Sepuloni CarmelDr JAMES McDOWALL (ACT): Thank you Mr Chair. Just a question to kick off to the Minister around the requirement the need for this bill and the focus on it being a reciprocal arrangement which is why because of our free-trade agreement and agreements—CHAIRPERSON (Greg O'Connor): The member might just need to speak up or go a little bit closer to the microphone. His voice is quite quiet.Dr JAMES McDOWALL: I'll try to speak a bit louder. How's that? Just a question around the purpose behind this is so that we meet our requirements our obligations under a free-trade agreement and the focus has been on it being reciprocal.So I was just going to query the Minister then as to why it isn't reciprocal in the sense that in this bill it sets a 5 percent fixed amount fixed rate whereas if we look at the European Union and look at the United Kingdom who have the same regime in place in each of those territories by way of Brexit. If we look at those rates the maximum royalty is 4 percent but then it's staggered. It goes down to 3 percent for the next threshold then down to 1 percent then to 0.5 percent then to 0.25 percent and the total amount of the royalty may not exceed €12500 looking at the European Union. So that's my first question. If this is supposed to be a reciprocal arrangement then why isn't it the same?Hon CARMEL SEPULONI (Minister for Arts Culture and Heritage): Requirements in the NZ-UK free-trade agreement and the NZ-EU free-trade agreement are high level. The bill meets all of these requirements. The requirements are that the bill must be reciprocal the right is inalienable eligible works must be an original work of art the work must be a resale the royalty must apply to all acts of resale by a person or persons acting in the course of dealing in the business of visual works.So we did have the opportunity to actually set our own threshold with regards to the royalty fee. My understanding is that we did not look into the staggered proportion or percentage that that member referred to because of the administrative burden that that would put on the system. So there's already been questions from the Opposition today around the level of bureaucracy and potential administrative burden. Having a flat rate clearly makes that a lot easier to manage and it's also a lot easier for people to understand.Dr JAMES McDOWALL (ACT): I appreciate the response from the Minister. So I guess a portion of that is around going above and beyond as opposed to just simplifying. I can understand not using the thresholds because that is added bureaucracy. None the less our percentage is set higher so it is a case of why is it above and beyond? And also the fact that there is in fact a cap in those jurisdictions that we haven't adopted.Hon CARMEL SEPULONI (Minister for Arts Culture and Heritage): Yes the member is right. In many overseas schemes including the UK and some EU countries there is a cap on the maximum royalty payable. However the New Zealand market is much smaller and artworks here do not sell for the high prices seen in many overseas countries—although we would like them to.Not having a cap is also key in ensuring the scheme can ultimately be self-sustaining into the future. As an administrative fee will be deducted from all royalties collected the administrative fees collected on higher-value sales will help in many ways cross-subsidise administrative costs associated with collecting and distributing royalties from lower-value sales. Therefore in line with the Australian scheme—a more comparable market to New Zealand than the United Kingdom—there will be no cap on the maximum royalty paid.CHAIRPERSON (Greg O'Connor): The honourable—Dr James McDowall.Hon Peeni Henare: That's a long valedictory!Dr JAMES McDOWALL (ACT): I know. Thank you Mr Chair. One further question around the setting of the threshold at which artworks are eligible: between $500 and $5000. That is quite a wide range and I'm just curious because the systems are already in place overseas in the UK and the EU why the Government has opted to take quite a large range there and not actually indicated something a bit more specific.Hon CARMEL SEPULONI (Minister for Arts Culture and Heritage): A minimum threshold is necessary because having no threshold—and therefore covering all sales even those of very low value—is not administratively feasible or cost effective. The bill states that the threshold will be between $500 and $5000 with exact amount to be set in regulations rather than in legislation.I think the range of $500 to $5000 has been chosen because a threshold lower than $500 would as I've said be administratively unviable while an upper limit of $5000 provides room for upward adjustment in the event of future inflation and/or a substantive market growth. So if we put it in regulation then what we can do is over time if we choose to—it's much easier to shift that threshold than what it would be if it was set in legislation.Dr JAMES McDOWALL (ACT): Thank you Mr Chair. So just on that is there any indication that the Minister has as to where—and I understand that it's going to be in regulations—as to where she or the Government would like to see that threshold start?Hon CARMEL SEPULONI (Minister for Arts Culture and Heritage): At this point final decisions on that are yet to be made.Dr JAMES McDOWALL (ACT): Thank you Mr Chair. Separate question entirely: something I raised in the previous reading was around will there be any consideration for exemptions—or exclusions I should say—around say an artist that has been imprisoned for whatever whether they're still in prison or whether afterwards. Once they've finished their sentence will they still be eligible to keep being paid by the scheme?Hon CARMEL SEPULONI (Minister for Arts Culture and Heritage): The answer to that is no.CHAIRPERSON (Greg O'Connor): The question is that the Minister's amendments set out on Supplementary Order Paper 413 be agreed to.Amendments agreed to.Parts 1 and 2 Schedule 1 and clauses 1 and 2 as amended agreed to.Bill to be reported with amendment.House resumed.CHAIRPERSON (Greg O'Connor): Madam Speaker the committee has considered the Resale Right for Visual Artists Bill and reports it with amendment. I move That the report be adopted.Motion agreed to.Report adopted.ASSISTANT SPEAKER (Hon Jenny Salesa): This bill is set down for third reading immediately.