Volume 671 Week 70 - Thursday 7 April 2011 
Text is incorporated into the Bound Volume 
Volume 671 Week 70 - Thursday 7 April 2011 
[Sitting date: 07 April 2011. Volume:671;Page:17825. Text is incorporated into the Bound Volume.] 
Thursday 7 April 2011 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon SIMON POWER (Acting Leader of the House) 
: 
 When the House resumes on Tuesday 12 April the Government intends to introduce and make progress on legislation to respond to the Canterbury earthquake. If time permits the Government will also look to make further progress on bills on the Order Paper. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Can I ask the Acting Leader of the House whether it is the Government’s intention to pick up the Opposition’s suggestion of sending the Canterbury legislation to a select committee—if only for a few hours—in order to give people like the regional and city people and the Law Society an opportunity to comment? 
Hon SIMON POWER (Acting Leader of the House) 
: 
 I can advise the shadow Leader of the House that that matter is currently under consideration by the Minister in charge of the bill. 
Ministerial Statements 
AMI Insurance—Financial Support Package 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I wish to make a ministerial statement under Standing Order 347 in relation to Government support for the company AMI Insurance. I seek leave for my statement and the responses of the leaders of the Labour and Green parties to be 7-minute speeches for other parties to have speeches of up to 3 minutes and for my reply to be up to 3 minutes. 
Mr SPEAKER 
: Leave is sought for that course of action. Is there any objection? There is no objection. 
Hon BILL ENGLISH 
: AMI Insurance approached the Government on 9 March concerned that its reserves and reinsurance might not have been sufficient to cover the total value of claims resulting from the Canterbury earthquakes. In response I asked Treasury and Reserve Bank officials to gather information about its true position and to consider the best option for taxpayers and AMI Insurance’s policyholders. AMI Insurance is New Zealand’s second-largest residential insurer with 485000 policyholders and 800 staff primarily insuring residential property. In Christchurch it has 85000 policyholders representing about 35 percent of the residential insurance market. 
The Government rejected the option of doing nothing. This would have left thousands of Christchurch homeowners—many with mortgages—whose properties had been destroyed or damaged without insurance cover. Quite apart from the human misery that would have resulted this would have stalled Christchurch’s reconstruction. The Government established three key policy objectives: first that certainty was to be provided to AMI Insurance policyholders who had purchased insurance in good faith from a large reputable insurer; second that the preferred solution was for the company to find a way to recapitalise itself if necessary and that it should be given strong incentives to do so; and third that if Government assistance was needed the best way to limit the cost to taxpayers was for AMI Insurance to remain a going concern. Other options such as directly guaranteeing payments to Christchurch policyholders in the event the company failed were considered and rejected as being more costly and slow to resolve. 
On 17 March AMI Insurance’s board resolved that Government support be sought with all haste and that urgent steps be taken to pursue other capital-raising possibilities. This need was reinforced by an impending review of the company’s credit rating. On 21 March Treasury provided a letter of comfort to AMI Insurance noting that its request for Government support merited serious consideration and inviting the company to continue discussions. The company forwarded this letter to its credit rating agency A M Best Co. On 23 March A M Best downgraded AMI Insurance’s rating for its claims-paying ability two notches from A+ to A- on review with negative implications. There is little doubt that without some prospect of Government support the downgrade would have been greater and could have created significant uncertainty. On 28 March Cabinet delegated power to act jointly to the Prime Minister and me and to the Minister for Canterbury Earthquake Recovery. Yesterday we approved the arrangements that were announced today. 
The key terms of the agreement between the Government and AMI Insurance are that the company has paid the Crown a $15 million establishment fee. The Crown will receive board representation and in addition the Crown observers will have full access to the company’s operations. AMI Insurance has issued $500 million of unpaid convertible preference shares to the Crown with preferential rights to dividends. Payment will happen only if the company’s own resources are depleted below the level that is prudent for an insurance business or if at any time the Crown decides that it is in the public interest to make the payment. In exchange the Crown could take ownership of AMI Insurance and have control of the board. The Crown also has the option of taking ownership if necessary by making a partial payment of $100 million at any time. If the arrangement is called on by AMI Insurance and it later becomes clear that the company can pay all likely policyholder claims it will exit the support arrangement by repaying the Crown. The arrangement also provides for the maintenance of customer service standards by the company. 
The eventual cost to the Crown is impossible to know precisely. A plausible range extends from zero where current resources will prove to be sufficient to $1 billion. The potential $500 million injection will allow the company to keep operating and give it time to seek a long-term solution. Policyholders will be protected whatever the outcome. The arrangements mean that all claims by AMI Insurance policyholders will be met. 
AMI Insurance’s situation is unique so the Government entered this arrangement reluctantly. The company is the leading insurer in a region subjected to two earthquakes in short succession. Christchurch is an area where the company has a particular concentration of policyholders. Moreover because the company is owned by its policyholders it had little ability to raise new capital quickly. I can confirm that we know of no other large insurance company in a similar position. The insurance sector as a whole remains sound. The Government entered the arrangement reluctantly. There is a possibility that the Government may not have to inject capital at all. But if it does then it does not intend to become a long-term shareholder. None the less we are satisfied that this is the best possible solution and that it protects both those insured by AMI Insurance and taxpayers. The Government acted primarily because we cannot leave the people of Christchurch in the lurch in their time of great need. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The Labour Opposition supports the need to provide certainty to the 85000 Cantabrians who have been worrying about whether their insurance claims for earthquake damage would be paid out. In that regard the Labour Opposition supports the Government’s provision of up to $500 million as an equity stake in AMI Insurance. The Labour Opposition hopes that the package will provide the confidence and certainty that Cantabrians need. The well-being of Cantabrians and their ability to rebuild their homes and lives must not be put at risk because of financial uncertainty. We understand the extraordinary circumstances of two earthquakes in the immediate region of the domicile of AMI which is New Zealand’s largest domestic-based insurance operation. 
The package must however be seen as a last resort. We noted that the Government has indicated that the $500 million will be drawn upon only as is necessary when all other legitimate claims on equity and financing have been exhausted. Safeguards must be put in place to protect the long-term interests of taxpayers. 
We note that in the Government’s statement what is being provided is “up to $500 million in equity” plus the following statement from the Government: “If losses were to be greater than $500 million the Crown would stand behind the claims.” We will be seeking more detail from the Crown on the nature and extent of this additional exposure and what information has been provided upon it by the company. We note that in the case of another prominent South Island financial institution the Government’s initial estimate of liability was of the same order of magnitude but has ballooned to nearly three times the original estimated amount. We want to ensure that better standards of oversight occur in this case. We put the Government on notice that as part of the Opposition’s support for this step we will expect ongoing consultation and sharing of information in respect of the company. 
Part of the reason for that is that New Zealanders are sick and tired of bailing out the private sector including finance companies which—let us say—in some other circumstances could have been seen as often reckless and/or greedy. Some companies have capitalised on the good times raking in profits but when they started making losses or going bust it has been left up to the taxpayer to rescue them. That is not a precedent we can allow to stand. It sticks in the throat of most New Zealanders. However on this occasion AMI Insurance is in a different situation that has come about through extraordinary circumstances. We accept that action has had to be taken to protect the interests of 485000 AMI Insurance policyholders throughout New Zealand especially those affected by the disaster in Canterbury. Thank you. 
GARETH HUGHES (Green) 
: 
 The Green Party supports the Government’s move to underwrite AMI Insurance a move that will give certainty to policyholders especially those in Christchurch needing to rebuild their homes and their livelihoods. Giving ourselves the option of taking a preferential shareholding in AMI Insurance is the most prudent way to bail out the company and will ensure that the interests of taxpayers are best protected. However the Government has itself admitted that the $500 million may not be enough to cover the full liability AMI Insurance is exposed to. With the Government committed to borrowing to fund this bail-out amongst a growing list of others the argument for an earthquake levy is now more compelling than ever. We as a nation have to be prepared for more bad news from the Christchurch earthquake. The Government needs to design a fiscally and economically resilient response. Putting it all on the credit card does not constitute a plan. Putting it all on the credit card leaves us less able to deal with future shocks to the economy. 
The Green Party has proposed a temporary levy on income as the fairest way to pay for AMI Insurance - like scenarios. Our proposed levy is fair it would fall on those most able to afford it and it would raise over $1 billion of additional revenue for each year it remained in place. The levy is a targeted tax one that would go directly to pay for the rebuilding of Christchurch. It is also a proposal that is widely popular. We commissioned UMR Research to test the waters and its poll results show total support for the temporary levy at 57 percent. Our plan to raise a temporary levy is smart economics. Raising additional revenues would significantly lessen the risk of a credit downgrade. 
The Minister of Finance’s office confirmed through an answer to a written question yesterday that the credit agencies will be reviewing New Zealand’s sovereign credit rating after the Budget. Standard and Poor’s and Moody’s currently have us on a negative credit watch. The Government’s latest bail-out of AMI Insurance simply increased the chance of a credit rating downgrade unless the Government shows some commitment to raising revenue to lessen its debt blowout. A credit rating downgrade would add significant dead weight of costs right across the economy—the last thing our fragile economy needs right now. 
The other part of the Government’s approach to paying for the rebuild of Christchurch is to cut public sector spending at a time of weak economic activity. This carries the great risk of sending an already fragile economy back into recession and a recession will further worsen our ability to repay debt and slow our ability to ensure that Christchurch lands on its feet sooner after this great disaster. 
A temporary levy avoids the risk of a credit downgrade and the risk of sending the economy into recession as it spreads the cost of funding the rebuild right across and fairly through the economy. In light of this new economic reality the smart pragmatic way to pay for rapidly increasing costs from the earthquake is to reconsider the raising of a temporary levy. We encourage the Government to do this. 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 I have been warning the Government of this moment for the last 2 years. Here is what I said in March 2009: “All this talk of bailouts and the like undermine certainty. It suggests to business that the Government may begin to actively pick winners and losers. But such an approach is a recipe for disaster.” In normal circumstances the Government should not step in and bail out AMI Insurance. Certainty is essential to the operation of the market. Bail-outs undermine certainty by suggesting to business that the Government will start to actively pick winners and losers. In the case of AMI Insurance the company gained a larger market share than it might otherwise have done through offering lower premiums made possible by a policy of limiting expenditure—that is having too little reinsurance. AMI Insurance took the risk and those who took out insurance with it benefited from the risk for a while. It was a risk that did not work. If the Government is going to step in here what about the people in Canterbury who ran a similar risk by having no insurance at all? What is the Government going to do for them? 
The question however is what we do from here. We as New Zealand citizens might just—and I emphasise “just”—be able to go along with the Government’s decision to bail out AMI Insurance but only I suggest under strict conditions. If these conditions are not met then the bail-out in my view at least should not proceed. There need to be two non-negotiable conditions for this bail-out. First the Government must send out an unequivocal warning to all New Zealanders that the Government cannot afford nor will it entertain any further bail-outs. This is it! If New Zealanders want to try to benefit from running a risk they must be prepared to live with the consequences. The Government can no longer afford to pick up the tab. Second the Government must get its books in order. We need for example to get Government expenditure under control immediately. Going slow as we have done over the last 3 or 4 years is no longer possible. To boil it down the way that the Minister of Finance has run the economy over the past 2½ years and the risk that he has been prepared to take are not different in any way from the way that AMI Insurance has run its business. They both lived at the edge— 
Mr SPEAKER 
: The member’s agreed time has expired. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Speaker. Kia ora tatou. The Maori Party stands in support of the policyholders’ support package for AMI Insurance and we do so in taking a whanau approach. This is about protecting the interests of whanau: whanau in Christchurch and whanau elsewhere who have already faced significant costs from not just the earthquakes but the collapse of finance companies. This measure is about providing a level of confidence to us all that if financial assistance is required the Government will take extraordinary steps to minimise the cost to taxpayers. We will be watching very carefully to ensure that that happens. We are opposed to bailing out the private sector. 
The events emerging out of the Canterbury earthquakes have placed many sectors within our nation under great pressure. Today’s announcement responds to the considerable tension that AMI Insurance has experienced in direct response to the earthquakes last September and in February of this year. It is an unusual situation and from the viewpoint of the Reserve Bank it does not appear to have impacted on the bulk of the mainstream insurance sector only AMI Insurance. 
The Government has described the policyholders’ support package as a last-resort approach kicking in only when the company’s own reserves have been exhausted unless the Crown believes that it is in the public interest to take control sooner. This is about taxpayers supporting other whanau who through no fault of their own have sought support from a residential insurer that now finds itself in a precarious position as a result of two natural disasters on a massive scale. The Maori Party supports the Government in this initiative. 
Hon PETER DUNNE (Leader—United Future) 
: 
 The Christchurch earthquake and its associated events is a rare and extraordinary thing in the life of our country. So too the solutions to the flow-on problems that arise from it are rare and extraordinary as is evidenced by the decision with regard to AMI Insurance. This is not a case where ideological solutions from either the right or the left are appropriate but is one where what is appropriate is the best course of action in the circumstances—85000 policyholders in the Canterbury area cannot be cast to the wind in these circumstances. 
The parallel that I want to draw on which although different in context has relevance in terms of its extraordinary impact is the proper decision that this House made some years ago to bail out Air New Zealand. In that instance the Government of the day could not stand by and let a critical component of national transport infrastructure fail. In this instance the Government cannot stand by and see a large number of residential policyholders in the Canterbury area cast to the lions as it were simply because the pressure on their insurance company has proved to be too great. One other parallel with Air New Zealand which I just caution about in the context of the Christchurch bail-out is that at the time of the Air New Zealand bail-out the Government was confident on the basis of the information available to it that its involvement would be relatively short term and that it would start to withdraw from the level of equity that it purchased over time. In reality that has not happened and I suspect that despite the Minister of Finance’s optimism that this can be a relatively short-term involvement with AMI Insurance that will prove not to be the case as time unfolds. 
I think it is appropriate that we support AMI Insurance in this way. This is one of those rare and extraordinary occasions and this solution should be seen as being precisely in that category. 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I thank the leaders of the various parties for their support for this unique and extraordinary measure. I reassure Parliament that the Government is not out looking for opportunities for these kinds of arrangements. I want to send a clear message to New Zealand’s commercial sector that only in unique circumstances would the Government contemplate supporting a commercial venture. They should conduct their business and their advice to consumers of their products in the usual method whereby they bear all the risks of the transactions they are undertaking. It is only the sequence of events of two earthquakes in Christchurch that merits the kind of support that taxpayers are offering to homeowners of the suburbs of Christchurch. The Government will endeavour to execute its responsibilities in a way that will ensure the claims are dealt with expeditiously and the taxpayers’ interests are protected. 
Questions to Ministers 
Beneficiaries—Numbers 
1. 
Dr CAM CALDER (National) 
 to the  
Minister for Social Development and Employment 
: What reports has she received on the latest benefit numbers? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 The March numbers have been released today. There are now 331529 people receiving a benefit. The number fell by 12531 during March and was down 3.6 percent on the February figure. Most of that decrease was because of students going back but the number on the general unemployment benefit dropped by 4368 as well. Although it is encouraging to see another drop in benefit numbers I caution against getting too optimistic on the basis of these figures. 
Dr Cam Calder 
: Do reports show any improvement for young people? 
Hon PAULA BENNETT 
: Yes. Reports indicate that young people are beginning to move off the unemployment benefit faster than the overall reduction in the number of people on the unemployment benefit. The number of young people on it decreased by 4 percent in the year ended March and is now 8398 a fall of nearly 2000. Although 4 percent may not seem like much after increases of 66 percent and 187 percent in the previous 2 years it is positive to see that fall. 
Dr Cam Calder 
: What reports has she seen on the availability of hardship assistance? 
Hon PAULA BENNETT 
: The Government is paying twice as many special needs grants as it did in 2008. In March 2008 $3.7 million was spent on special needs grants; in March 2011 $7.2 million was spent. The amount of benefit advances in March was up by about 30 percent. In March 2008 $7.9 million was spent on advances and forwarded and in March 2011 it was $12.2 million. Although some might think that number is too high and we should not be giving those grants I think it proves that the help is there when people need it. 
Hon Annette King 
: Can she confirm that unemployment benefit numbers showed almost the same drop at this period last year as the latest figures show but then continued to climb throughout 2010 and can she guarantee that will not be the pattern in 2011? 
Hon PAULA BENNETT 
: As indicated the March fall was expected as we are seeing students go back and we are also seeing the usual decrease due to seasonal work. What I have indicated is that in previous years we have seen a dramatic increase but in the last 12 months we have seen the figures actually go down slightly. I am hoping we have slowed the flow. 
Rugby World Cup—Minister’s Statement 
2. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Minister of Finance 
: Does he stand by his reported statement that the Government is not prepared to penny-pinch when providing money for the Rugby World Cup? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes. 
Hon Annette King 
: Will he also not penny-pinch for the children of low-income New Zealanders like the three children of a woman who has longstanding physical and mental health problems as reported in the  
New Zealand Herald  
today but who was refused a food grant by Work and Income because of this Government’s tough new hardship rules? 
Hon BILL ENGLISH 
: I understand that some of the facts as represented in the story are incorrect. In fact the woman was not refused a hardship grant. She has received a large number of hardship payments in the past. She is welcome to sit and discuss her issues with Work and Income if she chooses to do so; she has not done so. 
Hon Annette King 
: If the Government can loosen the money and the rules on tendering for a $2 million plastic waka for party central then why can the Government not loosen the rules for poor families when they face unexpected costs at a time when their food their power their rent and their petrol have all gone up at a rapid rate? 
Hon BILL ENGLISH 
: The Government has on 1 April just increased payments to families on a benefit. The rules that are now in place provide for hardship and tens if not hundreds of millions of dollars are spent on hardship payments over and above benefit payments. The rules are there to ensure that corrective action is taken for families who are struggling to live on the benefit. Of course there are many of them and Work and Income works with them consistently and usually successfully. 
Hon Annette King 
: Can he tell us what rigorous assessment and evaluation was undertaken by the Government to ensure that the plastic waka which is costing taxpayers almost $2 million met his requirement that expenditure must be on necessities and not “nice to have” projects in light of his admission yesterday that he did not know the project had not been tendered? 
Hon BILL ENGLISH 
: The proposal went through the usual kind of officials and Cabinet process and is paid for largely by the cancellation of other spending. 
Hon Annette King 
: Is the Minister confirming that this project went through the full Cabinet procedures with evaluation and a business case presented before a decision was made? 
Hon BILL ENGLISH 
: I repeat my answer to the original question. It went through the Cabinet process. 
Hon John Boscawen 
: Further to his correction in the House last night who recommended and approved the decision to transfer the contracting responsibility for the plastic waka to Ngati Whatua removing the need for a competitive tender? 
Hon BILL ENGLISH 
: I do not actually know the answer to that question but I can tell the member that my advice is that arrangements are in place to oversee value for money. The project is being overseen by Beca which is also overseeing the Cloud and fan zone construction in the same part of the Auckland waterfront. 
Hon Annette King 
: Was John Armstrong of the  
New Zealand Herald  
correct when he wrote today that funding of the waka is nothing short of abdication of fiscal responsibility on National’s part; if not why not? 
Mr SPEAKER 
: Before I call the Minister to answer the question I point out that he is not responsible for anything that John Armstrong might say. I do not want to deprive the Minister of the chance to answer the question. 
Hon Annette King 
: Is he correct? 
Mr SPEAKER 
: The Minister is not responsible for whether John Armstrong is correct but I am happy for the Minister to answer the question. I am just pointing out that he is not responsible for that. 
Hon BILL ENGLISH 
: Mr Armstrong is sometimes right and sometimes wrong. On this occasion he is wrong. 
Hon John Boscawen 
: How does he avoid the perception that this is a sweetheart deal to Ngati Whatua reinforcing the conclusion that there are two rules in New Zealand with a National-led Government which is happy to hand out hard-earned taxpayers’ cash to hopeless projects just to keep the Maori Party on side? 
Hon BILL ENGLISH 
: That is not correct. The worth of this project will in the end be measured in the same way as the worth of many other Rugby World Cup projects and that is according to whether they excite tourists and fans and whether they take part in the events that go on in that venue. 
Television New Zealand—Mandate 
3. 
SUE KEDGLEY (Green) 
 to the  
Minister of Broadcasting 
: Does TVNZ have any other mandate other than returning a profit under the National Government? 
Hon Dr JONATHAN COLEMAN (Minister of Broadcasting) 
: 
 The mandate of Television New Zealand (TVNZ) is described in the Television New Zealand Amendment Bill. New section 12 in clause 6 of Part 1 states: “(1) The functions of TVNZ are to be a successful national television and digital media company providing a range of content and services on a choice of delivery platforms and maintaining its commercial performance. (2) In carrying out its functions TVNZ must provide high-quality content that—(a) is relevant to and enjoyed and valued by New Zealand audiences; and (b) encompasses both New Zealand and international content and reflects Maori perspectives.” 
Sue Kedgley 
: Did he attend a TVNZ board meeting last month and instruct the board that from now on TVNZ is to be run as a strictly commercial organisation? 
Hon Dr JONATHAN COLEMAN 
: I did attend a meeting with the board and I made the Government’s expectations very clear. They are that there is a large amount of public equity tied up in that organisation and the public deserves to get a dividend from it. 
Sue Kedgley 
: When the TVNZ board presented a business case to the Government to allow it to continue funding TVNZ 7 did he personally advocate for continued funding and is it true that Steven Joyce squashed the idea? 
Hon Dr JONATHAN COLEMAN 
: The member has got quite confused about this. TVNZ has never brought a case to the Government to allow it to continue funding TVNZ 7. It brought a case that wanted us the Government and the taxpayer to continue funding it which was just not tenable. 
Sue Kedgley 
: Why does the Government consider it to be good practice to allow a private sector media company founded by Mr Joyce to have a preferential loan deferral scheme while at the same time killing off the State broadcaster’s sole remaining public service channel? 
Hon Dr JONATHAN COLEMAN 
: Once again the member has got confused. I think what she is referring to is a scheme that was made open to all radio companies to defer their licence payments as opposed to what we are talking about here which is continuing to meet the unfunded promise that the last Government made regarding TVNZ 7. 
Sue Kedgley 
: Can he confirm that as result of the Government’s decision to make TVNZ a solely commercial broadcaster New Zealand will be the only country in the Western World without a public service television channel other than Maori Television? 
Hon Dr JONATHAN COLEMAN 
: Well the first point to make is that TVNZ has been predominantly commercially funded for a very long time. The second point that I would make is that one would struggle to find another OECD country that has suffered the economic shocks that we have had in the last year and that still has a very firm plan to return to surplus by 2015. 
Sue Kedgley 
: What about Ireland? Will Radio New Zealand National be the next State broadcaster to face funding cut-backs and the pressure to commercialise; if not why not? 
Hon Dr JONATHAN COLEMAN 
: If the member had read the  
New Zealand 
Herald 
 this morning she would know what the position is. Basically Radio New Zealand National has a very good plan for living within its means which we are very happy with. 
Sue Kedgley 
: Can he promise New Zealanders in this House that the Government has no plans to sell off TVNZ in this or the next term of Government? 
Hon Dr JONATHAN COLEMAN 
: I can confirm that there has been absolutely no discussion about selling off TVNZ at any time. 
South Canterbury Finance—August 2010 Recapitalisation Bid 
4. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: What was the maximum estimated Crown liability under the recapitalisation bid proposed by Permanent Investments Ltd in August 2010 as assessed by KordaMentha in its report to Treasury of 26 August 2010? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 There was no maximum estimated Crown liability and certainly no terms of contract that would limit the Crown’s liability. The member should read the advice of the receiver who scrutinised the contract documents in detail; he will find that the assertions he is making in public are simply wrong. That is reflecting on his competence not on the deal. 
Hon David Cunliffe 
: Can the Minister confirm that the KordaMentha report estimated that the Crown’s exposure to placing South Canterbury Finance into receivership was “approximately 500 million dollars” and that its exposure to the leading recapitalisation proposal was “between $400 and $500 million”; if so can he explain why he chose the more expensive option? 
Hon BILL ENGLISH 
: The nature of the deal that the member is referring to is similar to any number of other approaches that Treasury and the receiver had about South Canterbury Finance. First the people making the offer expected the Government to lend them the money to buy the company and secondly there was no limit on the Crown liability. Any loans that the buyers found that they did not like were going to be handed back to the Government. So the assertion that there was some limit on the Crown’s liability is simply wrong. 
Hon David Cunliffe 
: Noting the email from Treasury dated 25 August 2010 that states “The Minister has developed an appetite for receivership so it might pay to clear the table of other options.”— 
Hon Member 
: Oh dear! 
Hon David Cunliffe 
: —oh dear—can he confirm that the Treasury email in fact reflected his instructions or preferences? 
Hon BILL ENGLISH 
: No I cannot confirm that but what I can confirm is that there was no deal put to officials that limited the Crown’s liability. The deals that were considered involved— 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. The question was very straight and very specific. It referred to an explicit email— 
Mr SPEAKER 
: We established yesterday that when I get to my feet all members resume their seats. The member’s question was answered quite explicitly. The Minister said he could not confirm that. But he was going on further than the question asked and I think we had heard sufficient because the question was a very limited one. 
Hon David Cunliffe 
: Given that KordaMentha’s estimate of Crown exposure under the recapitalisation proposal of $400 million to $500 million was similar to the Opposition’s estimate of “around $500 million” why did the Prime Minister state the Opposition’s estimates were “nonsense” when they were nearly identical to those made by his own leading specialist adviser? 
Hon BILL ENGLISH 
: Probably because most of the things the Opposition has said about this have been nonsense. No such deal exists as the member has been talking about. The real problem with South Canterbury Finance was the large number of bad loans and it took a couple of years to get to the bottom of that heap. The member is talking nonsense. 
Hon David Cunliffe 
: Given that the final cost to the Crown of the bail-out of South Canterbury Finance will be around three times the Crown’s original estimated cost how can New Zealanders have confidence that the cost of supporting AMI Insurance will be limited to the $500 million equity injection he has so far disclosed; and if it is not the full estimated cost of supporting AMI Insurance can he please advise the House now what the total cost is estimated to be? 
Hon Dr Nick Smith 
: What were you doing for 9 years? 
Hon BILL ENGLISH 
: A very good question: what was Labour doing for the 9 years it was in Government about regulating the insurance industry? 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. A straight question was asked: what was the final estimated cost of supporting AMI Insurance? It is a serious matter. The Minister is not at liberty to answer— 
Mr SPEAKER 
: The member has made his point of order. We do not need to go on any further. I think the Minister could have made a better attempt to answer the question. The question was not quite as simple as the member portrayed at the end; it was a much longer question than that. But the Minister should make some attempt to answer it. 
Hon BILL ENGLISH 
: The public can expect the Government will manage the arrangement with AMI Insurance in order to minimise the taxpayers’ losses. I might say we will be relying on the same kind of advice we relied on with regard to South Canterbury Finance. The member should listen to what KordaMentha which he is quoting said about the offer he is promoting: “[South Canterbury Finance] promote the offer as crystallising the Crown’s loss; that is not correct.” And the member promotes the offer as crystallising the Crown’s loss. This is not correct. So he knows that it is not correct but continues to say so trying to trade on what credibility he might still have. 
Hon David Cunliffe 
: I seek leave to table the report to Treasury of 26 August 2010 by KordaMentha on South Canterbury Finance which quantifies the Crown’s estimated loss on this receivership proposal as around $500 million. [ 
Interruption 
] 
Mr SPEAKER 
: There is a query. Is this document on the Treasury website? 
Hon David Cunliffe 
: It is. 
Mr SPEAKER 
: It is on the website. Well I do not think we should be tabling documents on the website that are readily available to all members. 
Treaty of Waitangi Settlements—Progress 
5. 
SIMON BRIDGES (National—Tauranga) 
 to the  
Minister for Treaty of Waitangi Negotiations 
: What recent progress has the Government made towards its aspirational goal of settling historical Treaty of Waitangi claims by 2014? 
Hon CHRISTOPHER FINLAYSON (Minister for Treaty of Waitangi Negotiations) 
: 
 On Saturday the Government signed a deed of settlement with Ngati Makino. The deed sets out commercial redress the return of culturally significant sites marae restoration and revitalisation and social service development. Ngati Makino’s claims relate to the New Zealand Wars and the Bay of Plenty confiscation the operation and impact of native land laws and the Crown’s land purchasing techniques as well as 20th century issues relating to public works and scenic reserve takings. 
Simon Bridges 
: What other progress has the Government made towards its aspirational goal of settling historical Treaty of Waitangi claims by 2014? 
Hon CHRISTOPHER FINLAYSON 
: On 12 March the Crown signed a deed of settlement with Ngati Rereahu in respect of the Maraeroa A and B blocks. Also in March the Crown signed a deed of settlement with Ngai Tamanuhiri in Turanga and initialled a deed of settlement with Ngati Manuhiri in Tamaki. Since the last election and with the support of the Maori Party the Government has reached almost 100 significant settlement milestones including 21 agreements in principle and 16 deeds of settlement. That represents great progress especially compared with the previous administration’s average of less than 1.5 settlements a year. [ 
Interruption 
] Because of the noise I will repeat that important figure. I think it is important that the House know that that figure was less than 1.5 settlements a year. 
Television Public Service Channels—Closure of TVNZ 7 
6. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Broadcasting 
: Does he agree with the  
New Zealand Herald 
 headline “Axe falls on last public service channel”? 
Hon Dr JONATHAN COLEMAN (Minister of Broadcasting) 
: 
 No. The subeditor might have done better justice to an otherwise excellent article by using the headline “Labour promised channel would be self-sustaining but had no plan for how that would happen”. 
Hon David Parker 
: How can that denial have any credibility given that the Television New Zealand chief executive at the Commerce Committee this morning conceded the  
New Zealand Herald 
 headline was correct? 
Hon Dr JONATHAN COLEMAN 
: Just as I am not responsible for the headline I am not responsible for what the chief executive says. 
Hon David Parker 
: Can the Minister confirm that he declined the request that TVNZ had made disclosed today at the select committee to get at least some direct funding to keep TVNZ 7 running and will he agree to release all of those proposals and all of the related correspondence? 
Hon Dr JONATHAN COLEMAN 
: I would be very happy to release the proposals because they ask for more Government funding which we just do not have. 
Hon David Parker 
: Is not the reason that those reports have not been released publicly until now that they embarrass the Government which has been widely criticised for privately subsidising TVNZ’s competitors through preferential deals on tens of millions of dollars’ worth of frequency licence fees but it will not support Television New Zealand? 
Hon Dr JONATHAN COLEMAN 
: That member might say that the Government is being criticised but we have also had a lot of support for our broadcasting policy. This quote: “we need a strong modern public media that crosses platforms is agile and does not require a bottomless pit of funding to prop it up.” came from Clare Curran the Opposition spokesperson on broadcasting. This quote: “For twenty years TVNZ has done what successive Governments told it to do; make money.” came from Brendon Burns. And I found this very good quote from very 2 days ago on Red Alert: “Let TVNZ— 
Mr SPEAKER 
: The member will sit down. How many times do I have to tell senior members—this applies to senior members—that when I get to my feet they sit down immediately. Those final parts of that answer were not required to answer the question. 
Hon David Parker 
: Is the Minister irked that his colleague Minister Joyce is subsiding TVNZ’s private competitors while he is having to cut public service TV? 
Hon Dr JONATHAN COLEMAN 
: I totally disagree with the premise of that question. 
Hon David Parker 
: Is not the other reason the Government is subsiding Television New Zealand’s overseas-owned competitors but withdrawing support for TVNZ’s public service functions that it makes TVNZ drop public services which is patently clear become more commercial and therefore easier to sell in the future? 
Hon Dr JONATHAN COLEMAN 
: That just sounds like a wild conspiracy theory to me. 
Roading Auckland—Victoria Park Tunnel Road 
Hon TAU HENARE (National) 
: 
 My question is to the Minister of Transport— 
Hon Shane Jones 
: “Tupperwaka”— 
Hon Tau Henare 
: How is Linda Lovelace these days? 
Mr SPEAKER 
: The House had better come to order. 
7. 
Hon TAU HENARE (National) 
 to the  
Minister of Transport 
: What progress has been made on the Victoria Park Tunnel road of national significance? 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. There is an amount of giggling here. We did not all hear Tau Henare’s interjection; I wonder whether you would like to repeat it. 
Mr SPEAKER 
: I am sure the House does not want me to repeat it. 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 Good news! I visited the Victoria’s Secret—sorry; Victoria Park construction site this morning and I am pleased to report to the House that Aucklanders will begin to benefit from the Victoria Park Tunnel in November this year well ahead of schedule. The $340 million Victoria Park Tunnel project will increase the capacity of State Highway 1 between the Auckland Harbour Bridge and Newmarket one of the country’s most important freight and commercial routes and the last major bottleneck of the central motorway junction. It is great to see that the whole programme will be completed in February 3 months earlier than planned. 
Hon Tau Henare 
: How has the Government’s commitment to infrastructure spending boosted confidence in the construction sector? 
Hon STEVEN JOYCE 
: The Government’s funding pipeline of $10.7 billion of State highway funding over 10 years has provided a secure funding pipeline which has given contractors the confidence to continue investing in their people and machinery and to complete projects more quickly. This has sped up the construction of a project that may in fact never have happened if the previous Government had cut back on its State highway funding as it had planned to do. I am pleased that this confidence is flowing through to a number of projects which are now being delivered even earlier than scheduled. Last week I announced that the Hobsonville motorway will be completed 6 months ahead of schedule. Last year the southbound part of the Newmarket Viaduct opened early and the Manukau Harbour crossing also opened early. 
Development Assistance—Shift in Primary Focus 
8. 
Hon MARYAN STREET (Labour) 
 to the  
Minister of Foreign Affairs 
: Why has the primary focus of overseas development assistance shifted from poverty elimination to sustainable economic development and can he assure New Zealanders that overseas aid is being delivered in accordance with the highest ethical standards? 
Hon MURRAY McCULLY (Minister of Foreign Affairs) 
: 
 I have said on many occasions that there is no debate about whether we want to alleviate poverty; the question is how do we alleviate poverty? With the finite resources available to us we need to make choices about the sort of assistance that is most likely to change the lives of aid recipients in a sustainable way. The Government’s approach to overseas aid should always be administered in a way that meets high ethical standards. 
Hon Maryan Street 
: Why is the New Zealand Government contributing to the building of a ski field in war-torn Afghanistan which is largely inaccessible to tourists and how many people are estimated to be lifted out of poverty as a result of this project? 
Hon MURRAY McCULLY 
: The New Zealand Government spends approximately $10 million a year on development assistance in Afghanistan. Most of that is centred on education and health but I am trying to ensure that we shift more of it into agricultural capacity-building and energy support. 
Hon David Parker 
: A ski field—a ski field! 
Hon MURRAY McCULLY 
: There is a small component that has been in the programme for the last couple of years that relates to tourism development around the Bamian area. It is part of an overall programme. 
Hon Maryan Street 
: How many jobs have been created in Niue as a result of the $78000 tourism development contract given without a tender process to former National MP Mark Blumsky and how many people in Niue have been lifted out of poverty through that initiative? 
Hon MURRAY McCULLY 
: The contract that Mr Blumsky has is as our high commissioner. It is a normal arrangement that is at the behest of the Minister. Before Mr Blumsky took up that contract as high commissioner he spent a period doing lead-up work on the development programme. 
Hon Member 
: Oh rubbish! 
Hon MURRAY McCULLY 
: But that is what the member is talking about. 
Phil Twyford 
: Did you tender it? 
Hon MURRAY McCULLY 
: I tell the member that the former Prime Minister Helen Clark took me aside when I was appointed to this role to discuss one issue that concerned her above all others. It was the state of the relationship with Niue. As a consequence this Government has put a good deal of effort into making sure we put in place a programme that will develop a tourism sector in that country. I report to the member that Mr Blumsky as our high commissioner is coordinating that programme in a most effective fashion. 
Hon Maryan Street 
: What reassurance can the Minister give that the appointment of sitting National MP John Hayes to the panel that disperses the contestable Sustainable Development Fund will not result in those funds being allocated to National Party cronies? 
Hon MURRAY McCULLY 
: I assure the member that the funds will be tendered for by non-governmental organisations not by cronies of either the Labour Party or the National Party. As far as the chairman of the Foreign Affairs Defence and Trade Committee is concerned I have revived a practice that was initiated by Sir Donald McKinnon my august predecessor in the 1990s. I am informed that a range of senior members of the Foreign Affairs Defence and Trade Committee have sat on the panel that administers the funds including I am told the current Minister of Defence in his capacity as a former member of the select committee. I think it is good practice to have a senior person on such a panel. In Mr Hayes’ case we have a former diplomat. He was in charge of the Pacific division of the ministry and of the overall aid programme and is a former ambassador to Tehran and a former High Commissioner in Papua New Guinea in which capacity he brokered the Bougainville accords. I cannot think of anyone who is better qualified to judge these matters than Mr Hayes. 
Trade New Zealand - United States—Mutual Recognition Arrangement and Secure Exports Scheme 
9. 
MELISSA LEE (National) 
 to the  
Minister of Customs 
: What progress has been made to facilitate trade between New Zealand and the United States? 
Hon MAURICE WILLIAMSON (Minister of Customs) 
: 
 I have very good news for the House. Just recently an exchange of letters was signed between our ambassador in America Mike Moore and the head of United States Customs and Border Protection Alan Bersin. The extension of the mutual recognition means that New Zealand exporters who are involved in what we call the Secure Exports Scheme will be exempt from a whole range of America’s import inspections. It means that those companies will be about three and a half times less likely to be inspected. The real benefit is that New Zealand is the only country in the world to have this special arrangement. It means we will not only be able to keep our communities safe but also allow our exporters to go about secure and efficient trade between the two countries. 
Melissa Lee 
: What benefits does the agreement give to New Zealand Secure Exports Scheme exporters to the United States? 
Hon MAURICE WILLIAMSON 
: As I said New Zealand is the only country in the world to have the arrangement with the United States which is a first. I am really pleased. The arrangement is that if our companies—and there are a lot of New Zealand companies; they export about $1350 million to the United States—have joined the Secure Exports Scheme prove they have secure channels and make sure the containers leaving their base have been properly packed inspected and sealed then they will be given very special treatment. The agreement means they will be able to enter the United States rapidly and be way less subject to inspection than companies from any other country. 
State-owned Enterprises—Risk to Crown in Holding Shares 
10. 
Hon TREVOR MALLARD (Labour—Hutt South) 
 to the  
Minister of Finance 
: What are the risks to the Crown in holding State-owned enterprise shares that he was referring to when he gave evidence to the Finance and Expenditure Committee in February 2011? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I recall raising the issue of risks in the context of a discussion about the Government bond rate and the return on State-owned enterprises. The Crown faces the same range of risks as any owner of any commercial company: the need to change prices; fluctuating demand for their product; changes in costs such as the changes in the oil price at the moment; changes in the exchange rate; competing against better technology; and changes in the supply and demand of the products they buy and the products they sell. They are all risks of owning a commercial company. 
Hon Trevor Mallard 
: When he referred to the risk both then and today does he regard the risk profile of the assets as positive or negative? 
Hon BILL ENGLISH 
: It is not a matter of whether it is positive or negative; it is whether it is in a technical sense properly priced. The benchmark is what the Government borrows money at which is 6 percent. When we own companies we expect to make a return of higher than 6 percent to reflect the fact that there are more risks in running a company than in lending to the Government. 
Hon Trevor Mallard 
: Does he therefore think an average 17.5 percent total return over the last 5 years is a reasonable return for this type of asset? 
Hon BILL ENGLISH 
: I will make a couple of comments about that. The first is that those returns are based in some of those years on dubious valuation methods. Secondly if the returns were actually 17 percent based on sound commercial valuations those returns would look excessive. But the previous Government allowing electricity prices to rise by over 70 percent in 8 years might explain why they made such big returns. 
Hon Trevor Mallard 
: Pursuant to that supplementary answer is it therefore his view that the energy company assets are overvalued in the Crown accounts? 
Hon BILL ENGLISH 
: Those are matters of some contention; different people have different views about the valuations. What we do know is that the Government is proposing a mixed-ownership model where a lot of those issues would be determined by the market rather than by politicians. 
Student Services Levies—Legislative Reform 
11. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister for Tertiary Education 
: What changes is the Government making to ensure student services levies are fairer to students? 
Hon STEVEN JOYCE (Minister for Tertiary Education) 
: 
 I announced last week that the Government intends to seek to pass legislation shortly to ensure that large unjustified increases in compulsory non-academic student levies become a thing of the past. The legislation will give power to the Minister for Tertiary Education to require institutions to consult students on the charges and the range of services provided. Over the past few years we have seen a trend emerge where levies have increased in some institutions by as much as 400 percent in a single year. I cannot accept that these exorbitant increases reflect a commensurate increase in services offered. 
Mr SPEAKER 
: I call David Shearer. Oh I beg the member’s pardon. I have called David Shearer not Peseta Sam Lotu-Iiga for the first supplementary question. That is most unusual and I apologise to the member for my mistake. 
David Shearer 
: Does the Minister agree with the University of Canterbury vice-chancellor Rod Carr that the reason student levies have increased so dramatically in recent years is that students are getting “a crap deal” from the Government which is refusing to fund higher education at the levels it should? 
Hon STEVEN JOYCE 
: No I do not agree with that comment at all. In fact New Zealand has one of the most generous student support systems in the world. In New Zealand we pay 75 percent of the tuition fees for students; we subsidise a student loan scheme which writes off about 45c in the dollar for every student; and we pay student allowances to many students as well. It is the most generous system in the world. 
Peseta Sam Lotu-Iiga 
: What plans does the Government have to ensure accountability by tertiary institutions in the setting of the types of student services provided? 
Hon STEVEN JOYCE 
: Institutions will be required to consult students on the range of services provided and report on how they have spent the levies. They must state what services the levies provide account transparently about their expenditure consult students on the expenditure and publish clear expectations in their annual reports. I am concerned that the cost of what can only be described as poor services has sometimes been passed on to students when the costs of these services should have been included in the tuition fees paid by the students. The Government as I said earlier funds 75 percent of the cost of tuition on average for students and I intend to ensure that students and taxpayers get the benefit from that funding. 
David Shearer 
: How will “ensure greater involvement of students in decision-making” as the bill says be achieved when students associations which the providers will be dealing with will be degraded and possibly destroyed by the Education (Freedom of Association) Amendment Bill which his Government is supporting? 
Hon STEVEN JOYCE 
: They can be degraded or destroyed only if students do not value the services they provide. That is the challenge with that particular assertion. But the universities and other institutions will have the responsibility to consult their student bodies and I imagine that will include the students associations. 
Food and Nutrition Guidelines for Healthy Children and Young People 
—Minister’s Support 
12. 
GRANT ROBERTSON (Labour—Wellington Central) 
 to the  
Minister of Health 
: Does he support the  
Food and Nutrition Guidelines for Healthy Children and Young People 
 produced by the Ministry of Health? 
Hon Dr JONATHAN COLEMAN (Associate Minister of Health)  
on behalf of the  
Minister of Health 
: The  
Food and Nutrition Guidelines for Healthy Children and Young People  
is in draft and has been out for public consultation which closed on 13 December. The ministry is considering the 44 submissions to the consultation document and the Minister expects to receive advice from the ministry later this year. The new guidelines will be published once they have been finalised. 
Grant Robertson 
: What is his response to Lisa Williams from Timaru who has to spend $180 a week for her family to meet the guideline of eating five servings of fruit and vegetables a day which she says is out of reach for her family? 
Hon Dr JONATHAN COLEMAN 
: The Minister’s response would be that if the member wants to look at the history of food prices in Labour’s last year in Government inflation hit 5.1 percent yet food prices went up by 11 percent. Over the tenure of the Labour Government food inflation overall was 36 percent. That person has to look back at the history to really understand the problem. 
Grant Robertson 
: Does he agree with the findings of the study by the Wellington Regional Public Health Service that shows that a family supported by a minimum-wage earner would need to spend more than 50 percent of their income after rent to give their family a healthy diet—a figure that puts them into the globally recognised category of being in food stress? 
Hon Dr JONATHAN COLEMAN 
: I would have to read the study because frankly I do not have any faith that the member has reported those findings in context. I would be happy to be sent a copy of it. 
Grant Robertson 
: Does he accept that the cost of healthy food is putting it out of the reach of many New Zealanders as the cost of living soars; if so what specific actions will his Government undertake to ease pressure on New Zealand families? 
Hon Dr JONATHAN COLEMAN 
: Look this is a long-term issue. We know that many New Zealand families are having difficulties but a lot of this problem started under that member’s Government and we have been left with the task of clearing up the mess. 
Grant Robertson 
: What is the point of issuing guidelines for healthy eating for young people if his Government is not prepared to step up and take specific actions to reduce the cost of living? 
Hon Dr JONATHAN COLEMAN 
: That member needs to pay attention to the detail. The guidelines have not been issued; they have been put out for consultation. We will be responding when we have considered the advice and submissions. 
Te Ururoa Flavell 
: Does he agree with the statement on page 114 of the guidelines that “Access to safe and healthy food will influence nutrient intakes.” of Maori tamariki rangatahi and their whanau and does he agree that supporting the Maori Party’s policy to remove GST from healthy foods would make healthy foods more accessible for young Maori; if not why? 
Hon Dr JONATHAN COLEMAN 
: The Minister has made the Government’s position on the guidelines very clear and of course the member will know the Government’s position on GST. 
Grant Robertson 
: I seek leave of the House to table the report from the Wellington Regional Public Health Service entitled  
Food Costs for Families 
 which shows that a family with a minimum-wage earner will need to spend 50 percent of their income to get a healthy diet after paying rent. 
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. 
Appointments 
Abortion Supervisory Committee 
Hon SIMON POWER (Minister of Justice) 
: 
 I move  
That pursuant to sections 10 and 11 of the Contraception Sterilisation and Abortion Act 1977 this House recommend His Excellency the Governor-General reappoint Professor Dame Linda Jane Holloway of Dunedin and Reverend Patricia Ann Allan of Christchurch as members of the Abortion Supervisory Committee and appoint Dr Tangimoana Frances Habib of Hamilton as a member of the Abortion Supervisory Committee each for a term of three years from the date of appointment and appoint Professor Dame Linda Jane Holloway as Chairperson of the Abortion Supervisory Committee. 
The Abortion Supervisory Committee is constituted under section 10 of the Contraception Sterilisation and Abortion Act and consists of three members one of whom is appointed as chairperson. Two of the members must be medical practitioners. Members are appointed by the Governor-General on the recommendation of the House of Representatives for a term of 3 years and they may be reappointed. At the expiry of the term of appointment members continue in office under section 11(5) of the Act until reappointment or the appointment of a successor. The powers of the committee are not affected by any vacancy in its membership. The committee has the responsibility of reviewing all provisions of abortion law in New Zealand and the operation and effect of those provisions in practice. That includes licensing institutions for the performance of abortions and appointing certifying consultants to authorise abortions. 
The terms of appointment for Professor Dame Linda Holloway Rev. Patricia Allan and Dr Rosie Fenwicke expired on 17 June 2010. Dame Linda and Rev. Allan confirmed their availability for reappointment and I agreed to put this process on hold until a successor to Dr Fenwicke was identified so that all three appointments could be processed together. I take this opportunity to thank Dr Fenwicke for her contribution to the committee. 
Dame Linda Holloway previously pro vice-chancellor of health sciences at Otago University is a highly respected health professional who was made a Distinguished Companion of the New Zealand Order of Merit in 2005 in recognition of a career dedicated to health science. She is currently a part-time fellow in the department of pathology at the school of medicine at Otago University. She is a specialist anatomical pathologist who earlier in her career worked in rural general practice. Her major area of research interest has been respiratory disease and perinatal pathology. She was one of the advisers to Dame Silvia Cartwright during the inquiry into the treatment of cervical cancer at National Women’s Hospital. Dame Linda has served one term as chairperson of the committee. 
Rev. Patricia Allan has held a number of governance roles in the Methodist and Anglican churches and has been involved in social service or ministry roles in Christchurch and on the West Coast for over two decades. She was awarded the New Zealand Suffrage Centennial Medal by the Queen for her community work on the West Coast. Rev. Allan is a member of the board of the McLean Institute which is a charitable trust and has established her own consultancy business as a facilitator and mentor. She is a registered nurse and also holds a licentiate of theology. Rev. Allan has served one term as a member of the committee. 
Finally the Government is proposing the appointment of Dr Tangimoana Habib to replace Dr Fenwicke. Dr Habib is of Ngati Tuwharetoa descent and currently works as a general practitioner for Te Kohao Health Ltd in Hamilton. Te Kohao Health is based in an urban marae and serves a mainly Maori population with strong links into the community through a variety of programmes. Dr Habib also runs a satellite clinic in another high-needs area of Hamilton. Since 2000 Dr Habib has been involved in Te Ohu Rata o Aotearoa (Te ORA) the Maori Medical Practitioners Association and she has been a member of Te Akoranga a Maui the Maori faculty of the Royal New Zealand College of General Practitioners since its inception in 2002. In 2003 Dr Habib was awarded a fellowship of the Royal New Zealand College of General Practitioners. She served on the college’s council in 2005 and 2006 and is the continuing medical education provider for Te ORA. In addition Dr Habib has been a general practitioner registrar trainer and is on the Royal New Zealand College of General Practitioners board of assessment and a new board established to provide governance in the education and examination of general practitioners. 
All of the appointees are obviously very capable. They will bring a balance of knowledge and experience to the committee. 
CHARLES CHAUVEL (Labour) 
: 
 As the Minister of Justice said the Contraception Sterilisation and Abortion Act 1977 requires there to be an Abortion Supervisory Committee. Section 10 provides that it is to have three members two of whom are to be medical practitioners and that those members are to be appointed by His Excellency on the recommendation of the House. Under section 11 of the Act the members of the supervisory committee are to hold office for up to 3 years. 
The Minister’s motion on the Order Paper proposes the reappointment of Professor Dame Linda Jane Holloway of Dunedin and the Rev. Patricia Ann Allan of Christchurch to the committee. Professor Holloway is to be chairperson of the committee and an additional member Dr Tangimoana Frances Habib of Hamilton is proposed to be appointed. As we have heard from the Minister Dr Habib is proposed to replace Dr Rosie Fenwicke and I would like to take this opportunity now to acknowledge the service of Dr Fenwicke on the supervisory committee over the period of Dr Fenwicke’s term. 
I will say one or two words about the Contraception Sterilisation and Abortion Act. It is a poorly drafted Act. It is antiquated. Litigation over its provisions has been frequent especially in recent years. The legislation contains what to a contemporary ear are offensive terms—for example the title of section 4 “Administering Contraceptives to Mentally Subnormal Females”. It is widely agreed that the legislation needs to be modernised and administered as a health statute rather than a justice one which was the paradigm at the time in 1977 when the legislation was framed. I certainly personally welcome an updating of the law and I hope to see that some time during my service in this House. 
Meanwhile I congratulate Professor Holloway and Rev. Allan on what is effectively a thankless task: embarking on service on the Abortion Supervisory Committee. I confirm on behalf of the Labour Opposition that our members were consulted some time ago by the Minister as to his proposed nominees on both the reappointments and the fresh appointment of Dr Habib. The Opposition knows of no reason to object to the appointment and the reappointments that have been proposed. Although as is the tradition members on the Labour side will have a conscience vote as to the names proposed given the consultation from the Minister and the lack of any knowledge of objection to the qualifications of the persons proposed I anticipate that there will be widespread support on this side of the House for the names proposed. 
I am told that there may be another name floated in the debate. If that is the case then I can confirm that there has been no consultation with the Labour Opposition over any such name. I would be surprised if members on this side of the House were to support any such late nomination in the absence of such consultation. 
GARETH HUGHES (Green) 
: 
 The Green Party wishes to take a brief call in support of the Abortion Supervisory Committee appointments: Professor Dame Linda Holloway and the Rev. Patricia Ann Allan who have been nominated for reappointment and Dr Tangimoana Habib who has been nominated as a new appointment. Those women have a very responsible job under section 14 of the Contraception Sterilisation and Abortion Act 1977. This job includes licensing institutions and certifying consultants. I will not outline all the responsibilities under section 14. Suffice it to say that as well as other duties the committee has a reporting function and its reports are carefully studied by the protagonists on all sides of the debate. 
The Green Party has no reason to challenge the existing members of the committee and from what we have been able to judge the new nominee has a strong background in vital issues—notably improving Maori health status particularly in terms of breastfeeding. We are hopeful that her concerns about whanau and the well-being of mothers and children will assist the committee in its work. 
A percentage of people will always oppose abortion from their ethical perspective. However there are other ethical perspectives and human rights issues to be addressed and the supervisory committee plays a vital leadership role on this issue. More information and safe options for contraception are essential and it is fitting that those professional women continue the important work of the 1977 Act. The Green Party caucus members are unanimous in supporting this motion. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 I move  
That the motion be amended by omitting “Reverend Patricia Ann Allan of Christchurch” and substituting “Dr Ate Moala of Wellington”. 
 I say from the outset that the issues associated with abortion are absolutely essential to any understanding of w’anau well-being and w’anau ora. The protection and preservation of w’akapapa of genealogy are fundamental to the growth and health of our w’anau. 
I think about the precious heartbeat of every child. I think about the comment that Ngati Whatua leader Naida Glavish once made—that there is no such thing as an unwanted mokopuna. I contrast that comment with the statistics that tell me that in the last 5 years close to 100000 babies have been aborted—more than twice the population of my home city of Wanganui. 
The Maori Party was pleased to support Dr Tangimoana Habib when her appointment was first proposed. Tanigmoana who is of Tuwharetoa w’akapapa is a Fellow of the Royal New Zealand College of General Practitioners and currently works as a general practitioner in practice at Te Kohao Health in Hamilton as well as running a satellite clinic in another high-need area of Hamilton. She has been involved in Te Ohu Rata o Aotearoa (Te ORA) the Maori Medical Practitioners Association since 2000 and has been a member of Te Akoranga a Maui the Maori faculty of the Royal New Zealand College of General Practitioners since its inception in 2002. She is the continuing medical education provider for Te ORA and is also a general practitioner registrar trainer. But perhaps her greatest qualification is her lifelong proven commitment to improving the status of Maori health. 
We are very pleased to support her appointment to the Abortion Supervisory Committee particularly given the concern we have for maintaining the health and well-being of mothers children and the greater w’anau at any time in which health issues occur. When I was involved back home with Te Oranganui Iwi Health Authority we always insisted that any young woman seeking advice of a sexual and reproductive nature be supported with the wisdom of elders of kuia whom we had arranged to work with us. The thinking for us was that sexual and reproductive health is never about just biomedical or clinical matters. It is about mauri the life force. It is about wairuatanga the spiritual dimension. It is about ira tangata the ongoing genealogical connections found in our w’akapapa. So we welcome the opportunity for Tangimoana to bring issues associated with Te Ao Maori to the debate. We also support Professor Dame Linda Holloway as chair of the Abortion Supervisory Committee. 
We believe that our amendment today strengthens the representation on the committee to take account of the particular needs of Pacific families. Dr Ate Moala is of Tongan descent. She has a distinguished background in Pacific health and in particular health related to the family. She is the clinical director of Pacific orthopaedics in Wellington. She is a Fellow of the Australasian Faculty of Public Health Medicine and has particular experience in working with Pacific communities on a range of health issues including breast cancer immunisation asthma and healthy lifestyles. She is a board member of the Pacific Health Research and Development Foundation Trust and a former president of the Pasifika Medical Association of New Zealand. 
We all know that culture counts. We believe that different cultural frameworks are vital in helping all New Zealanders to see health in a holistic way. In terms of my amendment we consider it crucial that the issues of Pacific families are considered when coming to such a sensitive issue as abortion. 
Dr Ate Moala was previously in 2007 put forward as a nomination to the Abortion Supervisory Committee in order to add value to the cultural competency of the committee and strengthen the composition and professional knowledge available to the committee. We hope 4 years on that wisdom will prevail and that we will see an Abortion Supervisory Committee that represents the breadth and diverse strength of Pasifika populations alongside tangata w’enua and other populations. 
We have a most solemn duty in the House to ensure that we act in the Chamber in ways that enhance the health and well-being of all of our people. I hope my amendment will help us all to do that. 
The ASSISTANT SPEAKER (Eric Roy) 
: The question is that the amendment be agreed to. Are any further members seeking the call? We need a copy of the amendment to be tabled and signed. 
Hon Tariana Turia 
: Sorry Mr Assistant Speaker. After the vote on voices can I call for a personal vote? 
The ASSISTANT SPEAKER (Eric Roy) 
: The member firstly needs to table the amendment and we have not had that done yet. We will then follow process. I will wait for the amendment to be tabled before the Clerk. It is in order and there are no further amendments. I will put the question on the amendment. The question is that the amendment be agreed to. Given that there is an amendment to the motion I declare that there will be a personal vote. 
Hon RICK BARKER (Senior Whip—Labour) 
: 
 I raise a point of order Mr Speaker. Not all members are in the House and this amendment has come at a very very late stage. It is so late in fact that the amendment had not been signed or put on the Table when the member had finished speaking. Not all members will be entirely clear about the situation so I want you in order to assist members to read into the record exactly what is happening now and who is voting for what so that members are clear about how to vote. I do not want to stymie this by taking objection to it but I have to say that this is poor process. 
The ASSISTANT SPEAKER (Eric Roy) 
: I will make this very clear. An amendment has been moved by the Hon Tariana Turia to omit the words “the Reverend Patricia Ann Allan of Christchurch” and substitute the words “Dr Ate Moala of Wellington”. That is the amendment that the House will now vote on and it is a personal vote. 
A personal vote was called for on the question  
That the motion be amended by omitting “Reverend Patricia Ann Allan of Christchurch” and substituting “Dr Ate Moala of Wellington”. 
Ayes 31 
Ardern S (P) 
English (P) 
Katene (P) 
Shanks 
Auchinvole (P) 
Finlayson (P) 
Lee 
Sharples (P) 
Bakshi (P) 
Flavell 
Lotu-Iiga 
Tisch 
Blue 
Gilmore 
Macindoe 
Turia 
Borrows 
Goodhew  
McClay 
Woodhouse 
Bridges (P) 
Goudie (P) 
Parata 
Young 
Carter J 
Guy 
Quinn (P) 
Teller: 
Dean (P) 
Heatley (P) 
Roy E (P) 
Henare 
Noes 67 
Barker 
Dunne 
Lees-Galloway 
Ross 
Beaumont 
Faafoi 
Locke 
Roy H 
Bennett D (P) 
Foss (P) 
Mackey 
Ryall (P) 
Bennett P 
Graham 
Mallard 
Sepuloni 
Boscawen 
Groser (P) 
Mapp (P) 
Smith L (P) 
Brownlee (P) 
Hague 
McCully (P) 
Smith N (P) 
Calder (P) 
Harawira 
Nash 
Street 
Calvert 
Hodgson 
Norman 
te Heuheu (P) 
Carter C 
Horomia 
O’Connor 
Tolley (P) 
Carter D (P) 
Hughes G 
Parker 
Tremain 
Chauvel 
Huo 
Peachey (P) 
Turei 
Clendon 
Hutchison 
Pillay 
Twyford 
Coleman (P) 
Jones 
Power 
Wagner (P) 
Cunliffe 
Joyce (P) 
Prasad 
Wilkinson (P) 
Davis 
Kedgley 
Ririnui 
Williamson 
Delahunty 
King A 
Robertson G 
Teller: 
Douglas 
King C (P) 
Robertson R 
Fenton  
Abstentions 1 
Adams (P) 
Amendment not agreed to. 
The result corrected after originally being announced as Ayes 31 Noes 70 and Abstentions 1. 
Motion agreed to. 
Third Readings 
Hon SIMON POWER (Minister of Commerce) 
: 
 I move  
That the Financial Markets Authority Bill the Securities Amendment Bill (No 3) the Securities Markets Amendment Bill (No 2) the KiwiSaver Amendment Bill the Financial Advisers Amendment Bill (No 3) and the Securities Trustees and Statutory Supervisors Bill be now read a third time 
. The passing of these bills marks the completion of a significant part of the Government’s programme of reform of New Zealand’s financial markets and I would like to take the opportunity to comment on the most important changes made by these bills. 
The Financial Markets Authority Bill establishes the new Financial Markets Authority which will replace the Securities Commission and take on responsibilities of the Government Actuary and some of the regulatory roles of the Registrar of Companies. The main objective of the Financial Markets Authority is to promote and facilitate the development of fair efficient and transparent financial markets. The Financial Markets Authority will act as the single market conduct regulator for New Zealand’s financial markets introducing a culture of visible proactive and timely enforcement. An important regulatory tool that the authority will have is the power to exercise a person’s right of action where this is in the public interest. 
Amongst other things this will enable the Financial Markets Authority to take action in order to pursue directors for breaches of their duties under the Companies Act 1993. I look forward to working with the authority’s inaugural board whose members I announced earlier this week. They bring exactly the right mix of expertise and governance experience to the authority. 
The Securities Trustees and Statutory Supervisors Bill implements a licensing regime for trustees and statutory supervisors of issuers and importantly retirement villages. The new regime will require trustees and statutory supervisors to be capable and to perform their functions effectively. It will also enable the authority to hold them accountable for any failure to act in accordance with their obligations. During the Committee stage specific commencement dates were inserted into the bills to the effect that the Financial Markets Authority will be established on 1 May 2011 and the new trustees and statutory supervisors regime will come into force on 1 October 2011. I am pleased that these urgent pieces of work will be in force in a timely manner. 
I would like to take this opportunity to thank the members of the Financial Markets Authority establishment board—in particular the chairman Simon Botherway and also Paula Rebstock Bruce Sheppard Shelley Cave Andrew Harmos Frank McLaughlin Scott St John Mariette van Ryn and Neville Harris who have been working on the operational establishment of the authority. They have done an outstanding job and have ensured that the new authority will be up and running nearly a year to the day after I publically announced that the Government was going to set up a new financial market conduct regulator. 
I would also like to thank officials for their extremely hard work in what could be considered short time frames and of course the Parliamentary Counsel Office for its hard work on these bills. I would also like to acknowledge the contributions of financial markets participants who provided comments on the bills. These bills constitute essential steps in restoring investor confidence in New Zealand’s financial markets. A major focus of this Government has been to ensure we are putting in place a regulatory framework that will give investors confidence in our markets. These bills represent significant achievements in that regard. I am very proud to commend these bills to the House. 
Hon DAVID PARKER (Labour) 
: 
 The Labour Party supports these bills. I accept what the Minister of Commerce says which is that this suite of bills is probably the largest work programme that the Government has had running and I congratulate the Minister on that. 
It causes me to reflect though that at a time when New Zealand is in an economic malaise and when the promises on which the Government was elected—closing the wage gap with Australia causing a step change in the New Zealand economy and leading us towards a bright future—are not being met the largest work programme that the Government can show after 2½ years going on 3 years relates to the regulation of financial markets. I think it perhaps highlights the fact that the Government has lacked an overall credible plan for the development of the New Zealand economy. 
I am not denying the importance of financial markets and I am not denying the need to tidy up the regulation of financial markets particularly given the failures of finance companies. Those finance companies were effectively allowed to get away with poor practice for too long and they caused innocent investors to make unwise investment decisions in part because investors were not properly informed about the risks they were taking and in part because there was insufficient regulatory oversight of poor practice and of related party transactions for the benefit of some of the owners of those finance companies. There were a number of other misdeeds including I am sad to say those by people who had prior form in earlier incarnations. The regulators should have had an eye on them. So there is no denying that there was a need for regulatory reform but the more pressing issues that face the economy are how to grow it. 
Although I am happy with most of the detail of these particular instruments to improve the regulation of our financial market I have no confidence that they will make a material difference to the growth in the New Zealand economy. It does not make much difference to the growth in new exports that our country so desperately needs. It does not produce many more jobs. There might be the occasional extra job in the Government service but that is hardly the sort of outcome that the Government has said it wanted to be judged upon. 
I think the fact that we are considering this large suite of bills described by the Minister as being one of the largest work programmes of the Government just highlights the fact that the Government has not really had a credible plan in respect of the problems that the economy faces more generally. 
I know that the Government has had some problems as a consequence of the Christchurch earthquake and those problems are not the Government’s fault. But it is not right to say that those problems arising from the Christchurch earthquake are the underlying source of most of the problems that the Government faces. Those problems are of the Government’s own making. The fact that those problems are not getting better in the way that was promised and are not getting better relative to how other countries like the United States and the United Kingdom are performing proves the point I think that the Opposition has been making: the Government does not have a credible plan. 
While we are talking about major things the Government has done the other big thing the Government says it has done in its view is to make changes to the tax system. Those changes to the tax system stripped bare have not really done much. The change to GST from income tax for low and middle income people is still effectively a tax upon their labour. They earn their money through their wages and salaries and they have to spend it when they go to the grocery store when they pay their mortgage or rent or when they buy clothes. GST is effectively a tax upon their earnings—a tax upon their labour. 
The only people for whom this switch from income tax to GST makes a substantial difference are the very high-income people who received a big income tax cut and do not pay as much extra GST as they received in their income tax cuts. Rather than it being a tax switch across the board it has been only a change from a tax upon income to a tax upon consumption for the very highest earners in a material way. They of course received more in income tax cuts than they will incur in extra GST costs. Stripped bare the effect of the tax changes by the National Government was to increase the proportion of tax paid by low and middle income people and decrease the proportion of total tax paid by higher-income groups. 
Again this brings us back to the theme that I was developing earlier. In terms of economic plans the Government’s plan has been too narrow. It has a focus on income tax cuts rather than on a broader suite of measures that are needed to grow the economy. That is one of the things that the Labour Party says is different about our polices compared with National’s policies. We see that economic policy is broader than tax policy. 
There has been a real failure of leadership in respect of savings. I can see Sir Roger Douglas in the House. He was a leader on New Zealand’s savings policy going back to the Kirk years. He knows that New Zealand needs deeper capital markets to improve the productivity of our output. Financial markets actually touch upon that so I concede to the Minister that these instruments to the extent that they improve public confidence in capital markets make a small difference to the depth of our capital markets. But it is not nearly as big a change to the depth of capital markets as a decent savings policy would make. 
Of course the Government criticises the previous Labour Government for overseeing an increase in private debt. At a time when private debt was rising around the Western World New Zealand was not immune from that affliction. Labour when in Government pushed against that increase in three ways: we contributed to long-term public savings through what is colloquially called the Cullen fund to save for future superannuation and to make that sustainable; we ran surpluses every one of which was opposed by National now in Government which said that we should have had tax cuts but that would have further fuelled property bubbles and private debt levels; and we introduced KiwiSaver which of course National undermined as soon as it came into office. 
I find it surprising that in respect of this absence of adequate political leadership on economic matters the Government is now saying the focus of this year’s Budget will be to improve savings and investment in New Zealand when for the first 2 years the Government virtually ignored it. It belatedly set up an advisory group despite the fact that National had 9 years in Opposition to plan decent policy around savings. After 2 years in Government it found that it was being criticised for its absence of vision when it came to adequacy of capital markets in New Zealand and thin savings compared with Australia and belatedly set up an advisory group to tell it some of the things it might consider. 
The Government took a lot of the things that needed to be considered off the agenda and effectively forced the committee to work with one hand tied behind its back so it is not as fulsome or as balanced a report as it might have been. Again it shows that the Government has been bereft of an adequate vision; we see this reflected in the fact that the unemployment rate is vastly higher than what it inherited the gap with Australian wages continues to grow ever larger and the promised step change in the economy has yet to occur. In fact if we were not in a double-dip recession now we would be close to that reality particularly given that some of the more negative records were in an office in Christchurch that Statistics New Zealand could not access. 
Although these bills will be favoured by Labour we said yesterday that in respect of some of the securities changes we would have preferred to see the legislation’s third reading delayed. We think there is an argument that we need to wait on one of the other documents that the ministry is working on upon which we expect public comment. Although it was necessary to improve the regulation of finance companies and the like we are at risk of over-regulating private capital raising by small corporates that are trying to raise money for expansion. For example an innovative firm that wants to embark upon exports ought not to be prevented from effectively accessing retail equity markets for equity investments into their companies by rules and regulations that are overly prescriptive and overly expensive to comply with relating to prospectuses and the accounting rules that apply under them. 
In terms of further work that needs to be done I have a view that the financial accounting standards and reporting standards have become far too complex in New Zealand. They have become so complex that most people even if they are experienced business people cannot understand them. They need professional advice to properly read them or need an hour or two to read what ought to be digested in half an hour. That needs to be fixed. 
Hon Simon Power 
: Help is on the way. 
Hon DAVID PARKER 
: Well that is good because I am a little tired of some of the accounting fraternity saying that we must have lower compliance costs when they are the cause of a greater increase in compliance costs in respect of accounting standards and audit rules than is the case for many other sectors of compliance costs. 
I would like to see some progress made in that area because it is absolutely fundamental to the growth of those new export sectors. I am not talking so much about the expansion of existing sectors like the agricultural sector important though those are; I am worried that New Zealand has an unnecessary hindrance upon the ability of small innovative businesses to grow as they try to expand into export markets through the compliance costs and impediments put upon their capital raisings when they are trying to raise funds for their next stage of expansion. 
I think most New Zealanders would rather go back to a period where we had some rather simple descriptions of the risks that they were facing when they made those sorts of investments. The most they can lose is the amount of their investment obviously. They need a fair description of the risks that are set out for them; more often than not the financial projections of those high-risk early venture companies are effectively bereft of detail anyway because they are so high-risk that investors do not really know what they will be able to achieve. If people are willing to invest upon that basis—and I know that people are on occasions willing to support those nascent enterprises—then we should be helping that happen rather than putting too many roadblocks in the way. We cannot avoid all risk for people; as long as risk is appropriately described we ought not to overlay that with lots of mumbo-jumbo as we currently do. 
I was shown recently by a mentor of mine a prospectus for the floating of Radio Otago which eventually became a very big public company. It was effectively a 5-page document that described what was proposed and what the risks were. The financial projections were very very simple and could be understood by people. We know that the complexity of some of the rules relating to financial disclosures were both incomprehensible for people and did not protect us from the greed and the poor behaviour of the big financial institutions who were the cause of most of the problems anyway. The little person trying to raise half a million dollars to expand a small company has not been the cause of the big losses in the international arena; it has actually been complex derivative transactions that have been promulgated by the biggest banks and insurance companies in the world. 
Although these bills are supported by the Opposition in respect of some of the securities changes as we said we would have preferred them to be put on the back-burner for a little while in order to wait for this other discussion document to be commented upon. But we congratulate the Minister on a lot of hard work. I know that the members of the Commerce Committee—I was in it only at the end so I am not claiming credit for this—put in a lot of work. Submitters included the professional societies of the accountants and the Law Society. They put a lot of work into their submissions to help the country have better legislation. I think in the end we have got to a reasonable result for which everyone can take a bit of credit. Labour supports these bills. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 I also rise to support these amendment bills and in particular the Financial Markets Authority Bill the KiwiSaver Amendment Bill and the Securities Trustees and Statutory Supervisors Bill. Unlike the previous speaker my learned colleague Mr Parker I believe these bills will make a difference. They will make a difference to the confidence and trust in our financial markets and in our capital markets. This is about restoring some of the confidence in our capital markets that has been knocked out of investors—both mum and dad investors as well as institutional investors—because of the finance company failures that we have seen in recent years. 
When we talk to businesses in the electorates particularly in my electorate of Maungakiekie we hear that it is about accessing capital. It is about the exchange rate and the costs of production. This legislation with its focus on bringing together the powers of regulating capital markets and financial markets will make a difference to our capital markets. It will boost economic growth and create jobs and it will provide for a stronger economy through strong and robust financial markets. 
As has already been stated by the Minister of Commerce the bill makes changes to the functions duties and powers of the regulating body. I want to acknowledge at this point the work of my colleagues on the Commerce Committee. There was quite a bit of work. We seem to have worked on securities legislation over the whole 2½ years we have been in Parliament. But it has been rewarding. With the work of the stakeholders of the industry particularly the professional bodies that came in to submit and with the hard work put in by the officials I think we now have pretty good legislation here. 
This legislation is about ensuring that the new Financial Markets Authority has the right tools. One tool I want to talk about in particular just briefly is the power for the Financial Markets Authority to exercise the person’s right of action. We have seen through the finance company failures that the rights of individuals to take on companies that have failed the directors of those companies and the promoters of those companies has been quite limited. Investing in the regulatory body the power to exercise not just the right of the individual but the rights of companies to take actions in these instances is a positive move and is one that has been embraced by a number of bodies throughout the industry. 
I will also touch on the part of the legislation dealing with securities trustees and statutory supervisors. It is about granting licence applications and receiving mandatory reports from licensed trustees and statutory supervisors. There is a degree of accountability and a degree of transparency from those who have been given the responsibility of oversight of the issuance of securities through the securities legislation. This is positive legislation and it has received widespread support throughout this Parliament. On that note I commend it to the House. 
CHARLES CHAUVEL (Labour) 
: 
 I will say a few words on the third readings of these bills. First of all really I echo the comments made by my friend and colleague David Parker who found it somewhat ironic that notwithstanding the difficult economic conditions the country finds itself in we are now in the words of the Minister of Commerce nearing the conclusion of the Government’s largest package of economic measures to be passed in this Parliament. It is telling that those measures relate to the regulation of financial markets rather than to the stimulation of the economy—a real missed opportunity as far as current circumstances are concerned by this Government. 
Notwithstanding those words it is worthwhile recounting the history of these measures. The programme of reform that the Minister is now starting to bring to a close was begun obviously under the previous Government and I think it is important that people understand that this series of reforms which is supported on this side of the House is supported because it does represent important institutional reform that we began. 
When the last Government was in office there was a recognition of the need to strengthen regulation in this area. A number of the measures that were taken at that time included making regulations that gave trustee companies robust powers to supervise finance companies on behalf of investors; allowing criminal prosecutions against finance companies that had misled investors to be funded from the Securities Commission’s litigation fund; making the Reserve Bank the prudential regulator for non-bank deposit takers and finance companies are the classic example of those sorts of entities; regulating financial advisers and financial service providers; commencing in 2004-05 reviews of financial products and providers and financial intermediaries to improve the regulation of non-bank financial institutions financial products and financial advisers; amending the Securities Act to strengthen rules on insider trading and market manipulation; and passing securities markets legislation which introduced a co-regulatory framework for supervising registered exchanges. That was the beginning of much of this work. The Minister deserves credit as I said earlier for bringing a significant part of the continuation of that work through the House and to a conclusion. As I said that is why those measures will be supported by members on this side. 
I was amused to hear Sam Lotu-Iiga the deputy chairperson of the Commerce Committee talk about how hard that committee had had to work. That is a natural consequence of having to deal with levels of reform of this magnitude and detail. Similar experiences would be reported by the chairs of the Finance and Expenditure Committee and the Commerce Committee in the last term of Parliament. That is as it should be; these measures require careful scrutiny. They are of wide-ranging importance and if they are to work and to be fit for purpose then they need that level of scrutiny. That is the job of committees and of this House. I acknowledge the work that has been done in the Commerce Committee by all the members of that committee including its chair Lianne Dalziel. I think she feels some level of satisfaction that she is able for that side of the ledger as it were to watch the current Minister complete a series of important institutional reforms begun on her watch. I pay tribute to both of them for that. 
But the truth is as David Parker put it that the real job of broadening and deepening financial markets in New Zealand will be only partly accomplished by having good housekeeping on the regulatory front. Of course we do not want to see the sort of nonsense that has gone on in relation to finance company failures and the other sorts of frankly predatory behaviours that we have seen directed towards what are classically referred to as mum and dad investors. There should be an environment that stops that sort of thing from happening but there also need to be markets. The New Zealand Superannuation Fund which the previous Government set up and which sadly has been diminished by the current administration as far as ongoing contributions are concerned and the KiwiSaver scheme—again something that was cut by the incoming National Government at a time when actually some stimulus would have been a useful thing—are two very very good examples of substantive policy initiatives of the type we need to see in this country if we are to get out of recession and start growing the economy again. Those are the sorts of policies that we need in addition to this sort of good housekeeping. 
I have a couple of words on the housekeeping itself. As has been said in speeches during the passage of this legislation this is good legislation but there are some areas where it could be improved. I heard the Minister yesterday in the House during the Committee stage talk about how important it was to have the Financial Markets Authority in place as a comprehensive regulator across the sector and I agree with him on that point. But we should not mislead ourselves that—for example in the case of criminal behaviour or fraud—the Financial Markets Authority will be able to call all the shots. Obviously the Serious Fraud Office in particular will have an overlapping jurisdiction in certain cases. When the Serious Fraud Office decides to investigate then frankly the Financial Markets Authority and other bodies will just have to stand aside. In criminal investigations that is the way it works. It is important to observe that this seems to be a general problem we have in a country as small as New Zealand; we often have overlapping regulatory and criminal oversight responsibilities divided between different bodies. It might well have been a good idea to extend the Financial Markets Authority’s powers into the criminal sphere so that when there is a case of suspected serious fraud the authority has the power to deal with that matter to the exclusion of the Serious Fraud Office. As it is there are still overlapping jurisdictions and we will still see in future cases investors being burnt through unfair and fraudulent behaviour where the Financial Markets Authority is unable to act because the Serious Fraud Office has stepped in and there is a criminal investigation for a period. There will be frustrations and annoyance—justifiably—as a result of that overlap. We ought to have fixed that up by now. 
The other concerns about the way in which we have set up the regulatory oversight regime were pointed out by Lianne Dalziel in one of her speeches in the Committee stage. She tabled a Supplementary Order Paper that would have seen the Financial Markets Authority enabled to issue statements of principle in broad-brush terms along the lines of the Financial Services Authority’s powers in the UK. Market participants would have to comply with those principles. Instead we have gone for a much more compliance-based approach—to the delight I am sure of those in my former profession and in the accounting profession. We will have to see which approach in practice works out best for participants in the market. 
There are two others things that I want to say by way of foreshadowing the watching brief that I think needs to be kept on the legislation. The first thing is that we still do not have in this country a single body that is responsible for promoting financial literacy. I am pleased to see the Minister Simon Power nodding because I think it is something that across the House we could agree on and try to deal with on a priority basis. We can have all the regulation and enforcement in the world and we can even have the best-functioning capital markets in the world—which we are still a way from I am afraid—but until we have the ability of people to invest on a confident basis because they understand the products they are investing in there will be a problem. 
The final word is that it is great that we have regulated comprehensively the upper and middle ends of the market. We have not yet dealt comprehensively with those payday lenders—those loan sharks—that are preying on people in a particularly distressing way. Another part of the watching brief we will be keeping will be in respect of how Parliament reacts to the problem that those lenders present to the market. They are not yet sufficiently dealt with in the reforms and they need to be. 
SUE KEDGLEY (Green) 
: 
 The Green Party is also very pleased to support these bills. We too congratulate Minister Simon Power on steering them through Parliament. Although they will not solve all the problems and challenges confronting financial markets they will give more protection to investors they will establish a higher degree of transparency in the markets and they will establish a more appropriate regulatory environment which will be beneficial to both investors who provide capital and those who utilise it the shareholders. 
It must be noted—and others have noted—that deregulation of the financial sector has been an abject failure in New Zealand. It has cost our economy dearly and has been devastating for many small investors with ongoing effects that are cascading through our economy. We hear a lot about the wonders of deregulation but it is not often that we consider the incredible failure of deregulation in many of our sectors—for example the building sector. The National Government of the day deregulated the building industry which has cost the New Zealand economy a huge amount—around $10 billion in leaky homes. It has also been utterly devastating for thousands and thousands of ordinary New Zealanders. That is an example of the way in which deregulation and the laissez-faire approach of leaving it to the market have been an abject failure over and over again. So we are pleased we are at last beginning to regulate the financial sector. 
There is obviously no risk-free investment. On occasion investors will inevitably suffer losses but we believe that mum and dad investors and potential investors need to have protection. They need to be able to assess the level of acceptable risk in the context of a robust regulatory framework that mitigates against incompetence against unethical behaviour most of all and against outright dishonesty in particular. These bills provide a step along the road to achieving those objectives which is why the Green Party is pleased to support them. 
The bills we are debating today are quite complex and indeed far-reaching. The Commerce Committee was fortunate to be guided by a chair Lianne Dalziel who had considerable experience and a strong personal commitment to the purpose of the bill. But we were disappointed that an amendment that she proposed at the Committee stage of the bill—namely to insert a set of enforceable principles to guide market participants principles that are similar to those that apply to financial market businesses in the United Kingdom—was not supported by the Government. We cannot understand why that very very sensible amendment did not get cross-party support in the Committee. 
The select committee in its report proposed that as well as the legislation pursuing the overall objective of promoting fair efficient and transparent financial markets it should also facilitate the development of those markets. In New Zealand our business and industry have long been hampered by the difficulties of acquiring capital and one of the reasons for this is the inappropriate tax and other advantages given to investment and real estate in New Zealand. We of course are one of the only countries that do not have a capital gains tax on other than the family home so that gives a huge incentive to invest in real estate and a disincentive to invest in other businesses. 
The Greens consider that the transition to a smart green economy will require investment—and substantial investment—in cleantech and greentech industries which would make a huge contribution to the economic resilience and future well-being of New Zealand. Such investments will be made only if investors are confident of the integrity of markets and we believe that this legislation makes a useful contribution to that goal. 
We hope that once this legislation has been passed we will be spared the series of fiascos we have witnessed in recent years as a result of financial deregulation. We are pleased to support this legislation and we congratulate the Minister on taking the initiative and driving it through the House. We know there is a very tight agenda of legislation and we are pleased that this Minister obviously has the political capital to get his legislation through the House. We congratulate him on that. Thank you. 
HILARY CALVERT (ACT) 
: 
 I rise in support of the legislation arising from the Financial Markets (Regulators and KiwiSaver) Bill. I sat on the Commerce Committee which considered that bill and I would like to commend the officers and everyone else involved who conducted the whole process excellently. New Zealand has the dubious distinction of being the first Western country to go into recession several months before the global financial crisis started. A big part of the reason was the collapse of dozens of finance companies since 2007 costing investors many millions of dollars. It was my colleague John Boscawen who led the campaign for an inquiry into finance company failures. He has heard many stories of mum and dad investors losing large portions of their savings due to actions that although not illegal were certainly unethical. The bills before us are in part a reflection of these stories as well as of course the recommendations of the Capital Market Development Taskforce. They are a recognition that the current fragmented regime did not have the ability or power to hold trustees to account for their often dubious actions. 
These bills also recognise that to have a growing economy we must have financial and capital markets that encourage people and institutions to invest. The establishment of the Financial Markets Authority will help foster such investment. The authority will not only replace the Securities Commission but also incorporate several other functions previously delegated to various other agencies. It makes perfect sense to bring these related responsibilities under the control of one organisation. 
The mission statement of the Financial Markets Authority particularly resonates with the ACT Party. Clause 8 of the Financial Markets Authority Bill requires the new Financial Markets Authority “to promote and facilitate the development of fair efficient and transparent financial markets.” As a defender of the free market ACT is definitely in favour of this. In order to thrive participants in the market place require confidence to invest. To have this confidence they need information and accountability—more than they are getting at present. If the Financial Markets Authority succeeds in its objectives we will hit hard those trustees who play loose with the rules. As a result we will have financial markets that mum and dad investors will want to invest in. 
We also welcome the crackdowns on unsolicited securities offers. In case we needed reminding of the importance of this a couple of weeks ago one such person a Mr Bernard Whimp made a timely reappearance with his latest lowball offer. Mr Whimp has made over $1 million by sucking in the unsuspecting. As business commentator Liam Dann said in the  
New Zealand Herald  
on 12 February: “The unsatisfactory part of the Whimp transactions is that despite being legal the imbalance of knowledge between the buyer and the seller seems too large and the degree of unfairness too great to stomach.” 
This legislation redresses this imbalance by requiring that warnings of a lowball offer be published on offer documents and on the website of the person making the offer. There will also be a minimum cooling-off period during which such investors can see the light. The select committee also recommended the disclosing of the market price of the securities. If investors after all these red lights forge ahead then so be it. The problem becomes theirs. That is fair. These bills after all will not make us immune to future individual and institutional failures nor should they. There is always a degree of risk and without risk there is no prosperity. 
I was alerted to a  
Breakfast 
 interview from a fortnight ago with  
Fair Go 
’s Gordon Harcourt—a man who has no doubt seen a few dubious business practices in his time. When asked about the problems of company failure he replied: “Company failure is not a crime and that is a good thing because allowing failure encourages success. If we wanted to live somewhere where company failure was a crime we could all go and live in Cuba or Venezuela where capitalism is illegal.” 
These bills represent big improvements on the current regulatory environment. Let us be clear. They take a dim view of costly regulations and red tape. As Minister for Regulatory Reform Rodney Hide has a bill coming before Parliament to prevent such follies before they happen. If passed the Regulatory Standards Bill will play a huge part in increasing the efficiency and transparency of the lawmaking process and will in turn make our economy more productive and prosperous. 
As the party of those opposed to pointless and costly red tape ACT does not accept new regulations lightly but it was ACT that led the drive to sort out our finance companies and although there is no such thing as the perfect law anything that increases the efficiency and transparency of our capital and financial markets is to be applauded. Such steps will help our fragile economy to attract the investments it needs badly to recover. Accordingly we support these bills. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to take a call this afternoon on the third reading of the bills arising from the Financial Markets (Regulators and KiwiSaver) Bill. I would like to thank the officials who were present during the process of getting this legislation back into the House and also the submitters to the Commerce Committee. The securities legislation is very complex legislation and it took those of us on the select committee a fair period of time to actually get our minds round where we were going with it and some of the consequences that might have come out of it. So we went slowly and very thoroughly through this legislation. I would like to thank the officials for the patience they showed because they had a fair bit of patience as we kept going back to them for more explanations and more explanations because we really wanted to get a good understanding of what we were doing with this legislation. 
The programme of reforms this Government is going through with its securities legislation is to get confidence back into the market. Confidence in our markets has been hit for a number of reasons and over a prolonged period of time. The previous speaker Hilary Calvert was correct: New Zealand hit a recession before everybody else in the world and our finance companies were struck down for a number of reasons. I know that in the electorate of Ohariu where I represent this Government I had a number of mum and dad investors coming in and talking to me about their losses in finance companies and they did not know where to go. These people do not have a lot of money; they have a little bit put aside. These are the people who invested in 1987 in the sharemarket and it crashed. They then left the sharemarket after they got burnt and they went to managed funds. We all know that managed funds took a massive dive in 2000 and people lost a huge amount of money. These people thought their next best bet to get a bit more of a return off their money after the banks was to go to finance companies. So they invested in finance companies not really understanding the risk involved or the way they were advertised. In many cases the advertising was misleading. They put their money in the finance companies only to find once again for the third time they had lost their investment. We are talking about mums and dads who are on fixed wages and salaries and it is really hard for them to recover when an investment goes south on them. They wonder where to invest that is safe. 
This legislation is about putting a framework in place so our mums and dads can invest in New Zealand and invest in our capital markets. We need them to have confidence that although there is always risk with investment they understand better that risk and we have processes in place through this reform programme which protects them better. Part of this is the Financial Markets Authority to be set up to make sure they have the correct tools. One of the really important tools I think coming out of this is the right of individuals and companies to take action to try to get results. Hopefully we will see some of that coming through in the future. We cannot reverse a lot of the harm that was done and a lot of the losses that happened because the reforms were not fast enough and did not come in fast enough to help those people. Hopefully now that we have these tools in place for the financial markets this will not happen again to many of the people who lost their money. 
The other area I would like to touch on is in the Securities Trustees and Statutory Supervisors Bill which will help significantly the confidence of the mum and dad investors in our markets because the people they thought were looking after their money—the trustees or statutory supervisors—whom they were trusting to keep an eye on these finance companies actually could not do anything. We have beefed up the requirements significantly. They now have to be capable trustees or statutory supervisors. They have to perform their functions effectively and they have to be accountable to the Securities Commission for any failure to act to expected standards. That is a significantly higher bar. This legislation is positive and with the reforms in our markets will give confidence to our mums and dads to invest. I commend this legislation to the House. 
STUART NASH (Labour) 
: 
 I stand to speak on the third readings of these bills. I have spoken in the first and second readings and in the Committee stage on this legislation. I think everyone knows that this legislation has cross-party support. It is most important legislation. This is quite an unusual reading because the Financial Markets (Regulators and KiwiSaver) Bill has been divided into five separate bills. We have the Financial Markets Authority Bill the Securities Amendment Bill (No 3) the Securities Markets Amendment Bill (No 2) the KiwiSaver Amendment Bill and the Financial Advisers Amendment Bill (No 3). There is a reason for this: the bills are quite similar in their intent and it makes a lot of sense to clump all of these together basically for the integrity of the legislation. The legislation establishes the Financial Markets Authority and sets out the wider enforcement and surveillance powers that are currently available to regulators. It also makes changes to the regulation of registered exchanges and improves the regulation of KiwiSaver schemes. 
Other members have spoken on the absolute importance of enhancing the confidence of our financial markets. A single market regulator should contribute towards this end. Labour launched the Capital Markets Development Taskforce and we are pleased that this Government is acting on its recommendations. We are concerned about the lack of transparency around the current security commissioners though. 
One thing I would say is that this legislation is from the Hon Simon Power. It is good legislation and as highlighted by Simon Bridges about 2 weeks ago I think 40 percent of the legislation that this Government has passed through the House has been brought in by the Hon Simon Power. It is a real shame that he is leaving Parliament because he appears to be the only Minister in this Government who is doing any work. There has been a lot of conjecture as to why the Hon Simon Power is leaving. I suspect that he is leaving because he is sick and tired of carrying the workload for the rest of the National Government. If one Minister is putting 40 percent of the legislation through the House then I ask what the other Ministers are doing. In fact when I looked through the Order Paper I thought it was more like 50 percent of the legislation that Mr Power is handling. So whether he is rushing stuff through to get it done before he leaves or whether the other Ministers are just so lazy and do not have a plan for anything Simon Power is doing everything. 
Having said that I note that Mr Power was the Minister who put forward the plan for selling off State assets. That is a real shame but fortunately for New Zealand that legislation will not be passing through this House. But I do congratulate the honourable member. He has done a good job with this legislation and he has taken on board a lot of the recommendations from the Capital Market Development Taskforce. He consulted widely I believe with the Hon Lianne Dalziel and it is very much good legislation and necessary legislation. Members can tell Mr Power is such a hard-working Minister; he is the only one who is in the House. I do not know where all the other National Ministers are— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
STUART NASH 
: I apologise. But I offer my congratulations to Simon Power. He is a good hard-working Minister. I am sure that the National Government will be sad to see him go because he is the only one who is carrying the can and the only one who seems to have a plan for certain areas. 
Labour supports this legislation. As mentioned it establishes the Financial Markets Authority and in principle we support the idea of consolidating all the different regulatory bodies into a single agency. The concentration of power in the hands of the Financial Markets Authority—the FMA—means that all its officers must be beyond reproach and its processes must be fully transparent. I think that is something the people of New Zealand have really demanded: a much higher level of transparency. The integrity of the markets depends upon the integrity of the Financial Markets Authority and its personnel. This is especially true and most important as I believe our financial markets are still struggling under the perception that cowboys and crooks run the show. Hopefully this is no longer true and I think a lot of those people have been weeded out but it is up to the Financial Markets Authority to act in a way that totally dispels that perception over time. I know it is a cliché but the proof of the pudding is in the eating as they say. The Financial Markets Authority has the very important task of letting the confidence return to our financial markets if we are to grow as a country and deepen our capital markets. 
Labour started the financial markets reform process and we are pleased that the Government is continuing this work. As mentioned Lianne Dalziel set up the Capital Markets Development Taskforce in 2008 in order to develop a blueprint and an action plan for the development of our financial system. We are pleased the Government is starting to act on the recommendations in the task force’s report one of which was to create a single market regulator. 
I could go through a number of measures that the previous Labour Government recommended that this legislation picks up but the whole process was accelerated by the global financial crisis and the spate of finance company collapses. I think that there have been up to 61 collapses now. It is quite astounding to think that there are even 61 finance companies in the country but 61 finance companies have collapsed. I have spoken about the consequences of the collapse of those finance companies in this House many times and certainly of the consequences that has had on a number of New Zealanders who have lost their life-savings. Some of the stories are diabolical; some of them are incredibly sad. In fact we are still dealing with the fall-out from South Canterbury Finance which looks like it might end up costing taxpayers well over $1 billion—some say up to $1.6 billion. There is a widely held belief that if the Government had managed this process properly then the cost would not have needed to be so high at all. But South Canterbury Finance will end up costing taxpayers about $1.6 billion. 
Labour’s view on the Financial Markets Authority is that enforceable principles such as integrity skill reasonable care and financial prudence are needed. Principles are flexible. Unlike rigid rules which are made to be broken it is important that the ethics that underpin the new regime will help rebuild the trust and the confidence in the financial sector that is so important in terms of developing our capital markets and our financial markets as well. 
This legislation gives the Financial Markets Authority new powers that were never available under the Securities Commission including the ability to take action against those directors it believes have acted illegally when to do that is in the public interest. That is the most important point. It is about what is in the public interest. As well the authority has the power to seek search warrants and to raid offices and seize documents. This is not about an ambulance at the bottom of the cliff; this is getting to the nub of the issue and solving problems before they become another South Canterbury Finance incident and cost us about $1 billion or more. 
The removal of the New Zealand Exchange’s regulatory role is sensible. Although there may never have been an actual conflict of interest the NZX’s dual commercial and regulatory roles have created the appearance of a conflict of interest and as mentioned this legislation is a lot about perception and appearances. We need to create an environment where the people of New Zealand actually have trust in the people who are controlling and regulating these markets. 
Regulators have attracted some blame for recent troubles in our financial markets and we believe it is necessary to reshape New Zealand’s regulatory environment. The Financial Markets Authority will have powers to require that warnings about financial products and providers be included in offer documents and be published by the people involved. This provides investors with the information required to make sound decisions. That is most important. I remember that legislation was passed within the first 6 months of this Government I think that stripped away a lot of the information that needed to be required in prospectuses in order to raise funds from the public. I had major reservations about that legislation because I believe there needs to be as much information as possible in a prospectus that allows the general public to make an informed decision. This legislation contains many far-reaching powers and this underscores the importance of its transparency and rigour. 
This is very important legislation and Labour is backing it wholeheartedly but there is one thing I would like to see. I would like to see more robust legislation in this House that shows the Government has a plan in areas outside the portfolios that the Hon Simon Power manages. I have not seen an economic plan that will allow the development of our capital markets. I have not seen any sort of plan whatsoever that will encourage the development of our financial sector. The only conclusion I can come to is that the Government has no plan. If mining national parks and selling State assets is its idea of a plan then New Zealanders need to be very very worried. That Government over there actually has no plan whatsoever for economic growth or job creation. 
I commend this legislation to the House. Thank you very much. 
JONATHAN YOUNG (National—New Plymouth) 
: 
 The legislation arising from the Financial Markets (Regulators and KiwiSaver) Bill as well as the raft of other legislation that we are looking at today is sponsored by the Minister of Commerce Simon Power of whom the previous speaker Stuart Nash spoke so highly. It is very good to hear Labour members speak so highly of Government Ministers. 
A tremendous work programme and a tremendous commitment have been undertaken by the Minister and also by members of the Commerce Committee who have the privilege in essence of reviewing the engine room of the New Zealand economy in so many different ways. The financial markets legislation establishes a new financial sector regulator the Financial Markets Authority and makes some very important changes to the governance of KiwiSaver schemes. The overriding focus in the commerce portfolio is to restore investor confidence in our capital markets after the global financial crisis. One of the first constituent inquiries that I had as the new MP the MP for New Plymouth was when a retired couple came to me surrounded by a disaster that had not only cost them in regard to where they had invested but also cost them their personal home. We have heard stories such as this one that have necessitated such an extensive review of the regulations surrounding the financial sector. 
We often hear the classic phrase “the mum and dad investor”. Essentially this is the investor who has a bit of spare cash which has been saved for retirement by a person who does not see investment as something that he or she is necessarily highly specialised in. Coming out of the global financial crisis it is important to have those improved protections for such investors because they are imperative for their future confidence in their ability to invest in New Zealand. Notwithstanding that one of the things we discovered through the select committee process of looking at this legislation was that investor education and awareness is very important. Last year Professor David Mayes who is the recently appointed chair of finance at the University of Auckland business school—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Courtesy is contagious. 
JONATHAN YOUNG 
: Thank you Mr Assistant Speaker. Professor Mayes recently said that New Zealanders are average. We do not like to hear that we are average do we? But he was making a comment that we are average when it comes to financial literacy. It is a problem that is not unique to this country. He commented that a lot of the finance company collapses occurred before the global financial crisis which shows that New Zealand was ahead of the curve on this one but any company that indulges in risky finance gets into trouble when the economy turns downward. 
We need to understand and acknowledge that this problem has been in existence for some time and that this country was in recession months or even a year before the global financial crisis happened around the world. We were ahead of the curve. That means our financial markets regulatory framework was somewhat fragile; some would even say that it was shonky in different parts and places. This all occurred under the watch of the previous Labour Government even though some have made the comment that the situation was observed and that that Government wanted to improve it. Essentially we were not fit for purpose to trade in the modern world where opportunities are global but accountability is local. Investment in “New Zealand Inc.” needed to have some tremendous work done on it. 
A substantial disincentive for people to shift from a borrowing-based way of thinking which has dominated New Zealand in the last decade to an investment-based way of thinking is a lack of confidence in a system that fails to ensure professional effective ethical and accountable oversight of that system. When we try to convince New Zealanders not to invest simply in the housing market with money that has been borrowed from overseas but to save and invest in our economy our industries and our businesses many people have asked whether they can trust that investment to be protected. It is important to acknowledge that following the introduction and passing of this legislation we will have a framework and an environment that will encourage that level of confidence and will see the capital base of our nation be released more for business. Even this morning as the select committee heard the financial review of New Zealand Trade and Enterprise its chief executive said that although we have enough market opportunity globally we do not have enough companies of international scale that are able to face and conquer the known challenges of size and distance. So we need a stronger capital base that will enable our companies to internationalise and to grow in scale and capacity in order to take advantage of the commodity boom happening around the world and to build the wealth of New Zealanders. 
This raft of legislation which has been sponsored by the Minister of Commerce the Hon Simon Power is leading us in that direction and is a great step forward for us for our economy and for the future success of all New Zealanders. I commend this legislation to the House. Thank you. 
RAYMOND HUO (Labour) 
: 
 Ni hao Mr Assistant Speaker Robertson. It is a great pleasure to take a call on the third reading of this legislation which has been divided into five bills. It is relevant necessary and timely for us to deliberate on these important issues. 
Over the past 4 years 61 finance companies have failed the latest of which was South Canterbury Finance which was bailed out to the tune of $1.6 billion of taxpayers’ money. Labour’s finance spokesperson the Hon David Cunliffe has made some valid points on this matter. Bill English and the Government turned down recapitalisation offers that would have limited taxpayer costs for South Canterbury Finance to about $500 million. Instead National insisted on throwing it into receivership. Losses have already reached $1.2 billion and are still climbing. The extra $700 million lost to the taxpayer is in fact roughly equivalent to all the new money John Key has just cut out of this year’s Budget. 
It has been noted that shortcomings in New Zealand’s regulatory set-up are partly responsible for the finance company failures. No single entity took responsibility for any problems. Therefore Labour welcomes any measures that would ensure like the UK Financial Services Authority market confidence public awareness financial stability consumer protection and reduction of financial crime. 
The Financial Markets (Regulators and KiwiSaver) Bill had eight parts and it was divided into several bills at the Committee of the whole House. Parts 1 to 4 and schedules 1 and 4 deal with the Financial Markets Authority and they have become the Financial Markets Authority Bill. Part 5 amends the Securities Act 1978 and it has become the Securities Amendment Bill (No 3). Part 6 and schedule 5 are now the Securities Markets Amendment Bill (No 2). Part 7 and schedule 6 deal with the regulation of KiwiSaver and have become the KiwiSaver Amendment Bill. Part 8 and schedule 7 are now the Financial Advisers Amendment Bill (No 3). 
It is crucial that we enhance confidence in our financial markets. A single market regulator should contribute towards this end. Labour launched the Capital Market Development Taskforce and it is pleased that the Government is acting on its recommendations. We are concerned about a lack of transparency around current security commissioners. We support the bills and specifically the establishment of the Financial Markets Authority. In principle we support the idea of consolidating all the different regulatory bodies into a single agency. In 2008 the Hon Lianne Dalziel set up the Capital Market Development Taskforce to develop a blueprint and an action plan for the development of New Zealand’s financial system. We are pleased that the Government is starting to act on the recommendations in the task force report one of which was a single market regulator. The Labour-led Government took a number of measures aimed at strengthening our financial markets and this process was accelerated by the global financial crisis and the spate of finance company collapses. 
The bills are designed to deal with some important issues. Firstly concerning the securities law the reform of securities law is a crucial complement to this process. This bill provides for regulations to be made that will prevent products from being structured to avoid regulation. This happened in the case of the Blue Chip scenario. The investment scheme offered interests in land. It was therefore exempted from the Securities Act to the significant detriment of its investors. However the only concern I have at this stage is that the deadline for the review has been pushed back until 2012. 
Secondly in regard to KiwiSaver calls for changes to KiwiSaver regulation were made earlier this year when former Huljich KiwiSaver managing director Peter Huljich admitted he used his own money to top up investors’ funds. There are 1.5 million Kiwis with a collective $6 billion in KiwiSaver. It is utterly critical that the regulation of its schemes is robust. Compulsory enrolment even with an opt-out and the absence of a Government guarantee mean that a higher level of assurance has to be offered to those investors who do not wish to choose their own scheme. 
We support moves to tighten KiwiSaver’s regulation. This bill puts the onus on fund managers to act in the best interests of investors by making them primarily responsible for the accuracy of their prospectuses investment statements and advertisements. Currently KiwiSaver trustees are technically the issuers of KiwiSaver schemes under the Securities Act. This means that managers have few duties to investors and less liability for misleading statements than trustees. 
Thirdly in regard to the collapse of finance companies I come back to what I said at the beginning of my contribution. This bill should ensure the Financial Markets Authority has broad oversight of the sector ensuring that Kiwi investors do not face this kind of disaster again. As part of this reform of finance markets the Government might also wish to look at the sentences for so-called white-collar criminals. Lianne Dalziel and Charles Chauvel have recently said that people convicted of offences like burglary tend to be treated much more harshly than those who destroy huge amounts of wealth through reckless and dishonest business practices. 
Finally I am pleased to see that through these bills the law is being changed to provide for a regime that supervises the supervisors. This legislation removes the automatic right for the six previously statutorily approved trustees to supervise issuers of securities in some investment schemes. It introduces a licensing regime for trustees that will be run firstly by the Securities Commission then by the Financial Markets Authority when it is established. Under the new regime all trustees statutory supervisors and unit trustees must be body corporates and the directors and senior managers must be of good character. 
I agree with what the Minister responsible for this bill said that New Zealand needs a single market regulator with a culture of visible proactive and timely enforcement. Recent finance company collapses illustrated gaps between regulators. The Financial Markets Authority is needed to rebuild investors’ confidence. In relation to KiwiSaver the Government says it has fast tracked these measures due to apparent gaps in the regulation of some of the schemes. So they are all good initiatives and I commend the bills to the House. 
MELISSA LEE (National) 
: 
 I feel like I am delivering my third reading speech on this legislation from Siberia but perhaps that is because I was wishing I was in Siberia while the previous speaker Raymond Huo was speaking—he lost me after “ni hao”. 
Mr Assistant Speaker Robertson this is the first opportunity I have had to speak since your ascension to the Chair. I would like to congratulate you on your appointment. I would also like to take this opportunity to thank the Minister of Commerce Simon Power for the tremendous amount of work he has put into this raft of bills we are considering. 
I do not really want to take too much time and I do not want to repeat the comments that previous speakers have made throughout the House—we are all in agreement obviously. But I want to give a view from the ethnic communities. We have all heard far too many stories about investors losing a lot of money. Many Asian communities have lost money. Members of a lot of Asian communities when they arrive in New Zealand because initially they do not have jobs want to invest their life savings into an investment portfolio and many have lost their entire life savings as a result. 
Only a strong economy can provide financial security for families real opportunities for young people safe communities and the high-quality education and health services that all New Zealanders need. In respect of this raft of legislation that has gone through the Commerce Committee I guess I was the layperson on the committee who did not really know very much about the financial sector or accounting. As my learned colleague Katrina Shanks who happens to be an accountant said we thank the advisers who have worked very very hard to go through the options with us and we praise the Parliamentary Counsel Office and everyone who helped us through the process. 
With this legislation—and through an understanding of the basics of investment advice people can trust and informed decision-making—we know we will have regulators with the power to protect and boost public confidence and with the ability to publicly enforce the duties of issuers directors auditors trustees and others involved in financial markets when it is in the public’s interest to do so. That has to be good. I believe that the much-needed confidence in the financial markets will return as a result of the work we have done in respect of the raft of legislation that is before us. I commend these bills to the House. Thank you. 
Financial Markets Authority Bill read a third time. 
Securities Amendment Bill (No 3) read a third time. 
Securities Markets Amendment Bill (No 2) read a third time. 
KiwiSaver Amendment Bill read a third time. 
Financial Advisers Amendment Bill (No 3) read a third time. 
Securities Trustees and Statutory Supervisors Bill read a third time. 
Environmental Protection Authority Bill 
Second Reading 
Hon Dr NICK SMITH (Minister for the Environment) 
: 
 I move  
That the Environmental Protection Authority Bill be now read a second time 
. The establishment of the Environmental Protection Authority marks an exciting new era in the environmental management of our country. New Zealand deserves no less than a world-class regulatory system that reflects our environmental values in conjunction with our economic interests. We need to be smarter in developing ways to grow our economy while lifting our environmental management. The Environmental Protection Authority which this bill establishes will do just that. 
I acknowledge the Local Government and Environment Committee and particularly its chair Chris Auchinvole for the hard work and scrutiny that has gone on with this bill. I am pleased to note that the committee has recommended that this bill be passed and I signal now that the Government will be supporting the amendments that the committee has recommended; they are improvements to the bill. These amendments will transfer to the Environmental Protection Authority the permitting and enforcement functions under the Ozone Layer Protection Act and the Imports and Exports (Restrictions) Act that are currently administered by the Ministry of Economic Development. These functions relate to New Zealand’s international obligations under a number of conventions and protocols for both the protection of the ozone layer and the management and transboundary transport of hazardous wastes and chemicals. It makes good sense for these functions to be moved to the Environmental Protection Authority as they align well with the authority’s new role in undertaking the functions of the Hazardous Substances and New Organisms Act. 
I also thank all members and submitters who took the time to offer their analysis and opinion of this bill. I am pleased that out of the 38 submissions received a vast majority supported the establishment of the Environmental Protection Authority albeit at times there were differing views on the exact form and function that the new authority should take. Some submitters wanted the Environmental Protection Authority to undertake a wider range of environmental functions not provided for in this bill. I say to them as the Government has already demonstrated that the building of the Environmental Protection Authority is an iterative process. For example we have already had a transitional Environmental Protection Authority in place handling proposals of national significance under the national consenting regime that was established as part of the first phase of the Government’s Resource Management Act reforms. 
This is not the end of the journey. The Environmental Protection Authority we are establishing today has been designed to be as flexible as possible to receive extra functions and responsibilities. For example it is my widely stated intention that the Environmental Protection Authority should be responsible for permitting functions under the proposed exclusive economic zone legislation that I hope to bring to this House before the end of this year. In future the Environmental Protection Authority may look more like what some submitters envisaged but for today the Government is confident that the functions and powers we are bestowing on this new authority are a good starting point. 
On the flip side of my last point I know that some members of the committee expressed concern about the Environmental Protection Authority’s ability to adopt new functions and in particular questioned under whose authority that would occur. I am pleased that the committee has clarified this process in that substantive new functions will be able to be added to the Environmental Protection Authority only upon the scrutiny and agreement of this House through legislation. Although it is the Government’s intention that the Environmental Protection Authority be designed to remain flexible enough to adopt new functions it was not our intention that the new authority should assume those functions simply by ministerial fiat. 
I also take the opportunity to address the criticism by some that the protection element of the Environmental Protection Authority is not explicit enough in the purpose of the Act. I find this accusation perplexing as all pieces of legislation that sit behind the Environmental Protection Authority have the protection of the environment at their core. For example the hazardous substances and new organisms legislation which the Environmental Protection Authority will now be responsible for has as its core purpose the protection of the environment and the health and safety of people. The Resource Management Act’s purpose is to promote the sustainable management of natural and physical resources; sustainability is defined in the Act as the use development and protection of our natural and physical resources. The purpose of the Climate Change Response Act is to reduce dangerous levels of climate change greenhouse gases thus protecting people and the environment. 
Some also allege that the Environmental Protection Authority is running contrary to the protection of the environment in its role in administering consents for projects of national significance. Yet I would ask how it is expected that some of our smaller and least resourced councils are able to decide on quite complex nationally significant resource consents and whether that in fact promotes better protection of the environment. The Environmental Protection Authority and the board of inquiry process bring the technically robust expertise needed to scrutinise and pass judgment on the environmental impacts of these proposals. This process ensures more robust decision-making which can only mean better environmental outcomes for New Zealand. The requirement that a decision must be reached in 9 months brings certainty to investment and to those communities that are potentially impacted by a project. I contrast for instance the 15-year-long battle over the Wellington Inner City Bypass and the 12-year-long fiasco over the Whangamata Marina against the 8 months it has taken the provisional Environmental Protection Authority to hear to consider and to issue a decision on the Tauhara geothermal project. 
This Government’s blue-green vision for New Zealand promotes the effective management of resources supported by efficient and effective environmental regulation. This bill does just that by establishing a new Environmental Protection Authority as a one-stop shop for environmental regulatory functions: consenting monitoring and providing technical advice. The Environmental Protection Authority will provide the national leadership that has been missing in the administration of the environment as well as the greater central government direction. This bill is a balanced environmental approach. It reinforces the importance of good scientific and technical skills to effective environmental regulation; it recognises the importance of efficient environmental regulation to our economy. The creation of the stand-alone Environmental Protection Authority marks a major milestone in this Government’s progressive environmental reforms and I commend the bill to the House. 
CHARLES CHAUVEL (Labour) 
: 
 Labour voted for the first reading of the Environmental Protection Authority Bill to send it to the Local Government and Environment Committee so we could hear public submissions and expert evidence on its provisions. We had reservations at that point which I expressed in my first reading speech but we thought it was appropriate to hear what the public had to say. One of the major concerns we have had about the functioning of the interim Environmental Protection Authority is that it has been not an environmental protection agency but a national development agency. So far it has been pretty much an understaffed office in the Ministry for the Environment already being used to fast track controversial projects. The Minister for the Environment talked about extreme examples under the previous law and somehow thinks that this justifies the new 9-month fast-track process even though we are hearing extraordinary reports of enormous legal bills consulting bills and major inconvenience accruing to parties and submitters under the 9-month rushed process—one bite at the cherry. [ 
Interruption 
] I know that members opposite Mr Auchinvole and Mr Quinn think public consultation is overrated but members on this side of the House think it is important to hear what the public have to say. I will develop those comments further. 
We have already seen the fast tracking of the Waterview Connection and the time frames for submissions on that project being far too short. That is despite protests from the Eden Albert Community Board and the Auckland Council asking for an extension of deadlines. But never mind there is a pretty poor track record on local democracy on the other side of the House and we know that what community boards and city councils think does not matter too much to people. 
Amy Adams 
: So we just fix it. We just get on and get it fixed. 
CHARLES CHAUVEL 
: As Ms Adams said they just want to get on with it. They know best. They do not really care what local communities say. They just think they can hurry things through in 9 months. The reality is that that is not acceptable to local communities. They need a say and they want a say on what goes on in their communities. That is a right we will ensure is restored to them when we have the opportunity. 
The concern we had around the “trust me” approach being asked for by the Minister is that members opposite have a bad track record on the environment. We look at the extension of the deadline for the national environmental standards for air quality to 2018 ignoring warnings that doing so puts people’s lives at risk— 
Chris Tremain 
: Where did emissions go under that Government? 
CHARLES CHAUVEL 
: —I say to Mr Tremain. Never mind about all the Kiwis who will die as a result of having to breathe poor air; we should just ram things through again and not worry about the cost! That is a summary of the record of those members. 
There is the watering down of the emissions trading scheme adding billions of dollars to the taxpayers’ bill for New Zealand’s carbon emissions and letting off polluters just because they are polluters and they can pollute. Then of course there is the proposal to open up the national parks to mining which was stopped only due to a major outcry from people. There is the abolition of the democratically elected Canterbury Regional Council just so more intensive dairying could be allowed through giving dairy farms more water; the complete sabotage of biofuels policy; and the repeal of the restriction on new baseload fossil-fuelled thermal electricity generation. I see the Acting Minister of Energy and Resources is in the House. It was good she conceded in question time the other day—notwithstanding she was trying to claim credit for a whole lot of new renewable energy generation—that fully four-fifths of that generation had been consented on under the previous Labour Government. Then there is the disastrous revision of the New Zealand Energy Strategy which was leaked the other day. The draft already released is short on action and has a strong focus on coal and petroleum development which shifts environmental concerns like carbon emissions to the bottom of priorities giving the lie to the claims that were made in the Minister for the Environment’s initial remarks that this Government prioritises the environment and our environmental values but somehow balances them with the economy. That energy strategy speaks volumes to that claim and I hope many many New Zealanders will read it and see the truth about what this Government’s record actually is in this area. 
There is also the refusal to put in place a standard for smart meters. Instead of putting in place an incentive for consumers to be able to control their energy use in their home and in their business there is confusion and a lack of leadership from the Government in this important area. The vehicle fuel economy standard has been scrapped by National simply because it thinks the standard would just lead to an increase in cost for new vehicles. Then of course there is the phasing out of the old inefficient incandescent light bulbs using 75 percent more electricity than the new efficient eco-bulbs. 
Hon Steven Joyce 
: Ah the old light bulb control. 
CHARLES CHAUVEL 
: Mr Joyce scoffs about it. I can see Mr Joyce’s favourite phrase forming on his foaming lips at the moment: nanny State. It is all about control wanting to tell New Zealanders what to do. But he is conveniently ignoring the fact that China—that bastion of freedom of enterprise and democracy—will very quickly surpass New Zealand as far as energy policy is concerned. We will not be able to buy non - energy-efficient bulbs anywhere I say to Mr Joyce because the major manufacturer of them China will not make them any more because they are so dirty. But never mind. That member should tell people what he thinks they want to hear and they will re-elect him! That is clearly the theory. Unfortunately on environmental matters I think New Zealanders are too smart for that. 
At the Local Government and Environment Committee the concerns we had initially about the content of the bill were actually reinforced by public submissions. We have heard a pretty vanilla version of what happened at the select committee from the Minister; clearly he has asked his— 
Dr Cam Calder 
: Is it Milli Vanilli? 
CHARLES CHAUVEL 
: It may be Milli Vanilli actually I say to Mr Calder but that is an artist more from his generation than mine. I will leave him to tell the House more about that. Of course Milli Vanilli was a great lip-syncer I understand. No doubt we will hear more speeches from members opposite! Mr Auchinvole and others will lip-sync to the Minister’s tune read out the departmental notes and spin the lines around what they say is great for the environment and the economy under National. As I say voters are more discerning than that and they know better. 
The concerns about the Environmental Protection Authority are fourfold. I know that National members do not like to listen to the facts but here they are. First of all the Environmental Protection Authority will not provide sectoral leadership. I know it was the Minister’s desire that it should. I know he was well motivated about this. But the reality is that he has been rolled. All it does is to get fast tracking for major projects up and running and all it does is to cobble together some functions from existing Acts. The climate change legislation registry the Environmental Risk Management Authority’s old functions under the Hazardous Substances and New Organisms Act and a few functions under the Resource Management Act under the fast-tracking process—that is all the Environmental Protection Authority gets to do apart from those functions mentioned by the Minister: the ozone protection and the other functions. But what about the exclusive economic zone regulation that was so vaunted by the Minister? What about our Antarctic obligations? What about administering under the waste minimisation scheme all those product stewardship schemes that ought to have been brought into force by this Government but have not been so far? 
The first problem with the Environmental Protection Authority is that it will just not be a strong sectoral leader. It will fail at the first hurdle because its legislation is weak and it does not have enough functions. The second problem is that its objectives are not fit for purpose. Nothing in the Act actually tells the Environmental Protection Authority it has to protect the environment. Well how is that for setting up an entity for failure at the first hurdle? Then there is the lack of any independence from the Minister. Under the Hazardous Substances and New Organisms Act the functions of the Environmental Protection Authority come closer to the Crown not more distant from it. Well I do not know about other members but I do not think I want this Minister deciding matters under the Hazardous Substances and New Organisms Act; some might say that was actually a conflict of interest for him. 
Finally there is the issue of obligations to Maori. There is no Treaty clause in this legislation yet there is one in every other environmental and conservation Act in this country. What sort of signal does that send about the obligations of the Environmental Protection Authority to deal with the perspectives of iwi? I want to see the Maori Party take a stand on this. Why this omission? This is a major missed opportunity for the environment. The blue-green agenda is bankrupt and the Environmental Protection Authority is not a body we can support. 
CHRIS AUCHINVOLE (National—West Coast - Tasman) 
: 
 I rise to support the Environmental Protection Authority Bill. This bill is an important part of the Government’s programme and it is actually an important part of the parliamentary programme. I find it a little disconcerting to have heard only criticism from Charles Chauvel my parliamentary colleague from the other side of the House—but more of that later. This legislation formed part of our environmental policy at the 2008 election. The public has now come to expect from their National-led Government that it will follow through on its policies and this is another case of our doing exactly that and doing it proudly. 
This measure follows on— 
Hon Damien O’Connor 
: What about GST? 
CHRIS AUCHINVOLE 
: That member who has just called out from the back of the other side of the Chamber should be careful because he gets so many things wrong that he is starting to become a legend. This measure follows on from the first stage of the Resource Management Act reforms which were passed and it is really an important part of the process of ensuring that our need for economic growth is carefully balanced with environmental concerns. I draw to the attention of Charles Chauvel the mission statement: “environmental stewardship for a prosperous New Zealand”. That is for the Ministry for the Environment which has a balanced approach. A balanced approach? 
Amy Adams 
: A balanced approach. 
Dr Cam Calder 
: Yes balanced. 
CHRIS AUCHINVOLE 
: Balanced—I thank my colleagues. We talk about balance; we know that it is not a popular word with members on the other side of the House. But I believe and National believes that we must achieve the right balance. Part of achieving that balance is ensuring we have strong environmental management at central government level. That is what the Environmental Protection Authority will give us. 
My involvement with this bill has been as the chair of the Local Government and Environment Committee. I thank colleagues who are part of that committee for the work they put into the bill and for the constructive debates and discussions we had. I just point out that we appreciate that the Labour members in particular have been going through difficult times and that it has been difficult to provide continuity at meetings. Had they been able to do so Mr Chauvel might not have concentrated just on written submissions because he would have been party to some of the discussion that occurred when we met people at the time and I think he would have been a little more reassured by that process. 
I also thank the officials from the Ministry for the Environment and the Environmental Risk Management Authority for their assistance and advice and for the work they did and provided us with. Indeed as a committee we went across to the Ministry for the Environment this very day today and had a splendid illustration—I think my colleagues would agree with me—of the ministry’s commitment to balance and to its work. It was very very impressive and I commend them. 
Dr Cam Calder 
: Inspiring. 
CHRIS AUCHINVOLE 
: It was inspired leadership. 
I will focus though on what Opposition members have been saying about this bill when they have spoken about it. I participated in a debate last Wednesday on the various parties’ approaches to the Resource Management Act. Labour was represented by Charles Chauvel and I listened to what he had to say about the Environmental Protection Authority. He expressed general support for the idea of having an agency of this nature at central government level but he seemed to be frantically scrambling around for something to disagree with. That was what he was doing again today; he was looking searching desperate to find something he could disagree with— 
Dr Cam Calder 
: He could refer to 1980s pop songs. 
CHRIS AUCHINVOLE 
: Indeed. One of the main criticisms he raised was that the bill does not contain a sentence that explicitly requires the Environmental Protection Authority to protect the environment. 
Amy Adams 
: Isn’t that supposed to be the objective? 
CHRIS AUCHINVOLE 
: Indeed. That just shows how desperate Labour is to try to gain traction on something—to find something to criticise. We are dealing in this bill with policy and practicality not cloud nine ideology. As the member knows every bit of legislation that sits behind the Environmental Protection Authority is about protecting the environment. Protecting the environment is at the core of this bill. Protecting the environment is what this bill does and what every piece of legislation does that the Environmental Protection Authority is built on. 
Labour then says the bill is not clear about the need for the Environmental Protection Authority to take Maori perspectives into account in decision making. I find that to be a real example of the fact that Labour members did not come to select committee meetings and hear what was said because the Environmental Protection Authority like the Environmental Risk Management Authority before it will have an independent board and a Maori advisory board. Like the Environmental Protection Authority itself the Maori advisory board will be at arm’s length from the Minister. From the submissions we received we know that the board is regarded as a very good form of inclusion for independent Maori representation. 
This is a good bill. It is the fulfilment of yet another election promise. It strengthens New Zealand’s environmental management. The Environmental Protection Authority will be a strong independent authority that will bring a strong national direction to environmental decision-making and most important it will have the protection of the environment at its core. Thank you. 
PHIL TWYFORD (Labour) 
: 
 As my colleague Charles Chauvel has pointed out Labour voted for the Environmental Protection Authority Bill at the first reading. We considered it to be on the face of it an important initiative an important development in the Government’s legislation programme. But we are bitterly disappointed with the bill that has come back to this House. We genuinely hoped that the submissions process and select committee scrutiny would strengthen this bill and would give the new Environmental Protection Authority the tools and the standing it needs to do the job it is supposed to do but New Zealand has been sadly let down. 
There is a “truth in advertising” problem at the heart of this bill. It claims to establish an Environmental Protection Authority but as my colleague has pointed out it is an Environmental Protection Authority only in name. 
Labour has four key concerns about the authority. The first is that the functions of the authority are far too narrow. It is incapable under this bill of providing any strong leadership in environment matters. All it really gets to do under the bill is to manage the fast tracking of consents for major projects and a few other bits and pieces: the registry functions of the climate change response legislation and the Environmental Risk Management Authority’s old role under the Hazardous Substances and New Organisms Act. 
A whole lot of things are missing from the bill that submitters came along to the Local Government and Environment Committee and said should logically be in the bill. We agree with those submissions—for example coastal and marine management and environmental management under the exclusive economic zone the administration of our Antarctic obligations the administration of an environmental enhancement fund generated by fines issued by district and regional councils the Waste Minimisation Act and numerous other functions under the Resource Management Act. 
The second objection we have to the bill is that the objectives are plainly inadequate. They do not even expressly require the authority to protect the environment. Instead as the bill is currently worded the objective of the authority is to “undertake its functions in a way that—(a) contributes to the efficient effective and transparent management of New Zealand’s environment and natural and physical resources; and (b) enables New Zealand to meet its international obligations.” 
Something is missing from the bill. Let us play a game of  
Where’s Wally? 
. Let us look for where in the bill we can find any kind of mandate to protect the environment. If we were to play the game we would be playing it for a very long time. We have looked in the bill and it is not evident to us that protection of the environment is what the authority is all about. 
The third objection we have is that the structure mandate and authority of the authority is so weak that it is not sufficiently independent from the Minister to give it the strength and integrity it would need if it had the real job of protecting the environment. If we look at the hazardous substances and new organisms role it will inherit from the Environmental Risk Management Authority we see that the authority will have less independence from the Minister than the Environmental Risk Management Authority currently has in its administration of those tasks. That is a real concern. If the Government seriously believed in stewardship of New Zealand’s natural environment for the sake of future generations then it would have beefed up the provisions in the bill and given the authority the independence and integrity to do the role free from potential political interference. 
The fourth concern we have is that the bill is very confusing about the authority’s obligation to take into account in its decision making its responsibilities to tangata whenua and Maori perspectives. Frankly we are surprised that the Maori Party has not clearly insisted on the insertion of a Treaty clause. All other major environment and conservation legislation today has a Treaty clause that requires the administrators of the legislation to take into account Treaty obligations. Such a clause is not in the bill. That sends a very confusing message. 
When we introduced the Ministry for the Environment in 1986 the intent of that move and of all the changes we have seen in the intervening period was to integrate environmental sustainability into the heart of policy making in this country so that it sits alongside social and economic objectives and operates in a complementary way not in a competitive way. We have seen from the Government over the last 2 years and we see in this bill a perspective that sees economic and environmental objectives as competing interests to be balanced or set off against each other. It is simply irresponsible to see the objectives as being separate; they are inextricably bound up together. Unless they are taken in an integrated way policy making in this country will never adequately protect the environment and our prosperity. When the objectives are set off against each other and seen as separate and competing we instead see the kinds of policy failures that Charles Chauvel outlined in his speech—a litany of missteps and mishaps by the Government on environmental and conservation policy over the last 2 years. 
I will come back to the functions of the authority and comment in a little more detail about the other things that should have been in the bill such as the administration of the Waste Minimisation Act numerous Resource Management Act functions coastal and marine management and an environmental enhancement fund. We agree that those things would have amounted to a much more logical and substantial work programme for the authority. Instead we see piecemeal transfers of jurisdiction from existing bodies. The bill will be a legislative dog’s breakfast for future policy makers and administrators let alone the public in trying to come to terms with the effect of this now interlinked legislation. The Climate Change Response Act the Resource Management Act and the Hazardous Substances and New Organisms Act all have to be read in conjunction with the new Environmental Protection Authority legislation. That is not the way we should be making laws in this country. 
In addition we have raised concerns—and the Minister for the Environment has attempted to address them—about the way future functions will be transferred to the authority. We are uneasy with what is set out in the bill because it does not contain a brightline test that we can be confident will distinguish between ancillary and substantive functions. We fear that the Minister of the day will make a determination according to political judgment about which new functions should or should not be transferred to the Environmental Protection Authority. That is a real weakness in the bill. 
These flaws are so fundamental that we worry that it will be impossible for the new authority to survive as a credible institution charged with managing and protecting the environment for New Zealanders. This is a classic case of legislation that should have waited for the Minister to do his work to put the building blocks in place and to put in place a new regime that was logical credible and substantive. Instead we see a new institution that is insubstantial. There are question marks about its integrity and whether it can in fact carry out the role it has been given. The worry is that it will be stillborn. 
There has been some comment already about the fact that the authority’s objective does not adequately set out the role of environmental protection and I know that my colleagues will have further comments to make about that fact. Thank you. 
SUE KEDGLEY (Green) 
: 
 George Orwell when he wrote his book  
Nineteen Eighty-Four 
 coined what he called the language of newspeak or double-speak. It was a language that made the bad seem good and the inappropriate seem appropriate. So it was really a language where one pretended that one was doing something wonderful when one was actually doing something to sabotage things. This double-speak would apply extraordinarily well here. In fact the whole Environmental Protection Authority Bill is a classic example of George Orwell’s double-speak. We can see from the title that we will have an Environmental Protection Agency. How fantastic! 
Hon Dr Nick Smith 
: Authority. 
SUE KEDGLEY 
: I am sorry; the bill is called the Environmental Protection Authority Bill. Wonderful! But when we flick through the bill to find the objectives we see that there is no objective to protect the environment. It is all about the efficient and effective management of the New Zealand environment. That is a code as Charles said for saying: “Let us give an agency powers to ram through to fast track projects—controversial projects—so we do not have to have long prolonged battles as the Minister for the Environment said. He cited various prolonged battles we had had— 
Hon Dr Nick Smith 
: The Wellington city bypass. 
SUE KEDGLEY 
: —like the Wellington city bypass. He said he wanted to be able to ram these through in a short period of time. 
No one should be deceived about what the Environmental Protection Authority Bill is about. There are two reasons alone I believe why the Government is getting rid of the Environmental Risk Management Authority and setting up this authority. The first is that it wants to remove the autonomy the Environmental Risk Management Authority has. It has a degree of autonomy and the Government wanted instead to set up an agency that lacked autonomy—one the Government could give directions to. That is what the bill does. It states that the Environmental Protection Authority must give effect to Government policy when directed by the responsible Minister.  
In other words the legislation will enable the Environmental Protection Authority to act as a rubber stamp for the Government. The Government was annoyed that Environmental Risk Management Authority had a degree of autonomy a degree of independence which prevented the Government from giving it directions. So that is the first purpose of this bill.  
The second purpose is as Charles Chauvel said effectively to turn it into a national development agency to enable it to fast track controversial projects. The project it is most keen to fast track and is doing so at the moment ramming through— 
Chris Auchinvole 
: Ramming? 
SUE KEDGLEY 
: Yes. I am talking about the so-called roads of national significance—the motorways all around New Zealand. We are spending $2 billion on motorways at the very time when oil prices are escalating. The Government is raiding the transport budgets for walking public transport and so on to build motorways around New Zealand. It was worried it would face opposition and it needed a mechanism to ram through these projects like a great big juggernaut. 
It was interesting that just a few nights ago in Hataitai there was a public meeting to discuss the fact that part of the huge great motorway coming from Levin right through to the airport will be a four-lane motorway dividing the lovely suburb of Hataitai. I can tell members that when the residents of Hataitai realised that the Government’s plan—which will finally be released in May—is to have a big motorway through their community they were horrified. People from Kapiti were at the meeting and they said that that road that motorway imposed on the community and has devastated the community. 
The Minister has come up with this particular motorway. He consulted the residents. They came up with an alternative he completely ignored it and now there is a great big juggernaut ramming this road through Kapiti and causing chaos. But the problem is that under the new authority the Government will have the powers to fast track projects—and that is what this bill is all about. It is about enabling the Government to get its bulldozer through unimpeded by local communities that are implacably opposed to the Government’s plans. 
No one should be under any illusion. This bill has two purposes: to erode the independence of the Environmental Risk Management Authority and to ensure that this so-called Environmental Protection Authority will be a rubber stamp for the Government. The Government will be able to give directions and the agency will have to give effect to Government policy when directed by the responsible Minister. The Government will then be able to fast track controversial projects. 
I notice that one of the things being transferred to the new authority is the Ozone Layer Protection Act and we can only hope that the authority with its very very limited powers will be able to do a slightly better job than the Ministry for the Environment in terms of protecting the ozone layer. This is another sort of Orwellian example. In 1987 New Zealand signed the Montreal Protocol. We pledged solemnly that we would refrain from using methyl bromide and that we would use non - ozone depleting technologies wherever possible. Since we signed the protocol our usage of methyl bromide the most ozone-depleting substance that humans have ever invented has increased by more than 500 percent. In 2009 we used 271 tonnes of methyl bromide and we destroyed 136 tonnes of ozone. I repeat: 136 tonnes of ozone. 
So we signed the Montreal Protocol we made these wonderful pledges and then we proceeded to increase our use of methyl bromide steadily and we do not— 
Hon Dr Nick Smith 
: Tell the full story. 
SUE KEDGLEY 
: We have alternatives. We have recapture technology that we could be using but no the Government—the Environmental Risk Management Authority in this case—has not required us to use recapture technology. Instead for another 10 years we will be allowed to release the most ozone-depleting gas that humans have ever invented in this primitive way directly into the atmosphere. We will be able to continue to use our atmosphere as a sewer and this is all in the name of implementing our solemn pledges under the Ozone Layer Protection Act. 
So we can only hope that when these functions are transferred to the Environmental Protection Authority it will be slightly more effective than the ministry but we know that it will not be because the objectives of the authority are to be just the efficient and effective management of New Zealand’s environment. That is a code for enabling the Government to fast track large projects such as building motorways around New Zealand. 
The authority has no objective to protect the environment and of course it will be totally hamstrung because it will be required to give effect to Government policy. The authority will be under the direction of the Minister. It will be required to be a rubber stamp of the Minister. The Environmental Risk Management Authority had a degree of autonomy and that enabled the authority to try to be something of an independent protector of the environment. But this bill unfortunately makes the new authority just a rubber stamp for the Government. 
New Zealanders should be under no illusion: this is an Orwellian piece of legislation. It will not unfortunately protect the environment. We will not have as the Minister said a world-class environmental system although we wish that were the case. We will be opposing the bill for that reason and because it gives the authority such limited powers such limited objectives and no autonomy. 
Dr CAM CALDER (National) 
: 
 It gives me great pleasure to rise and speak on the second reading of the Environmental Protection Authority Bill. The bill establishes the Environmental Protection Authority as a stand-alone Crown agent to perform environmental regulatory functions. The bill is an omnibus bill. It amends the Climate Change Response Act Hazardous Substances and New Organisms Act and Resource Management Act. 
We have heard some concerns from members on the other side of the House which I can say having served on the Local Government and Environment Committee were not reflected in a lot of the submissions we received. In fact it is remarkable that of the 38 submissions a total of 25 were in broad support of the intent of the bill. Twenty-five submissions were in broad support of the bill. Some of them made suggestions for amendments which we have taken on board. 
What are we aiming to do with the bill? The Environmental Protection Authority will be a strong independent regulatory authority that will ensure the protection of our environment at a national level. The authority will bring together a wide range of regulatory functions and provide a strong national direction to the environmental roles of regional and district councils. Immediately we are giving an element of certainty. 
Once again the Government believes in keeping its promises and the bill is a reflection of our efforts to lift our economy and cut the red tape that grew like a noxious weed through the regulatory framework of New Zealand under the last administration. The stand-alone Environmental Protection Authority will strengthen New Zealand’s environment management. It will be a one-stop shop for environmental regulatory functions. 
We have heard some concerns about the authority’s independence. Let me just try to put some of those concerns to rest and to allay some of the concerns expressed. The majority of the authority’s decision-making powers will be under the Hazardous Substances and New Organisms Act. Currently the Hazardous Substances and New Organisms Act restricts the power of the Minister for the Environment to direct the Environmental Risk Management Authority to give effect to Government policy when making decisions under the Act. The bill maintains that restriction. Therefore the autonomy of decision making under the Hazardous Substances and New Organisms Act is preserved. 
With regard to the Resource Management Act decisions on proposals of national significance will continue to be made by boards of inquiry and the Environment Court which are both independent bodies. The authority’s only decision-making power under the Resource Management Act will be for certificates of compliance related to proposals of national significance. As with decision making under the Hazardous Substances and New Organisms Act the bill prohibits the Minister from directing the authority to give effect to Government policy when making decisions on certificates of compliance. That is an important point to stress. 
There will be more effective efficient and transparent management of regulation around New Zealand’s environment and natural physical resources. As I say the bill brings together under one roof the regulatory functions that are currently administered by the Ministry for the Environment. We heard from a previous speaker the very able chairman of the Local Government and Environment Committee Mr Chris Auchinvole that the raison ďêtre—the mission statement—of the Ministry for the Environment is “environmental stewardship for a prosperous New Zealand”. The bill will also bring in functions that are currently administered by the Ministry of Economic Development and the Environmental Risk Management Authority. I commend the bill to the House. 
STUART NASH (Labour) 
: 
 I find it quite interesting that the previous speaker Dr Cam Calder was on the Local Government and Environment Committee which heard all the submissions that he proposes to be passionate about the Environmental Protection Authority Bill that he represents the Government and that he has an interest in this bill yet he stands up and speaks for only about 5 minutes on what is reasonably important legislation. I wonder whether that is because he simply has no plan has no idea how the bill actually works and does not have an understanding of what the bill is about. 
I would have thought that Dr Calder he had an idea of what the bill was about—and this is reasonably controversial legislation—he would stand up for the 10 minutes which is not long to try to sell it to the people of New Zealand. He would have put his best foot forward and explained why the Government is putting this legislation through. But he did not. He either did not or he could not. I suspect his senior whip said to him: “Dr Calder you need to stick on this for 10 minutes because we’re getting a lot of rubbish and a lot of bad emails about this bill. You need to sell this.” So he said to the senior whip that he would do that. He stood up and after 5 minutes he realised that he could not sell the bill because it is not saleable. He asked himself what he would do. So instead of trying to sell the bill he commended the bill to the House and sat down. After 5 minutes he could not even sell it. 
In 10 minutes I will attempt to outline the major concerns that Labour has about this bill. If I had been given 20 minutes—although unfortunately I was not given that amount of time—I would have used the full 20 minutes to outline the concerns. If I had been given the full 2 hours then that would not have been long enough to outline the concerns that Labour has about this legislation. The main reason is that we care about the environment. We understand what New Zealand’s competitive advantage is about. We understand where New Zealand’s competitive advantage lies. 
Labour did vote for this bill in the first reading. Do members know why? Because we support democracy. The reason was that we wanted to know what the people of New Zealand thought about it. We needed to know what the experts thought about it where they saw problems and how they saw the legislation playing out. We wanted to get their ideas. So we supported it to go to the select committee because that is where the robust debate happens. After hearing all the submitters we knew that it was the wrong legislation. It is the wrong legislation for New Zealand. 
But I must admit that when we did support this legislation we had major reservations which were played out. We were concerned that the Minister for the Environment would use the Environmental Protection Authority as a mechanism for fast tracking controversial projects through in an undemocratic way without adequate consultation. Well I will tell members what happened: the Government floated the idea of mining the national parks without consultation. But 40000 Kiwis decided to have some form of consultation and what did they do? Without any sort of advertising they marched up Queen Street and told the National Government: “How dare you even consider mining schedule 4 land?”. Those people understand where New Zealand’s competitive advantage lies. They know that New Zealand’s competitive advantage lies in our pristine environment and in a regulatory framework that makes sure that the environment is protected. This bill does not do that. Labour’s concerns were reinforced at the select committee and we decided to oppose this bill. 
I tell members that when it comes to policy and when it comes to vision there will be only one party that the people of New Zealand will listen to. The party over there does not have a vision and it does not have a policy. It has legislation that will fast track economic policy like mining national parks. 
Hon Dr Nick Smith 
: Just tell us your policy. 
STUART NASH 
: The Minister for the Environment asks what our policy is. Well I can tell him what our policy is not: it is not to mine national parks. I can tell the people of New Zealand and I say this to the Greens and to anyone who will listen that Labour will not mine schedule 4 land. Labour will not have a Minister for Economic Development who stands up in this House and says we need to mine our national parks. That is what we will not do. 
Further to that we will not have an agency in place that is not answerable to the people but only to the Minister because we know that when it comes to this sort of stuff the people of New Zealand demand the right to be consulted. The functions of the Environmental Protection Authority are too narrow. They are just too narrow. The authority will not provide the environmental sector with any sort of leadership. Do members know why I am right? Because the Minister is trying too hard to defend this legislation. He knows that it is wrong. 
Dr Ashraf Choudhary 
: He’s a lawyer. 
STUART NASH 
: He is an environmental engineer I think. In fact I think the Minister may even have a doctorate in environmental engineering. We should look at how far he has come in terms of protecting the environment. The Minister lives in a pristine area. It is one of the nicest places in the country outside Hawke’s Bay yet he is sponsoring a bill that could potentially destroy that. There is only one thing that the people of Nelson will tell him: “Thank you Dr Smith but no thanks.” I predict that Maryan Street will be the next MP for that area. I predict that that will happen. 
The Environmental Protection Authority’s objectives are inadequate. They are just inadequate. They do not even expressly require the authority to protect the environment. Labour will have a policy where the environment comes first. We are living in the 21st century. This is the 21st century when “environmental” actually means something when water quality stands for something when air quality means something and when the people of New Zealand demand accountability from Ministers and from the Government and this bill is taking that away. 
Who would believe that the Minister for the Environment would sponsor a bill that does not even expressly require the authority to protect the environment? Instead as clause 11(1) of the bill is currently worded the objective of the authority is to undertake its functions in a way that “(a) contributes to the efficient effective and transparent management of New Zealand’s environment and national and physical resources; and (b) enables New Zealand to meet its international obligations.” I think that Gerry Brownlee has interpreted “the efficient effective and transparent management of New Zealand’s environment” to mean that he can take in diggers and we can dig it up that we can mine our schedule 4 land that we can mine our competitive advantage and that we can send a message to all those around the world that New Zealand just does not care because we take for granted what the rest of the world requires. 
I lived in a city in Japan for a year and I can tell members that after living in a city like that one really comes to appreciate the beauty that is this wonderful country. One really comes to understand that New Zealand’s competitive advantage is our countryside our national parks our clear water and our clean air. Yet this bill does nothing to protect our international competitive advantage. It is just another case of the fact that the Government actually has no plan. I have come to the conclusion that the Government and the Minister for the Environment in particular has lost touch with reality. The Minister does not understand what New Zealanders want. The Minister does not understand what New Zealanders value and we know that because this bill does not reflect those values at all. 
The authority is not sufficiently independent from the Minister especially on issues regarding hazardous substances and new organisms. In fact its independence is reduced. I wonder whether this bill is just another feature to allow the fast tracking of mining in national parks. I think this bill is leading to that. I think that if Nick Smith is in charge of that then we will see schedule 4 land mined and there will not even be the chance for the people of New Zealand to march up Queen Street because before they know it the bulldozers will be there and that is a disgrace. That is a disgrace as is this bill. This legislation is confusing. It denies our competitive advantage and Labour certainly does not support a bill that is out of touch with what the vast majority of New Zealanders want. I will not be supporting this bill and neither will Labour. Thank you very much. 
CHRIS TREMAIN (National—Napier) 
: 
 The Environmental Protection Authority Bill takes another step in delivering on a National Party promise to the New Zealand electorate and it takes another step forward to protect the environment. I want to take a few minutes at the end of this session tonight to reflect on Charles Chauvel’s criticism of National and its environmental record and to compare that with the record of our Labour friends across the House working together with the Greens. 
Let us start with greenhouse gas emissions. Labour came into office in 1999 criticising the Kyoto target as being too modest. It said a 20 percent reduction in emissions was required by 2005. Helen Clark upped the ante further in 2007 when she said New Zealand would be the first carbon-neutral country in the world. Despite the rhetoric UN figures showed an increase in emissions from 69 million tonnes in 1999 to 77 million tonnes in 2005 alone. That was a 12 percent increase compared with Labour’s promise of a 20 percent reduction yet Mr Nash was saying “We care about the environment.” That is absolutely laughable. What is more despite the rhetoric it took Labour 8 years to get any climate change legislation through the House. Can members believe that! On the other hand National immediately put its climate change legislation through the House and it was passed within National’s first year in Government. Now here we are with this Environmental Protection Authority delivering another promise from National within our first term. 
Let us look at the planting of trees because this is really interesting in terms of protecting the environment. The Labour-Green record on forestry planting can be described only as a chainsaw massacre. New Zealand lost 30000 hectares of trees in Labour’s last 4 years in office—more than in any other period since records began in the 1930s—yet Labour members say they care about the environment. It is a joke. National has implemented clear definitive policy to turn that round. In 2009 the deforestation stopped and there was a small gain in forest area of 500 hectares. I accept that that is not a lot but it is certainly going in a much better direction than that where the Labour Government left this country. Foresters indicate there will be increased plantings of 4700 hectares this year and of a further 5000-odd hectares next year. That is an upward trend. Again the Environmental Protection Authority is another step. 
Let us look at renewable energy because that one is a real classic. Despite all the hype about wind power and renewables New Zealand went consistently backwards with renewable energy for 9 years under a Labour Government in proportion to electricity generated from renewable sources. In 2007 New Zealand produced less electricity from renewable resources than in any year in our history. It is laughable for members opposite to step up at this time of the night and say they care about the environment. The record is obvious and here we are implementing another policy as we promised our electorate to protect the environment. Thank you. 
KELVIN DAVIS (Labour) 
: 
 First of all I congratulate my colleague Stuart Nash on the eloquence and detail of his speech. I also acknowledge what Sue Kedgley said about double-speak in the Environmental Protection Authority Bill because the title of this bill is a misnomer. There are no actual guarantees that the environment will be protected. 
The other double-speak I would like to raise in the very short time I have is that in the Minister for the Environment’s first reading speech he said this bill is about having an efficient public service where we group like activities together under one roof. That is double-speak for cuts to public services. 
Debate interrupted. 
The House adjourned at 6 p.m.