation system. But this bill although it is not objectionable really does not go very far. It does not go very far towards creating a tax system that is going to ensure that ecological damage is valued appropriately by companies when they are pursuing different business investment opportunities. It does not make changes that would ensure that those who are at the very top end of this scaledo not have a permanent advantage that then leads to growing inequality in New Zealand.We just saw with the census figures that were released earlier this week that inequality is growing in New Zealand and that is not good for anyone. It is very very clear that an increase in inequality leads to all sorts of problems in terms of increased crime and increased public health costs but above all it is just not fair. It means that not everyone in New Zealand has a fair go. Those who are on the top income scheme do not necessarily pay back their fair share and ensure that everybody especially those children who are living in poverty have all the advantages that every other New Zealander has and should have.The Green Party stands for a simple and fair tax system that leads to a more equal New Zealand and a New Zealand that is going to have long-term opportunities for all of us in the future. Thank you.DAVID BENNETT (National—Hamilton East): I want to take just a short call on this bill the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill but first I just want to say that the Green Party is nothing about fairness and equality. That is a load of rubbish. The Green Party is all about its own economic agenda which it got from a textbook it has read recently and which it believes is the way to go. The Green Party just wants to make everybody poor and ruin this country. That is the Green agenda. It has not worked in any communist country it has been tried in it will not work here and the public know that.This is a good bill. It is something that we need to do around annual rates foreign superannuation and remedial matters in the taxation area and we support the bill going through the House.A party vote was called for on the questionThat the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill be now read a second time.Ayes116New Zealand National 59; New Zealand Labour 33; Green Party 12; New Zealand First 7; Māori Party 2; ACT New Zealand 1; United Future 1; Independent: Horan.Noes1Mana 1.Bill read a second time.Heritage New Zealand Pouhere Taonga BillSecond ReadingDebate resumed from 19 September.EUGENIE SAGE (Green): Peace and goodwill must be breaking out in the House given the number of bills that the Green Party is supporting today. We are very pleased to support the Heritage New Zealand Pouhere Taonga Bill because we certainly agree with the value of modernising our historic places legislation changing the governance structure of the Historic Places Trust to one that better reflects its Crown entity status simplifying the archaeological authority consent process and ensuring that we have an effective system for identifying our historic heritage. We also welcome the improved planning functions that Heritage New Zealand will be required to undertake. That includes doing things like developing a general policy statement as to how it is going to administer the New Zealand Heritage List and the National Historic Landmarks List.The Local Government and Environment Committee made quite a few improvements to the bill and I certainly acknowledge and thank the many submitters who raised the issues that led to these changes and the work and advice of officials. One of those notable changes was to remove the arbitrary limit of 50 on the number of places that could be on the National Historic Landmarks List. Other countries such as Australia and the United Kingdom that have such lists do not have a numeric limit. Just to get on the list a place needs to have outstanding national heritage value and it needs to be subject to appropriate legal protections so that is already quite a high threshold.Although the Green Party is supporting the bill we do have some concerns about it. The first of those is the much greater emphasis on protecting landowner rights as part of what the National Government calls a rebalancing between heritage values and private ownership interests. Seeing this provision here and in other legislation such as in the proposed changes to the Resource Management Act will give greater weight to landowner interests and less weight to community interests. Our second concern is around ensuring that the new heritage advocacy committees at the regional level are well supported. The third is around the emergency provisions for dealing with heritage post-disaster.Looking at each of those concerns in terms of the rebalancing clause 11 sets out the functions of Heritage New Zealand Pouhere Taonga. It requires Heritage New Zealand when it is performing its functions to “recognise the interests of an owner in a particular historic place historic areawāhitūpunawāhi tapu orwāhi tapu area.” This was not in the bill as introduced and there is no equivalent provision in the functions section of the Historic Places Act 1993 which this bill will replace. The requirement “to recognise the interests of an owner” is a much stronger legal test than “to have regard to” or “to take into account”. Our concern is that this may lead to Heritage New Zealand equivocating and not using its powers as a heritage protection authority under the Resource Management Act for example when you have got a conflict between an owner’s desire to modify or harm a heritage building and the need to protect and preserve it.Submitters such as Historic Places Canterbury said that by international standards New Zealand has got very weak protection for heritage buildings. In this bill the heritage list—previously the heritage register—does not have any statutory weight unless the buildings and places in it are listed in a city or district plan. Yet there is no provision in the bill to require councils to ensure that those buildings are listed.We have seen in Christchurch what happens when you have an emphasis on landowner rights at the expense of the community values of heritage. Post-earthquakes we have had more than 220 listed heritage buildings that have been demolished and 40 percent of those listed buildings are in the central city. The very oppressive Canterbury Earthquake Recovery Authority legislation and its noxious section 38 consent process override the normal Resource Management Act processes for demolition. Where you have had landowner rights and interests wanting to demolish a heritage building and take the insurance payout rather than repairing and restoring that building when there is engineering advice saying that that can be done then the buildings end up being demolished and their value in creating an interesting and character-filled city is not recognised. So we think that the bill gives too much weight to landowner interest.Our second concern is the transition from the voluntary branch committees and structure of the Historic Places Trust to new organisations and whether these new organisations are being adequately resourced. Before the Historic Places Act was reviewed the trust had 24 functioning branch committees. Submitters told us that they received $170000 annually for their projects and administration. That was about 5 percent of the trust’s annual income from membership subscriptions. These newregional voluntary organisations will take on some of the roles of the former branch committees but they will not get any ongoing funding from Heritage New Zealand in the way that the branch committees did from the Historic Places Trust. Certainly the Ministry for Culture and Heritage is providing a one-off allocation but we would encourage the Minister for Arts Culture and Heritage to be more generous with this establishment funding so that these new regional organisations are well positioned to do the heritage advocacy work of the former branch committees.Finally are our concerns about the emergency provisions which are in clause 58. There is a fast-track procedure here to get an emergency authority to enable the modification or destruction of an archaeological site when there is a state of national or local emergency declared and for about 12 months after that. So this is about streamlining the process but this whole streamlined process has been a disaster for heritage buildings in Christchurch where there was a failure to recognise the need for people with heritage protection expertise to work alongside the emergency services people and the people who are active immediately after the quakes.We had Christchurch heritage expert and architectural historian Dr IanLochhead talking about a petition to the Finance and Expenditure Committee recently. His concern was that there is no robust and readily accessible data on the status of heritage buildings and heritage sites and the level of seismic code compliance that would be readily available to civil defence in emergency situations. That could help prevent the quite large-scale heritage destruction that occurred in Christchurch as a result of ignorant gung-ho actions.What would also assist is a national register of people with heritage knowledge who could be called in to work alongside the first response personnel. We had about $30000 of needless damage done to the Government Buildings in Christchurch when people just charged through doors that the building manager had unlocked. That could be avoided if we had a bit more care around the emergency provisions. The Green Party will be supporting this bill because it does include a lot of useful provisions to actually modernise the way in which our heritage is managed.JACINDA ARDERN (Labour): It is my pleasure to give a contribution on the Heritage New Zealand Pouhere Taonga Bill. I was grateful to be able to follow my colleague Eugenie Sage because I unfortunately was not able to sit on the Local Government and Environment Committee which considered this bill. I thought her contribution was really helpful in terms of breaking down some of those key issues. I on behalf of the Labour Party want to traverse a few more issues that are of concern some of which relate to the new governance structure for what was previously the Historic Places Trust.Firstly I want to just to cover off again the main purpose of this bill which the Minister for Arts Culture and Heritage Hon Christopher Finlayson has brought forward and which I would add has taken quite some considerable time and has caused a bit of uncertainty for those who work in this sector many of whom are volunteers as has been referred to and who are now facing a very different governance structure for their overarching body. The main purpose of the bill has been to promote the identification protection preservation and conservation of the historical and cultural heritage of New Zealand.As part of that much in the same way as the Minister has restructured the Arts Council he has done the same thing again with this new body. The Government has changed the name of the New Zealand Historic Places Trust to Heritage New Zealand Pouhere Taonga and it has reformed the Government’s structure for that body. Currently the trust has a board the Māori Heritage Council and then branch committees made up of the paying members many of whom are the life and heart of course of thecurrent wider Historic Places Trust in New Zealand. But the bill disestablishes the branch committees it also removes three positions for elected board members and creates two new positions for board members appointed by the Minister. So as I say it is much like what we have seen with the Arts Council restructure.The question that has to be asked is what the motivation for this arbitrary slimming down of these boards is. Have we got some demonstration that they are too clunky and are not working? But also there is the switch to an appointment process. The bill was in part around clarifying the role of what was the Historic Places Trust which is now Heritage New Zealand Pouhere Taonga as a Crown entity. That was part of the reason for this bill. But I think it is still important to be very clear that despite being a Crown entity it has an advocacy role. That does cause some issues for those bodies that are caught between that difficult status of being a Crown entity but having to advocate sometimes against the Crown under certain circumstances or for instance other bodies like local government.I want to spend a little bit of time just reflecting on the loss of those branch committees. Most local MPs would have had some engagement at some point with their local New Zealand Historic Places Trust branch committee. The branch committees do a huge amount of work. They are a dedicated extremely well-informed and committed group of people. As a consequence of this bill those branches now obviously being disestablished are to having to transition into new forms of governance.I want to pay homage here to AnnaCrighton from Christchurch who established Historic Places Aotearoa as an overarching body to give an anchor to those branches as they transition into their new roles their new status and to give them the kind of support that previously was offered by the New Zealand Historic Places Trust and to I guess give advocacy advice and a bit of a pseudo-leadership role to those local branches. I really want to congratulate Anna on playing that incredibly important role and on getting it ahead of the game by not waiting for this bill to come through but really already proactively working with those groups. I thank her for that work.I do want to come now to what I was talking about earlier around that balance between advocacy and so on because not only will the new board have two individuals appointed by the Minister but also there will be the ability to appoint the special adviser. So the responsible Minister can appoint the chief executive of the Ministry for Culture and Heritage as a special adviser to the governing board of Heritage New Zealand. Look there might be occasions when that could be a really important and useful function but equally I do think we need to be cautious about the level of pseudo-independence that this board is able to exercise.I come then to clause 12(1)(a) where there was a recommendation from the committee but not from all of the committee “to make clear the nature and extent of the Crown entity’s advocacy role by stipulating that it is limited to advocating its interests in a public forum or a statutory planning process in which it has standing under an Act. This is intended to ensure that Heritage New Zealand Pouhere Taonga maintains an appropriate statutory role; that is presenting a professional heritage perspective in appropriate contexts such as council hearings.” The thing that I find interesting about that is the need to be that explicit when constraining the places where this body is able to take on that advocacy role. It gives me some concern. We need strong voices on heritage. We have seen time and time again in New Zealand situations where we all throw our hands up and say: “How is it that under our current planning laws or our heritage protection laws could we have lost X or Y building?” and yet it constantly happens.To say that the only voice or appropriate time that this body—which has an advocacy role but as a Crown entity—can speak up on those issues is in certain circumstancesbrings me back in my own mind to reflect on a situation in Auckland not too long ago that related to a historic building in which some individuals saw more value than others and that was Shed 10. During the Rugby World Cup there was obviously quite a lot of contention around what would happen down on the wharf and what facilities would be put in for the Rugby World Cup. There were two sheds down there. Murray McCully was very clear that he wanted a new building or even a temporary structure to act as a gathering point for those celebrating the Rugby World Cup and also in the future to act as a terminal for visitors coming via cruise ship into Auckland.Of course there were some on the other hand though—and I was one of them—who felt very strongly that the loss of Shed 10 would be a loss from a heritage perspective for the whole country and particularly Auckland. We felt that there was an ability and indeed an opportunity to upgrade that building preserve it and use it as a future facility for the city. We ended up in the middle ground where eventually one shed was saved and the other was not but I explicitly remember that there was a decision to take both sheds down. I remember visiting Shed 10 and seeing in there what I believed at that time were people who had been sent from the Historic Places Trust to simply document elements of the building before it was taken down to register what was where and what it looked like at the time that it was being taken apart. The role of the trust at that time I would have thought would be to be able to feel free to give a true perspective on the historic value of that building but now we know that it is literally being constrained in its advocacy role and confined to very specific scenarios. I find that unsettling because there will be times when a Minister will take a certain view and the Historic Places Trust—now Heritage New Zealand—may take another.One final point that I would like to make is that there were considerable concerns raised about Christchurch heritage issues during hearings on this bill and I think that raises the wider point. Some time ago Labour tried to instigate an inquiry at a select committee into heritage issues and the disconnect between public expectation around preserving heritage buildings and the reality where the reality hits the road. We actually have issues like insurance costs meaning that private owners cannot afford to upgrade their buildings which leads in some cases to simple demolition by neglect or for instance we have council time frames for repairs for earthquake-prone buildings being so tight that private building owners cannot afford to upgrade their buildings.Dr David Clark: There should be an inquiry.JACINDA ARDERN: We should be looking into those issues. Those are the substantive issues facing heritage in New Zealand. They cannot be delayed. This bill is one thing but preserving heritage for the next generation is a second entirely separate issue.ANDREW WILLIAMS (NZ First): I am taking a call on behalf of New Zealand First on the Heritage New Zealand Pouhere Taonga Bill in its second reading. I rise to speak to this bill and to say that New Zealand First will not be supporting it. We do concede that some aspects of the Historic Places Act do need updating. That Act was originally drafted in 1975 and it was amended in 1993. As time has marched on what has not been regarded as historic under that Act—that is what has been post-1900—is becoming of significant heritage and historic value now as we move well into the 21st century. For instance the World War I centennial era is now upon us so we must be mindful of the importance of such important periods in the history of this country. Important structures to commemorate the Great War are most certainly now being regarded as having historic importance. Likewise architecture from the 1930s such as the art deco buildings in Napier is now coming into that same category of unique historic significance.However putting that aspect of the bill to one side the most controversial focus of this bill and the area where New Zealand First has grave concerns is to change the name and completely restructure the Historic Places Trust. That iconic name of Historic Places Trust will become Heritage New Zealand Pouhere Taonga and with it the whole structure will be radically changed. New Zealand First does not agree with the proposed change that will see one the disestablishment of the local branch committees; two the removal of the three positions for elected members of the trust board; and three the creation of two new positions for members who are to be appointed by Ministers. In short this is another case of this National Government taking over the democratic local interests of heartland New Zealand and replacing it with dictatorial “we know better” control from the Beehive.The Historic Places Trust has comprised volunteer committees in communities all over New Zealand which have provided invaluable time energy and local knowledge to maintaining and protecting the history and heritage of New Zealand. They represent all that is good at grassroots level in New Zealand as dedicated guardians of much of our most precious history. These volunteers are being ungraciously moved aside in favour of a more centralised corporate model run from Wellington. The Local Government and Environment Committee heard from many branches and individual members who felt that they were being sidelined by this whole process. They felt that it was detrimental to the heritage movement across the country and would result in fewer people taking the trouble to volunteer their time and money to this most worthy endeavour: protecting the history of our nation. They felt aggrieved that their annual fees will continue to be taken but with greatly reduced representation within the restructured organisation.This is not what New Zealand is about. The history of our country is not another piece of Government property that it can corporatise and commercialise. It is therefore with these grave concerns that New Zealand First opposes the intent of this bill because it certainly does not put New Zealand heritage and dedicated volunteering New Zealanders first.CATHERINE DELAHUNTY (Green):Tēnā koutou e te Whare. I would like to take a call on this bill the Heritage New Zealand Pouhere Taonga Bill because it is an important bill. Our heritage is vital and central to our nation. We are very supportive of aspects of this bill and we will be voting for it. I have been discussing with the Minister for Arts Culture and Heritage some of our concerns. I also support Eugenie Sage’s speech about the good things that are in the bill. I understand the concerns of the last speaker Andrew Williams.Obviously we need a robust regime for any review of what was the Historic Places Trust. I think it is quite easy to romanticise how heritage has been dealt with in the past. Actually the Historic Places Trust has been very constrained for quite a long time. It has not had the resources to advocate for all of the issues that it would like to advocate for and I am not sure that this bill changes that. But we are supportive of many of the changes in terms of the focus on Māori heritage issues. The issues around Māori heritage are important.My partner was an archaeologist for many years and I guess we lived through some of the frustrations of the tension between localPākehā heritage—and the interpretation of heritage—versus the reality for Māori and their access to the protection of theirwāhi tapu and their taonga katoa. This is a very politicised issue and on the ground it has been hotly contested. History is about whose story we are going to tell whose objects we are going to protect and whose landmarks are given pre-eminence. In local communities for example in Te TaiRāwhiti where I live these issues were very very contested. For example whether the story of TeKurī aPaoa was both TeKurī aPaoaand Young Nicks Head or whether it was only Young Nicks Head was a very interesting issue. It was hotly debated amongst the different versions of history and the different holders of history in our community.So I am interested in the provisions in this bill that actually allow for tangata whenua to have a greater voice. As a person who speaks regularly about the implications of Te Tiriti o Waitangi I want to see those voices manifest in all the legislation that we work on and pass in this House. So I have been engaging with Minister Finlayson in a very constructive way about this issue. We have not reached any conclusion.I am not sure yet that I will be putting up some Supplementary Order Papers in the Committee of the whole House but the kind of issues that I am concerned about are around words such as “significance” and “minor”. These are very difficult words. If you look at the Resource Management Act they are very difficult in the Resource Management Act as well. Nobody really has ownership of what is considered to be significant in terms of heritage and what is considered to be minor.For example clause 42 is one of the clauses that I am interested in. Clause 42(1)(b) says “if the effects of that activity on the site will be no more than minor” and that sites can be destroyed without consulting mana whenuahapū. Again who decides what is minor is a very important question. Is the local heritage committee—or the former local heritage committee—deciding it or the localPākehā deciding what is minor? Is it the Historic Places Trust archaeologist in Wellington deciding what is minor? Or is it the tangata whenua who have a historic relationship with a place over a thousand years saying whether something is minor or not? The problem with this clause is that we are not asking them so how will we know? If we do not ask we do not know. That is part of the “invisiblising” of the mana whenua voice so often present in the structures that surround our archaeology and our heritage. So that is one the clauses I am very interested in.I am also interested in the issue—and this is one where we have not reached a conclusion in the debate with the Minister—of who gets to decide which archaeologist is going to work on those sites that are going to be modified and destroyed. At the moment developers decide the archaeologist and in the contested field of archaeology and heritage there are archaeologists who are dedicated to getting the job done for the developer as fast as possible in the most efficient manner possible and there are archaeologists who are dedicated to finding out whether the values of the mana whenuahapū and the values of the history are going to be protected at all costs. That is a real tension because he who pays the piper—and I use the word “he” advisedly—often calls the tune in development. I think that that has been the problem for mana whenua and archaeologists who are passionate about making sure that we do not modify and destroy without at least talking to the right people about what is at stake and finding ways of upholding preserving and researching what could be lost through development. So these are not small things. This is about the bulldozing ofurupā. This is about changing the face ofwāhi tapu for ever. If nobody asks mana whenua nobody will know.Apart from having those concerns we are supporting the bill. We are willing to see a review of the Historic Places Trust. We do think it has been under-resourced in its role. We do think there is value in the Heritage New Zealand Pouhere Taonga Bill but we do want to see further on in the Committee stage the possibility of looking at the word “minor”. Because really one of the most laden concepts that we have in resource management in archaeology and heritage is who gets to decide what is minor. For some people the colonisation of Aotearoa was a minor effect but it did help them gain quite a lot of land. But for other people it was the end of their relationship with their land and their culture. So I cannot emphasise enough the importance of recognising who shall get to decide what is minor how subjective such terms are in the law how difficult theyare and how they end up being contested through very expensive appeal processes which most mana whenua and other people cannot afford. So we need to write legislation carefully. We need to be really clear about what we mean by terms like “minor” and like “significant”. We will continue this theme and this dialogue as we continue to support this bill. Thank you very much.Hon PHIL HEATLEY (National—Whangarei): I rise to support the Heritage New Zealand Pouhere Taonga Bill and thank the Greens for also supporting the legislation at the second reading. At a very high level there are some key changes. The New Zealand Historic Places Trust is renamed Heritage New Zealand Pouhere Taonga. The bill separates regulatory and community advocacy roles and we are going to simplify and streamline the archaeological consent process for applicants. The Local Government and Environment Committee did do significant work on the detail of the legislation. I think it is important to note that we are ensuring that non-invasive activity such as simply walking across a site will not be considered exploratory investigation under the law. Those sorts of details are important. We are requiring Heritage NZ when determining an application to consider all factors before the Environment Court so that future development of a site—those sorts of issues and possibilities—are taken into account. It is very important that that sort of detail is wrapped up in this legislation. It is; I can assure the House of that. I look forward to the Committee stage where Supplementary Order Papers and new clauses are perhaps introduced. At this stage I certainly support the bill.A party vote was called for on the questionThat the Heritage New Zealand Pouhere Taonga Bill be now read a second time.Ayes109New Zealand National 59; New Zealand Labour 33; Green Party 11; Māori Party 2; ACT New Zealand 1; Mana 1; United Future 1; Independent: Horan.Noes7New Zealand First 7.Bill read a second time.Sittings of the HouseLOUISE UPSTON (Senior Whip—National): The House has made very good progress this afternoon. I seek leave for the House to rise a few minutes before 6 p.m.Mr DEPUTY SPEAKER: Leave is sought for the House to rise. Is there anyone opposed to that course of action? There appears not. Leave is granted.The House adjourned at 5.55 p.m.