Volume 681 Week 14 - Thursday 21 June 2012 
Text is incorporated into the Bound Volume 
Volume 681 Week 14 - Thursday 21 June 2012 
[Sitting date: 21 June 2012. Volume:681;Page:3215. Text is incorporated into the Bound Volume.] 
Thursday 21 June 2012 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 When the House resumes on Tuesday 26 June the Government intends to hold the combined 3-hour debate on the second readings of the Appropriation (2011/12 Supplementary Estimates) Bill and an Imprest Supply Bill; the debate on the performance and current operations of Crown entities public organisations and State enterprises; and the remaining stages of the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill. All of these measures need to be completed by 30 June 2012. It would also be desirable to make progress on the Dairy Industry Restructuring Amendment Bill as voting on Trading Among Farmers takes place on 25 June 2012. The Mixed Ownership Model Bill and first readings on the Order Paper would also be worth progressing ahead of the winter adjournment. Accordingly as notified to the Business Committee the Government will move extended hours next Tuesday or possibly full urgency depending on the progress this week. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I just want to seek an assurance from the Leader of the House that with regard to leave granted previously in select committees before they were aware of the extended sitting or urgency the select committees will not sit using that leave granted in ignorance of what is happening next week—they will not avail themselves of that leave and in fact they will seek it again if in fact the House is sitting under extended hours. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 The Business Committee was notified on Tuesday that extended hours were likely this coming week as is required under the Standing Orders. 
Questions to Ministers 
Question No. 1 to Minister 
Hon DAVID PARKER (Labour) 
: 
 There has been an error in my office and the word “deficit” should appear after the word “account”. I seek leave to insert the word “deficit” after the word “account”. 
Mr SPEAKER 
: Leave is sought for that course of action. Is there any objection? There is no objection. 
Government Financial Position—Effect on Credit Rating 
1. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: Does he accept the BNZ statement that New Zealand’s increasing current account deficit is “a very clear risk for New Zealand’s credit rating with Standard and Poor’s”? 
Hon STEVEN JOYCE (Associate Minister of Finance) 
 on behalf of the Minister of Finance: The current account is a factor—obviously one factor—in credit ratings. If it was to climb to the levels of deficit last seen in say 2008 when it reached 8.8 percent that could be a risk depending on what else was happening in the economy. I would note however that both Treasury and Reserve Bank forecasts for the current account deficit have it tracking significantly lower than the BNZ does. At its current level of 4.8 percent the current account deficit is well below the level seen at its peak but it does remain of course a significant area to work on. That is why this Government has a comprehensive programme to get back into surplus make our economy more competitive lift savings and turn round the strong imbalances that have persisted over several decades. 
Hon David Parker 
: Did today’s GDP figures show that imports are up and exports are down? 
Hon STEVEN JOYCE 
: I do not think that today’s GDP figures interpreted either of those necessarily on their own. What they did show was that the growth in the March quarter was very broad-based including the manufacturing agricultural and services sector and was therefore very positive for the wider New Zealand economy. 
Hon David Parker 
: Do the forecasts from Treasury the Reserve Bank the IMF ANZ and BNZ all forecast the current account deficit getting worse because the cost of imports is rising faster than the value of our exports? 
Hon STEVEN JOYCE 
: I can confirm the first part of that question which is that they do forecast an increase in the balance of payments deficit over the next couple of years for a number of reasons one of the most significant ones being the imports required for the rebuild in Christchurch. But there are also other indicators as well. It is important to note also though that the Treasury numbers peak at well below what we saw in the last decade where they were getting to quite worrying levels of around 8 to 9 percent particularly in the last couple of years of the previous Government. 
Hon David Parker 
: Has he seen the BNZ report that our current account deficit rising as it is risks another credit downgrade; and how does he reconcile the risk of a credit downgrade with his comments about underlying strength in the economy? 
Hon STEVEN JOYCE 
: I think all forecasters are having their challenges at the moment including the bank in terms of its expectations for GDP growth. Of course it turned out to be quite different today just a day later. But I would also in terms of referring to the report which I have read point out that it does say very clearly that the Government must remain hell-bent on achieving surpluses so that the ratings agencies do not have the excuse of twin deficits to downgrade our sovereign debt. I can assure the member that the Government remains very focused on that I have to say in contrast to the Opposition. 
Rt Hon Winston Peters 
: Has the Minister seen the comments of Stephen Toplis Bank of New Zealand’s head of research on the current account deficit when he said: “Not only is this a direct threat to the NZD but it is also a very clear risk for NZ’s credit rating with Standard & Poor’s in particular having recently placed great emphasis on the current account’s progress.”; and given that and other comments why would a Minister of Finance wish to remain in office and should he not have been sacked a long time ago? 
Hon STEVEN JOYCE 
: I repeat the answers to earlier questions in the same vein. Yes it has widened but nothing like what it was under the previous Government before it left office where it went to 8.8 percent. 
Hon Member 
: Sticking to a plan that’s working. 
Hon STEVEN JOYCE 
: Well I think it is working a heck of a lot better than the previous Government’s plan—of that we can be quite sure. 
GDP Growth—March 2012 Quarter 
2. 
SHANE ARDERN (National—Taranaki - King Country) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon STEVEN JOYCE (Associate Minister of Finance) 
on behalf of the Minister of Finance: I am surprised and pleased to have the opportunity to report that Statistics New Zealand this morning issued gross domestic product data for the March quarter of 2012. It showed that the economy grew 1.1 percent in the 3 months to 31 March which means that the economy in the quarter to 31 March was 2.4 percent larger than it was in March 2011 which is better than the growth in most other developed countries. 
Hon David Cunliffe 
: Better than growth in the last 2 years. 
Hon STEVEN JOYCE 
: Although the data is stronger than market expectations—and I appreciate Mr Cunliffe is surely disappointed to see New Zealand going better than he thought—we are likely to continue to see fluctuations in growth from quarter to quarter. But the figures do confirm underlying moderate strength in the New Zealand economy despite the uncertain international mood and ongoing difficulties in Europe in particular. 
Shane Ardern 
: What were the main reasons for economic growth in the March quarter? 
Hon STEVEN JOYCE 
: GDP growth in the March quarter was actually reasonably broad-based including manufacturing business services and agriculture. The economy has grown moderately since emerging from a recession that started in 2008. Importantly this is sustainable growth as households and businesses have built their incomes around higher savings and earnings rather than around consumption and debt which we saw in the last decade. That is a good thing. The excessive debt and Government spending that marked much of the 2000s were clearly unsustainable. It is important that the Government takes a long-term view of building New Zealand’s competitiveness and productivity. This will help us deal with the headwinds from the uncertain global environment and that remains the focus of the Government’s economic plan. 
Shane Ardern 
: How does New Zealand’s current economic growth compare with the position inherited by the National-led Government in 2008? 
Hon STEVEN JOYCE 
: I am pleased to confirm that the current position is significantly stronger on pretty much every score. In late 2008 the New Zealand economy had been in recession for almost 1 year—well before the global financial crisis and well before other countries went into recession. And in late 2008 the incoming Government was confronted by forecasts of never-ending fiscal deficits ever-rising Government debt and net international liabilities approaching 85 percent of GDP. Despite the global financial crisis and the series of debilitating earthquakes in Canterbury this Government has taken a series of sensible and balanced decisions to get the economy growing to get on top of debt to set a path back to surplus and to reduce our net international liabilities to 70.9 percent of GDP. 
Hon David Parker 
: Does the Minister of Finance stand by his statement in the House yesterday that “banks and officials are going to make forecasts and some are going to be pessimistic and some of them are going to be optimistic.” and has he seen that Treasury and the Reserve Bank are pessimistic the IMF is pessimistic the ANZ is pessimistic and the BNZ is pessimistic about our current account deficit and rising net international liabilities; if so who is it that is optimistic about these matters? 
Hon STEVEN JOYCE 
: I am sure he agrees with his statement in the House yesterday. I think he would probably note that Treasury the Reserve Bank and sundry other forecasters not only were pessimistic about some things; they were also pessimistic about the March GDP numbers and it turned out that the optimists were right on that occasion and the pessimists were wrong. 
Rt Hon Winston Peters 
: Why did he not as Minister of Finance tell the Prime Minister to stop comparing us favourably with Australia for the first 4 months of this year only to find that Australia’s growth rate at the end of March was 4.3 percent 300 percent stronger than New Zealand’s or was it the fact that he was irresponsible in advising the Prime Minister to keep on making a fool of himself? 
Hon STEVEN JOYCE 
: I am just trying to work out which one of those questions I would possibly answer on behalf of the Minister of Finance. Perhaps I will answer the serious one because the rest is with the greatest respect a whole lot of bumf. In response to the member’s serious question around New Zealand’s growth rate we absolutely are focused on growing the New Zealand economy stronger. I would point out that it is now completely without doubt that Australia’s growth rate is driven by minerals and oil exploration in Australia and I would welcome the member’s assistance in working with other members of the House to advance the Government’s agenda in that regard. 
Hon David Parker 
: Why is it that the Minister of Finance seems to be the only person who thinks we have rebalanced the economy given our rising current account deficit and projections that show rising net international liabilities to 2016 and beyond by which time National would have—should New Zealand be unlucky enough—been in power for more than 8 years? 
Hon STEVEN JOYCE 
: You know you really sort of wonder whether Mr Parker remembers where his Government got us to back prior to 2008. As Labour left office New Zealand’s net international liabilities were 85.9 percent of GDP; as at today they are 70.9 percent which is 15 percent less— 
Hon David Parker 
: It’s the insurance. 
Hon STEVEN JOYCE 
: Oh right. So we have to factor out everything that is positive! The balance of payments when Labour left office was 8.8 percent of GDP. Today we are debating the difference between 4.2 percent and 4.8 percent. I do not think the rest of the country looks at those numbers and says that Labour has any clue about economic management. 
Accident Compensation Corporation—Management of Long-term Claimants 
3. 
KEVIN HAGUE (Green) 
 to the  
Minister for ACC 
: Can she confirm that staff in ACC’s Recovery Independence Service teams receive more or less remuneration dependent on whether the proportion of people receiving weekly compensation is less or more than specified duration targets? 
Hon JUDITH COLLINS (Minister for ACC) 
: 
 I have today been advised that within the performance framework for the Recover Independence Service team there is a component related to net entries to the long-term claim pool. I have also been advised that the component related to that number was approximately 15 percent of how a case-managed performance is measured. If a case manager performs well against the other 85 percent of their targets they may still be entitled to a performance-based pay increase. 
Kevin Hague 
: What is the clinical basis for these targets if any at all? 
Hon JUDITH COLLINS 
: I do not think I can answer that because it is very much an operational issue but I can say that ACC has advised me that it uses specialist independent vocational rehabilitation services and clinicians to help people return to their pre-injury occupation wherever possible. 
Kevin Hague 
: Does the Minister accept that having a financial incentive to terminate claimants’ compensation is likely to make case managers more inclined to terminate compensation for more claimants? 
Hon JUDITH COLLINS 
: If the member wants to put it like that I can understand why he would be concerned. But we can look at it another way which is a financial incentive to help people get back to independence and get back to work. I would say that was probably a good thing. 
Kevin Hague 
: What safeguards if any at all are there to ensure that staff financial incentives do not lead to clinically inappropriate decisions to terminate compensation? 
Hon JUDITH COLLINS 
: I am advised that ACC uses the specialist independent vocational rehabilitation service and clinicians that these people are independent and that that is quite different from the case managers. 
Kevin Hague 
: Is she aware that the rates of successful challenges of ACC decisions continue to rise in both the decision review process and the District Court and does she agree that that is indicative of something badly wrong in ACC decision-making? 
Hon JUDITH COLLINS 
: I think what it does indicate is that Dispute Resolution Services is clearly quite independent of ACC as is obviously the District Court. There may well be instances—and I have asked ACC previously—where it believes that there are too many decisions being reversed on the basis that someone is clearly making the wrong decisions the wrong call. ACC tells me that these decisions are made by independent clinicians. Actually I think it would be a bad thing if for every dispute that was sent to for instance Dispute Resolution Services ACC was upheld. That would tell me either that the service was not independent or that nobody was actually checking to see whether or not people can work. 
Kevin Hague 
: What other ACC staff or contractors have financial incentives to deny claims or reduce compensation or rehabilitation services to ACC claimants? 
Hon JUDITH COLLINS 
: I do not have that information. 
Kevin Hague 
: Has she now received enough information about ACC’s disastrous claims management processes to ask the Auditor-General to bring forward her investigation of ACC’s claims management processes? 
Hon JUDITH COLLINS 
: I have not actually received enough information to do that. I am aware that the Auditor-General is undertaking her review and I am prepared to wait for that review. 
Kevin Hague 
: I seek leave to table a document. It is a document from ACC in response to an Official Information Act request from a member of the public. It sets out the key performance indicators for staff in the Recover Independence Service teams. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 









Document by leave laid on the Table of the House. 
Andrew Little 
: What incentives are there under the ACC performance framework for Recover Independence Service staff to ensure that ACC meets its statutory obligations in relation to treatment compensation and rehabilitation? 
Hon JUDITH COLLINS 
: I have been advised by ACC that the performance framework relates 10 percent to performance against organisational goals which clearly would include what that member has just asked; 10 percent against team goals again; 30 percent against organisational values which are clearly those matters he has raised; and 50 percent against personal goals. The 50 percent of personal goals includes 25 percent case-management quality 10 percent customer service and 15 percent net entries to the long-term claim pool. 
Andrew Little 
: How effective is the new regime for vocational rehabilitation which is intended to assist some claimants to return to work or to recover their independence given that there is a new layer of administration to pay for called lead providers and front-line service providers are complaining of being paid less and spending less time with claimants? 
Hon JUDITH COLLINS 
: I am sorry could the member repeat his question? I did not catch all of it. 
Mr SPEAKER 
: I ask the member please to do that. 
Andrew Little 
: How effective is the new regime for vocational rehabilitation which is intended to assist some claimants to return to work—namely to recover their independence—given that there is a new layer of administration to pay for called lead providers and front-line service providers are complaining of being paid less and spending less time with claimants? 
Hon JUDITH COLLINS 
: I have been advised by ACC when I have been around visiting its offices that what has been necessary is to actually bring in lead providers to maintain the quality of assistance that is given in terms of the claimants because before they had a large number of providers and very little ability to supervise the quality. So it has been I think cut down to about six lead providers and that seems to be working quite well. 
Economic Development Minister—Statements 
4. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister for Economic Development 
: Does he stand by all his recent statements? 
Hon STEVEN JOYCE (Minister for Economic Development) 
: 
 Yes especially my recent statement: “The only way we can create jobs pay for public services and lift New Zealanders’ living standards is through faster sustainable economic growth.” I am sure all members in the House will be pleased to note this morning’s growth numbers. Although it is just one quarter it demonstrates our economy’s improving strength despite current uncertain international conditions particularly in Europe. 
Hon David Cunliffe 
: Does he stand by his statement today to the Commerce Committee that the Pure Advantage green growth report would leave us poorer for an extended period of time that he fundamentally disagrees with it and that it would be value-destroying? 
Hon STEVEN JOYCE 
: I agree with the first and third propositions. The second is not actually correct. I said in response to your questions this morning Mr Cunliffe that its proposal to move investment from New Zealand’s traditional strengths which are around about 80 percent of our exports—in areas such as primary industries oil and gas and so on—immediately into what it described as new green growth industries would be very dislocating for the New Zealand economy. 
Hon David Cunliffe 
: We will look to the transcript. How can he reconcile his statement that “The Auditor-General’s process will not impact on the Government’s negotiations with SkyCity.” with his answer to written estimate questions that “decisions in this area will be a matter for the new ministry”—meaning the Ministry of Business Innovation and Employment—and can he therefore confirm that the incoming Ministry of Business Innovation and Employment Chief Executive will have the authority to cancel or renegotiate the Skycity deal? 
Hon STEVEN JOYCE 
: I am not sure where the member gets his proposition today but I can confirm for him that the Ministry of Business Innovation and Employment will start in 9 days’ time on 1 July. I can also confirm for him that negotiations are ongoing in parallel with the Office of the Auditor-General’s process. 
Hon David Cunliffe 
: In light of the Minister’s comments I seek leave to table his written answers to estimates— 
Mr SPEAKER 
: Order! No we do not seek leave to table written answers. They are available to all members. 
Hon David Cunliffe 
: Does he stand by his statement that the Government’s target for employment growth is 170000 over 4 years when his colleague Mr English revised that forecast down to 154000 in last month’s Budget or are those Ministers not in frequent conversation? 
Hon STEVEN JOYCE 
: Oh dear chasing things again. It is like a dog chasing a car. 
Mr SPEAKER 
: Order! The Minister should answer it. Sorry what was the answer? 
Hon STEVEN JOYCE 
: The answer to the question is that if the member cares to note one is Treasury’s predictions in 1 year and the next is Treasury’s predictions in the next year. I was asked this morning about how we were going in relation to the first year and I can report to members that we are progressing well and we are slightly ahead of target at this point. 
Hon David Cunliffe 
: Does he stand by his statements to the Commerce Committee today that all costs of the new Ministry of Business Innovation and Employment will be met within baselines; if so why does the Government continue to withhold the full due diligence report? 
Hon STEVEN JOYCE 
: The transition will be met within baselines and as I advised the member this morning the Government is seeking savings through this amalgamation which I advised him the numbers for at the time. In terms of the due diligence report there are a number of items that have been withheld at this stage but they will be released in due course. Of course we are going through a transition and it is important to give the officials the opportunity to manage that well. 
Rt Hon Winston Peters 
: Will the Minister release all of the Cabinet subcommittee and Cabinet papers giving rise to the superministry proposal which would debunk the rumour that this idea came purely from him and John Key; if not why not? 
Hon STEVEN JOYCE 
: For the member’s information I think you will find that redacted versions of the second Cabinet paper and the first Cabinet paper are available publicly right now. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. I did not ask for a redacted version of two documents. I want to know whether or not he is prepared to release all the documents behind this proposal not just two of them. 
Mr SPEAKER 
: Well it is a shame the member did not ask that question instead of the rest of what he put into his question. I am loath to intervene when members add unnecessary information to a question. If the member really wanted the answer to that question he should have just asked that and not put the other bit in about something to do with the Minister and the Prime Minister. But I would ask the Minister if he could answer the first part of that question: when he intends to release all the papers. 
Hon STEVEN JOYCE 
: The point I was making—he asked about papers of Cabinet committees and Cabinet and those are the papers. There have been some redactions as has been noted but the papers have been released. 
Mr SPEAKER 
: I thank the Minister. 
Street Racing Illegal—Deterrents 
5. 
JAMI-LEE ROSS (National—Botany) 
 to the  
Minister of Police 
: What actions has the Government taken against illegal street racers? 
Hon ANNE TOLLEY (Minister of Police) 
: 
 I am pleased to advise the House that the first vehicle crushing under the boy-racer legislation took place this morning at Seaview in Lower Hutt and it was pretty spectacular. The car’s owner had been found guilty of driving while suspended loss of traction and dangerous driving leading to a 21-month disqualification. The court ordered his car to be seized and destroyed following his third strike under the Sentencing (Vehicle Confiscation) Amendment Act introduced by my colleague Minister Collins in the last term of this Government. 
Jami-Lee Ross 
: What has the trend been in illegal street racing activity since the Government passed legislation tackling illegal street races? 
Hon ANNE TOLLEY 
: Police data across the districts show a 29 percent reduction in reported illegal street racing offences since 2009. This shows the powerful deterrent effect of the car-crushing legislation. I am confident that today’s crushing will make boy racers think twice before engaging in further illegal activity. 
Question No. 4 to Minister 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. I want to refer you to the answers given to question No. 4 by the Minister for Economic Development. The fact is that the State Services Commission advised that there are other documents and other reports— 
Mr SPEAKER 
: Order! 
Rt Hon Winston Peters 
: This is a pretty serious issue. 
Mr SPEAKER 
: Order! The member cannot dispute an answer by way of a point of order. The rules of this House make no provision for that. The member has further supplementary questions. He could have used those further supplementary questions to probe the Minister’s answer. But he cannot dispute the answer by way of a point of order. That is totally contrary to the rules of this House. The right honourable member has been in this House long enough to know that. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. The fact is that I asked the same question twice and I got the same answer twice and it is not correct. 
Mr SPEAKER 
: Order! The member will resume his seat and he will not carry on like that because the Minister answered his question. Whether the member agrees with the answer or not is another matter. 
Rt Hon Winston Peters 
: It’s not true. 
Mr SPEAKER 
: Order! The member should not be interjecting. If it ain’t true the member’s party has two more supplementary questions. He could have challenged the Minister’s answer. That is what question time is about. It is not about making clever statements; it is about asking tough questions. 
District Health Boards—2012 Community Pharmacy Services Agreement 
6. 
Hon MARYAN STREET (Labour) 
 to the  
Minister of Health 
: Has he received any reports or correspondence regarding the Community Pharmacy Services Agreement with District Health Boards and if he has have they caused him any concern? 
Hon JO GOODHEW (Associate Minister of Health) 
 on behalf of the Minister of Health: Yes he has received a number of reports and letters. Many have generally been in favour of the new agreement but there have been some concerns around the time frame and technical details. The district health boards have been in national discussions with the pharmacy sector for over 2 years to develop this new service model. The new model will provide an increased focus on high-needs patients to ensure the best outcomes for those most in need. This also makes better use of the pharmacists’ clinical expertise in medicines management. 
Hon Maryan Street 
: Does the Minister consider the contract that the pharmacies have been offered to be ill-conceived potentially dangerous and rushed as some pharmacists consider it to be; if not why not? 
Hon JO GOODHEW 
: No. In fact there has been a consultation process of over 2 years during which there has been wide support from the sector. I can tell you that it is a complex contract of 163 pages and having first had 1 month of consultation back in March and April—there were 500 submissions which all addressed the concerns of that contract—the contract was then sent out electronically to the pharmacists on 1 June and individual PDFs were sent to the pharmacies concerned on 6 June and 7 June. So no I do not believe either that it is ill-conceived or that there are problems with that time frame. 
Hon Maryan Street 
: Would the Minister consider it appropriate for any service provider including pharmacists to sign up to a 166-page service contract they had seen only in the last week that does not specify the fee that they are to receive for their service after 1 February next year; if not will he call for a delay in the implementation of the contract until such time as pharmacists are clear about the professional and financial implications of the contract they are being offered? 
Hon JO GOODHEW 
: The contracts as I have already alluded to were first sent out not 1 week ago but on 1 June electronically. The hard copies of the contracts that will be signed have progressively been sent out to individual pharmacists since that time. The district health boards are working with the pharmacists individually to address any concerns they have about the financial implications of this contract to their pharmacy. But I would remind the member yet again that back from 26 March to 27 April this proposed contract was consulted on comprehensively. More than 500 submissions addressing the concerns of the pharmacists have been addressed. So no I would not agree with the member. 
Hon Maryan Street 
: Is there any point at which he considers it useful as Minister to intervene in matters of this sort which he would normally call operational decisions or will he simply wait for the mistakes that the pharmacists are predicting to actually occur and for somebody’s health to be jeopardised before he takes an interest in this issue? 
Hon JO GOODHEW 
: This Government is absolutely committed to this contract because we believe that it is better for pharmacists and also for patients who have long-term conditions. The district health boards are working with individual pharmacies around the concerns. But this has been not just over the last few weeks; I will say again that this has been over quite a long period of more than 2 years spent developing this contract and 500 submissions have been addressed as well. I am sure the district health boards will continue to engage with the pharmacists in sorting through any of the issues that concern them. 
Question No. 4 to Minister 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I apologise for delaying the next question. I seek leave to table a letter to me from the Deputy State Services Commissioner in relation to the previous question to the Minister for Economic Development which says “There are no other papers in relation to the due diligence process.” contradicting what the Minister has just told the House. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 







Document by leave laid on the Table of the House. 
Better Public Services—Justice Sector 
7. 
TIM MACINDOE (National—Hamilton West) 
 to the  
Minister of Justice 
: How is the Justice sector contributing to the Government’s better public services programme? 
Hon JUDITH COLLINS (Minister of Justice) 
: 
 The justice sector is well on track to make significant contributions to the Government’s Better Public Services programme. The sector is working collaboratively on groundbreaking plans to reduce crime violent crime and reoffending. We will be reducing opportunities for crime by targeting repeat locations and supporting repeat victims targeting vulnerable youth and youth offenders reducing alcohol and drug abuse and reducing reoffending by strengthening rehabilitation services. The crime rate is at the lowest— 
Mr SPEAKER 
: Order! Before the Minister goes on too long I am not sure any members can hear this. There seems to be a problem with the—[ 
Interruption 
] Order! It would be helpful if members allowed a little time to try to fix it. There appears to be a problem with the microphone. 
Hon JUDITH COLLINS 
: Would you like me to start again Mr Speaker? 
Mr SPEAKER 
: Order! I would like the Minister to start again with a briefer answer. That answer is too long. 
Hon JUDITH COLLINS 
: Oh it was just such good news. Well we are reducing opportunities for crime by targeting repeat locations and supporting repeat victims targeting vulnerable youth and youth offenders reducing alcohol and drug abuse and reducing reoffending by strengthening rehabilitation services. The crime rate is the lowest it has been in 30 years. We have a great window of opportunity now to view the way in which our courts are functioning and our justice system as a whole is operating. We are committed to delivering better justice services and I think rehabilitation might be of some use to a few members over there. 
Mr SPEAKER 
: Order! I just hope that the public sound system is working. I want that looked into with some urgency because that is just hopeless. [ 
Interruption 
] No not the answer the sound system. Order! I meant the sound system’s performance. The Speaker makes no comments on the performance of most members. 
Tim Macindoe 
: How will the Justice Sector Leadership Board and the Justice Sector Fund contribute to the Government’s Better Public Services programme? 
Hon JUDITH COLLINS 
: The justice sector Ministers have developed a cross-agency plan aimed at providing an accessible justice system. A 4-year budget plan has been developed to integrate spending operations and change through to 2016. This is a first in the public sector. I am delighted that our Cabinet colleagues have shown such a level of confidence in the justice sector agencies. The justice sector chief executives who make up the leadership board are able to look across the entire funding of the sector and discuss the application of savings in a way that best achieves the sector’s goals. 
Charles Chauvel 
: Will most of the initial funding for the Justice Sector Fund which she told the Justice and Electoral Committee this morning will come from Vote Corrections be offered to the police so as to avoid a nil wage rise this year for uniformed officers; if not why not? 
Hon JUDITH COLLINS 
: In fact the decisions on how any underspends are spent is going to be made by the justice sector Ministers along with the chief executives. No one person makes that decision; it is one that we come at collaboratively and we can do so up to a total of $100 million without going back to Cabinet. So it is going to be something that every agency is going to be looking at: how they can better use the resources they have so that we do have some money to spend more particularly on rehabilitation—particularly of recalcitrant criminals—as we should. 
Charles Chauvel 
: I raise a point of order Mr Speaker. The Minister did not address the question which was a very simple one: why will the funds that are going into the Justice Sector Fund not be applied to a particular purpose? She told us how the fund would be managed she told us what some general priorities for the fund would be but she did not say why it would not go to the purpose that I asked about. 
Mr SPEAKER 
: Forgive me but if I heard the Minister correctly she said that she does not make that decision alone about where those funds will be directed. A number of Ministers will be involved and therefore she cannot say why any money may or may not be being directed to any particular place at the moment. I may have misunderstood totally. 
Charles Chauvel 
: Speaking to the point of order. 
Mr SPEAKER 
: I will hear the point of order further briefly. 
Charles Chauvel 
: At the Justice and Electoral Committee this morning the Minister was quite clear that she is the lead Minister for the fund and for the sector and if— 
Mr SPEAKER 
: Order! [ 
Interruption 
] No no. Order! The member must resume his seat. That would be the subject of a further supplementary question not a point of order. If the member thinks that the Minister’s answer was incorrect or inadequate he has good material for a further supplementary question: why did she say at the select committee such and such? The member is welcome to do that but not to raise it by way of a point of order. 
Iain Lees-Galloway 
: Has the Minister used any justice sector resources to facilitate negotiations with supermarkets on the Alcohol Reform Bill and has she made any deal with the supermarkets to weaken the current Alcohol Reform Bill? 
Hon JUDITH COLLINS 
: I generally do not make deals. 
Economy Sustainable—Role of Fossil Fuels 
GARETH HUGHES (Green) 
: 
 My question is to the Minister for Climate Change Issues and asks: does he agree with the statement made by the Minister—[ 
Interruption 
] 
Mr SPEAKER 
: Order! I apologise to the member. I want some respect shown to a member at the back of the House please. 
8. 
GARETH HUGHES (Green) 
 to the  
Minister for Climate Change Issues 
: Does he agree with the statement made by the Minister for the Environment Hon Amy Adams in Rio that “Money spent on fossil fuels is money that could be spent on other sustainable development priorities” and will the Government re-allocate the $889 million for ETS credits in Budget 2012 towards sustainable projects and a green economy? 
Hon TIM GROSER (Minister for Climate Change Issues) 
: 
 I certainly do agree with Minister Adams’ statement at Rio and that is the reason why we set up in June 2010 a group of countries to try to press long term for fossil fuel subsidy reform. As it stands that group includes Costa Rica Denmark Ethiopia Finland us Norway Sweden and Switzerland. 
Mr SPEAKER 
: This is a primary question so the Minister should really answer the bit that asks “will the Government re-allocate the $889 million …”. I mean this is a primary question. 
Hon TIM GROSER 
: Speaking to the Speaker’s point I considered that there were two separate questions and I answered the first part of the question. But if the Speaker would like it I can very easily answer two questions at once. 
Mr SPEAKER 
: Order! I am on my feet. Primary questions must be answered in full. If it is deemed that the question is in order it must be answered in full. In respect of supplementary questions there can only be one question asked and if there is more than one part to a question the Minister is welcome to answer just one part. But a primary question must be answered in full. 
Hon TIM GROSER 
: Thank you for the clarification. No we will not be reallocating the allocations we have given to trade-exposed industries for the very simple reason that were we to do so when those trade-exposed industries are facing competition internationally from similar industries that do not face a price on carbon it would create such a huge increase in unemployment—and I am sure that the member would be at the forefront of any queue to complain about the unemployment were we so reckless as to follow the advice. 
Gareth Hughes 
: Does the Minister stand by his statement made in 2010 that it would be incoherent to have a market price on carbon and to be subsidising it; how then does the Minister stand by the Government’s spending of $25 million subsidising the acquisition of petroleum exploration data to give to the petroleum industry and given that this Government in the next financial year has allocated $1.5 billion of free emissions trading scheme credits to polluters? 
Hon TIM GROSER 
: Yes I certainly do stand by that statement. It is time people stopped throwing around these loosely worded concepts of subsidies and started to reference them to the international jurisprudence that defines us. Although I would love to elaborate in detail on the Agreement on Subsidies and Countervailing Measures code and the issues of specificity actionability and serious prejudice were I to so elaborate I think my friend and colleague the Leader of the House would have convulsions—and we do not want that. 
Louise Upston 
: Is the Minister aware of any other country with a fully comprehensive “all-gases all-sectors” emissions trading scheme? 
Hon TIM GROSER 
: No and I would like to elaborate on that. Even the EU emissions trading scheme exempts nearly 60 percent of EU27 GDP from the scheme. 
Gareth Hughes 
: Can the Minister confirm that the New Zealand taxpayer is giving the oil industry in New Zealand $25 million of seismic survey data for free and the taxpayer in the next financial year is paying $1.5 billion in emissions trading scheme credits? 
Hon TIM GROSER 
: As far as I recall it is a statement of fact that the Government is providing $25 million to assist in seismic exploration. But we are doing this so that we can stimulate an industry that from memory produces something like an $800 million return to the taxpayer and it is a policy that I strongly support. 
Gareth Hughes 
: Does he think the Government’s agenda of increasing petroleum exploration giving hundreds of millions of dollars of taxpayers’ money to carbon polluters and supporting the massive lignite coal developments in Southland is putting the interests of the next generation ahead of all other interests and boldly doing the right thing as 17-year-old New Zealander Brittany Trilford has asked all world leaders to do in Rio? 
Hon TIM GROSER 
: No. 
Employment Seasonal—Recognised Seasonal Employer Scheme 
9. 
MIKE SABIN (National—Northland) 
 to the  
Minister of Immigration 
: What reports has he received on the benefits to New Zealand of the Recognised Seasonal Employer scheme? 
Hon NATHAN GUY (Minister of Immigration) 
: 
 I recently received the results of the 2011 survey of the Recognised Seasonal Employer scheme which show the scheme is working well. The Recognised Seasonal Employer policy was designed to help with seasonal labour shortages in the horticulture and viticulture industries where New Zealanders are unavailable. The research found that most employers in the scheme have enjoyed better quality more productive workers and a more stable workforce. Many employers reported that workers in the scheme have helped their business to expand. 
Mike Sabin 
: What feedback has he received on the Recognised Seasonal Employer scheme? 
Hon NATHAN GUY 
: I have received some very positive feedback: 93 percent of employers surveyed say that the benefits of this scheme outweigh the costs. I am also aware that there has been some very good feedback from one particular MP who took part in a television show last year working with workers in the scheme at Tendertips Asparagus farm in the Otaki electorate. That MP said: “I am now convinced that it’s a good thing for the workers a good thing for employers and a very good thing for the New Zealand economy.” And that MP was of course former Minister of Labour the Hon Trevor Mallard. 
Budget 2012—Police Resourcing 
10. 
KRIS FAAFOI (Labour—Mana) 
 to the  
Minister of Police 
: Does she stand by all the statements she made to the Law and Order Committee yesterday? 
Hon ANNE TOLLEY (Minister of Police) 
: 
 Yes. 
Hon Phil Goff 
: Why did she yesterday tell the select committee no less than four times that Budget 2012 did not represent a cut in real terms to police operational funding when patently it does? 
Hon ANNE TOLLEY 
: Because it did not. The police received a similar budget to the previous year other than carry-overs and that is the same amount of money. 
Hon Phil Goff 
: When the police told the select committee that inflation was likely to push up their costs by $24 million this year and the police operational funding goes up by only $8.891 million does that not represent in real terms—that is taking inflation into account—a cut of over $15 million this year? 
Hon ANNE TOLLEY 
: Because this Government lives in the real world where we are in the middle of a global world recession and the police as I said yesterday— 
Hon Phil Goff 
: I raise a point of order Mr Speaker. It is apparent to me that in the Minister’s answer so far she is not addressing a very straightforward and clear question. 
Mr SPEAKER 
: Order! I think the member has asked a very straight question. I think the answer should address the question first rather than get into broader discussion. 
Hon ANNE TOLLEY 
: As I said in answer to that question in the Law and Order Committee yesterday the police have received the same amount of money. They have been asked to live within their budget like every other ministry and department. That in no way represents a cut which is a withdrawal of money from the Budget. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. I had this problem four times in the select committee yesterday; I am having it again in the House today. Either it does represent a cut in real terms or it does not and I cannot get an answer from that Minister. 
Mr SPEAKER 
: Order! It seems to me the remedy is in asking the right question. [ 
Interruption 
] Order! I think the issue being pursued seems to be what the Minister said yesterday and I have got no idea what the Minister said yesterday. But it seems the problem is the Minister is answering in terms of actual dollars—in terms of cuts—and the member asking the question is trying to establish that if there is not a full adjustment for inflation that represents a cut. Now that is a debatable matter and obviously the question has to be very clear if the member is to be able to pin the Minister down and it must not leave any wriggle room. So I do not believe I can pull the Minister up yet because I have not yet heard a question that leaves no wriggle room in terms of what is actually being asked. It is no use hypothesising about whether things were adjusted for inflation. If the question is asking about cuts the Minister has answered about cuts and if the member wants to ask whether the Budget was inflation-adjusted he should ask that. That is a different question. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. You understand and I understand what the term “in real terms” meant. There was no room for wriggle room. The Minister is not answering the question— 
Mr SPEAKER 
: Order! I did not hear the member ask a question as to whether the budget in real terms was a cut. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. I did. 
Mr SPEAKER 
: Well if he did I invite him to repeat his question. I will listen very carefully. 
Hon Phil Goff 
: When the police told the committee that inflation this year could be expected to add $24 million in costs to the police and that operational funding increases by only $8.892 million does that not represent a cut of over $15 million in operational funding in real terms? 
Hon ANNE TOLLEY 
: The difficulty is that it is what is called estimates. So there is an estimate of what inflation might be and in the real world you have to wait and see what happens. 
Hon Phil Goff 
: I seek leave to table a number of documents. The first document is a transcript of yesterday’s inquiries of the Minister about cuts in real terms— 
Mr SPEAKER 
: Order! Can I just check. This was in public— 
Hon Phil Goff 
: Yes it was in public. 
Mr SPEAKER 
: It is already available to members then so we do not table that. 
Hon Phil Goff 
: This is a partial transcript. I can table if you like the whole CD-Rom— 
Mr SPEAKER 
: Order! All members have access to that material so we do not—[ 
Interruption 
] Oh I beg your pardon. I beg your pardon; the business has not been reported yet. Leave is sought to table that document. Is there any objection? There is objection. 
Hon Phil Goff 
: I seek the leave of the House to table answers to questions Nos 150 and 155 to the Law and Order Committee Vote Police 2012-13 where the police indicate quite clearly that the extra costs may represent $24 million and that is in response to a second question that said: “Was there an increase or a decrease in real level of funding?”. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Hon Phil Goff 
: I seek the leave of the House to table a document from the Office of the Auditor-General briefing—just one clause—that backs up the figure of $8.892 million being the increase that the police get when their costs have gone up by $24 million. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. [ 
Interruption 
] Order! [ 
Interruption 
] Order! That kind of interjection is not appropriate. 
Kris Faafoi 
: Do personnel costs equate to 71 percent of the current total expenditure budgeted in 2012-13 for police? 
Hon ANNE TOLLEY 
: I understand that is correct. 
Kris Faafoi 
: I raise a point of order Mr Speaker. This is a question that I put to the Minister in select committee yesterday and she refused—I was actually prevented from asking it. 
Mr SPEAKER 
: Order! The member will resume his seat. This is question time today. The member asked a question; the Minister answered it. There is no point of order I can see available. The member may ask further supplementary questions. 
Kris Faafoi 
: I raise a point of order Mr Speaker. I am just wondering what kind of remedy I have— 
Mr SPEAKER 
: Order! It is very simple. This is question time. The member can ask further questions that focus in on what the Minister said yesterday. There is nothing wrong with that but the member does not take the time of the House with points of order when his question was answered perfectly appropriately. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. You could possibly have added the advice to the member that if he had received an incorrect answer with regard to confidentiality of the information yesterday at the select committee he should complain now about a breach of privilege. 
Mr SPEAKER 
: He should not. The shadow Leader of the House has been in this place now as long as I have and he knows that those sorts of issues are not raised by way of point of order in this House. He should know that. 
Kris Faafoi 
: Given the fiscal pressures police face can she guarantee that there will not be a cut in front-line police staffing and the closure of police stations? 
Hon ANNE TOLLEY 
: Those questions were answered quite clearly to the member yesterday. The commissioner has made it very clear that there are no plans to close any police stations. 
Hon Phil Goff 
: When the police cut staff and services because they need to find savings because of the rising costs that they face will she accept responsibility for that because she failed to stand up for her portfolio and at least get compensation for rising costs; or will she blame the police saying it is operational responsibility? 
Hon ANNE TOLLEY 
: Quite the contrary. As I explained yesterday in the select committee the police are working through the Policing Excellence in a number of different ways. They are using 21st century technology which has meant that much of the entry work and the bookwork is able to be done while out on the streets while the police are still out in the community without having to come back to police stations and fill in forms and use carbon paper. That means that has freed up a lot of the jobs in the back-room office that used to be done. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. If you recall my question it was— 
Mr SPEAKER 
: Order! The member’s question was so loaded with his views on matters that it did not comply with the Standing Orders and therefore he cannot expect me to ask the Minister to comply any more than he did in asking his question. 
Court Facilities Christchurch—Youth Court 
NICKY WAGNER (National—Christchurch Central) 
: 
 To the Minister for Courts what recent announcements has he made—[ 
Interruption 
] 
Mr SPEAKER 
: Order! I want to hear Nicky Wagner’s question. I invite the member to start again. I could not hear the question because of interjections across the front of the House. 
11. 
NICKY WAGNER (National—Christchurch Central) 
 to the  
Minister for Courts 
: What recent announcements has he made regarding court services for Christchurch? 
Hon CHESTER BORROWS (Minister for Courts) 
: 
 On Tuesday I announced the plans to build the new Youth Court on the marae at Nga Hau e Wha. This is the location where we have been running the criminal list court and it has proved to be an excellent venue. 
Rt Hon Winston Peters 
: Nga Hau e where? 
Hon CHESTER BORROWS 
: Wanganui dialect. The construction of a Youth Court on this marae will be very conducive to dealing with youth appearing before the Youth Court and will have facilities for other agencies to be housed within the same building. 
Nicky Wagner 
: What benefit will the new courtroom offer to the wider court system in Christchurch? 
Hon CHESTER BORROWS 
: When not in use by the Youth Court the facility will be able to be used by other jurisdictions increasing the capacity for the courts in Christchurch. 
Charles Chauvel 
: Supplementary question— 
Mr SPEAKER 
: Charles Chauvel. I will allow this supplementary question. 
Charles Chauvel 
: Thank you Mr Speaker. Does the Minister think it is acceptable that nearly half—27—of New Zealand’s 60 courthouse facilities are used for less than half of the time; if not what plans does he have for improving the utilisation of court services in New Zealand generally? 
Hon CHESTER BORROWS 
: There is currently a review of court utilisation and how court services will be provided in the future. There are a number of considerations to be made as to court placement and their utilisation in terms of court hours is one of those important considerations. 
Christchurch Recovery—Rental Situation 
12. 
DENIS O’ROURKE (NZ First) 
 to the  
Minister for Canterbury Earthquake Recovery 
: Does he still believe that the best way to deal with the price increase in home rentals in Christchurch is to leave it to the market? 
Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery) 
: 
 Yes but with the qualification that the Government has provided temporary housing villages—soon that will be 75 residences—and financial assistance to earthquake-affected households costing $330000 per week in rental subsidies alongside accommodation supplements which have always been available. And we continue to pressure the Housing New Zealand Corporation to put more properties back into commission. We have ensured that the Earthquake Commission has paid $21 million towards the repair of council social housing. My colleague the Minister of Housing announced a $2 million grant towards 25 social houses to be built in Christchurch. He made that announcement yesterday. We have also taken moves to increase the supply of sections by inserting new chapter 12A in the regional policy statement. So this Government although we believe in the market has also taken active steps to ensure that there is a market. 
Denis O’Rourke 
: What is the Minister’s response to the mother of two who was recently reported in the  
Press 
 as stating that she has had to leave Christchurch because “the wages were so low the rents getting so high and the ongoing hassles with insurance EQC and Cera were so awful.”? 
Hon GERRY BROWNLEE 
: Well my first point would be that if that person has got a hassle with the Earthquake Commission and insurance then it is surprising that she is renting. However what I would say is that the rental prices charged in Christchurch are not disproportionate to other metropolitan centres. I would actually point the member to the same newspaper the Christchurch  
Press 
 today which reports “Landlords stunned at low response” to properties. The advice that is given to property managers there is that if they are finding they have properties with long waits before someone rents them they will have to lower those rents. That is the market working. I would also indicate to the member that today TradeMe shows that there are 245 houses available for less than $300 a week. 
Denis O’Rourke 
: Is the Minister aware that home rentals in Christchurch have increased over the last year by up to $60 per week in some suburbs and by an average of $32 per week over the whole city according to the  
Press 
; if so what assurance will he give to Christchurch tenants about future additional rent increases in the short term resulting from departures of homeowners from red zone properties and demand from the influx of workers for the rebuild? 
Hon GERRY BROWNLEE 
: The first point I would make is that the Christchurch  
Press 
 is a very inaccurate source of information on these matters. He may rely on its information; I do not. What I do know is that there is a number of people in Christchurch—landlords in fact—who are saying that they cannot rent properties because people do not want to take them and there are currently a total of 1032 properties for rent in Christchurch. 
Mixed Ownership Model Bill 
In Committee 
Debate resumed from 20 June. 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
on behalf of the Minister for State Owned Enterprises: I move  
That the Committee divide the bill into the State-Owned Enterprises Amendment Bill and the Public Finance (Mixed Ownership Model) Amendment Bill pursuant to Supplementary Order Paper 41. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I want to speak on this particular motion which has just been moved by the Minister in the chair the Minister for Building and Construction. I hope he takes the opportunity to respond to the issues that I want to raise at this time in the debate because this has been a very long debate that we have had on this particular bill and I know that every member on this side of the Chamber has been expressing the concerns felt by most New Zealanders that this bill should not be traversing through the House in this manner. The notion— 
Louise Upston 
: Point of order. 
The CHAIRPERSON (H V Ross Robertson) 
: I know what the member is going to raise. Can I just inform members that this is a very narrow debate. I want to refer members to Speaker’s ruling 120/5. In fact this is one of the narrowest debates we could have. To quote from the Speaker’s ruling it says this: “A debate on a motion to divide a bill is a very narrow debate. It is not an opportunity to recanvass all the principal issues contained within the bill. It is strictly related to the proposal that the bill should be divided.” What the debate here really is this afternoon is whether this bill should be split into the State-Owned Enterprises Amendment Bill and the Public Finance (Mixed Ownership Model) Amendment Bill. So the member can say whether she believes it should be split into those bills and give reasons why for or against. It is a very narrow debate. 
Hon LIANNE DALZIEL 
: Thank you for your assistance Mr Chairman. I want to ask the Minister a series of questions about the motion that he has just moved in the Committee which is specifically in relation to dividing the Mixed Ownership Model Bill which we have been debating over the last few days into two separate bills one of which would be enacting the State-Owned Enterprises Amendment Act 2012 and the second of which would be enacting the Public Finance (Mixed Ownership Model) Amendment Act 2012. I understand that the reason why the Government wants to divide the Mixed Ownership Model Bill into these two separate bills is that it wants to have the first part of the bill—clauses 1 and 2 and Part 1—as the State-Owned Enterprises Amendment Act 2012 because it takes four separate State-owned enterprises out of the coverage of the State-Owned Enterprises Act. 
As I understand it and I would like the Minister to confirm this this would mean that the four State-owned enterprises—and just to recap they are Mighty River Power Meridian Energy Genesis Energy and Solid Energy—the four energy companies that I have just mentioned would no longer be State-owned enterprises. So that is the question I have for the Minister. Is the reason why clauses 1 and 2 and Part 1 are being separated off into a separate bill that those four energy companies will no longer in fact be State-owned enterprises? 
Grant Robertson 
: Who would stop them from being SOEs? 
Hon LIANNE DALZIEL 
: Well I do not know. I would just like the Minister to stand up and confirm whether or not I have correctly understood the purpose of separating off clauses 1 and 2 and Part 1 into a separate bill. So that is the first question. 
I understand that the second question would relate to the separating off of the remaining parts of the bill which is actually just Part 2 and that that would then take them into the Public Finance (Mixed Ownership Model) Amendment Act. I just wanted to question the Minister as to the reason why this legislation would be called the Public Finance (Mixed Ownership Model) Amendment Act. Is that because the decision was made by the Government to call the privatisation of public property a mixed-ownership model rather than a former State-owned enterprise or a privatised State-owned asset or you know one of those different ones? I know we did debate those and it would be inappropriate of me to raise the actual topic of the debate in the context of this motion but is that the reason why the public finance amendment Act requires the words “Mixed Ownership Model” to be in brackets as part of the title to that Act? And is that why it needs to be separated out from other elements of the Public Finance Act? 
That is something that would not actually be required if the companies were in fact still State-owned enterprises because—again as I understand it—if they were State-owned enterprises then we would not need the first part of this particular piece of legislation. They would not have to be split into two separate pieces and—[ 
Interruption 
] It is a serious question and I think that we have really taken the opportunity on this side of the Chamber to ask all of the questions that the public has wanted to put to the Government. [ 
Bell rung 
] Mr Chairman thank you for the opportunity to continue down this path. I am disappointed that the Minister has not taken the opportunity to respond to these questions and perhaps he simply has not taken advice in preparation for participating in this debate. He may in fact be surprised that we are debating what is not normally debated in this House but because this is such an important piece of legislation I think it is important for us on this side of the Chamber certainly to raise all of these questions. 
I do not know about other members on this side of the Chamber but I have been inundated with a large number of inquiries from the public perhaps not necessarily about this particular motion because they may not have been aware that this motion was going to be moved by the Minister today but I do know that all the other elements of the legislation have been the subject of a significant number of approaches to members on this side of the Chamber certainly. Actually I suspect members of the Government have received a lot of feedback from constituents and from their own supporters very concerned about the decision— 
Hon Nathan Guy 
: There was an election Lianne. 
Hon LIANNE DALZIEL 
: Well it is interesting that the Minister interjects from the other side of the Chamber and says that there was a general election. There was one last year and that is true but there is also the point that was made by my colleague Grant Robertson—a very good point—which was that when you add up the numbers of people who voted against— 
Hon Nathan Guy 
: Against Labour. 
Hon LIANNE DALZIEL 
: —against National or voted for parties—well I am responding to the interjection from the Minister; I think it is only fair— 
Hon Nathan Guy 
: OK I’ll listen. 
Hon LIANNE DALZIEL 
: If you add up all of the people who voted for parties that were opposed to the sale of State assets then that was the majority decision which is reflected in the polls today. I am getting a signal from the Chair that I am to keep this to the narrow parameters of the debate. But I think he has accepted that it is appropriate that when I am interjected on by someone as important as a Minister it is important to place that interjection on the record and to respond to it and I thank the Minister for the opportunity to do so. 
The Minister in the chair though still has not taken the opportunity to explain why we are dividing this into the two separate bills. I really think it is important to this Committee that we receive the confirmation that we are looking for and that is around the decision to have Part 1 and clauses 1 and 2 now known as the State-Owned Enterprises Amendment Act 2012 and for Part 2 and schedules 1 and 2 to be separate legislation the Public Finance (Mixed Ownership Model) Amendment Act. 
 The fact is that the Government has decided to split this legislation into these two bills and it needs to explain the reason why it has chosen the name “Public Finance (Mixed Ownership Model) Amendment Act”. That is the question that I do think the Government does need to respond to in this debate this afternoon but also—and this is more important—it needs to explain the decision to use the “State-Owned Enterprises Amendment Act” description as the coverage of clauses 1 and 2 and Part 1. I think that the main reason that really needs to be dealt with is the confirmation that there are four State-owned enterprises today that are not going to be State-owned enterprises when the State-Owned Enterprises Amendment Act 2012 becomes law. I think that is probably the most important question that the public would expect the Government to answer in the Committee this afternoon as we come down to the very final parts of the Committee stage of what is going to be formerly known as the Mixed Ownership Model Bill if this motion is agreed to by the Committee. 
I should say that I understand that Labour will not be supporting this motion and the reason that we are not supporting this motion is that we have not really found any reason to support any element of this legislation. It is not supported by the general public and actually there is no reason to separate out this motion from any of the other motions that have had to be challenged on this side of the Chamber other than the very good set of amendments that we have put forward in respect of this matter. We did not put forward an amendment on this particular motion and that is because technically the motion had not been moved when we were still debating within the broader Committee stage. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on behalf of the Green Party on this motion to divide this bill the Mixed Ownership Model Bill into two parts. We have Supplementary Order Paper 41 before us to divide this bill into two parts the first of which would be called according to the Supplementary Order Paper the State-Owned Enterprises Amendment Bill 2012 and I do not have a particular problem with that. However the second part is to be titled according to this Supplementary Order Paper the Public Finance (Mixed Ownership Model) Amendment Bill and I do have an issue with calling it the Public Finance (Mixed Ownership Model) Amendment Bill as this Supplementary Order Paper proposes. 
The reason why I disagree with this is that I think this is a piece of propaganda. The reason I say that is that if you were serious about naming this piece of legislation in a non-propaganda way in a straightforward way as the title on this Supplementary Order Paper proposes here the Government would simply call it the “Public Finance (Mixed Ownership) Amendment Bill”. The question I have is that on this Supplementary Order Paper before us and in fact of course in the whole debate around this matter we have been forced to call this bill—now this bill that it is being divided—the Mixed Ownership Model Bill. The reason why this is being called the Mixed Ownership Model Bill in this Supplementary Order Paper “MOM” is that the acronym is “MOM”. That is the truth. The reason why we have been forced to call it the Mixed Ownership Model Bill is that the acronym forms “MOM”. What this Government has done repeatedly through this whole debate is refer to mums and dads and try to have a quaint little propaganda exercise around how it is doing this thing for mums and dads which is why in this amendment in front of us it is calling it the Mixed Ownership Model Bill. 
Louise Upston 
: I raise a point of order Mr Chairperson. You have already referred to the fact that your Speaker’s ruling 120/5 is that it is to be a very narrow debate. 
Chris Hipkins 
: Somebody in the position of a whip should know that it is completely out of order to interrupt a member to question the relevance of their speech. The sole judge of relevance—and there are Speakers’ rulings to this effect—is the member in the Chair. 
Louise Upston 
: I was not questioning relevance; I was coming back to the fact that this debate is a very narrow one specifically related to the dividing of a bill and I referred directly to the Speaker’s ruling that you mentioned earlier. 
The CHAIRPERSON (H V Ross Robertson) 
: Can I just say that obviously as the Chairperson I am the sole judge but I can rule about relevancy or whatever the case might be. I actually had signalled Dr Norman and he was starting to come back when the member rose to take the point of order. I would just refer the member to Speaker’s ruling 120/5 and I think that he was pretty much on key so let us just make it nice and tight and narrow. Thank you. 
Dr RUSSEL NORMAN 
: The point is that in this debate we are referring to a Supplementary Order Paper in front of the Committee which is an amendment and there is a proposal within this Supplementary Order Paper that the second amendment bill be called the Public Finance (Mixed Ownership Model) Amendment Bill. I could not be speaking more closely to the issue at hand by addressing what it is that the Government proposes to call the second amendment bill. The reason it is calling it by this specific name the Public Finance (Mixed Ownership Model) Amendment Bill is that it wants to promote a propaganda purpose. It is not related to the reality of what we are doing which is that we are creating mixed-ownership companies. The reason why it is called the mixed-ownership model—and goodness knows what that is meant to mean—is for propaganda purposes because the acronym is “MOM”. That is it is like mums and dads. That is what the Government is using in this Supplementary Order Paper right in front of us which we are addressing in this debate whereby the Supplementary Order Paper establishes an Act called the Public Finance (Mixed Ownership Model) Amendment Act. It is calling it this particular name because it wants to promote a set of ideologies about mum and dad New Zealanders even though most mums and dads will never be able to afford to buy shares in these companies. That is why all the way through this debate it has used the language that is in the title of the second Act that it is creating in this Supplementary Order Paper. 
When you look at what the Government has spent on SenateSHJ communications which is a spin-doctoring company a public relations agency with all the focus groups and all the propaganda it has put forward which will be funded by the taxpayer—$120 million on propaganda SenateSHJ communications advertising and investment bankers—it is all about these words in this Supplementary Order Paper. It is all about getting the propaganda right. Regardless of the fundamental fiscal or economic arguments what this Government has consistently done—and it is demonstrated in the words it has chosen to call the amendment bill in this Supplementary Order Paper—is make a propaganda point. My question to the Minister is why do you not just call it the “Public Finance (Mixed Ownership) Amendment Act” which is really what it is? Why is it that you have introduced the word “model” into the title of the second Act? The reason I would argue is that you wanted the acronym to be “MOM”. My apologies Mr Chair. The reason the Government wanted this second title to include the words “Mixed Ownership Model” was that it was part of its propaganda exercise. It is the propaganda exercise that has characterised this debate from beginning to end. Thank you. The Green Party will be opposing this amendment. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 On behalf of New Zealand First I rise to oppose Supplementary Order Paper 41 which divides the Mixed Ownership Model Bill. We have to ask the question as to why on earth after all this time with all the protestations of how far out from today the public of this country was advised the Government has finally got around to finding a title. Right now the Minister for Building and Construction is in the chair. He is mum on why the Government is calling it “MOM”. He is not saying a word not rising to his feet. He has been challenged pretty seriously in a very narrow debate as you know Mr Chair. You would expect at least to get an answer at this stage in the debate but no nothing at all. 
The fact of the matter is that the legislative change we have got here this change of title begs the question of how fragile and brittle and ham-fisted the thinking and preparation behind this bill has been. It is really indicative of the fact that as the debate has gone through month after month and their reasons have been proven to be so flimsy and immaterial they have kept shifting their ground. Today here late in the piece they are shifting their ground on the title. 
Dr Norman is entirely right. You usually expect the far left to have this sort of psychobabble Freudian type of psychology where people read between the lines or get subliminal messages and to expect that to happen by way of this title is I think a bridge far too far. Frankly why do you not just call it the “Mixed Ownership (Hell I Sold My Country Down the Drain) Bill” or the “Mixed Ownership (How I Decided to be a Quisling) Bill”? [ 
Interruption 
] No no. This is it. I am talking about this title. Why have you not called it the “Mixed Ownership (How I Became a Benedict Arnold Against New Zealand Interests) Bill”? That would fit everything that those members over there are doing. So why have you chosen “MOM” the mixed-ownership model? 
Jami-Lee Ross 
: What about the “When Winston Sold the Airport Bill”? 
Rt Hon WINSTON PETERS 
: There you go. I am going to respond to that. He said: “How about the ‘When Winston Sold the Airport Bill’?”. Everybody knows the National Party had that policy. Everybody knows that the only thing that saved it from going to international interests was the demand that it go to New Zealand interests. 
Everybody knows that I said at the end of the experiment that it was a big mistake and that I regret it. But when they came along on Wellington Airport I walked out of the second most powerful job in this country. That is my bona fides. That is my good faith. I would not sell Wellington Airport. I would not do it twice because I knew I had made a mistake. I also went on to stop the multinational agreement on investment. 
Those are my bona fides and I do not want a johnny-come-lately who has been here 5 minutes from south-west Auckland to get up and try to say what Winston Peters has done or what his record is. My record compared with yours makes me a paragon of virtue on these issues—unlike those people there who will do anything to sell their country down the drain as long as the whips say that is part of the caucus agenda. So I hope we do not see any more of that behaviour or hear any more of that conversation or criticism because I have got a lot more to talk about on the National Party’s record if you want me to. But it is too wide for this debate—it is too wide for this debate. 
I go back to my point. The sum of $120 million has been used to prepare this legislation and possibly millions on deciding what the title will be and very late in the piece showing how flimsy the preparation has been they come up with this. Then of course they have the audacity to say: “You know the Greens are spending $70000 trying to get a petition up.” They spend $120 million on things like trying to find the title and they have the audacity to criticise someone else. How fraudulent and deceitful is that? It is $120 million for them and no one can use a little bit of money to try to stop this sort of behaviour. 
I want to say that there is a better name for this legislation and I have given you a number of options. It should not be called the Public Finance (Mixed Ownership Model) Amendment Bill. It is not a matter about public finance at all frankly in that concept. They came along with one title and late in the piece they want to change it. They should have called it under New Zealand First’s view and interpretation very reasonably arrived at the “Benedict Arnold (How the National Party Sold Down the Country) Bill”. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I am very happy to take a call in the final stages of this debate on the Mixed Ownership Model Bill on Supplementary Order Paper 41 which will divide the bill into two bills. The new bills will become the State-Owned Enterprises Amendment Bill 2012 and the Public Finance (Mixed Ownership Model) Amendment Bill 2012. 
I want to ask the Minister in the chair the Minister for Building and Construction one or two questions on how this Supplementary Order Paper has been structured and the reasons for doing so. Part 1 of the Mixed Ownership Model Bill which is going to become the State-Owned Enterprises Amendment Act actually amends more than just the State-Owned Enterprises Act. It also contains amendments to the Ombudsmen Act amendments to the Official Information Act amendments to the Public Finance Act and amendments to the Income Tax Act. I am wondering why it is that in this Supplementary Order Paper to divide the bill it is actually being divided into only two bills. It has not been divided into bills for all of the respective legislation that it amends. 
Actually the amendments in Part 1 are more than just to the State-Owned Enterprises Act. For example amendments to the Ombudsmen Act repeal a number of provisions related to these State-owned enterprises from that Act and surely that is a reason that that should have been separated out into a separate bill or a separate Act—we are getting to the point where it is about to become an Act. It should be separated out into a separate Ombudsmen Amendment Bill. It should have been separated into a separate amendment bill for the Official Information Act a separate amendment bill for the Public Finance Act and a separate amendment bill for the Income Tax Act. 
 So I would quite like to know—I guess as much from an interest in parliamentary proceedings as anything else—why it is that it has not actually been separated into all of the respective Acts. It is a relatively simple question. It seems a bit odd that we would go so far as to separate it into two but not go so far as to separate it into about seven because I think there are in total about seven Acts that are amended by this bill. That is the first question that I have for the Minister. 
The second question that I have—which is really for the Committee—is whether the titles that are being used for the two Acts that this bill will become accurately describe the contents of the bill that we are debating. I think that is very important from a legislative perspective. We have a convention in New Zealand that the titles of our legislation are not overly political that they are factual and that they describe what the subject matter is. If you look at other jurisdictions overseas they have laws that are very politically labelled and that do not necessarily describe— 
Grant Robertson 
: No Child Left Behind. 
CHRIS HIPKINS 
: The No Child Left Behind Act for example. 
Hon Member 
: Clear Skies Act. 
CHRIS HIPKINS 
: The Clear Skies Act. They do not really describe the contents of the legislation in question. We do not have that practice here in New Zealand. Our convention is that our titles tend to be pretty boring and they tend to be just relatively factual descriptions of the laws concerned. The question the Committee now turns its attention to is whether the titles for the two new Acts being proposed here accurately describe in accordance with those conventions for how we label legislation the content of them. 
The State-Owned Enterprises Amendment Bill 2012 is I think probably a reasonably accurate description for that part although having said that again it comes back to my question about whether it accurately describes the contents of the bill given that it amends a whole lot of other Acts in addition to the State-Owned Enterprises Act. But when we come to the second part which is amendments to the Public Finance Act—an Act that is going to be subject to further amendment by this House I would say in the fairly near future—the question is whether the use of the term Public Finance (Mixed Ownership Model) Amendment Bill is an accurate description for what this bill actually does. I think that is where we want to spend a little bit of time pulling that apart. 
The mixed-ownership model is frankly a legal fiction. There is no such thing as a mixed-ownership model. Effectively what the substance of the bill does is it removes these entities from the State-Owned Enterprises Act where there is a legal nature and a very detailed legal purpose and so on for them and it puts them into the ether where they are kind of not quite private companies but they are not quite State-owned enterprises or public companies any more either. This is a whole new thing. Actually it is a fiction to say that it is a mixed-ownership model because it is portraying it as something that it is not. The Government will no longer be the owner of these companies; it will merely be a shareholder in them. The substance of the issue is whether the title the Public Finance (Mixed Ownership Model) Amendment Bill is an accurate description of what is being done here. As I have said there really is no such thing as a mixed-ownership model. This is a legal fiction that is being created by the Government. 
What it probably would be more accurate to say is that it is the “Public Finance (Share Sales in Previously Public Assets) Amendment Bill” because that is effectively what it is doing. These will now become publicly listed companies. The fact that the Government owns the majority of shares in the publicly listed company does not get away from the fact that they are going to be publicly listed companies. They are no longer going to be State-owned enterprises. They are no longer going to be publicly owned assets. Although the Government may own 51 percent of them that does not make them a publicly owned asset any more. So the question that I have is whether the description that is being used here the Public Finance (Mixed Ownership Model) Amendment Bill is an accurate description. I do not think it is because as I have pointed out there is not really any such thing as a mixed-ownership model. 
So then the question becomes whether this new bill that is being created adequately establishes a robust legitimate framework for there to be such a thing as a mixed-ownership model. It is a very light piece of legislation and I do not think it does. The title of this bill suggests that it is creating a whole new framework—something that is entirely new—in the nature that the State-Owned Enterprises Act would have been back when it was first created in I think 1986. Was it 1986? 
Grant Robertson 
: For the SOE Act yes. 
CHRIS HIPKINS 
: For the State-Owned Enterprises Act it was 1986. So when that was first established it was— 
Hon Ruth Dyson 
: Before you were born? 
CHRIS HIPKINS 
: I was at primary school actually Ms Dyson. It was a substantial Act— 
Hon Member 
: Maurice was here. 
CHRIS HIPKINS 
: Maurice was here. It created a significant new body of law and a significant new structure for companies. So the question we have is whether this is an appropriate name for what will become a part of the Public Finance Act; the question we have to ask ourselves is whether “mixed-ownership model” is a sufficient description for that because it is nowhere near as substantial as the State-Owned Enterprises Act actually was and of course it has not been through quite the same process that the State-Owned Enterprises Act went through when it was first established. I would argue quite strongly that in fact this is not an accurate description of the law that is being created by this Parliament and that it is a term of spin that is being used in the title of an Act which is not something that this Parliament has traditionally engaged in doing. Therefore I think we should find a more accurate description for the title. 
On the wider issue I still have the question as to why this bill is not being divided into many many more contributing bills or amendment bills for all of the relevant pieces of legislation that it amends. As I have said it covers the Ombudsmen Act the Official Information Act and the Public Finance Act—all of which I regard as constitutional instruments in New Zealand’s law—and the Income Tax Act which is amended all the time. Although the Income Tax Act has a significant bearing on Parliament’s income I would not necessarily describe it quite so much in the constitutional sense although I am probably going to get emails about that. But certainly the Ombudsmen Act the Official Information Act and the Public Finance Act are all parts of our constitutional framework. We do not have a written constitution in New Zealand so when we are amending those Acts I think we should be explicit about the fact that we are amending them. I do not think that this piece of legislation does that. 
At this point I think that probably concludes my remarks on this but I do look forward to the contribution of the Minister. I see that he has been taking some notes and I am sure that he is going to clarify my concerns. 
LOUISE UPSTON (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 I want to pick up on the excellent contribution from my colleague Chris Hipkins on Supplementary Order Paper 41— 
Hon Ruth Dyson 
: And Lianne Dalziel. 
GRANT ROBERTSON 
: —and also the contribution by Lianne Dalziel—that was a little stumble there—and the contributions by other members around the House as well. It is only water; do not worry. 
What I really want to do is to pick up for the most part on Mr Hipkins’ concerns about the division of the Mixed Ownership Model Bill into only two bills. I think this is quite a serious matter because when we look at what is in Part 1 which makes up the majority of what will now be called the State-Owned Enterprises Amendment Bill we see a number of matters covered. We see amendments to the State-Owned Enterprises Act 1986 and it would be quite logical in the system that we use in this Parliament to call any bill that amends those the State-Owned Enterprises Amendment Bill so on that count we can be satisfied. But then we look at what were clauses 6 to 11 of Part 1 of the Mixed Ownership Model Bill which now make up the part of the divided bill here and we see there amendments to the Ombudsmen Act 1975. The Minister in the chair the Minister for Building and Construction was not in the House in 1975 but I am sure he can provide us with some guidance around the question of whether or not it is possible to create something called the State-Owned Enterprises Amendment Bill and in doing so amend the Ombudsmen Act and not directly split the bill up to amend the actual Ombudsmen Act. 
To remind the Committee of what is being divided here the amendments to the Ombudsmen Act 1975 that will now form part of the State-Owned Enterprises Amendment Bill and that were in clause 6 of the Mixed Ownership Model Bill are in fact to remove Genesis Power Ltd Meridian Energy Ltd Mighty River Power Ltd and Solid Energy New Zealand Ltd from the Ombudsmen Act to take them right out remove the accountability on those matters and completely take out the ability of New Zealanders to find out what is going on in these companies that allegedly according to the Government we still own nearly half of. So they have gone. They have gone from the Ombudsmen Act. Surely that would be an occasion to have a completely new Act called the “Ombudsmen Amendment Act” rather than to have it under the State-Owned Enterprises Act. 
Rt Hon Winston Peters 
: The “Ombudsmen Sidelining Act”. 
GRANT ROBERTSON 
: That is right. In fact it could have a number of names. That is right Mr Peters it could be called the “Ombudsmen Sidelining Act”. It could be called the “Ombudsmen (Hiding Information from New Zealanders) Act”. There are many different names it could be called but whatever it is called it should be an Act by itself. I simply cannot understand how it can be part of the State-Owned Enterprises Act. It does not describe what will be done. It does not explain to New Zealanders that their rights to take issues to the Ombudsman about companies that they previously have owned all of and under this Government will own less than that—half of that less than half of that over time I am sure—will be repealed. They should have the right to have a piece of legislation in front of this Committee called the “Ombudsmen Repeal Act” the “Ombudsmen (Hiding from the Public) Act” or whatever name we would choose to give it. I simply cannot understand why the Government has split the bill in this motion into only two bills. 
If we then move to the next of the pieces covered under the State-Owned Enterprises Amendment Bill which is what was previously in clause 7 of the Mixed Ownership Model Bill these are amendments to the Official Information Act. This amends the Official Information Act to “repeal the item relating to Solid Energy New Zealand Ltd.” That means this is a significant change and it would be deserving of its own piece of legislation I would have thought. We need to explain what that change is. The change is that New Zealanders previously would have thought that the Official Information Act applied to an entity that they own to an entity that even under this proposal they have at least some ownership of we are told by the Government. Surely that would have been something of such significance—that New Zealanders could no longer use the Official Information Act to find out what is actually going on in Solid Energy; so much for control of it—that that would justify an “Official Information (Hiding What is Happening in Solid Energy) Amendment Bill” or an “Official Information (Taking Away the Rights of New Zealanders to Information About Assets That They Own) Amendment Bill”. All of those things would be more accurate descriptions than the State-Owned Enterprises Amendment Act. That does not describe what is happening here. That does not describe to New Zealanders what is going on here. 
Now we have a situation where under Supplementary Order Paper 41 which we are discussing the bill will be split into two; we have the State-Owned Enterprises Amendment Bill and we have the Public Finance (Mixed Ownership Model) Amendment Bill but we do not have any reference to the Ombudsmen Act the Official Information Act or indeed to the Income Tax Act which are clearly distinct parts of what is Part 1 of the Mixed Ownership Model Bill. 
So I think the Minister in the chair does need to stand up and answer to the Committee as to why this is happening. I could posit some reasons for him. It would be more constructive I suspect if the Minister were to get up and do that but I could posit some reasons. I would say that one of those reasons is that the Government does not want New Zealanders to know that their rights under the Official Information Act and the Ombudsmen Act would be taken away in this legislation. That would be one reason why the Government split this bill into only two parts rather than the many parts that would accurately describe what is happening here. 
It seems quite clear to me that we have a serious issue within Supplementary Order Paper 41. We are not allowed to debate the substance and the merits of what will happen within this but it is quite clear to me having listened to and participated in the debate that members raised many Supplementary Order Papers many amendments and many issues relating to changes to the Ombudsmen Act and changes to the Official Information Act. These are Acts that lie at the core of our democracy. These are the things that enable New Zealanders to know what is going on in public companies and entities in which they have an interest and in which all New Zealanders have an interest. Yet today the Government is blithely putting all of that under something called the State-Owned Enterprises Amendment Bill which is half of this motion. I simply do not think that describes what is happening here. I do not think it is accurate in terms of the history and as Mr Hipkins said of how we describe laws in New Zealand. 
Chris Hipkins 
: It’s a change from our practice. 
GRANT ROBERTSON 
: That is right; it is a change from previous practice. We have not had a single explanation from the Government side about why it has decided to completely ignore the fact that it is amending the Ombudsmen Act and the Official Information Act let alone I might add the Income Tax Act. The Income Tax Act does get amended more often in this House. I absolutely accept that. But again these are very important items in terms of the overall accounts of New Zealand. If we look at what the amendments are we see that what was formerly Part 1—clauses 9 10 and 11 of Part 1—are serious amendments that are being undertaken here. They remove from the Income Tax Act items relating to Genesis Power Ltd Meridian Energy Ltd Mighty River Power Ltd and Solid Energy. So the amendments remove them from the Income Tax Act. They are removing them from a fundamental piece of legislation so why is there not something on the Table right now in Supplementary Order Paper 41 called the “Income Tax (Taking Away the Profits that New Zealanders Get From these State-owned Assets) Amendment Bill”? It may not be that title. Mr Williamson possibly would want something with fewer words in it but it could be that title. So not actually having the Income Tax Act amendment— 
Rt Hon Winston Peters 
: Fewer. Fewer words. 
GRANT ROBERTSON 
: Fewer yes. I said fewer. Fewer words. 
Charles Chauvel 
: Could we have an animated version? 
GRANT ROBERTSON 
: We could have an animated version. We could have an app if it was the Minister in the chair the Minister for Building and Construction. It may be more appropriate that some kind of app was created that could actually do that for us. 
Phil Twyford 
: Smart app. 
GRANT ROBERTSON 
: SmartGate. That is right. Those amendments to the Income Tax Act are now lost within the State-Owned Enterprises Amendment Bill. 
There is another curiosity in this matter and that is that in fact what is now going to be the State-Owned Enterprises Amendment Act also includes amendments to the Public Finance Act. I think that creates an internal contradiction here because the second bill from this divided bill is the Public Finance (Mixed Ownership Model) Amendment Bill and I endorse the comments made by Russel Norman and Winston Peters on the Freudian nature of that title. Actually we are now also amending the Public Finance Act within the State-Owned Enterprises Amendment Act. Perhaps the Minister would like to explain to us exactly how that works. Would it not make more sense in this Supplementary Order Paper to divide the bill to include what was clause 8 of Part 1 of the Mixed Ownership Model Bill in the Public Finance (Mixed Ownership Model) Bill? If that is a bit confusing for those listening on their crystal sets—Maurice Williamson is aware of crystal sets—the Public Finance (Mixed Ownership Model) Amendment Act is the second— 
Rt Hon Winston Peters 
: He’s got earrings made of them. 
GRANT ROBERTSON 
: That is almost worth getting on the record is it not? Mr Peters says that he has got earrings made of them which I think is very clever. The Public Finance (Mixed Ownership Model) Amendment Bill— 
MAGGIE BARRY (National—North Shore) 
: 
 I move  
That the question be now put 
. 
DENIS O’ROURKE (NZ First) 
: 
 The whole question of dividing this bill into two raises the whole concept of what is a State-owned enterprise and what is not. I say that making Part 2 a separate bill is inappropriate because firstly it includes in the title the words “Mixed Ownership Model” and secondly Part 2 in its substance does not set out a model that is a genuine mixed-ownership model. In fact I think that the name for Part 2 should simply be the Public Finance Amendment Bill. It should not include the words “Mixed Ownership Model” at all. That is just not correct. 
The reasons for that are these. First of all the model set out is as I have said not a genuine mixed-ownership model at all. I say that in order for the model to be correct it would have to be a fifty-fifty ownership model because that is the only way there could be genuine mixed ownership. I say that mixed ownership can mean only that. Anything other than fifty-fifty is not mixed; it is dominated by one party or the other so it is not mixed. As it is of course as we know the Crown keeps 51 percent which is control and I do not see what is mixed about that. Control is control. You cannot be a little bit pregnant; you cannot be a little bit in control. Fifty-one percent is control; 51 percent is not mixed. 
I will tell members something from my own experience. I chaired a company Transwaste Canterbury Ltd that was a genuine mixed-ownership model. That was able to be called a partnership or could have been called a mixed-ownership model. Whether it was or was not a mixed-ownership model it could still operate as a fully successful commercial business. That is the model that it actually is. In that respect it is absolutely no different from a State-owned enterprise because under the State-Owned Enterprises Act they are required to operate as successful businesses. So I do not see how there is any difference between a State-owned enterprise defined in that way and what these entities will be with 51 percent shareholding residing in the Crown. What is the real difference? 
You could also see that the regime in which these entities will be operating is fully competitive the same as when they were State-owned enterprises having to operate in competition with each other. I further say that the only way they could be different is if the shareholding Ministers enter into shareholders agreements. 
The CHAIRPERSON (H V Ross Robertson) 
: Can I just advise the member that what we are looking at here is the reason why the bill should be divided—why it should be split into the State-Owned Enterprises Amendment Bill or the Public Finance (Mixed Ownership Model) Amendment Bill. The member is able to give reasons why that should happen and— 
DENIS O’ROURKE 
: Or reasons why it should not. 
The CHAIRPERSON (H V Ross Robertson) 
: Or reasons why it should not. The debate is strictly related to the proposal that the bill should be divided. 
DENIS O’ROURKE 
: And the reason I am giving Mr Chair for it not to be divided is because it is a mis-description in Part 2 to call these entities mixed-ownership-model entities when they are in reality not that and I have been giving reasons why that is the case. 
Finally I want to say this. The only way that it could become genuinely a mixed-ownership model is if the shareholding Ministers were to enter into shareholders agreements with the minority to allow the majority of directors to be appointed by the minority. Then you could say it would be a genuinely mixed-ownership model then you could say it would genuinely not be like a State-owned enterprise and then it would be reasonable for this bill to be divided into two parts for those sorts of reasons. But of course the Government would never allow that or should not allow that simply because if it did it would lose actual control and that would be a breach of its undertaking to the public of New Zealand that genuine control would remain with the Crown. 
So for those reasons I say that the mixed-ownership model is a myth. It does not and cannot really exist under this legislation and should not be reflected in a division of these bills on the basis that there is a difference between these entities and State-owned enterprises. 
A party vote was called for on the question that the Committee divide the bill into the State-Owned Enterprises Amendment Bill and the Public Finance (Mixed Ownership Model) Amendment Bill pursuant to Supplementary Order Paper 41. 
The CHAIRPERSON (H V Ross Robertson) 
: Order! Members know there are to be no comments at all during the taking of a vote. It can be seen as intimidatory and could lead to a breach of privilege. 
A party vote was called for on the question  
That the Committee divide the bill into the State-Owned Enterprises Amendment Bill and the Public Finance (Mixed Ownership Model) Amendment Bill pursuant to Supplementary Order Paper 41. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Maori Party 2; Mana 1. 
Motion agreed to. 
House resumed. 
Bill reported with amendment. 
The CHAIRPERSON (H V Ross Robertson) 
: I move  
That the report be adopted. 
A party vote was called for on the question  
That the report be adopted. 
Ayes 63 
New Zealand National 59; Maori Party 2; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Report adopted. 
Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill 
Second Reading 
Hon JUDITH COLLINS (Minister of Justice) 
: 
 I move  
That the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill be now read a second time 
. I want to thank the Justice and Electoral Committee for its consideration of the bill in the short amount of time available. The committee received five submissions on the bill and has recommended that it proceed without amendment. I am not surprised by this as the bill is very straightforward and merely maintains the status quo under the Prisoners’ and Victims’ Claims Act 2005 for a further 1 year. 
That Act provides for awards of financial compensation to be made to prisoners only in extraordinary circumstances where no other remedy is deemed appropriate. Prisoners are also required to make use of the existing complaint mechanisms that are available to them before they seek compensation through the courts. If financial compensation must be awarded the Act requires that deductions are first made to pay any legal aid debt in relation to the claim any outstanding reparation and any earlier orders in favour of victims. The Act then allows victims of the prisoner to claim against the money through a simplified victims’ claims process. 
Since the Act came into force in 2005 25 payments of compensation to prisoners have been subject to the victims’ claims process and finalised. Of the 25 finalised awards five have resulted in successful victims’ claims totalling $47000. Outstanding reparations owed to victims were also paid from 11 of the awards totalling a further $43000 for victims. The Act contains two sunset clauses that are due to take effect on 1 July 2012. The sunset clauses are effectively expiry dates for the Act. This bill extends the application of the Act for 1 year. It amends the sunset clauses so that it will now come into effect on 1 July 2013. Without the bill from next month claims for compensation filed by prisoners would not be subject to the Act’s restrictions and any compensation awarded would not be subject to the deductions or simplified victims’ claims process. 
 The bill will bridge the gap between the expiry of the current Prisoners’ and Victims’ Claims Act and progressing the Government’s policy to redirect prisoners compensation to support victims of crime rather than pay it to the prisoners. The Government has already introduced a bill to give effect to the redirection policy and to make the regime permanent. The Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill is currently before Parliament. However there is insufficient time for that legislation to be passed before the imminent expiry of the current regime on 30 June. I believe it is important for that bill to be fully considered by a select committee before it is passed and for interested members of the public to be given the opportunity to have their say and be engaged. I also intend to engage with Opposition parties to seek their input into the final form of that bill. 
In the meantime passing the current bill now ensures that the Act does not expire before the redirection bill can be progressed and ensures that claims by prisoners will continue to be subject to the current regime’s restrictions deductions and victims’ claims process. The bill before us and the redirection policy to be implemented later will not prevent prisoners from seeking to uphold their rights through the courts. Agencies responsible for wrongdoing will still be held to account and will pay compensation when required. Prisoner mistreatment will not and should not be tolerated. 
This bill merely maintains the status quo until we progress the redirection bill later this year and will ensure that the victims of prisoners who are awarded compensation will continue to have priority to claim against that compensation before it is paid to the prisoner. I commend this bill to the House. 
CHARLES CHAUVEL (Labour) 
: 
 As we have just heard from the Minister of Justice this bill the Prisoners’ and Victims’ Claims (20120 Expiration and Application Dates) Amendment Bill would extend for 1 year only from 1 July the application of the Prisoners’ and Victims’ Claims Act 2005. The thought is as I understand it that the temporary legislation that we are considering now is needed because the substantive Act expires according to an inbuilt sunset clause that takes effect in 10 days’ time. I think it is important to understand the context here and in particular to revisit the history of the enactment of the substantive legislation so that we are fully cognisant of what we are doing in respect of this transitional legislation. 
Between 1998 and 2004 the Department of Corrections operated a punitive regime that was known as the behaviour modification regime and was later known as the behaviour management regime—or for short BMR. That regime was heavily criticised in a High Court case  
Taunoa 
v Attorney-General 
 where Mr Taunoa complained about the operation of the behaviour management regime and gained a significant award of damages against the Crown because of the fact that the behaviour management regime was operated in such a way as to constitute an assault and a deprivation of the inmate’s human rights. As a result significant damages were awarded in that case to the inmate. 
There were concerns at the time given the high level of the award that there would be substantial damages flowing against the Crown to inmates and that the victims of the offending of those inmates—in order to try to get some sort of compensation for the wrong that they had suffered—would have to go through an expensive court process in order to make themselves whole yet the inmates concerned against whom sentences had been entered because of the suffering that these victims had been through would effectively end up with windfall payments that would not be able to easily be touched by their victims. So that is the context of the substantive legislation. That is why the Minister of Justice at the time the Hon Phil Goff responded to those concerns by proposing the substantive Act. The intention as can be seen from its wording was that it would always be temporary and that there would be a sunset clause built into the legislation. It would apply until only 1 July this year. 
The present Government—and the Minister was almost good enough to concede this—has not managed its Order Paper well. So as a result of that mismanagement and I do not know whether it is her responsibility or the responsibility of her predecessor Mr Power but for whatever reason the replacement legislation has not come to the House in time to be re-enacted to avoid the operation of the sunset clause. There is replacement legislation on the Order Paper but I think the Government realised that it would not be able to get that legislation through all its stages including the select committee hearing that would no doubt be appropriate to renew the legislation in time to be able to get it through before the sunset clause was triggered. That is the only reason that we have the temporary bill now before the House. 
I think it is important to say that there are some real concerns about the substantive legislation that is proposed to effectively make the Prisoners’ and Victims’ Claims Act permanent. This was pointed out to us by a number of submitters in the Justice and Electoral Committee. We heard from the Minister that of the five submitters I think only one was vaguely supportive and every other submitter was against this legislation and they were against it because of the provisions of the proposed replacement. There are at least two reasons why the replacement legislation is bad law on its face. 
First of all the  
Taunoa 
 decision which I mentioned earlier has been to the Supreme Court. The Supreme Court radically scaled back the award of damages that had been given in the High Court. So all that fear about inmates getting enormous amounts of damages from the Crown was really groundless because the Supreme Court our highest legal authority has said that actually the quantum that inmates can expect to receive from the Crown is quite low. I note that the Minister recited some figures about damages that have actually been recovered under the regime. I think in respect of the 25 claims processed to date the actual level of monetary compensation that has been paid to victims is very low—I think she said it was $43000. That is proof I think of the concern here. It is a special regime set in place because of concerns that are no longer live resulting in actually quite low payments to victims of crime. 
 The second problem with the substantive regime is that the legislation as I have said was always intended to be temporary. It was always intended to address the fact that the Department of Corrections had wrongly put in place the behaviour management regime. The behaviour management regime was done away with and the Department of Corrections—as I know a number of members who have visited prisons or taken an interest in the issue will know—has taken a number of important steps to try to professionalise the operation of the prisons and to ensure that the sorts of practices that we saw put in place in the 1990s with the behaviour management regime cannot happen again on a systemic basis. So the original case has been overridden substantially; the behaviour modification regime is no longer in place. The question therefore arises why we need ongoing legislation. 
There is another issue that relates to the point that I made earlier about the figures that the Minister saw fit to release in her speech. My colleague Lianne Dalziel at the select committee when we considered this legislation was very concerned about the scant nature of the regulatory impact statement that justified both this temporary law and the substantive replacement law. She wanted to know what the justification in monetary terms was for re-enacting the regime and the Minister’s officials told us very clearly at select committee: “No that information is not available. The Minister does not want you to have it. It is sensitive.” 
Well unfortunately we do not have a terribly good example of joined-up Government at the moment because all those figures were released by the Department of Corrections yesterday in the estimates process and they do make very interesting reading. There are currently only 19 claims against the department awaiting adjudication in respect of the prison service—although one is a class action—and three against the probation service. As far as officials can tell there might be another 20 cases out there but that is simply an attempt to quantify contingent liabilities. 
So a real question has to arise as to whether a problem that has given rise to only 20 actual and 20 potential cases since 1995 merits a statutory regime. Judith Collins has given me a commitment to negotiate over the content of the replacement legislation during the year for which this Act will be extended if the House passes this bill. Frankly I and my colleagues need to be convinced of the ongoing need for it or of any special legislation to apply in this area. 
If there is to be special legislation there are some major questions that have to be asked. Why should the legislation apply only to inmates? Why should it not apply to all those who are convicted of an offence—perhaps including a community-based sentence? Why could the judge not give an indication as to sentencing that would include any compensation that should be payable to victims in the event that the person subject to a sentence came into a windfall? And why should the windfall be limited to a payment from the Crown? Why should it not include a testamentary benefit a Lotto win or any other sort of recovery of funds that was unexpected? 
I accept and my colleagues accept that it is proper to preserve the status quo for a year and to allow those discussions about a replacement. For that reason and that reason only Labour will support this temporary bill. 
TIM MACINDOE (National—Hamilton West) 
: 
 The Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill is a bill of very limited application but it is also an important one. The Prisoners’ and Victims’ Claims Act 2005 is due to expire in 9 days’ time which is just 3 sitting days from this afternoon. As the Minister of Justice and now Mr Chauvel have noted two sunset clauses in that Act are due to take effect on 1 July. I urge all members to support this bill to extend them by a further 12 months—and that is all we are talking about—to ensure that there is no gap between the expiry of the current regime and the implementation of new provisions that will come into effect when and if the Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill is passed by this House. I submit that this interim measure is necessary and in the public interest. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 Sorry I was not expecting such a short call from the chair of the Justice and Electoral Committee Tim Macindoe. The reason I am surprised that it was such a short call is because of the issue that was raised by my colleague Charles Chauvel our spokesperson on justice in relation to information that we understood would be made available to us in the select committee in secret. The regulatory impact statement made it so clear that it was such a difficult piece of information to have in the public area because of the implications that it could have and then we find that the answers were given by the Minister of Corrections in another select committee in another context in terms of the financial review and we were denied access to that information at the select committee. I would have thought that the chair would like to take an opportunity to respond to that. I am sure that when we get to the Committee stage the Minister will be asked that question and it may be in the chairperson’s interest to make sure that the Minister is well briefed on the subject. 
I just want to quote from the  
Hansard 
 of my own contribution to the first reading of the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill because this was a matter that I raised at the select committee meeting itself. I said: “I … would like to receive an assurance from the Government that that information will be made available in secret to members of the committee because I think it would be useful for us to understand the context in which we are debating this. I note that the Minister of Justice is nodding her head. I think it is a matter she would be prepared to take on board and consider. And the reason that I raise this is due to the statement in the regulatory impact analysis about the issue around potential behaviour management regime claimants.” It actually had not occurred to me when we were dealing with the first reading of this bill that there were behaviour management regime claimants who had not actually lodged their claims at that point and were sitting back waiting for the sunset clause basically to take effect and to see what happened afterwards—to basically chance their arm. 
I just thought that it was fascinating that Charles Chauvel managed to get the information that we were denied at the select committee in written questions to the Minister of Corrections in relation to her appearance at the Law and Order Committee which of course is not the committee that was dealing with this particular bill. I think we have to be a little bit cautious about decisions that are being made without the relevant information being taken into account. 
When we look at the regulatory impact analysis and I dealt with this in the first reading of the bill it actually was prepared only at very short notice. I think the date of it was 28 March 2012. Given that the knowledge around the implementation of the sunset provision was well known ahead of that time it seems extraordinary to me that the regulatory impact statement was left so late. It actually smacks of having been forgotten—overlooked that there was a requirement to do this level of analysis before introducing even this bill—and I know having listened to both the Minister and the chair at the select committee that they think it is just so straightforward there is no reason to debate any of these matters. But actually if we are to do our jobs as parliamentarians I think we have to take notice of these kinds of sequencing issues. 
When we look at this particular one we see that it says this: “The Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill was introduced in Parliament on 13 October 2011 to give effect to the redirection policy but did not receive a first reading.” Well that it did not receive a first reading does not really explain to us why it did not receive its first reading. Then it goes on to say—and this is the non sequitur I would call it of this particular regulatory impact analysis—that “There is now insufficient time to progress it through its Parliamentary stages before the sunset clauses take effect on 1 July 2012.” Well you know of course that is the case but do we not need a little bit of a better explanation as to why the bill took so long to introduce? The knowledge around the general election actually occurring in the interim period— 
Charles Chauvel 
: He was too busy with Westpac. 
Hon LIANNE DALZIEL 
: I know that he was busy with his interview with Westpac as the member says but that is not the point. 
It is a serious matter because what has happened is this. I just think I should put this on the record of the House again because obviously it has not attracted much attention on that side of the House. The regulatory impact statement goes on to say: “This RIS was prepared within a very short timeframe and accordingly no consultation was undertaken. However the Ministry informed the Department of Corrections the Crown Law Office the Ministry of Foreign Affairs the Treasury and the Department of the Prime Minister and Cabinet. The public is likely to have an opportunity to comment when a new Bill is referred to select committee after introduction.” Well actually the new bill had been introduced so the whole concept of a proper discussion with the public and proper consultation prior to the introduction of this legislation has just simply gone out the window. The Government does not seem to think that that is important. 
Let me go to the actual provisions in the regulatory impact analysis where it talks about the need to keep certain information secret. So here it goes: “Exact numbers of existing and potential claims by prisoners for compensation are not stated in this RIS because that information”—so it is not the amounts; it is the numbers—“is legally sensitive. The numbers were available and were taken into account when the impacts of each option were assessed.” They did say that they did notify the Department of Corrections and the Crown Law Office so it is surprising that the Department of Corrections had no trouble supplying this information to the members of the select committee. 
So here is this information. This document asks how many individual claims for compensation by inmates are expected to be paid out or settled in the coming year specified by the amount sought and reason for the claim and how this compares with previous years. It says that settlements are comparable with previous years that there are 19 cases involving compensation claims filed by prisoners or former prisoners and that one of these is the class claim by 71 prisoners or former prisoners. So that one is already on the record. Another 20 similar cases have been identified. 
So this bill is about 20 cases. That is what this bill is about—20 cases. The document continues: “The department is likely to seek to settle four cases with compensation payments. A settlement offer has already been made in one other case. Another three claims involving offenders being managed in the community will also be considered for settlement by way of a compensation payment. If settlement occurs any compensation is paid to the Ministry of Justice in accordance with the Prisoners’ And Victims’ Claims Act 2005 which has to be extended.” It has to be extended or replaced because of the situation that we are in now with the sunset clause taking effect on 1 July this year. 
So I actually think that the Government has done a disservice to this House in terms of its response to these issues in the first reading although the Minister did indicate by nodding her head—she was not nodding off; she is not one of those Ministers who do that from time to time. She was actually nodding her head and she was indicating that that information would be made available. I actually went to the point that I had accepted what the regulatory impact statement had said at face value and that it could be provided in secret. But no we were not given that information. I raised it at the select committee and members of the Ministry of Justice were not aware of the issue and they were going back to check. We never got that information provided to us but now we find it has been provided to the Law and Order Committee. I actually think it is not a good process but we are supporting the passage of the bill for the reasons that my colleague enunciated. 
DAVID CLENDON (Green) 
: 
 I am pleased to take a call on the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill and pick up from the final comments of the previous speaker. I would like to begin by talking about the process. It has been pointed out that we have a 9-day deadline before us. That is an extraordinary thing when one considers that we are talking about an amendment to substantive legislation that was enacted in 2005 some 7 years ago. This Government has had complete control of the legislative programme of the House programme for 3½ years and we hear today from the Leader of the House that next week the House will be in extended hours and will potentially sit under urgency. One of the bills that we must use these longer hours for is this bill the Prisoners’ and Victims’ Claims (2012 Expiry and Application Date) Amendment Bill. It is an extraordinary failure of political management and of legislative management after 7-odd years to have to rely on extended hours or potentially urgency to deal with a deadline that was flagged so long ago. It is a remarkable failure. 
Tim Macindoe 
: The member’s confused. 
DAVID CLENDON 
: Well I am told I am a confused member. In fact I invite the member to do the sums—12 minus 5 does equal 7 and always has. The fact is that we are running up against a deadline and it is a failure of legislative and of political management. That is undeniable. 
Further the process has been truncated. This bill was introduced a couple of months ago at the beginning of a parliamentary adjournment. Very few members of civil society few of the interested NGOs and few of the organisations who would take an interest in this sort of bill had any idea that it was coming forward. The Government used its numbers to force a truncated select committee process. Barely 6 weeks were allowed for the select committee process and it is only through a change in the Standing Orders that we had any opportunity to even debate that. I am pleased that the Labour Party and the Mana Party supported the Greens in opposing that motion to have such an extraordinarily short select committee process. It is a very undemocratic and a very sloppy way to progress legislation. The Government should be ashamed of that failure to manage this better. 
The principal Act the Prisoners’ and Victims’ Claims Act 2005 which we are changing was very well described by Mr Chauvel who in his first reading speech described it as an experimental piece of legislation. As he did explain that earlier I will not repeat that in any detail. That legislation did come from the behaviour management regime and the systematic abuse and torture of inmates in one of our largest prisons. The climate of the day saw significant objection to and some disquiet about prisoners’ receiving monetary compensation despite their having proven a case of abuse and torture. This legislation that we are amending was the result of that. The reality is that at the time the principal Act was supported by the Greens and I suspect in part by other parties because it was clearly flagged there would be a substantive review and for that reason there was a deadline a sunset clause in the legislation. One of the things promised at the time was an independent prison inspectorate which in fact we never did get. It is true that the Office of the Ombudsmen does have dedicated officers who do a very good job of monitoring prisons and dealing with prisoner complaints. That is an issue that we can return to. The reality is there has been ample time to review the situation. 
The continuance of this legislation—and it has been clearly flagged by the Government that it is its intention to embed this legislation—indicates that the Government is expecting that there will be ongoing examples of abuse of prisoners in our prisons while they are in custody and that we need to ensure that they cannot receive any sort of monetary compensation in the event of such abuse occurring. That is an extraordinary assumption to make given that the Department of Corrections has changed. We have seen reform of the corrections system. There is a great deal yet to do it must be said but I do not think that the situation that arose in the early 2000s would be tolerated today or would be possible. If there is abuse of inmates then those responsible should be taken to task and we would argue that inmates should continue to be eligible for some compensation for that. 
We were told by the Minister of Justice in her first reading speech that the need for this temporary legislation was pressing because otherwise “There would be a clear incentive for potential claimants to file their claims during this window [of opportunity]” which she said would “defeat the purpose of the current regime”. She went on to say: “The new bill will prevent the unfair window of opportunity from occurring that would disadvantage victims of crime.” That is an extraordinarily narrow interpretation of the notion of fairness. What about fairness for the people who were indeed originally denied their human rights who were abused in custody and who were deemed to have suffered torture? What about their rights? They too were victims of crime and their right to be compensated was taken away from them. The continuance of this experimental legislation—well described—embedding the regime of zero compensation because that is what it will do is an admission that this Government does expect further abuse and misbehaviour within the corrections system and I think that the Minister of Corrections should be quite concerned about that. 
The point has been very well made by the previous speaker that the regulatory impact statement was clearly done in considerable haste and indeed the submission from the New Zealand Law Society highlighted that there are probably fairly substantial errors of fact in it. I mean no disrespect to the officials involved. It is simply that they were not given adequate time to do a good job which is what we normally expect and see from them. The Law Society has also pointed out that the original legislation was never subject to a New Zealand Bill of Rights Act section 7 report and nor has this continuance legislation been subject to that. It is simply an extension of a regime that was always intended to expire. It should be allowed to expire. It has served whatever useful purpose it may have had. There is clearly a contingent liability on the Government of the day if new claims were to emerge from the period of the early 2000s. That is a reality and the Government should basically front up and wear that cost rather than continue with what is a very unfortunate piece of legislation. This bill perpetuates two very perverse incentives. It could in a very perverse way actively encourage or almost give licence for the abuse of inmates given that it is most unlikely that those inmates would see particular value in making claims against the State for any abuse that they suffered in prison. The second is that it seems perverse that anybody should benefit from the abuse torture or mistreatment of prisoners while they are inmates of the State. 
Our international obligations have always been compromised by this legislation. It is true that Article 8 of the Universal Declaration of Human Rights guarantees “the right to an effective remedy” and article 2 of the International Covenant on Civil and Political Rights does something similar. It demands that people whose human rights have been compromised ought to be entitled to an effective remedy from the State which is responsible for that. It cannot be accepted at any level that absolute denial of any compensation or possibility of any monetary compensation coming to a person whose human rights were compromised could be seen as meeting the international obligations that New Zealand has accepted as signatory to those international agreements documents and conventions. 
When first passed this was a very marginal piece of legislation. The Greens supported it originally only on the understanding that there would be a rigorous and timely review and the installation of an independent prison inspectorate. None of those has occurred. This is very poor process for a very poor piece of legislation that we will continue to oppose. 
Dr CAM CALDER (National) 
: 
 On this on side of the House we make no apologies for focusing the justice system on the rights of victims. The Prisoners’ and Victims’ Claims (2012 Expiration and Application Dates) Amendment Bill has a simple purpose. It bridges the gap between the expiry of the current regime as we have heard on 30 June 2012 and the progressing of the Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill. There are two major effects on the awarding of compensation. The bill defers the expiry of the provisions relating to restrictions on the awarding of compensation until 1 July 2013 and it also affects the victims’ claims process. The bill extends the application of the provisions of the 2005 Act to 1 July 2013. The Government intends to progress the aforementioned Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill so that it is enacted before 30 June 2013. I commend this bill to the House. 
DENIS O’ROURKE (NZ First) 
: 
 This bill the Prisoners’ and Victims’ Claims (2012 Expiration and Application Dates) Amendment Bill is a sunset extension bill. Today being 21 June the shortest day of the year it is a shame that it cannot also extend sunset today. That would be very welcome with the weather we have had. But the bill simply extends the regime for a further year while new legislation is developed. I want to emphasise the term “new legislation” because what New Zealand First does not expect is that the current regime will simply carry on after the delay for another year. What we expect is a rigorous examination of the current regime under the current legislation to see whether it does work whether it is in fact necessary and whether it achieves its stated objectives. We do not know yet whether that is the case or not. 
For the time being New Zealand First will accept the bill as it is to extend the date for a further year and will support the bill. But it is better to get the legislation right take that time do that exercise and develop legislation that is worthwhile. I am not saying necessarily that the current legislation is a failure. I do not yet know that to be the case. But I do know that the principles we consider in the new bill include these. First of all being a prisoner means being penalised only by the temporary removal of personal liberty and incarceration. It does not mean anything more than that. Prisoners should still do daily work and they should live in a highly disciplined routine but they should also have the opportunity for rehabilitation education and reorientation in their direction of life. Secondly it does not result in the loss of other rights. It does not result for example in the loss of rights to obtain rehabilitation education and reorientation. It should not involve the loss of the right to vote. It does not mean the loss of the right to protection from personal or mental abuse and it does not mean the loss of rights to services like decent medical care. It does not mean the loss of right to fair treatment. It does not mean the loss of right to adequate accommodation and meals. It does not mean the loss of right to accident compensation for genuine injury or disability from genuine accidents and it does not mean the loss of right to compensation for substantial and genuine mistreatment. It does not mean the loss of the right to practise religion and many many other such rights that we all enjoy. It means as I have said just the loss of liberty for the period of the sentence. 
On the other hand the rights protected in this way must be balanced against the fact that there is concern in the community that prisoners abuse some of those rights especially the right to compensation for mistreatment and especially accident compensation. Those are genuinely held beliefs and we must give some attention to them but we certainly should not mollycoddle prisoners and we should make sure that there are no rorts of the like that we have seen in recent times by some prisoners. 
The final bill when it eventually comes through for the substantial legislation must still preserve those properly held rights especially those I have already mentioned. But it must also ensure that there is no abuse of those rights by prisoners. I think that does mean that there need to be some special rules in order to avoid inappropriate claims for compensation for mistreatment or for accident compensation. New Zealand First does adopt that position and is prepared therefore to consult with the Minister of Justice on those issues. I certainly welcome the undertaking given by the Minister to consult other parties on those matters because these are very difficult issues to sort out. We must be fair on the one hand—and I agree with the Green Party spokesman on this—that in fact prisoners can also be victims and on the other hand we must balance that with some sensible rules to make sure that the abuse of rights by prisoners is not possible because that is what the community expects of us. 
New Zealand First will want to make sure that the substantive legislation when it comes through is appropriate in restricting claims by prisoners because there is a case for that. On the other hand prisoners can also be victims and their rights must also be protected. As I have said already there is a balance to be held there. I think that it should be possible to get a consensus of all parties in the House if we look at it in that way—achieving an appropriate balance that protects rights on the one hand and on the other hand meets community expectations that prisoners will not be able to abuse those rights especially those giving rights to compensation whether it be for alleged mistreatment or whether it be for accident compensation. 
I think that is where the debate should be centred and that is the way New Zealand First will be looking at it. New Zealand First will welcome the consultation process that has been promised and welcome in the end the debate on genuine new legislation when it comes through based upon the facts when they are presented to us so that we know whether in fact this legislation is needed and what in fact is needed to rectify anything that is not happening as it should in the current situation. But for the time being New Zealand First will support the bill because it is simply a sunset extension bill and we look forward to the policy development work to be had in the coming year. 
Dr JACKIE BLUE (National) 
: 
 I am pleased to take a very short call on the second reading of the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill. It is a very straightforward bill. It bridges the gap between the current regime that expires at the end of this month while waiting for the passage of the 2011 bill. This Government is serious about putting victims at the heart of the justice system and focusing on the rights of victims. I support this bill and commend it to the House. 
KRIS FAAFOI (Labour—Mana) 
: 
 Thank you very much for the opportunity to speak to the Prisoners’ and Victims’ (2012 Expiry and Application Dates) Amendment Bill. The substantive legislation will expire in 9 days’ time and that is why we are here extending for 1 more year the sunset clause that is in the Prisoners’ and Victims’ Claims Act 2005. 
It is interesting to see that the members on the opposite side of the House this afternoon are taking very short calls because earlier in the first reading of this bill the member for Hamilton West someone who I have a lot of personal respect for— 
Hon Trevor Mallard 
: What? 
KRIS FAAFOI 
: —well a fair degree of personal respect— 
Tim Macindoe 
: Stick with the original line Kris. 
KRIS FAAFOI 
: —ha ha—was beaming about this bill. He actually said it was part of the Government’s “arsenal of initiatives”. An “arsenal of initiatives” Tim Macindoe said this bill was but today the praise around this bill is a tad shorter. 
We will be supporting this legislation because as I said it is a pure extension of the bill that Mr Goff introduced back in 2005. When we introduced and passed that bill in this House there was a perceived need following the court ruling that Charles Chauvel mentioned earlier on and a concern around compensation being given to prisoners and then the lack of that compensation being passed on to their victims. 
At the time of its introduction the Hon Phil Goff who is sitting to the right of me said—[ 
Interruption 
] Oh sorry; to the right of me! At the time of the substantive legislation being passed Mr Goff said that most people believe it is wrong that offenders should be compensated for wrongful treatment and in turn are not required to pay restitution to the victims they have harmed. That statement was made in the context at the time given the court case that I mentioned earlier and also a feeling amongst the community that there was a sense of unease around what was happening. But as Mr Chauvel also pointed out earlier and also in his first reading speech it was a response to a perceived need at the time. 
For those who might be watching or listening at home on their crystal sets I say for the benefit of those people this bill essentially extends the sunset clause— 
Hon Trevor Mallard 
: The member’s a pale imitation of John Banks. 
KRIS FAAFOI 
: A pale imitation of John Banks—that is some praise. This bill essentially extends for 1 year the sunset clause of the substantive legislation which as I said earlier expires on 1 July in order for this Government to address this area of law—to address this area of law I repeat. 
The Act has two main functions. The first one is that it restricts the circumstances where the courts can award prisoners compensation for any breach of their rights while they are locked up. A court must consider other remedies before it looks at awarding monetary compensation for those inmates and also investigate whether a prisoner has extinguished all other complaints procedures before it goes to award the monetary compensation that might be available to them. In essence there needs to be an exceptional case before a prisoner can be awarded any monetary compensation for any abuse of their human rights. 
Secondly the Act also sets out a process where if a prisoner were to receive any compensation in one of those rare cases for a rights breach their victim can claim against it if they are owed any money. That is why it is called the victims’ claims process in the Act. That compensation money is paid into a trust account after lawyers are paid of course and victims have 6 months in which to lay a claim against the moneys that are in that trust account. So that is the function of this legislation and for that reason we will be supporting the bill that is before the House. 
But that is not what this story is about because the functions of this bill are 7 years old. I would just like to echo the comments of the Green Party member David Clendon as to why we actually are in this House again extending the sunset clause within this bill. It is because although the Government has talked tough on law and order and this bill is part of its arsenal of initiatives or an initiative of an arsenal—well I do not think it is an initiatives arsenal basically—the Government has failed to address this issue which it said it was going to tackle back in 2008. So for the second time within this Government’s term we are back here extending the sunset clause within this bill. 
If you can give me the chance just to have a look at this it is almost the same date that we are back in this House extending this sunset clause. The Government has been rushing the process this time and 2 years ago when we extended it previously it was rushing the process as well. That bill on 22 June 2010 received its third reading. On 22 June 2010 that bill was in the Committee of the whole House and on 22 June 2010 the predecessor to this bill received its second reading. Again this Government has been caught out rushing through a temporary measure to extend this legislation which was passed under the previous Labour Government because this Government could not get its act together and come up with a decent alternative which it had promised to the people of New Zealand. 
This is a Government that said it took victims’ rights seriously but it has twice had to extend the sunset clause within this legislation which Mr Goff passed back in 2005. The legislation was experimental as Charles Chauvel said and that is why the sunset clause was built into it. But for a Government that says it is taking law and order seriously and is right behind victims it is finding itself for the second time—almost 2 years to the day—in a rush to try to make sure that it can get this sunset clause extended so that it does not look embarrassed because there is no mechanism for victims to try to get any compensation from prisoners. I think that speaks volumes as to what kind of commitment this Government has to victims’ rights when it has talked tough but has not walked the walk in this Parliament. As I have said nearly 2 years ago we were doing exactly the same thing. 
The story that this Government wants out in the paper tomorrow is that this bill passed and the Government is getting tough on crime as part of its arsenal of initiatives. But the true story is that it has had 3½ nearly 4 years to sort this out and it has not done a single thing. 
There is I understand an alternative piece of legislation on the Order Paper but where has it progressed? Where has it progressed? This Government again is buying itself another year in this House today—another year to sort itself out. It cannot get itself organised enough to get legislation through this House to make sure it can walk the walk on its talk on the election campaign. Two years ago we were doing exactly the same thing. 
Another part of our argument as to why this Government has not walked the walk is that there needed to be a review of this legislation to see whether it was being effective and 3 years ago when it came into office that was one of the options that it looked at but there was no review. There was no review and we have also got no legislation before us. In terms of a rolling maul on its arsenal of initiatives— 
Andrew Little 
: 120-point plan. 
KRIS FAAFOI 
: —and its 120-point plan as Mr Little says to crack down on crime and its war on P and whatever other mottos that this Government has around crime and law and order this Government is not necessarily walking the walk when it talks the talk. 
Lianne Dalziel spoke earlier about what the regulatory impact statement said. I think it speaks volumes as to just how rushed this process has been. Let me quote from it. Where are we exactly—there is a lot to consider in this. The regulatory impact statement says: “The Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill was introduced … to give effect to the redirection policy but did not receive a first reading. There is now insufficient time to progress it through its Parliamentary stages before the sunset clauses take effect on 1 July 2012.” which is in 9 days’ time. That is the first piece of information to show you how slack this Government has been. The regulatory impact statement continues: “Due to this the Ministry of Justice was asked to urgently consider alternative options to maintain the existing provisions of the PVC Act until the redirection policy can be given effect ... The RIS was prepared within a very short timeframe and accordingly”— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I am sorry to interrupt the honourable member. His time has expired. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to take a brief call on this bill the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill tonight. This bill has already been well debated in the Chamber. The Minister of Justice Judith Collins and Charles Chauvel debated the points very well I thought and raised issues that were considered in the Justice and Electoral Committee and through that stage. 
Obviously it is a very simple bill. The Prisoners’ and Victims’ Claims Act 2005 has got two sunset clauses which come up on 1 July so this is a transitional bill until the Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill is passed in Parliament later on in the year. 
So it is my pleasure to take a brief call on this bill and I look forward to talking about it in the next readings. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I understand the next call is a split call. I will ring the bell at 4 minutes. 
Hon PHIL GOFF (Labour—Mt Roskill) 
: 
 I am very conscious of the circumstances under which the legislation that we are looking at now the Prisoners’ and Victims’ Claims Act was passed in 2005. I was the Minister in charge of that bill. The circumstances at that point were basically that in 1998 under the then National Government a behaviour modification or management regime was put in place. It was kept in that form through to 2004 when it was found that this regime was not operating as the Governments that initiated it and continued it had intended but was in fact operating in breach of basic rights that New Zealand as a nation had signed up to internationally. I would hope nobody in this House would suggest that a State when it has control over an inmate however heinous the crime that that inmate might have committed should not work under its own rules and the rule of law. 
What worried me at the time when a very large case was brought—a class action that might have involved considerable sums of money—was that these people who had committed particularly terrible crimes would get compensation for the abuse of their rights but their victims in turn who had suffered and still carried the scars of the offending against them by this particular group of people would still be outside with no compensation at all for the crimes that were committed against them by the offenders. That seemed to me fundamentally wrong. 
As Minister of Justice and since that time I have always felt that the principles of restorative justice are really important and that to the extent possible an offender should try to right the wrongs committed against the victim. That actually achieves justice. In our current justice system we do not often do that. We have the State against the offender and the victim is to one side; the victim almost does not matter. To me it seems that the victim needs to be at the heart of the process. 
We were not sure that this legislation was long term going to be the most appropriate form of the legislation that we needed and that is why we put the sunset clause into it. I have to comment that it is unfortunate that we are sitting here less than 10 days before the legislation expires in order to put in place replacement legislation to carry on the provisions for another year because the Government did not get its act together despite having 3½ years’ notice of this. 
We will support the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill because we want a new regime in place that really will work on behalf of the victims. That should be the focus of the review and it should be the focus of replacement legislation. I think what we need to do is to think more laterally than was the case in this legislation and in the proposed legislation from the Government. If any offender receives a windfall payment—they might win Lotto they might come into a big inheritance—but at the time that they were convicted of the offence against the victim they had no money and the victim got no restitution or reparation then subsequently the offender is able to make good for the victim the wrong that they committed. Why do we not think about broadening legislation so that in any case where an offender has badly damaged a victim and made no compensation reparation or restitution they should be required to make good the wrong that they have done to the victim? 
Let us not restrict this just to the inmate who is in prison. That is taking one small category of those who have offended and leaves the vast majority of the victims uncompensated by offenders. If we truly believe in a form of restorative justice why do we not think more widely and why do we not come up with a compensation scheme that allows—even some considerable time after the offence was committed—an offender now placed in a position to do so to put things right for the victim. 
I am conscious that under the existing legislation there are only five cases where the victims got compensation totalling about $45000. That is a drop in the bucket. Let us use this period of time of 1 year to think more laterally and come up with something that truly does put the victim at the heart of the justice system. 
JULIE ANNE GENTER (Green) 
: 
 Tena koe Mr Speaker. My colleague David Clendon has already spoken on this bill and I would like to add my voice to his in emphasising that the Green Party will not be supporting the thrillingly titled Prisoners’ and Victims’ (2012 Expiry and Application Dates) Amendment Bill. Although the Justice and Electoral Committee has reported the bill back without amendment by majority decision we do not feel that either the full context or the full consequences of the bill have been appreciated. Extending two sunset clauses in the principal Act may sound innocuous—and certainly other members who have spoken in the House have emphasised that it is very simple and straightforward—but we retain our concerns for two important reasons. First of all it is not immediately clear that extending the sunset clause is a necessary step. Notwithstanding that the Green Party supported the principal Act at its third reading only on the basis that the legislation would expire. 
As part of a plan to reduce the amount of abuse in prisons the Law Society in its submission made the valid point that case law precedent in  
Taunoa v Attorney-General 
 from 2007 cast doubt on whether subpart 1 of Part 2 of the 2005 Act is now needed at all so why the Government is taking up precious time debating this bill is somewhat beyond me. More important we reject the assertion that because this bill merely extends the sunset clauses it has no human rights implications because it clearly does. The Government’s own Attorney-General has released a section 7 New Zealand Bill of Rights Act report on the proposed Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill condemning it as a denial of an effective remedy and also including a chastisement of the previous Attorney-General for not making a similar ruling in regards to the principal Act. So how does extending the restriction to the right of an effective remedy before making that change permanent not contradict the New Zealand Bill of Rights Act? Prolonging that denial is a denial in itself and should be considered as such in principled lawmaking. 
In response to Mr Goff’s assertion that he is interested in putting victims at the heart of our criminal justice system the Green Party absolutely agrees with this but let us be honest the principal Act that this bill extends never sought for victims to receive compensation and money. It was all about limiting the Crown’s financial liability for the human rights abuses of prisoners. 
Hon Phil Goff 
: No. No it wasn’t actually. 
JULIE ANNE GENTER 
: That is what it is about. That is why it is limited to this and clearly— 
Hon Phil Goff 
: No. Take it from me; I was there—and the Greens supported it at the time. The Greens supported it. 
JULIE ANNE GENTER 
: Yes because it had a sunset clause; that is why we supported it. Lawmaking should avoid perverse incentives and in perpetuating the status quo this bill fails in that regard. That is probably why there have been so few cases taken and so little money awarded to victims as a result of it. 
Compounding the problem is the fact that where abuses happen prisoners are less likely to make a claim and that is exactly why there have been so few claims made or awarded. Making prisoners less likely to claim compensation reinforces the incentive to commit human rights abuses by lessening the chances of punishment against perpetrators. 
These are broadly the reasons why we will not be supporting this bill and why we do not commend it to the House. We realise that it will pass. We look forward to engaging in what will be hopefully but unlikely a more substantive debate on the Government’s future plans in regard to the Prisoners’ and Victims’ Claims (Redirecting Prisoner Compensation) Amendment Bill. Thank you. 
ALFRED NGARO (National) 
: 
 I am proud to take the final call on this Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill in its second reading. It is a transitional bill. I too want to echo and support the sentiments expressed by the Hon Phil Goff that despite the I suppose sense of delay and the disappointment about its process what is absolutely important is that the focus of this bill is around the awarding of compensation and the victims’ claims process. I sense too that the comments around the lack of consultation and on the regulatory impact statement make it quite clear that the public is likely to have an opportunity to comment when a new bill is referred to the select committee after its introduction. 
This bill is in line with the Government’s focus on the justice system and the rights of victims. It is disappointing if not unsurprising that the Greens are not supporting this. All we have ever heard from them is about the rights of the prisoners not the rights of the victims and that is very clear. We are directing the prisoner compensation to victims at the heart of our justice system. Extending the sunset clauses in the Prisoners’ and Victims’ Claims Act means that the Government’s objective of maintaining the redirection policy is progressed. It is therefore the preferred option. Thank you. 
A party vote was called for on the question  
That the Prisoners’ and Victims’ Claims (2012 Expiry and Application Dates) Amendment Bill be now read a second time. 
Ayes 103 
New Zealand National 59; New Zealand Labour 34; New Zealand First 8; ACT New Zealand 1; United Future 1. 
Noes 16 
Green Party 13; Maori Party 2; Mana 1. 
Bill read a second time. 
Dairy Industry Restructuring Amendment Bill 
Second Reading 
Debate resumed from 14 June. 
Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) 
: 
 I am very proud to rise and speak on this bill a very very important bill. It is perhaps opportune that we are not to complete this bill prior to a vote that will take place on Monday the 25th when farmers themselves will vote whether they want to support TAF which is Trading Among Farmers which will be enabled under this legislation. 
The bill does three things: it enables trading among farmers of their own cooperative shares it sets a milk price setting - process and in the absence of Trading Among Farmers it sets a process for setting share value. The bill is unique because nowhere else in the world has this structure been put in place for cooperatives. It is complex for that very reason and unfortunately the whole bill has been rushed. That is why Labour cannot support this bill at this point. We welcome the opportunity that the Committee stage of the bill will provide beyond the vote having got a clear message from farmers whether or not they want this to proceed. We welcome the opportunity to tinker with and improve the bill at that time. 
We were hampered in my view by advisers to the Primary Production Committee who did not have a wide knowledge of cooperatives. They had a very good knowledge of competitive law in New Zealand. I am very grateful for the efforts of James Morrison who was the independent adviser to the select committee who brought a truly independent and focused view. 
In 2001 the Labour Government set up Fonterra through the Dairy Industry Restructuring Act. It is the world’s No. 1 dairy cooperative. It is the most successful company in the most successful industry arguably in this country. At that time that company had effectively 95 percent control of the dairy industry. The Labour Government laid down some requirements. Firstly milk should be supplied to independents who might want to innovate and grow opportunities in the dairy industry. Secondly farmers should not be trapped in a company but they should have some flexibility to enter the company—and there was an obligation on Fonterra to take their milk—and they should be able to leave if they chose. So we set up open entry and open exit. 
The third requirement was a fair value share which again was a new concept for a cooperative. Some have said that that was flawed from the start. I tend to agree that it has not been perfect and it has not always given the good drivers for Fonterra and now it is time that that should be changed. The issue is how we should change things. 
We have major competitors in the country now taking farmers’ milk processing it and exporting milk products. We have opportunities for farmers to leave Fonterra. That ability to leave has created over time what Fonterra has deemed a redemption risk—that is farmers can say “We’re out of here.” and within 30 days of leaving at the end of the season require the company to pay out the capital. That has been a challenge for the company at different times. In fact in 2007 the company saw some real problems and thought it would need to go to the market and get outside capital to shore up the company and secure its balance sheet. 
The farmers rejected that proposal because they said that they did not want outside capital and that they could manage the challenge themselves. How the company got to that point is a reasonable question. Firstly the executives of Fonterra were incentivised through their salaries to have an increasing share price which was basically a flawed concept and driver for a cooperative company. They were also incentivised on the basis of a better payout than Westland Cooperative Dairy Co. Ltd which produces about 2 percent of New Zealand’s milk supply. Again arguably two flawed drivers of executive behaviour that led to the problems in 2007. 
Farmers rejected any notion that outside investors should come in and control or have any stake in ownership in the company. So we have ended up with a bill here now. The Primary Production Committee unfortunately did not get much of an opportunity because of the rushed process to go back to basics and ask why the bill is here why we are doing this and what the objectives are that we are trying to meet here. 
We were firstly told back in 2007 that the company needed new capital that there was redemption risk and that there was a need for permanent capital. These underlying drivers—reasons—have seen this progress in my view from a 2007 concept to one that is in the House here today. That evolution has meant that we do not have the right solutions to deal with the appropriate problems. The 2007 proposal did create a great opportunity for the New Zealand Exchange—that is a company of such size where farmers are committed through huge capital investment through hard work through innovation and through an ability to produce milk efficiently for the international market means that anyone investing in or having a stake in this company is arguably having a stake in one of the best companies in the world. The farmers rejected that notion. The 100 percent control and ownership of their own company has been an underlying driver that the board has been slow to realise but I think it finally got the message. 
So we have a bill here that does a number of things. It allows trading of farmers’ cooperative shares among themselves which farmers endorsed in concept 2 years ago. But officials have said I think for reasonable reasons of liquidity that there must be an equivalent fund that is fungible—that is that the value of the shares and the value of the units must be equivalent. They must be set out alongside the sharemarket for farmers so that people can purchase units and take the dividend streams—the economic rights and any increase in share value—from those units. 
The concern has been that this may create tension within the cooperative. I go back to a quote from our independent adviser who says: “the whole of the draft Bill including Trading Amongst Farmers (“TAF”) rests on the Fair Value Share which is fundamentally flawed.” I go back to as I indicated earlier a belief that this is perhaps right. But what occurs in this bill in trying to address that problem reduce the redemption risk and identify what officials call “well discovered price or share value” is it opens up an investment opportunity and a unit trading market the consequences of which the select committee had no ability to truly test. I can quote one of the submitters Tony Reilly a farmer—a director—who said that “redemption risk does not go away under TAF—it is simply shifted to farmers’ balance sheets. TAF will allow for much greater fluctuation in the share price.” We got no advice from officials on that proposition and have not been able to truly test whether that might or might not occur. 
The bottom line is that there is so much uncertainty that will be injected into the dairy industry from this legislation. There is so much uncertainty for the farmers themselves that Onno van Bekkum—again an independent cooperative expert—has said that “This hybrid structure created under the TAF concept is one that has not been tested and one that can’t identify the solution to the growing tension between the interests of investors through units and the interests of farmers who want to maximise the return from their milk price.” 
Labour has concerns that in spite of the belt and braces approach from Fonterra assisted by the select committee to tidy up the issues to reduce the fund size from 25 percent to 20 percent in the constitution of Fonterra and to tweak the milk price obligations to ensure that contestable markets do not mean an undermining of Fonterra’s position but do allow competitors to come in and have a fair go the share price in the absence of Trading Among Farmers does not undermine Fonterra. 
 We attempted to do all those things in the select committee but the bottom line is that this is a complex bill. It is being rushed through the parliamentary process and the advice to the members of the select committee in my view was inadequate. We welcome now the opportunity for farmers to speak first knowing what they are approaching and we will through the Committee stage of this bill take another look at what might be required to improve this legislation. 
STEFFAN BROWNING (Green) 
: 
 This bill the Dairy Industry Restructuring Amendment Bill is the thin edge the setting up of the selling out of the Fonterra cooperative and its family farmer members. So the Green Party will not be supporting this bill. This bill is the dairy farmers’ poor cousin of the Mixed Ownership Model Bill which was set up to privatise State assets. 
In the Dairy Industry Restructuring Amendment Bill the so-called Trading Among Farmers provision—TAF—allows outside investors in to trade on the dividend stream of Fonterra farmer members and begins an inevitable demutualisation of Fonterra and increased foreign control of New Zealand’s primary industries. We already have much foreign control in New Zealand primary industries particularly timber and we do not need more in the pastoral area. 
 This is not Trading Among Farmers; this is actually “Trading Against Farmers” nothing less. Even if Trading Among Farmers is not agreed by Fonterra’s farmer members—and they have not been well-informed by their executive—the milk pricing and so-called fair value share regime sets the scene for the rot to set in at Fonterra devaluing family farmers’ worth. 
Fonterra—the cooperative of 10500 New Zealand farmers representing 3 percent of global dairy production 25 percent of New Zealand’s export earnings and some $19.9 billion in revenue according to Fonterra—has got the greedy looking at how to get a slice of the action albeit that some are actually insiders. 
This bill has suffered from poor process with the Fonterra executive pushing a willing Government into rushing legislation through a rushed submission and hearings process at the Primary Production Committee and now we are dealing with this reading of the bill while farmers are actually in the middle of voting on whether they even want this version of the runaway Fonterra executive’s plan for bringing in outside investment and influence. 
The Dairy Industry Restructuring Amendment Bill should not be before Parliament at this time. Independent expert advice and informed responses that show serious flaws in the Trading Among—or arguably “Trading Against”—Farmers concept are still being circulated as we speak among decision makers including farmer shareholders and members of Parliament. 
The Green Party points out again the limited time given to the Primary Production Committee and the farmer members of Fonterra the limited access to full information from Fonterra the limited time for more expert discussion and advice and the subsequent difficulty in exploring the nuances of the bill especially considering its complexity. 
Let me reassure the House—and you well know Mr Deputy Speaker—that the select committee did spend dedicated time on extended hours to hear many and often substantive submissions and advice and spent a reasonable time in deliberations. However the information available to the select committee was never complete nor was there opportunity for farmers to submit to the committee on the information circulated very very late in the process by Fonterra to them. 
Fonterra has tried reselling the “TAF” concept the Trading Among—or “Against”—Farmers concept on the basis of redemption risk which is the need to be buffered against an outflow from Fonterra of farmer members to other milk processors or land-use choices. The need to pay out their shares on their exit is redemption risk and we will come back to that. 
The Minister for Primary Industries said just today that this bill is about allowing free access in and out of Fonterra by farmers and about allowing free competition in the dairy sector. That is clearly setting a scene for his friends including ex-frontbench National colleagues and the independent processors to have less competition from the most successful farmer cooperative we have known. 
Primary production cooperatives or single desk - type collectives work to the advantage of their members to ensure the best returns for their farming or sector production. Fonterra has been a good example of this and Zespri although not a cooperative but a producer collective is another. That is particularly evidenced by its management of export sales. ENZA—formally the New Zealand Apple and Pear Marketing Board—however is an example of where deregulating and fierce competition including outside investment blew the sector apart and it can no longer be considered a successful export sector to the level that dairy and kiwifruit are. 
This bill the Dairy Industry Restructuring Amendment Bill also missed an opportunity. The bill includes provisions that can influence land use land price commodity trading or value-adding. It may have been designed to reward best environmental practice also. The focus of the bill on the efficient operation of dairy markets in New Zealand missed an opportunity and it fails to allow those broader gains such as organics. Fonterra has already dropped 50 percent of its organic producers and certainly is not paying them any form of premium from its organic programme due primarily to what it considers inefficient milk pick-up runs and processing plant operations. What is inefficient? Unsustainable production is inefficient. Larger-volume independent processors show no sign of picking up what can be seen as more environmentally sustainable production. “Efficient” is primarily a term used for volume-based production and marketing. It does not address long-term economic efficiency that being sustainable production. 
The dairy industry has presented to me how it wants a 10 percent lift in production while holding its environmental footprint to the status quo as though that is OK. Well that is not such a fantastic outcome when the status quo in environmental outcomes is seriously way below par. This bill could have included drivers that would have focused on value-adding on-farm through certifiable sustainable production such as organics not further commodification for outside and more often than not foreign interests making New Zealand farmers peasants on their own land. 
Some consultants suggest it may take 15 years for the breakdown of Fonterra following the cracking of this cooperative nut but I suggest that with the vested interests of this loyal Fonterra board and management and the outside investors demutualisation will occur much more quickly once Trading Among Farmers or wildly fluctuating share values and milk pricing chip in. 
We all need to remember that Trading Among Farmers as proposed in the bill has had an evolution from origins that intended open stock exchange listing. Fonterra’s push for Trading Among Farmers follows that and Trading Among Farmers maintains as much of that as Fonterra’s executive the Government and officials think that they can get past the Fonterra farmers. That does not fit the cooperative model that has allowed the success of Fonterra to date. 
Fonterra has said that it needs this move to achieve the capital to allow offshore farm and infrastructure development. Then it says: “No no no that is not what we are saying. It is to cover redemption risk.” It is very easy to doubt the veracity of the Fonterra executive’s statements. Spin fact or fable—whatever the statements the real need for Trading Among Farmers as presented to the select committee is in part contradicted in its complex communications to its farmer members. 
Many submitters pointed out that buffering for redemption risk can be achieved by other means such as a retention policy that has already been shown to be successful in accruing significant capital. Figures show that retentions taken from 2008 have managed any redemption risk and in fact $438 million was taken in 2010 it was retained and another $487 million was retained last year. Effectively half a billion dollars a year can be retained and Fonterra was saying that it needs to do this smart thing of letting outside investors in for redemption risk. That is clearly not the case. 
I will just point to Mr van der Heyden and his friends who seem to have gone for a walk from their members. They have certainly alienated their members. But their very latest missive—and they are pushing very very hard— 
Mr DEPUTY SPEAKER 
: Order! The member’s time has expired. 
COLIN KING (National—Kaikoura) 
: 
 It gives me great pleasure to rise and speak in support of the Dairy Industry Restructuring Amendment Bill. I think to begin with it would be very important to get some facts on the table during the second reading. In 2010 farmers voted in support of Trading Among Farmers. Fonterra in 2012 by 25 June has allowed farmers to have another vote as to whether they want to support Trading Among Farmers. This bill provides the appropriate platform by setting out that structure as to what that would look like. It does help Fonterra to manage the redemption risk and when we look at it if farmers vote for or against—and we on this side of the House have confidence in farmers’ choice—there is a default situation and that sits around the fair value share. So this bill does provide the mechanisms necessary to allow our most successful cooperative to go forward. It guarantees 100 percent farmer ownership and it gives me great pleasure to commend this bill to the House. 
RICHARD PROSSER (NZ First) 
: 
 I am pleased to rise on behalf of New Zealand First to speak to the second reading of the Dairy Industry Restructuring Amendment Bill. New Zealand First is opposed to this bill as I hope a majority of New Zealand’s dairy farmers will also be. This bill is quite possibly the single most important piece of legislation to come before this House in recent times and it is a shame its importance has been largely overshadowed by several other of this Government’s monumental failings. 
I have been privileged to be allowed to participate as a non-voting member in the proceedings of the Primary Production Committee as this bill has been examined and I wish to thank the committee members particularly the chairman Mr Ardern and the deputy chairman Mr O’Connor for their help and advice in assisting me to understand the workings of the dairy industry and the potential ramifications of some of the aspects of this bill. I also want to thank the committee for demonstrating so clearly how well the select committee process can work as a vehicle for promoting collegiality and true consensus politics even though that may not necessarily be reflected in the speeches in this House and the ultimate outcome of the voting process on this bill. It is enormously encouraging to see that cross-party discussions can be carried out in the way that they were during the committee’s deliberations. It gives me great faith that our parliamentary democracy can work as advertised and as intended. 
I went into this process thinking I knew a great deal about New Zealand’s dairy industry and the place and structure of Fonterra within it. I came away realising that the more I learnt and the more I understood the less I knew. If a person like me who has had dealings over many years with farmers can come to realise that my knowledge of this vital part of our country’s economy was not what I thought then I wonder how much understanding of it the average layperson can have and further to that how much understanding the general public may not have with regard to the potential effects this bill may bring to the dairy industry and New Zealand’s entire economy. 
At the heart of this bill is the authorisation for Fonterra to launch TAF its Trading Among Farmers scheme. Through Trading Among Farmers Fonterra proposes a one-off issue of non-voting bonus shares or dry shares to its farmer shareholders the proceeds of which will create a capital pool which Fonterra can use both as a hedge against the threat of redemption risk and as a fund for growing its offshore and value-added businesses. Fonterra shareholders have voted in favour of this scheme once already on the understanding that it would guarantee 100 percent farmer ownership and control of the cooperative. 
However the scheme as it is now proposed is very different from that originally suggested the key change being the addition of unit securities attached to the dry shares which can be bought and sold by any investor and not solely by Fonterra’s farmer shareholders. The problem with Trading Among Farmers is that Trading Among Farmers as it is presently proposed is not what farmers voted on originally. If Trading Among Farmers really was just trading among farmers there would not be a problem. But it is not. Trading Among Farmers is trading including farmers—TAF is TIF—and the trading part of Trading Among Farmers will benefit nobody but the traders. 
We are told that in order to provide itself with a hedge against the threats exposed by redemption risk Fonterra requires additional capital available. This capital can also be used by Fonterra to grow its brand businesses and its offshore ventures which are the future for what is entirely an export-orientated organisation. This is well and good. However redemption risk we believe has been overstated and also not well understood is the reality that the real risk from redemption is not the exit of capital from the cooperative but the exit of milk. 
Milk is the sole source of wealth and income for Fonterra. No matter how it is dressed up the only way Fonterra can pay its bills is by producing its own milk and that milk is valuable: $20 billion in turnover give or take; $10 billion in revenue give or take—95 percent of it exported—and more than fully one-third of all cross-border trade in dairy products globally is produced right here in New Zealand by Fonterra’s farmer shareholders. Twenty-six percent—more than one quarter—of all New Zealand’s export earnings are generated by Fonterra’s 10500 suppliers. 
We salute them for that. New Zealand First salutes New Zealand’s dairy farmers. They are small in number but they are mighty in wealth creation. These are the people who get up at 4 o’clock in the morning and go and stand outside in the cold and the wet at the back end of a cow getting covered in mud and other unmentionable materials and extracting the white gold that is the single biggest source of this nation’s wealth. We want them to succeed. New Zealand First wants these people these private business owners to succeed and become wealthy. 
 When they are successful New Zealand is successful. When farmers have money they spend it. They spend it into their communities and they spend it into the economy and we all benefit from that. In my previous employment I sold irrigators—more and more of them to existing and new dairy farmers. In a past life before that I sold tractors and farm machinery. Farmers buy these things and the money they spend stays in circulation in New Zealand. But if the shares in Fonterra and the dividend streams attached to them are owned by foreigners in foreign countries then that is where the money will go and all New Zealand will be the poorer for it. And if Trading Among Farmers goes ahead in its present form that is precisely what will happen. 
At the moment there is no real redemption risk and redemption risk has been overstated and oversold. It has happened only twice in Fonterra’s history both under circumstances of a perfect storm. But if Trading Among Farmers goes ahead the first thing it will do is create a redemption risk. It would do this because under Trading Among Farmers share values will rise. They have to rise. They must rise because if they do not traders will not make a profit and that is the entire point of a trading scheme. 
So if Trading Among Farmers goes ahead as it is proposed prospective investors will offer to purchase blocks of unit securities by way of tender. Farmer shareholders who wish to avail themselves of the return available will then arrange to purchase dry shares in the co-op and money paid for these shares will become part of the so-called shareholder fund. The investor will then purchase the unit securities from the fund along with the dividend stream from the shares in question. In order to encourage farmers to make dry shares and thereby unit securities available investors will offer buy prices in excess of Fonterra’s existing share values. This is the only way in which they can ensure that shares will become available. As that happens it will create a risk that some farmers may choose to take the win on increased share values quit the co-op and take the milk to another processor. At the same time existing farmers young farmers and new farmers will find themselves faced with a much greater hurdle in terms of the investment required in order to supply Fonterra—an investment that they will have to fund through their own bank borrowing. 
These things combined contain the potential to create another perfect storm whereby there is a great incentive for farmers to quit Fonterra and supply their milk to alternative processors the majority of which are neither cooperatives nor New Zealand - owned. Because the sole source of revenue for Fonterra is ultimately milk as share values rise so the pressure for dividends to rise will also increase. And because all the money comes ultimately out of that one bucket of milk the only way in which increased dividends can be funded will be for the farm-gate milk price to fall. 
So we will have farmers finding themselves in the situation where they have voted in favour of the Trading Among Farmers scheme because they have been assured that Trading Among Farmers will guarantee 100 percent farmer shareholder ownership and control but rising share values and a falling milk price will ensure that control rests with the people who set the share values and those will be the unit security owners. Ownership will rest with the majority shareholders and they will be the investors as well. 
It will not matter that neither dry shares nor unit securities carry voting rights because economic reality is that financial pressure would take our farmers’ vote on constitutional matters as far as Fonterra is concerned. And they will vote to save their own skins. Who can blame them for that? I would do the same thing myself. If that means that they vote to lift the cap on the proportion of dry shares that the shareholder fund may hold or the percentage of shares that any individual shareholder may own then that is something that will impact immediately and tangibly on the cooperative as a whole and its ongoing viability. In the select committee Mr McKelvie made the point that Fonterra’s dairy farmers have the right to vote themselves back to being peasants if they choose—and they do; they have that right. They are private business people. They are masters of their own destiny and long may that be the case. 
But Fonterra exists as a creature of statute. It is allowed to exist as a virtual monopoly in contravention of what would otherwise be laws providing protection against anti-competitive behaviour because it was recognised by Parliament a decade ago that the size and strength of a unified dairy industry would be to the greater good of “New Zealand Inc.” as a whole. And it has been. The thing that was allowed to be created by the Dairy Industry Restructuring Act 2001 has grown in such a way that the whole is greater than the sum of its parts. New Zealand has benefited greatly as a result of Fonterra’s size and strength in the international dairy trade and in international markets. New Zealand currently exports 95 percent of the dairy we produce and New Zealand accounts for 35 percent of all cross-border dairy trade globally. It is a $20 billion industry and the vultures are circling. Wall Street wants a slice of the New Zealand dairy industry and this bill will deliver it to them unless the farmers of New Zealand see the Trading Among Farmers scheme for what it is and vote it down. 
Trading Among Farmers is a partial float of Fonterra in all but name created by virtually the same people who suggested the float in 2007 and it was rightly rejected by farmers then. I have faith in the farmers of New Zealand. I have faith and I hope they will see the truth of this abomination and shoot it down in the same way that they shot down the “fart tax”. I hope so because there is no protection for them in this bill. If they vote for Trading Among Farmers they will lose their co-op and New Zealand will lose its dairy industry. They will go back to being peasants and we will all go with them. It will happen quicker than they can change their board and it will not be able to be undone. 
The farmers of Fonterra have been misled and misinformed. The Trading Among Farmers scheme is not what they have been led to believe it is. We have seen what happens to a dairy co-op that opens itself up to outside capital in this way and subsequently becomes demutualised. We have seen it in the example of Kerry dairies in Ireland. Once we go down this road there is no going back. This is a terrible bill and New Zealand First is opposed to it in its entirety. Thank you. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I am taking this point of order before the member speaks because I know he is a rural member although I am not sure of his particular circumstances. Last time this bill the Dairy Industry Restructuring Amendment Bill was up something occurred that caused me some concern and that was that the honourable member Shane Ahern— 
Mr DEPUTY SPEAKER 
: Ardern. 
Hon TREVOR MALLARD 
: Ardern sorry. He made a declaration at the beginning of his speech around his financial interests in farming matters and I think to do with dairy farms. That caused me to do a little bit of research and to look in particular—and I think what is quite important in the House is that we have consistency as to declarations so that we do not have some members declaring and others not making declarations to the House when they are in the same circumstance on the legislation. 
It caused me to look at Speaker’s ruling 76/6 which is one from Mr Speaker Kidd. It says: “The fact that an amendment might open up a business opportunity for a number of companies in which members have an interest is not a direct financial benefit. Such a business opportunity might or might not eventuate from a particular clause of bill becoming law. The matter is entirely speculative.” The view that I would like to put to you is that dairy farmers with regard to this change in Fonterra are in that situation. Whether there is a financial advantage to them or not is a matter of speculation. 
The other more longstanding Speaker’s ruling that almost certainly applies is 76/3 a 1956 ruling from Volume 310 by Mr Speaker Oram. I think most members—well no not most members of the House; that would be wrong. Many members of the House who have looked at the Standing Orders and some of the old Speakers’ rulings know that he was a wise old owl and there are quite a few of his rulings here. What he indicates is that “A farmer member does not have a financial interest in a bill that provides for the payment for and marketing of dairy produce.” The point that I would like or the submission— 
Mr DEPUTY SPEAKER 
: Could the member— 
Hon TREVOR MALLARD 
: Well I am nearly there. 
Mr DEPUTY SPEAKER 
: Please continue. 
Hon TREVOR MALLARD 
: Well the point I would like to make is that it is my view that that applies and therefore members who are farmers should not be declaring an interest as they enter into a speech in the House in the interests of consistency in the Parliament. 
Mr DEPUTY SPEAKER 
: I thank the member for raising the point of order. The member has obviously done some homework. We will find those rulings on pages 75 and 76 of  
Speakers’ Rulings 
. There is actually quite a suite of them. In the case of members getting up I think there is no specific and direct interest as far as I am can see but if a member wishes to declare that they have one then I think that is up to them on this occasion. I do not see that any of these points of order direct either one way or another. In the case of Mr Shane Ardern he also made it very clear when he chaired the select committee. If in fact this was legislation to demutualise then that would have a more specific application. So I am quite happy to let members make that declaration as they desire. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I think that is where we run into a problem because Speaker’s ruling 76/3 is actually very clear that a farmer member does not have a financial interest in my submission to you. If members declare that they do have a financial interest when the Standing Orders and Speakers’ rulings say that they do not then that is where we run into problems and we run into inconsistencies. 
Mr DEPUTY SPEAKER 
: I think and I am going from recollection here that Mr Ardern said that he had an interest in the dairy industry. I do not think that he actually linked it to the legislation and that is why he spoke with some passion about that. I do not think any member—and I would need to check the record but I was in the Chair at the time—said that they had a particular interest directly relating to this bill but some acknowledged an interest in the dairy industry. 
IAN McKELVIE (National—Rangitikei) 
: 
 Given the recent point of order I will very quickly take the opportunity to declare my lack of interest in the dairy industry. At the start of this process— 
Chris Hipkins 
: Oh outrageous! What electorate does he represent? 
IAN McKELVIE 
: At the start of— 
Hon David Cunliffe 
: Why is he speaking? 
IAN McKELVIE 
: I have got only a couple of seconds here. At the start of this process I did have an interest in the dairy industry. I no longer have one as of 1 June. I just want to take this opportunity to speak and I guess it saddens me to think that we had to listen to what I can only think of as a scurrilous attack on an industry that has served this country amazingly for 100 years by the Green member who spoke earlier. I think it is a shame when we have to put up with that sort of stuff. I accept that we do not all agree with things but there is no need to attack an industry that has served our country in the manner that it has. 
The Dairy Industry Restructuring Amendment Bill surprising as it may seem is probably the most important piece of legislation that will go through this House in this term of Government. When you think of the contribution this organisation makes to New Zealand and the fact that it is a creature of statute we have no choice but to re-regulate it. That is how the system works. It will have a massive impact on New Zealand’s dairy industry and on New Zealand’s future. Having sat through the select committee process I spent a lot of time getting myself confident and comfortable with the fact that this is the best possible solution for the New Zealand dairy industry in general. And the reason for this being the best possible solution is that— 
Hon David Parker 
: You don’t know that. 
IAN McKELVIE 
: I said that I am satisfied myself. If we do not make progress in life we go nowhere. It is time for Fonterra and the New Zealand dairy industry to take the next step. The last 10 years have been hugely successful for the industry and I think that will continue. So I have no problem supporting this bill having given it a great deal of consideration and I think that the Primary Production Committee did a fair bit of work on that as well. I have no problem supporting this bill as it goes forward in the House. Thank you. 
Hon DAVID PARKER (Labour) 
: 
 I rise to take a call on the second reading of the Dairy Industry Restructuring Amendment Bill. I begin by thanking the Primary Production Committee for its consideration of the bill. I also thank some of the representatives of the dairy industry who have been helpful to me and to the Labour Party in our understanding of the issues that lie under the bill and I will list a couple of groups. Can I thank Fonterra and the executives who have addressed openly and helpfully the questions the Labour Party has raised; I thank them for their efforts. Can I also thank members of the dairy industry who have an alternative view from Fonterra’s as to where the balance properly lies in these considerations for their thoughtful contributions to the issues before us. 
There are two aspects to this bill as we have heard from other speakers. One relates to the price of milk that is to be paid by Fonterra to the people who deliver milk to Fonterra and the division between that total payment as between a milk component and a return on the investment that people have in the Fonterra cooperative. The second is Trading Among Farmers and the trading amongst non-farmers of profit streams from the Fonterra shares. 
I want to deal firstly with the milk price issue. There are a number of reasons why it is important that we get the milk price right. Some of the things that Fonterra cuts across in New Zealand because of its size and its effective close-to-monopoly position in large parts geographically of New Zealand—in fact in large parts of New Zealand it is an absolute monopoly when it comes to the collection of milk—are the interests of consumers the long-term interests of the New Zealand economy and the long-term interests of Fonterra which mean that we need to get the milk price right. If we get the milk price too high then we prejudice New Zealand retail consumers of milk. People end up paying too much for milk and that means that somewhere there will be someone consuming Coca-Cola instead of milk. That is not good for the health of our country and it is not fair on consumers who are paying more for their milk than they should otherwise pay. 
 The milk price in New Zealand is significantly higher than it is in Australia— 
Hon Trevor Mallard 
: Yep and in the UK. 
Hon DAVID PARKER 
: —and in the UK—and it remains an open question as to whether that is because of the dominance of Fonterra in New Zealand and the fact that we have inadequate competition in what is called our fresh milk market but is actually increasingly reconstituted milk even in New Zealand out of season. So the ability of competitors to compete against that price of milk is in part reliant upon them being able to acquire milk at a fair price from farmers. If farmers are paid by Fonterra a higher price for milk than is a fairly competitive price for milk then those competitors will not be able to enter the market because they would always be at risk of Fonterra changing its pricing methodology undercutting them and effectively taking their market away from them. So there are very real issues as to why it is from that perspective important to get the division between milk price and return on Fonterra investment right. 
One of the other reasons it is important to keep that price correct is that in the absence of competition we know that monopolies are inclined to become inefficient—inefficient in terms of their price structures and inefficient in terms of the choices they make commercially both within New Zealand and outside of New Zealand. If Fonterra is not facing competition from entrants and potential entrants then as a monopoly it will become less efficient over time. That is standard competition theory. That is why we in the Labour Party believe in the efficiency of competitive markets because if you do have a competitive market then competition between participants in that market is you know survival of the fittest. Those that act non-competitively or have unduly high cost structures or unduly high profit structures fail because other competitors that have more efficient price structures or more efficient cost structures succeed at their cost and take their market share. So it is actually in the New Zealand economy’s interest and in Fonterra’s long-term interest that there be competition and the potential for competition in New Zealand which is enabled through having a fair milk price and is prevented if you do not have a fair milk price. 
I am not yet convinced that we have got this quite right in the legislation. I have heard and I am convinced that there are a couple of problems in the price-setting methodology for milk. The price for milk that is contemplated under this legislation is predicated upon a theoretical model for Fonterra that is based not on the actual efficiency of its milk production but on how efficient it might be if it was acting perfectly. Members opposite are shaking their heads—well I think that is right with respect based on the submissions that I have seen and my reading of the legislation. 
There is a theoretical product mix and a theoretical efficiency of the plant that Fonterra has that drive this milk model rather than the actual efficiency that it achieves out of its plants and rather than the actual product mix that it chooses to produce. I cannot understand why we are using a theoretical construct rather than the actual construct of what it is that it produces because that seems to me to mean a higher milk price than it can justify in practice based on a theoretical model that is different from what it achieves in practice. I am not yet convinced that that is right. I think the milk price should be a fair milk price based on what a competitive market would be. We do not have a competitive market; therefore we have to have a theoretical construct but that theoretical construct ought to be based on what is a competitive market rather than a theoretical rendition of it that cannot be achieved in practice. That is the first point I would make in respect of milk price. 
What does that mean in practice? I am told that there is some dispute as to the amount by which the milk price is overstated. It might be by as much as 50c per kilogram of milksolids. I know that Fonterra denies that. Its competitors say that it is 50c per kilogram of milksolids. What that means—and this will be of interest to the Greens—is that that would have an impact on land price of around $5000 per hectare which affects land-use choice and has an outcome in terms of whether something is being used for sheep and beef forestry somewhere or dairying. 
I want to turn in the brief time I have available to Trading Among Farmers. There is a national interest in Fonterra that arises from its importance in the New Zealand economy. That interest goes beyond the interests of the individual farmers and the interests of Fonterra both of whose interests are important. That national interest is why we have let Trading Among Farmers out of some of the Commerce Act restrictions that would otherwise have stopped the formation of Fonterra or its continued expansion. 
Redemption risk has been overstated in my opinion. Retentions policy is limiting that. We have seen Fonterra purchase the Waimate facility that the Russians owned that has gone broke. For people to have somewhere else to put their milk they have got to have somewhere else that is willing to process it. I do not think the redemption risk is as much as it was stated and so the Labour Party was concerned to limit the ability of Trading Among Farmers to grow like Topsy. We are not satisfied with the provisions in the constitution alone for Fonterra. We think there should be a statutory limit on the number of shares that can be owned by non-cooperative members. We have suggested a limit of 20 percent. We would be comfortable with a lower limit. We have yet to reach agreement with Fonterra. There has been some negotiation with Fonterra and maybe that will come to something maybe it will not but there should be a statutory limit on that. Otherwise we put at risk the long-term viability of the vertically integrated Fonterra through the tension between the new shareholders and the wet co-op shareholders. 
Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) 
: 
 I referred to a report in my speech and it is not part of the submissions of the Primary Production Committee. I seek leave to table a report by Dr Onno van Bekkum. It is called  
Fonterra Farmers’ 2nd Vote on TAF: A Second Opinion 
. 
Mr DEPUTY SPEAKER 
: Leave is sought for that purpose. Is there anyone opposed to that course of action? There appears to be no objection. Leave is granted. 






Document by leave laid on the Table of the House. 
MIKE SABIN (National—Northland) 
: 
 I will take a short call on this very important bill before the House the Dairy Industry Restructuring Amendment Bill. The previous speaker made mention of the pricing capacity. The reason for that is that Fonterra processors have to be in a position to process all the milk in case the competitors that Fonterra is required to supply under this legislation choose not to take it. So Fonterra has to be in a position to process that milk. 
I just want to briefly discuss the huge implications of this legislation. I want to commend members of the Primary Production Committee which I have been privileged to be a little bit of a part of from across the political spectrum for the robustness and integrity shown by members to tease through this very important legislation and work it to be as it should be. I also want to acknowledge the fact that this is a very very important part of my electorate’s economy and so I have a very very significant interest in watching the progression of this bill through the House. At the end of the day what this legislation is about and what dairy is about is ensuring that we have the most efficient dairy industry possible in this nation. 
Just in closing with regard to Trading Among Farmers I just want to make this point. Ultimately the judge of this will be the farmers who will vote on Trading Among Farmers itself. I have great pleasure in commending this bill to the House. 
Mr DEPUTY SPEAKER 
: This is a split call. Two 5-minute calls so there will be a 1-minute bell. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Members opposite may be wondering why an Auckland member is taking a call on this bill the Dairy Industry Restructuring Amendment Bill. I would just like to say— 
Hon Trevor Mallard 
: Maybe it’s because you drink milk. 
Hon DAVID CUNLIFFE 
: My mother brought me up to drink milk. That is dead right. But actually for my colleague’s information— 
Hon Trevor Mallard 
: He’s the drinkers’ representative. 
Hon DAVID CUNLIFFE 
: That is it. I am the drinkers’ representative. I actually grew up in the shadow of the Clandeboye dairy factory in South Canterbury and worked on farms in that area. 
Hon Trevor Mallard 
: Wasn’t there quite a lot of pollution down there? 
Hon DAVID CUNLIFFE 
: It had some impact I think it is fair to say colleague Trevor. To my great interest I later found myself working as a consultant to the New Zealand Dairy Board around the time that consideration was being given to the merger into what became known as Fonterra. I have a longstanding interest in these issues and I am delighted now as Labour’s economic development spokesperson to be able to make a contribution—a small one—to this debate. 
I would like to pick up where my colleague the Hon David Parker left off and just address the issues around Trading Among Farmers. There is a very fine balance it seems to us to be struck. On the one hand we need to ensure that the benefits to farmers which are considerable and the benefits to the nation which are also considerable of the cooperative ownership structure are not gradually unravelled. We do not want to see New Zealand’s No. 1 export industry suddenly become owned by foreigners because the value of that industry to New Zealand is roughly akin to I do not know the banking industry. Banking and finance as we know rather than having a positive impact on our current account are a perennial drain to the tune of billions of dollars because the ownership is offshore. We cannot afford—we absolutely as a country could not afford—that to occur with Fonterra. So there is a huge national interest a long-term national sovereignty interest here as well as a very tangible and quite proper farmer interest in retaining a long-term cooperative structure. 
So the question that arises is whether the advantages of the Trading Among Farmers proposal—in terms of redemption risk in terms of permanent capital and underlying that in terms of the ability of the organisation to draw in outside equity so that it might further invest in the development of consumer products and more advanced nutraceuticals getting more value out of a bucket of milk if you like—would be outweighed by the risks of a gradual erosion of corporate ownership and control. The argument against that risk is that Trading Among Farmers sets up the trading of units—not full shares—and those are non-voting and that is accepted. But I can be absolutely clear to members of this House that notwithstanding that the stock market and many of the institutional investment interests there are absolutely drooling at getting their hands on Fonterra units. They only wish it was more than $500 million—at least double would have suited them. It is essential in the face of that pressure that the balance is retained. That is why as my colleagues have said Labour has been in discussions with Fonterra around a legislated cap on the amount of units. Those discussions have not yet concluded. For this moment in time of course we have no option but to maintain our opposition to this bill because in its current form it seems to us that the risks of a gradual and progressive erosion of farmer ownership and control and therefore of national sovereignty and long-run national interests are just too high. They are too high because there is nothing in the law to cap the level of units and the constitution could be changed under market pressure at some future point. 
The interests of external investors are not the same as the interests of farmer shareholders. They will—to some extent quite legitimately—pull in different directions. It is essential that the law to some extent allows for that but does not allow for so much of it that that pressure gradually pulls the cooperative apart. 
There are some significant process issues around this bill to do with the rush and haste with which it was forced through the Primary Production Committee. I want to pay tribute to the work of the committee but I want to reflect the views of many members from around the House that this bill went through too fast and that farmer submissions and other submissions were not fully or adequately heard. They want to recognise that farmers themselves are having some serious second thoughts about aspects of this proposal. Notwithstanding the Fonterra Shareholders’ Council support farmers themselves are going to have to vote. That will be quite finely balanced and we look forward to picking up this debate in the light of that vote. 
EUGENIE SAGE (Green) 
: 
 I rise to take a short call on the Dairy Industry Restructuring Amendment Bill. Before I start I would just like to say that the criticism that Mr McKelvie made of my colleague— 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the member but this bill is set down for resumption next sitting day. 
Debate interrupted. 
The House adjourned at 6 p.m.