Volume 649 Week 84 - Tuesday 2 September 2008(continued on Wednesday 3 September 2008) 
Text is incorporated into the Bound Volume 
Volume 649 Week 84 - Tuesday 2 September 2008(continued on Wednesday 3 September 2008) 
[Sitting date: 02 September 2008. Volume:649;Page:18187. Text is incorporated into the Bound Volume.] 
Tuesday 2 September 2008 
( 
continued on Wednesday 3 September 2008 
) 
Employment Relations (Breaks and Infant Feeding) Amendment Bill 
In Committee 
Debate resumed. 
Part 1Commentary  ( 
continued 
)  
SUE MORONEY (Labour) 
: 
 Last night when we were debating Part 1 of this bill the National Party was asking what these issues had in common. I just want to spell it out because this debate is about the purpose of this bill. National members asked what having meal breaks and rest periods having the right to breastfeed at work and having the right to take a personal grievance against one’s employer if he or she tries to disadvantage one for joining KiwiSaver have in common. Well I will tell National members what those things have in common: it is all about fairness at work. It is all about having fairness at work and it is all about ensuring that when there are mean-spirited employers who will deny employees their proper meal breaks or will try to disadvantage them because they dare to save for their future or dare to save for their retirement all these things are about fairness at work. The Labour-led Government will not stand by a minute longer to allow that unfairness to continue in the workplace and that is what it is about. So the National Party needs to understand that workers do have rights at work that it is about fairness and that— 
Paula Bennett 
: Send it back to the select committee. 
SUE MORONEY 
: The member says to send it back to the select committee. There was a very full select committee process over KiwiSaver. The employers understood the rules—they knew exactly what was being asked for there. And the National Party voted against KiwiSaver as well. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Before I call Dr Wayne Mapp I will ask whether we could have less barrage. Both sides know well I say to Miss Bennett—less barrage. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I should correct an impression that you gave—that this is a hard-working Government that would work through to midnight. In fact Government members were so lazy that they actually lifted the Committee at 10 o’clock— 
The CHAIRPERSON (Hon Marian Hobbs) 
: Apologies and you know very well that we were not in urgency and that we finished at 10 o’clock as per normal and as per the rules of the House. No game-playing. On you go. 
Dr WAYNE MAPP 
: We are debating as is quite plain not just the purpose provision but also this Supplementary Order Paper. I know that the Government thinks it has done a good thing for workers but in fact it totally misunderstands the situation. The Minister in the chair the Hon Trevor Mallard has been in continuous conflict with the Employers and Manufacturers Association (Northern) Inc.—not that it is a surprising situation for this particular Minister to be in continuous conflict with whomever he is talking to—and Government members have always misunderstood the point that the Employers and Manufacturers Association (Northern) was making. It is surely an issue of choice whether someone joins the KiwiSaver programme and the whole point of the Employers and Manufacturers Association’s concern was that it is the total remuneration that ought to be looked at. People should be able to say: “Well I’m going to be in KiwiSaver and I will get my remuneration through that.” or “I’m not in KiwiSaver and I don’t want to be disadvantaged against those people who are in KiwiSaver.” So in that instance some people will simply want to have the cash in hand. That is particularly true of lower-paid workers.  
Certainly there are a significant number of workers in KiwiSaver—I understand that—but I would suggest to members that the ratio of lower-income workers is not nearly as high as middle-income workers. The truth is that if one has more money it is usually easier to save and those are the groups that are choosing to join KiwiSaver. Actually I might add that the 700000 includes a very large number of children who were joined up by their parents who are there to get the $1000 without having to make any further contributions. Often the Government tries to pretend that that figure of 700000 represents people who are in the workforce. Well that is actually not the case anyway—many of them are children. 
I suggest to the member who spoke before Sue Moroney that in fact lower-paid people are not joining KiwiSaver at nearly the same frequency as middle and higher income earners. So that is why the Employers and Manufacturers Association’s view on KiwiSaver is the correct view because it is all about people making choices. For lower-income people that is a particularly important choice they need to be able to make for many of them actually need the cash in their pockets—not put into a savings scheme. Paying the petrol bills paying the food bills and paying the interest or rent is rather more significant than saving for the future. Indeed many of those people will simply see New Zealand superannuation supported by the superannuation scheme as probably their protection.  
I want also to correct another misapprehension that the Government is labouring under. Sue Moroney explicitly said she did not expect National to support this bill at its third reading. I want to make it very clear to the Government and more important to New Zealanders that we are supporting the bill its at third reading—that is not news. Whilst we are opposed to the insertion of the Supplementary Order Paper put in this way we do not see that as such a large issue that would then cancel our vote altogether for the broader principle around fairness in the workplace in relation to meal breaks and mothers who wish to breastfeed at work. We do understand the importance of those claims and therefore wish to support the bill. That is indeed why the bill has gone through the parliamentary process relatively quickly. It was introduced only earlier this year and it is now going right through into law at this point in time. And that does actually represent a level of consensus. I know it pains the Government to find out that we are supporting it. I guess the Government would prefer us to vote against it but in fact we are supporting it. 
CHRIS AUCHINVOLE (National) 
: 
 I recall the way this Employment Relations (Breaks and Infant Feeding) Amendment Billwas introduced to the public once it had been decided on. I was actually down at Blackball on the West Coast and indeed Madam Chair you may have been there yourself at the time. You too will possibly remember the occasion of the 90th anniversary celebration of Paddy Webb and others’ activity in obtaining half-an-hour’s crib time for coalminers. This was an interesting occasion because there were historians down there who painted an interesting picture of the whole sequence. 
Let us address Part 1 of the bill. It refers largely to breastfeeding opportunities for mothers and to rest breaks. It is a perfectly sensible bill and one that National is supporting. It was introduced as I say at Blackball. Maryan Street introduced it to the assembled gathering that was down there to note the 1908 strike which led eventually to the crib break of half-an-hour. There were quite a few interesting aspects of that. There were some historians there and there was also a High Court judge there who corrected some of the myths and the legends that have crept into the memory of the litigation. An interesting point is that there had always been a half-hour crib break which was reduced to 15 minutes at the request of the miners so they could get out of the mine a little earlier. So it was not quite as plain as it first looked. I have to say that this bill is not quite as plain as it first appeared because here we go again. An innocent and useful little bill has been treated as a sort of miniature Trojan horse. 
The bill has been loaded in the words of my colleague Kate Wilkinson with a “sneaky little Supplementary Order Paper” as if by sleight of hand to include an amendment to cover disadvantages to employees signed up to KiwiSaver as grounds for personal grievance. I wonder whether this is really in the scope of the bill. I do not remember it being discussed. It certainly was not mentioned by Maryan Street down in the workingmen’s club in Blackball. She said in her splendid manner that she had received advice from the Hon Trevor Mallard that we had these new advantages for working people—breastfeeding breaks meal breaks and rest breaks. She did not say: “Oh and by the way there’s going to be another little addition that will refer to personal grievance associated with KiwiSaver.” 
How long has this been part of an intended but undisclosed agenda? I do not say it is a secret agenda because it is out in the open now but there was certainly very little advice when this bill was put forward that this provision around KiwiSaver would be part of it. I have to wonder as a novice in the House what other Supplementary Order Papers disguised as something else we will see slipped into bills as part of an intended but undisclosed agenda during this period of urgency. I am astonished that this is the way it is done. Is this really the ethical standard that Labour is now showing towards the end of this term? Is this Mr Mallard’s ethical standard suddenly revealed? What else will be rushed in during urgency? Ah the Minister smiles! That indicates to me—being a trader and a bit of a negotiator—that what we have seen is just the start. Are we going to hear perhaps something about the situation of Timberlands down on the West Coast where West Coast millers and West Coast communities are calling for a response from Mr Mallard and other shareholding Ministers? There seems to be silence on the issue. Those on the West Coast seem to think they have not been treated fairly. 
The CHAIRPERSON (Hon Marian Hobbs) 
: The bill sir the bill. 
CHRIS AUCHINVOLE 
: Indeed. Coming back to the bill I say that this again is a situation where something has been promised something has been proposed something has been discussed and now it is going to be changed. The emphasis has changed completely away from the original intention of the bill. People are beginning to feel “We was robbed we’ve been cheated.” I think Paddy Webb whom I have respect for would have been ashamed. 
KATE WILKINSON (National) 
: 
 I raise a point of order Madam Chairperson. I seek a ruling as to the relevance of the amendment to the initial question pursuant to Standing Order 119. I seek a ruling as to the relevance of KiwiSaver to the issue of meal breaks as it is outside the Standing Orders and therefore out of order. 
Hon TREVOR MALLARD (Minister of Labour) 
: 
 The member is absolutely right and that is why the House before it went into Committee unanimously passed a motion to bring the amendment within the scope. 
The CHAIRPERSON (Hon Marian Hobbs) 
: That is actually correct Ms Wilkinson. There was a— 
Hon Trevor Mallard 
: —motion in the name of Dr Cullen. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Yes. A motion—and I have in front of me now—was moved at the beginning. It said: “I move that it be an instruction to the Committee of the whole House that it have the power to consider and if it thinks fit adopt the amendments set out on Supplementary Order Paper 229.” That was passed by the House and therefore it has been agreed by the House that Supplementary Order Paper 229 is under consideration as part of this bill. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I raise a point of order Madam Chairperson.  
The CHAIRPERSON (Hon Marian Hobbs) 
: Is it a new matter? 
CHRIS TREMAIN 
: I want to clarify when specifically that was moved. 
Hon TREVOR MALLARD (Minister of Labour) 
: 
 It was moved immediately after the urgency motion; as soon as this bill was called and before we went into Committee. The member’s party supported it. 
CHRIS AUCHINVOLE (National) 
: 
 Just to help me with the technicalities does that mean then that without that clause this particular part would not have been within the scope of the bill? 
The CHAIRPERSON (Hon Marian Hobbs) 
: Let me take the member through it very slowly. The House is master of its own destiny. In this case a motion was put to the House while the Speaker was in the chair which said we should consider this Supplementary Order Paper 229 in conjunction with the bill. The House agreed to that. That is done. Otherwise it may not have been—but the House agreed to that. I will take no further points on that. 
DAVID BENNETT (National—Hamilton East) 
: 
 We have just seen a prime example of what the Labour Government has been doing in the last couple of weeks. It has been doing sneaky little tricks to pass through things that it knows it cannot pass through under the conscience of the public gaze. 
Hon Trevor Mallard 
: I raise a point of order Madam Chairperson. The member is now referring to a ruling that you have given and to a motion that has been agreed to by the House as was made absolutely clear. This was not sneaky; this was something that was agreed to unanimously. The member’s whips voted for it. 
DAVID BENNETT 
: Madam Chair— 
The CHAIRPERSON (Hon Marian Hobbs) 
: You are not speaking to the point of order? 
DAVID BENNETT 
: No it is the speech. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I will rule on the point of order. Can we just settle down on the issue. Members may make points of order about it but they cannot say that the House has been sneaky. The House agreed to this. 
DAVID BENNETT 
: I never implied that the House was sneaky; I just implied that Labour was sneaky. There is a subtle difference there. 
The Employment Relations (Breaks and Infant Feeding) Amendment Bill is an attempt by the Labour Government to put through a couple of pieces of its policy in a bill under the guise of something that politically most members of the public want to see happen. The infant feeding portion of the bill is something that is not really a debatable issue. Most members of the public perceive the need for that and for some regulation in that area.  
The meal breaks portion of the bill is not such a public issue and has not required such attention. It was quite obvious in the Transport and Industrial Relations Committee that this idea was not thought through. The meal breaks component of the bill could have taken away workers’ rights. There was the potential that many workers may have engaged in contracts that gave them greater meal breaks than the mandatory ones in this bill. The bill had to be amended at the select committee once the National Party members brought it to the Government members’ attention that the bill they put forward would hurt workers. They were putting forward legislation that would take rights off workers. Can members believe that? Only the National Party members of the select committee brought that up and it was only the National members’ good conscience at the select committee that enabled workers to retain the rights that they got in their individual agreements rather than get Labour’s quick-fix solutions to these idealistic programmes that did not take into account the reality of contractual arrangements between employees and employers. 
Today and yesterday we have been aghast at seeing that the Minister has included a portion in this bill in respect of the KiwiSaver legislation. There is a problem in respect of the KiwiSaver side of it. That programme was another piece of legislation the Government brought forward that it did not think about. It did not follow due consultation and it did not look at what the options would be in the marketplace. One of the problems with the KiwiSaver legislation has been that employers may be able to not give a wage rise in the year following the implementation of the legislation and to say that the KiwiSaver contribution is the pay rise. That is something that a lot of employees would naturally feel quite aggrieved to see happen. This is why that change has been brought about to the legislation—so that elements of the law in which employers could potentially take advantage of employees are able to be rectified.  
But this is not the appropriate place to do that. It is not the appropriate place to put in a sneaky amendment to legislation that would mean that this part of the KiwiSaver regime had been fixed up through a Supplementary Order Paper in respect of the Employment Relations (Breaks and Infant Feeding) Amendment Bill. If the Minister had liked to do the process properly he should have put forward an amendment to the KiwiSaver legislation and put it through the appropriate political processes not use this method of trying to get the fix-up measures done in time for an election in a few months’ time. 
Those fix-up measures are something that the National Party is now seeing and that the public of New Zealand will see over the next couple weeks. We are seeing this Government attempt in any little way it can to change legislation to its advantage in its last dying days in office. We will see it put up a lot more Supplementary Order Papers and amendments. The National Party will be vigilant in looking at those because it now sees the agenda of this political party in its dying days in Government. Its agenda is to change the focus of legislation. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 If the member over there is convinced that Supplementary Order Paper 229 put up by the Minister of Labour is sneaky why the dickens did he agree to it going before the House? The Minister sought leave yesterday evening to extend the scope of the bill to embrace his Supplementary Order Paper. Why the dickens did the National Party agree to it if it feels so strongly— 
Hon Trevor Mallard 
: Moved a motion. 
PETER BROWN 
: He moved a motion. The whole thing was done correctly as per the Standing Orders and National members sit over there and say “Oh it’s sneaky.” It is not sneaky if it is up front. 
New Zealand First supports this bill. Something else the member might think is sneaky—but I know that Kate Wilkinson does not—is the amendment in my name which adjusts the main part of the bill. It amends the part that deals with rest breaks in particular. It simply proposes adding subsection (2) to section 69ZH inserted by clause 5 and states: “(2) Despite subsection (1) where an employee is a person who is required to take a rest break by or under another enactment the requirement for a rest break defined by or under the other enactment applies instead of the provisions or entitlements for rest breaks or meal breaks provided under this Part.” The amendment comes about because basically the legislation that the Transport and Industrial Relations Committee—of which I was a member—handed back to the House did not correctly cover the rest breaks scenario in respect of the transport industry. We thought it did but it did not—hence the amendment in my name which I tabled this very morning. 
Supplementary Order Paper 229 in the name of the Hon Trevor Mallard deals with KiwiSaver. Let me make it quite clear: as far as New Zealand First is concerned we believe in compulsory savings. We always have; we have long been on record as saying that loud and clear. This measure is not compulsory but it is a step towards it. The Supplementary Order Paper is needed to ensure that there is the maximum incentive for individuals to join KiwiSaver. That is how I see it. It encourages people to join KiwiSaver. We understand that some employers are caught in a trap. Understandably they will be given time to rectify the situation but in essence KiwiSaver is an essential vehicle in this country to encourage people to save. We hope that in the fullness of time—and I clarify for members that I am talking about years rather than days and certainly not hours—legislation will come into being that makes it compulsory for people in this country to save. It is likely there would have to be exceptions for people on low pay who cannot afford to save but by and large we should do everything we can to encourage people in this country to save and we should eventually make it compulsory for them to do so. Australia introduced such legislation years and years ago and it has over a trillion dollars in its superannuation account that it invests here there and everywhere. It is about time New Zealand stepped up to the plate. New Zealand First has advocated that for a long long time. 
Supplementary Order Paper 229 improves the legislation by giving more incentive for people to save for their retirement and whatever else. So New Zealand First will support this provision. We would have preferred the process to be a little different—a little more transparent should I say—but we need this measure here and now. That is how New Zealand First sees it. So we will support it. 
In essence this bill is not contentious. It does the right thing for New Zealanders in terms of breastfeeding and breaks—I hesitated just then because I was going to say “smoko breaks” but they are not allowed now are they—and it addresses the KiwiSaver concerns. New Zealand First supports this bill. 
KATE WILKINSON (National) 
: 
 I am pleased to take another call on the Employment Relations (Breaks and Infant Feeding) Amendment Bill. The comments of Mr Brown were interesting. He said that the bill was not contentious and in a sense he was right. The bill was not contentious but it certainly is now in relation to KiwiSaver. I still think that the Supplementary Order Paper in relation to KiwiSaver is sneaky and I want to address that point for a moment.  
National will be opposing the KiwiSaver amendment to the bill. We will be voting for the bill because we do believe in fairness in the workplace and we do believe that workers are entitled to meal breaks and rest breaks. We think it is good employment practice also to provide breastfeeding facilities and breaks where reasonable and practicable. National does believe in fairness in the workplace.  
Employers should be able to treat employees fairly regardless of their private and personal savings decisions. Why should it be unlawful to offer employees different salary packages because they are or are not members of KiwiSaver? Why should one employee be treated less favourably than another merely because that employee has made a different private savings decision? It is a ridiculous approach for introducing important legislation to the House.  
The original bill has gone through a proper consultation process. Interested parties have had a chance to work through the issues it has raised. It has come out of the Transport and Industrial Relations Committee with amendments and now we have this last minute Supplementary Order Paper that gives the general public absolutely no opportunity to consider this change to the KiwiSaver scheme or to make submissions on it. This KiwiSaver amendment is actually another case of bad faith from this Government. This Government touts good faith all the time yet this is a perfect example of bad faith. The Government specifically allowed for employers to include employee KiwiSaver contributions as part of its total remuneration in the original KiwiSaver. Now it is reversing its position.  
This amendment will introduce complex and costly uncertainties into the planning of employers. They cannot be sure how much their wage bill is going to be in any given year and leaving well alone would at least allow some certainty to employers who in general have made a good fist of the introduction of KiwiSaver. Their good faith should be reciprocated.  
It is worth noting that it is actually unlawful now anyway for an employer to do what the Minister alleges—that is to deduct the employer contribution from employees without first giving them a pay increase of at least that amount. It is unlawful now. Why do we need this amendment? Currently section 101B of the KiwiSaver Act makes it quite clear that after 13 December 2007 the question of whether compulsory employer contributions are in addition to current remuneration or can be offset in part against pay rises is subject to mutual agreement between employers and employees. Good faith is a requirement. This Government has exhibited bad faith.  
That provision was specifically inserted at the time by Government members on the Finance and Expenditure Committee. At the time Michael Cullen said: “The Government expects that the phase-in of compulsory matching employer contributions will be taken into account in wage and salary bargaining.” That is what he said. The Government was therefore quite comfortable that there would be trade offs between pay rises and KiwiSaver contributions and now without consultation without allowing the submission process and without allowing the select process the Government has U-turned and reversed its position.  
This Government claims that this move will genuinely benefit people who are in the KiwiSaver scheme but if one looks at it the other way one sees that it will harm people who are not in KiwiSaver. People who can afford to save will benefit. People who cannot afford to save and enter into the KiwiSaver scheme will not be able to benefit.  
Employment laws should be based on what is fair. There should be a balance of what is fair in the circumstances to both employees and employers. Employment laws need to help both employers and employees control their own destinies as far as possible. This Supplementary Order Paper does not do that and as the Hon Peter Dunne has aptly stated the irony of this amendment is that it will disadvantage lower-paid workers and elderly workers—exactly the people whom Labour claims to represent. National will be opposing this Supplementary Order Paper but we reiterate that we are voting in favour of the fairness of the meal breaks portion of the bill. 
PAULA BENNETT (National) 
: 
 Thank you for the opportunity to speak in the Committee on the Employment Relations (Breaks and Infant Feeding) Amendment Bill. I will start off by talking about the importance of breastfeeding by our young mums—and our not-so-young mums as it happens to be in society a bit these days—and perhaps talk about how that actually works in the workplace. Although I am not a big fan of over-regulation and certainly find parts of this bill a little unnecessary if nothing else it has brought the issue a bit more to the fore. People are speaking a bit more about what that relationship means when women have a baby and then go back to work and how they juggle working the care of the child breastfeeding and everything else so how could we in the National Party not stand up and support that as being a good thing at the end of the day? 
When it comes to meal breaks I do not think I am alone in being relatively appalled at some of the stories that we heard such as those about people who perhaps did not get breaks had feelings of disadvantage and did not feel like they could stand up and have their voices heard on the issue. So to say that I thought this legislation was necessary would be utterly wrong but to say that if it has to be passed and this is the way that this Government thinks all problems can be solved—if it moves then legislate and regulate—then we actually can stand up and support it. 
This morning I will talk a bit about process. I do not think that anyone out there would disagree that if it were a National Government that was slipping a Supplementary Order Paper through like this one is being slipped through—at the last minute when the public had not had the opportunity to address it—and it was being introduced after the select committee process there would be an uproar from the other side of the Chamber. I can tell members that the uproar is happening from this side. We say that people deserve transparency on the issue. People deserve an opportunity to have a say on this Supplementary Order Paper because it makes a fundamental difference to the bill and therefore makes a fundamental difference to their workplaces. People deserve the opportunity to make sure there is transparency on this issue and they deserve an opportunity to be heard. This Clark-Peters Government is not giving them that opportunity and it is stepping aside and thinking it can slip something through under urgency at the last minute. That is appalling for process. It is bad lawmaking and bad for process to slip in a Supplementary Order Paper at the last minute that contains an amendment that makes a fundamental difference. That is wrong and people have a right to be heard. This Clark-Peters Government is a Government that supposedly stands up for democracy and believes that that should actually be happening. This process is obviously not open democracy.  
Hon David Cunliffe 
: Tell us about open democracy National Party—what do you stand for? What are your policies? 
PAULA BENNETT 
: Mr Cunliffe wishes to speak about open democracy and let us do that. Let us talk about what this bill actually means for employers when it comes to the KiwiSaver scheme and how it can happen. If this was so important that it needed to go through I ask the Minister in the chair the Hon Trevor Mallard why it was not put through at the beginning of the process and why it is being snuck through under urgency at the end of the process. I think that is a question that the Minister should stand up and be counted on—that he should put on record. Why was this Supplementary Order Paper not presented months ago when we were dealing with the 17th or 18th amendment to this legislation because it was rushed through so appallingly in the beginning? Why are we still rushing amendments through and why is the public not having a say on something that is of importance to them in their workplaces and in their workplace relationships? While this Clark-Peters Government rails on about how important process is how important open democracy is and how important it is to be open we are seeing a classic example of something being snuck through in urgency without the substance to go with it. 
Throughout the Committee stage on this bill we certainly heard people talking about breastfeeding and how important it is. I think it is for a small number of people who are still breastfeeding and who wish to have that in the workplace but we heard from employers that they saw that as being important as well and that they felt it was something they could accommodate relatively easily although it will differ from workplace to workplace as to how they actually do it. 
We heard about meal and rest breaks. In fact we heard that it is happening across the board and it is not such an issue. As far as this legislation is concerned I know that my colleagues on the select committee certainly spent a lot of time trying to make sure there was that bit of flexibility. The flexibility needed for those rest and meal breaks is as much for the advantage of the employee as it might be for the employer. We heard many instances of when employees wish to take a 10-minute break and attach that other 30 minutes at the end of the day so they can go home early to their children. They were looking at that sort of flexibility in their working arrangements. I only hope that this move to legislate will not deter some of those flexible arrangements that happen for employees and employers at the moment. Thank you Madam Chair. 
The question was put that the amendments set out on Supplementary Order Paper 229 in the name of the Hon Trevor Mallard to Part 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; United Future 2; Independent: Copeland. 
Amendments agreed to. 
Part 1 as amended agreed to. 
Part 2Amendments to principal Act  
The CHAIRPERSON (Hon Marian Hobbs) 
: This debate is on clauses 5 and 6. It also includes an amendment put forward by Peter Brown and the Minister’s amendments on Supplementary Order Paper 229. 
KATE WILKINSON (National) 
: 
 Again I am delighted to stand to take a call on Part 2 of the Employment Relations (Breaks and Infant Feeding) Amendment Bill. As we have been throughout this process National is supportive of giving meal breaks and rest breaks to workers and National is supportive of giving breastfeeding facilities and breaks in the workplace where reasonable and practicable. I have to say that it is not without some concern of course because the prescriptive nature of the bill does add compliance costs to businesses.  
In terms of the provision in relation to breaks the issue that was raised at the select committee was not the duration of the meal breaks and rest breaks or the provision of the meal breaks and rest breaks; it was the prescriptive nature of the timing of those meal breaks and rest breaks. Although one of the union submitters attempted to suggest that the old awards were far more prescriptive and that this provision was far less prescriptive that was actually proved to be false when we pointed out that the old tearooms award specifically stated that breaks were to be taken “at a time convenient to the employer”. “At a time convenient to the employer” is not the same as the wording in section 69ZE(1AA) in new Part 6D—in clause 5 of the bill—that has been agreed to by the select committee: “Rest breaks and meal breaks are to be observed during an employee's work period—(a) at the times agreed between the employee and his or her employer; but (b) in the absence of such an agreement as specified in subsections (1) to (4).” That amendment is important. It at least acknowledges the ability of the employer and the employee to reach agreement and we will certainly be voting for it. 
I signal at the outset that we will also be supporting Peter Brown’s amendment. It has particular relevance to the transport industry. The transport industry submitters were most concerned about the consequences of this bill for their respective operations. Their hours of work and the timing of their work breaks are covered under separate subordinate legislation such as the work time and logbooks rule and the maritime rules. Mr Peter Brown’s amendment makes it clear that those specific transport-related rules would prevail. We will support that. To not support it runs the risk of there being conflicting rules and confusion as to which rules prevail in relation to the transport industry. 
There is still concern of course about the wording of the bill and in particular about what “reasonable and practicable” means because that term is applied not just to the rest break and meal break provisions but also to the provision of breastfeeding facilities and to breastfeeding breaks. Concern has been expressed as to what “reasonable and practicable” would exactly mean and what it would entail to test it. We were given some guidance that there is some definition or indication of what “reasonable and practicable” means in health and safety legislation but not in the Employment Relations Act itself. Perhaps that health and safety legislation can provide some guidance as to what “reasonable and practicable” means. There is also some comfort—again not a lot of comfort—in the fact that a meaning will be provided in a code of practice that is to be drafted. One can only hope that it will be drafted with sufficient certainty and flexibility to ensure that both employees and employers understand what it means and to ensure that it is fair. With any legislation we have a duty to create good law. Good law requires certainty and not just for businesses; both employees and employers need certainty as to what the wording of the legislation means and what it will entail. That proposed code will need to be drafted with a lot of thought and research. 
We support this bill.  
DAVID BENNETT (National—Hamilton East) 
: 
 As regards the Employment Relations (Breaks and Infant Feeding) Amendment Bill my colleague Kate Wilkinson has made some very pertinent points about it. A number of amendments take into account the views of specific industries that felt the bill did not accommodate the practicalities and the realities of how they actually do business. The transport industry was one of those whose representatives came before the Transport and Industrial Relations Committee—with special reference to the nature of the bus industry. They made it quite clear that the bill would have a detrimental effect on the way that they run their operations. I think all the members of the select committee saw some relevance and some practicality in what they were saying. The amendments put forward in that regard take into account the need to make law that is sensible where we can do so. 
But in looking at the Employment Relations (Breaks and Infant Feeding) Amendment Bill in a general sense I think one of the big things about the meal break portion of it is to consider what it actually means for a lot of employees. A lot of employees negotiate meal breaks within their employment agreements. During the course of the select committee process it was found that some employees would actually lose rights under this legislation proposed by a Labour Government. Many employees have better rules in regard to meal breaks than what this legislation was originally going to provide and in this case still provides. We saw that in the medical field especially with nurses who in certain cases had negotiated much more comprehensive arrangements for their meal breaks. The legislation was going to take away some of those advantages. The select committee looked at the legislation and came to the conclusion that we needed to make sure that workers would not be in a worse position than they were in before this legislation had been proposed. 
That was one of the key requirements that the select committee made some progress on and we saw amendments made to the bill to take into account the nature of the work arrangements. Members will see that the words “so far as is reasonable and practicable in the circumstances” have been added to clause 4. That is one of the opportunities I guess to provide some flexibility within the legislation to take into account individual circumstances. There is a bit of debate about what the wording actually means; “reasonable” and “practicable” are quite legalistic terms but they are common terms that are used throughout our legislation and in our courts. They open up the way for interpretation and that should be done in a meaningful and progressive way for all concerned.  
When we look at the timing of rest breaks we see that one of the major considerations was to get those timing requirements right—not too prescriptive but not too restrictive either. The bill needed to take into account the nature of work arrangements and also employment agreements in the sense that some speciality of the work or the nature of it may require negotiation on the timing and the nature of rest breaks. 
In essence the legislation in trying to deal with breaks dealt with some things one would find in normal employment arrangements. The legislation needed to account for that and in most cases that has been done through the Supplementary Order Paper that has been put forward or through the select committee process which looked at the practical realities of what the legislation could provide to make sure we had sensible legislation going forward that could provide those kinds of meal breaks in the future. 
The National Party supports this legislation. Some changes have been made to it in the past couple of days that probably are not in the best interests of this Parliament. 
The question was put that the following amendment in the name of Peter Brown to clause 5 be agreed to: 
to add to section 69ZH the following subsection: 
(2) Despite subsection (1) where an employee is a person who is required to take a rest break by or under another enactment the requirement for a rest break defined by or under the other enactment applies instead of the provisions or entitlements for rest breaks or meal breaks provided under this Part. 
Amendment agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 229 in the name of the Hon Trevor Mallard to Part 2 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; United Future 2; Independent: Copeland. 
Amendments agreed to. 
Part 2 as amended agreed to.  
Clauses 1 and 2  
The question was put that the amendment set out on Supplementary Order Paper 229 in the name of the Hon Trevor Mallard to clause 1 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; United Future 2; Independent: Copeland. 
Amendment agreed to. 
Clause 1 as amended agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 229 in the name of the Hon Trevor Mallard to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 67 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; United Future 2; Independent: Copeland. 
Amendment agreed to. 
Clause 2 as amended agreed to. 
Bill reported with amendment. 
Report adopted. 
Employment Relations (Breaks Infant Feeding and Other Matters) Amendment Bill 
Third Reading 
Hon TREVOR MALLARD (Minister of Labour) 
: 
 I move  
That the Employment Relations (Breaks Infant Feeding and Other Matters) Amendment Bill be now read a third time 
. This is a bill with relatively non-controversial parts to it. Right at the beginning I acknowledge the very good work of my parliamentary colleague Sue Moroney in the early stages of this legislation. I also thank Steve Chadwick for the expertise that she has shown. Those two members from the Waikato and the Bay of Plenty have made an enormous contribution to Parliament and I thank them for getting into the law something that is very very reasonable.  
There was a fairly small amendment on the question of KiwiSaver that did not take a lot of debating late last night and early this morning. Essentially the amendment organises the law in the way that people thought it should be organised. In fact many of us thought—other than from the actions of some unreasonable employers—that that was what was occurring under the law anyway. 
Craig Foss 
: Why didn’t you fix it when they submitted? 
Hon TREVOR MALLARD 
: Well basically it was because I did not believe any employer would be so unreasonable as to take KiwiSaver employer contributions from the wages of a worker and at the same time collect the employer subsidies. That is a sad state of affairs and it is clear that Craig Foss has more experience of working with unethical employers than I have. He could well be one himself. That is something that the National Party to its shame stood up for. National members stood up for employers who were taking the employer contribution out of the wages of their employees. That was absolutely wrong and I think it is sad.  
But I think it is fair to say that National members did not stand up for it for very long. They did not oppose the motion to incorporate the amendment regarding KiwiSaver in the bill which is something that I was slightly surprised about and they voted for it at each stage. They voted for Parts 1 and 2 of the bill notwithstanding those changes. They voted for the second reading and I understand that they are voting for the third reading.  
So I am very pleased to say we have a unanimous decision of the Parliament to treat employees properly as to their meal breaks and rest breaks and to treat breastfeeding mothers and those mothers who are expressing milk with much more dignity than has been the case in the past. I think that is very important. Furthermore we have had the clarification around KiwiSaver which I understand will be passed unanimously as part of the third reading of the bill and I want to thank all members of the House for that. 
KATE WILKINSON (National) 
: 
 I rise to speak on the third reading of the Employment Relations (Breaks and Infant Feeding) Amendment Bill which we probably should be calling the “Employment Relations (Breaks and Infant Feeding and Sneaky KiwiSaver) Amendment Bill”. However we are voting of course in favour of the third reading of this bill despite the fact that we vehemently opposed the Supplementary Order Paper in relation to the KiwiSaver provisions.  
The bill should have been relatively uncontroversial. Of course National believes that employees should be given meal breaks and tea breaks and by all accounts common sense prevails and this actually does happen. Employers want to retain good employees; they will do what they can to do so and they will work in with employees to make sure the workplace is a happy environment. Rest breaks and meal breaks are not there just for health and safety issues of course; they are also there for the socialising impact between employees so that they can get to know each other and it can be a happy and productive workplace and we certainly support that.  
Obviously the bill was drafted with two—well it is now three—relatively separate and discrete issues. Firstly one was to deal with meal breaks and rest breaks which most people did think was already covered in the law; it was certainly arguable that it is already covered in the health and safety legislation. But this bill to a certain extent codifies what happens with rest breaks and meal breaks and for that reason it should be relatively uncontroversial. 
Secondly the bill deals with the requirement for the employer to provide breastfeeding breaks and facilities. We did ask at the time why those two matters which are relatively discreet and separate were included in the one bill. The answer that was given to us was that it was to make it politically difficult for National. I have to say that National has not found it politically difficult to debate in favour of giving meal breaks and tea breaks to employees because we believe in fairness in the workplace. We believe in balancing what is fair to employees with what is fair to employers. [ 
Interruption 
] We have said that all along I say to Mr Fairbrother even though the member may not have heard it.  
What we did oppose though is Supplementary Order Paper 229 which shows the unfairness of this Labour Government the arrogance of this Labour Government and actually its bad faith. The Employment Relations Act is based on good faith and this is one of the most classic examples of this Government exhibiting bad faith. The relevance of KiwiSaver to breaks and infant feeding still eludes most common people. That was dealt with in the House yesterday—apparently by motion—surreptitiously and sneakily. The amendment has not been subject to proper scrutiny: it has not been subject to consultation and it has not been subject to proper scrutiny of the Transport and Industrial Relations Committee. The public have not been permitted to submit on it and to give their views. It has been snuck through under urgency at the eleventh hour and I have to say that I think that is a sad sad day for democracy in this country. I think it is a disgrace and an abuse of process.  
Already this Parliament has been criticised by a New York University professor for the recklessness of its lawmaking and for the irresponsible lawmaking that can happen and this is an example of that. I find it very disappointing that this Government is so arrogant and so ignorant of the process of legislation and just overrides common sense common decency— 
Hon Trevor Mallard 
: The member voted for it. 
KATE WILKINSON 
: —we did not vote for the amendment—in fast-tracking legislation which the professor himself described as disgraceful by world standards. This is reckless legislative process. It is a typical example of bills being rushed through under urgency in a deserted Chamber. Members are subservient to the executive there are constant closure motions there is no quorum and there is no second Chamber which is why we do have a robust select committee process. But this Government just ignores that. There were no checks and balances on Supplementary Order Paper 229 for KiwiSaver. I have to say that the duty of care was not being properly exercised when this was snuck through.  
This undermines the effectiveness of the select committee process. It actually undermines the confidence that New Zealanders can have in the democracy of our country. I think that that democracy unfortunately is not as robust and not as stable as one would expect. It is tenuous and when we have a Government like we have after 9 long years one realises just how tenuous democracy really is. There is no concern whatsoever for common decency for democracy. It is just power at all costs: “We want to get in; we will do what we have to to stay in power not what is best for New Zealanders.”  
What is best for New Zealanders is to have a proper consultation process. What is best for businesses is that they should be consulted on these far-reaching KiwiSaver amendments. What is best for New Zealanders is that the very people that this Labour Government pretend to be supporting the lower-paid and elderly workers—those workers who cannot afford to enter into the KiwiSaver scheme—are those workers who have not been consulted. Has the impact of the KiwiSaver legislation been referred to them? No it has not. On the day that this House went into urgency a sneaky amendment was introduced bearing no relevance whatsoever to a meal breaks bill a tea breaks bill and a breastfeeding facilities bill—bearing no relevance whatsoever—with no consultation and no submission to a select committee and I think it is atrocious and an outrage that it has been done in this manner.  
We did oppose the KiwiSaver amendment because we do not think it is fair. We think that providing meal breaks and tea breaks is more than fair. We think that providing breastfeeding facilities and breaks is more than fair when reasonable and practicable but the KiwiSaver Supplementary Order Paper 229 is not fair. Why should it—and this has not been answered by the Minister—be unlawful to offer employees different salary packages because they are or are not members of KiwiSaver? Why should one employee be treated less favourably than another because that employee has made a different private savings decision? This amendment is a case of bad faith.  
It is really interesting that the Government specifically allowed for employers to include employer KiwiSaver contributions as part of that total remuneration package when it passed the KiwiSaver Act. Now this Government has flip-flopped done a U-turn and has reversed that decision. At the time the Minister of Finance said the Government expected that the phase-in of compulsory matching employer contributions would be taken into account in wage and salary bargaining. The Government was quite comfortable that there would be trade-offs between pay rises and KiwiSaver contributions. What has happened since then? What has happened is that the Minister has decided that it is unlawful for employers to deduct the employer contributions from employees without first giving them a pay rise of at least that amount. But that is already unlawful under existing KiwiSaver legislation. That did not need to be sneaked through as a Supplementary Order Paper to the meal breaks and rest breaks legislation.  
The KiwiSaver Act provisions made it quite clear that after 13 December 2007 the question of whether compulsory employer contributions are in addition to current remuneration or can be offset in part against pay rises is subject to mutual agreement between employers and employees. That provision was specifically inserted by Government members on the select committee and this Government has now reversed its stance. Good faith is a requirement of the Employment Relations Act provisions. It seems that good faith is not a requirement of the Labour Government. 
SUE MORONEY (Labour) 
: 
 People say that timing is everything. I think it is very appropriate that at roughly 8 minutes past 10 when a lot of workplaces throughout this land are in the middle of having morning tea we are here in the third reading of the very bill that brings that provision into law and makes it compulsory for workplaces to recognise that workers have the legal right to—not just the right to negotiate—decent breaks at work. As a member of Parliament who was involved in drafting the parts of this bill that refer to the right for workers to have those decent breaks at work I feel very pleased to be able to stand up here as most of the nation is having its morning tea break to vote in favour of the third reading of this bill.  
I shall talk a little bit about the history of why as a new member of Parliament I chose to make this an issue that I wanted to put before this Parliament. It was because of my experiences as I campaigned in the last election when this issue was brought to my attention. I remember one particular instance very clearly. A group of young men who were working in a service station in the Waikato came to see me because their staffing arrangements had changed. Their service station had cut the number of staff it was employing. We all know the story that when we pull into service stations these days we do not have someone come out to fill up our car for us; we prepay and we do it all ourselves. The cutting back of staffing numbers at that service station meant that those workers were not getting a lunch break. They were not getting a lunch break at all. They were working 12-hour shifts and because there was a requirement to have one person available for forecourt duties at any given time the service station did not have the staff to allow any of them to go off to have a lunch break. Those young men said to me: “This can’t be right. Surely there’s a law against this.” When I looked into it sadly I found that there was no law that safeguarded them. That was the very beginning of my thinking very seriously about this issue.  
As I kept thinking about this issue I found that those young men are not alone in their predicament; there are a range of workers for whom tea breaks rest periods and meal breaks are not the norm in their working day. They are invariably young people they are invariably workers in small workplaces and they are invariably the most vulnerable in our workforce who have been suffering this fate. But as a result of this bill being passed they will suffer no longer.  
Another situation that came before our select committee demonstrates the need—yes the need—for this bill. I know that National Party members have said they do not think the bill is necessary but we had many stories coming before our select committee that demonstrated that it was. One example was from a young worker in Hamilton East where I come from. He had been working for Subway and told us about being sacked for daring to take a meal break of half an hour during a 12-hour shift. He was sacked for that. I observed that National Party members at the time— 
Kate Wilkinson 
: He deserted the workplace! 
SUE MORONEY 
: —and I notice Kate Wilkinson is saying something quite different now—said to this young man that that was illegal and that he could take a personal grievance. Yes under the current laws he can take a personal grievance and he is in fact taking a personal grievance. But the National Party is proposing a 90-day probationary period bill that it wants to bring in if it is the Government. That policy would completely take away this young man’s right to take a personal grievance over that issue because this young man was in the first 90 days of his employment with Subway. There were some very nice sentiments from National Party members opposite but absolutely no ability to understand that their policies would have taken away that young man’s right to contest that unfair dismissal over the right just to have a reasonable lunch break while at work.  
The next situation I want to talk about is with regard to the KiwiSaver aspects brought into this bill. I fully endorse the Government acting at the earliest opportunity to stop that unfairness in the workplace because there is an unfairness in the workplace. What has been happening is that some employers—and I would call them mean-spirited employers—have taken away and reduced workers’ take-home pay because they dare to be some of those workers who look to the future and save for their retirement. They have been discriminating against workers because they dare to save for their retirement—and that is wrong. This Government was not going to stand by for another minute longer and let that unfairness continue to happen in our workplaces in this country.  
I feel confident that fair-minded New Zealanders resile from this practice because I have had pay clerks come to see me because they do not want to implement their employers’ mean-spirited views on this. The people coming to see me are not those who are disadvantaged by it but the pay clerks who are saying they are being told to do that and they do not want to do it because it is unfair and is just not right. If that is the view of a pay clerk who is not the person who is going to be disadvantaged at all then I feel confident that fair-minded New Zealanders will see the basic unfairness.  
Members should have seen the look on the pay clerk’s face when I told her that the situation was even worse than she expected. When I informed her that her employer was getting a $20 a week tax credit for every single employee involved in the KiwiSaver scheme and that that was more than the 1 percent the employer was knocking off employees’ wages then she could see straight away that the employer was double-dipping—taking taxpayer money for having employees involved in KiwiSaver and then taking money off those workers to pay for the employer contribution that was already being paid for by the taxpayer. That was completely unfair. 
The National Party cannot see that at all. It voted against the Supplementary Order Paper that said that that was wrong and would not be tolerated in this country—because the National Party does not care. The National Party thinks that that sort of unfairness at work and that sort of double-dipping into taxpayers’ and workers’ pockets at the same time is fine. It has no problem with it—“Let’s not fix it up; let’s just keep it going.” Well that will not happen under a Labour-led Government. We will not stand by for another minute longer and let that unfairness continue in the workplace.  
I will not go into great details about my own personal experiences of infant feeding. Suffice it to say that expressing milk in a toilet cubicle is not a very dignified thing to be doing in one’s workplace but that is certainly the experience I have had in the past as a young mother in the workplace. Again I congratulate my colleague the Hon Steve Chadwick who had the foresight to ensure that this bill also included the right to have some dignity in infant feeding in the workplace and I think that is a very appropriate thing to do.  
In closing I also thank the Minister and the officials for their work on this bill. It is a very important bill it will make a difference to a significant number of New Zealanders and it will ensure fairness in our workplaces. Thank you. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I will speak on three issues in relation to the third reading of the Employment Relations (Breaks and Infant Feeding) Amendment Bill. The first issue is the general principles of the bill which the previous Government speaker Sue Moroney spoke about. Then I will speak specifically about KiwiSaver issues. Thirdly I will speak about process and procedure—the way legislative issues are dealt with.  
On the first issue let me make it completely clear to listeners to governing party members and to other parties that National supports this bill. The reasons we support this bill are the reasons that were given by Sue Moroney. We believe that people—women in particular—must have dignity in the workplace in respect of breastfeeding and so forth. That is why we support the bill. We had an extensive discussion in our caucus and we understood that fairness requires that employees have proper opportunities for meal breaks and that mothers breastfeeding must have dignity in appropriate circumstances. So National is supporting the bill and I assure listeners that the reasons we are doing so are ones of fairness. The reason this bill is being passed into law today is that there is a consensus in Parliament. I know that the Government would like us to be voting against the bill. That would suit its agenda and I could tell that from Sue Moroney’s speech. I could tell that she was kind of disappointed that National is supporting this bill. She really wanted to be able to go out into Hamilton East and say that David Bennett does not understand the circumstances of workers needing tea breaks and that he does not understand the circumstances of mothers breastfeeding. Well she will not have that opportunity.  
Perhaps in the past the National Party may not have supported this bill. I can think of a National Party that may not have supported the bill but the truth is that our party has shifted to some extent on some of these issues. That is why we have taken a much more moderate stand around employment relations generally and I congratulate my colleague Kate Wilkinson in respect of that. We understand that New Zealanders expect fairness in the workplace and that the law must reflect that as well. That is why we are not saying there will be wholesale and dramatic changes made to the Employment Relations Act. Clearly we will make some changes and they will be moderate and reasonable changes that are the norm in the OECD. The standard operating practice if you will across OECD countries is essentially where National is pitching itself because we are taking a balanced and fair view in relation to employment relations. 
Peter Brown 
: Same old philosophy! 
Dr WAYNE MAPP 
: I know that New Zealand First will be interested to know that we are taking a fair and balanced view on that particular issue. That is a particular stake in the ground that I want to put: National has shifted on this issue.  
The other two issues I will talk about relate more fundamentally to issues of firstly KiwiSaver and secondly process. National has voted against the Supplementary Order Paper in relation to KiwiSaver. We believe that the situation is actually quite different from the way in which the Government expresses it. The way the Government expresses it is to say that it is unfair that someone who is in KiwiSaver potentially might receive less in his or her take-home pay than someone who is not. Actually if members look at it the other way around they will see that it is also unfair because the Government is also saying by that statement that it is fair that the person who is not receiving KiwiSaver would get less money in terms of total remuneration purposes. That is the philosophical objection that National has. We say that employers and employees start from a total remuneration perspective and then from there they will work out how it is delivered. The vast majority of it will be received as a cash payment via salary and wages. Some people might choose to take for instance a company car. Others may take other fringe benefits. Others will take superannuation and all of that needs to be calculated. I certainly appreciate that clearly there is value in cash received right now as opposed to the deferment in terms of KiwiSaver.  
The way we view this is philosophically different from the way the Government sees it. We start from the point of total remuneration. The Government simply does not see that and that is why it has never really understood the objection of the Employers and Manufacturers Association (Northern) which looked into this particular issue very carefully; it simply refused to understand it. We can understand the point that has been made about the tax credit and there is some merit in that but of course that gets taken into account in any event in negotiations on total remuneration. That is the proper starting point in the contemporary workforce around how one receives one’s salary—part in cash part in superannuation and part no doubt in many instances in other fringe benefits. 
The third issue I want to deal with is the process of Supplementary Order Paper 229. It is actually a broader principle anyway because in the last 24 hours we have seen a pattern whereby the Government introduces Supplementary Order Papers in a way that does not allow for proper consideration. I could understand a Supplementary Order Paper on this particular bill for instance being introduced last week giving time for a dialogue time for members of Parliament to talk to the relevant parties affected and so forth and time for a more considered debate but to introduce a Supplementary Order Paper on—essentially—a new topic on the day the bill comes before the Committee of the whole House is I believe an abuse of the process.  
I refer Government members back to a former Labour Prime Minister’s book  
Unbridled Power 
—published some 29 years ago in fact—in which he spoke of these kinds of issues. The way the New Zealand Parliament was characterised back then was that it was the fastest lawmaker in the West. What are the characteristics of being a fast lawmaker? It is actually about the House being in urgency all the time or at least on a regular basis in relation to bills. It is about introducing large Supplementary Order Papers which is the case in respect of the emissions trading scheme into the select committee process at a time when they can no longer be properly considered.  
In relation to the emissions trading scheme 700 amendments were introduced at the very point in time that the bill was to be debated. I read many of those amendments yesterday. Some of them were actually complex in their own right. They had to be referred back to both the bill itself and the prior Supplementary Order Paper. Members had to mesh all that together during the debate in the Committee of the whole House. Some of the amendments clearly were just technical. I guess there is no real objection about a minor technical amendment such as for example schedule one being described as “schedule 1” as opposed to “schedule one”. Clearly no one has concerns about that. But other amendments were not of that character at all particularly around some of the trading issues.  
I use that as an example because just very recently—and it has been recorded in both the major legal publications in New Zealand—Professor Jeremy Waldron of the New York University school of law spoke in New Zealand of the “terribly irresponsible” view of our parliamentary institutions that has “enabled the debasement”—and I want this to be noted specifically—“of deliberation.” Bear in mind that this Parliament does not have a second Chamber. Second Chambers historically are for deliberation and scrutiny. A single Chamber such as this—the legislature as in Australia and other countries—tends to operate more quickly. That is OK when there is a more deliberative process but in our jurisdiction we do not have that so it behoves Governments to be a little bit more careful to allow that debate to take place. I have to say to the parties that are here because of our MMP system of representation that MMP has not actually changed that aspect of our parliamentary institution. It has changed other aspects—and I must say from my own perspective that it is generally for the good—but that particular aspect has not changed at all. Anyone who was a member of Parliament in the 1970s or 1980s under first past the post would see today’s legislative processes as being essentially the same.  
It seems fundamentally wrong that in 2008 we are still beset with exactly the same set of problems that Sir Geoffrey Palmer referred to 29 years ago in his book  
Unbridled Power 
. So many members on the other side of the Chamber pride themselves on their constitutionalism and their care for parliamentary procedure. At least they say that in theory; in practice they abuse it. National is putting on the record our dissatisfaction of the way the Supplementary Order Paper for this bill was introduced. We need that on the record because frankly this Parliament for the benefit of the nation needs to do better. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I listened to Wayne Mapp’s speech with quite some interest. I was genuinely taken aback—amazed—by his statement that the National Party has changed and now wants to be fair to people in the workforce. I do not doubt that the member himself is genuine but I could not help asking myself what some of his colleagues at a convention would say to a man with a tape recorder—probably if they did not know he had one. But I welcome the National Party saying it wants to be fair because as Wayne Mapp has implied it has been a long way short of that in the past.  
This bill is a very simple bill. I think it will go through the House with total support. In the first instance it encourages employers to provide breastfeeding facilities for women in the workforce where it is reasonable and practicable. What is wrong with that? It is very sensible and very fair. 
Hon Mita Ririnui 
: They don’t like it. 
PETER BROWN 
: I suspect that some of those members do not like it but they tell us they will vote for it.  
We think that that is quite a big step forward for society. This bill goes on to formalise the requirement for employers to provide employees with meal and rest breaks. I have to say that before the bill came up I thought it was mandatory for an employer to provide for meal and rest breaks and I was quite amazed to find that it is not written into legislation. Obviously if it is written into employment contracts it gets acted upon. When the bill was before the Transport and Industrial Relations Committee and we heard in particular the young man from Hamilton telling us his story we had to think that we do need legislation like this to ensure that people do get their meal breaks and rest breaks. 
David Bennett likes to throw a spanner in the works. During the Committee he implied that the workers who received longer rest breaks or meal breaks than this legislation provided for could lose those breaks. Is that correct? Have I understood the member correctly? 
David Bennett 
: Yes. 
PETER BROWN 
: The member was on the select committee was he not? 
David Bennett 
: That’s why they changed it. 
PETER BROWN 
: Well let me read out new section 69ZG(1) to be inserted by clause 5: “This Part does not prevent an employer providing an employee with enhanced or additional entitlements to rest breaks and meal breaks (whether specified in an employment agreement or otherwise) on a basis agreed with the employee.” That provision was amended by the select committee. 
David Bennett 
: Exactly! That’s what I’m saying. 
PETER BROWN 
: Well why did the member not make that clear when he addressed this Parliament a few moments ago? 
David Bennett 
: I did. If you check the  
Hansard 
 you will read it. 
PETER BROWN 
: Well I might well check the  
Hansard 
. That change is clearly written into new section 69ZG. 
The final part of the bill that has upset the National Party to some degree amends the KiwiSaver legislation to give further encouragement for people to save. New Zealand First has been a strong advocate of people in this country saving. We were saying that when the party was formed in 1993 and we are still saying it. This is a move in the right direction. Unfortunately it will capture some genuinely reputable employers and they will have some difficulty implementing this change over a reasonable time frame and changing from the total remuneration package to this package whatever it will be called—there is probably a name for it. But the change will present some difficulty for some employers. I know one employer who will move heaven and earth to get this rectified but it will take a bit of time. I am hopeful that that time will be given. 
This part also protects employees from the situation outlined by Sue Moroney. I did not know that that was occurring and Sue outlined it very very clearly a few moments ago. That sort of situation obviously creates a need for us to amend the current legislation pretty promptly. That is being done by way of a Supplementary Order Paper that is outside the scope of the main bill and that has been put forward as National members have said more or less at the last moment which perhaps puts a question mark over it. We debated this amendment long and hard in New Zealand First and we decided that the issue had to be addressed and had to be addressed speedily. So we are supporting this bill totally. 
DAVID BENNETT (National—Hamilton East) 
: 
 I was a bit disappointed Mr Assistant Speaker that you did not give me the call earlier but given that you are showing your Scottish heritage we will forgive you today. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: That is nice of you. 
DAVID BENNETT 
: It is interesting that although the Labour Government is amending the Employment Relations Act with this legislation it is not amending the title of the bill to include the word “KiwiSaver”. Why did Labour not include KiwiSaver as part of the amendments? It did not do that because that would be far too honest open transparent and accountable for this Government. It prefers the sneaky approach of just putting through a Supplementary Order Paper and having in it something quite irrelevant to the original legislation—something that deals with a mistake it has made. 
This legislation is symbolic of the mistakes that Labour has made. Labour has a continual process of making quick cheap solutions and not thinking through the full and final outcomes of what it puts forward. That is the case with the KiwiSaver legislation. There was a loophole in the KiwiSaver Act that some employers were taking advantage of to the detriment of some employees. The Government has sought to address that loophole through a Supplementary Order Paper to a completely alien bill the Employment Relations (Breaks and Infant Feeding) Amendment Bill. By doing that Labour has shown its true colours to the public of New Zealand. It has shown that it is not willing to draft legislation that is good for New Zealand that is good for workers and that will build this country stronger. Labour just drafts legislation on the hop when it feels it is right and how it feels it is right and it does so for political convenience. 
That is not the way to run this Parliament. It is not the message to send the people of New Zealand. The people of New Zealand will rectify that message in a few months’ time because they will deliver a message back to Labour that they are not happy with the process that it is engaged in with the way it does things and with the outcomes that it has achieved. 
In terms of the outcomes of this bill we can see that a pretty quick job was done on it by Labour when the bill came before the Transport and Industrial Relations Committee. Labour had not really thought out what it wanted to achieve with it. In fact the bill was detrimental to some employees. Labour in its wisdom was going to pass legislation that took away rights from employees. Why would it do that? The reason is that it does not care about employees. Employees are not its mandate. Its mandate is to stay in power. Michael Cullen has said that. He has said: “Our job is to win this election and to stay in power.” It is not about the people of New Zealand. It is not about the employees out there. It is not about the mothers out there. It is all about staying in power. 
Why are we in urgency? To stay in power. Why are we passing this legislation? To stay in power. Why are we passing the emissions trading scheme legislation? To stay in power. Why are we passing the emissions trading scheme? To give Labour something that says it was in power. That is what it is all about for Labour; it is not about the actual requirements of our country our workers and our people. It does not care and it has never cared. It is a Clayton’s promise to say that Labour cares for our people. All it is interested in is self-fulfilment and fulfilling its ambitions of power. That is what one sees time and time again with Labour. 
If Labour had really cared it would not have taken away employees’ rights in the first place. It would have put forward a bill that took into account employees’ rights. It was only the National members who stood up at the select committee and said that this legislation would take away some workers’ rights. When National members told that to the officials the officials said that some agreements provided for more open meal breaks than this legislation would provide for. Labour members then went back to their offices and decided to rewrite the legislation and put it back through the select committee with changes. That is the reality of what happened in this case. It was the National Party that looked after workers in the circumstances. It was the National Party that provided the incentive for New Zealanders to have the right solutions to their problems. It was not Labour that did so. 
Labour will take the credit for the National Party time and time again and this is another example of that happening. We stood up in that select committee and said that this legislation should not be ideological but practical and that it should provide for people in their time of need in their working environment. That is something that the National Party is very proud of and we will stand behind that position at any election forum. We can stand up and say we were genuinely after the workers’ rights in this case unlike Labour which was after self-fulfilment and re-election by putting out policies in the last month of its 9 years of campaigning. 
Why would you put in a KiwiSaver amendment to the Employment Relations (Breaks and Infant Feeding) Amendment Bill? Why would you not put up your own KiwiSaver Amendment Bill? That would be the normal natural process that you would go through but why would you not do that? 
Sue Moroney 
: I raise a point of order Mr Speaker. I know the member has not been here for very long but he knows not to bring the Speaker into the debate and he has done that on about four occasions now in the last minute or so of his speech. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member must not use the word “you”. It actually brings the Speaker into the debate. 
DAVID BENNETT 
: Why would the Labour - New Zealand First Government—married and tied together like we will never see in any other political arrangement—put forward an amendment of that kind to this bill? 
The Government does not want to admit that it got it wrong with its KiwiSaver scheme. KiwiSaver was one of the Government’s flagship policies. It went out there and talked about how great the scheme was but the scheme took away rights from workers again. KiwiSaver had a hole in it that actually hurt workers. So the Government needed to reinvent its legislation and the only way it could do that without going through a formal process of select committee hearings and creating public awareness of the mistakes that it had made with KiwiSaver was to amend it by means of this bill. That is the crux of what is going on. 
The select committee members from Labour and New Zealand First do not want to admit to their mistakes so they are trying to hide it by means of this bill. In doing so they are showing once again that they are not acting in the best interests of New Zealand workers or the New Zealand economy. All they have regard for is the necessity for them to get through an election campaign. If they were honest open and transparent they would put up a separate bill to amend the KiwiSaver Act—called the KiwiSaver Amendment Bill—and they would detail the nature of the issue and look for some solutions. 
I believe that Labour members do not know what is going on in the KiwiSaver environment. They are just reacting to what they see as circumstances that may arise in the workplace over time. If they were to take a more progressive approach and get submissions from the public and those concerned they might find there are other areas in the KiwiSaver environment that need to be amended as well to look after workers’ rights. That is not likely to happen in a Government that will not admit to failure and that pretends that everything is hunky-dory with its flagship policies. 
The Government knows in its heart of hearts that this policy is not successful and that the policy of KiwiSaver has some issues and needs to be refined. That cannot be done by means of this 3-page Supplementary Order Paper to amend the Employment Relations (Breaks and Infant Feeding) Amendment Bill. The heart of that bill now is the amendment to the KiwiSaver scheme. But this amendment should be in a separate bill and be sent to a different select committee—the Finance and Expenditure Committee not the Transport and Industrial Relations Committee. 
Kate Wilkinson 
: The Supplementary Order Paper didn’t go to any select committee. 
DAVID BENNETT 
: It did not go to through any select committee but if it had gone through a proper process then the Transport and Industrial Relations Committee would have been the wrong committee for that amendment. 
The Government of the day has abused the processes of this House. It has taken advantage of this House by using urgency to put through this sneaky little amendment. It should not do that. The Government has made a deliberate use of the political process for its own gain. Members of this House should not be able to do that in good conscience. This House should be able to say that it has consulted on issues that it has given the public of New Zealand the ability to have their say and that it has given New Zealanders the chance to debate the issues of the day in the public forums of the media and also in the select committees. 
If a Government does sneaky little amendments to legislation as in this case then it is denying the public the right to justice. The Labour - New Zealand First Government may want to deny the public the rights to justice which is something it has done on numerous occasions but it should not have done so in this situation. It should have been up front it should have admitted its mistakes and it should have used the appropriate processes to deal with them. It should not have taken advantage of the Employment Relations (Breaks and Infant Feeding) Amendment Bill to do so. That devalues this bill. It says that this bill is being used just for political purposes. It does not show that the Labour Government is committed to the intent of the legislation and that is a shame for this Parliament. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 I rise on behalf of United Future to support the third reading of the Employment Relations (Breaks and Infant Feeding) Amendment Bill but I start by explaining making very clear and putting on record why we have opposed Supplementary Order Paper 229 which amends the KiwiSaver provisions. We have done so for three reasons.  
The first and perhaps the most important reason we are opposing the amendment is that it represents extremely shoddy process in this House. I think the National member Wayne Mapp articulated that particularly well in this debate. This amendment put up by the Government is important but it should have enjoyed a full submission process and full parliamentary consideration. To bring it into the House under urgency in this way we consider completely unacceptable. Our second objection to this amendment is that we believe the Government is trying to solve a problem that it may well have created itself with KiwiSaver. We believe that the Government has been the author of some very mixed messages that were contained in speeches during the introduction of the KiwiSaver legislation and that could well have created the concerns the Government is now seeking to address. The third reason we are opposing the amendment is that we currently remain unconvinced that it is necessary and would go so far as to say that Labour by moving this amendment has disadvantaged some of the lowest-income wage earners in New Zealand—the very people whom this Government heading into an election campaign would say it is there to advocate for. United Future would have liked the opportunity to see this amendment go before a select committee and to hear the arguments both ways— 
Craig Foss 
: And the costings. 
JUDY TURNER 
: —and the costings making sure that it was the right way forward. This amendment is not just a little technical change; it is an amendment of substance. 
However we see the overall bill as reflecting family-friendly practices. The Department of Labour has put out a rather interesting document for employers on the issue of breastfeeding and I notice a section called “Frequently asked questions” which covers some really good points: what it will cost employers to comply and the amount of space they will have to make available if their employees require breastfeeding considerations. There are some really good answers to questions about potential issues for employees who are Maori or Pacific or from a different religious background in terms of the need to breastfeed discreetly with cultural considerations. There is a section called “Is this good for business?” which I think is the most relevant question that the department traverses in this document. I want to reinforce the answer given because I think the benefits to business of having good employment practices and of being family friendly are very clear for business and are very good for employees. It is certainly clear in this day and age when we have a very different employment environment from even one or two decades ago that employers need to realise that the benefits of increased productivity staff retention and a number of other very tangible benefits of these types of family-friendly policies will be make-or-break issues in terms of the ongoing success of their business.  
United Future thinks this provision is long overdue. The Labour member Sue Moroney traversed the issue very well when she talked about the fact that many of us had always understood that breaks were an entitlement that the law covered. We like others in the House were quite surprised to discover that this was an area of law that needed strengthening and we certainly support the strengthening of that provision. United Future thinks this bill is timely but we are disappointed in the Supplementary Order Paper amendment that has gone through today. We will be interested to see how history will judge this amendment and whether it creates its own set of unexpected and unintended consequences that a future Government has to work on and fix but we certainly want to make it very very clear that we support the third reading of this bill. 
Bill read a third time. 
Reserve Bank of New Zealand Amendment Bill (No 3) 
Second Reading 
Debate resumed from 26 August. 
R DOUG WOOLERTON (NZ First) 
: 
 As I recall last time when I opened up and had 2 minutes on this bill I talked about why people in New Zealand are far keener on putting their money into property when the move by the Government and other people is to encourage them to put it into shares and businesses. I said that that is because a house or property cannot disappear and turn itself into somebody’s Porsche 911 or something like that.  
This No. 3 amendment bill will go some way towards requiring finance companies to have a credit rating. There is much angst over that in the financial sector not because of the fact that finance companies should have a credit rating—they are happy enough with that—but in fact over how it should be done. People came to the Finance and Expenditure Committee and said to us they were worried that a credit rating would have an overly prescriptive nature when it came to administration and may not give as much credence to the fact that there was a certain amount of asset backing to a particular financial institution; another institution with a lesser asset-backing but with different administration systems could end up with a better credit rating.  
So there were arguments about how that provision would play out. But by and large submitters agreed that the public need more information. They need some sort of a guide as to where to put their money. Only time we think can give any surety to the public when it comes to investing funds. But one thing is that we cannot go on as we are and we have not progressed it seems since the late 1980s when we were held up around the world as the Wild West of the financial world. Although the recent credit crunch and finance meltdown have not been that bad a lot of improvement is certainly needed. This bill goes some way towards that.  
New Zealand First would like to go further and at some time in the next Parliament we will bring legislation to the House that we think will help towards looking after old people— 
Craig Foss 
: Transparency of donations. 
R DOUG WOOLERTON 
: Absolutely I say to Mr Foss; transparency to the nth degree. People can see going through our trusts at the present time how everything is kosher there. There is no fraudulent behaviour. There is no corrupt behaviour. There is nothing wrong there. We feel that if we are happy to have all of those transactions open to the public with the absolute transparency that people are seeing today other parties in this House should join for the benefit of the public and to give everybody surety in opening their trust accounts in the same manner. Whatever the Serious Fraud Office wants of us we believe that in a non-partisan way other parties should front up to open their books thereby giving comfort to the public and the news media who have been throwing a lot of harsh words around.  
So we are in favour of transparency. [ 
Interruption 
] I am pleased to hear the voice of my colleague Dail Jones behind me because he is the member who has been entrusted with the task of giving some surety to retired people in particular as we move forward. I say to Mr Jones that I think he is on that case and we look forward to that in the next Parliament. Is that correct? 
Dail Jones 
: Oh absolutely. 
R DOUG WOOLERTON 
: So we can look forward to that—yet another reason if I may say so why people will vote for us at the coming election. They will have the surety that they will have something done unlike if they vote for the National Party which has thrown stones and done nothing for 9 years. It is even doubtful whether National will be able to do anything post election because sadly for those members they will find themselves back on the Opposition benches.  
But I come back to the point that there is need for this legislation. This bill goes some way towards a solution. It is not the total answer. Risks cannot be taken out of financial transactions. Along with this it is absolutely understood that there is a need for the public of New Zealand to be given more information as well as a need to look at a credit rating system. This bill goes some way to doing that. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker. Tena tatou katoa. This bill has the primary purpose of implementing regulations for non-bank deposit takers. It is interesting to even consider what is meant by the concept “non-bank deposit takers”. It reminds me of a longstanding discussion about the use of the term “non-Maori” a term that places all the emphasis on what people are not rather than on what people are. I have always considered it more appropriate for people to define their own identity their own cultural heritage whether it be as Pakeha tauiwi Scottish African or Tongan. So I come to this bill wondering how it is that we are implementing regulations for finance companies building societies or credit unions by considering what they are not; in other words deposit takers not of a bank. This bill therefore defines the default position—what these deposit takers are if they are not deposit takers of a bank.  
This bill implements a new framework that will require all deposit takers to comply with minimum prudential standards as enforced by trustees and the Reserve Bank—standards that in themselves will ensure that care caution and regard are taken in providing for the future. We in the Maori Party can think of no better goal than to legislate for care and caution in the context of investment strategies. Such principles will be welcomed we know by the lobby group Exposing Unacceptable Financial Activities. It has been established to stand together in solidarity with the victims of the finance and investment industry collapse. Its very reason for being is to ensure that New Zealanders are given every opportunity to receive information to apply for legal aid and to pursue multiple avenues to reach a just resolution for all victims of failed finance companies. So we come to this bill alert to their suffering and wanting to see how this legislation will allow deposit takers to better care for and protect the finances of their investors.  
Exactly how severe this crisis has been on New Zealanders is perhaps best represented through the words of Exposing Unacceptable Financial Activities coordinator Suzanne Edmonds: “Investors lives are in total despair coupled with economic insecurity such as losing their homes while New Zealand sits back watching the games and neglect by those who have a duty of care slopping around discrediting us all.” The Maori Party takes very seriously our mission to listen and to hear the voices of the voiceless. We have heard the pain of the people who have taken the fall for the company mismanagement. We have heard the pleas for accountability and the collective stand to insist for compliance enforcement upon the finance industry. We must not overlook the victims of finance collapses including those of Bridgecorp and Blue Chip. 
Hon Mahara Okeroa 
: That’s right. 
Dr PITA SHARPLES 
: Cool bro. The Maori Party is aware of a number of whanau whose quality of life has virtually disappeared overnight—whanau who lack the funds to take legal action; whanau who have had to sign their homes over in mortgagee sales simply to stay afoot. The headlines may highlight the dollar amounts lost and the fact that 13 firms have failed in the last 18 months owing 61341 investors $1.5 billion but what has hit home hardest for us is the real stories of lives hurt by Hanover Finance—victims of money managers who have mismanaged their life savings; stories of real grief.  
We were interested in the views the Institute of Chartered Accountants of New Zealand expressed to the select committee. It believed that the case for a more prescriptive heavy-handed prudential regulatory regime for non-bank deposit takers had not been sufficiently made. Its view was that the collapse of finance companies is not sufficient justification as failures are happening in other jurisdictions that are more regulated than New Zealand. Its view was that such measures should be used only in extreme circumstances where the risk of the market failure and significant harm were relatively high. However we cannot overlook the fact that since the Institute of Chartered Accountants of New Zealand made its submission in March this year 16 more finance companies have entered into difficulties with some entering into moratoriums and some going into receivership and that eight more mortgage trusts or property funds have closed or suspended the repayment of investors’ funds.  
Perhaps the more compelling analysis in our view was the advice we received from the Federation of Maori Authorities. It contended that regulations to increase prudential standards are urgently needed to tidy up the sector and make it more accountable to its investors. In fact if anything they should have been in place a whole lot earlier. We know the reality that a lot of mum and dad investors including Maori have been investing their savings in finance companies without realising the actual nature of the risk that they are exposed to. It is that long lost hope when our families are struggling to survive to pin our trust on and have confidence in finance companies to create the pot of gold at the end of the rainbow—a hope that as the reports remind us is often not well placed as these companies do not necessarily have the prudential rules and standards in place to properly protect their investors. The common misconception is that there are standards in place and proper monitoring but there are not. I commend the advocacy of groups such as Exposing Unacceptable Financial Activities Society which has so bravely represented the realities of those who may well have otherwise lost hope.  
We in the Maori Party will support this bill as we believe the changes will allow deposit takers to better care for and to protect the finances of their investors. We also support the fact that the changes allow the Reserve Bank to increase its ability to regulate monitor and protect the New Zealand finance system and economy. Such attention to the financial infrastructure is we believe important for the kotahitanga—the nationhood—of this place this country of ours. Finally we want—and I am sure every other member of this House joins me in this—to minimise financial collapses. We have heard the impact the collapses have had on families and on the economy. For all these reasons we will vote in support of this bill at its second reading. 
CRAIG FOSS (National—Tukituki) 
: 
 The National Party is voting for the Reserve Bank of New Zealand Amendment Bill (No 3). I acknowledge the previous speakers and I will just touch on a couple of points Dr Pita Sharples raised. 
Currently there are Acts and legislation to regulate banks. With reference to that word “bank” an institution cannot have the word “bank” in its name unless it is regulated by the Reserve Bank. That is why the other institutions are described as “non-bank” because a completely different tree of regulation is set up—there are trustees involved etc. So that is where “non-bank” comes from but I pick up the point that it is funny to be talking about what is not a bank rather than these financial institutions as we generally understand them.  
This bill is actually part of a suite of bills: there is the Financial Advisers Bill and the Financial Service Providers (Registration and Dispute Resolution) Bill which are on the Order Paper and before select committees at the moment. I make the point that many non-bank financial institutions have actually survived and their depositors’ moneys are quite safe. They obviously followed quite conservative strategies—perhaps there is a bit of luck involved. But unfortunately and very sadly some funds have been lost. We are very sympathetic to that but we also have to distinguish between organisations where illegal or misleading behaviour has been alleged—and I repeat the word “alleged”—and the Serious Fraud Office is currently investigating some of those larger institutions and institutions that have come to difficulty because of the credit crunch funding crises and the inability to raise further funds so they have had a market difficulty as opposed to alleged dodgy behaviour which the Serious Fraud Office is looking into at the moment both in New Zealand and in Australia I understand. I think everyone in this Parliament is very sympathetic and wishes all speed to the Serious Fraud Office and the appropriate agencies to find any dodgy behaviour and arrest and bring those involved to account. Many families and individuals are suffering immensely because of some very very dodgy behaviour.  
But there is another point that seems to be lost on many commentators. At the same time as these three bills are going through—the Reserve Bank one here and the other two I just spoke about—there is of course the monetary policy inquiry. It seems to have been missed by a lot of commentators that actually they are touching on many of the same issues. In this bill here we talk about capital adequacy prudential ratios—basically everything that the non-banks influence. They have a part to play of course in the financial system—as the monetary policy inquiry is looking at across the sector I guess at a much more macro level. As we go through the Committee stage I will be talking particularly about some of the technical pieces in there and I will seek advice on the technical stuff from Mr Doug Woolerton as we go through further.  
But there is a concern—it comes from here and I raised this concern at select committee—that there is a balance. It is a fine balance and I am constantly concerned about any politicisation or further influence of monetary policy via some of the methods and tools that are in this bill here and the confusion of prudential regulation with monetary policy. They are totally different. The moment there is greyness between those areas we are in trouble. If members think our interest rates in New Zealand are high now I tell them that any removal of that certainty—those Chinese walls—will actually add further to the New Zealand risk premium that we currently suffer under and which has actually got worse particularly over the last 9 years.  
It is all about risk. This legislation sets up a framework for non-bank financial institutions—let us just call them things that are not banks; it is a bit easier—that is about risk. It is about the risk of their funding stream and the Reserve Bank looking to see whether they are actually too exposed—whether they have lent for 10 years and are borrowing every 3 months. The Reserve Bank will look at that and say that if the tap gets turned off for 3 months the financial institution will be in deep trouble. That is actually the exact problem many institutions are facing right now. It is compounded by the credit crunch that started in the United States and arrived in New Zealand about the middle of last year. But it is accentuated here because our interest rates start so much higher and there already starts to be a risk premium in New Zealand. Sadly New Zealand is at the back of the queue when we are lining up whoever it is from New Zealand to try to find funding in times of crisis. This is the exact problem that many of those pretty sound institutions are having right now: they have lent for 10 years and borrowed for shorter terms. 
We can think way back to the PSIS problem—in the early 1970s I think it was—and to the problem JBL had way back then too. It is a common theme: when any of these institutions run into difficulty it is simply because their funding does not match their obligations on the other side; their liabilities are short term and their assets are long term. They have borrowed short and lent long and as interest rates go higher they have to pay more they have negative cash-flow or sometimes that cash flow is turned right off. That is the big problem many of those financial institutions are facing right now.  
Another point that I raised throughout the period when the Reserve Bank of New Zealand Amendment Bill (No 3) was before the Finance and Expenditure Committee was that this issue is about risk and there has been a merging of all things financial not only within New Zealand but also around the world. There has to be a level playing field because if a bank and a non-bank financial institution have the same funding profile and the same asset and risk profile the requirements upon them should be the same. Otherwise the Reserve Bank or—as a clause in this bill allows—even the Minister of Finance can start to skew or favour one particular type of organisation over the other and we do not want to go down that track.  
It is really a balance between our need and our want as parliamentarians to provide for the public good a framework to ensure that those who do not fully understand what they may be getting themselves into when they invest in something after seeing some flash advertising programme on TV with celebrity presenters etc. and without really understanding the risks of doing so—there is a tension between that and at the other end of the spectrum the principle of caveat emptor or let the buyer beware. I think we are all pretty much in the middle space there. There are many companies that have—deceptive is not quite the right word perhaps misleading is the correct word—implied guarantees of people’s funds as they were invested and in fact those guarantees turned out not to be there once the surface was scratched. This bill starts to address that and brings as it states in the introduction some accountability and transparency back into all things non-bank. I think it is a sign of the maturity of our financial sector that most organisations have come round and are now quite supportive of this bill. The current crisis and the issues people are having regarding non-bank financial institutions are making the bill more pertinent.  
We also need to note that there are about only 70 or 80 non-bank financial institutions in total—and that number is declining—and I think they manage about 10 or 15 percent of all funds under management in New Zealand. That is my point: yes there have been some terrible losses but our financial system is actually quite sound. Unfortunately in the case of many of these institutions the perception of the risk to investors was not understood was not particularly apparent or perhaps was somewhere down in the small print. That is not acceptable I do not think to anyone in this House or even to the common person out in the street.  
As we go through the other parts I will also speak about this thing called Basel II which defines how all these capital adequacy ratios are set etc. But it is fair to say that actually there are existing frameworks out there which banks have used for a long time. Banks also get into trouble and then they do come right but there comes a point when a bank gets so big that of course the regulator cannot afford to let that institution fail. We have seen that to a massive extent in the case of Northern Rock in the UK Fannie Mae and Freddie Mac in the United States and in fact in the case of some Australasian banks too unfortunately where some larger banks have absorbed some of the minor institutions into their own balance sheet. Although National is voting for the bill I say that we just have to be careful that an implied underwriting or guarantee by the Reserve Bank or the taxpayer of these non-bank financial institutions is not given. It is a very slippery slope that we go down once we get into that space. The tensions of the current financial crisis make that quite tempting and we just have to resist that. Thank you Mr Assistant Speaker. I look forward to speaking through the Committee stage.  
Bill read a second time. 
In Committee 
Part 1Amendments outside Part 6 of principal Act  
TIM GROSER (National) 
: 
 I will take just a brief call on Part 1. National is supporting this bill as one of a suite of bills designed to shore up some problems that have emerged in recent years. It has been a fairly technical bill. The reality is that as soon as we regulate one sector of the financial system we create by definition an incentive for others to operate outside the rules. This is known as the process of financial disintermediation. I note just in passing for those readers of the  
Dominion Post  
who saw the consequences of this reported on the front page just this morning that the collapse of some of the second-tier financial institutions we are referring to now has created a space for some fairly dubious new institutions to gain business. That is the reality of this process. It is a cat and mouse game between the regulator and the private sector. In the course of recent years we have discovered that the non-regulated second-tier sector we are addressing here has created some major problems for those involved. 
Part 1 attempts to put some precision around the definitions of the institutions concerned the governance structures and the actual requirements that the regulator—which will be of course the Reserve Bank of New Zealand—will expect of these second-tier non-bank financial institutions. In looking at the definitions in Part 1 my colleague Craig Foss has given an excellent overview of this issue and he has answered some other parliamentarians’ questions about the slightly strange term “non-bank”. As my colleague put it it has a very specific meaning in the law precisely because of the requirements that anyone who wishes to use the term “bank” must follow. 
I was not privileged to be a member of the Finance and Expenditure Committee during this process but it has put a lot of work into this bill. If members look through the tracked changes in Part 1 they can see—and I take this as just one example of many—the care with which the select committee has sought to define a building society unless the building society is a registered bank. Then if members look at new section 157 to be inserted by clause 11 they will find that there are consequential amendments in terms of the expected governance regime for that particular type of non-bank deposit taker that take account of the specific characteristics of building societies. 
I want to draw attention to a couple of other points in Part 1. New section 157F deals with the issue of risk. Parliament is making a bold statement here which is that eliminating all risk is not part of the deal. That is not an exact quotation which is in new section 157F(2)(b)(i) and states: “it is not the purpose of this Part to eliminate all risk in relation to the performance of deposit takers or to limit diversity among deposit takers;”. But we will never overcome the principle that we cannot legislate for common sense. I am sorry but that is the reality. We are trying to reduce some risk around this issue. 
I have always felt that the phrase “caveat emptor” was as cold as charity when it comes to this type of issue given the degree of financial expertise required on the part of any person who wishes to put his or her deposits and savings into an institution of this type. To expect them to be able to undertake on their own behalf the type of assessment of the risk is I think a bridge too far. So although I understand the reason for that old phrase “caveat emptor” I think that the reality is that we live in a slightly greyer world than this and we have had to respond in the manner set out in this bill. 
I will also focus on the question of the credit ratings which is also dealt with in Part 1. Clause 11 inserts new Part 5D and in that part new section 157I sets out definitions of appropriate rating agencies. That provision is perhaps a little more controversial. A bit of a judgment call was required here. There is no question that there is a role for this second-tier financial structure in our community in spite of the very sad collapse of certain non-bank deposit takers or finance companies in New Zealand over the last 6 months or so. I hope this bill will go some way towards illuminating the situation. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise on behalf of the National Party to support the Reserve Bank of New Zealand Amendment Bill (No 3). The bill implements the main elements of the new regulatory framework for non-bank deposit takers. It deals mainly with prudential regulations for non-bank deposit takers. There is a suite of bills currently before Parliament and the Finance and Expenditure Committee including the Financial Advisers Bill and the Financial Service Providers (Registration and Dispute Resolution) Bill which will add to the portfolio of products aimed at hardening up the regulation of non-bank deposit takers. 
I acknowledge the members of the Finance and Expenditure Committee which dealt with the bill and particularly my colleague from the Hawke’s Bay Craig Foss whose experience in matters of banking is excellent and certainly helped us to understand the issues in the bill. I think Craig will be heavily involved in the Financial Advisers Bill as it goes forward and his contribution needs to be acknowledged. 
We are focusing on Part 1. I want to look at a number of clauses within it starting with clause 8 which deals with policy advice. The clause was amended by the select committee to clarify that the advice that can be requested by the Minister under the regime must be connected with the functions of the Reserve Bank. The advisory function of the bank must not limit the bank in the performance of its primary role. The primary role of the bank is dealing with monetary policy the official cash rate and the policy targets agreement. We wanted to clarify that the bank’s additional responsibility to provide advice to the Minister in relation to non-bank deposit takers was secondary to its responsibility for monetary policy. We wanted to make it clear that the bank’s predominant role is and will always remain dealing with monetary policy. 
The select committee inserted new clause 8A to make sure that any information collected from non-bank deposit takers would remain confidential to the Reserve Bank in the same way that information it collects from the main banks is kept confidential. There were further amendments by way of insertion of new clauses 8B 8C and 8D and they were interesting amendments. Mr Woolerton may recall that currently the Governor of the Reserve Bank and the deputy governor cannot have an interest in any banks that operate within New Zealand. We felt it was really important that the governor and the deputy governor not have an involvement a financial interest in any non-bank deposit takers as well to avoid conflicts of interest that could cause issues down the track—particularly given that the bank is seeking quite detailed information from non-bank deposit takers. 
The key part of Part 1 is new Part 5D inserted by clause 11. New Part 5D is a new part of the Reserve Bank of New Zealand Act 1989. It relates specifically to the regulation of deposit takers. It adjusts the Act to allow the Reserve Bank to deal with non-bank deposit takers. New Part 5D is the substantive part of the bill—a very important part. I want to talk about a number of important provisions in it. 
I will talk firstly about the provisions that deal with the definition of deposit takers. That definition is very important. It is vital to defining what type of organisation this bill applies to. Members of the committee heard from a number of submitters who were concerned that they would now have compliance costs accorded to them unnecessarily because in fact they were not in the business of taking deposits from members of the public. We made it clear through new section 157C which organisation would and would not fall under this regime. 
There is an interesting point in subsection (4). It allows groups to be excluded from or included in the regime by Order in Council. That is a point I wanted to highlight. I also want to highlight what came to be known as the “hire business clause”. The “hire business clause” comes in via subsection (5). It allows the governor the power to exempt—or to include for that matter—a business according to the nature of its business activities. The concern from the likes of hire businesses which take deposits from customers for hire equipment was that they would be considered deposit takers when in fact the principal reason for their business was to hire out products to consumers on a day-to-day basis. Although they take deposits to prevent the products from being stolen or damaged their principal business is not being deposit takers. We inserted that provision to make that very clear and that is good. 
I want to touch on new section 157I which insists that deposit takers must have a current credit rating. You see up until this point in time non-bank deposit takers have not been required to have a current credit rating although some do have one. Hanover Finance I believe had a BB+ rating—which did not prevent that company from falling over. The fact of the matter is that now under this legislation non-bank deposit takers that are defined as such must have a credit rating. New section 157I insists that that be the case. 
The committee had a look at that and we put in a new provision to define the principles to be followed by the bank in deciding whether to approve a certain credit agency so that New Zealanders can have some surety that the credit agencies that are being used to provide these credit ratings have some substance to them. Members will see a range of measures in new section 157J that define the principles to be followed. 
That is all I want to say on Part 1. I will leave it at that point. Part 1 is the substantive part of the bill. It defines how we are to adopt credit ratings for non-bank deposit takers. It brings non-bank deposit takers under the auspices of the Reserve Bank of New Zealand Act and I think that is a good thing. That is why the National Party will support Part 1 going forward. 
CRAIG FOSS (National—Tukituki) 
: 
 Further to what my two colleagues have said yes we are speaking on Part 1 of the Reserve Bank of New Zealand Amendment Bill (No 3). I will cover some specifics and I have some questions I would like to ask of the Minister in the chair Chris Carter about these matters. I look forward to his clarifying some of the issues.  
The principal Act is the Reserve Bank of New Zealand Act and I would particularly like to talk to clause 6 which substitutes a new section 16 “Dealing in foreign exchange by Bank”. Clause 7 then talks about foreign reserves. Another bill recently clarified that for the Reserve Bank; I cannot quite remember its correct title. This bill is a clarification actually of what the Reserve Bank does of what it is allowed to do and of which agents it can use or can use it.  
But I would be interested to ask the Minister if the Ministry of Education was ever dealing in foreign exchange for example whether it would deal in it via the Reserve Bank or the Debt Management Office or whether it would deal in it direct because that perhaps would give us a clue as to some of the efficiencies in the Public Service. There would not be any point in the Ministry of Education buying foreign exchange through a particular trading bank for example or the Ministry of Health selling foreign exchange through the same trading bank because the bank would be the winner there at the end of the day. So I would like the Minister in the chair to clarify that. I imagine he knows about the Ministry of Education; I would like to think so.  
Clauses 8B 8C and 8D just provide detail. They talk about the removal of the governor or the deputy governor and the disqualification of them—that is they cannot have a vested interest or shares or an equity holding in or be exposed to non-bank financial institutions. That obviously makes sense as suddenly the Reserve Bank will be the regulatory arm for those institutions. That is I think identical language to that used to describe what those individuals are able or not able to be or to have in relation to existing banks which is to be shareholders or to have substantial stakes in those banks—or at least they must declare any stakes that they may have in them. It is quite difficult in the very thin stock exchange and equity market that we have for those individuals to not have some investments in those banks but I am sure the investments are in blind trusts or something like that.  
I would ask the Minister in the chair whether he could expand a bit on new section 68B “Bank to have regard to directions about government policy objectives” inserted by clause 10. My colleague Chris Tremain spoke about this a little. The bill has gone through a few drafts to be fair but when it first came to the Finance and Expenditure Committee one interpretation of it—and again I alluded to this in my second reading speech—was that there was possible politicisation of monetary policy here. The extreme example of such politicisation was Robert Muldoon and the old reserve asset ratios. If he wanted to pump the economy up in an election year funnily enough he would change those ratios.  
In fact what we originally saw here was the ability of the Minister to virtually influence the Reserve Bank in a bit of a roundabout way to change the cost of capital to certain institutions. Now that is totally unacceptable and I covered the reasons why it is not acceptable in my earlier speech. But if it was an election year—as for example it is right now—and the Minister of Finance in an extreme example wanted to pump things up he could have got on the phone to ask for some policy advice from the Reserve Bank governor and said: “Hey this is a request for policy advice. We think the housing market needs to go up again. What do you think?”. The Reserve Bank governor was obliged to respond to that question and the Minister of Finance could have given him directions.  
Things are a lot tighter in this final version of this bill to be fair. However I would like the Minister in the chair to answer some of the questions about exactly how that process would work. If possible I ask him to give us an example of the policy questions that the Minister of Finance may ask the Reserve Bank governor and to describe the way that that process would work including the checks and balances in it with reference also to the banking side of the economy which is of course the larger one.  
Many people who are exposed to debt and who have borrowed from the many non-bank institutions are as a previous speaker alluded to actually very very vulnerable. We saw in the  
Dominion Post 
 today that a little finance company—I think it was in Porirua or Taita—is advertising interest rates of 8 percent per week. When compounded that 8 percent actually translates to something like 400 percent per annum—I think in that example the paper just used a blind and multiplied 8 by 52 and got a figure of 400-odd percent per annum. The finance company declares the rate per week on its board at the front of its office. The problem is that although the company has actually been up front about its hugely exorbitant interest rates many people do not see the distinction between the weekly rate and the rate when compounded per annum. That company because of its exorbitant pricing and because it is taking advantage of the vulnerable is up against the Commerce Commission. I also understand that there are some quite extreme collateral obligations around those companies which now they have been publicised will be investigated I am sure. 
Tim Groser 
: Hopefully. 
CRAIG FOSS 
: Yes hopefully.  
I will now talk to clause 11 which inserts a new Part 5D. I do not know why all this has happened. I guess it was to get the bill through more quickly with fewer parts to talk about. But there are many new parts of the principal Act in there that I would like to talk to—particularly the credit rating provisions set out in new sections 157I 157J and 157K. I would like the Minister to answer a few questions and give us his thoughts on who should be an approved credit rating agency how they should be reviewed and what criteria the Reserve Bank would look at when approving them. I would also like the Minister to step up and say whether that means that some existing credit rating institutions in New Zealand should be put out or at least blacklisted as some others should come in. As Chris Tremain mentioned earlier many of the failed institutions did actually have credit ratings but they were not worth the paper they were written on or the TV ads they were portrayed on.  
Again to be fair once the select committee went through various drafts of this bill that area was tightened up a lot. It was good practice all round and I would like to acknowledge the officials here too. I thank them for all of the work that they have done around this bill and many others.  
I would also like to speak to new section 157L which is about governance requirements. Many submitters had concerns regarding the cost of compliance to them and as I alluded to earlier there is a danger here that this is seen as an implied guarantee of deposits by the Reserve Bank—a deposit insurance. Another downside is that it is skewed against the smaller financial institutions which may be quite robust very conservative and below the radar but which now have to front up to all the costs of getting a credit rating managing the governance requirements and changing their deed to allow for the capital adequacy ratios etc. The larger institutions of course have a larger back office and plenty of lawyers to do that stuff for them and they have more depositors to spread the load over. There is a problem here with regard to the smaller ones and we have to be very careful that we are not skewing the playing field against some quite robust institutions.  
As we go through Part 1 I would also like to speak about risk management. As long as institutions declare what they are investing in and that is public and open—that is it is clear what the risk is—that should be fine for many of these institutions. The problem we have recently seen is that the risks were not put up front. So yes this bill provides a framework and the Reserve Bank will monitor the companies allowing them to invest in whatever they may like. The legislation is not very prescriptive on that as long as the risks are declared. That is the balance between full prescriptive parliamentary regulation and the belief in caveat emptor which we spoke about earlier and I think it is a pretty good fit down there. The good point—it is somewhere else in the bill; it might be in another part—is that it will be reviewed in 5 years. That is very good.  
I know many people do not understand the minimum capital requirement. It is quite technical but here is a simple example. If a bank or one of these institutions wants to lend to a business it has to have 8 percent of that capital sum allocated and put aside in case there is a default somehow. But if it is lending against a residential home it has to have only 4 percent of the same amount of capital put aside. When one looks at that one can understand why many people borrow against their own home in order to fund their business. New Zealand is a nation of small and medium sized enterprises and many business owners actually put their own home at risk in order to fund their business. One can see why they do that because the cost of borrowing against their own home is cheaper than if they were to borrow against the cash flows of the business. The monetary inquiry is looking at some of those issues at the moment. Many people approach this the wrong way. The point is that people are taking a risk with their own assets—be it their own home a second home or a third home—in order to invest in a business. So those people are taking much more of a risk than their bank whichever one it may be.  
R DOUG WOOLERTON (NZ First) 
: 
 Before I follow on from where Mr Foss left off I would like to say in recognition of Mr Foss that he is an ex-banker with a level of financial literacy far above the norm. I will not speak for any other levels of literacy that the man has but certainly his financial literacy is far above the norm. The Reserve Bank of New Zealand Amendment Bill (No 3) is designed to attend to problems encountered by people with a normal standard of financial literacy and it is for people who just want to be assured that their money will be looked after. So part of this bill is to enhance the transparency of what goes on and to ensure as Mr Foss has been talking about that some money is put aside if everything goes wrong. 
We talk of deposit takers having a risk management programme and they should tell people in broad terms what they intend to invest in. Mr Foss has covered that. Other parts of the bill deal with governance and it tries to attend to the sort of thing we have seen recently where finance companies have ostensibly been out there to take deposits from the public and to on-lend them to business people developers and the like. 
We are finding now—and I am sure many people are startled to find this—that in many cases the people who own and run these companies are the very same people who are borrowing and in fact they are developers who have set up a finance company to get money off the public to finance themselves in some of their very risky ventures. In many cases there are not the capital ratios that Mr Foss speaks of and the people who miss out are the innocent members of the public who think when they put their money in that they are investing for their retirement that they are helping business in New Zealand and that they have some backing from financial institutions and some regulations that will ensure the return of their capital plus a return of interest for the risk they have taken. Very few of them look seriously at the risk and in particular at the categories of risk that are so familiar to people like Mr Foss and to the people who live in his world—or the one he used to inhabit. 
I am not saying that with any sense of nastiness. I have a high regard for Mr Foss in his previous occupation. But people are searching for a guide when they are investing. This bill goes some way towards that. We would all like to see it go further but as Mr Tremain was talking about—or maybe it was Mr Foss in his earlier speech—it is a question of balancing the entrepreneurial activity that we require in a free and open economy and ensuring that there is enough regulation to encourage people to put money into a financial institution in order to encourage the growth and the entrepreneurial activity to take place. Unless both sides of that equation are satisfied we will be starved for capital. In fact that is what is happening worldwide at the present time—the depositors have taken flight. 
CRAIG FOSS (National—Tukituki) 
: 
 I shall pick up from the earlier speaker Doug Woolerton who was starting to talk about scarcity of capital. That is a big problem. The word “capital” goes right through here—if one looks at the new section 157R about capital ratio requirement and even before that it talks about “capital” etc. As I said earlier it is a very very scarce commodity. When times are good there seems to be plenty of it but as we have recently found out all around the world particularly down here in New Zealand where we are at the end of the capital queue if you like it is particularly scarce. That is reflected in New Zealand in what we have to pay for our capital as well as the general state of our economy.  
But it is not just capital that the framework in this bill will start to address. It is the definition and the qualification of what a particular asset is. Then one has to apply so much capital to it. It works the other way actually. So if one has a house for example it is bricks and mortar and a certain amount of capital is required for that which is 4 percent. If one has a business with a house above it then all sorts of different ratios start to apply. Because capital is so scarce many institutions will go to all sorts of lengths to make sure or to try to make sure at least that the regulatory body such as the central bank or Reserve Bank in this instance agrees with them about the class of that asset—whatever it is—and therefore that is how much capital is required to be stashed away for it.  
If one takes the house example one could have a mortgage in Australian dollars—one could have borrowed Australian dollars to fund that house mortgage. So not only is there risk on that house of bricks and mortar and one’s income to be able to fund the mortgage—one’s income might be in Australian dollars so one has foreign exchange risk. Or one might have a house in New Zealand from which one is earning money in Australia for example so the bank is exposed not only to the bricks and mortar and one’s income to fund the mortgage but also to the exchange rate between Australia and New Zealand and also to the interest rates of New Zealand and Australia where someone could borrow there to fund oneself here. Take that to the huge extreme of course with Uridashi bonds with the good old Japanese housewife lending about $120 billion I think it is to New Zealand.  
This raises a very important point because we must always remember that New Zealand is a debtor nation and sadly that is one of the reasons we have to pay such high interest rates which have incidentally approximately doubled over the last 9 years. We have to address that and not just assume that we are a creditor nation. It makes one approach many things in another way when one confronts the fact that one owes an awful lot more than one owns or earns.  
I refer to parts of Part 1 including new section 157S “Deposit takers and trustees must ensure capital ratio included in trust deed” and new section 157T “Deposit taker must maintain capital ratio required to be included in trust deed”; that is all very good but it does require quite a bit of work for those various institutions. That is countered by the fact that at the Finance and Expenditure Committee we extended time for them to have all that in place to 18 months which is obviously 1½ financial years for most of them. The credit-rating agencies will start to look at their assets to find out how much capital they need and therefore tell them how much the ratios and what their exposures are in regard to their trustees and what their allocations are and the Reserve Bank reassures us that at the end of this quarter it will have at least a starting list of credit-rating agencies. Again Mr Chair I alert you to the questions I asked of the Minister in the chair before around those agencies and I would like him to consider answering those and I am sure those listening in would like him to at least consider some reply to them.  
In my second reading speech I talked about this thing called Basel II. Basel is a place in Switzerland that used to be the centre of the financial universe. Section 157V starts to talk about that as far as non-bank financial institutions are concerned. All banks reference Basel II—there was a I now there is a II and there is in fact even a further move from II—and its application to non-bank financial institutions is obviously the commonality between financial institutions and the finance sector.  
Interestingly Basel II has moved to a point where the Reserve Bank can now accept a bank’s own credit rating and measurement models. So as long as a “Foss Bank” if you like rocks along to the Reserve Bank and says: “Here’s my model for measuring my exposures; is this OK?” and the Reserve Banks says yes then that means I can have different capital ratios outside of Basel II. I would be interested if the Minister could answer whether they would be extending that same freedom—that throttling or flexibility—to non-bank financial institutions. I cannot recall the answer from select committee hearings and submissions so I would be interested in the Minister’s opinion on that.  
Touching on new section 157Y relating to liquidity requirements I note it states: “Regulations may impose requirement that liquidity requirements be included in trust deed” and members can also look at new section 157Z. I presume they are talking about debt ratios exposure the 60 percent 80 percent or 10 percent leverage—whatever it might be. But again when the legislation states: “Regulations may impose requirement” we need to know from the Minister in the chair that whatever is required of the institutions pari passu—meaning all things being equal—for the banking institutions the requirements will be the same and the cost of capital is not being increased to non-bank deposit-takers. That is my largest fear because many people rely on such institutions to fund themselves through this increasingly expensive cost of living and increased mortgage rates just to get by. I would be interested in the Minister’s comments around that.  
Finally as we wander through the legislation I will talk about confidentiality of information. Again the committee made good strides and I thank the officials for helping us with that because again in the early drafts it was open slather. Confidentiality outside of an institution and the regulatory body—the Reserve Bank in this instance—is absolutely paramount. Of course every other bank and institution wants to know the exposures of the competitors but that information is none of their business; they can fight that out amongst themselves in the market place. It is good that it is confidential and there are some quite good parameters around that and checks and balances to stop any dubious leaking of information outside what would be necessary in a prudential bill like this.  
I will also talk just a bit further to the offences and penalties. I would like the Minister in the chair to describe some of those in a bit more detail if he could. Earlier I asked about the process around policy advice from the Governor of the Reserve Bank or the Reserve Bank. What happens if one of those parties chooses not to follow that advice? I realise that this particular clause is about the institutions themselves but what if an institution that is heavily exposed and has a huge amount of deposits chooses not to follow what the Reserve Bank says because there is a moral hazard there? If a bank or an institution calls the Reserve Bank’s bluff what happens—if the bank or institution said: “We have done all we can we have funded all we can we just have to taihoa we have good assets here we just need to ride this storm out.”?  
The previous speaker talked about frozen assets. So I ask the Minister in the chair what would happen in that instance. If the Reserve Bank in that instance froze a large institution—$100 million in deposits or whatever it might be—we start to question that and there could be some systemic problems going down from that right throughout the financial system. The simple outcome of that is that interest rates will be higher in New Zealand for longer as they have been in truth with this Government here for the last 9 years.  
Incidentally if this bill had come in in 2000 or 1999 the underlying interest rate that these institutions would have had to deal with would have been 4.5 percent. That was the official cash rate when Dr Cullen became Prime Minister—at least Minister of Finance; I am getting a bit ahead of myself there—and we have recently seen 8.25 percent. Thank you Mr Chair. 
The question was put that the amendments set out on Supplementary Order Paper 225 in the name of the Hon Dr Michael Cullen to Part 1 be agreed to. 
Amendments agreed to. 
Part 1 as amended agreed to. 
Part 2Amendments to Part 6 of principal Act  
The CHAIRPERSON (Hon Clem Simich) 
: This debate includes the schedules. 
TIM GROSER (National) 
: 
 This is a very important substantive part of the bill but it is very much briefer in its coverage than Part 1 and I think we can deal with it fairly expeditiously.  
The core of Part 2 relates to the transparency of the Reserve Bank’s reporting obligations which are set out in very clear language centred on in particular the  
Financial Stability Report 
 and the regulatory impact statements. Although we can safely assume that those reports have a tiny audience it is an audience of great importance to our country as it would be in any country because financial stability rests on having transparency and an information base. Experts in other institutions such as the international financial institutions the IMF and the OECD—which report as they should regularly on monetary policy in New Zealand—as well as overseas investors domestic investors and a whole host of companies do actually need to see very clearly the key bits of the information puzzle. So the legislation around this issue although it is not of general public interest is certainly of immense importance to the general public because it is one of the foundation stones of the financial stability of this country.  
Let us not overlook the fact here that in the midst of the really very very sad tales about people losing their savings in the non-bank financial sector—something we have just discussed at length in relation to Part 1 of this bill—my recollection of the share of total savings in the banking sector as opposed to the non-bank deposit taker sector is that the figure is even higher than the one my colleague Mr Foss gave. I am not 100 percent sure but I believe it is well above 90 percent. But whatever the actual figure is we have to be grateful for the fact that for the most part and so far—and I guess we should be touching wood when we say this—the financial stability of this country is pretty sound. We are tidying up areas here we are strengthening areas here in the non-bank deposit taker sector and we are strengthening the transparency procedures that underlie the whole system. But the fact remains that despite the concern that our banking sector is dominated by Australia I think one would have a hard job to persuade New Zealanders who had just lost their money in a New Zealand financial institution that somehow they were better off because they had lost their money in a New Zealand institution than the people whose assets were being protected in an Australian-owned bank.  
Part 2 is very very technical. If we look briefly into the language used in Part 2 we see there is a requirement that the Reserve Bank report on all matters relating to the soundness and efficiency of the financial system and on other matters associated with the bank’s overall prudential responsibilities. I know that those bank reports are pored over by highly technical people and their assessments of the information contained in them are absolutely critical for the whole operation of our economic system. So the National Party is pleased to be supporting this legislation.  
We also note the changes that have been made in respect of the Reserve Bank’s dividend. Obviously the bank is in a highly privileged position as the sole issuer of currency. It makes seigniorage from that operation. In fact if members go back through time they will find that throughout earlier parts of our antecedent political history that was a traditional source of financing for Governments before the invention of direct income tax. Seigniorage is an ancient form of revenue for the Crown and the principles are now set out even more clearly to determine what the appropriate dividend to the Crown is. I think that matter is extremely uncontroversial and we welcome the slight clarification of it. Thank you Mr Chairperson. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to take a short call on Part 2. Like my colleague Tim Groser I can move through this part expeditiously. Part 2 has two key parts: firstly it deals with the determination of the Reserve Bank’s annual dividend back to the Crown; and secondly it deals with the timing of financial stability reports and the importance of them. 
In terms of the first part which deals with the bank’s annual dividend at present the bank calculates the dividend in accordance with a legislative formula. I take this opportunity to say to the Minister in the chair the Hon Shane Jones that given his financial background and the time he spent as chair of the Finance and Expenditure Committee I am quite keen for him to take a call to give us a feel for what that legislative formula entails so that we can learn a little bit more about it. I ask the Minister in the chair to seek a call so that he can define how the Reserve Bank calculates its dividend in accordance with a legislative formula. 
The formula-based determination does not always reflect changes to the bank’s balance sheet market and accounting and in recent years it has not accurately reflected the amount that should be available for distribution back to the Crown. The committee has changed the provision to make it clearer. The amendments we recommend would allow the bank to determine the principles—which must be published in its statement of intent—upon which it would recommend the dividend. That is quite a change. The bank will have to define how that dividend will flow back to the Crown and it will have to consider how its own balance sheet has changed because of the impact of the financial markets on it rather than the dividend just being calculated in accordance with a formula—which I am hoping the Minister will take some time to define for us before we close off the debate on this part. 
R Doug Woolerton 
: Shane will sort it out. 
CHRIS TREMAIN 
: I am just acknowledging that the previous chairperson of the Finance and Expenditure Committee is a wise member of the House. I look forward to his call. 
The second part of Part 2 which I will briefly touch on is new section 165A in clause 19. It deals with the financial stability reports and the timing of those reports. We have allowed more flexibility around the timing of them. Previously they had to come out every 6 months on a specific date. The section has been changed to state that “The Bank must not less than twice in every calendar year” publish one of these reports. They are critical reports. They are used by many financial organisations around the world to consider the state of the New Zealand economy; the likes of the OECD and various global financial credit agencies look at them in detail. Making sure that the reports come out in a timely fashion is important for our wider financial credit ratings and I guess that it is important in relation to our OECD rankings as well. That particular amendment is a small change but it takes us forward. 
That is the end of my speech on Part 2 of the Reserve Bank of New Zealand Amendment Bill (No 3). Thank you for the opportunity to speak Mr Chairperson. 
CRAIG FOSS (National—Tukituki) 
: 
 I raise a point of order Mr Chairperson. I wonder whether we could give the Minister in the chair the Hon Shane Jones a copy of the  
Hansard 
 for this debate so that he could address the questions we asked the previous Minister in the chair. 
The CHAIRPERSON (Hon Clem Simich) 
: I call Craig Foss. 
CRAIG FOSS (National—Tukituki) 
: 
 It was worth a try! Speaking to Part 2—and yes I have spoken a fair bit on this part; I was on a bit of a roll before—I note that Mr Tremain alluded to the dividend that the Reserve Bank pays and also to the statement of intent that it has to produce. Mr Tremain started to describe how the dividend payment will be changed and that is all very fine but the size of the dividend depends on whether there is an excess of revenue over expenditure—I was going to say “profitability” but that would not be right in the Reserve Bank’s case. Hopefully it is positive. That drives what the bank pays back to the Crown. It will be interesting to see. 
I ask the Minister in the chair the Hon Shane Jones whether there is a charge on the capital that the Reserve Bank has. The Reserve Bank will now have $2 billion of taxpayers’ capital tied up in order for it to manage and run its operations. A hospital or district health board for example has to pay a charge of between 7 and 10 percent on the use of capital. I would be very interested to hear the point of view of the Minister in the chair on that. 
In the recent Budget $600 million extra of taxpayers’ capital was allocated to the Reserve Bank to enable it to carry out its operations. I was quite concerned about that. Many people were not aware of it. It has had some publicity now and the Reserve Bank has explained to the public why it needed that amount. But it is worth noting because there has not really been a debate on it that $2 billion of capital is now allocated to the Reserve Bank. That is capital that cannot be used to help fund infrastructure—to help pay for hospitals schools etc. That money is tied up with the Reserve Bank and at risk. I freely admit that it is very conservative with that capital and one would expect it to be. However I am somewhat concerned that we have not had a public debate about the matter. The outcome of that debate may be that yes it is absolutely fine but it did seem to slip below the radar. If the Reserve Bank lost some funds in the course of its operations be it through bonds that it has invested in be it through foreign exchange that it is engaged in or be it through the money supply that is out there that capital would start to be eaten. 
The Reserve Bank was given $600 million because its bond portfolio was massively under water when it marked to market. All Government accounts now have to be produced under the International Financial Reporting Standards so the bank had to put that money up as if it were for sale. The difference in respect of the money it spent to buy all those Government bonds versus the value of those Government bonds today is a huge negative hit to the taxpayer. The Reserve Bank argues and fair enough that it holds those bonds until maturity so it will always achieve the principal—assuming that the Government is still in place and let us hope a Government is in place to do that. That is fair enough but this issue should have been considered when the International Financial Reporting Standards were adopted for all public accounts in New Zealand. 
Members will note that even the Auditor-General has raised serious questions about the application of mark-to-market valuations to public sector accounts and that is a typical example of the problem. Landcorp is very open about its problems with it but we can take it right down to the level of our local councils which have huge issues with it because it imposes a huge compliance cost upon them. 
Regardless of how the dividend is structured and calculated the amount depends on the operations of the Reserve Bank and what is at risk. Given the pressure that non-bank financial institutions will be under because of this legislation the Reserve Bank should put itself under the same framework. The fact that it needed much more capital to fund its operation because of an accounting change shows that it was undercapitalised from the start. I know that the Reserve Bank has assured us that its prudential ratios are very very conservative and absolutely fine—we all know that—but $600 million suddenly disappeared from the Crown bank account to it to allow it to continue its operation and to expand. 
We also know that the Reserve Bank has a short New Zealand dollar position of $4.2 billion—$4.2 billion in foreign exchange. I know why it is doing that and that is absolutely fine but does New Zealand understand what is at risk? That is a debate we need to have. I am not saying it is wrong and I am not saying it is right but we have had big discussions about the purchase of New Zealand Rail—$650 million and counting—yet $600 million was parked with the Reserve Bank and there was hardly a whisper apart from two articles in the  
National Business Review 
. 
Finally I would like to take issue with the changes to the Act in terms of the statement of intent. The intent of the Reserve Bank as most people understand it is to keep inflation between the 1 and 3 percent band. Actually that is not its intent at all. The public needs to understand that the job of the Governor of the Reserve Bank now is to ensure that forecast inflation is between 1 and 3 percent over the next term which is basically 3 years. The effect of that has been to have forecast inflation of 3 percent rather than inflation being capped at between 1 and 3 percent which is what most people understand to be the case. Yes that might sound a bit boring and technical but it has huge ramifications. It creates uncertainty because when we calculate the value of something in 10 years’ time—infrastructure investment for example—the higher inflation and interest rates are then the less viable that investment is. That is why we need certainty that inflation outcomes will come within the band which is what has been agreed at the moment. High inflation is devastating. If we look at the interest rate curve in New Zealand and at the viability of many projects we see that they do not work and that is the core reason why. 
I would like to have another read of the statement of intent of the Reserve Bank to measure its outcomes versus its intent because inflation has been outside the 1 to 3 percent band many times over the last 2 years and it is forecast to be outside it for at least the next 12 to 18 months. That is devastating for New Zealand. It is devastating for our older folk who have funds invested because inflation eats financial savings. It is devastating for the first-home buyer who is trying to get ahead but has to borrow at an interest rate of 8 or 9 percent to obtain a mortgage. That is why it is devastating that is why we need to be totally vigilant and that is why the provisions in this bill need to be comparable with the regulations and supervisory commitments of the rest of the banking sector. Thank you Mr Chair. 
Part 2 agreed to. 
Schedule  
The question was put that the amendment set out on Supplementary Order Paper 225 in the name of the Hon Dr Michael Cullen to the schedule be agreed to. 
Amendment agreed to. 
Schedule as amended agreed to. 
Clauses 1 to 3  
CHRIS TREMAIN (National—Napier) 
: 
 I will take just a brief call given that we have covered most of the issues in the debate on Parts 1 and 2. I shall refer to the commencement date which is part of the three clauses we are debating. The commencement dates of many of the bills we are involved in are fairly superfluous but in this case the commencement date is very important. From the way that the bill was written these prudential changes would have been immediately imposed on a raft of non-bank deposit takers—depending on the definition. The Finance and Expenditure Committee in its wisdom sat back and saw that a heck of a lot of information would need to be churned through and provided to the Reserve Bank; a lot of detail is involved even in terms of the definition of which organisations fall under the auspices of the Act and which do not. So the commencement date was moved out by 18 months to make sure that the organisations that fall under this regime have time to find out exactly what they need to do to meet the requirements of the bill. This is a short call just to say that the select committee gave due consideration to making sure that the organisations captured by the bill have time to come to grips with what is required to provide the necessary information and to do so in a way that reduces their compliance costs. Thank you Mr Chair. 
Clause 1 agreed to. 
Clause 2 agreed to. 
Clause 3 agreed to. 
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon SHANE JONES (Minister for Building and Construction) 
 on behalf of the  
Minister of Finance 
: I move  
That the Reserve Bank of New Zealand Amendment Bill (No 3) be now read a third time 
. Tena koe Mr Assistant Speaker tena tatou katoa. E te matamua e Winitana kia ora. 
[ 
Greetings to you Mr Assistant Speaker and to all of us. Greetings to you Winston the elder statesman 
.]  
This bill establishes a framework for the regulation of non-bank deposit takers with the aim of promoting a sound and an efficient financial system. The bill will do this by establishing prudential standards and providing depositors with a clearer basis for distinguishing between lower risk and higher risk entities. The House has already spent quite some time on this bill this morning so I do not plan to go back over ground that has been well traversed. However I think it is important to note that this legislation is a significant step forward and should provide more confidence in a sector that has faced a number of challenges over the last year or so. It complements some important work that is being undertaken by the Minister of Commerce the Hon Lianne Dalziel. This is important legislation which has broad support from the House.  
I commend the bill to the House. 
TIM GROSER (National) 
: 
 In the course of the discussion around the Reserve Bank of New Zealand Amendment Bill (No 3) over the last few months one of New Zealand’s experts suggested to me that the position of the Reserve Bank is a little like that of a parking attendant who has a closed circuit television trained on a number of different levels in a parking building and whose responsibility it is to make sure that everything is tidy and safe. From time to time the regulator—in that case the parking attendant—will look through and see something slightly dodgy going on at one level of the parking building which justifies his or her zeroing in and trying to respond in a policy sense to it. Most of the time it is a sort of cat-and-mouse game. I think the cat wins most of the time but occasionally the mouse may win.  
That is an elaborate way of describing the process that goes on in any financial system. The Government of the day will regulate one part of the financial system thereby putting into place almost automatically an incentive on the part of other operators to try to lower their costs by getting around the regulatory frameworks that the Government has just created and creating a new niche in the market. So we have a situation here in which we have I think a very sound regulatory framework for the banking sector of New Zealand as defined very precisely in New Zealand law and any institution that wishes to carry the title “bank” in its name as my colleague Mr Foss pointed out during the various stages of this bill has a legislative requirement to conform to the very technical and demanding provisions relating to banks. But by definition we have created in the past an incentive structure for a non-bank deposit taker sector to emerge and it is now quite apparent that the light regulatory frameworks that have governed that sector are inadequate. The cat is catching up with the mice again.  
Unfortunately I am quite confident that a future Parliament at some stage will have to do exactly the same tidying-up effort as this one. As soon as one loophole is closed by definition that opens the opportunity to game the system and create the opportunity for new loopholes. However that is the nature of the process and in this bill Parliament is solidly behind the effort to try to improve the non-bank financial sector.  
The reasons for that I think have been well traversed. Amongst the many things that make up a sound society the rule of law property rights an independent press and a sound financial system are clearly of central importance to a well-functioning society. We have learnt of course about the importance of the financial system from Adam Smith onwards. He said that when two or three merchants gather together it is usually for the purpose of deceiving the public so the very founder of the whole free-market philosophy still accepted that a free market needed to have appropriate regulatory frameworks put around it. There is no more important sector than the bank and the non-bank financial sector in which to ensure that we do have an appropriate regulatory framework. Unfortunately I suspect that we will not ever overcome the old saying that a fool is very quickly parted from his or her money but we at least can minimise some of the risk around that through appropriate regulation.  
We have here in the bill I think a pretty sound framework. My understanding is that the Finance and Expenditure Committee—I was not part of its process—has had access to some excellent international-quality advice and I think that the end result will ensure that as we move now to regulate beyond the first tier of the financial sector the banking sector into the second tier we have a structure that will provide a robust framework looking forward. Obviously we are looking at only the major institutions here in the sector. There is a licensing threshold—from memory it is around $10 million—that an institution has to meet before this quite demanding framework comes into play. And then as we have discussed in the various stages of the bill there are minimum capital adequacy ratios and governance requirements that need to be met. Quite a lot of bespoke engineering has been going on in this bill—for example in respect of building societies. It is carefully defined in the bill that building societies are not themselves operator banks. There are quite specific governance structures that reflect the reality of a building society.  
We have had a very serious look at the two opposing sides of the argument in respect of credit ratings. On the one hand I think there has been widespread recognition amongst members that credit ratings are not a panacea. My colleague Chris Tremain pointed out that the most recently collapsed firm I think Hanover Finance was one of the non-bank deposit takers that had actually found it in its own interest to go out and get a credit rating. But that did not stop Hanover Finance falling over. I think members have been aware that in reality there is a bit of a moral hazard around that issue. The public may interpret it that if a company has an international credit rating under the provisions of this legislation that somehow takes risk out of the equation. Well the bill has done what it can—quite explicitly in fact in its principles—to make it clear that that is not the intent of the bill. The legislation probably will be misread at some future point but the House has done what it can to lay down the realities. At the end of the day we are into risk minimisation not risk elimination on this issue. So on balance although there was a strong argument against credit ratings the bill has come out in favour of them for the non-bank financial deposit taking sector.  
There is a whole series of provisions around financial disclosure including some provisions we have just debated in respect of the bank’s own legislative requirements and in respect of its supervisory role in terms of putting information before a narrow group a group of international and domestic experts who do need access to information of a highly technical nature in order to make an informed judgment about the soundness of the system. I am sure that the improved reporting procedure across various aspects of the bank’s responsibilities will further enhance the financial stability of this country.  
To sum up by referring to the bigger picture I think we all understand that although this bill is deeply technical the soundness of the financial system is of central importance to this country. We have taken a beating in the non-bank financial sector recently but the majority of New Zealanders have had the protection of a very sound system which is one of the world’s best systems. It has been put under pressure obviously as the effects of the subprime crisis have worked their way through the system. I think there are some improvements here. I am sure this is not the last word for the incentive reasons I have tried to explain. The process of financial disintermediation is an ongoing process and we will have to deal with it again. But I do think New Zealanders should be confident that we are going in the right direction. 
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First wholeheartedly supports the Reserve Bank of New Zealand Amendment Bill (No 3) and its intentions. To follow on from Mr Groser I say that we absolutely support the free market even though we sometimes criticise aspects of it. We recognise that regulation is needed to give confidence because this bill apart from anything else is about confidence. If we have a situation where those with the money are reluctant to lend it on to those who need it then that will stifle business and stifle the growth of this country. This bill will ensure that that does not happen by putting in place some light regulations around that area. 
Speaking personally I am one of those who are criticised in this country. My family coming from farming stock like to be able to see touch and walk over their assets rather than have somebody look after them. We have a stockbroker in the family by marriage and he is far wealthier than the rest of us so maybe that proves something. 
I think that credit ratings for the non-banking sector which this bill brings into play are important. I am in agreement with Mr Groser that it would be wrong for that sector to give the general public the idea that there was no risk and that they could rely absolutely on those ratings. However it is another step forward in terms of supplying more information to the public. We applaud that and think it is long overdue. If we have a situation where confidence goes down the tubes we will have a country that forever has a stop-start economy. We would not like to see that happen. One of the previous speakers spoke about this aspect of the financial sector being mainly New Zealand - owned. I just want to say that we should not take anything from that apart from the fact that there has been less regulation in this area than in others. 
New Zealand First looks forward to the day when more banks as opposed to the second tier of financial institutions are owned by New Zealanders. We would like to see our first tier of banking institutions owned by New Zealanders and we believe they could run them with aplomb dignity and absolute surety just as they do with Kiwibank and the Taranaki savings bank. The banks can make sure their depositors do not lose out. 
New Zealand First is keen to see the Reserve Bank of New Zealand Amendment Bill (No 3) progress so I will not take up any more time of the House. I say again that New Zealand First enthusiastically supports the passage of this bill. 
CRAIG FOSS (National—Tukituki) 
: 
 I rise to speak on the Reserve Bank of New Zealand Amendment Bill (No 3) for the last time. We are up to the third reading and I have already covered many of the points that I and my party have been concerned about. 
I acknowledge the previous speakers; I think we are pretty much all on the same page. The bill is quite technical. It is about my field—finance. The bill says a lot about the need for many New Zealanders or for New Zealand per se to have a better understanding of all things financial. We have our house and we have our income but sometimes some of the biggest risks we take are financial risks and many of us are not fully aware of the underlying risks we take. 
For example we see advertisements for investments over 3 months 6 months 1 year etc. and underneath we see the word “Terms”. Those terms may state that the deposit is guaranteed by first debenture or guaranteed by so-and-so or has a triple B rating from some outfit we have never heard of. If we are not in the finance sector or if we do not have an awareness of it then it all sounds legitimate but it is quite deceptive. That is one of the reasons why the National Party is voting for this bill and for the other bills I alluded to earlier—the Financial Advisers Bill and the Financial Service Providers (Registration and Dispute Resolution) Bill. When the report of the Finance and Expenditure Committee on the inquiry into monetary policy comes out I am sure we will see a familiar theme along those lines—from the National Party at least. 
I point out that if for example a non-bank financial institution states that it is taking deposits and that they are guaranteed by person B that sounds great to a lot of people but it all depends on the integrity of person B. Effectively the depositor is lending money to person B not to the headline institution with the nice flashy brochure that is doing a roadshow around town. Once these prudential declarations have come out and the frameworks are in place and after the initial hiccup or two that is bound to happen then at least what is at risk—a very important term—will be exposed to daylight. There is nothing like a bit of daylight particularly in relation to finance to make sure everything is clean and certain. 
I reiterate what I said earlier: the mission of this bill which I think Mr Groser alluded to is not to take away risk but to declare fairly and transparently the actual risk being taken by first the depositor and second the institution taking the deposits. This bill is not retrospective by the way so unfortunately many of the difficulties we are having with many finance companies will not be fixed by it but hopefully at least it will provide a platform and a framework that will decrease the number of such events in the future. It would be very naive to say we will not see a repeat of those failures in the future. It is very important that what is called the “funding risk” is transparent. As I said earlier the Serious Fraud Office and other agencies with all their powers are looking at some of the institutions that have allegedly misled depositors—the public. Under this legislation some of the related-party transactions would have come out in the wash in the various declarations. 
Some institutions have failed because of dubious behaviour which the authorities are looking into—and all speed to them and I hope those people who have misled the public get their comeuppance—but other institutions are suffering because of the scarcity of capital the scarcity of committed funding against whatever assets they have. In fact some institutions have frozen funds in order to secure their assets. Interestingly some institutions have frozen only withdrawals in excess of a million dollars. They have got a bit of grief for doing that but they are trying to protect their smaller depositors because the larger institutions that have on-deposited to them if you like have moneys in excess of a million dollars. The result is the small investors are quite OK and can withdraw funds. Those institutions argue that the asset—the building the apartment block or whatever it is—will still be there in 5 or 10 years’ time and they just need to taihoa and to get themselves through this trough. 
That does not mean much to someone who is suffering at the moment but my point is those institutions have a funding issue and a funding crisis and that would have been apparent and would have been declared under the capital ratios that this bill brings out. As long as it is declared and is apparent to everyone then there is no problem at all. I think most parties would agree with that. 
The legislation has been tidied up a lot on its way through the House. My main concern has been the various holes in the legislation. The extreme almost absurd example in earlier drafts of the bill was the possible politicisation of monetary policy in New Zealand in so far as non-bank financial deposit takers are concerned. As we spoke about earlier the people who borrow a lot of funding off these institutions are very very vulnerable. They will be looking for somewhere to get credit. That is one point and the select committee’s inquiry into monetary policy may come up with a similar theme. Hopefully that report is not too far away. 
One thing that was not mentioned in the Committee stage was an obvious change that the Finance and Expenditure Committee made to the definition of “deposit taker”. The commentary on the bill states that the committee recommended that the “definition be extended so that a person who had offered debt securities to the public that remained unpaid could be subject to the regime.” That was a very important point. If an institution advertised for investments and if something untoward happened to it between someone committing to send a deposit to it and the funds actually arriving under the bill as originally drafted only funds that had already arrived would have been looked after. Of course we are talking about intent here and if there is an intent to mislead or not show as much information as an institution should in order to be fair and transparent then I say well done to the committee and the officials for picking that up and for many of the other improvements to the bill. 
I spoke before at length about the various capital adequacy bits and pieces and I also alluded to my interest in the Reserve Bank’s own books and balance sheets. It is quite interesting in that it is very difficult to go and look at the Reserve Bank’s books. We cannot go via the Auditor-General; there has to be an independent auditor and we have to go via that organisation. That is an interesting challenge for us; I am spending a bit of time on working out how to get that one put before various committees etc. 
Finally I acknowledge the various speakers and the Minister in charge of this bill and the other two bills that the National Party is voting for. The bills set up a more transparent viable framework. They are good for New Zealand but we have to make sure that we are not skewing the system in favour of or disfavouring one part of the sector. There is an internationalised global financial system. New Zealand gets its capital its funds from elsewhere from outside our borders. We do not fund domestically so we should say thanks to the Japanese housewife etc. So we have to make sure that whatever we do in this bill and whatever we do prudentially and in and around our central bank does not politicise in any way the operation of our regulatory body—our central bank—and does not put us out of step with the other partners and parties we deal with around the globe. 
Thank you Mr Deputy Speaker. I have enjoyed speaking on this bill and I thank the earlier speakers.  
SUE MORONEY (Labour) 
: 
 It is my pleasure to take a short call on the third reading of the Reserve Bank of New Zealand Amendment Bill (No 3). This bill establishes a framework for the regulation of non-bank deposit takers with the aim of promoting a sound and efficient financial system. The bill also promotes a sound and efficient financial sector in which the public has confidence. It will increase the public’s confidence in the professionalism and the integrity of the advisers so it is very timely from that perspective. 
This bill is part of the largest-ever reform of the non-bank finance sector and it has been conducted with wide input from and the support of that industry. It also promotes the development of a more consistent regulatory framework for financial services and coupled with the advent of KiwiSaver it will promote a stronger savings culture and encourage greater levels of investment. This issue was well traversed with the previous bill passed by the House the Employment Relations (Breaks and Infant Feeding) Amendment Bill. We want to ensure that we shift from the credit card - type culture that has developed here in New Zealand to a stronger savings culture and this bill will aid and abet that process. Thank you. 
CHRIS TREMAIN (National—Napier) 
: 
 National will be supporting the Reserve Bank of New Zealand Amendment Bill (No 3). In the Committee stage debate on Part 2 we discussed the financial stability reports and some changes around them. It is on that note that I wish to start my debate in the third reading and refer to page 30 of the financial stability report presented in May 2008 that lists the financial companies that have gone into receivership in the last couple of years. The total number of financial companies in receivership or in moratorium relates to $1.925 billion in deposited funds. That is a significant amount of this country’s money earned by hard-working Kiwis. The companies in the $100 million - plus category are Provincial Finance $300 million; Bridgecorp $459 million; Nathans Finance $149 million; Capital + Merchant Finance $187 million; Lombard Group $127 million; Geneva Finance $141 million; and MFS Boston $319 million. All in all these total $1.295 billion. That is justifiable reason to be standing here debating this legislation today and taking it through its third reading and that is why National supports the bill.  
The bill does not cover all the companies that have gone into receivership or into moratorium during the credit crisis that has been in place. There are companies like Blue Chip New Zealand property investment development companies that many New Zealanders have suffered at the hands of. I can talk only about my own electorate of Napier where a number of people who have come into my office had invested money with Blue Chip and bought not just one but two investment apartments using their home as security. Unfortunately they will lose their home as a result of that investment decision.  
This legislation will not fix that but it will add some more prudential supervision to those second-tier finance companies. Although the bill will not fix it entirely hopefully it will provide a high level of scrutiny and more security to New Zealand investors in those second-tier companies. If we go back 2 years and look at the balance sheets of those companies most of them were in pretty good shape then. The problem was that when the credit crunch came many people got the jitters. These companies had borrowed from depositors short term and had lent long term and all of a sudden the investors wanted to withdraw their funds from these companies. They were faced with not having the strength in their balance sheets to be able to sustain a run on their funds and that put them into a difficult position.  
Although the prudential requirements from the Reserve Bank that will be implemented by this bill may improve the balance sheet requirements in a credit crunch there will still be times when it will be difficult for these companies to stop a run on their funds so I do not see how we can overcome that problem in all situations.  
The bill introduces a new regulatory framework for non-bank deposit takers. I have canvassed that during the Committee stage today and I will not go into it in any more detail than is necessary. I just want to say that although the bill does add a higher level of prudential requirement to second-tier deposit takers it will not solve all the problems in that area.  
Under the new arrangements the Reserve Bank’s role will be to license deposit takers to develop and enforce minimum prudential and governance requirements and to apply credit-rating requirements. Trustee corporations will continue to be the front-line supervisors of deposit takers. There will always be a risk in any investment and it is important that that is understood by all consumers. Take for instance Bridgecorp with a credit rating of BB+. This business to all intents and purposes had an investment rating yet it still went into receivership. Although we will introduce credit ratings across the second-tier financial sector it will be important that a strong education programme follows so that consumers out there understand firstly what the credit ratings mean and secondly that a credit rating does not guarantee that their funds will be safe 100 percent of the time; they need to understand that.  
This new bill is however a means by which New Zealand can add more checks and balances on non-bank deposit takers to provide depositors with another level of security. I will say lastly that this will not reduce or remove all risk from the equation. There will always still be a risk at this level and that must be taken into account at all times. Thank you Mr Deputy Speaker. 
Bill read a third time. 
Subordinate Legislation (Confirmation and Validation) Bill (No 4) 
First Reading 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That the Subordinate Legislation (Confirmation and Validation) Bill (No 4) be now read a first time. 
 At the conclusion of the first reading debate I will move that the bill be referred to the Regulations Review Committee where I am sure under the estimable leadership of Dr Richard Worth the committee will deal expeditiously with the bill and return it to the House. This bill of course must pass before the end of the year not before the election in order to avoid certain rather nasty consequences for large numbers of people including New Zealand superannuitants. This is a routine annual bill to confirm and validate items of subordinate legislation that in accordance with the confirmation and validation provisions in the Acts under which the various instruments are made lapse at stated times unless earlier confirmed or validated by Act of Parliament.  
This year the bill provides for Parliament to confirm or validate and confirm 14 Orders in Council made under 10 Acts. Two apply movements in the CPI to the rates of social security benefits New Zealand superannuation and war pensions. There are four under the Customs and Excise Act 1996 and two of those apply movements in the CPI to rates of excise and excise-equivalent duties on alcohol and tobacco products. The other two prohibit the importation of trout and trout products and prohibit the export of cattle deer goats or sheep for slaughter except with the consent of the Director-General of the Ministry of Agriculture and Forestry.  
Two orders under the Tariff Act 1988 amend the Tariff concession reference No. 80. This concession covers the importation of passengers’ baggage and effects that are not intended for gift sale or exchange. Two of the orders deal with commodity levies which of course go through a process with the industries involved. Regulations made under the Animal Products Act 1999 increase total revenue for verification services provided by the verification agency and cap the new verification agency disestablishment charge.  
An order made under the Civil Aviation Act 1990 increases the annual levy to be paid to the Civil Aviation Authority by the Airways Corporation MetService and specified aerodromes to fund the aeronautical information service. An order amends the schedule of the Electronic Transactions Act 2002 which lists enactments that are excluded from the application of Part 3 of the Act.  
The final order to be confirmed is made under the Road User Charges Act 1977 and increases from 1 July certain rates of road-user charges. This is to ensure that operators of diesel vehicles contribute more equitably to the funding of land transport activities once all petrol excise duty is directed to the National Land Transport Fund. Effectively we are now moving to a fully hypothecated system of excise duty on petrol with all the money going into the National Land Transport Fund. Of course it is therefore necessary to adjust the road-user charge system to make sure that those who are using diesel vehicles and paying road-user charges are treated equitably—or more precisely that those with petrol vehicles are treated equitably in relation to those who have diesel vehicles and are paying road-user charges. 
Dr RICHARD WORTH (National) 
: 
 The previous speaker Dr Michael Cullen succinctly outlined the scope of the Subordinate Legislation (Confirmation and Validation) Bill (No 4) and as he said it is to go to the Regulations Review Committee. It is limited at this part of the urgency debate simply to the first reading. The plan of action is that it will go to the Regulations Review Committee which will meet next Wednesday and come to a view on whether these particular delegated provisions should be confirmed and validated.  
There are perhaps a couple of points to be made in the context of a first reading speech. First the purpose of the bill is to confirm and validate certain subordinate legislation that in accordance with confirmation and validation provisions in the Acts under which it is made lapse at a stated time unless confirmed or validated by Act of Parliament. So—if one likes to put it this way—there are a whole lot of sunset provisions in these delegated provisions which require for continued life a further parliamentary step. If one looks through the bill itself one sees that in some cases the subordinate legislation is to be confirmed and in other cases it is to be confirmed and validated. Nothing really turns on that; it simply relates to the empowering provision in the statute requiring validation or confirmation and validation.  
The step of confirmation and validation does not itself cure any invalidity in those particular provisions. As the previous speaker said a raft of statutes and associated delegated legislation is affected: the Animal Products Act the Civil Aviation Act the Commodity Levies Act the Customs and Excise Act the Electronic Transactions Act and so on. I thought I would just take as an example to illustrate the process one such Act and its related subordinate legislation. I have chosen the Civil Aviation Act 1990. It is interesting actually to see that the dates of all of these pieces of primary legislation are all now of an age—the latest would be 1999. So it seems that this drafting technique may not be in favour as much as it used to be.  
But just for example looking at the illustration I have chosen—the Civil Aviation Act—one sees in section 42A and the later provisions that follow a power given to the Governor-General to impose levies. The levies may be in respect of a range of aeronautical activity and services. But under section 42C there is provision for “Levy orders to be confirmed”. That is what we are talking about here. Under section 42C(2) “Every such Order in Council shall” expire at a fixed date “except so far as it is expressly validated or confirmed by Act of Parliament passed during that year;”. That is why Dr Cullen said that there is a degree of urgency in seeing this legislation in place before the end of the year.  
Then if one looks at the relevant piece of delegated legislation—in this case the Civil Aviation (Aeronautical Information Service) Levies Amendment Order 2008 which was made on 26 May—one sees that a range of levies are set for a number of airports throughout New Zealand. So the aeronautical information service levy for Christchurch for example is $39526 that for Wellington is $47852 and—the final example—that for Westport is $299.  
The Regulations Review Committee will go to all of the relevant ministries examine their responses for the justification for the legislation and then report to the House. I know it is certainly the hope of National Party members that we will see the Subordinate Legislation (Confirmation and Validation) Bill (No 4) back in the House in good order for the further steps that must necessarily follow—those further steps being a second reading Committee stage a third reading and the Royal assent. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 I rise in support of the Subordinate Legislation (Confirmation and Validation) Bill (No 4) as well. I know that the bill will be well handled in the Regulations Review Committee chaired by our very able colleague Dr Richard Worth. I will just touch on a couple of issues that are of interest in this legislation.  
I refer specifically to clause 10 “Customs and Excise Act 1996” where subclause (a) states “Customs Import Prohibition (Trout) Order 2007 (SR 2007/298)”. When I look at the Order Paper I notice the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill in the name of the Hon David Parker languishing down at No. 51. I inform the House that when I arrived here—I think it was in the forty-fourth Parliament briefly when I first came here—that proposed legislation was sitting on the Order Paper at I think about No. 51 or 52 or somewhere in that order. Here we are today in the closing hours of the forty-eighth Parliament and I see that the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill is still on the Order Paper. It would be an interesting thing given that we have the Leader of the House here with us to find out whether the Leader of the House intends with similar legislation to this bill to bring forward the conservation of trout bill in this Parliament. Otherwise I am sure it will turn up at about No. 51 52 or 53—or something like that—in the forty-ninth Parliament.  
There is an interesting process on bills like this one and I notice that this is the No. 4 bill so I presume that it happens annually. Therefore for the last 4 years we have had a rollover provision—in this case the Subordinate Legislation (Confirmation and Validation) Bill (No 4). It is a useful vehicle I think for the House to tidy up and validate bits of legislation that potentially would roll over—or will indeed roll over—and collapse if that did not happen. The only question I guess that comes from that is whether this is a good way to deal with legislation in general. If it is why are there not more Acts of Parliament that have—I am not sure whether this is the right legal term or not—a sunset clause in them? Such Acts would therefore roll over on a regular basis and then be subjected to a process such as that gone through in the Regulations Review Committee where the original intent of the Act or the reasons for the Act in the first instance would be able to be scrutinised and it would be deemed whether they were still valid.  
There will be an interesting situation going forward because I know that a colleague of mine not too far from where I am right now has some intentions in the future to bring about an opportunity for legislation to go through a filter whereby the cost of implementing that legislation versus the potential benefit from it will be scrutinised. This type of bill might be a vehicle for that to take place—or a part of that vehicle.  
I would also like to pick up on a comment the Minister made about the changes to the Road User Charges Act 1977 and to say that this is actually a good move. For too long although most people thought excise tax was taken for the purpose of roading it has not been spent for that purpose. 
Sitting suspended from 1 p.m. to 2 p.m. 
LINDSAY TISCH (National—Piako) 
: 
 National will be cooperating with the Government on the Subordinate Legislation (Confirmation and Validation) Bill (No 4) and supporting its referral to the Regulations Review Committee which Dr Worth spoke about earlier and of which I am a member along with Eric Roy on the National side. We will be happy to support this bill. We know how important it is to have this legislation back in the House and National will be supporting it.  
Bill read a first time.  
Bill referred to the Regulations Review Committee. 
Public Transport Management Bill 
Second Reading 
Hon ANNETTE KING (Minister of Transport) 
: 
 I move  
That the Public Transport Management Bill be now read a second time 
. I would like to thank the members of the Transport and Industrial Relations Committee for their work on this bill and I fully support the changes that have been made to improve its workability. If we want New Zealanders to move towards a more sustainable transport system we must create a public transport system that is a realistic alternative to the use of the private car. It is therefore essential that New Zealand’s public transport services are affordable integrated accessible safe responsive to change and above all economically socially and environmentally sustainable. With the requirement to reduce our carbon emissions and with high oil prices there is a need to increase public transport provision. We are already seeing a rise in the number of people using public transport with approximately 32 percent more trips being taken on public transport in 2006-07 than in 2000-01. This bill will empower regional councils to better plan and manage public transport services. It will give them the tools to do what they need to when it is needed and where it is needed.  
More than 80 percent of services are contracted and subsidised by ratepayers and taxpayers. Councils set standards for these services but they cannot do so for the 20 percent of services that are run commercially at the operator’s initiative without a contract. These are called non-contracted services or commercial services. The bill would empower regional councils to impose controls on all commercial services. The current lack of control over and information about commercial services is hindering the ability of regional councils to achieve best value for money and to effectively plan and manage public transport services. It is critical that public transport services are effectively planned and managed to ensure value for money from the $909 million of ratepayers’ and taxpayers’ money that is forecast to be spent on public transport services in 2008-09.  
A wide range of submissions on the bill were received and a number of changes have been made in response. The most significant is the inclusion of an oversight mechanism to allow existing commercial public transport operators the right to appeal to the Environment Court against controls imposed by regional councils. A number of criteria for adopting controls and appealing against them have been added to the bill. This will help to ensure any controls set are justified. The bill also defines the transport-disadvantaged more clearly—not listing groups that may be transport-disadvantaged but focusing on what it means to be transport-disadvantaged.  
It has been made clear that accessibility standards for example requiring super-low bus floors may also be set. Accessibility standards for public transport services have been defined so that it is plain that accessibility is not just about being able to get on to the bus or ferry but also about having access to information identifying the correct service getting to and using seating and being able to get off the service in the right place.  
A number of provisions have been clarified and improved including setting out the development and content of regional public transport plans who must be consulted and when. New criteria for determining when the bundling of services is justified have been added. This bill will enable regional councils to set their notice periods for commencing varying and withdrawing commercial public transport services. The timing and process for decisions regarding registrations and deregistrations of service have been improved so notice periods can be extended while allowing operators a clear right to be heard.  
At present commercial services can be registered varied or withdrawn in 21 days. Operators can register some services as commercial if their tender for a contract is not successful or even while tenders are still being sought or register part of a timetable of services as commercial. This can inhibit competition for contracted services and give an operator a financial advantage for the contract of remaining non-commercial services in the timetable.  
This bill will give regional councils more time to respond to changes in commercial services and ensure continued delivery of services to their communities. The bill will enable regional councils to access more information from commercial public transport services such as detailed patronage information and this will help assist in better planning. Monitoring powers have been added so that regional councils can ensure that commercial services are meeting the standard set in their region. Requirements for providing information about commercial services have been improved so that regional councils can use this information for developing plans now rather than having to go through a complete planning process before being able to access this information. Where information is commercially sensitive requirements governing its release have been tightened so that such information will be protected unless there is an overriding reason not to do so.  
Regional councils will be able to set quality and performance standards. Quality standards have been defined and regional councils will be able to require the use of lower-emission buses and specify standards for such matters as accessibility comfort and customer service training. Performance standards will help to ensure that services are reliable and run on time.  
This bill will enable the integration of services ticketing and fares across a region. If regional councils choose to use this provision services can be scheduled to connect with each other. All operators will be required to accept the same tickets and travelling on public transport will be made a whole lot more simple. I would like to take this opportunity—[ 
Interruption 
] I beg the member’s pardon? 
Hon Bill English 
: You’ve got to be joking. It won’t be simple. 
Hon ANNETTE KING 
: The member has just said that it will not be simpler. I would say that he has never travelled on a bus because anybody who gets on a bus with one ticket then has to buy three or four more tickets to travel on a ferry a train and a different bus service finds it very difficult indeed. I say to the member that he should try using public transport in Auckland to see whether it is simple.  
I take this opportunity to signal my intention to introduce a Supplementary Order Paper. Given the recent passage of the Land Transport Management Amendment Act 2008 a number of minor and technical amendments are needed to align this bill with that Act.  
Once again I thank the Transport and Industrial Relations Committee for the work it has done on this bill and emphasise the importance of this legislation in enabling regional councils to effectively plan and manage public transport and respond to rising demands.  
This is a very good bill. It will certainly mean a lot to the passengers who travel on public transport. This bill is aimed at ensuring we have more people travelling on public transport than we currently do and to better integrate it to better align it and to give better standards. It will give consideration to those who are disadvantaged in terms of being able to travel and I believe that this bill will be widely accepted by the community. It provides options for regional councils; it does not impose them. It gives councils a range of tools that they can choose to use.  
I am surprised at the deputy Leader of the Opposition who is showing his ignorance in not having read the bill in not knowing what is in it and in not caring whether or not the travelling public of New Zealand have a better transport experience. We know that the National Party’s policy is to build toll roads at $50 a week rather than to provide more public transport for the people of New Zealand. We believe in better public transport and we have taken public transport expenditure now in conjunction with our ratepayers to close to a billion dollars which is up from the miserable $40 million a year spent by taxpayers and the National Government of the day. We are seeing real growth in public transport in New Zealand because of that commitment. I know that the Greens would like to see more. They will see more; public transport services will grow over the years. We will see that because of the ability to provide proper public transport services for passengers. 
PANSY WONG (National) 
: 
 We National on this side of the House and the public are looking forward to hearing the amount of the tolls this Minister will announce in a month’s time. Apparently Labour is very proud of its toll roads as well. I also want to tell the good news to the Clutha-Southland people down there because the Minister has challenged the Hon Bill English to use more bus services. So I am sure the Minister is going to put extensive bus services down there in Clutha-Southland so that the Hon Bill English and other good people can travel on them.  
No matter how many times the Minister has muttered the words “public transport” this Public Transport Management Bill has a very clearly stated objective. It is actually to clarify and extend the functions and powers of regional councils in respect of public transport planning and regulation. It is all about control it is typical of Labour’s intrusive micro-management and it shows neither respect for private property rights nor the proper process for passing legislation.  
Let me share with people listening in to this debate: currently we have two types of public transport service. One is commercially viable; the operators register with the regional council their intention to provide a service and they receive no subsidy for it. In the Transport and Industrial Relations Committee we listened to some of the operators during the committee process and some have built up the commercial viability of their bus routes through the involvement of a family business over a long time. Others have been innovative to ensure that their bus routes have become commercially viable. But another type which we know as contracted services actually requires subsidies: public subsidies are required to make sure there is a service on that particular bus route.  
Currently the type of operators who provide public services range from city council - owned bus companies as in Christchurch and other cities family businesses or large-scale commercial operators. Some operators as I have indicated have registered their intention for a bus route and have developed it to a more popular base where public subsidy is no longer required.  
Before this bill was introduced there was indeed a quite extensive consultation process. It was carried out to look at three options. Option A apparently was the status quo where bus and ferry services would continue to operate as a mix of contracted or commercial services and regional councils would have limited control over commercial services that required no subsidy. During the select committee submission process it was interesting that no matter what backgrounds these operators or submitters came from they all hailed the Christchurch bus services as an outstanding success and we remind everybody that the Christchurch bus services have flourished under the current legislative environment.  
Option B was an option to empower regional councils to be able to impose control on commercial services. Let us revisit that: commercial services are services where operators register to operate without public subsidy. One can therefore imagine that commercial operators were very apprehensive. They received no public subsidy but this legislation would introduce more power for regional councils to tell them what to do or what not to do. Members should think about this—we are down to micro-management such as the colour of buses that a regional council might want to impose on the bus company. There might be pink buses to stand apart from red ones; I would probably welcome blue buses on the road.  
So those operators were shocked to find out that the option B they had been consulted on was eventually different from the option B that had been introduced in the bill. Apparently the Labour Cabinet after considering the results of the consultation have introduced more controls and more powers for regional councils than there were in the option that had gone out for consultation. But Labour has not had the decency actually in the foreword to the legislation to highlight the fact that option B in the legislation has been presented with variation. It is not the original option B.  
It took quite a lot of effort for some of us to debate that and to say that to be fair to the submitters who had been originally involved in the consultation they should also be able to see the analysis done by officials in order to offer them the comfort of the original option B and the revised option B which according to officials consists only of technical differences. I can assure members that they are more than technical. But it took quite a bit to convince the committee that the analysis should be released to the operators because the Labour-led Government always believes that it should keep people in the dark and introduce changes at the last minute to shut down debate or consultation.  
The other option which is known as option C was to empower regional councils to prohibit commercial services and to bundle commercial and subsidised services together. Can members imagine? If an operator of a family business a bus operator had developed a service over a long time and had developed a route into a commercially viable one so that the operator did not need to receive a public subsidy that service could disappear. The regional council could decide that it would bundle it together with something else and take it away from that operator. Well in the bill that was introduced the officials advised us why they had decided to go against option A the status quo. They said they also rejected option C because that option would prohibit commercial services in a region which might lead to the reduction of opportunities for public transport operators to be innovative and would reduce the control operators had over their own businesses. That would potentially undermine business confidence.  
So even the officials had advised Cabinet—I presume—to ditch option C and go for option B. There was a shock then to select committee members—not to mention submitters—when the chairman of the committee the Hon Mark Gosche suddenly introduced the notion to the committee that most people liked option C. Well it was actually not most people; it was the Auckland Regional Council the Auckland Regional Transport Authority and councils largely from Auckland that were saying “Isn’t it a great idea to give local government the total say on how people should run their businesses?”. 
The chairman said that maybe the select committee should forget about consultation and the official advice and go for option C. Then of course we said that option C was outside the scope of the legislation but we were told by the chairman that he had had a quiet word with the Minister and that it was all right because the Minister would welcome option C. That is terrible I thought. Cabinet had rejected option C and the chairman was trying to get the select committee members into the position of saying that the select committee rather than Cabinet wanted to impose option C.  
Well even New Zealand First the doormat for this Labour-led Government can see the writing on the wall in imposing option C and going against the wishes of the great majority of submitters who had rejected option C. I just point out that I find this Labour-led Government’s total disrespect for consultation and the select committee process incredible.  
The last thing I will say continues to be on this process. We found out that the good Regulations Review Committee chaired by my able colleague Dr Richard Worth had sent us advice on some major concerns it had about the regulatory-making powers in the bill. Unfortunately the letter went astray but then the chairman of our select committee would not agree to having a proper process for us to bring this bill back to the select committee for a proper debate before it was brought back to the House. National would not agree to a bill that had taken away private property rights and had ignored the consultation results. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 It is a very sad day when the National Party’s transport spokesman the Hon Maurice Williamson who is a former Minister of Transport and the deputy chair of the Transport and Industrial Relations Committee which dealt with this Public Transport Management Bill is unable to speak. Why is that man not allowed to speak? 
David Bennett 
: I raise a point of order Mr Speaker. The member cannot draw attention to a member’s absence from the House. 
Hon MARK GOSCHE 
: Speaking to the point of order I say that I did not. Maurice could have been sitting right there. That member has just pointed out that he is not even allowed in the House; I did not point that out. [ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Does the member have a point of order on the floor? If he does I did not hear it. The member does not. 
Hon MARK GOSCHE 
: Oh dear! The deputy chair of the select committee who has been National’s transport spokesman for years and years and is a former Minister of Transport is unable to take a call today. Has it something to do with the fact that he told the truth about the National Party’s policy on tolling—that it would charge New Zealanders $50 a week? National would give with one hand a $50 tax cut and take with the other hand a $50 toll on the roads. 
We on that select committee have heard year after year about the Hon Maurice Williamson’s travels. He is the most travelled man in Parliament. He has been to every public-private partnership structure ever built in the world—every bridge every tunnel every road. He knows what those public-private partnerships cost in tolls. I do not get out of the country very often but recently I was in Brisbane and I went over the Gateway Bridge which is just one of the toll roads in Brisbane. Can members guess how much the toll was? It was $2.90 each way. I know that Maurice Williamson is sure to have visited that bridge because he has visited every bridge in Australia he tells us. He knows how public-private partnerships work he knows how much the public would have to pay and he was telling only the truth about the National Party’s policy. 
What is the National Party’s policy on public transport? Bill English said during the speech of the Minister of Transport that it was ridiculous to say that integrated ticketing and integrated fares would solve the problem. Well Maurice Williamson believes that they would. Actually he tells us that it is the National Party’s policy to have integrated ticketing and integrated fares—so much so that we all got on a bus outside Parliament to see the new smart-card system operating in Wellington which could be turned into integrated ticketing and integrated fares if we pass this bill if the regional council is able to have control. But no Bill English once again has had to put his transport spokesman in his place. He says that integrated ticketing and integrated fares are not National Party policy that it is opposed to them and that they are stupid. Maurice Williamson says that National is actually for them; he told us that in the select committee. He told the transport operators who brought a bus here not so long ago that they are a sensible idea that they are a good part of the bill and that National supports them. 
So what is the truth? Is it $50 a week or $2 a week? Is it integrated ticketing or is it not? Well we will wait and see whether the National Party can figure out something as complicated as that before the election. I doubt it can because poor old Maurice has been sidelined. National members have probably buried him in concrete under a highway somewhere to keep him quiet. Even then we would be able to hear from him because he would take his telephone with him and make calls. Everybody would still hear from Maurice Williamson what the transport policy of the National Party really is and Bill English would be working full-time to close him down because he does not want anybody to be frightened by Maurice Williamson’s speaking the truth. 
I was listening to Pansy Wong try valiantly to take the role that Maurice Williamson should be filling here today as National’s transport spokesperson. She said there should be no control over the spending of public money. She said it should be left the way it is. That is paraphrasing what she said but she was saying how terrible it is that the Government wants to have some control over those in the private sector who provide bus ferry and train services in this country. The taxpayer and ratepayer subsidy is $909 million—not quite $1 billion. But we heard from the National Party members who oppose this bill that the local government authorities which administer the subsidy on our behalf are evil stupid and venal people who cannot be trusted to put controls on the wonderful people out there who run ferries buses and trains and who because they are from the private sector know everything and can do everything without any control by the funder. Well it will be an interesting situation if that party ever becomes the Government; National would just hand the loot over just give it to the private sector and it would not expect to have any control. 
National says it would be ridiculous for the regional councils to even have a plan for a bus colour system. There is no control in the bill—we took it out—but we have said there should be a plan. Anybody who knows Maurice Williamson’s electorate will know that buses go there and back. Generally speaking they are owned by one company which has maroon-coloured buses. Everybody who wants to go to east Auckland—which is unfortunately represented by Maurice—knows to get on a maroon-coloured bus. National says it is OK for that bus company to paint its buses to look like a Milo tin or a Qantas aeroplane but it is not OK for the people who pay the bills the ratepayer and the taxpayer to tell the company to put up a standard sign or to use a standard colour scheme. National members say that is an intrusion into the rights of the private sector. 
Hon Annette King 
: Who’s paying for it? 
Hon MARK GOSCHE 
: The taxpayer and the ratepayer are paying for it because most of those bus companies receive 60 or 70 percent of their income their revenue from the taxpayer and the ratepayer. In some cases it is 80 percent. But National members say we should leave them alone we should not tell them what to do and we should not tell them that it would be simple for consumers to figure out that if they want to go somewhere up the coast they need to get on a bus of a certain colour. No no those members say we cannot have that because it is an intrusion into the private sector’s right to do business. Well what a lot of nonsense! That is why the National Party is voting against this bill. It says that the private sector should be trusted with $900 million of ratepayers and taxpayers’ funds without people elected by the community having any say about it. National says that no the local authorities should not be planning and no they should not have control. It wants to leave everything to the market. 
Well we left it to the market in the 1990s. If my memory serves me right the previous National Government in all its generosity was putting $18 million into Auckland’s public transport. Aucklanders wonder why their trains are dilapidated and why it is not easy to get on them at the moment. They wonder why their bus fleet is dilapidated. Well when the taxpayer and the ratepayer are putting in such a pitiful amount no signals are sent to the private sector to invest so it did not. It did not build any new trains it did not order any new trains it did not do anything about double tracking and it did not do anything about grotty railway stations that were open to the weather covered in graffiti etc. It did nothing about building wharves so that people could access ferries easily—no no. Those companies did not do any of that because National left everything to the market and we had an absolutely appalling public transport system for a city the size of Auckland. 
I have just been to Brisbane and I have seen the wonders of a public transport system that has integrated ticketing that has a plan and that has a Government and a local council committed to it. One can get on a Quick Cat ferry and go from one end of the river to the other on a daily pass costing $4.40. If one gets off the ferry one can within a certain time frame get on a bus and travel by road—some of the roads have dedicated busways like the ones this Government has built—or get on a train all on the same ticket. 
Bill English says integrated ticketing is rubbish and the National Party is opposed to it. What would one expect from a visionless outfit like that which does not have a policy yet? If it does have a policy Maurice Williamson is not allowed to espouse it because he might tell the truth. This is our truth: public transport up and down the country. Local government has called for it; it supports it. Auckland—all the territorial local authorities and the Auckland Regional Council—was united around option C. The National Party opposed it. The Labour Party members on the Transport and Industrial Relations Committee thought it was worth putting it in the bill as an option. Members opposite who oppose everything for the sake of it oppose Auckland having a decent public transport system. 
There are something like 200 different fares and products within the public transport system in Auckland alone. The Auckland Regional Transport Authority wants to have it down to 20 and it says this bill is necessary. That is why the Government has put it forward that is why we have improved it in the select committee that is why it is necessary and that is why the National Party will vote against it. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 In the context of the last couple of weeks I did not think I would be saying this but I will say it now: “Thank you New Zealand First.” It may be part of a rotten coalition that is going down the tubes but it has saved New Zealand from the extreme Labour vision for public transport. Just so the House is quite clear option C was a grubby little deal done between the member for Maungakiekie and the chairman of the Auckland Regional Council Mike Lee with the Prime Minister’s oversight which would effectively have given Mike Lee direct control of not just hundreds of millions of dollars of public subsidy but also of hundreds of millions of dollars of private assets.  
I do not quite know what other people think but my experience of the Auckland Regional Council is that it is not the most flexible responsive and responsible entity in the country. New Zealand First saw what a huge problem this would be and it vetoed option C which is what the Labour Party wanted and we should be grateful for that. I tell members who else should be grateful for it: passengers. I have listened to Government members who have now given two speeches about public transport and they never mentioned the word “passengers”. We have heard all about bureaucrats and all about plans and all about tickets and all about what great legislation it is but we have not heard anything about the people who use public transport.  
Even if one goes with the bill which is option B+—that is option B with some of the features of option C—it is still a planner’s dream. If we go with this the only way people will be able to get a bus service from one part of Auckland to somewhere else is by turning up to the meetings knowing how to make submissions and sitting through a 2-year process to get the regional public transport plan changed—and we know how difficult that will be—and then hoping that some bureaucrat somewhere agrees that a person should be allowed to have a bus service. Even though it is completely commercially viable planners have to agree that it has to fit in with their nice neat tidy plan about how the world should work. Then one might get a new bus service.  
This is at a time when oil prices have gone through the roof and public demand for public transport is higher than it has ever been and growing faster than it has ever been. So just when it has to be innovative and dynamic Parliament will take control of public transport in Auckland. It actually works fine everywhere else. Wellington and Christchurch are running just fine under the current rules. In fact there is quite a bit of innovation going on. In Wellington the Snapper card is really going to take off. It did not need the Government to pass legislation to get the Snapper card and the inevitably integrated ticketing which is a good idea if people want to use it. But people in Auckland will get a new bus route when the Auckland Regional Council gets round to changing its plans to a 2-year or 3-year process.  
What about the people who are most dependent on public transport? They do not have the time or the money to be public busybodies going off to give submissions and sitting through long boring meetings because they are working every hour in the day that that household can work to keep body and soul together and to pay their bills. That is the reality of people—passengers users—whom the Government has not talked about in 20 minutes of speeches on the parliamentary consideration of this bill. The Government thinks public transport is for the people who plan it. It thinks public transport is for consultants. It thinks public transport is there to go down the road of the large failed integrated ticketing projects in Australia which in Sydney and Melbourne have fallen apart. This is exactly the vision that the Auckland Regional Council is trying to pursue—to spend $100 million on it when it has failed in Sydney. The Wellington Regional Council has put in the Snapper card at no public cost. It has been successful and the council did not need legislation to pass it.  
This is a Labour Party dream: how to make sure that we turn our public transport service into all those things that are the worst aspects of public service. Right now our public transport works because it is a combination of public subsidy some legislative oversight and private sector operators who run it who are able to innovate who are able to start new bus routes and who are able to see public transport not just as a utility but as a service for the public that should operate the way the public want it to work.  
For instance if one lives in the wrong place in Auckland where the planners are dead keen on this new urbanism and intensification the planners think everyone should live in high-rise buildings next to a railway station. Well even if they are right—and I think they are wrong; that is not the right carbon or environmental outcome—most people do not think so. The planners are trying to direct our public transport systems to do something that will not suit most people as in 95 percent of people because 95 percent of people do not live in high-rise buildings next to big car parks and railway stations which is the model. They do not; they live out in the suburbs often a long way from work; and with oil prices the way they are they need new and innovative public transport. This bill is designed for political control for inertia for endless complicated planning processes. It is designed to privilege those people who have the capacity to take part in this bureaucratic morass.  
I can tell members that the new urbanist planners will have much more influence on the shape of public transport under this bill than the people who use the service—the 1 million Aucklanders who want good and better public transport. And up to now they have been able to get it. The bus-only route to the North Shore appears very expensive. It is mostly empty but in terms of public transport measures it has been quite successful. It did not need this legislation to do it.  
The other effect of this legislation will be if we are not careful a downgrading in investment. You know one of the reasons people do not like using public transport is that it is just not attractive. In the past the buses and the trains have been dowdy and smelly so people avoid them if they can. That is often the case—it is as simple as that. 
There need to be people running these services so that investment in quality public transport and a good experience will earn some rewards from that investment. That is how we will get buses painted in a way that is attractive ticketing systems that are easy to use and reliable and integrated ticketing across whole systems—when there is a financial incentive for success. This bill is heading in exactly the other direction because Labour believes that anyone—[ 
Interruption 
] There we go. Anyone who makes a profit must have ripped someone off; that is what Labour believes. This bill is designed to create the lowest common denominator. Instead of a dynamic and responsive public transport system that responds to the fact that oil prices are going through the roof we are going to get a stodgy lowest-common-denominator over-planned over-politicised public transport system. It may be the dream of Labour to spend millions and millions and to pass laws to satisfy the planners and the bureaucrats but National is with the passengers. We want a system that responds to the needs of the passengers—the people who get on the people who use it and the people who cannot afford to fill their cars. I can tell members that no one in Auckland believes that the Auckland Regional Council is interested in the passengers and I can tell Sue Moroney that no one in Auckland believes that Labour is interested in them. They know that Labour is much more interested in the Auckland Regional Council getting bigger and fatter than in people getting better public transport. That is why National is opposed to this bill. 
DAIL JONES (NZ First) 
: 
 My ears were smarting and I was almost embarrassed as the deputy leader of the National Party started his speech. Did I hear correctly that he was saying “Thank you New Zealand First.”? 
Pansy Wong 
: Yes. 
DAIL JONES 
: I appreciate those comments and I hope all the people who— 
Rodney Hide 
: Tell us about the money! 
DAIL JONES 
: I ask Mr Hide to tell us about all his secret trusts and to open his books. New Zealand First is the most open political party in New Zealand. We would never get Mr Hide to make a true statement outside this House. He hides in this House. He is very well named—“Hide”—he is a hider.  
As far as the Public Transport Management Bill is concerned New Zealand First has a consistent attitude of supporting land transport management. We supported it in 2004 and we supported it a few weeks ago. Of course the National Party has a consistent attitude of opposing land transport management. It opposed it in 2004 and it opposed it a little while ago. Let us bear that in mind. The speech we heard from the deputy leader of the National Party although I appreciate his compliment to New Zealand First is consistent with his party’s failure to support a proper land transport or public transport management system.  
New Zealand First went to a considerable amount of trouble with regard to this legislation. Peter Brown who is busy at the moment on other public business was on the Transport and Industrial Relations Committee. I met with Peter Brown and other interested people and another member of our team also met with Peter Brown and interested people and we have taken a close interest in this legislation. What appears to have been the case is that we had the original option A then we had in fact two option Bs—what I have been calling option B1 which was a compromise situation that was agreed and then option B2 which was a variation of the compromise. 
Now I always take the view that if people sat down and had a meeting and everyone has agreed they should stick to that agreement. They should not later on try to use the power and weight from a certain section to bully another party. Some people are just bullies inside this House and they are puppy dogs outside. We take the view that when people have a meeting and have come to an arrangement they should stick with that. If they are going to change the arrangement they should have another good meeting and go through the exercise once more; they should not go around the corner and use a cudgel to try to browbeat someone.  
We ended up with option B2 which was set away from the compromise and then we had this option C. I read the explanatory note of the bill during the first reading—I do not have it here—and it totally condemned option C. In the explanatory note the people who brought this bill to Parliament were highly condemnatory of option C. I cannot see how they could stand up in Parliament to support option C when they had totally condemned option C when they introduced the bill. New Zealand First will not be supporting option C in any shape or form. If any amendments are brought in the Committee I say we will not be supporting a bill that has option C in it. Let us make that absolutely clear.  
Many changes have been made to the bill. As an Auckland member of Parliament I say that once again sadly this is virtually an Auckland-type of bill. There are no problems as I understand it around the rest of the country but once again we are stuck with trying to sort out something in Auckland. Auckland of course has a particular geographical nature. It is an isthmus very widely spread out and it is uneconomic to run a proper transport system on a population of just about 1.3 million. As far as that is concerned it is very difficult. Again we are on an area of volcanic rock and that makes it very hard to go underground. I am not an engineer but I know that Auckland has peculiar topographical difficulties.  
To make it clear New Zealand First recognises that in the majority of regions public transport operates under a fully regulated model and it can be said that it often operates very well. There are other areas where it operates under a less regulated regime but it can also be said to operate well.  
In Auckland there are problems particularly around integrating ticketing and bundling of services to some extent. I am familiar with the integrated ticketing system. I was speaking with someone on the plane the other day and asked him where he was going and how he travelled to work and such like. He used the busway on the North Shore and then he caught another bus or train to go to Mount Eden and he used the same ticket. I regard that as integrated ticketing. I understand integrated ticketing already exists in a form in Auckland. I also understand that we do not need to change the law even in Auckland to have integrated ticketing if we want it.  
It seems to be the case in Wellington—and I have just heard for the first time that there is integrated ticketing there. I have seen the Snapper card and I was very interested in it. In England there is another fish—there is the Oyster card. When my daughter greets us at Heathrow she gives my wife and me an Oyster card each. We get off the plane and we get on to the train and we use the bus. We use whatever we like; the system is totally integrated. That is a wonderful way of doing things and I am wholeheartedly in favour of an integrated system whether it is called a Snapper card or an Oyster card or whatever fishy name it is given. 
Rodney Hide 
: Talking about fish how about scampi? 
DAIL JONES 
: I do not eat fish so I have no idea what people talk about when they go on to fishy things. I am saving the fish population of the world; that is my contribution to the environment. I do not eat fish and stocks will not run out in 2047 because of me.  
There are some who believe option C is a solution to Auckland’s public transport woes. New Zealand First disagrees and will oppose any Supplementary Order Paper that attempts to introduce option C. Let us explain why. In essence we believe Auckland needs an administrative structure that encourages investment innovation and efficiency. At the same time it should hold transport operators to account to ensure that services provided are reliable convenient comfortable and affordable. To achieve these attributes it is essential there is regular consultation between regional administrators and the transport operators. We believe that the bill as returned from the select committee achieves that balance so we will support it at the second reading.  
A comment was made about buses and the regulations surrounding the administration of the system and when I first saw this bill I was very concerned about clause 10 and clause 12 which seem to have a considerable regulatory impact on what could be done including even painting the buses in a particular colour. The question was raised by a Labour member as to who is paying for it. The Labour member seems to have forgotten that the buses are paid for by the private operators who own the buses. If someone owns the bus surely that person has the right as to how the bus should be painted. That person wants in many respects to distinguish his or her company from a competitor’s so will paint the bus however they choose. Stagecoach as opposed to Ritchie’s Transport Holdings in Auckland might want to paint a bus in a particular colour and others might have their own style. They can say to the public: “We—X company—run our company and our business better than you and in commercial areas you should be using our operation because we are good and we are willing to say that we are good and we want our bus painted our way.” 
In respect of that aspect of insisting that buses be painted in a particular way although we can understand it all we really need from the point of view of someone like me who uses a bus now and then is a sign that tells us where the thing is going. We can stand at a bus stop see the sign know where the bus is going and hop on that bus. None of us is that deficient that we cannot work out where a bus is going. We should not insist a bus be painted in a particular colour when we do not even own the bus. When bus owners want to put on say a hundred new buses at a cost of God knows what a bus costs—about $400000—surely they should have the right to paint their own buses in the way they want to.  
I note that some work was done by the Regulations Review Committee. I could see very well having been a member of that select committee in the last session—and having been in Parliament when that concept was first established many many years ago—why we would be concerned about clauses 10 and 12. I must say that I congratulate the select committee on the work it did. Many amendments have been made to this bill. Clauses 10 and 12 have been changed in some respects quite drastically and dramatically and I am very pleased with the efforts made by Peter Brown to try with the select committee to produce a bill that goes some way down the middle.  
New Zealand First wants to make sure that all New Zealand has a good public transport system. We appreciate that the solution in this legislation is mainly directed at Auckland because once again Auckland is the problem. We believe that this legislation as it stands is a workable solution to the problems that exist at the present time and we will be supporting this bill. Thank you Mr Assistant Speaker. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 Public transport needs a big hand up if it is to play the role that it needs to play to reduce car dependence to reduce greenhouse emissions to protect us from oil price rises so we can still get around and to reduce congestion in our cities. The Public Transport Management Bill sets out to make progress in that direction and the Green Party supports it. However still more needs to be done. New Zealand cities are world famous for their poor levels of public transport and their high levels of car dependence. The famous transport academic from Western Australia Peter Newman says that car-dependent cities around the world have the highest proportion of their wealth spent on transport. Auckland spends 16 percent of its wealth on moving people around. That is four times higher than a city like Copenhagen for example. So it is highly economically inefficient to have public transport services that are less than what they could be.  
We also have a quote from Paul Mees from the University of Melbourne who says: “The decline of public transportation used since the 1950s has been the worst of any major Western city in the world. Even in US cities today the bulk of transport funding is going into public transport. Auckland defies this global trend.”  
I want to talk about public transport in our cities from the perspective of a transport user. I will suggest that what Bill English has just said about the perspective of a public transport user could not be further from the truth. The travelling public in Auckland and Wellington at least are voting with their feet. They are moving out of their cars now. We have a reduction for the first time in history of vehicle kilometres travelled on Auckland motorways at peak time and we have a very significant increase in the use of public transport. This is in response to rising oil prices and also I think to congestion. The fact that the trains have benefited even more than the buses because they are not subject to that congestion just shows what a significant factor this is in influencing transport choices.  
When as consumers we try to make those choices what do we find? Well Bill English admitted that we find poor-quality buses we find poor reliability we find unclear timetables and we find a complete failure to connect. Who is running those buses now? It is the private companies that Bill English thinks should retain all the decision making. If we have poor-quality buses now that are old and dilapidated and not very clean we need to be able to set standards for the quality of public transport services. But we cannot do so unless those services are contracted. That is why we need a fully contracted model. If I want to change from my train trip to a bus to get where I am going the timetable is not integrated the buses do not leave when the trains arrive the tickets are not integrated and despite what New Zealand First has been claiming I cannot buy a ticket in either Auckland or Wellington that will allow me to transfer from buses to trains on the same fare. They do not connect. Yes we have a Snapper ticket in Wellington which is very snappy but it is only for the buses; it does not allow connection with the trains at all.  
We have public transport systems that are not reliable. I have a secretary who regularly texts me in the morning to say that the train has stopped between stations that she does not know when it will start again and that the trains are not on time. In order to solve that problem we need more investment and we need more services. If the public are moving from their cars to buses and trains we need more buses and trains at peak hour to accommodate that demand.  
Bill English says that private operators and private owners of buses will give the people what they want but their elected representatives will not. Do we really believe that? Will we vote in those people who say that they will not give people the sorts of bus services they want and that they will do something else just because they believe in it? I do not think so. The private operators have not been giving people what they want which is why there is now a call to have greater public control over those services and greater powers for regional authorities. So in fact Mr English destroys his own case.  
He thanked New Zealand First for protecting the rights of the monopolist bus companies against the overwhelming submissions of virtually every council and of the smaller bus operators—who do not get a fair go in the competitive system at the moment because of the monopolist behaviour of some big ones—against the submissions of the Planning Institute and against the submissions of commuters. The travelling public will thank the Green Party for introducing an amendment in the Committee stage to insert option C which is a fully contracting model as an option. We will not impose that on any regional council. We believe that regional councils that are elected by the people can decide in consultation with the people what the best model is for their city. But they ought to have that option of a fully contracted system. We will introduce that amendment at the Committee stage and we believe it will pass. I thank numerous colleagues for that.  
Regional councils need to be able to ensure that there is coverage of the whole city that there is a network of buses that go where people want and when people want that there are common standards of comfort quality emissions and reliability and that all of these services connect. They cannot do that without the powers of this bill and particularly without the powers of option C which we will add back into the bill.  
This in itself will not be enough. We are strongly supportive of this legislation. We have talked to the Government about it all the way through. It is a great first step but more is needed. We have a system that tells people that if they want a new State highway or motorway in their region central government through the National Land Transport Fund will dish out all the money—100 percent funded out of the fund. But if people want public transport as an alternative to that new motorway they will have to pay for most of it themselves. That has always been a problem because as soon as a regional council—however much its people are asking for public transport and however much it wants to provide it—puts up the rates to pay for it it gets turfed out of office.  
It has been distortionary of our transport system for years and years that State highways and motorways are centrally funded yet if we want to build a railway to do the same thing and to carry the same people the same distance across the city Auckland or Wellington will have to fund about half of it itself. We need to change the funding arrangements in the National Land Transport Fund. We need to put public transport and roading on a level playing field. We need to make sure that those alternatives to new roading—those alternative choices for commuters—are funded at the same rate as roads are. Otherwise we are asking them to compete with one hand tied behind their backs.  
That is something the Green Party has campaigned on for years. I have a bill that has won the ballot and has been sitting waiting for its first reading for a year. It would change that balance of funding but it is pretty obvious it is not going to get its first reading before the election. However I look forward to it progressing next year and to our getting a level playing field for different transport modes so that at least consumers can have the choice of travelling the way they want to travel. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker. Tena tatou. The Maori Party comes to this bill fuelled by our commitment towards developing options to support cheap free regular reliable and frequent public transport. We are acutely aware that the transport sector is responsible for 45 percent of our greenhouse gas emissions. Our capacity to achieve an integrated safe responsive and sustainable public transport system is thus motivated by our commitment towards the impacts of peak oil alongside our responsibility to prepare for climate change.  
We are interested in any strategies to achieve vehicle fuel efficiency and reduce vehicle emissions and public transport services are certainly a central part of that plan. As the Auckland Regional Transport Authority advised us a good public transport system is one of the many tools to support sustainability and climate change initiatives. But our focus is also as always on he tangata he tangata he tangata. What will be the contribution that this legislation makes towards improving the quality of life for our people? It is more than simply adding a band-aid to the perpetual problem of the urgent need to develop a high-quality public transport system for Auckland.  
This House has long been aware that public transport in Auckland is inadequate. There is too much duplication between bus and train services and almost no coordination between services. Constituents in my Tamaki-makau-rau offices are routinely describing public transport in our region as slow infrequent unreliable and expensive. Worst of all people who happen to live in the outlying suburbs of Auckland Takanini Massey Clendon and Ranui are often the least well provided for yet it is these same communities where the people who need quality affordable public transport are more likely to live.  
This Public Transport Management Bill is therefore desperately needed not so much because of the general lack of satisfaction with our transport options but more because of the need to have the infrastructure in place to ensure there is public transport available for those who need it most. One of the most interesting amendments added by the Transport and Industrial Relations Committee was the importance of regional councils considering the needs of people who can be considered transport-disadvantaged and consulting groups that represent them. In the submissions received on the bill we heard a range of variations on a theme about what transport-disadvantaged could mean.  
Age Concern drawing on the World Health Organization report  
Global Age-friendly Cities 
 emphasises that accessible and affordable public transport is a key factor influencing active ageing describing it as a lifeline from social isolation for those without access to cars. CCS Disability Action and the Human Rights Commission describe the provision of an accessible public transport system as pivotal to enabling disabled people to participate and live full and enriched lives. They drew attention to the issues associated with social isolation and exclusion when people are unable to move freely about their communities and are trapped within their own homes.  
The National Council of Women told the committee that there is a lack of public transport in rural towns and in regions. In fact as a consequence of the submission a new definition of “transport disadvantaged” was established to refer to those living rurally. The council also argued that city services need to provide better for shift workers and those wanting more flexibility in peak time. The proposed definition of “transport disadvantaged” as put forward by the select committee chose to focus on people being at least able to get to basic community activities and services such as work education health care welfare and food shops rather than refer to specific interest groups or populations. That is a very useful addition to the bill and we welcome the intent of the legislation in clarifying and extending the functions and powers of regional councils to regulate public transport services provided in their regions.  
The bill will enable regional councils to plan for the public transport services they wish to have in their region and all of that is very positive especially in the case of Auckland. But we in the Maori Party wonder whether this bill goes far enough. The undeniable fact is that world oil production is peaking now. There is an increasing rate of demand for oil but also an increasing rate of scarcity. For every new barrel of oil discovered five or six barrels are being used. We inevitably find ourselves in a position in which we have become almost totally oil-dependent for transport. So it is essential that we apply our most creative thinking to considering long-term feasible public transport options. We may need to electrify more transport to prioritise urban design around walking and biking rather than create more traffic jams or exacerbate the suburban trap.  
It may well be time to turn to the ingenious humans who have for some time been leading the world in providing public transport on a reduced energy diet. Cuba now moves masses of people across Havana during rush hour by a complex mass-transit system that requires little additional funds or fuel. Virtually every vehicle in existence is called on for an elaborate system of ride-sharing in which commuters ride in handmade wheelbarrows and on buses animal-powered vehicles bicycles and motorised two-passenger rickshaws. Imagine that here in Wellington. Ministers could travel to work in pairs in a rickshaw and Associate Ministers could be issued with a wheelbarrow each. Imagine the savings that would be achieved.  
One of the most innovative Havana inventions is the camel—not the spitting humpback version but a large mule semi-trailer pulled by a truck that holds up to 300 vehicles. It may not sound like a going concern for Remuera or Kohimarama but the point is that a massive attitudinal change has taken place that we could all learn something from. In Cuba it is nothing for Government officials to pull over and fill up their Government vehicles with people needing a ride. A donkey cart with a taxi licence nailed to a frame will be travelling in Cuban streets while a common truck has been converted to public transport by welding a set of steps on the back for riders to jump on and off with ease. Dover could ride on that. The Maori Party is keen to investigate all options all strategies to consider additional public transport options. 
Mark Blumsky 
: Wheelbarrows. 
Dr PITA SHARPLES 
: Wheelbarrows yes. We believe that we need to make a long-term investment in improved public transport systems to achieve less oil dependency less smog lower petrol bills and significantly reduced emissions.  
There is however one last thing I would like to raise about this bill—that is our greatly weakened consultation processes. The select committee has recommended that the consultation provisions of this bill should be amended by deleting the requirement to consult the public and Maori. The rationale given was that such consultation was too onerous yet on the other hand it was content to extend the requirement to consult commercial operators and to add in a two-phase consultation approach. That new approach consults operators and councils as a first step then the wider public under local government processes.  
We in the Maori Party believe that the effect of this new two-phase approach actually narrows the scope the weight of public voice and significantly the views of whanau hapu and iwi. To this end we will be submitting a Supplementary Order Paper at the Committee stage to ensure that these limitations are adequately addressed. There ends my wheelbarrow! 
RODNEY HIDE (Leader—ACT) 
: 
 It is always a pleasure to speak in this House and to speak in particular on behalf of the people of Auckland and especially those of Epsom. I would like to thank Jeanette Fitzsimons of the Green Party for putting up option C. I can tell the House that having considered this issue and having talked to the people of Epsom and the people of Auckland the ACT party certainly will support option C. We in Auckland are sick of a commercial operator dominating the market and blocking out competition and choice—things that ACT favours. 
I hear Dail Jones giggling away in the background. I would not mind if Dail Jones would argue this matter on the basis of policy. I find it very disturbing to have reports from the Transport and Industrial Relations Committee that Peter Brown said New Zealand First had to support option B because it had received money from Infratil. If that is the case— 
Dail Jones 
: I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I know exactly what the member is— 
Dail Jones 
: He’s a liar—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Mr Hide will stand withdraw and apologise. 
RODNEY HIDE 
: I withdraw and apologise. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I now ask Mr Jones to stand withdraw and apologise. 
Dail Jones 
: I withdraw and apologise. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: That is one all. Let us proceed with the game. 
RODNEY HIDE 
: Well that was a reason that Peter Brown gave as to why New Zealand First had to support option B. I am sorry but that was what the members of the committee heard—unless they have been misleading me. Maybe others there will confirm it for me. I see Mr Bennett nodding his head to indicate that what I said was an accurate rendition of what happened at the committee. I notice also that Dail Jones was not at the committee which is a bit tough. David Bennett was at the committee and he has confirmed what I said. 
Dail Jones 
: I raise a point of order Mr Speaker. He is persisting with his disregard of your ruling. You have ruled that this matter cannot be raised any further and I would ask you to take the appropriate action. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I ask the member to desist and to be careful with his debate because that kind of remark can lead to disorder and that has its own ramifications. Would the member just speak to the bill. 
Dail Jones 
: I raise a point of order Mr Speaker. The Speaker’s ruling is 52/1 or something like that. A member cannot repeat in this House a defamatory statement that was made anywhere and cannot regard it as a reliable statement to use in the House. If something is defamatory anywhere it cannot be used in this House just because someone has said it somewhere else. That is Speaker’s ruling 52/1. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: That is the one referring to quotes. The member is quite right. That is why I have asked the member to desist and to get on to the actual bill because he cannot get round Speaker’s rulings or the Standing Orders by the use of quotes. 
RODNEY HIDE 
: I raise a point of order Mr Speaker. I was not quoting from a document. I want to check with Dail Jones that nothing I am saying is potentially sub judice. Am I OK? Just about every time I get up here to speak the matter becomes sub judice and the Speaker shuts me down. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you Mr Hide. 
RODNEY HIDE 
: I raise a point of order Mr Speaker. I also want to know from Dail Jones whether there is anything sub judice about the Tiberius Corporation. Would that be sub judice? 
Dail Jones 
: We know that Mr Hide breaches the sub judice rule all the time because he is a political coward. He does not have the guts to say it outside the House. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Mr Jones this is getting to the stage of being out of control. To imply that someone is a coward is to challenge his or her courage and that is a personal reflection. The member has been here a long time and I ask him to be careful with what he is saying. I ask him now to withdraw and apologise for the use of that word. 
Dail Jones 
: I withdraw and apologise. I raise a point of order Mr Speaker. I can I believe describe the actions of a person in a vigorous way but not the person himself. I am describing Mr Hide’s actions when I use that particular phrase not Mr Hide which is why I put the word “political” in front of it. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you Mr Jones. I ask Mr Hide to desist and come to the bill. I remind members that under Speakers’ ruling 51/1 unparliamentary remarks from a member do not justify an unparliamentary reply. That ruling was from Speaker Guinness. I ask Mr Hide to be careful and speak to just the bill. 
RODNEY HIDE 
: I will be very very careful and I will speak to the bill. I forgive Dail Jones because he is under a lot of pressure and why would he not be? I have never asked for him to withdraw and apologise and I have never tried to shut down Dail Jones’ speeches because I think he is fully entitled to speak. I forgive him for his slights of me and the ACT party because I understand the pressure he is under. 
I come back to the matter at hand and it is this. This is why I support option C from Jeanette Fitzsimons. We put a subsidy of about $90 million a year when I last looked into Auckland bus services. What I find disturbing about how the subsidy operates now is that if one commercial operator has that subsidy another commercial operator cannot run along that route—it is effectively blocked. It is a huge advantage to receive the subsidy. It blocks competition and choice. When I talk to the people of Epsom lovely as they are wonderful as they are they ask what is wrong with having another bus run down the road what is wrong with having a bit of competition and choice and what is wrong with allowing the Auckland Regional Transport Authority to contract on a competitive basis. People in Epsom understand choice and they understand competition just like the Green Party members do. 
Hon Member 
: Because they are wonderful. 
RODNEY HIDE 
: Yes because they are wonderful—the people of Epsom; I have to be careful about praising the Green Party! They have fine memories by the way of Keith Locke. He will be telling everyone there to give the party vote to the Green Party—which I respect; we can work with those members on some issues—and he will also be saying: “Give your vote to Rodney and I promise I won’t run naked down Newmarket in my birthday suit ever again.” Of all the people whom I would want to run naked down Newmarket I would have to say that Keith Locke would be higher up the list than a lot of others I could think of. 
Sue Moroney 
: They banished your yellow jacket in Newmarket didn’t they? 
RODNEY HIDE 
: They love my yellow jacket in Newmarket. The people have spoken. I tell members the one thing people in Epsom do not like: red jackets. They hate red in Epsom and in Newmarket. They like every other colour. They like blue they like Jackie Blue they love Jackie Blue but they do not love the Labour Party. 
David Bennett 
: They don’t? 
RODNEY HIDE 
: No one does. ACT supports option C and I am a little bit disappointed in my colleagues in the National Party. 
Hon Members 
: Oh! 
RODNEY HIDE 
: Yes I know I know. I am not being churlish I hope and I hope I am not being overly critical and I hope I am not causing any upset that could derail National’s campaign or unhinge future Cabinet posts. I am a bit critical of the National Party because I thought it favoured competition and choice. No? Oh it looks like it might be up for grabs. I ask David Bennett to say “Yes”; now would be a good time to say “Yes”. No the National party members have learnt not to answer even simple questions. David Bennett is in favour of competition and choice and that is what option C is all about—competition and choice. That is why the ACT party favours it. We are against any attempt to monopolise a service and we know that with option C Auckland will get a better-quality service it will get better value and it will get better pricing and if members add all that up they will see that it cannot be too bad. Here is another reason for voting for it: if New Zealand First wants option B members have to look twice at supporting it! 
DAVID BENNETT (National—Hamilton East) 
: 
 After that very inspirational and entertaining speech the first thing we need to look at is what the options actually were. Option C was the Government’s preferred option which basically gave regional councils the greater share of control. There were two versions of option B as New Zealand First has explained; there was B1 and B2. This is probably not the best analogy to describe the options but B2 was the option that was followed in the legislation and B1 was the option that was agreed upon between the parties. That agreement happened when the bus companies the regional councils and the Government got together had a bit of a talk and decided they could live with option B1. Although it was not quite the perfect scenario it was the one they believed would make some change to assist in public transport especially in the Auckland region.  
But at some point the Government changed its mind and felt it could not live with the agreement it had made with all the parties involved so it decided at Cabinet level that it would go out on its own. The Government then promoted option C which basically gave the regional councils the greater share of control. The Minister came into the Chamber earlier and indicated that she will be putting forward a Supplementary Order Paper on this matter which will essentially change the legislation to option C. It will be very interesting to see how the parties in this House vote on that and the indication we heard from New Zealand First today is that it will vote against that Supplementary Order Paper. I do not expect to see that happen because from our experience in the Transport and Industrial Relations Committee to actually see New Zealand First carry through on its word and vote in that manner will be something that National will look forward to. The day I see it will be the day I believe it I guess. But the ball is in New Zealand First’s court and it may go against the Government’s Supplementary Order Paper and vote for option B2 not for option C. Mr Hide has raised some issues about how and why that may happen but that discussion is for another day I am sure. 
Public transport is at the heart of the legislation and I do not think anybody has a problem with supporting the need for a strong public transport network in New Zealand. That is especially so in Auckland which has the largest population density in the country. The region needs to be serviced by an effective and efficient public transport system which will be a combination of buses and trains and ferries for a city that has a harbour as Auckland has. Many options can be taken and things done to assist in that process. One option may be integrated ticketing and another may be to keep the private sector involved in the competitive aspect of keeping public transport an effective and efficient tool in our biggest city. 
The Auckland Regional Transport Authority is the body that has the primary role for organising and managing the public transport of Auckland City and it does a very good job. It is a well-known body that has worked well within the community to achieve its aspirations. We look forward to seeing its preparedness to do that in the future and maybe even the development of its ability to do so as we see potential change in the structure of Auckland governance. There may be an extended role perhaps for the transport authority under such a change. 
However the authority is not the only body that can play an important role in this process; we need the private sector to also be successful if we want to have a public transport system in Auckland that is effective. The private sector role in public transport is very apparent at the moment. The private sector is probably providing the vast bulk of bus services in the city and it does that through a number of operators with one large operator having a very high percentage of the market. That operator has done an exceptional job as well. It has worked with the Auckland Regional Transport Authority in the past and both parties have come to some very fruitful agreements and provided a lot of good services for the public of Auckland City. 
We need to see that process continue. There is no way in which we can take both of those parties and then choose one to have the upper hand over the other. We need both the private sector and the regional council in order to be effective. That was the whole reason why they both came to the Government and reached an agreement. Option B1 was proposed and agreed upon. That is what we need to see happen in the future but at this stage we are seeing a breakdown between the players. We essentially have a situation where the Government of the day is aligning itself with one of the players and that is not good for Auckland’s public transport. What is needed in this case is for those parties to get around the table and to work out a viable solution that involves the private sector gives the Auckland Regional Transport Authority the powers that it needs in order to do its job and also gives the Government the confidence that public transport service operations will be delivered in Auckland City. That is the goal we should attempt to achieve in this House through this legislation. 
But that goal is not being achieved through this legislation and it will not be achieved if this bill and the Supplementary Order Paper the Labour Government wishes to put through are passed. That will seriously damage any chance of that kind of tripartite working arrangement becoming a reality for the benefit of Auckland public transport users. So I would encourage the Government to pull this bill—to actually go back to the parties and work out a viable solution that achieves its goals. The Government has got itself in a predicament now where it has a solution that is favouring one of the parties and that is not acceptable for Auckland transport users long term because it will not give the best gains for users as they go forward. That is a true test of governance and a Government showing leadership in this area will be recognised if people can work out that they have made a mistake or have not actually reached a proper agreement and then work towards a solution in the area. That is something we have seen lacking in this Government in its dealing with transport issues. We constantly see legislation put forward that is a quick-fix solution but does not take into account the parties and the roles they can play in reaching viable and successful solutions. 
It has been an interesting environment in which to see how the options were progressed through the select committee how they were progressed through the Government mechanism and how we are now getting to a result that is not in the best interests of all the players involved. That shows a poor understanding of the issue by the Government members involved. It shows an unwillingness by the Government to work with all the people who can be involved in solving these issues for Aucklanders. 
The National Party has opposed this bill because we see that this solution has gone too far to one side of the argument. It has not taken into account all the parties involved and what their potential arrangements and contributions could have been towards reaching a greater solution. So the National Party is very disappointed in the result of this legislation. We believe that if the Government had stuck to the original agreement made by the parties then the House could well have been passing legislation that was not what everyone wanted but was what everybody could have worked on together and achieved.  
If this legislation passes and if the Supplementary Order Paper passes I think we will see that the private sector involvement in Auckland’s public transport will be very much limited and that will be to the detriment of the users of the services. I do not think that that is in anyone’s interests when we need to encourage people on to public transport especially in a major city such as Auckland. Equally we need to take into account the role of the Auckland Regional Transport Authority and the need for that body to have some control and provide some solutions it sees as important as it works on long-term planning in the city of Auckland.  
There is the prospect of getting that solution but it will not come about through this bill. The process by which this bill has arrived at the option that has been voted on today is something that we have all found quite interesting and an eye-opener into the way politics can work. This bill certainly does not represent the interests of Auckland’s transport users. It does not represent the public good of promoting public transport and it does not represent the potential contribution that the private sector can make in solving those issues. Therefore we oppose this bill. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I think the Public Transport Management Bill is a very positive bill. I did not have the privilege of sitting on the Transport and Industrial Relations Committee and I want to compliment Mark Gosche and his team on their work. A bill that attempts to better integrate commercial services into a regional transport plan is a good one. In that context I also want to say that this Government has over the years increased spending on public transport by what—1000 percent? By what percentage have we increased investment on public transport? The chair of the Local Government and Environment Committee should know that; I am sure she does. It is by at least 1000 percent. 
One of the reasons why I am interested in greater supervision in respect of the commercial services is the announcement made by Maurice Williamson that we are to be looking at tolling on the Waikato Expressway which would increase the cost to motorists going from Hamilton to Auckland by $100 or $200 a week. Therefore ironically the National Party’s intention to look at privatising and tolling some of our major roads is the real secret agenda. Funnily enough that will be a huge incentive for people to use bus and rail services even if they are commercial services with no public subsidy. Obviously we will take a greater interest in commercial public transport services. I hope we can get a better middle course and not necessarily go down that road. 
I have repeatedly asked the member for Coromandel Sandra Goudie to get up in this House and talk about the National Party’s plans to toll Kopu Bridge but she will not. Dare I say that public transport in the Thames area between Thames and Ngatea is also quite an important factor because that will be another— 
Hon Dr Nick Smith 
: More desperate scaremongering. 
MARTIN GALLAGHER 
: Scaremongering? That is not scaremongering. That is the truth. How can we be scared of the truth? The member should not be scared of the truth. That is what is in the top drawer of National’s policies. What is scaremongering about Maurice Williamson going on the  
Agenda 
 programme and speaking the truth? 
Hon Dr Nick Smith 
: He never said that. 
MARTIN GALLAGHER 
: If the member looked at the transcript of the interview he would see that Maurice Williamson talked about $5 a trip and he talked about tolling. I think he talked about 50 bucks a week or whatever. That is what he said. The member should read the transcript of the  
Agenda 
 interview. 
Hon Dr Nick Smith 
: You are making it up. 
MARTIN GALLAGHER 
: That is not making it up. That is not scaremongering. In that context this excellent bill has a certain resonance to it. 
Obviously we will take an interest in commercial public transport services because should National get into office I would say that some of those intercity commercial services will get a whole lot more attractive. Certainly the bus services in the Thames area—and Sandra Goudie needs to take a call on this—just got a whole lot more attractive. [ 
Interruption 
] She will not take a call? She has been in the House but she will not take a call. Is it National’s intention to put a toll on the Kopu Bridge? 
In the brief time I have to speak on this bill I want to emphasise that it is good that the bill will improve the tools available to local authorities for providing public transport services to a set standard in our region. I think the leadership that Environment Waikato if I can speak in terms of my region is providing along with the city council is really good. I think there is some work to do in terms of the control and the working of the buses within our city but I think this gives us a very good template and a very good model on which we can improve our integrated public transport services. 
My final observation is to point out what an incredible achievement we have seen in this country after 9 years in terms of integrated public transport services. 
Hon Dr Nick Smith 
: What a joke. It has gone backwards. Congestion has got worse. 
MARTIN GALLAGHER 
: The Maurice Williamson solution to congestion is tolling. 
Hon Dr Nick Smith 
: Build some roads. 
MARTIN GALLAGHER 
: I am speechless. It is not often that I am speechless but I am. These guys have not watched the interview on  
Agenda 
. These guys do not even know what their own spokesperson on transport has in store. They must know what is in store. It will be congestion charges it will be tolling and it will be the Macquarie Bank Waikato Expressway. Can members not see the grand opening? Roger McClay or whoever— 
Hon Dr Michael Cullen 
: Jim McLay. 
MARTIN GALLAGHER 
: Jim McLay; I am sorry I apologise to Roger McClay. Jim McLay and the Hon Maurice Williamson will be at the opening of the Macquarie Bank Waikato Expressway. We can just see it! Commercial bus services between Hamilton and Auckland just got a whole lot more attractive under that terrible scenario. 
Finally I want to commend this bill to the House. It gives a very very good platform for the future management of public transport in our region. I hope the doomsday scenario that I just painted never comes to pass. 
A party vote was called for on the question  
That the amendments recommended by the Transport and Industrial Relations Committee by majority be agreed to. 
Ayes 70 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Question agreed to. 
A party vote was called for on the question  
That the Public Transport Management Bill be now read a second time. 
Ayes 70 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Bill read a second time. 
Biofuel Bill 
Second Reading 
Hon DAVID PARKER (Minister of Energy) 
: 
 I move  
That the Biofuel Bill be now read a second time 
. Let me first extend my thanks to the Local Government and Environment Committee. The committee worked hard and gave full consideration to the important matters raised in public submissions. The Biofuel Bill introduces a biofuel sales obligation and makes other legislative changes to provide for biofuels in the New Zealand market. The obligation will provide for greenhouse gas reductions in the transport sector and will also reduce our dependence on oil. Since the bill was introduced to the House last year those objectives have become all the more important.  
Since that time the sustainability of biofuels has also come under significant scrutiny. The select committee made a number of recommendations to sharpen the focus of the bill on the sustainability of biofuels. That is provided by the principles of sustainability contained in new section 34GA(3) in new Part 3A which is inserted by clause 9 of the bill. Principle 1 states: “Sustainable biofuels emit significantly less greenhouse gas over their life cycle than obligation engine fuel.” This principle ensures that biofuels will provide a genuine contribution to greenhouse gas reductions. In the first instance the bill requires a minimum reduction of 35 percent. Principle 2 refers to food production and states: “Sustainable biofuels do not compete with food production and are not grown on land of high value for food production.” That principle recognises the concern that where biofuel crops are directly substituted for food production that can increase food prices by decreasing food supply. Where food supply is maintained or even enhanced however that is not a concern. So by-products from food production—like tallow for bio-diesel and rotational oilseed crops—are expressly set out as meeting that test. The third principle states: “The production of sustainable biofuels does not reduce indigenous biodiversity or adversely affect land with high conservation value.” That principle addresses concerns that increasing biofuel production can have negative impacts on the physical environment and in particular on biodiversity and precious ecosystems.  
From the beginning of the biofuel sales obligations companies will be required to report on the sustainability of the biofuels they supply and under new section 34GA the Minister of Energy “must recommend the making of an Order in Council … as soon as practicable” requiring biofuels that are sold towards the biofuel obligation to be consistent with the principles of sustainability. Under new section 34GA(4) if no recommendation has been made by 30 June 2009 the Minister of Energy must report to this House and explain why a recommendation has not been made outline any alternative methods of ensuring qualifying biofuels are sustainable and indicate when the associated recommendations will be made.  
The second major change relates to the proportion of biofuel that oil companies will be obliged to sell. The obligation now begins at 0.5 percent of total sales on an energy equivalence basis rising in 0.5 percent increments annually to reach 2.5 percent by 2012.  
As a consequence of the time taken to carefully consider the bill the commencement date has been changed to 1 October 2008. That reduces the period of the first obligation from 9 months to 3 months. There is no impact on subsequent periods.  
Once again I thank the select committee for the work it has done on the bill and I commend the bill to the House. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 This is not just poor public policy—it is awful. Why on earth would we want to impose substantial additional costs on the household users of fuel at the very time when all the international evidence is that biofuels have a very dubious environmental benefit? The Parliamentary Commissioner for the Environment did not just say this bill should be amended; she told the Local Government and Environment Committee that it should be dropped. She even went further than that and said this bill will damage New Zealand’s clean green reputation.  
Just a month or two ago an article in  
Time 
 magazine “The Clean Energy Scam” said that although it is hyped as an eco-friendly fuel ethanol increases global warming destroys forests and inflates food prices. So why on earth are we subsidising it? New Zealand’s very well-respected former Minister for the Environment Simon Upton wrote in the  
Dominion Post  
“the road to hell is paved with biofuels”. We have the 400-page report from the British House of Commons that asks the question “Are biofuels sustainable?” and overwhelmingly concludes that they are not; we have the report from the OECD  
Biofuels: Is the Cure Worse Than the Disease? 
; we have pleas from the World Food Programme; we have Oxfam submitting to the committee and pleading with this Parliament not to go down this track; and we even have the United Nations Secretary-General calling on nations to halt the passing of these sorts of laws because they are a hoax.  
There are two fundamental flaws in this bill. The first is that despite all that the Minister says about the sustainability standards those standards do not come into effect until well after the compulsory requirement comes into place. If one ever wanted to have a bill where the cart is being put before the horse we have it here in black and white. On 1 October in just 27 days’ time it will be compulsory for fuel sold in New Zealand to have a component of biofuel in it. But the sustainability standard to ensure that that does any good is at least 9 months away and I put it to this House that it will be many years more than that. You see the European Union which has been debating these same issues has been trying to establish a standard for sustainability for 2 years and it has not been able to get there. So why does this Clark-Peters Government suddenly believe that it can instantly get there—that it can somehow get through those issues? Even the Government’s own officials said it would take at least until 2011 to come up with a proper sustainability standard. So I ask the House why we are to have a compulsory requirement—a nanny State “they know all” approach—before there is any sort of sustainability standard.  
The second key flaw is this: ethanol is provided with an exemption from excise tax. That means ethanol is being given a huge tax advantage over bio-diesel. We asked Government members we asked the Minister and we asked officials why they wanted to screw the scrum so hard in favour of ethanol over bio-diesel. The answer was blank. They said they would look at that issue some time in the future. Well why on earth would we want to provide an incentive to import ethanol from Brazil when there are very good reports that show that that product arises from and helps to drive the destruction of Amazonian forests? Why would we want to compel that? Why would we want to provide a tax incentive for that over for instance biofuels that are produced in New Zealand by converting agricultural by-products such as waste fat from the meat industry to biofuel?  
You see with this bill we are adding very substantial costs. If we can believe the Minister he says there is no cost for consumers arising from this bill because they would use biofuels anyway and these fuels are inexpensive. Well I simply ask the Minister why he needs to compel their use. If it is economic people will use them anyway. The idea that there is no cost for the consumer is about as straightforward as Winston Peters saying he has never received a donation from Mr Owen Glenn. The submissions heard by the select committee were that the oil companies say this requirement is likely to cost 7c per litre and the officials said the cost would be about 2c a litre. Let us take the mid-range figure of 4c a litre; that is an extra $240 million a year. Why on earth in the middle of a recession would we want to impose extra costs of $240 million a year around biofuels when there is an overwhelming international consensus that they are not the right way forward?  
I put this to the House. We know that the biggest challenge New Zealand faces is around agricultural emissions particularly from methane and nitrous oxide. We are spending $3 million a year on research in those areas and the Biofuel Bill proposes to bank $240 million a year in terms of the cost to road users. I say to the Minister that this bill has got it awfully wrong. How can the Minister and Government members claim there is no cost to the consumer? If there is no cost why do we need a law that compels people to comply with it?  
This bill represents another botched climate change policy. For 9 years we have seen emissions go up at record rates. We have seen huge growth in electricity emissions. We have seen more coal-produced electricity being used than at any time in New Zealand’s history. We have seen the Projects to Reduce Emissions policy fall over. We have seen the negotiated greenhouse agreement policy fall over. We remember the promise of the billion-dollar surplus from Kyoto and how it fell to pickle. We remember the policy announced on animal emissions levies. We have seen one botch-up after another for 9 years around climate change policy but I have to say this Biofuel Bill is the very worst of them.  
I challenge members opposite: why are they ignoring the Parliamentary Commissioner for the Environment whom they themselves supported? They appointed Jan Wright to that role. Her evidence to the select committee was absolutely damning in terms of this bill. This bill represents the Government jumping on the bandwagon just as the wheels are falling off. At the very least there should be no compulsion to use biofuels until the actual biofuel standards are put into place. The idea in this legislation that we are going to impose on the fuel sector the cost of introducing infrastructure without knowing what the sustainability standards are is seriously flawed.  
This bill should not proceed. We should heed the warnings of the United Nations the World Food Programme the Parliamentary Commissioner for the Environment and every one of the other submitters who have made it plain that this is flawed legislation. Biofuels do have a role to play in respect of the challenge of climate change but this compulsory legislation will impose costs for little environmental benefit and what is worse still it runs the serious risk of contributing to deforestation and some of the huge difficulties that the world is facing as we speak in respect of food prices and their impact on the poorest people of the world.  
I can only conclude with the contribution from Oxfam which said that in order to fuel our cars we are going to take food from the mouths of the poor.  
MOANA MACKEY (Labour) 
: 
 I am tending to get a sense of déjà vu. Here we are with another major climate change bill in the House the Biofuel Bill and we have had another speech from the National Party which claims to support any kind of legislation or policy that reduces greenhouse gases yet all we got was a speech full of excuses about why National could not vote for another climate change policy brought up by this Government. I say to the Hon Dr Nick Smith who is a member of the Local Government and Environment Committee which I chair that I wonder why he did not listen to the Parliamentary Commissioner for the Environment on the Climate Change (Emissions Trading and Renewable Preference) Bill which she said absolutely must go ahead and why he is now accusing the Government of not listening to her on the Biofuel Bill. I suspect it is yet another story of what is good for the National Party being no good for anyone else.  
I say to the Hon Dr Nick Smith that obviously he has been very well influenced by the huge business lobby against biofuel and against this legislation. Obviously he has been lobbied. I wonder whether any donations have gone into the Waitemata Trust from people who oppose this legislation. The select committee worked incredibly hard on this bill. We worked hard on it because we know the climate change issue is a reality for New Zealand that this measure is doable for New Zealand that some of it is very low-hanging fruit and that if we put a bit of time and energy into sustainability standards and into making it clear which biofuels would qualify and which would not we could do this. We are an agricultural and a horticultural nation. We have by-products from that. We have tallow and we were told that China is already looking at lowering some of its trade barriers to American and Canadian tallow. We also have ethanol derived from whey as a by-product of our dairy production.  
We heard the submitters who came before the select committee. As always they were from both sides. We had the oil companies on one side who did not want to do it at all and on the other side we had the biofuel producers who wanted us to go miles in the other direction because they have an interest too. It was the role of the select committee to look down the line and find a good compromise: one that is good for New Zealand and good for the environment. What response did we get from the National Party? Its response was that the free market would provide. Well the free market has been fantastic for the environment over the last 30 or 40 years has it not? It has been wonderful! The fact is that until this bill came into the House and was being seriously looked at Mobil Oil did not have biofuels. Before the bill is even passed in the House it has now said it will go down that path and that is because of this legislation.  
I thought it was astonishing that the Hon Dr Nick Smith said that because no one else has implemented this measure New Zealand should never try to do it. The National Party believes that we should just accept that we are not as good as everyone else that we cannot think for ourselves and that we are not smart enough to come up with this kind of legislation. A group of European parliamentarians actually came here to speak to the Local Government and Environment Committee specifically to look at what we had done on this bill. The select committee worked hard. We worked long hours to try to come up with something that indeed the Europeans are also working on. In the Labour Party we say we will always try to do the best that we can in the legislation in front of us to benefit the people of New Zealand. The fact that Europe or America has not managed to do something is never an excuse for Labour members of Parliament to say we will not even try to do it which is the excuse we had from the National Party.  
I thank the officials who worked on this bill. When they walked into our select committee room for the first time we wondered whether they were interns because they were so young and fresh-faced. But they were incredibly knowledgable and provided us with very timely advice. I was extremely impressed with the quality of their advice and I thank them for it. I thank all the submitters who came along to the committee. They often faced very robust questioning and I thank them for all the supplementary information they were able to provide at very short notice so that we could get on with our deliberation. I thank the members of the select committee. I thank the Green member Metiria Turei for all the work she did on the sustainability standards. I also thank the National members of the committee who despite declaring their hand pretty early on in the process and saying they were not going to vote for the bill did stay and work hard with the committee in order to make sure we did all that we could do. I am sorry that they declared their hand as soon as they did. I believe that they might have been able to accept parts of the bill but unfortunately they could not accept them because they had already stated they were going to vote against the bill before some of our deliberation had finished.  
The Hon Dr Nick Smith raised a number of important points in his speech and one of them was about the issue of the relative tax treatment of fuels. We tried very hard to work out whether that was something we could address. I believe that we genuinely agreed that it needed to be addressed properly not as a tag-along to the Biofuel Bill. We stated clearly in the commentary on the bill that we believed as a committee that the treatment of ethanol as a fuel that has zero excise duty should end in 2012. We stated that in the commentary in order to send a clear signal. The National Party also believed as we did that a number of people had expected that that tax treatment would continue until 2012 and had made investment decisions based on that. So it would have been unfair of us to change that and if we had changed it we would have needed to grandparent that zero excise duty for companies such as Gull Petroleum which had believed that it would continue. We clearly stated in the bill that we thought not just biofuel but also other forms of fuel such as compressed natural gas and liquefied petroleum gas and electric cars should be dealt with in terms of the relative tax treatment of fuels for environmental purposes.  
Before I finish I just want to touch on the issue of price. It is very very difficult for us to guess what the price impact of this legislation may be because there are many different variables. We do not know how the oil companies will implement their biofuel requirement. For example— 
Hon Dr Nick Smith 
: You should know. 
MOANA MACKEY 
: I say to Dr Smith that we do not know because they are private companies and we have left the bill very very flexible because we believe that that is the best thing. We know that overall by 2012 of the total fuel sold in New Zealand there will be a 2.5 percent biofuel component and we have left it up to the people who sell that fuel to decide how they are going to get there. If we had not done that Dr Smith would be yelling at us and saying this was a case of nanny State telling private companies what to do. We have said to the companies that they can decide on how to do it themselves. They can do it through the pumps across the whole country or just in Auckland just in Wellington or just in Christchurch or they can sell 100 percent direct to customers so that it does not even have to go through a service station—they can get their reduction in that way. All of this will— 
Hon Dr Nick Smith 
: How much will this cost the consumers? 
MOANA MACKEY 
: Well interestingly enough Gull Petroleum which already includes biofuel in its product is cheaper than the rest of the oil companies. It is cheaper than the rest of the oil companies and it already sells an ethanol blend. So for Dr Smith to stand up and say fuel will be 7c a litre more expensive which is what the oil companies said it would be is wrong. Another oil company said it would be 4c a litre dearer but our officials told us that if they looked at recouping the entire cost of the infrastructure upgrades that may be required by oil companies using the oil companies’ figures the cost would come out as being no more than 0.2c to 0.4c a litre more expensive and it might even be cheaper than it is now I tell Dr Smith. 
Hon Dr Nick Smith 
: Why make it compulsory? 
MOANA MACKEY 
: Oh because the free market has worked really well up till now I tell Dr Smith. I know the National Party just thinks the invisible hand of the market will deliver for the environment will deliver for poor people will deliver for the hospital system and will deliver for the education system. Dr Smith can just sit back and say he does not have to do anything because the invisible hand of the market is doing it all for him. That makes it really easy to be a National Minister. But I am afraid that on this side of the House Labour members believe in actually taking action against climate change rather than sitting in an office as Dr Smith does thinking of as many excuses as he can to vote against every single piece of climate change legislation that comes before this House.  
Well Dr Smith should be ashamed of himself because he knows—he was on the select committee with us—that what he is saying is not true. Yet he will go out there and try to terrify the people of New Zealand. Dr Smith apparently knows what the exchange rate will do what the price of oil will be and what the price of ethanol will be—all the things that will be relevant to the overall price of biofuel production in New Zealand. But Dr Smith does not know that. Apparently Dr Smith is saying that the National Party will never support a biofuel obligation unless it can be certain about the international price of oil unless it knows what the exchange rate will be and unless it knows exactly how the oil companies will implement that obligation. I say to Dr Smith that those are excuses excuses excuses—again again again! The people of New Zealand can see through that.  
This is a good bill. I thank the select committee for all its hard work. 
JOHN CARTER (National—Northland) 
: 
 I will start off by saying that if anybody listened very closely to that last contribution from the member who has just resumed her seat he or she would not have heard anything positive in regard to supporting this Biofuel Bill. One of the things we would have expected from the Government and particularly from the chair of the Local Government and Environment Committee Moana Mackey is that they would have offered a whole lot of reasons—good valid reasons—why this Parliament and this country should be supporting this legislation. But if people listened really closely to every word she said they would have heard that it was all about attacking Dr Smith for what he said attacking the fuel companies for what they said and attacking other people for not saying the things the Government thought they should say. Therefore there was nothing positive at all that would have persuaded anybody to want to support this bill. I would have thought that that member at least would come up with one or two reasons why this country should be embracing this sort of legislation. Unfortunately there was nothing at all positive in her speech.  
The second point is that the whole reason this legislation is before the House is that the Prime Minister got out ahead of the game and decided to grab the hose from a fuel pump and put it into a car and try to get a photo opportunity while saying to everybody “And this is what this Government is going to do. We’re going to do all this stuff introduce biofuels and make everything better.” But the Prime Minister did not even know where to put the nozzle. Actually it was all about a photo opportunity but suddenly officials and Government members all had to get in behind and support her because she had gone out saying that this was what was going to happen.  
Unfortunately what had not happened—and this is the problem with this legislation and indeed with the Government’s approach to this whole issue—was the Government doing its homework. We just need to look at commentary from all over the place—from everybody. What does the OECD Round Table on Sustainable Development say about biofuels? It says that they are unproven; it says that it is not certain about them. It does not know whether this is the way we should move forward.  
The United Kingdom’s House of Commons Environmental Audit Committee report says that we should hang on a minute; we should just take our time on this—that it has been around for a while but we are still not sure whether it is the right way to go. The G8 conference of legislators said the same thing. The United Kingdom’s chief scientist the World Food and Agriculture Organization the Royal Society the World Bank and the Secretary-General of the United Nations have all said that there are some real problems about this stuff. It is a difficult way in which to approach a fuel issue. All these authorities are saying that there are real question marks over this issue yet this Government has decided to proceed.  
I draw the House’s attention to two other people who have made comment. The first is the Parliamentary Commissioner for the Environment. One would have thought that if anybody was going to get out there and say “Yep! We are on the right track; this is the way to go. This legislation is going to hit it on the nail.” then it would have been the commissioner but she did not. I will read to the House a couple of the statements she has made which I think are absolutely important for us to take into account: “International concern about the sustainability of biofuels and their true environmental and economic impacts has heated up considerably in recent months—which signals a need for caution.” Biofuels are seen as a way of achieving both lower carbon dioxideemissions and energy security but Dr Wright does not believe that the mechanisms allowed for in the bill will deliver those two goals. There is the Parliamentary Commissioner for the Environment saying that this legislation is on the wrong track. “Biofuels appear to be carbon-neutral because plants absorb carbon dioxide (CO2) as they grow and this is equal to the CO2 emitted when the fuel is burned. However this does not account for the CO2emitted during cultivation and processing into fuel. Lifecycle assessments of a wide range of biofuels shows large variation in CO2emissions across fuels and in some cases across countries” says Dr Wright. “Ethanol from corn in the US for example is a very poor performer with total CO2emissions close to those of diesel.”  
Well we have to say to ourselves that if the Parliamentary Commissioner for the Environment is asking those sorts of questions on this legislation then surely this Parliament should sit up and take notice. She has said that she is very uncertain about this Parliament and this nation proceeding with this legislation.  
I also draw the House’s attention to a report of the Ministry of Economic Development its briefing paper to the Local Government and Environment Committee. I have to say that it was astonishing to start reading through this paper that that committee put before this House. These are the Government’s own advisers talking about this and they are talking about the principle of sustainable biofuels: “After reviewing a number of potential principles provided by officials and suggestions from within the Committee there does not yet appear to be a consensus opinion. In this sense debate in the Committee has reflected international deliberations on biofuel sustainability. While one might know it when one sees it sustainability is difficult to define. … At its meeting on Thursday 29 May the Committee asked officials to provide advice on how principles can provide the best possible direction to the making of biofuel sustainability requirements.” They went on to say that they do not know. They are not sure. They cannot convince us actually that it can happen. And these are the Minister’s own officials who are telling the committee that. This paper if it has not come to the attention of the House needs to come to its attention.  
The next thing people should be concerned about is the issue of impact on food. We all know that we have a major issue around the world about food security. It will be one of the major factors of debate as we move forward around the world in the next 20 or 30 years. After the Second World War we had food supplies that without producing any more food would have lasted more than a year. We would have been able to feed ourselves. Currently the food supply is measured in days not months. What is now starting to happen which I think is an absolute disgrace is that some countries in Europe are asking countries in Africa to grow and export food to countries in Europe that will turn it into biofuels while the people in those very same southern African countries are starving. Quite honestly that is an absolute disgrace and it should not be allowed to happen.  
Finally I come to the point that Dr Nick Smith made in his address which is the issue of price. The previous member to speak Moana Mackey talked about the fact that there is debate and argument about whether there will be a cost. What she was not able to tell us was that there would not be. She said that there was some disagreement. She said the Government did not know whether it would be 7c or 1.5c and that it was not sure what it was. She said that different streams of advice gave the Government different levels of increased costs. But what she did not say and could not say was that there would be less cost. We all know that this legislation will impose more costs on this country; it will put more costs on to travellers in this country. The fact is that whether or not we like it this sort of legislation with the infrastructure needed to provide it will unquestionably cost the transport sector in this country a lot of dollars. So when members of this Government stand there and say: “Yep we are going to move forward.” when all the evidence is against it including the advice of the Parliamentary Commissioner for the Environment and its own advisers and when so many of the submitters have said that we should not do it then I say to this House that we have to take note. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 When this Biofuel Bill emerged and was introduced in the House some time ago we had significant concerns. I could perhaps go even further and say that we had major concerns. Those concerns were strengthened when we read the submission from the Parliamentary Commissioner for the Environment. She summarised at the end of her submission to the Local Government and Environment Committee and recommended that the bill did not proceed. 
Our concerns revolved around a number of issues. First and foremost we did not see why New Zealand should be a world leader in the adoption of biofuels but apparently we are not. Biofuels have already been adopted in the USA Brazil Canada most European countries Australia China India and Thailand. All those countries apparently use biofuels. 
The second concern we had was the possibly adverse effect on car engines and the cost for motorists. We thought that motorists might well have to have their car engines modified at some expense but we were informed that modifications would not be necessary for petrol or diesel vehicles using low-level biofuel blends. Petrol engines tuned correctly for use with ordinary petrol would not normally exhibit any problems when using bio-ethanol petrol blends of up to 3 percent. So that knocked that concern on the head. We were concerned that bio-diesel in a diesel-powered vehicle would clog and not flow properly but we were told that that concern was needless. One organisation involved in producing bio-diesel told us that tests had been done on it and it had not been found to alter what the organisation called the cold-flow properties of the original mineral. In other words that was a concern we did not need to have. 
We were concerned that productive land in New Zealand would be used to grow crops to make ethanol. I am told that the select committee modified the bill to ensure that that would not happen. So that was another concern knocked on the head. 
We were told that the new infrastructure costs would add significantly to the cost of a litre of petrol or diesel. But we were told that the select committee had looked at this issue at quite some length—that is as I understand it; we were not represented on the select committee—and the figures bandied around to us were anywhere between 4c to 7c a litre. But as the member who resumed his seat some time ago said—and I think that this is in the select committee’s report—it is estimated that the cost will be somewhere between 0.2c to 0.4c a litre and it might be even less than that. Biofuels might even reduce the cost of fuel. That was another concern knocked on its head. 
Finally we had the concern that John Carter raised—that somewhere overseas in Africa or wherever people are growing crops to produce ethanol for the world market. That matter is of concern but it is happening anyway. It will happen whether or not New Zealand buys into this. 
We have looked at these issues as comprehensively as we have been able to and we believe that this bill should proceed. We note that the select committee recommended that the percentage of ethanol in petrol should be 0.5 percent. It will reduce from 0.53 percent this year to 0.5 percent and then go up in increasing increments of 0.5 percent for the next 4 years to reach a figure of 2.5 percent in 2012. That is a reduction on what the original bill said; I think the percentage had been 3.4 percent in 2012. So we think all in all that this bill has taken the concerns into consideration and has addressed them. New Zealand First will support the bill. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 The whole world is on a mission to move its transport systems off fossil fuels and on to renewable sources of energy and we do not have a lot of time to do it because this is driven by two things. It is driven firstly by rising oil prices which indicate that oil production has probably already peaked and will continue to decline and that prices will rise from hereon and it is driven secondly by climate change where transport is a major contributor. In New Zealand 44 percent of our carbon dioxide emissions are from transport and we have to get that level down.  
Biofuels can make a small contribution to this. Nobody here is claiming that biofuels can be the whole answer; in fact no one thing will be the whole answer. The future will be a jigsaw of sensible effective sustainable technologies that fit together in order to give us some mobility in a climate and oil - constrained world. So we need to build capacity for the biofuels that New Zealand can produce sustainably.  
How would we make that happen? I will read to members from a letter I received last month: “Following the passage of the Biofuel Bill into law we expect to shortly thereafter announce our intention to initiate the construction of our planned bio-diesel production plant at a site close to our present pilot plant. The initial capacity will be 20 million litres annually but we intend to double that capacity within a year or two. Our plant is designed to process 100 percent New Zealand - sourced tallow which is recognised as the most environmentally sustainable feedstock … leading if you include the rendering plant as well to a greenhouse gas reduction of 68 percent.” 
If one listens to National members one would ask the question: why will those producers not do that unless the bill is passed? There are answers. Those producers will not do it without this bill being enacted because first of all they would be exposed to competition from unsustainable imports of cheap bio-diesel—which comes from palm oil grown in South-east Asia where people have cleared the rainforest to do it—and we have to put some standards in place or no one will be prepared to produce sustainable biofuel in New Zealand. That is the first point. 
The second point is that everybody has been talking today about what this measure will cost. The fact is that the cost of oil is just hovering around a threshold at the moment where for some of the time bio-diesel is no more expensive than oil and for some of the time it is. We know that at $140 a barrel for oil bio-diesel does not add to the cost of diesel; at $105 a barrel it does somewhat. So without legislation without an obligation and by leaving it to the market there is a stop-go policy of cheap imports that come in when the oil price goes high and that do not come in when the oil price goes low. It builds no capacity in New Zealand—it does not. 
People talk about infrastructure; the National Party loves to talk about infrastructure. Part of the infrastructure that we need is the capacity to make blend and distribute small quantities of biofuel to eke out our petroleum and this is the way we will get it. We need to build that industry here. We have resources. We have tallow as the obvious main one. We have some whey and that is already being turned into ethanol for some purposes. We have other agricultural and food wastes. We have oilseed rape which can be grown in rotation with other crops thereby improving the general productivity of the rotational crops and that is happening on a small scale now. In the future we will have algae which are capable of producing bio-diesel while growing on sewage ponds. What could be more sustainable than that? We will also have wood wastes turned into ethanol or potentially into bio-diesel. The quantities that the bill obliges on the industry are carefully scaled to match what can be produced locally from local resources. That is their purpose. We actually reduced quantities a bit from what they were when the bill was introduced just to make sure that we were not overwhelmed by imports.  
It is very easy to stand here in the House and mislead people who are listening in by saying what a terrible thing biofuels are how this bill will lead to world hunger and how it will lead to lack of biodiversity. The Green Party was the first to raise these issues. At the very beginning before the bill was even introduced to the House or mooted we told the Government that we would not support its proposed Biofuel Bill—and we had not even seen it at that stage—unless it had a sustainability clause in it. We made it absolutely clear that firstly it had to make serious carbon reductions compared with petroleum and of course corn from ethanol clearly does not do that. Secondly it had to not compete with food production because in the unequal market world that we have where the stomachs of the poor have to compete with the SUVs of the rich the stomachs of the poor have no chance of winning that battle. So that had to be ruled out. Thirdly we had to rule out bio-diesel that compromised biodiversity by clearing rain forests and so forth. It was a high test and the Government accepted that challenge. 
If we do not pass this bill we will end up in New Zealand with imported biofuels that do all of those evil things. There is nothing at the moment to stop bio-diesel from South East Asian rainforest clearance coming into New Zealand. There is nothing at the moment to stop biofuels grown on land that used to grow food for the poor from coming into New Zealand. There is nothing even to stop the US’s outrageous ethanol from corn from coming into New Zealand. That is what this bill does and for National members to stand there and say they are on the side of sustainability but they want to preserve the status quo where all of these biofuels that are destroying people’s food and biodiversity can come into New Zealand unhindered is absolutely outrageous. 
I heard the argument that the officials did not know how to write a sustainability clause. Well I do not actually believe that but the fact is that the Greens have written it for them. And it is a good one. Let us look at what it says. It establishes the principles of sustainable biofuels. First of all they emit significantly less greenhouse gas over their life cycle than obligation engine fuel—that is petroleum. Secondly they do not compete with food production and are not grown on land of high value for food production. That is a high test. Thirdly the production of sustainable biofuels does not reduce indigenous biodiversity or adversely affect land with high conservation value. Those principles are as clear as one can get. There will be regulations under the bill to give effect to that clause and I have no doubt at all that in 9 months our officials can write those regulations and get them through. 
National members know that the scare stories they have been telling in the House today cannot happen in New Zealand under this legislation. They are pretending otherwise and I think that that is a wicked thing to do. The core message is that some biofuels are very bad indeed and we will not have them in New Zealand. Some biofuels are good and we will get them to happen. Is that actually too hard for people to understand? 
I totally agree with the Parliamentary Commissioner for the Environment who says that the first step we should be taking is to reduce our use of transport fuel—to use our cars less and to use rail and public transport and cycling and walking more and not just to ask what we shall put in the tank. She was right. She gave that advice to the select committee and I applaud her for doing so. That is why the Green Party continues to campaign on all of those transport alternatives. But when she gave advice that the bill should not proceed because of sustainability issues she did not know that the Green Party had set these conditions. She had not seen any of the drafting that we were doing with the Minister and then in the select committee. She was commenting on the bill as introduced which had a placeholder clause on sustainability that I said in my first reading speech was merely a placeholder clause. 
So this bill is a no-brainer. It is a small start to getting a sustainable fuel industry going in New Zealand under very very strict conditions and the whole House ought to be supporting it. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 In the Maori Party we live by the belief that our people are our greatest wealth. In thinking of the Biofuel Bill our thoughts inevitably turn to the late Mountford Te Mana o Te Rangi Retemeyer. Monte was one of those men whose footprints are everywhere. Deeply committed to the marae of Maketu Parawera Aruka and Te Koraha he also had time to be chairman of the Waikato District Maori Council vice-chair of Tainui-Kawhia Forestry Incorporation director of Protac Investments trustee for Aramiro Ahu Whenua Trust chairman of the Kawhia Moana Harbour Committee chairman of the Parawera Maori Culture Group and to be involved with schools councils prisons and in fact every aspect of community life.  
But it was Monte Retemeyer’s role as chairman of the major Waikato-based incorporation Taharoa C Block that has particularly inspired me. Taharoa C Block is a multimillion-dollar incorporation with about 1500 shareholders set up under Te Ture Whenua Maori Act 1993. So when Taharoa C Block presented to the Local Government and Environment Committee on the Biofuel Bill its submission bears the legacy of Monte Retemeyer. It is a submission that is worth listening to. Taharoa C Block told the select committee that the bill has the potential to make an important contribution to combating climate change. That is advice that it is well equipped to give. Taharoa C Block is in a partnership arrangement with Te Runanga o Ngai Tahu focusing on Maori-owned land as the context for exploring the potential of developing a sustainable biofuel supply. If anyone knows much about the quality of some of our Maori-owned land it would be evident that most of that land is pretty marginal for food production. So it will be of great interest to see how that project fares.  
The project funded by the Foundation for Research Science and Technology to the tune of $4 million involves a partnership with fuel company Chevron Oil as a principal industry partner. It involves growing plants for bio-diesel feedstock that do not require the use of valuable agricultural land. Taharoa C Block in the north and Te Runanga o Ngai Tahu in the south will provide the technical input and the field trial management that are needed to get the project going. The focus is to apply a variety of ecological and agronomical engineering methods to the production of affordable low-impact fuels that are also ethically sound.  
It all sounds a bit too good to be true but Te Runanga o Ngai Tahu alongside Taharoa C Block sees the value of being involved in an entirely new and sustainable industry that opens up opportunities for grassroots Maori landowners in Te Wai Pounamu the South Island. It is not as though either entity is a newcomer to innovation. Taharoa C Block has already been exploring other sources of renewable energy through its wind power generation and energy crops. Both organisations have been concerned that the environment must not be damaged in the process and just as important as that they are keen to ensure that they are not putting in more energy than comes out.  
That hits at perhaps the greatest issue with biofuel production. The simple reason for biofuel market failure is the rising cost of fossil fuels—crude oil and natural gas—and the pervasive impact those fuels have on the entire economy including biofuel production. It is all a question of balance. Modern agriculture is an industrialised system and large-scale biofuel production is dependent on it.  
But as the Maori Party has consistently presented to the House it is essential that when we focus efforts in one area we do not compromise another area. Environment and Conservation Organisations of New Zealand Inc.—a natural alliance of some 65 groups with a concern for the environment—presented such concerns to the select committee. It warned the committee that it is essential that the development of biofuels does not cause a further loss of biodiversity or result in increased greenhouse emissions. It was able to share with the committee developments from the European Union which has announced that it may ban imports of certain biofuels that are produced unsustainably.  
If we go further down the biofuels track it is essential that New Zealand does not accept biofuels from sources that exacerbate the destruction of rainforests or result in a net increase in greenhouse emissions. The Parliamentary Commissioner for the Environment Dr Jan Wright as has already been said in this House described the international context of the debate around the sustainability of biofuels which has in her words “heated up immensely”. She urged that this bill not proceed being particularly concerned about the impacts of importing biofuels while turning a blind eye to the hugely damaging environmental impacts that are occurring in countries like Indonesia and Malaysia which have been referred to earlier. Dr Wright’s key concern was that importing biofuels would be inconsistent with our clean green image. So we return to Taharoa C Block and Te Runanga o Ngai Tahu for our motivation.  
The critical question then is to assess how well the bill will deliver on the two goals of reducing carbon dioxide emissions and increasing the security of our supply of transport energy. The select committee has recommended the Minister issue through two very comprehensive Orders in Council requirements to specify that biofuels must not contravene sustainability principle 2 regarding competition with food production or greenhouse gas emissions. The select committee has suggested that the bill will be enhanced by including a methodology to assess life-cycle greenhouse gas emissions from engine fuels. It also recommends the establishment of a methodology to assess the effects of the production of a biofuel on food production and for assessing whether those effects amount to competition.  
There are other elements to this bill that we are pleased to see included. The select committee has recommended the insertion of a mechanism for recognising particular land including land outside New Zealand as having high value for food production or conservation. It has also introduced a methodology for assessing the effects of the product of a biofuel on indigenous biodiversity and on land that is of high conservation value. Those are all new initiatives that help us to have confidence that biofuels can be offered tentative support. We are however always conscious that on their own biofuels will make only a small contribution to reducing emissions and to contributing positively to reducing the price of oil and addressing the supply problems of the future. As oil prices rise the contribution to energy costs of biofuels will lessen.  
Some will argue that the use of bio-diesels will not result in any fuel price increases and we are all of the view that the issue still remains of finding new ways to reduce energy consumption by living differently. Conventional economics cannot fix that problem; industrial capitalism as promoted by our major parties including policies based on building more roads will not lead into a low-energy future. How we utilise our natural resources in a sustainable environmentally considerate manner is critical in ensuring that all New Zealanders have access to affordable energy resources in a world where shortages will mean escalating prices.  
Finally I say there are many and varied ways of looking at new ways to reduce energy consumption. We in the Maori Party promote the further development of cheap free regular reliable and frequent public transport of telecommuting of fully connected off-road tracks and of walkways. We have supported improvements to the rail infrastructure in order for it to deliver a better service and thereby reduce the number of cars on the road. Ultimately it is up to us to play our part in reducing our dependence upon over 500000 everyday oil-based items by developing strategies to reuse recycle repair respect and replace items and to trade locally. It is up to us to tread carefully in the footprints left by people such as Mountford Te Mana o Te Rangi Retemeyer.  
We will support this bill as we support us all in order for people to live differently to reduce their carbon dioxide emissions and to look for other sources of energy supply. Thank you. 
Hon PETER DUNNE (Leader—United Future) 
: 
 It surprises me greatly and I suspect it will astound the Greens even more to be able to say that we find ourselves in virtually total agreement with the comments that Jeanette Fitzsimons made a little earlier about the Biofuel Bill. This bill is not a silver bullet but it is a small step forward and we believe it is a useful step forward that deserves to be supported.  
I was interested in the quotation that Jeanette Fitzsimons read because it reminded me of a number of meetings I have had of late with people and companies that are interested in having a domestic biofuel industry. The message she quoted was very similar to the message they had been giving me in those meetings. It was essentially that there was a need for some certainty; some significant investment decisions were pending based on the fate of this bill. There was certainly a need to get this matter resolved and there was also an issue to ensure that a domestic industry based around our capacity to use tallow was able to be secured and that provisions would be put in place to prevent the potential importation into New Zealand of product from unsustainable sources.  
A number of those matters have been mentioned already. The concern being raised at that time was the absence in this bill as introduced of a mechanism that would prevent the importation of product that was adverse to the sustainability interests that biofuels are ostensibly about promoting and that that would not make it possible to develop a competitive industry in this country.  
I was interested too because it had bothered me to hear earlier references to the fact that the Parliamentary Commissioner for the Environment was opposed to this bill to hear of the sequence of the Parliamentary Commissioner’s report and the subsequent amendment to the bill regarding the introduction of a sustainability clause. I think that makes sense and it puts the Parliamentary Commissioner’s comments into their proper perspective.  
Because of the introduction of those provisions which make it clear that issues relating to the food supply biodiversity protection and the likely importation of some quite dangerous product into New Zealand would be addressed and that we could look with some confidence to what was available domestically we took the view that this bill was worth supporting more than it was worth opposing. We had not made the call to oppose it but we were getting to the stage of thinking that some of its measures would not be as environmentally desirable as they had been portrayed and that therefore this might be one of those things that look good on paper but was unworkable in practice.  
The bill that has emerged—and I acknowledge the discussions we were able to have with the Minister at critical stages—I think addresses the concerns that reasonable people have about the way in which this measure is being advanced. Therefore it is appropriate to support its further passage. Those reasonable views are not some wild-eyed exposition of the fact that biofuels are a saviour to us all or that the advent of these products would move us away completely from our dependence on oil-based products or other alternatives. But there is a recognition of the possibility that a market niche could be developed in New Zealand particularly given the level of tallow in this country to give us some alternative and to perhaps just spread out a little more the range of products available. This has to be handled in a sensitive way and also with a degree of precision so that key investment decisions can be made. 
The message I distinctly recall receiving from a number of the potential investors—and I note that one has already gone by the wayside—was that unless Parliament proceeded to send the signal in relatively good time this would simply be theoretical and there would be no capacity to develop a domestically based industry. As a result of that we would be totally reliant on an imported product with all of the implications that have been discussed in other addresses this afternoon.  
On that basis I think this bill is a prudent step forward and is one worth supporting. It is not perfect in every respect. Some issues will need to be resolved as the regime it introduces unfolds. There is clearly an issue about the fact that the bill takes effect in October but there is a window until July of next year when the sustainability standard comes into force. That is a practical step as I understand it to get over the fact that certain transitional steps are under way.  
The challenge I think the House faces and why we come down on the side of supporting the bill is that we either make a stand on this issue at this time given the interest there is and the capacity in the New Zealand economy to make some movement or we effectively give it away as an option for this country. On that basis we made the call to support this bill. We think that it is the right decision and we believe that although there may well need to be adjustments as the bill takes effect in order to put in place a more viable long-term regime it is important to make a start at this point. That is why we are voting for the bill. 
NICKY WAGNER (National) 
: 
 Of course we all like the idea of biofuels. All New Zealanders are keen to see a cleaner and greener New Zealand. The vast majority of the public are concerned about climate change issues—we are concerned—but we do not really want to change our lifestyles so we would be absolutely delighted if a simple change of fuel could solve some of these problems. If only life was so simple.  
I have a question for the House. What do the OECD Round Table on Sustainable Development the UK House of Commons Environmental Audit Committee report the G8 conference of legislators the UK’s chief scientist the World Food Organisation the UK Royal Society the World Bank and the United Nations Secretary-General all have in common? What do those august bodies have in common? They are all respected international organisations that comment on world issues and world policies. Several of them are specialist green organisations and they along with the New Zealand Parliamentary Commissioner for the Environment have all expressed serious concerns about biofuels and any biofuel obligation.  
But this Labour Government thinks it knows best. This Labour Government wants to ram through this Biofuel Bill despite the reservations of all those world experts. The Labour Government thinks it knows best. The Labour Government wants to ram through the Biofuel Bill despite the fact that it will add increasing costs to all New Zealanders and that the environmental return is very debatable.  
There are serious costs to the introduction of biofuels. There is some debate over what those costs are. The chairperson of the Local Government and Environment Committee tells us that she does not know what they are. She does not really have much idea but the bill will still be passed. There is debate over these costs and the best estimates we have are somewhere between 1.5c a litre and 7c a litre. So even if we take a mid-point range the cost of the biofuels obligation will result in an increase to the New Zealand public to the tune of about $240 million. New Zealanders might be prepared to pay that because we know that they are keen to see the country being more clean and more green. They might be prepared to pay that but only if they are sure there will be some benefit and even the world’s experts cannot guarantee that.  
When we are making decisions about new green initiatives we need to prioritise the things that will give us the most bang for our buck. Members should consider other planned environmental spending. For example there is solar water heating and we are putting $4 million aside for that; maybe research into geothermal energy or even tidal energy and we are putting away $1 million each for that; or perhaps research into how we can reduce greenhouse gases from animals and we are putting $5 million into that. Members can compare that spending with the $240 million for biofuels—the spend for biofuels is huge. What could we achieve if we spent even half of that $240 million on doing some other environmental initiatives with a better pay-off?  
In saying that I also say that I support the development of biofuels. In my previous life as an Environment Canterbury councillor I was involved with the trialling of biofuels on the Christchurch City bus fleet. We undertook a trial that proved both tallow and reused oil-based biofuels would work very well in the city fleet. In fact they worked so well that one company Leopard Coachlines decided to use biofuels permanently. It decided to use a 5 percent blend. Then came the problem the problem we are all foreseeing with this Biofuel Bill: the availability of feedstock became the issue. We all talk about tallow today which is sold on the international market. The increased global demand for tallow has meant that the cost of tallow feedstock has become prohibitive for biofuel manufacturing and for this bus company. The bus company was caught between a rock and hard place.  
One of the aims of having a public transport system is to provide a more environmentally friendly method of getting people around the city. The more buses there are the less congestion there is and the fewer harmful emissions there are. But if bus fares increase because of the use of a cleaner fuel the service becomes less attractive and the environment suffers. It was a difficult balance for the bus company to make but in the end they are no longer using biofuels and that is a real shame.  
As the National spokesperson on waste I am particularly interested in the new technologies being developed to manufacture biofuels from waste products—the so-called second-generation biofuels. Producing biofuels from waste is a fantastic idea because one gets double the environmental benefit. It avoids the horrible downside of the world’s present focus on biofuels which is that biofuels stock is being grown instead of food. It is a supply and demand problem so any of the rules we put around this can only mitigate not solve the issue.  
The fact that biofuels stock is being grown instead of food has sent food costs spiralling up and out of control. The horrible downside we have seen is starving people rioting across the world. The horrible downside means that wealthy car owners can have cleaner fuel but desperate people who could never even imagine owning a car let alone buying biofuels are starving because they cannot afford food for themselves or for their families. We cannot allow our demands for biofuels to destroy other people’s lives.  
The use of waste as a feedstock for biofuels is a great idea because it cleans up the environment as well. During the last few months I have visited several biofuel manufacturing projects focusing on waste. One is in Blenheim. The Aquaflow plant is producing bio-diesel from algae growth in Blenheim’s sewage ponds—bio-diesel from nutrients that are polluting our environment bio-diesel from a very plentiful waste product. 
I have also seen projects that involve the digesting of dairy effluent from dairy sheds to provide a fuel source. We all know that the effective management of dairy effluent is essential if we are to be able to control the nitrate levels in ground water and streams so producing biofuels from dairy effluent is a further environmental bonus. Other groups are working with wood waste industrial waste and green matter. The bottom line is that all these projects are a better use of resources than growing biofuel feedstock. All these projects have dual benefits—cleaner fuel but also the recovery of resources that would otherwise pollute the environment.  
Right now we again have an environmental bill in this House that is on the right track but it just has not been very well-thought-out. The basic idea is good but although National supports the use of biofuels we are also very aware of the pitfalls of this legislation. These are perverse environmental effects unacceptably high costs and international humanitarian ramifications. 
A party vote was called for on the question  
That the Biofuel Bill be now read a second time. 
Ayes 70 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Bill read a second time. 
Points of Order 
Maori Affairs Committee—Attendance 
Hon TAU HENARE (National) 
: 
 I raise a point of order Mr Speaker. I bring to the attention of the House that the chairman of the Maori Affairs Committee has called an urgent meeting of the Maori Affairs Committee tomorrow. Unfortunately not a lot of people on this side of the House can be at that meeting because it does not fall on the usual day that we meet and members of the select committee have other select committee business and other issues to attend to. I am wondering what the Speaker’s view of that would be. It would have been all right if we had had notice of the meeting but we did not have any notice; it has come out of the blue. Mr Deputy Speaker I would appreciate your view. 
Mr DEPUTY SPEAKER 
: My view is that I will digest the matter for the moment and give you an answer very soon. 
Biofuel Bill 
In Committee 
Part 1Amendments to Energy (Fuels Levies and References) Act 1989  
The CHAIRPERSON (H V Ross Robertson) 
: Part 1 includes clauses 3 to 17. The debate on Part 1 includes debate on schedules 1 and 1A. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 The great disappointment with this Biofuel Bill is that this Clark-Peters Government is ignoring all of the international evidence in respect of concern about biofuels. We are asked to believe that the OECD is wrong that the United Nations is wrong that the World Health Organization is wrong that the British House of Commons is wrong that New Zealand’s own Parliamentary Commissioner for the Environment is wrong and that the only one who has it right is David Parker. Well the Government is mistaken. Rushing through under urgency this flawed bill which will impose significant extra costs on New Zealand consumers at a time when they can least afford it and for very little environmental gain is flawed bad public policy. 
The first key question I have for the Government is this: why impose a compulsion a nanny State “you must do” before putting in place a sustainability standard? Why on earth compel every person who buys liquid fuels to include in his or her purchase a component of biofuel when the Government has not sorted out its biofuels sustainability standard? I think I know exactly why. It is because after 9 years of this Government our greenhouse gas emissions have gone up in every single one of those years. New Zealand has one of the worst records in the world in terms of increased greenhouse gas emissions and in a desperate last-minute bid a few weeks before the election the Government wants to try to get some climate change policy on the record in a hurry. 
Hon Pete Hodgson 
: Oh Nick. 
Hon Dr NICK SMITH 
: That is it I say to Pete Hodgson. That is it. 
Hon Member 
: Where’s the rest of it? 
Hon Dr NICK SMITH 
: Well the thing on which I would challenge Mr Pete Hodgson—the guy who went around New Zealand saying we should ratify the Kyoto Protocol because we would make a billion dollars—[ 
Interruption 
] I say to Mr Hodgson that I have spoken to the officials and he misled Parliament; he knew that New Zealand did not have a surplus and he fibbed and he told porkies— 
Hon Pete Hodgson 
: I raise a point of order Mr Chairperson. Dr Nick Smith has just advised Parliament that he knows that I misled Parliament. 
Hon Dr NICK SMITH 
: That is right. 
Hon Pete Hodgson 
: And he has just said that is right. Not only is that remark out of order but it is flat wrong and I invite him to withdraw and apologise for it. It is entirely out of order. 
The CHAIRPERSON (Hon Clem Simich) 
: The member has requested that the member withdraw and apologise and I would ask him to do that please. 
Hon Dr NICK SMITH 
: I withdraw and apologise. It is a matter of record that for 12 months before Minister Pete Hodgson came clean about the mess this Government had made around Kyoto policy Ministry for the Environment officials advised him that the numbers that he was telling the public were untrue—were false. I would be happy to table the emails and the facts to back up my assertion about that scandal involving Pete Hodgson. 
Coming back to the Biofuel Bill— 
Hon Pete Hodgson 
: Go right ahead. You’re just making it up. 
Hon Dr NICK SMITH 
: Well did the member claim that New Zealand stood to make a billion dollars from Kyoto? 
Hon Members 
: Yes. 
Hon Dr NICK SMITH 
: Yes he did. He got it awfully wrong and officials advised him at least 12 months before he came clean that he was continuing to express a view that we had a surplus when we did not. That is the sort of snaky behaviour I say to Pete Hodgson that we have come to expect from this Government. Whether it is Owen Glenn and his donations to this Government or whether it is Kyoto the dishonesty that this Clark-Peters Government now displays is a tragedy for New Zealand and is one of the reasons there will be a change of Government in a few weeks’ time. 
The Government says we should not worry about the big global debate around sustainability because the Government has put some principles in Part 1. But what is the use of principles if they do not result in regulation? The real flaw in this bill is this: why should we compel people to use biofuels before the sustainability standard comes into place? Can any member of the Government or any of the parties that are supporting this bill answer that very basic question? Why compel the use of biofuels before one has a sustainability standard? 
Moana Mackey 
: Because they told us in their submissions that they wanted to know what would be in those sustainability standards so that they could plan ahead. 
Hon Dr NICK SMITH 
: The Minister in the chair the Hon David Parker is silent but we have the chair of the Local Government and Environment Committee commenting. The officials have said that it will take till 2011 to get a sustainability standard. That is what they advised us in their papers to the committee. So I ask the chairperson of the committee and the Minister why on earth they would want to compel people to use biofuels before then. This is nanny State saying we must do something without it being really sure that there will be an environmental benefit. 
What is really ridiculous about this provision is that there will be a substantive cost—the select committee heard it is about $130 million—in that the fuel companies will have to put in place the infrastructure to be able to deal with the different types of biofuels. Whether it is bio-diesel which has particular technical issues around it being cold so there is a need to avoid blockages or whether it is ethanol in terms of it being water absorbent an investment of about $130 million in infrastructure will be required. But before one invested in that infrastructure would not one want to know which biofuels are OK and which ones are not? The madness the absolute madness is that the Government is going to require the introduction of biofuels before the standard is in place. That is unforgivable; it is mad public policy. 
A further issue is this. Why is the Government providing a huge skewing of the scrum towards ethanol over bio-diesel? The Government says that yes it acknowledges there is a problem. There is no logic to it providing a 42c a litre advantage to the importing of ethanol from Brazil compared with bio-diesel made in New Zealand out of tallow—no good reason at all. The Government accepts that but it says it will put off sorting out that issue until 2012. What nonsense! Why would one introduce a compulsory biofuels requirement today when one acknowledges that the tax rules significantly advantage ethanol over bio-diesel for no good environmental reason and then say: “Oh we can’t sort that out now; we’ll put it off until 2012.”? I tell the Minister that that is not good enough. He should sort out the tax issues and the sustainability issues now before introducing the compulsory requirement. 
I will be asking the Committee to support a very simple straightforward amendment to put the sustainability standard before the compulsory requirement. I want any member of the Committee to please advise why Parliament would not want to do that. Why would we not want to put the standard before the compulsion? The silence is deafening; the silence is absolutely deafening. I tell members that there is only one reason for not doing that and it is political—straight politics. It is because this Clark-Peters Government continually puts its own political interests ahead of what is right for New Zealand. It is desperate to pass any sort of climate change legislation even flawed legislation before the election rather than do what is right for New Zealand. I invite the Committee to support that amendment to ensure that we sort out the sustainability standard and the tax issues before we introduce compulsion. 
The last point I would make is this. Every party in this Parliament agrees that a carbon price and an emissions trading system is the sensible way to respond across the economy to climate change. The problem with the Minister is that in terms of getting an emissions trading scheme he immediately says we need some extra regulation. If biofuels cannot stack up economically why are we going to compel their use? That is the million-dollar question. In respect of the illogical ban that this Government wants to put on thermal generation and in respect of the Biofuels Bill the Government is being a busybody. It cannot help reverting to a nanny State attitude. It wants to tell people how to live their lives rather than just give a price signal. 
Where members on this side of the Chamber differ significantly from the Government on environmental issues is this: we say that we should provide a price incentive and not have a nanny State. We should provide an incentive and provide the right sorts of price signals and let people get on and live their own lives rather than having the nanny State dictates that we get in Part 1 of this bill. This Clark-Peters Government believes that it knows best and National says otherwise. 
MOANA MACKEY (Labour) 
: 
 I just want to take a short call to respond to the previous speech. I sometimes wonder whether Dr Nick Smith and I were sitting in the same select committee when listening to the submissions because what he is relaying to the Committee is certainly not what we were told during those submissions. And if he had listened then the submitters would have answered a lot of questions for him. 
Hon Dr Nick Smith 
: What did the Parliamentary Commissioner for the Environment say? 
MOANA MACKEY 
: Well I tell Dr Smith that the Parliamentary Commissioner for the Environment submitted on the original bill not the bill as reported back to the House after the Local Government and Environment Committee had done its work. In fact all the international organisations that Dr Smith quoted were the reason why the select committee worked so many extra hours through all the adjournments and I acknowledge the hard work that Dr Smith himself put into coming along to the select committee and working on the bill. We did it because we listened to those international organisations and because we listened to the reports out there. We recognised as a committee that the bill needed to change from the original format that came to us which was the format that the Parliamentary Commissioner for the Environment spoke on when she came to our select committee and gave that report. Dr Smith knows that just as well as everyone else. 
I want to say of Dr Smith’s amendment which he brought up that it is a very handy way of never having to do anything. If we simply do not ever develop standards and if we do not have a time line in the bill as we have now where the Minister has to come back with the methodology then we never have to do anything—that is true. I tell Dr Smith that if we never come up with standards then his amendment says we never have to have a biofuel obligation—yes? 
Hon Dr Nick Smith 
: That’s right. 
MOANA MACKEY 
: Dr Smith says “That’s right.” Well we say that that is not good enough. 
We were told by submitters that they wanted to know the kind of biofuels that the select committee and this House believe should be exempt. That is why we put in those three sustainability standards that we developed in conjunction with the Greens—to make it clear. Oil companies do not go into 3-week contracts when they are looking at biofuels; they want to know up front what this Parliament might smack on them part-way through their obligation. And we have told them. So they know that some biofuels out there are absolutely never going to be allowed regardless of what the Minister comes back with after he has done the methodologies and the things the bill requires him to do. 
We have been up front about it. We know that that is what biofuel producers want because they need some certainty. We will never have a domestic biofuel industry in this country if we cannot provide some form of certainty like a biofuel obligation so that producers know they will have some kind of industry to provide to here. That is why we are doing it. I do not know how many times Dr Smith needs to be told but if he had listened at the select committee then I would not have to be telling him again and again. 
JOHN CARTER (National—Northland) 
: 
 I have been listening to this debate and it is just amazing listening to the reasons why the smaller parties are supporting this legislation. This Government is foisting a Mad Hatter’s experiment on this country and if we listen to the debates by first of all the Greens by New Zealand First and by Peter Dunne we hear them all saying: “Yep we know there are some problems. Yep we know some issues need to be debated. But nevertheless let us be first let us give it a go and let us lead the world on this whole issue.”  
One of the things that absolutely astonished me was what Peter Brown said. He went through three reasons three things that he was concerned about and that really worried New Zealand First with the last reason being an issue about food security and the impact it might have on other countries. But he said in the end that those members can accept it because it will happen anyway so it does not matter. That is exactly what he said and the  
Hansard 
 will prove it. He said it does not matter because it will happen like that anyway so let us not worry about it. Well we need to be worried about those very things.  
Peter Dunne said exactly the same thing. He said there are real worries about this whole bill and we should be concerned about it but if we do not get started we will never get going. Well it is all very well to say we should get on the bike but I say that if it is going downhill at a great rate of knots and one cannot control it then one does not want to get on it. That is what Peter Dunne is saying.  
I listened to Jeanette Fitzsimons. She said that although we know there are a whole lot of issues around the world that we need to be concerned about and that all sorts of reports are telling us this is a real problem we need not worry because we will put this sort of ring around New Zealand. She said we will make sure that it is New Zealand - generated and that the rest of the world does not matter because we will do our own little bit. Well if we are to try to contain ourselves then we will be going back to the good old days when we had all the borders shut people could not come and trade and we were not allowed to do things overseas. If we wanted to buy a pound of butter or margarine we had to go to the doctor to get a prescription! Are we going back to those days? Obviously that is what the Government wants and those parties are supporting the Clark-Peters Government in making the sorts of policies that take us backwards at a great rate of knots. I have to say that is just crazy.  
Mr Chairman you are indicating that I should come back to the bill but I am pointing out that this is a crazy silly bill. All of Part 1 is just dopey and New Zealand will end up being worse off.  
The Minister of Finance has come down to the Chamber to listen to my speech and I can understand why he would do that. He is worried about the financial impact this bill will have on the country. He should be concerned. He knows that at this time when New Zealanders are struggling when New Zealanders have their backs to the wall and when lots of people are struggling to put food in the mouths of their children his Government wants to put more costs on to those families. This whole bill will add more on to their fuel costs and it will add more on to their living costs. He might laugh about it but that is the impact it will have.  
Not one person who came before the Local Government and Environment Committee said: “Please do this because it will be advantageous financially to New Zealanders.” Not one! Everyone said that yes there will be a cost. Even the Minister’s own officials said that and I ask the Minister of Finance to have a look at this paper. The officials said there is an issue around the cost. Surely to goodness should we not be listening to the officials and listening to the submitters?  
The only people who seem to think that it does not matter is the Labour Government and New Zealand First. The Greens do not seem to worry about these costs. Peter Dunne does not seem to be worried about them. Surely to goodness somewhere along the line we have to take into account what the public think about more costs being put on to them by this House. Is that not an issue we should be worried about? Maybe the Minister of Finance does not care. Maybe it does not matter.  
Moana Mackey 
: What if it works out cheaper? 
JOHN CARTER 
: Cheaper than what?  
Hon Dr Nick Smith 
: Why make it compulsory? 
JOHN CARTER 
: That is a good question. If it could be cheaper as the chairperson of the select committee says then surely to goodness it will just happen will it not?  
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
: 
 Given that Mr John Carter for the first time in about 5 years deigned to speak in the Chamber in some detail about a bill although it was not clear that he knew which bill he was talking about—I can help him in that case; it is the Biofuel Bill—let me just respond to a couple of points he makes. The first point very clearly following upon the rational guidance from Dr Nick Smith is that Mr Carter has joined the brigade of those who believe that one can save the planet at no cost and that it is possible to actually deal with global warming with nobody changing his or her behaviour with no relative cost changes at all and with nobody doing anything differently; all anybody needs to do is—what? It was not clear.  
We heard from Dr Nick Smith that every party supports the emissions trading scheme. That is not true actually. The ACT party does not. The ACT party now supports having a carbon charge but of course when the Government proposed a carbon charge the ACT party opposed a carbon charge. The Business Roundtable is being followed faithfully by the ACT party in that respect. But ACT supports the emissions trading scheme as long as there is no cost to anybody and nothing has to change.  
So what is the cost in this bill? Well the best estimate we have been told is 0.2c to 0.4c per litre. Petrol prices go up and down 3c or 4c a litre a day at the present time. They went down US$10 a barrel overnight. Dr Norman was almost in tears this morning thinking about the price of oil coming down. That is not supposed to happen. It went down by US$10 a barrel! That is equivalent to something like 6c a litre at the pump in New Zealand. So this bill will make a tiny difference on costs but unless there is a requirement to start moving we will never build the infrastructure for alternative fuels because that is where the cost occurs.  
The larger the usage of alternative fuels then the lower the cost per litre to use those alternative fuels because the infrastructure is being better used in that respect. And yes there are some problems with some alternative fuels but this bill lays out the method by which we address those matters to ensure— 
Hon Dr Nick Smith 
: After it’s compulsory. 
Hon Dr MICHAEL CULLEN 
: Oh after a period of months or so we will lay out those rules! So what Dr Smith says is that for the sake of 9 months we should do nothing. I wish his parents had said the same thing at a certain key moment in the past. We would all have been saved this kind of irrationality on matters of this sort.  
I say: “Get with the programme National!”. There is a real need to address the issues before us. When National members promote themselves as young and vigorous and a brighter future but on everything they are timid unable to move and afraid of change then this is not the brighter future that National is pointing to. 
Hon TAU HENARE (National) 
: 
 Let me just respond to the comments of the Minister of Finance. The issue about costs is that they will be an impost on those who are involved in the transportation industry. So it will be a cost on them; and if it is a cost on them then surely to goodness it will be a cost on the mums and dads out there. Even the transportation of a budget loaf of bread will result in an impost a cost to the mums and dads. So that is where the issue of costs arises I say to the Minister who has gone now.  
The CHAIRPERSON (Hon Clem Simich) 
: Order! 
Hon TAU HENARE 
: The whole thing about coming up with a standard is that if we develop a standard everybody in New Zealand knows the standard and that is what they have to do to make their business work. But there is nothing of the sort in the bill. There is no standard whatsoever.  
Moana Mackey 
: Read the bill. 
Hon TAU HENARE 
: So there is a standard? So the standards have been sorted out in somebody’s feeble mind—for the future. John Harrison of Harrison Motors the transport company up in the mid-north has to think: “That’s right. The standards are there in the feeble mind of the Government but it’s not going to tell us.” So how can they run a business; how can people possibly operate on an idea of standards? What are the standards? 
Moana Mackey 
: Read the bill. 
Hon TAU HENARE 
: So there are standards? The standards have been sorted out? That is what list member No. 43 is saying—no sorry that is not the member’s number. That is Louisa Wall’s number.  
Allan Peachey 
: What’s the number then 48? 
Hon TAU HENARE 
: Well if she is not No. 48 she should not be there anyway. I want to set out that the bill creates an obligation for fuel companies to blend diesel and petrol with 0.5 percent biofuel on 1 October with the requirement increasing by 0.5 percent each year to 2.5 percent in 2012. We couple that with the bill’s stated intention that requires a person subject to the biofuel sales obligation to file an annual return. What have we heard over the last 2 or 3 years from businesses? We have heard that the impact of red tape is huge on that 90 percent making up small to medium sized enterprises in this country. It is a huge impost and has a huge impact on their day-to-day business. Because they have just been told that the fuel companies will have to file a return every year—it is another piece of paper they have to fill out—then that is an impost. It has an impact not only on the transport companies and on the fuel companies but also on mums and dads. At the end of the day when they toddle off to Woolworths to Countdown or to Foodtown that is where they get it. Who pays for it? The mums and dads do. So on the one hand we get a tax cut from the great Labour Government but it gets taken away with all these other little add-ons. In the end they do not see anything. 
Hon Pete Hodgson 
: Have a talk to Maurice. He will tell you about it. 
Hon TAU HENARE 
: Leave it until tomorrow? Well we could leave it until tomorrow. We might leave it until tomorrow. If the Minister wants to leave it until tomorrow if that is his philosophy then it is no wonder he is no longer the Minister of Health.  
Let me say this. It would have been all right for the House to accept no standards if the Government had been here for only 6 months. We could have forgiven the fact that there was only a small amount of time in which to figure out what the standards were to be and to put them in place after the compulsion bit. But let us not forget the Government has been in office for 9 years. 
Eric Roy 
: How long? 
Hon TAU HENARE 
: For 9 long years. What has the Government been doing for the last 8 years? Has there been anything on standards? No. Has there been anything on listening to other nations and organisations from around the world? No. The Government has gone ahead and thought it knew everything; and all it has done and all it will do on the passage of this bill is put an impost on mums and dads. That is where it will happen. Mums and dads will pay for the Government’s weird ideas about saving the planet because that is all it is. It is the weird ideas from the Labour Government and the nanny State supported by the Greens over there. For goodness’ sake! Talk about putting the cart before the horse! My goodness me! The next thing we will know is that we will be riding around in a horse and cart. Mind you there is nothing wrong with that I suppose if we are on holiday down in the South Island somewhere. But if we have to get to work from west Auckland out to South Auckland and there is no highway because the Government could not afford to look forward on the transportation—[ 
Interruption 
] Absolutely Mr Chairman.  
I want to finish by coining the phrase that Moana Mackey used in this House not so long ago—get with the programme. Absolutely! We have to say “Get with the programme.” What is that programme? The programme is to get rid of this Government.  
I feel sorry for my colleagues on the other side of the Chamber. Half of them will not be back here after the election and they might need some biofuels. Where they are going they will need our help. In all seriousness this is nothing more than a cost on mum and dad. Mums and dads in these times cannot afford another tax another impost on their meagre wages. 
Hon DAVID PARKER (Minister of Energy) 
: 
 One particular part of Mr Henare’s contribution does need to be repeated. It is his complaint that the compliance cost of an annual return on biofuel blends is a compliance cost on small business. There are approximately five oil companies in New Zealand. Those companies have a combined turnover that is measured in billions of dollars—[ 
Interruption 
] An annual return for companies that have a turnover of many hundreds of millions of dollars is not an onerous compliance cost. If that is the sort of hurdle that can never be overcome by a National Government as we move towards sustainability measures it is no wonder National members never do anything to advance sustainability issues. 
The reality is that oil companies will not introduce biofuels without there being a mandatory obligation for them to do so except for the occasional exception like Gull Petroleum. Probably even that company is introducing them only because it knew that a biofuels obligation was coming. When they do introduce biofuels because of this obligation they will be helping New Zealand to take a small step towards sustainability—not a large step. But that small step towards sustainability has to be taken before the subsequent larger steps can be taken. 
We have to update our infrastructure. In terms of the cost of that the advice from the officials to the select committee—on which the National Party was represented and its members did not accuse the officials of misrepresenting the facts—was clear that the infrastructural cost will be between 0.2c and 0.4c per litre of fuel if that cost is recovered over 4 years. It will probably be recovered over a longer period because as sure as anything it will last more than 4 years. The cost is minimal. In terms of the fuel itself it is not yet clear what the impact on price will be. Some of the tallow producers say that at current oil prices—at prices under US$100 a barrel—bio-diesel from tallow could be cost competitive with or indeed slightly cheaper than petrol. 
There is nothing wrong with this bill. The sustainability standards are world leading. That is not good enough for the National Party but of course it is not willing to lead on anything. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I am here to speak briefly on the bill. I am one of the few people in the House who has been very actively campaigning against palm oil - based biofuels over a long time. Of course palm oil is one of the really problematic biofuels. It has resulted in massive deforestation in South-east Asia; 20 percent of all greenhouse gas emissions are now as a result of tropical forest deforestation which is being driven in part by the palm oil industry. 
It should also be noted that New Zealand has a connection to the palm oil industry. One of the by-products of the palm oil industry palm kernel is now imported into New Zealand in vast quantities. Last year alone 400000 tonnes of palm kernel were imported into New Zealand largely to feed dairy cattle. One of the secondary drivers of the destruction of rainforest is the palm kernel industry and the palm oil companies are on the public record as saying that palm kernel is now one of the significant factors in their profit stream. Biofuels are a major issue and they are linked to the palm oil industry. 
The Greens would not be supporting this bill had we not negotiated clauses around sustainability. Listening to the National Party members talking about sustainability reminds me of the saying that “A little bit of knowledge is a dangerous thing.” Clearly if we are going to make some progress on these issues we need to encourage particularly the domestic production of biofuels. I do not know how many members have been to look at some of the projects happening around Taupo and elsewhere around biofuels and woody biomass. Woody biomass offers a real opportunity in a country like ours to develop second-generation biofuels. I would have thought we would be supporting it because it seems to me that it is real progress. 
It is also worth saying in terms of the amendment that has been put by Nick Smith that the member has not discussed it with the member in charge of the bill from the Green Party’s side Jeanette Fitzsimons. If National were serious about that amendment I am sure it would have discussed it with us earlier. We will not be supporting the amendment because it has not been discussed with us. If it had been we obviously would have considered it and looked at it. 
I shall respond to the discussion around regulation and leaving it up to the price to determine. It is certainly true that in the transition we need to make towards sustainability price and price signals are an essential part. But by themselves they will not be sufficient. We also need to use regulatory mechanisms and regulatory mechanisms need to work alongside price mechanisms. It is also true that we need to reach out to the community and win people over to the idea of our moving towards sustainability. We have if you like three levers that we can use in this transition: one is price signals one is regulation and one is what we might call consciousness raising or winning the community over to our ideas. Green members believe that we need to use all three levers. 
Finally in response to the increase in price that is involved—the very small increase—I say that the long-term trend of oil prices in spite of what the Minister of Finance was saying earlier is up. Anyone who has read the International Energy Agency’s reports on this matter will be aware that even that agency is now saying that the long-term trend of oil prices is up and that we need to look at alternatives. Biofuels may be a small part of that but they are certainly not a part that we should rule out. 
HEATHER ROY (Deputy Leader—ACT) 
: 
 I stand and agree entirely with my colleagues from the National Party and with what they have been saying about the Biofuel Bill. This bill as introduced requires petrol and diesel suppliers to also supply biofuels with an initial level of 0.53 percent in 2008 increasing—as we have heard—to an upper level of 2.5 percent by 2012. Here we have more dopey legislation being introduced in this urgency motion. Why after 9 long years of a Labour Government is this bill suddenly being rushed through in the death throes of this Government? The reason is that it wants to leave its mark on the world and show that it cares. Well if it really cared it would look not just at the costs which it is having difficulty quantifying anyway—or describing accurately—but also at the hidden costs this bill will bring to not just New Zealand but elsewhere.  
The environmental benefits of biofuels are arguable at best. Before we embark here in New Zealand on a campaign of changing our fuel source let us look at what is happening abroad. I contend that other countries are now exhibiting very serious lessons that we should be paying some attention to. In the United States the leading source of biofuels is corn or maize. Nobel Prize - winning atmospheric chemist Paul Crutzen a man not known for his climate change scepticism found in 2007 that biofuels made from corn and rapeseed—something that Jeanette Fitzsimons stood in this House and propounded the benefits of—contribute more to global warming than fossil fuels. Biofuels made from corn and rapeseed contribute more to global warming than fossil fuels; there is a lesson there.  
While we are on the topic of emissions we should note that biofuels emit a significantly higher level of nitrous oxide into the air. Before Mr Anderton gets too excited I should point out that nitrous oxides are the principal cause of smog—something that people in Christchurch are well aware of or at least they should be. So I ask the Labour members of this House from Christchurch to explain to their constituents why they are supporting this bill.  
While we are talking about overseas examples I ask: what about Brazil? It is the second largest producer of biofuels in the world. How has it achieved this honour? Through having a large-scale slash and burn of the country’s native rainforest. As if the rainforest was not diminishing at a rapid enough rate as it is Brazil has now embarked on an unprecedented campaign of cutting down rainforest to plant sugar cane for biofuel production. That is something I thought the Greens and possibly some of the more conservation-minded members of the Labour Party might have thought was important.  
The loss of Brazil’s rainforest though is potentially not the worst impact of biofuels. The worst impacts may well be seen in Africa. In May 2008 Olivier de Schutter the United Nations food adviser stated: “The ambitious goals for biofuel production set by the United States and the European Union are irresponsible … I am calling for a freeze on all investment in this sector.” Why did he call for that? The reasons are twofold. Firstly food that was once used for its intended purpose is now being turned into biofuels. The very poor in the world are now starving because they can no longer afford what was very cheap food that made them sustainable—it actually kept them alive. Again the Greens and Labour once upon a time actually believed in helping out the poor of the world.  
Secondly land once used for intensive food production is now being converted to biofuel production. The cause is the latest fascination of the West and the victims are those in poverty—those in poverty in Asia and Africa. Sadly those who are in poverty in New Zealand will now have more costs imposed upon them. Pushing food prices up will hurt most those who are least able to afford it and all so that Helen Clark Michael Cullen and the Labour Cabinet can feel that they are doing something positive for the environment when they drive around in their new BMW ministerial fleet. Legislation that diverts food supply into fuel for those least able to afford it is dopey legislation and the ACT party will be opposing it. 
ERIC ROY (National—Invercargill) 
: 
 I want to make a contribution. I am fascinated intrigued and a little disturbed by the Biofuel Bill. I think for a start it is wrongly named but we are not having the title debate. I am inclined to think that it is the “Placebo Climate Change Bill’. 
The Minister of Energy said this measure would be a small step. Well it is not even a step; it is barely a shuffle. You see if we look at what New Zealand is attributed to be contributing to the world’s discharge of carbon gases we see that we contribute 0.2 percent nationwide. Fifty percent of that is from agriculture. I do not know what the figure for transport is by— 
Peter Brown 
: About half of that. 
ERIC ROY 
: Well no. I say to Mr Brown that it is less than half of that because there is coal consumption in a whole lot of furnaces coal is used in electricity generation and quite a bit is used in thermal energy. So transport contributes a long way less than one-half of 0.2 percent. 
Peter Brown 
: No no—half. 
ERIC ROY 
: Let us not get into that. It is minuscule. Yet we are here in the dead of night arguing about 0.5 percent of an element of fuel. It is not even a small step. It is so small that it is not even a perceptible shuffle. 
I am a bit alarmed because I actually believe that the consumption of fossil fuels is a serious issue. I do not believe that from here on in we can combust and release 6 billion tonnes of greenhouse gases into the atmosphere every year without it having an impact. My point is this: the energy and the effort that we are putting into this debate will have zero impact. If there is an issue out there our focus should be on doing some serious work on looking at alternatives in the whole transport arena—hydrogen-powered vehicles and that sort of thing. That is where the focus must be—to find an alternative. 
The Minister may well argue that this measure should be a focus. My argument would be that it is more of a placebo. It actually will not make one whit of difference. Well it will make a difference because the world has embraced biofuels and that has created some huge distortions in other areas. Dr Norman referred to this issue. When biofuels are picked up in the wrong way there is quite often destruction of ecosystems that actually make a contribution to reducing greenhouse gas emissions. For example in tropical areas palm oil and sugar cane are replacing rainforests. In a lot of places in the world particularly in Europe and the United States crops that have high fertiliser and water requirements are being grown to produce biofuels and they have a negative impact. 
What does that mean in terms of the world? Well let us look at the world supply of food on a consumption basis. For at least the last two decades the time frame between harvesting food and consumption has been between 100 and 120 days. If we grow and harvest lettuces they are not going to last 120 days but for baked beans ice cream frozen mutton or milk powder that is what the time frame has been—between 100 and 120 days. We are seeing food shortages in countries that have never had food shortages before. One of the drivers of those food shortages is the shift of arable land to biofuels. I am told—and I am gullible so I believe it—that the current time frame in terms of the food chain between harvest and consumption is around 50 days. At times it has been down to as low as 47 days. That is simply because we are misusing arable potential to create biofuels that will not make one whit of difference in terms of dealing with the issue of fossil fuel - generated carbon gases. 
I say that yes we have a responsibility but as for dealing with a bill such as this in urgency well that is why I call it the “Placebo Climate Change Bill”. There are a whole range of other issues. We talk about sustainability— 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I will start by responding to John Carter’s comments in regard to my earlier contribution. I outlined the concerns New Zealand First had with this kind of legislation at the time of the first reading and I outlined the solutions that had been put to us by various experts in the field of biofuels. We are quite happy with that. The growing of crops in Africa to sell to the global market is a concern but it is not a concern that New Zealand can address. If we can I would like to know how. If they are growing crops in Africa to produce ethanol to sell in America that is a concern but I am not sure how New Zealand can stop that. I would like to stop it but I do not know how we could. 
I do have a legitimate concern and I invite the Minister of Energy to respond to it. I understand that ethanol absorbs water. I see the Minister’s attention is taken elsewhere but I trust he is listening with his other ear. Ethanol absorbs water. The aviation industry and particularly the leisure boat and maritime industries use fuels that I think would be more effective if they did not contain ethanol because water can get in the fuel tanks of airplanes and it can certainly get into the fuel tank of the outboard motor of a leisure boat. It concerns me that if we are putting ethanol into these products and an airplane or a leisure boat fills its tanks with it there is a high risk that something will go astray—there will be water in the tank the ethanol will absorb it and the engine will stop. That is not too good an experience when one is a pilot in the sky and it is not particularly pleasant when one is in or outside the harbour in a small boat powered by an outboard motor. I invite the Minister to address my concern and tell us how this bill will prevent that problem from occurring. It is a genuine concern. I am an ex-mariner and my son is a pilot so I would like to know exactly how this bill will address that concern. 
Hon DAVID PARKER (Minister of Energy) 
: 
 Before I respond to Mr Brown’s query in respect of Eric Roy’s contribution I contrast that with the position he took in the first reading as recorded in  
Hansard 
 when he said he believed that biofuels are a part of our response to the whole issue of climate change—which seems a little inconsistent with the position Mr Roy has articulated now.  
In terms of Peter Brown’s question the member is correct that ethanol does mix with water so we can get water in ethanol in a way that we cannot with petrol because petrol would float on top of the water. There are issues that ethanol also cannot be used in some transport applications for reasons of safety—for example we do not want it in aircraft because of the propensity of water with ethanol to freeze. How is that avoided? These biofuel blends will not be taken down the lines that are used to deliver jet fuel and the like from the refinery to the major airports so there will not be cross-contamination there. How will it be handled at service stations for people who are filling up for example their outboard motor for a pleasure craft? It is likely that one pump will have a biofuel blend and one will not and there will be some labelling to ensure that people know which choice they are making.  
There are biofuels that are suitable for use in the fishing industry. Indeed I read an article recently about a vessel that has been specially built to run on bio-diesel. It was a fishing vessel that was launched recently in the Lyttelton region so there are some biofuel solutions there too. 
ALLAN PEACHEY (National—Tamaki) 
: 
 I appreciate the opportunity to make a contribution to the debate on Part 1 of the Biofuel Bill. The people of New Zealand heard it here first when the Minister who is the Deputy Prime Minister and Minister of Finance in the disintegrating Clark-Peters coalition came down to this Chamber and told us that this bill will cost New Zealanders money. I do not know why the Minister of Finance did not go the next step and admit that the way in which this bill is structured amounts to nothing more than stealing food from the mouths of the poor. That is what that crowd opposite and its coalition partners to my left are engaged in. 
I listened with a good degree of interest to the contribution made by the list member Moana Mackey. This Government with contributions such as that member’s is ignoring some of the best international evidence on this subject. Does anybody in this Chamber in this debate on Part 1 of the Biofuel Bill find compelling the suggestion that Moana Mackey list MP who is not capable of holding a seat herself has greater wisdom than the chief scientist of the United Kingdom? For that matter do the members of the Green Party have any greater wisdom than the secretaries general of the United Nations the Royal Society or the World Bank? And surely nobody in this House will suggest there is greater wisdom in the New Zealand First Party—in particular in the New Zealand First member who spoke a few moments ago—than for example the G8 conference of legislators the House of Commons Environmental Audit Committee report or the OECD Round Table on Sustainable Development. 
It will not be lost on the people of New Zealand as we debate Part 1 that that Government over there the disintegrating Clark-Peters coalition is putting forward legislation for this country and trying to rush it through under urgency in the dying days of this tired Parliament. I ask the Minister in the chair the Hon David Parker what the hurry is. I invite the Minister to explain what the hurry is. Does anybody in New Zealand seriously think that this bill is good for the country? I invite the Minister to get up be up front and explain to this House—and through this House to the citizens of New Zealand—why this is so urgent. What are the compelling political forces that are driving the Clark-Peters coalition to bring this legislation—Part 1 of the Biofuel Bill—before this House under urgency in its dying days? The Minister must answer that question. 
The Minister must also answer the question as to why there is a mandatory sales obligation. Why is a mandatory sales obligation coming into effect before the regulations to define sustainable biofuels? Why is that? Is this just another example of a nanny State a disintegrating Government and a Parliament in the last days of its life telling New Zealanders what is better for them? 
Hon PETE HODGSON (Minister for Economic Development) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Motion agreed to. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 6; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Part 1 agreed to. 
Part 2Miscellaneous amendments  
COLIN KING (National—Kaikoura) 
: 
 It is indeed interesting to have been part of the audience during the first part of the biofuels debate. It is worthwhile to connect Part 1 and Part 2 together because this bill really comes from the basis that we are endeavouring here to set up a framework whereby we can grow an industry that will eventually give certainty for investors and that framework is part of a tax regime. We know that that in itself should not only give certainty but allay a lot of fears for those people who would be strong-spirited enough to consider setting up a biofuels industry in New Zealand.  
There is just one thing I want to draw the Chairman’s attention to. We had a speech from the chairperson of the Local Government and Environment Committee and it made very little sense around the urgency of why we have to implement this bill. My mind went back to a number of the other bills that have been pushed through under urgency and it worries me terribly to think about the regulations that will be worked out under this bill should it ever be passed into law.  
When we look back on the track record of this particular Government we see that we have had the Electoral Finance Act and the debate on the emissions trading system the other night in the Committee of the whole House. It really worries me that we have seen a lot of work done in this Chamber on bills such as this Biofuel Bill—we are on Part 2 here—that really when the work mutates into its application on the ground is quite untenable and unworkable and has to be brought back to Parliament for a number of rewrites.  
With regard to our science around biofuels I suppose that it could be quite clearly said that this bill has had a very quick gestation period. It went to the select committee in 2007—I think it was in October—and it has come back now. Yet that is probably an indication of how quickly this science is moving. The conversations and the science have clearly shown that the perverse effects of biofuels have become very clear. We know clearly now that Government incentives to stimulate biofuels within the economy—whether as a tax incentive or tax write-offs in whatever way is referred to in Part 2—have created such perverse effects as those we have seen in the mid-west of America: less food being produced to be available for sale on the world market and the subsequent rise and hike in fuel prices.  
I imagine too in listening to a comment before about what Dr Norman the Green member was saying that if we went far enough back in  
Hansard 
 we would find that the very gestation of this bill would have emanated from the Greens with a plea very similar to what the Minister said originally—that this was a panacea to many of our problems. However with the quick passing of time and the perverse effects of taxation incentives we find that we are confronted with harsh realities. This bill is headed in much the same way. It has unintended consequences bearing in mind the comments made by Dr Cullen when he came to the Chamber to rescue his chairperson Moana Mackey who was unable to rebut the scientific arguments. 
Sitting suspended from 6 p.m. to 7 p.m. 
COLIN KING 
: Mr Chair I seek your indulgence to raise one question to the Minister.  
The CHAIRPERSON (H V Ross Robertson) 
: You have 32 seconds—go.  
COLIN KING 
: I draw attention to a further mess in this policy—the incentive that gives ethanol an advantage over biofuels. I ask the Minister to explain to me the logic of why in schedule 2 “Amendments to Schedule 3 of Customs and Excise Act 1996” ethanol is given a 42.524c advantage over bio-diesel. I would welcome hearing the Minister explain why to the Committee. 
ALLAN PEACHEY (National—Tamaki) 
: 
 In the debate on Part 1 of the Biofuel Bill a number of questions were put to the Minister of Energy that he chose more or less to slip over and not answer. That is fine but one thing I wanted to know applies equally to Part 2—although when I look at Part 2 I see some of the answer. What political imperative of the disintegrating Clark-Peters coalition is driving this sort of legislation through the House in the dying days of this Parliament? That question is as valid in the debate on Part 2 as it was in the debate on Part 1. What is the political imperative? What is the urgency? What emergency is this country facing that means that Part 2 has to be driven through Parliament tonight under urgency? What is the imperative? 
Let us look at Part 2. We see definitions of gasoline petrol and goodness knows what else. Then there it is straight in front of us: tax. We see clause 27 “Powers of component authorities to levy petroleum tax” and reference within it to local authorities’ fuel tax. We see clauses headed: “Assessment of tax” “Tax recoverable as a debt” “Penalty for late payment of tax” and “Effect on agreements of imposition or alteration of tax”. We first heard the answer in this Chamber when the Deputy Prime Minister—the Minister of Finance in the disintegrating Clark-Peters coalition—said that this legislation would cost New Zealanders money. At the end of the day is that not what it is all about? It is all about the rush of a Government that has taxed New Zealanders for 9 years to take the opportunity to throw some more taxes at the hard-working people of New Zealand. 
The Deputy Prime Minister did not even have the good grace—nor has the Minister—at least to acknowledge that the impact of Part 2 if passed in its current form will be no more than to steal food from the poor of the world. 
Hon Members 
: Ah! 
ALLAN PEACHEY 
: The socialist members of the failing Clark-Peters Government can sneer and shout. [ 
Interruption 
] The Minister for whatever from Christchurch can bellow out but it makes no difference. Part 2 will have two impacts. One will be to gather revenue for the Government—tax tax tax. I would have thought that members opposite rather than sneer and bellow across the Chamber would at least be respectful of the impact that this sort of legislation will have on the poor of the world. Some respect at least needs to be shown. 
Let us think about how much Part 2 will cost New Zealand. Officials have told us that an additional $60 million a year will be imposed on New Zealanders through the 1c per litre levy on fuel. 
John Carter 
: That’s just 1c. What about when it goes up to 4c?  
ALLAN PEACHEY 
: That is right I say to Mr Carter. This Labour Government and its coalition partners need to be very very sure that these additional costs are justified and I ask the Minister to address that question.  
JOHN CARTER (National—Northland) 
: 
 One of the interesting things about this debate is finding out whether people genuinely believe in and support the Biofuel Bill or whether they oppose it. It is fair to say that the National Party has made it quite clear that it opposes the bill for a whole number of reasons which my colleagues have already communicated. It is probably fair to say that the Greens are genuine in their belief that the introduction of a bill of this nature may well have some benefit to New Zealand and from their perspective to the world. It is also fair to say that Peter Dunne probably thinks that Part 2 will have some positive impact from a New Zealand perspective and maybe even make a positive contribution to the world. Even New Zealand First members—although their arguments were pretty spurious I have to say—probably have genuinely reflected on the bill and think that it is worthy of support although I must say I was disturbed by Peter Brown’s explanation. But I cannot accept that the Government’s reason for supporting this bill is genuine. If the Government were genuine then we could have expected it to bring forward this bill 2 5 or a number of years ago. We might have thought that that was fair enough—that the Government had taken some time to study the topic. If the Government were 5 years or 3 years into its term of office maybe it would be reasonable to say that it was genuine in what it was doing. But when the Government is bringing forward this bill 9 years after it came to power just before the finish of this session and is asking Parliament to pass the bill under urgency we just cannot accept that it is genuine. We cannot believe that it is doing this for the right reasons. 
It is obvious that the Government is pushing this bill through for political reasons. The Prime Minister said to New Zealanders that she would pour some fuel into the tank—she did not quite know how to do that properly but it was a photo opportunity for her—and then the officials— 
Jill Pettis 
: What about Don Brash walking the plank or trying to get into that stock car? 
JOHN CARTER 
: The member over there who lost her seat and will soon go out of Parliament goes on about a lot of things. 
Allan Peachey 
: Is this her farewell speech? 
JOHN CARTER 
: Well that may well be so. [ 
Interruption 
] I am not denying that of course. Parliamentarians all take photo opportunities. But the member has just accepted and acknowledged that this bill is being passed for the photo opportunity for the Prime Minister and not for genuine reasons at all. She has just confirmed my argument. Sadly what this means is that when we look at Part 2 and talk about taxes it will just put more cost on to the people of this country and the reason is that it gives the Prime Minister and the Clark-Peters Government another photo opportunity. 
Jill Pettis 
: Doesn’t that word “Government” have a lovely ring to it? 
JOHN CARTER 
: I have to say to the member over there who keeps interjecting that that is not accepted— 
Allan Peachey 
: Her farewell speech. 
JOHN CARTER 
: That was her valedictory—the interjection. The fact is that whether or not we like it not even the Minister in the chair the Hon David Parker has come up tonight and put forward any lucid argument about which we could say that we might reflect on it and have to accept that the Minister has a valid argument. 
You know it is all very well for all the parties to say that we have to start somewhere. We accept that. No one is arguing that there should not be a debate and an argument around biofuels. What we are saying which is the opposite of what the Government and its supporters are saying and have not yet put forward lucid arguments for is that we should question whether this bill will achieve what should be achieved by introducing biofuels to New Zealand. That is the unfortunate thing about this debate—it has become hollow. All that has happened all night throughout this whole debate is that the National Party has been attacked for the fact that we do not support the bill. No Government members have argued that they do not accept the National Party’s arguments but that nevertheless they will consider this point this point and this point because those are the valid reasons for this bill. 
I have not yet heard the Minister the chairman of the Local Government and Environment Committee or anyone from New Zealand First put forward a lucid argument that we could sit here as the National Party in Opposition and say there may be a valid argument in it. The Minister could take a call and stand up and say: “Listen John Carter. You need to understand that you have missed the point. You need to understand that there are valid reasons why we are doing this. You need to understand that this will bring this benefit to New Zealand. It will have this benefit for households and car-owners in this country. It will mean this much from a New Zealand perspective on the world stage.” If the Minister had put forward those arguments then maybe we would have had to sit back and think about it. But I am afraid that the Minister has never put forward those arguments. He has never done that in the select committee. Indeed if you have looked Mr Chairman—and I am sure you have because you are a very erstwhile member of this Parliament—you would have read— 
Jill Pettis 
: “Erstwhile”? 
JOHN CARTER 
: He is. He is a very earnest member of our— 
Jill Pettis 
: But you said “erstwhile”. 
JOHN CARTER 
: Well he is both. I mean that is a double compliment. The point is that at least he is coming back to this Parliament. Anyway we should not bring the Chairman into the debate. 
Jill Pettis 
: But erstwhile means former. 
JOHN CARTER 
: Oh well then it is that member whom I am referring to. I am sorry; I got the direction wrong. I beg the member’s pardon. The point is this. If the members of Parliament had read this statement from the Ministry of Economic Development then they would see that it is against this legislation. Ministry officials make it quite clear. They are saying that this legislation will not work and that it will put costs on to this country. They know it will increase taxes and they know it will increase costs for motorists. The Parliamentary Commissioner for the Environment a person whom one would think would want to support this sort of legislation has said in her statement that she opposes this legislation for the way it is drafted. She does not oppose the concept; she supports the concept. So does the National Party. No one is arguing against the concept of biofuels; what we are arguing against is the way in which this Government is implementing their use. The timing of it is bad and on top of that the bill itself is flawed. It does not allow sufficient time for the whole issue around standards to be established before people have to compulsorily get on and implement it. That is seriously bad. 
The fact is that this Minister has failed this Parliament. Mind you he has done it before in many other things. He has not done anything with regard to energy. We have serious problems with regard to a whole number of issues in areas where he has been the Minister and this is just another example of where this Minister has been found to be deficient in his ability to contribute to this Parliament and to this country. 
Nick Smith put forward a very good amendment—which unfortunately was defeated I assume—and the point now is that we should be considering this bill and opposing it. I would like to think that the Minister would stand up take a call and explain to members why this Opposition should be supporting this bill because he has not done so yet. I say to the likes of Dail Jones who is here on behalf of New Zealand First and I say even to the member from the Greens that maybe they need to reconsider. They were opposed to this bill in its original form. 
Sue Bradford 
: You didn’t mention Jeanette Fitzsimons speaking before. 
JOHN CARTER 
: Yes I did; I mentioned Jeanette. She made a contribution. I made the very point earlier that when I listened to her contribution it was all about the fact that we were putting borders round New Zealand. We were not worried what was happening worldwide. Well I say that that is the problem. This Minister has now tried to shut us out from the rest of the world. He is saying that this legislation will all be New Zealand - focused it will be all about our country and it will be all about us. The sad fact is that this legislation will be to the detriment of New Zealand and it will certainly be to the detriment of the people in this country and all because this Minister has not done his homework. He has not set some standards that we can all apply. This legislation certainly has not allowed us a convincing argument. 
COLIN KING (National—Kaikoura) 
: 
 Speaking to Part 2 of the Biofuel Bill I say that it is quite appropriate that we direct attention to schedule 1 which contains the new schedule 5 “Biofuel percentage” to be added to the Energy (Fuels Levies and References) Act by clause 16 of this bill. I make the point that when we look at when this legislation would become law—should it pass—we see that it is 1 October 2008. There is an indication based on that date that there is an anomaly and that there will be a perverse effect. I would like the Minister in the chair the Hon David Parker to explain why it was acceptable to wait until 1 July 2009 before a standard would be put in place to fulfil the requirement put in at the very beginning of the bill that it was to be sustainable. That is why we on this side of the Chamber are saying that the bill in its present state is perverse in the sense that it is following the notion that biofuels are a panacea for all our global warming problems. However time has moved on so quickly that we now understand the full extent of the issue. Forests are being cut down and the equivalent percentage on which our biofuels are produced is far and away outweighed by the carbon footprint so there is quite a perverse effect. Yet we have set this standard that is coming in on 1 July 2009 and National members are saying effectively that doing that is no better than everybody else’s perverse effects which are driving Third World countries towards poverty and starvation.  
I just draw the Minister’s attention to the fact that a lot of the international commentary is saying that countries will not be able to arrive at a standard until 2011 so this Clark-Peters Government in its last dying days is to introduce that type of legislation into this House. I seek the indulgence of the chair of the Local Government and Environment Committee to allow me to mention what we were saying when we had a very brief discussion about this matter before the dinner break. We were talking about creating a biofuel industry in New Zealand and about using some of the growth within the dairy industry and using the whey to produce biofuels or maybe tallow and things like that. Of course in Marlborough some people have been working on sewage so from that point of view some very very creative thinking is going on. 
May I put it to members in the context of where biofuels have replaced a lot of the food basket would it not have been far better to in actual fact have thought beyond just the confines of biofuel and looked at ways of incentivising research because in my view that would have been a far more effective way than picking winners with ethanol over bio-diesel? I am still waiting for the answer to my questions that I raised earlier as to the logic of that 42.5c preference of ethanol over bio-diesel.  
So when we stop and look at it all here we have this bill in front of us and we do not have a sustainable standard. We are actually seeing the perverse effects of a bill for virtually the next 12 months whereby continued burning and cutting down of forests and Government incentivised tax-benefited biofuels will be produced and we know even from the Green member if my memory serves me right that 20 percent of the carbon emissions at the moment are coming from the perverse effects of cutting down forests planting crops and endeavouring to produce biofuels. I would like that question answered because schedule 1 talks about the percentages of biofuel. In the first year it will be 0.5 percent year 2 will be 1 percent year 3 will be 1.5 percent year 4 will be 2 percent and year 5 onwards will be 2.5 percent. To me it all looks rather strained—very much just a structure and a framework with very very little substance. This Government has a track record of this sort of thought to containing global climate change as part of a suite of actions taken by a Government that is in desperation. 
Hon Maurice Williamson 
: In the dying throes of the Government. 
COLIN KING 
: In the dying throes of the Government as my colleague here mentions. Part 2 talks very much about the taxation and when one thinks of the tax one thinks about a pretty structured regime with a well-fleshed up body to it. Unfortunately the debate being put forward on this side of the Chamber indicates that we are so light on substance. This bill is all about form and it is a tragedy to see that it is all form without substance when we look at the sustainability standards. Schedule 1A “Consequential amendments to other enactments” talks about the far-reaching effects and it may be interesting from that point of view. Could the Minister also take a call because I am finding these schedules incredibly complex and I think they need to be explained. It is fascinating to me that it has an implication on such Acts as the Building Act 2004 and the Injury Prevention Rehabilitation and Compensation Act 2001. It also affects international agreements: the International Energy Agreement Act 1976—that is going back to last century—international energy agreements land transport rules and the Local Government Acts. [ 
Interruption 
] It is all written down here in black and white. It will be so very very difficult for the members on the opposite side to make head or tail of that let alone from this side of the Chamber.  
I would like to take the opportunity to get some answers on those two questions—the one I asked first about why the advantage of 42.5c for ethanol and secondly why it is so urgent to put this Act in place that the Minister will not even wait until July 2009 when officials are saying there will be a standard put forward as referred to in Part 2. I ask the Minister why he has not deferred this bill until such a time as there is the possibility of a sustainable standard. Is it because they know that this Clark-Peters Government is in its last days? Is there another reason for it? In the form it is in today it is not a very positive bill. It is just one of those other bills that will be following in the footsteps of the Electoral Finance Act and the emissions trading scheme that we are still debating at the moment. Basically as I hear it this Government has stopped listening to the nation—the citizens of New Zealand.  
We have so many unintended consequences that emanate out of this bill. Sadly this bill appears to me to be born out of a notion that biofuels would be the panacea to all our problems going forward. In actual fact the substance of this bill when it materialises into regulations will not do one thing to stimulate the development of biofuels in a sustainable way or any other way. It will just be a very very complex morass of regulations—a spaghetti bowl of regulations—that will be just as purposeful as this Government in its last dying days.  
Thank you Mr Chair for allowing me to speak on this bill. It is rather complex. It is certainly a very new area. I would encourage the Government though to think outside the square because if we have a global issue in finding alternative fuels I would have thought that it would be very important to be able to identify those people who are doing like research and get alongside those so we multiply the effect of the dollar that we have here and in that multiplier effect find some true solutions going forward. At the moment with the bill the way it is it will not stimulate sustain or promote the production of biofuels.  
NATHAN GUY (National) 
: 
 I wish to make a contribution to the debate this evening on the Biofuel Bill. I tell those who are listening that we are sitting in urgency—13 hours of urgency today right through to midnight. This bill is obviously a priority for this Government. It is in its urgency motion. It obviously wants to get it through the House. When reading the bill—some 100 pages; no it is 97 pages; I knew that it was close to 100 pages—one realises that it is all about the Government’s political survival. 
Those listening and those in the House will recall that the Prime Minister’s statement to the nation last year was all about sustainability. In her speech she mentioned it 17 times. Then she said that the Government will sell all the Ford Fairlane Crown cars because it wants to have less of a carbon footprint. Well lo and behold they have been replaced by BMW 7 Series cars and the former Ford Fairlane Crown cars are now being driven around Auckland. In terms of the Government reducing our carbon footprint and in terms of the Prime Minister’s statement about the Government wanting New Zealand to be more sustainable well it has not happened at all. It was yet another political stunt. 
I am interested to see that the legislators are still struggling to define what sustainability really means. The important point about Part 2 is that it is all about taxes and regulations. We have seen that over the last 9 years—more and more taxes and regulations. They affect hard-working people and families in New Zealand. There have been 2000 regulations passed in the last 9 years under this Government. This Biofuel Bill requires only 0.5 percent of biofuels in the first year. The environmental benefits of this legislation can be debated until the cows come home. Members should just think about it. The figure I hold in my head is 230 kilograms of corn to produce enough ethanol to fill up the family car for one trip but 236 kilograms of corn produces enough bread on the table to feed mum and dad and two kids for the whole year. How can ethanol be sustainable when we analyse those facts? That is the important thing. This is a case of the Government wanting more regulation. 
On this side of the Chamber we say that yes we want a more sustainable environment and yes the public will determine where they want to go with biofuels but they do not need the Government and nanny State legislation to tell them they shall have biofuels—but by the way they are only half a percent. It is a bit like telling mum and dad and the kids in the morning after they wake up and go to spread butter on their toast: “Oh by the way half a percent has to be margarine.” We have some real concerns about these regulations and the costs they will impose on hard-working families that are currently struggling with mortgage rates. Fuel is actually starting to come down in price in terms of the price per barrel in US dollars. That is a positive sign. 
I think New Zealanders now as we go into the election will think hard about this Labour Government and all the legislation it has passed. We are in the dying days of this Clark-Peters Government. It is starting to be incredibly fragile. Today we are sitting for 13 hours under urgency we are sitting until midnight tonight to pass a bill and even those on the other side of the Chamber do not know how it will be implemented. 
The important point about this bill that I also want to take particular note of is that the standards will not have been set so the fuel companies will have to invest considerable amounts of money before they actually know the rules about specific biofuels. Will it be bio-diesel? Will it be ethanol? The list goes on and on. Tallow is another example. National has some concerns about this bill in its current form and that is why we are opposing it. 
MOANA MACKEY (Labour) 
: 
 I move  
That the question be now put 
. 
ERIC ROY (National—Invercargill) 
: 
 I have had to break an important occasion to get back here to take part in this debate. [ 
Interruption 
] Yes it is commendable. I was involved in a carbon-neutral activity to get here—I walked. 
Part 2 deals with miscellaneous amendments. National members aired a number of issues that are of concern to us during the debate on Part 1 and similarly this part raises a huge number of questions for us. 
The first issue is that I have never seen a bill before Parliament with so many delegated responsibilities in it. There will be more than one Order in Council; there will be Orders in Council to change set amend and modify issue after issue. That in itself might not be bad except that there is a vagueness around a whole lot of these issues—the setting of levies the setting of taxes and deeming whether something is sustainable. Being a member of the august Regulations Review Committee I have to say that I see troubled times ahead when it has to determine for example whether an ethanol-based biofuel has come from sustainably harvested sugar cane. Those are the sorts of decisions that are delegated responsibilities. As I said in a previous debate on this bill the focus is in the wrong place. The focus should be on finding alternative fuels that are sustainable and will solve the issue of our significant consumption of fossil fuels and this bill simply will not do that. The delegated responsibilities are a significant issue. 
Another issue that National members have a number of concerns about is what the cost will be. We are principally an exporting nation. That is where we earn the wealth that drives this economy. If we are imposing upon ourselves a series of levies taxes and costs that our competitors do not have the impact is that we will not have investment in that part of our industry and significant sections of our industrial base will head off overseas. Already a number of people who have been investing on a continuing basis in the dairy industry are now heading to South America. They are doing that because opportunities exist over there but also because they will not be bound by the various regimes that are incorporated in this bill. 
One need only read clause after clause. There is clause 29 “Assessment of tax”; clause 30 “Assessment presumed to be correct”; clause 31 “Tax recoverable as a debt”; clause 32 “Penalty for late payment of tax”; clause 33 “Separate bank account to be kept by distribution authority”—for storing the money—and on it goes. Those provisions would not be in this bill if there were not significant costs associated with the implementation of it. We want a quantification of those costs. We are not saying we want to abrogate our responsibilities in terms of dealing with climate change; we need to know some of the specifics of the costs but all we have are the words “set by Order in Council” which are embraced within the bill time after time. Having spent some time on the Regulations Review Committee which has the responsibility of reviewing such orders I can see inquiry after inquiry. I can see a dearth of knowledge of how to make the astute decisions that will have to be made about issues of sustainability and where to strike those taxes. That will be the responsibility of the Regulations Review Committee. It will have to make sure that those impositions of cost stand where they fit. 
The other issue I want to raise—and no other member has raised this issue that I know of—is we talk about sustainability in terms of the supply of fuel—  
DARIEN FENTON (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Motion agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Part 2 agreed to. 
Schedule 1  
A party vote was called for on the question  
That schedule 1 be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Schedule 1 agreed to. 
Schedule 1A  
A party vote was called for on the question  
That schedule 1A be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Schedule 1A agreed to. 
Schedule 2  
A party vote was called for on the question  
That schedule 2 be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Schedule 2 agreed to. 
Schedule 3  
A party vote was called for on the question  
That schedule 3 be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Schedule 3 agreed to. 
Schedule 4  
A party vote was called for on the question  
That schedule 4 be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Schedule 4 agreed to. 
Clauses 1 and 2  
Hon Dr NICK SMITH (National—Nelson) 
: 
 I want to make two important points in this part of the debate on the Biofuel Bill. The first is in relation to costs. We have no idea of the cost we will be imposing on New Zealand households with this bill. We know that households are under enormous cost pressures—food prices going up electricity prices going up—and what we know from this Government is that it is completely out of touch with the struggle that is going on in ordinary New Zealand homes as they put their family budgets together. I was just astonished to hear the contribution from Dr Michael Cullen the Deputy Prime Minister in this Clark-Peters Government. What Dr Cullen said was this: “The price of gas sometimes goes up and down by 10c overnight. So why would we give a bother if this is 1c or 2c?”. Why would we bother if this bill poses an increase of anything from—depending on the advice—somewhere between 3c or 7c a litre? Well let me tell members what 3c a litre means. Every cent a litre costs New Zealanders $60 million—$60 million. So tonight this Parliament is looking at whacking another $180 million of costs on to families and businesses for very questionable environmental gain.  
We believe that if we have an emissions trading scheme there will be an incentive for biofuels. Biofuels should be able to stand or fall on their merit rather than our having this nanny State bill where the Minister is going to define the exact percentage of biofuels for the next 6 years. That is my first point. The second point is—and it comes down to the amendment in my name in respect of the commencement date—that every member of this Committee knows there is enormous international debate about the sustainability of biofuels. There is not a publication in the world that has not talked about the awful problems that other countries have got themselves into with their biofuel regulations. And what does this bill do? It says we are going to make biofuels compulsory on 1 October this year but we are not going to sort out the sustainability standard for some time in the future. So if I bowl a tropical rainforest over grow palm oil and export it to New Zealand it will meet the compulsory requirement of this bill on 1 October. If I go and bowl over some Amazonian forests if I steal food from the poorest people in the world and produce biofuels on 1 October that is all OK. And the Green Party New Zealand First and Labour are saying they do not care.  
They do not care! Have they not listened to the submissions from Oxfam—a reputable organisation? Have they not listened to the Parliamentary Commissioner for the Environment whom the Government appointed and who opposes this bill and says that it is damaging to New Zealand’s environmental reputation? My amendment is very simple and says simply this: do not introduce the compulsory requirement until we have the sustainability standard in place—put the cart after the horse not before. Have members ever heard of anything so common-sense?  
Now the Green Party members were interesting. They did not want to argue for introducing this compulsion before some sustainability standard comes into place into the never-never. They just simply said: “We can’t vote for Nick’s amendment because we haven’t yet seen it.” Well that is not a very good argument. We moved it at the Local Government and Environment Committee. We gave notice that it was one of the most important issues in this bill and for members in this Committee to proclaim that this bill is about sustainable biofuels when the sustainability standards do not come into place for some long time down the track—officials say it may be as late as 2011—is reckless and irresponsible.  
I could refer to the Secretary-General of the United Nations pleading with countries not to put biofuel requirements in place without sustainability standards. I could refer to the reports of the OECD and to the United Kingdom House of Commons. I could refer to the reports from the World Food and Agriculture Organisation and to all of that international advice and still the Government blindly proceeds with this bill and this compulsory requirement that is so foolhardy. 
Hon DAVID PARKER (Minister of Energy) 
: 
 I would like to respond to some of the misinterpretation of information that was provided to members of the Local Government and Environment Committee including Dr Nick Smith by officials from the Ministry of Economic Development. The cost estimates that Dr Smith continues to recount to this Parliament are as he knows not the figures that were given to him by the Ministry of Economic Development. 
Hon Dr Nick Smith 
: Give us its figure. 
Hon DAVID PARKER 
: The figure is the figure that I gave earlier and the member has heard it on numerous occasions before. It is shown on this piece of paper here which is a briefing on the Biofuel Bill given by the Ministry of Economic Development on 18 June 2008 when that member was on the committee. 
Hon Dr Nick Smith 
: What does it say about costs? 
Hon DAVID PARKER 
: The advice was that the cost of the additional blending infrastructure and the like that the oil companies will have to have would be the equivalent of 0.2c to 0.4c per litre of fuel sold assuming that the— 
Hon Dr Nick Smith 
: For the infrastructure. What about the fuel? 
Hon DAVID PARKER 
: For the infrastructure assuming that the cost is recovered over a 4-year period. They will probably recover it over a longer period. 
Hon Dr Nick Smith 
: $20 million. 
Hon DAVID PARKER 
: It is 0.2c to 0.4c per litre. The overall cost to consumers is estimated at being in the range of a net benefit of 4c per litre to a net cost of 1.3c per litre. With higher oil prices biofuels could in fact save New Zealanders money. 
Hon Dr Nick Smith 
: So you don’t need regulation. 
Hon DAVID PARKER 
: We have Dr Smith chipping away there saying we do not need regulation. His other stated concern is the sustainability of biofuels. At the moment one can sell biofuels in New Zealand they are sold in New Zealand and there are no sustainability criteria. Whichever way one looks at it this bill improves the status quo because it immediately introduces reporting obligations in respect of biofuels and it promises to have fully articulated sustainability criteria by about the middle of next year. In the meantime it sets out the principles that have to be applied in respect of those sustainability criteria. 
Can I just demolish a couple of other things that have been spuriously put up by the National Party. An example was given of corn-to-ethanol. We agree that that is a bad thing. Corn-to-ethanol could be produced and sold in New Zealand at the moment; this legislation because of the sustainability criteria will prevent it from occurring in the future. It would not meet the sustainability criteria because the criterion of a 35 percent reduction in greenhouse gas emissions would not be met. It would fail on that one. In addition it would fail to meet the criterion that biofuels not be grown on land of high productive value. 
Finally on the issue of cost as I said the cost might go down or it might go up by 1c a litre. We hear National members shed crocodile tears about that whilst their transport spokesperson who has not taken a call in this debate is proposing tolls in Auckland of $5 a day each way—50 bucks a week! 
ERIC ROY (National—Invercargill) 
: 
 I just know Mr Chairperson that you are dying to hear the rest of the bit at which I got cut off on when I was debating a previous part and it does fit neatly into the title of the debate—trust me. The title is I guess the principal part of the debate we are having and as I said in an earlier debate this is largely a placebo bill. Certainly one of the reasons I oppose it is that it does not encompass those things that are really going to make a difference. I would have much preferred this bill to have in its title and to include “alternatives to fossil fuels” because in my humble view if there is to be some resolution to the consumption of fossil fuels then we have to look at the big picture at the hydrogen options and at some of those other things—dare I say electric; I am not sure whether that is a fuel or not—including solar power. That is why this bill is so narrow and will make such a minuscule difference to what actually happens. That is my first point. The bill is too narrow to actually resolve the issues confronting humanity. I put that out there to be considered.  
The other thing I was about to raise in the previous debate in terms of sustainability is that we have a dearth of knowledge—a lack of knowledge—about the impact on existing plant and machinery in New Zealand. When we start mandatorily making regulations about what fuel mixes are to be I am not sure what the implications of that are going to be. In my modest operations at Te Tipua I have a tractor. It is an old tractor but it is about 140 horsepower. The replacement value of a tractor today is about $1000 per horsepower so members can do the sums. If this tractor which probably has an engine life of somewhere in the 12000 to 18000 hours—it has done about 4500—does not like what it is mandatorily being asked to consume under this bill which is a 5 percent mixture of a biofuel into the additive and it dies the implications are going to be quite serious on the kind of revenue flows that are in my modest operation I can tell you.  
So when we talk about sustainability there is a certain sustainability of the plant and machinery that we do actually have currently in New Zealand and nobody has actually raised that issue. If we are seriously talking about the title then it might include the words “and killing off obsolete machinery”. So that is an issue I want to put before the Committee as well.  
There is another issue about sustainability. Whilst I acknowledge what the Minister said about the corn-to-ethanol argument there is a sustainability issue too surrounding the use of our farmland. We talked earlier in the debate about the pressures on feeding the world and food chain compaction in terms of the food now being consumed. One or two members in this series of debates have talked about rape or granola or some of those other oil-bearing fruit alternatives that we can actually grow. The economics are that the current price of wheat is about $500 a tonne and most good operators are getting yields in excess of 8 tonnes. Some of them are getting over 10 tonnes per hectare. Members can do the sums on that—$5000-odd a hectare gross. With the current price of canola at about $800 a tonne and somewhere about 2.5 to 3.5 tonnes per hectare one is sort of saying that the pressures then come on to sustainably farming one’s arable land.  
Whilst the bill talks up the benefits of rape in a crop rotation most people involved in arable farming in New Zealand have been around long enough to have worked out what grain crops suit them and where they have pulse crops brassicas and all that. To actually impose a crop that is not as viable as current arable use puts certain other implications on arable farmers.  
The absolute contrast in this is that the current price of wheat at $500 a tonne makes the growing of the oil-seed crops less viable and less preferable. But the more of a move there is to the oil-based crops the less there will be of the grain crops and that price goes up further and that margin just gets wider and wider. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I apologise to my colleague; I have a meeting I need to go to and I want to make a further contribution. I have noticed that not a single member in the Committee has been able to refute the core argument around the amendment that National has put. 
Moana Mackey 
: Because it is not doing anything. 
Hon Dr NICK SMITH 
: Well let us go through it. Does the member accept as the Minister of Energy does that there are a large number of unsustainable biofuels around the world and that that is cause for serious concern? 
Colin King 
: He’s nodding. 
Hon Dr NICK SMITH 
: He is nodding as is the member. In every other area of public policy before we make something compulsory we want to have the standard in place. Have members ever heard of anything as ridiculous as what the member for Rotorua wants? She is the temporary member for Rotorua; she is a goner the National candidate is on his way here and we are looking forward to welcoming him. One of the reasons Steve Chadwick will go is she does not seem to give a hoot about the costs imposed on people in Rotorua on low and middle incomes. She is prepared to pass any sort of politically correct legislation that imposes costs on her constituents and that is one of the reasons she will go down the gurgler in a few weeks time when we have a general election. 
I come back to the core point: why will this Parliament not support having the sustainability standard in place before making biofuels compulsory? The Government says that that would just delay them. 
Moana Mackey 
: Of course it is. 
Hon Dr NICK SMITH 
: Well is it a bad thing to delay making unsustainable biofuels compulsory? I ask those ladies opposite why we would want to compel people to use biofuels made from palm oil from Indonesia. Labour is making biofuels compulsory before it introduces a sustainability standard and not a single member of the Government including Steve Chadwick can give me a reason why. 
Hon Steve Chadwick 
: It will stimulate biomass. 
Hon Dr NICK SMITH 
: Oh she says it will stimulate the biofuels industry. Well let us try to stimulate a sustainable biofuels industry. There is absolutely no logic in the Government bringing this provision into effect on 1 October. 
There is a reason for it. Labour has been in Government for 9 years and New Zealand has the worst increase in emissions of any of the 42 Kyoto-obligated countries—an awful record. We have lost record numbers of trees. We have had a constant decline in the amount of renewable electricity. Basically the Government is going into the election on the issue of sustainability with one of the worst records on climate change that any Government could have. It wants a little photo opportunity on 1 October so that its members are able to say: “Hey guys we know that climate change is in trouble we know that emissions have gone through the roof but hey we’ve got the Biofuel Act.” 
What the Government is not telling the public is that the sustainability standard is miles down the track. I do not think a single member of this House believes that it will be provided by the due date of 1 July next year. The Government says it wants to get in early with this legislation in order to get the benefit of it. Sorry? In order to get the benefit of biofuels making up half a percent of fuel in the first year it will go ahead with it without the sustainability standard! 
National members on the select committee struggled for 6 months to get a sustainability standard and could not do it. We have given a hospital pass to the officials to try to work it out. The Government knows that they are not going to meet the timetable for the sustainability standard but it is passing this bill without that most basic component. I have a simple challenge for members of the Government: if they want compulsory biofuels they should put in place the sustainability standard that will deal with the risk of food being taken from the poorest in the world that will deal with the risk of biodiversity being bowled over and that will ensure that there actually is some climate change benefit before rushing ahead and introducing compulsion. 
The last point I will make to the Minister of Energy is this. He says we need this bill to stop unsustainable biofuels. Well whenever we get the standard it still will not prohibit unsustainable biofuels. 
COLIN KING (National—Kaikoura) 
: 
 It is indeed a pleasure to follow my colleague Nick Smith who would have to be the most knowledgable member in this House on this subject. I would like to refer to the title of the bill and to cover about six issues very very briefly: what the Minister of Energy said previously; the behaviour of the various parties in this Chamber; what true leaders would do when confronted with the challenges that this Government has scored own goals on; the comments that Nick Smith drew to the Committee’s attention; and the record of this Clark-Peters Government on the Kyoto Protocol. 
If we were to listen to and believe what the Minister said before we could only draw the conclusion that this bill in actual fact is not required because everything is rosy. But we know that that is not the case. This Biofuel Bill is a lot deeper and more complex than that. 
When I heard the contributions from New Zealand First United Future and the Greens I drew the conclusion that a lot of members are voting in support of this bill for the wrong reasons and I have seen that happen in this House far too many times. Biofuels have a little bit of a notion around them that they will be the panacea for all our problems. However the science has caught up with them and that attitude seems to be very very perverse. Yet the politicians in this House will support this bill because there has been an amendment around sustainability. 
Nick Smith very eloquently highlighted how senseless the speedy process of this bill through the House is. In actual fact it makes the whole thing quite unprincipled. 
In terms of talk about principles and sustainability we heard from the chairperson of the Local Government and Environment Committee who got up before and gave a contribution. She spoke about the principles. She could not talk about the standards. I put it to members that if they are talking about the principles around a sustainability standard then why are they pushing this bill through the House before they have that sustainability standard? Why would they continue to go down the pathway of the perverse effects of the production of biofuels: the total demolishing of forests for the purpose of reaping Government-subsidised taxation benefits; rising food prices; and the taking of food from the mouths of the poor? It defies logic. 
Another point I would like to make—time is running away on me—is that I have the sense that a very dumb thing is being done by this House. Accepting those perverse effects a true leader would go further afield instead of trying to fence off New Zealand and make it a solution inside itself. A true leader would actually go further afield and seek collaborative partners to identify long-term global solutions. Is the Clark-Peters Government doing that? Not at all. One has to seriously challenge the motive for it introducing this measure. The Biofuel Bill is damaged because it is being rushed through the House. National members recognise the potential of it but it is hugely risky if one does not get the principles right. 
In terms of the cost when we look at the overall context of things we see that regardless of what the Minister says a lot more money is being spent on this novel bill than is being spent on the substantive game of addressing climate change. Regardless of how one wishes to quote it the cost-benefit ratio of this bill does not stack up. 
Coming from Marlborough I recognise that a lot of the growth in that area in recent years has come from the change of land use. It has come from the use of automotive engines such as tractors which burn fuels. Again this bill will impact upon the competitiveness of our region. 
Probably the point I am most disappointed about is that in asking the Minister to give me an explanation— 
RODNEY HIDE (Leader—ACT) 
: 
 I have to say this bill is a shocking bill. No one here knows how to drill for oil distribute it refine it and put it together but a bunch of politicians who have never done any of those things sit around a select committee table and decide to mandate how it will be made here in New Zealand. No one here has ever made fuel or refined it but no a bunch of politicians a bunch of elected representatives on a select committee are so so clever that they can decide and debate in Parliament whether in the year 2012 the level of biofuels in our fuel should be 3.4 percent or 3.35 percent or 2.4 percent. Those are things that our politicians have spent their time debating and considering. Where on earth does the expertise or the knowledge come from? 
Those politicians are so clever; they can sit around in this Parliament and decide not only the financial cost but the environmental cost. I promise that no member of the Committee knows whether adding that percentage of biofuel is a plus or a minus in terms of environmental outcomes. Members have no mechanism to account for it. That is what is so extraordinary. We cannot trace all the work all the resources all the effort; we cannot trace the sources of all the compounds and chemicals that go into a litre of fuel. We cannot even trace the mechanisms by which biofuel is manufactured and made but a bunch of bureaucrats and politicians sitting around in a committee meeting in Parliament say they think the figure for 2012 should be 3.35 percent. They have no idea. They know nothing. It is the conceit that bothers me. The socialists have given up trying to run an economy. 
Darien Fenton 
: Ha ha! 
RODNEY HIDE 
: They think it is funny. 
Darien Fenton 
: No we think you’re funny. 
RODNEY HIDE 
: At least I would get higher up the Labour list than poor old Darien Fenton has if I put my name up. What is tragic about this bill is what it means to New Zealanders. It will put up the price of fuel for no environmental purpose; it is just so I guess some madcap members of Parliament and politicians who think they know something about the environment who think they know something about an economy who think they know something about the refining and manufacture of petrol can go around and say “Look what we did!”. 
All they are doing by the way is helping a couple of businesses in New Zealand get rich. They cannot sell their product commercially so they come to Parliament they get their product legislated for and they get it into the market place. How mad is that? The next time I hear Steve Chadwick worry about the effect of rising costs on middle-income workers and low-income workers I will tell her she is shedding crocodile tears. I would have included Darien Fenton but I do not think she actually cares; I think Steve Chadwick does. It is this legislation aided and abetted by the crooked New Zealand First Party that will add costs on to New Zealanders. It is a disgrace and David Parker should hang his head in shame. What sort of command and control kind of commissioner of petrol and fuel does he think he is that he can sit in Parliament and dictate the composition of the nation’s fuel? 
Clause 1 agreed to. 
The question was put that the following amendment in the name of the Hon Dr Nick Smith to clause 2 be agreed to: 
to add the words “except section 34K which shall not come into effect until the regulations under 34GA have been gazetted by Order in Council”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Noes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Clause 2 agreed to. 
Hon DAVID PARKER (Minister of Energy) 
: 
 I move  
That the Committee divide the bill into the Energy (Fuels Levies and References) Amendment Bill the Customs and Excise Amendment Bill (No 5) the Tariff Amendment Bill (No 2) and the Local Government Act 1974 Amendment Bill (No 2)  
pursuant to Supplementary Order Paper 245 
. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 69 
New Zealand Labour 49; New Zealand First 7; Green Party 5; Maori Party 4; United Future 2; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Motion agreed to. 
Bill reported without amendment. 
Report adopted. 
Third Readings 
Hon DAVID PARKER (Minister of Energy) 
: 
 I move  
That the Energy (Fuels Levies and References) Amendment Bill the Customs and Excise Amendment Bill (No 5) the Tariff Amendment Bill (No 2) and the Local Government Act 1974 Amendment Bill (No 2) be now read a third time.  
These bills were previously parts of the Biofuel Bill. 
The legislation introduces a biofuel sales obligation and makes other legislative changes to provide for biofuels in the New Zealand fuel market. Record oil prices have compounded the environmental imperative to facilitate alternative transport fuels. The challenge of responding to climate change means that those fuels must be sustainable. Oil companies will be obliged to sell biofuels as a proportion of their overall fuel sales starting at a rate of 0.5 percent by calorific value this year and rising to 2.5 percent by 2012. Decisions on what type of biofuel to supply whether bio-ethanol or diesel how much is blended with fossil fuels and where industries purchase it—from New Zealand or overseas—will be left to the industries so as to provide the most cost-effective and appropriate options to consumers. 
Of course we know that not all biofuels are created equal and the sustainability of biofuels has come under increasing scrutiny. However just because some biofuels are not good does not mean to say that all are bad and the positive of many biofuels is not in doubt. Biofuels in this category already produced in New Zealand include bio-diesel from tallow and waste cooking oil as well as some amounts of ethanol from whey. This legislation will provide sustainability requirements and will ensure that biofuels qualifying for the obligation will reduce greenhouse gas emissions relative to fossil fuels and avoid negative impacts on food production and biodiversity. 
I say one other thing in respect of the frequently misrepresented assertions as to cost. We are advised that the cost of the additional infrastructure that oil companies need in order to blend and deliver these biofuels is between 0.2c to 0.4c per litre of fuel delivered assuming that the cost is recovered over a 4-year period. The overall cost to consumers including that infrastructure cost and the fuel cost of course will depend upon the future price of oil the future cost of biofuels and the exchange rate. The range of estimates provided to the select committee suggested a price impact between an extra cost of 1.3c per litre on average at one end of the range and at the other end of the range a saving to consumers of 4c per litre.  
It is clear that New Zealand does need to make a transition towards cleaner fuels and towards renewable fuels for both environmental and cost reasons. We have to start. Further delay is the National Party’s suggestion but it would be the wrong course to take. I thank the other parties in this Parliament for their indications of support for the legislation. I commend the Energy (Fuels Levies and References) Amendment Bill the Customs and Excise Amendment Bill (No 5) the Tariff Amendment Bill (No 2) and the Local Government Act 1974 Amendment Bill (No 2) to the House. 
JOHN CARTER (National—Northland) 
: 
 The Government is asking tonight for this country to embark on a great big unsubstantiated experiment and it is asking this Parliament to support it: “Let us have a shot at biofuels. Let us introduce a bill that will make them compulsory and let us see if it works.” But during the whole debate that we have had this afternoon and this evening the Government has not been able to put forward one substantive fact to back up its argument that we should move forward on this in the manner it is suggesting. The Government is saying: “Let us have a go.” 
The Government has looked at all the evidence as the select committee did. We looked at the evidence that had been given to the OECD. We looked at the advice given by the UK House of Commons environmental audit the G8 conference of legislators and other worldwide august bodies. All of them without fail said there is great doubt about the introduction of biofuels into a country. They said and we have heard it said tonight that the worry in countries where biofuels have been developed for example in Europe is that African nations have been asked to provide biofuel at the expense of feeding their populations; people are going hungry as a consequence of other countries getting involved in biofuels. 
We have heard tonight that this Government has already admitted that it knows there is no absolute evidence that this sort of legislation will work in this country. The Government can point to no evidence. There is not one iota of evidence anywhere to say that this sort of legislation has been proven. But the Government tonight is asking this Parliament and this country to embark on an experiment and its reason is that we have to start somewhere. The Government says that it is certainly the Greens’ argument and United Future’s argument that we have to get off the ground and get going somewhere so we might as well do it. Well that is all very well. Why does this experiment have to be in New Zealand? Why does it have to be on the people of New Zealand? 
Rodney Hide 
: No one else is stupid enough. 
JOHN CARTER 
: I think that is actually the nub of the issue. The fact is that no one is arguing about using biofuels; we are saying to let competition introduce it because it will then get on and it will be accepted. But where its introduction has to be forced where that has to be done by rules and regulations it is bound to fail. 
The co-leader of the Green Party said: “Well of course we don’t have to worry about all those things overseas. We don’t have to worry about the negative impact that it might have on African countries.” as did the member from New Zealand First. He said: “We had a look at it. We know that it has a negative impact—that people will starve because of the introduction of biofuels—but we can’t do anything about it so we won’t worry about that. It’s OK. We’ll do it here. It doesn’t matter if they starve over there because it will happen anyway. We can’t do anything about it so we won’t worry about it.” Actually we do have a responsibility. The point is that if we look at biofuels just from a New Zealand perspective the impact we will have worldwide is virtually zilch. 
Rodney Hide 
: Virtually? It’s totally zilch. 
JOHN CARTER 
: Well we might be able to mount an argument that it might have a sliver of impact somewhere. 
Rodney Hide 
: I have got more hair on my head than that. 
JOHN CARTER 
: Ha ha! That is the very point. In fact we should use the member’s head as an example of how the experiment will not work because quite honestly we can’t grow hair where it ain’t going to grow. We are not going to make an impact where it ain’t going to happen.  
The sad thing is that are asking New Zealanders to pay for this unfortunate experience. With this unfortunate experience we are saying to New Zealanders: “Look we will have a bit of a go but we know it will cost you money.” The Minister said in his third reading speech that he thought there might be a bit of a cost or that there could be some saving. Well he actually contradicts the Minister of Finance who said it will cost this country money. He said that it will cost this country money. In every bit of evidence that came before the select committee no one said that they would make a saving or that some people would be better off. No one anywhere suggested that from a financial perspective this was a positive. Everyone argued to a greater or lesser degree—the amounts we debated in the select committee ranged between 1.5c and 7c; those were the amounts put forward—but the fact was that no one said: “By the way we can save you some money. Jibe up with us and we will fix it up and you will be better off.” Nobody argued that at all. That is the problem. The Minister of Finance acknowledged in his contribution in the Committee that the legislation will cost this nation money. It will cost the people of this country more money out of their hard-earned income. I say that quite honestly that is not acceptable. 
Finally we have the matter of making the legislation compulsory before we have set the standards which is absolutely nuts. You know there is no reason why we have to rush into this. Nobody has stood up—maybe some speakers maybe Peter Brown will stand up and convince— 
Rodney Hide 
: If you pay him. 
JOHN CARTER 
: Well I do not know—people will pay for this so maybe that is what happens. But the point is that no one has been able to put forward an argument to convince us that we should make it compulsory and then worry about setting the standards later. I have to say that that is the dopiest thing I have ever heard. In all the time I have been in this House I have never yet seen legislation that puts the horse before the cart but this bill does. All we will end up with is a biofuels issue that backs right up and rolls over itself. That is what will happen. It will roll right over itself. It will not work and I have to say that no convincing arguments at all have been put forward by anybody in this debate tonight to say why we should be the country that embarks on this experiment. 
I say again that no one is arguing about the use of biofuels—no one is arguing about that—but the issue is the way we are going about it. People will argue and I know that Jeanette Fitzsimons will argue that we need to get started. Peter Dunne came down and said “Let’s get going.” Well no one is arguing about the fact that we should address these issues; it is just a matter of how we go about it. The fact is that this legislation will just set us off on the wrong track. It will set us off on a way that will actually end up being a negative. Instead of something that could have been positive for our nation and positive for our people we will end up with some legislation that will be to the detriment of this country and to the detriment of those things we are trying to achieve. I say tonight that if this bill is passed this country will be the poorer for it. 
MOANA MACKEY (Labour) 
: 
 I am happy to stand and support the third reading of these bills. The member who has just taken his seat John Carter is actually the deputy chair of the Local Government and Environment Committee that worked on the Biofuel Bill. But one would not guess that because he clearly did not listen to a single submitter who came to the select committee or read a single paper produced by the officials. All the statements he has made in this House have been total misinterpretations and deliberate misinterpretations of what was said at the select committee. Some submitters said that this would save consumers money; it is not true to say that none did. Some biofuel producers said—and people may say that they may well say this—that when they had done their figures and looked at the oil prices they believed that their product could save consumers money. The fact is that they came and said that and it is completely untrue to stand in this House and only give the opinion and the submissions of the oil companies. We need to represent all the submitters who came and submitted to the select committee.  
It is also completely not true—and saying this shows that the member did not read his papers—that we are the only country using biofuels. That is a completely ridiculous statement. In fact submitters from international biofuel production companies came to the select committee to tell us about the targets or obligations in other countries that they were currently meeting. So again it is completely wrong to say that we were told at the select committee that we are the very first country in the world ever to use biofuels. Of course biofuels are also already being used sustainably in New Zealand and the very strong message we had from that industry was “Please give us some certainty. We have this little bit going but because of the uncertainty in the sector we cannot grow our domestic biofuel industry without a biofuel obligation.”  
This bill has not been rushed through the House. The select committee reported back on 23 June. The Hon Dr Nick Smith had more than 2 months to consult parties in this House on his amendment to the Biofuel Bill but he chose not to do that; he chose not to talk to us. 
John Carter 
: He put it in the select committee. 
MOANA MACKEY 
: That does not matter I say to Mr Carter. He did not tell us that he would be reintroducing it in the House. I believe he actually introduced it at the select committee at the last minute as well. But the important point is that he could have come and talked to us about this and he chose not to.  
I have said that my issue with Dr Smith’s amendment is that it is a very convenient excuse to never have a biofuel obligation if one says one will have one only if there are sustainability standards. Mr Carter has talked about putting the cart before the horse; I suggest that if Dr Smith’s amendment had passed there would be no cart—there would absolutely be no cart. He would come under pressure to never produce the sustainability standard and we would never have a biofuel obligation.  
I go back to the point I made earlier. One of the important reasons for having this bill is that we need to create some certainty for biofuel producers in New Zealand. They said to us quite clearly when they heard about this amendment that had been raised at the select committee: “Please don’t do that. It just reintroduces all the uncertainty and we will never know when we will have an obligation. We may never have an obligation and we will never see the investment coming into New Zealand to build that domestic biofuel industry that we know there is the potential for.”  
That is a very good reason to pass this legislation. Another good reason—as has already been raised in earlier debates—is that at the moment there are no sustainability standards. The sustainability principles in this legislation are a huge step forward. We have said over and over again that this legislation is not a silver bullet. No one voting for it has said that they believe it is a silver bullet. But it is an important step on the road towards sustainable biofuels. We all know that second and third-generation biofuels are likely to be far better than the ones we are dealing with at the moment.  
The fact is that the time for excuses has long passed. We have worked on this bill for a long time and it has been reported back from the select committee for a long time. The National Party has had plenty of time to consult other parties in this House if it wanted to bring amendments but Dr Smith chose just to dump his amendment in the Committee on the night. I do not think that he can reliably stand up and accuse the rest of us of not voting for it because we are terrible people and we hate the people of New Zealand when he did not give us the opportunity to even consider the Supplementary Order Paper that he brought into this House.  
The legislation clearly spells out sustainable principles. The sustainability principles in there already will leave some of the biofuel sellers in absolutely no doubt about which biofuels are absolutely off the table. As we have said before if we are going to put some kind of sustainability principles in the legislation they told us that they would like to know what they will be like so that they will know when they go into their long-term agreements with biofuel producers whether in 9 months’ time those will be knocked out by the sustainability principles in the legislation when the methodology and mechanisms are done by Order in Council. The principles are already there and they are quite clear. It is the methodology and the mechanisms that will be done by Order in Council.  
The Minister has already referred to the price. The oil companies came to the select committee and quite fairly said they thought it would be 3c to 7c and the biofuel producers came and said they thought it could save us a lot of money. We got our officials to do some work on it to find out what we thought it would be. We were told that the large portion of the costs would come from the infrastructure investment that was required. Our officials came back and told us that based on the figures provided to them by the oil companies it would be 0.2c to 04.c a litre for 4 years if they recouped all that cost in 4 years which of course they will not. That was the basis for the infrastructure costs. We found when we looked at a table based on possible prices of oil versus possible prices of biofuels that our officials told us that a 1.3c a litre increase was at one end and at the other end was a 4c per litre savings for the consumer primarily because of the rising price of oil. 
So in fact on balance this legislation is more likely to lower that cost than raise it. But one would not guess that from the speeches made by the National Party members who all have this information because they were on the Local Government and Environment Committee and they have the same reports that we have but who choose to mention only the range that was quoted by the oil companies not that given by our officials or any of the other people who came along to the select committee hearings.  
I will point out one other thing to the National Party members who get up and say how much they care for mums and dads: they did not care about mums and dads when they told us they were going to lift the cap on general practitioners’ fees. They did not care about superannuitants when they slashed superannuation. They did not care about mums and dads when they opposed Working for Families or when they opposed 20 hours’ free early childhood education. They seem to care about mums and dads only when it is a convenient excuse to vote against legislation like this. I also say to those members that although I am very pleased to see they have discovered that there are poor people in the world— 
Simon Power 
: That’s a disgraceful thing to say.  
MOANA MACKEY 
: —it is very difficult to sit here and listen to them go on about it when they only ever mention it I say to Mr Power as an excuse to vote against the Climate Change (Emissions Trading and Renewable Preference) Bill and any climate change legislation in this House. Some consistency would be nice and then we might take them seriously on that point.  
I say to those members that they should read the sustainability principles. We have been clear that biofuel crops cannot compete with food production and that they cannot be grown on land of high production value. We have addressed that issue in this bill. Read the legislation I say to National members before standing up and giving another speech that completely misrepresents what this legislation does.  
NICKY WAGNER (National) 
: 
 Why are we rushing this legislation through the House now?  
Moana Mackey 
: Oh did you even listen?  
NICKY WAGNER 
: Just wait I say to the member. It is not because it is good legislation. It is because the Government has to be seen to be doing something now about climate change after 9 long years of inaction.  
There has been much debate tonight and in fact right round the world about the environmental benefits of biofuels. We have heard from dozens of world experts who are concerned about the use of biofuels and who debate the actual benefits of them. But Labour knows that those experts are wrong. There has been much debate about the cost of introducing the legislation and we have heard Moana Mackey the chairperson of the Local Government and Environment Committee going through those costs just now. A whole series of economists and people who work in the industry have given us their estimates. Moana Mackey is concerned that we in the National Party are considering what the oil companies say but the oil companies do work in the industry so that is significant as well. The Labour Party knows that those people are wrong and that this will not add costs—in fact experts right across the board are wrong in that respect.  
There has been much talk about the New Zealand Government requiring sustainable biofuels and about the Order in Council that will provide the criteria for these fuels and Moana Mackey just suggested that we look at the principles that are in the Biofuel Bill. So let us have a little look at them. They are in new section 34GA(3) in clause 9 of Part 1. The principles of sustainable biofuels are as follows. The first principle is less greenhouse gas: “Sustainable biofuels emit significantly less greenhouse gas over their life cycle than obligation engine fuel.” We agree with that. That makes sense—over their life cycle we should get less greenhouse gas. But the bill goes on to state that “the Order in Council must—(a) specify a methodology for life cycle assessment of greenhouse gas emissions from obligation engine fuels;”. That is an enormously difficult exercise. We know that people have tried to do that right round the world and no one has been able to come up with any sensible way to do it effectively.  
Paragraph (b) of this principle states that the Order in Council must “specify minimum levels of no less than 35% greenhouse gas emission reductions for qualifying biofuels …”. If we have a problem focusing on and sorting out how much that life cycle of greenhouse gas emissions is how can we possibly discover whether it is 35 percent less? So yes in principle that makes sense but in practice it is going to be enormously difficult to do.  
Let us look at the second principle which is to do with food production. “Sustainable biofuels do not compete with food production and are not grown on land of high value for food production.” The problem with that is that this will also be enormously difficult to assess to monitor and to ensure that sustainable biofuels are involved. They must not be by-products of food production—the ethanol from sugar cane grown in circumstances described by the Order in Council—and they talk about rotational oil seed crops. Again we have to come up with a methodology to figure out whether this will be good for biofuel and not food production.  
We are also saying here that they must come up with a mechanism that recognises the particular land and that includes land outside New Zealand. Can members imagine the amount of work that has to go into analysing land not only in New Zealand but also land outside New Zealand that would be used for high-value food production? It would be an enormous task.  
Let us look at Principle 3 which is to do with biodiversity and land with high conservation value. We have the same problem as with the assessment of land for food production. We have to come up with a mechanism to recognise this particular land both inside and outside New Zealand. When we look at those three principles yes they all make sense and yes we agree that that would underpin sustainable biofuels but to come up with that assessment and methodology will be enormously difficult. The bill also states that the Minister must recommend the Order in Council by 30 June 2009. That means there is just over a year and a half to do that—it is not quite as long as that—and we are really concerned that the Minister will not be able to do it. So yes in principle the principles behind the idea of sustainable biofuels make sense but in practice it will be very difficult to do.  
Let us go back to why we are rushing this legislation through the House under urgency. I am a little confused by some of the debate that has gone on tonight. One of the things that David Parker has been saying is that we need to introduce this legislation because unless we do oil companies will not be prepared to build infrastructure to underpin the use of biofuels. Without compulsion they will not build the infrastructure. Then on the other hand he states that the cost of building infrastructure is minimal—0.2c to 0.4c per litre over 4 years. That will not be a huge amount of money to build that infrastructure and it will not affect the cost of biofuels in the long term. So on the one hand the Minister is saying that there has to be compulsion because the cost of infrastructure will not be met otherwise and on the other hand he says that it is very cheap.  
Gull has already introduced biofuels to New Zealand and Moana Mackey tells us that Gull’s biofuels are actually cheaper than fossil fuels. So we have a situation where a company has already voluntarily introduced biofuels. Earlier today I spoke about a biofuel trial that went on in the bus fleet in Christchurch whereby a bus company was voluntarily and keenly using biofuels until the price of tallow went up and made the cost of the fuels prohibitive. The argument here is circular. If the infrastructure demands are not great and one company is already selling biofuels why do we need this legislation at all? Thank you Madam Assistant Speaker. 
COLIN KING (National—Kaikoura) 
: 
 It has been the Government’s point of view that the biofuels legislation as presented to us has been the best possible outcome; it will be best practice and world leading. But on this side of the House we say that that is rubbish when we see the shell the flimsy framework that makes up the legislation. For instance if we look at the principles we start to understand the issues and narrow-minded thinking of this Clark-Peters Government in its last days. As a nation we export 85 percent of what we produce and we can boast about being the very best protein producers of produce from a grass-fed farming source. That being said this legislation is presented in a wholly different light. Regardless of the notion of sustainability which in actual fact probably brought onside the Greens New Zealand First United Future and for that matter the Maori Party a whole lot of rubbish is made out of that claim that sustainability is the appropriate measure by which to have a biofuels law to underpin infrastructural development in the context of that notion of growing 0.5 percent in the first year growing through to 2.5 percent in the fourth year and then growing onwards. 
Whether or not we like it we live in a global village and by supporting this legislation to go through the House into law the Government in actual fact is interfering and creating an otherwise perverse effect. That perverse effect means that unless we create biofuels out of tallow whey or waste we will be producing them on land that we could more efficiently use to produce the proteins for which the world is clamouring. That is no better than the experiment that has occurred throughout the developed world whereby Governments have sought to create by tax and other perverse incentives a biofuel industry within their own countries. 
We have heard the arguments from the Government that we have to get started—“Let’s get on with it!”. But that mentality is a fortress mentality a fortress New Zealand mentality—that we will inhabit New Zealand in isolation just amongst ourselves and become totally efficient. That in my view is a very weak argument. Effectively that brings us very much back to the question of what a leader nation in this field would do under these circumstances. Well I will tell the House what a world leader would do. It would get about to partner with international research and development companies or other nations that are doing research and development and identify the best solutions going forward. That is not a new idea. In actual fact when we look at many of the biosecurity risks around farm animals be they bovine spongiform encephalopathy or foot and mouth disease we see that this is what is occurring. New Zealand recognises that it does not have the ability the scientific machine to do these things on its own even though it is a pastoral farming leader. It cooperates with Europe and with America it goes into partnerships with cooperative research centres in Australia and there is the multiplying effect of a good outcome. 
On that basis we are taken back to the arguments that were clearly articulated from this side of the House. We listened to the Minister when he got up and spoke to the second part of the Biofuel Bill and he made it sound as if this was just so rosy. There was not going to be a problem and it was not going to cost anybody anything but all of that flew in the face of a number of the submitters. It also flew in the face of a number of the expert scientific explanations from those countries that have endeavoured to set up a sustainable biofuels industry. It left members on this side of the House with the feeling that there was another agenda in behind all this which was borne out by the implementation date. 
The implementation date is 1 October 2008 which has to be considered in the context that it is planned for New Zealand to have a standard of sustainability by July 2009. Even that date is pretty flimsy because best expert advice has said that it will more likely be 2011. So we can see there is a determination to push this legislation through. Again we have seen MMP in operation whereby deals are done to make it politically expedient to be supporting such a notion. Then the numbers are there and the deal is done. This is standard form for the Clark-Peters Government in its last dying days. It was quite compelling in my view to have Nick Smith’s amendment about lining up the date of the implementation of this bill—should it pass into law—with the date of the ability to supply a sustainable standard an accurate standard. There was some concern expressed about that by the Government because in its truth of truths it understands just how really difficult it is to find an answer to this. That is borne out by the expert advice. 
When we look at the situation here of the biofuels legislation we see that clearly the record from this Government has been abysmal. As far as the Kyoto Protocol obligations go from 2001 to 2008 we have had some incredibly poor performances. The Government’s performance has been totally underwhelming to say the least. This legislation is very difficult and I was disappointed that the Minister did not take the opportunity to explain to members on this side of the House why biomethanol was given a 42.5c advantage or favouritism over bio-diesels. It would suggest to me that there was a very strong and compelling reason for picking winners like that. I do feel that we have rushed this situation. It seems to me to be a political answer in the face of a common-sense way forward. The legislation is certainly something that will come back to this House because when we go through it we find that it becomes very complex. There are heaps of regulations and a lot of Orders in Council and I believe that the Regulations Review Committee will be confronted time and time again with the interpretation of what indeed is sustainable—what in actual fact is 35 percent less by way of carbon emissions in a lifetime compared with the biofuels produced. 
It is with great disappointment on this side of the House that we are at this time of night—9 o’clock in urgency—pushing through legislation that will only have to come back to this House to be tidied up cleaned up when there was the opportunity of doing something collaboratively and internationally and genuinely solving a problem. Thank you. 
RODNEY HIDE (Leader—ACT) 
: 
 It is typical that in the dying days of a teetering Government under urgency on a Wednesday night we are rushing through legislation that sets down—to the hundredth of 1 percent graduated over time—how much biofuel we are to have in our fuel. This Government wants to tell us what we can put in our kids’ tucker boxes it wants to regulate our light bulbs and it wants to regulate every little part of our lives and every part of the value chain of a modern economy. Why do Government members want to do that? There are two reasons. The first is that they love the exercise of power. They love telling people what to do how to do it and when they can do it and they love telling people what they cannot do. They love the moral superiority that power gives them so this legislation tells oil companies and consumers how they have to mix their fuel.  
The legislation is like the Electoral Finance Act which regulates political expression but of course none of the rules ever apply to the Government. That is the amazing thing. It seems that the Electoral Finance Act does not apply to the Labour Party. The financial disclosure regime does not apply to New Zealand First; it is just for everyone else. The Government can break the law and the rules at will because it is morally superior. It is everyone else who is corrupt and crooked and who needs to be told what to do and how to do it. Everyone else needs the finger wagged at them. Even simple principles of common jurisprudence such as being innocent until proven guilty apply to the Government when it is in trouble but not to anyone else. It is typical of this legislation and of the Government’s telling us how to live our lives that Helen Clark said that a man was an honourable man and innocent until proven guilty when Judge Dalmer had found in a court of law in relation to  
Cushing v Peters 
 that the man was a liar and a malicious liar at that. Yet the Serious Fraud Office was guilty. The Serious Fraud Office was guilty of what? 
Peter Brown 
: I raise a point of order Madam Speaker. I am sure that this is very interesting but I think the member should go back to the legislation. I for one am interested in ACT’s viewpoint on this legislation but I am beginning to conclude that it does not have one. I believe that Mr Hide should be instructed to go back to the legislation. He can have a wide-ranging debate on the legislation but the Serious Fraud Office and judgments of years gone by are really not part of it.  
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: Mr Brown you must have been reading my mind because I have just opened up the Speakers’ rulings on relevancy. I was trying to find what in Mr Hide’s speech was relevant. Mr Hide please speak to the legislation before the House.  
RODNEY HIDE 
: I am happy to Madam Assistant Speaker. I was just drawing a long bow about the busybody nature of the Labour-Helen Clark-Peters Government.  
Hon Trevor Mallard 
: Here we go again! 
RODNEY HIDE 
: I ask Trevor to pipe down.  
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: Can I have order from both sides please. Would you continue with your speech Mr Hide.  
RODNEY HIDE 
: This legislation reflects the busybody nature of this Government. Under this legislation we will start off with 0.53 percent of biofuels in 2008 and each year the percentage will increase until we end up according to this bill at an upper level of 3.4 percent in 2012.  
Peter Brown 
: I think the member should read the amended bill.  
RODNEY HIDE 
: Well I am just reading the obligation as set up. I ask Mr Brown how much it should be.  
Peter Brown 
: Oh for goodness’ sake Mr Hide read the literature. 
RODNEY HIDE 
: How much should it be? 
Peter Brown 
: It is 2.5. 
RODNEY HIDE 
: Oh you see the level started off at 3.4 percent but the Government members sat around at the Local Government and Environment Committee and decided with the wisdom of ages that the level of 3.4 percent was a little high and that it should be put back to 2.5 percent. That is how these guys think we make fuel—that we sit around in a political committee and decide the composition of fuel. The Government knows so much! The level started off at 3.4 percent but Government members sat around in the select committee and decided after getting expert opinion from engineers after hearing all the cost-benefit analysis and with their super knowledge of the world climate that the level should be—what was it I ask Mr Brown—2.5 percent. But that is just the start because each year the level will be ratcheted up a wee bit. But the Government cannot tell us what the environmental benefit of it is.  
Peter Brown 
: I’ll bet you Jeannette Fitzsimons can. 
RODNEY HIDE 
: I bet she cannot actually because I promise members that we do not know what the resource costs of the scheme are at the margin and what its impact on the environment will be. If Mr Brown thinks that the environment and the economy are such simple things that we can set a simple percentage crank it up by 0.5 percent each year and suddenly achieve a net gain then he is under a massive misapprehension about the complexity of an economy the complexity of social interactions and in particular the complexity of the environment. It is not a system that can be easily engineered. It is not a mechanical system where one can push here and get a result over there. It is far more subtle and far more complex than that. Indeed I ask Mr Brown why if the Government has confidence in its emissions trading scheme he is debating this bill.  
Peter Brown 
: I’m sure you don’t want me to answer that Rodney.  
RODNEY HIDE 
: I look forward to Mr Brown taking a call to tell us whether he has confidence in this bill. 
I heard Mr Brown and some Government speakers say that the fuel companies were against the bill but that the biofuel suppliers were in favour of it. Well that is a surprise. Why not do this for other things? Why not do it for carrots? Why not say that when we eat dinner 2.5 percent of it must be carrots? I am sure that if we did that the carrot growers— 
Katherine Rich 
: Brussels sprouts. 
RODNEY HIDE 
: Brussels sprouts will be next. Government members will sit around and debate what percentage of our food intake should be carrots and what percentage should be brussels sprouts because they know best. Here is the interesting thing: if we did that carrot suppliers would probably come along to a select committee and make a submission saying that they thought the percentage should be a bit higher and that it would be good for the environment. Even that great arch-interventionist Sir Robert Muldoon never got down to this level of detail and specificity—never—because he was not that vain.  
Hon Clayton Cosgrove 
: Speci-what? Can you say that again? 
RODNEY HIDE 
: Clayton Cosgrove has opened up. How interesting! I ask him how the real estate bill is going.  
Hon Clayton Cosgrove 
: Hold on; help is on the way Rodney. 
RODNEY HIDE 
: He must have sorted out Mr Peters because he says that help is on the way.  
Hon Bill English 
: He went on the list because he knows he’ll lose Waimakariri.  
RODNEY HIDE 
: He has got on the list? What an admission. 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: Please come to the legislation.  
RODNEY HIDE 
: After all these years— 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: Could we come to the legislation please? 
RODNEY HIDE 
: I am sorry but if Mr Cosgrove is chipping at me about the English language am I not allowed to respond? Is that now against the rules too Madam Assistant Speaker? Is it only allowed to be all one way in this House? 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: The member is trifling. Would the member sit down please; I am on my feet. There was a chip there was an answer back and then we started up a conversation there that was totally off the legislation. The member had 1 minute to go and he now has 30 seconds to go. Would the member please complete his call. 
RODNEY HIDE 
: I just wish that Speakers would actually let a person speak and not let it be all one-way traffic from that— 
Hon Trevor Mallard 
: I raise a point of order Madam Speaker. The point of order is one that is absolutely obvious. The member is now commenting again on your ruling. Clearly that is in breach of Speakers’ rulings over many many years. 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: I thank you Mr Mallard; I doubt whether I need much help at the moment. The member has 15 seconds still to go please. 
RODNEY HIDE 
: It is going quickly. Anyway it is for those reasons that we oppose this legislation we oppose this Government we oppose Clayton Cosgrove in Waimakariri—it is good news that even he has given up—and we oppose New Zealand First. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 This legislation provides certainty for business investors who are poised to invest significant money in infrastructure in this country. It is the sort of certainty that the National Party often demands for investors but it is not voting for this legislation. It will allow investors to set up a plant to use low-value by-products—like tallow whey and eventually waste wood and algae—to reduce our dependence on imported oil. The legislation is a small step towards reducing our oil dependence and carbon emissions but the investment will create the infrastructure that will allow us to build on those quantities and to make a more substantial contribution in the future when new resources and technologies become available with second-generation biofuels. But the National Party is not voting for the legislation.  
The arguments we have heard against this legislation this afternoon and tonight are based on a mixture of such overwhelming mind-boggling ignorance by some and on an absolute determination by others to ignore all the facts no matter how many times they are put in front of them that it is actually very hard to know where to start to reply to the nonsense that has been thrown around the House tonight. My colleague Russel Norman said this afternoon when I just happened to catch the end of his speech that a little knowledge is a dangerous thing and I think that has been demonstrated by a number of the speakers here tonight. We had John Carter saying that this is an experiment and asking where the evidence was that it would work. Well it has been working in Brazil for 40 years. Is that long enough for Mr Carter? For 40 years the Brazilians have been blending biofuel with their petrol and in the process they have become less dependent on imported oil and have had more security of fuel supply. 
Rodney Hide 
: That’s why Brazil flies along—it’s so prosperous. 
JEANETTE FITZSIMONS 
: Brazil is growing faster than New Zealand is if that is Mr Hide’s measure. Many other countries also have proven biofuel blends. It is not rocket science it is not hard and it is certainly not an experiment.  
Nick Smith said that ethanol from sugar cane in Brazil is displacing the Amazon rainforest. Well I am sorry but sugar cane does not grow on the sort of land that grows the Amazon rainforest. It is grown in an entirely different part of the country. It is soy beans and cattle that are displacing the Amazon rainforest. If in fact at some future time Brazilian ethanol was shown to be displacing some kind of forest and biodiversity then this legislation creates the regulatory mechanism to keep it out of New Zealand whereas at the moment we cannot.  
John Carter said that biofuels are being grown in Africa and are causing starvation because they are grown on land that should be growing food for humans. He is right. It is one of the great outrageous tragedies of the world at the moment that the rich are filling the tanks of their sport utility vehicles with grains that ought to be filling the stomachs of the poor. But John Carter knows that this legislation will not allow any fuels of that kind into New Zealand. He knows that because we have said that repeatedly in the House in front of him. He knows it because the Greens have required the introduction of section 34GA which is to be inserted in the Energy (Fuels Levies and References) Act by this legislation and which sets out very clearly the sustainability standards that fuels must meet before they are allowed into New Zealand.  
Actually if the Greens had been designing this legislation from scratch we would have made it much simpler than it is. We would have set up a framework for biofuels to be grown in New Zealand and we would not have had any imports because the ones that will meet our standards are pretty much all New Zealand - grown anyway. But because of deference to the world trade system the Government was not prepared to say we would not have imported biofuels because they are mostly junk they are mostly unsustainable they are a bad idea and we should do our own thing better and do it here. So instead we had to come up with the sustainability standard.  
Nicky Wagner is so worried about the sustainability standard that she says we cannot do life-cycle analysis for carbon reductions from biofuels. Well I am sorry but the tables exist. The Parliamentary Commissioner for the Environment presented them to the Local Government and Environment Committee. A whole lot of international biofuels have been analysed for their life-cycle carbon reduction and for their effects on food growing and on biodiversity. So once again a little knowledge is a dangerous thing.  
Nick Smith says it is to be 9 whole months before we will have any regulations and during that time the country could be flooded with unsustainable biofuels and the regulations will not be in place. Well first of all I say he did not believe in his own remedy enough to discuss his amendment with us in advance. We might well have said there was a point there and asked to look at his amendment but instead he just tabled it in the Committee because what he was trying to do was to make a political point that nobody would vote for it. So he had to make sure that he did not tell us about his amendment first in case we did vote for it. Nick Smith also knows that there is a reporting obligation on anyone who brings biofuels across the border during that 9 months to state and to publish where they come from. He does not trust the New Zealand public enough after all the articles there have been in the popular press about the damage that is being done to food supplies in poor countries and the damage that is being done to biodiversity especially in South-east Asia to say they will not buy the brand of fuel that has been created by knocking over South-east Asian rainforests. And that is quite apart from the fact that during that 9 months the quantities of biofuel coming into New Zealand will be so tiny that they will hardly be the cause of world starvation.  
This Saturday the National Party is holding a conference on Waiheke Island called the Bluegreens conference. This is where the National Party claims to have the answers for the environment. National members are trying to paint themselves as the environmental party. What they have demonstrated tonight is that they are mostly too ignorant to even do a good job of misleading the public about the biofuels legislation. The people on Waiheke Island on Saturday will not buy the rubbish that we have heard tonight; they are far too well informed for that. They know that right now there is nothing to stop the import of the biofuels that cause starvation in Africa and that Nick Smith says he wants to perpetuate that situation by not passing this legislation. They know that at the moment there is nothing to stop the import of biofuels made from palm oil in South-east Asia after the rainforests have been knocked over and that Nick Smith wants to perpetuate that situation by not passing this legislation. They know that this legislation will stop those unsustainable biofuels coming into New Zealand that it will create a new profitable industry in New Zealand—which is surely something that we want—and that the Greens have achieved that through section 34GA which sets the sustainability standards.  
We should all be passing this legislation and getting on with it. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 When this legislation was first introduced New Zealand First was of the opinion that biofuels would be of some advantage to our environment but to what degree? Well frankly we did not know and we thought that some of the concerns we had would outweigh those advantages. 
The first thing we questioned was why we should be world leaders in this sort of issue and with this sort of legislation. But when we checked on that we found that we were not. The USA uses biofuels. Brazil uses biofuels and has been doing so according to Jeanette Fitzsimons for some 40 years. Canada most European countries Australia China India and Thailand have all used biofuels for quite some time as I understand. Frankly Gull is selling biofuels at this moment in Auckland. So we are not world leaders. 
Hon David Parker 
: And at less than petrol prices. 
PETER BROWN 
: And at a lower price than petrol—that is very interesting. So that addressed our concern.  
We were concerned about the effect on car engines and whether the engines would have to be modified. When we checked into that we found that most cars could easily run on a modest or low amount of biofuel be it diesel or petrol. So that was another hurdle that was overcome. We were concerned that bio-diesel might become clogged in engines in cold weather. We understand that tests have been done on that and they have come through quite well—no problems at all in fact. We were concerned that biofuels could get into aeroplane engines with ethanol in the tank—we know that ethanol absorbs water. But the Minister addressed that question in the House this very evening when I put it to him. We were equally concerned about water in outboard motors in leisure boats—that if they were compelled to use biofuels they would hit problems and malfunction and stop but the Minister addressed that in the House tonight. We were concerned that productive land would be used to grow crops on to make bio-ethanol but the Local Government and Environment Committee addressed that and amended the bill accordingly.  
We were concerned about the cost. We have heard figures ranging from 4c to 7c a litre on bio-petrol but the officials tell us that it ranges from 0.2c to 0.4c a litre. And if the price of oil goes up it could well make biofuels cheaper than normal ordinary petrol. That is the cost according to the Minister when spread over 4 years and if spread over a longer term it will be even less.  
So one by one all the concerns that New Zealand First had were addressed. We came to the conclusion that the advantages do outweigh the concerns so New Zealand First will accept that there are advantages to our environment from using biofuels. We understand that to develop them the industry needs certainty and it needs certainty to invest. The only way we can achieve that is by passing this sort of legislation. New Zealand First supports this legislation. 
A party vote was called for on the question  
That the Energy (Fuels Levies and References) Amendment Bill the Customs and Excise Amendment Bill (No 5) the Tariff Amendment Bill (No 2) and the Local Government Act 1974 Amendment Bill (No 2) be now read a third time. 
Ayes 70 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 2; Progressive 1; Independent: Field;. 
Noes 50 
New Zealand National 47; ACT New Zealand 2; Independent: Copeland. 
Bills read a third time. 
Commerce Amendment Bill 
Second Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Commerce Amendment Bill be now read a second time 
. The overarching objective of this bill is to provide for efficient and cost-effective regulation of the price and quality of key goods and services that are not subject to competition and to do so in a way that promotes greater certainty and incentives to invest and innovate for regulated businesses.  
In practice the number of services not subject to competition is small. However they tend to be important services relating as they do to essential infrastructure such as electricity lines gas pipelines and airports. The Commerce Committee has recommended a number of amendments to strengthen the bill and the Government both welcomes and supports these improvements. The bill introduces a specific purpose statement for economic regulation which is a significant improvement to the current Act. I would go so far as to say that the absence of such a purpose statement has led to considerable uncertainty which has affected the ability of infrastructure companies to make timely investment decisions. The new purpose statement makes it clear that the objective is the long-term benefit of consumers of goods or services that are not faced with competition or the likelihood of a substantial increase in competition. This is to be achieved by promoting outcomes consistent with those in competitive markets including providing incentives to suppliers to invest innovate and improve efficiency while requiring them to share efficiency gains with consumers and to limit excessive profits.  
The bill makes it clear that regulation may be imposed only if three criteria are met: namely there is little or no competition and little or no likelihood of a substantial increase in competition; there is scope for the exercise of substantial market power taking into account the effectiveness of existing regulation or arrangements including ownership arrangements; and importantly the benefits of regulation must materially exceed the cost. Getting the rules right is critical for promoting confidence and providing certainty for businesses particularly for infrastructure providers who need to invest in long-life assets. One of the main criticisms of the current regime is the lack of certainty and predictability on crucial regulatory matters such as how to calculate the cost of capital and value assets allocate common costs and so forth. To address this the bill requires the Commerce Commission to develop as a priority the rules requirements and procedures—and we have described them as input methodologies—for regulation.  
I note that submitters were unanimous in supporting the intent of these provisions but were concerned that as drafted these objectives might not be achieved. It is pleasing to note that the select committee has given considerable thought to this and recommends strengthening these provisions to require the commission to develop the rules in sufficient detail to provide predictability and certainty for businesses.  
The bill as introduced provides for a right of appeal on the Commerce Commission’s determinations on input methodologies. The appeal is to the High Court with the judge sitting with expert lay members. The select committee has recommended that should the High Court decide to amend or substitute a new input methodology it would need to meet the test of being materially better in meeting the purpose statement. This is a sensible criterion to apply in the circumstances where we have an expert body but where it is essentially the rule maker and the regulator. In Australia there are separate bodies in the energy sector to make the rules on the one hand and to implement the rules on the other. New Zealand simply does not have the scale to achieve the separation so the appeal right was designed to essentially mimic the separation of functions. 
The biggest change to the bill recommended by the committee is providing for appeals to the High Court on the commission’s final decisions on customised or individual price-quality paths. Submitters were unanimous in supporting such appeals. Appeals that may be lodged in order to game the process are dealt with by excluding matters already determined as input methodologies and providing for the commission’s decisions to apply pending an appeal. For those who have read my concerns which I expressed before the bill was introduced about the potential for gaming I can say I am satisfied with this approach.  
Under the current regime price control is the only response available to address markets where goods and services are not subject to competition. We consider that it is desirable to provide a range of regulatory options to provide fit-for-purpose regulation. In this regard the bill provides for the following alternative forms of regulation to price control. The first is information disclosure which is a relatively non-intrusive form of regulation that requires firms to disclose information to the public about their costs prices asset management plans and so forth.  
The second option is negotiate/arbitrate. This form of regulation requires a supplier to negotiate prices in supply agreements with its customers with compulsory arbitration if parties cannot agree. The commission will set the processes and procedures for negotiation and arbitration and if the parties cannot agree on an arbitrator then the commission will be responsible for appointing one.  
The next is the default and customised pathway. This form of regulation requires the commission to set a simple relatively low-cost default price-quality path for regulated suppliers for 5-year periods. The key feature of the default price path is that the rate of change in prices will be determined by the consumer price index less a requirement for productivity improvement based on long-run productivity improvement rates for the sector. Suppliers will be able to apply to the Commerce Commission for a customised price-quality path if they can justify this—for example because they need to make significant new investments. The commission would be required to make decisions within 12 months.  
The bill has specific subparts that set out how economic regulation will apply to electricity lines business gas pipelines and airports. For electricity lines businesses Part 4A will be repealed. Small consumer-owned businesses will be subject to information disclosure regulation only. This is because consumers as owners are able to ensure that the business looks after its long-term interests. These provisions should significantly reduce compliance costs and avoid complex regulation where the risk that the long-term interests of consumers will not be met is relatively low. However as a safeguard consumers will be able to petition the commission if they consider that increased regulation is required.  
For other electricity lines businesses information disclosure and the new default customised regime will apply. This new regime is expected to provide greater certainty for businesses than the current Part 4A. This is the result of a combination of design features such as requiring input methodologies to be set in advance provision of an upfront opportunity for firms to apply for customised paths statutory time frames for processes and the introduction of conventional penalties and remedies. I mention that because the real benefit is that it removes the requirement to breach thresholds before being able to negotiate with the commission which under the current arrangements is an administrative settlement based on past history rather than a customised approach going forward. The bill also provides detailed transitional arrangements. I note that the committee has recommended improvements to these provisions in response to submissions.  
The key change for the regulation of gas pipelines recommended by the committee is for the gas pipelines of Powerco and Vector which are currently under price control to transition to the new default customised regime for other gas pipelines in 2012 rather than 2016 or at an earlier date agreed with the commission. Other gas pipelines will be subject to a default customised regime from 1 July 2010.  
Specified airport activities supplied by the Auckland Wellington and Christchurch international airports will be subject to information disclosure from 1 July 2010 and the Commerce Commission will monitor disclosed information and report to Ministers after 2012 as to whether the information disclosure regime is effective.  
In conclusion I say that I am confident that this bill is a significant improvement on the current provisions and that it will improve certainty for businesses provide better incentives to invest and protect consumers from excessive prices and poor quality where there are no competitive pressures to do so. I would like to take this opportunity to acknowledge and thank the officials and the Commerce Committee for their hard work on this bill for the careful consideration they have given to submissions and for a unanimous and timely report recommending worthwhile improvements to the bill. I commend the bill to the House. 
SIMON POWER (National—Rangitikei) 
: 
 It is nice to be talking on an upbeat matter in this House—the Commerce Amendment Bill. I want to pick up the Minister on something she said towards the end of her speech. Indeed the Commerce Committee did work well on this issue. For those who have not followed this particular legislation—although if I am right and if I may refer to you directly Madam Assistant Speaker you were in the Chair at the time this bill was read the first time and you took some interest in input methodologies as I recall. But having said that I note that the Minister is right in the sense that this bill did in the end get the unanimous support of the Commerce Committee. That might sound like the sort of thing that one should just sweep over when talking about a report back or a second reading of a bill but this is extremely complex legislation.  
I acknowledge the Hon Paul Swain and just for a moment will make a comment to that effect. He really held up the end for the Labour Party on that committee and got his head around the detail quicker than most. I have to say that the discussions that occurred on that committee between the Hon Paul Swain the chairperson and to a far lesser extent myself probably saw this legislation move in a reasonably friendly and constructive way. That does not mean that there were not serious and very big consequences for many of the industries that have the potential to be covered by this legislation if the committee had got this wrong. In fact the amount of detailed discussion that went into this was vast.  
The Minister as I recall it wrote to the committee part-way through the proceedings indicating her suggestion that the committee look at a number of issues relating to the stages of appeal on merit review and various other matters. That was helpful actually because the National Party during the first reading drew those matters to the attention of the Minister at that time and said that there would be some issues that we would need to deal with in the committee and it would be helpful if we could get some guidance from the Minister in charge of the bill and that guidance came.  
I will not go over the material that the Minister went over. I will leave that to the detailed discussion in the Committee stage when we really get into the nitty-gritty around valuations the weighted average cost of capital and other input methodologies. I am sure that the Minister will be happy to answer any practical questions in that regard as we work our way through this bill.  
There are a couple of things that the National Party will be watching. The Minister has alluded to one or two of them but I want to make these points. During the course of the open parts of the committee—that is the parts that were open to the public—members on our side of the table were keen to know from the submitters whether they thought the Commerce Commission had the capacity and the expertise to deliver on time the detailed input methodology requirements for the purposes of this bill. The Commerce Commission assured the committee when it came before it that that was the case and we look forward to making sure that that indeed does occur.  
On the appeals issue the Minister made a reference to gaming which is something that members on this side raised at the first reading. There was a lot of discussion about whether the point of appeal or merit review should occur once the input methodologies had been determined prior to the price-setting discussions commencing or at the final practical implementation stage of that pricing formula.  
Hon Lianne Dalziel 
: Or both. 
SIMON POWER 
: That is right. The arguments that were made by submitters were that it should occur at both stages and in the end there was some concern from members of the committee that if that was the case gaming would occur using those appeal procedures to prevent that pricing mechanism from locking in and taking effect to the benefit of consumers in the short to medium term. I am confident and I know that National Party members are confident that this is the right outcome and we endorse what the Minister said about having that two-step merit review process.  
I will not talk about airports because I know that the Hon Paul Swain just loves that stuff and he will give a lengthy and detailed contribution as we try to work out the relationship between airlines and airports. I will leave that to him and to Mr Lindsay Tisch who has our particular interest in this area. 
But could I just say in relation to the exemption for consumer-owned electricity lines businesses—again not as straightforward as it may first look—that on the theoretical side the model goes something like this. If the shareholder of the consumer-owned electricity lines business is the consumer and the ultimate end benefactor of the pricing decisions is the consumer the squeeze of pressure from the ownership and the consumer side of the equation will produce the right pricing equation. That effectively is the position whereby pricing will not enable rorting because the consumers are the owners of the consumer-owned electricity lines businesses. I will watch this one really carefully because I think the model in theory makes sense. But as the Minister I think said in her contribution there is a fall-back position if that does not occur which is to directly approach the commission to ask it to have a view on more or less regulation—well it would actually be more in that case.  
But having said that the National Party starts from the position that to add another layer of regulation the case needs to be watertight and we were of the view that in this instance that case was not made—that in fact self-regulation if one likes would be able to determine the correct overall pricing outcome. But it is worth watching and comparing it to the pricing outcomes that will occur as a result of the more regulated environment from the non - consumer-owned businesses. So that is a point to bear in mind as we step through.  
I thought the Minister started quite interestingly by making reference to the purpose clause. I think she is right when she says the balance has been struck. What I am interested in is this notion of the missing market which is the consumer of tomorrow—not the consumer of today nor the infrastructure decisions that are made today—and what the impact will be on the consumer of the future. That is a third dimension to this pricing and purpose equation which I think is worth monitoring and worth thinking about if indeed we ever have cause to revisit the Commerce Act in that particular sense. That is something that members will be hearing a bit more of over the weeks to come.  
By and large this was exceptionally complex legislation. I just want to conclude by thanking the Minister of Commerce for making her officials available to the National members and for the large number of briefings that we received—or that I received—on this particular legislation. We had some spirited discussions about the nature of some of the issues that we have raised today but I thank the Minister for giving me in particular that opportunity. I think that in the end the select committee has come up with workable legislation.  
It is always interesting when one is sitting on these committees. I think it was my colleague the Hon Paul Swain who is soon to retire—it may have been Dave Hereora; no it cannot have been it must have been the Hon Paul Swain—who said to me that the interesting thing about legislation like this is that all submitters agree with it in principle but there are always a couple of things around the edge that need a bit of tweaking. I think the committee did that particularly well. The committee was chaired by a member who was not from the Government side; these committees can work quite well when they are chaired by people who are not from the Government side—well we will see. I have to say that the help we were able to get from the officials was first class. The officials who stepped us through this legislation were experts in this area. I have to say that it is some of the finest work I have seen in the last 9 years. This bill is really tricky stuff and it cannot be overstated just how difficult it is. Those officials did a fantastic job and I hope they will be in the Chamber during the Committee stage so that when we ask the Minister some questions she can lean back and get the answers as we move our way through. The National Party will be supporting the second reading of this bill and we look forward to posing some interesting and timely questions to the Minister in the Committee stage. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 I am extremely obliged to the kind words that the previous speaker has said about me as I am in my twilight zone. 
Hon Trevor Mallard 
: Just about the statesman. 
Hon PAUL SWAIN 
: I know—just about the statesman indeed. I have my boarding pass ready to head off. 
Simon Power 
: What’s the date? 
Hon PAUL SWAIN 
: I would love to know that. The problem is that I am so far out of the loop I cannot even find it. I am part of the unbundled local loop actually. I am obliged to that member for his kind comments. I also I suppose acknowledge the fine work that the member did on the Commerce Amendment Bill as well. 
Simon Power 
: Don’t. You’ll belittle yourself. 
Hon PAUL SWAIN 
: No no. One good turn deserves another as they say. I enjoyed the work on the Commerce Committee because in fact Simon Power had his head around the bill and I thought the committee was interestingly chaired by Gerry Brownlee. Even though the member acknowledges that the bill has come through unanimously it is fair to say it did not always have a smooth passage which is often the case—[ 
Interruption 
] Well I will not even comment on that because that would ruin my speech and I am in a praising mood at the moment. The point is that Mr Brownlee had some very strong views about some things. But I thought that the debate and discussion as the member said improved the bill and I enjoyed the debate.  
I think the point that the member made about the officials is right. Mike Lear is one of those officials and of course he is an old veteran. He was around at the time when the former National Government structurally separated the electricity industry. So Mike knows things up hill and down dale when it comes to energy and it was useful to have him there during this time.  
The member Simon Power makes the point that these issues are enormously complex. One could read a speech in a couple of minutes and say a measure was absolutely necessary etc. but the truth is that when the providers of goods and services do not necessarily face competition one has to be really careful in what one does. I think the classic example of that is in the electricity sector. Lines companies for example are basically monopolies. If one tries to regulate them too tightly there is no real incentive for them to reinvest. Their reinvestment plans get altered and as a result of that the lights go out. That is the really big problem. On the other hand if one does not regulate well enough then the monopoly has the opportunity to price gouge and the consumers are really rorted. So a huge balancing act has to go on in any of those kinds of industries. I think it is a very finely balanced call and the question is always whether it is appropriate to regulate and if so how it should be done. There was a lot of really good discussion and debate around the electricity sector—a sector that I know the National members had some concerns about—and of course around airports too which I will talk about in just a minute.  
One of the important improvements made to the bill was around the purpose statement. I remember that when I became the Minister of Commerce it was a very bald statement that talked about improving competition. There was no mention of consumers in the legislation so in my time we added wording about the consumers of goods and services. What we have done now is to add on “in markets where there is little or no competition and little or no likelihood of a substantial increase in competition.” So we have tried to clarify the purpose of the legislation and I think that is an advantage.  
Simon Power talked about the issue between input methodologies and final appeals. There was lots of discussion around that. It is fair to say that the submitters were very keen on both and I think they are well pleased. In fact the reports I have had from people who have looked at and submitted on the bill are that they are pretty pleased with the outcome. I do not need to say any more about that except to say I think that that is useful. I also share the member’s concerns about the potential capacity of the Commerce Commission here. That is something that the Government will need to keep in mind when this legislation proceeds because in fact there is an enormous amount of work to be done here. I hope the commission will not be shy in coming forward if it finds that it does not have the resources to do the things that it will now be obliged to do. 
I do like the idea of what is called the new fit-for-purpose regulatory powers. Under the old regime it was either price control or not. It was an on-off switch and that was very very difficult. Having been in that position myself I know that it is very very difficult for the Minister to try to make decisions on such complicated matters. So we have a graded process starting with the very light-handed regulation of requiring information disclosure then moving to negotiation or arbitration and further on to a default/customised path which is the approach that has been taken for lines companies. So there are steps in there that can be used to avoid the problem of having to get into very heavy-handed regulation where the Government tries to second-guess market signals. The problem with regulation is that decisions by regulators are always second-best to those that the market can provide. In the first instance we are trying to get contracts negotiated between two parties. If there is a power imbalance between the parties then clearly there needs to be an independent agency like the Commerce Commission that steps in and tries to mimic what in fact a competitive industry might provide.  
I want to make just a couple of quick points around the electricity lines businesses. In that area we decided that the trusts the small consumer-owned companies would be faced with only information disclosure—and I think that is good; it will lower their compliance costs—primarily because the people who are the consumers directly elect the trustees. There is a direct relationship there although there were some issues around whether that would mean the trustees would therefore not want to make tough decisions because they would get voted out if they did. I think there is still an issue lurking away in there. We found some really interesting trust arrangements by the way. We found out that the people who appointed the trustees to Northpower were the member for Northland and the member for Te Tai Tokerau. We thought that was a fine piece of patronage and we considered looking at replicating it around the country—it was one way of dealing with the problem. I certainly would like to see that particular piece of authority in my own area. But to be fair we thought that it probably was not the right way to go and we made adjustments accordingly. Around the other electricity businesses there will be information disclosure and the new default/customised regime will apply to them.  
I have heard from the Electricity Networks Association and it is pleased with what has happened here. It gives it some certainty particularly around the transitional arrangements and the penalty regimes it was potentially facing which we have now amended.  
One of the hot issues was around airports. The issue there is whether Auckland airport is a regional monopoly. Is it a poor cousin to the powerful airlines which can fly elsewhere or is it in a position to charge airlines for things that the airlines do not think they should rightfully pay for? In the end we have decided that the airports in Auckland Wellington and Christchurch should be required at least to provide an information disclosure type of regime so that negotiation around the prices that should be paid for airport services can be effective. I personally think that is the right way to go and I will be watching to see how that pans out in the future.  
In conclusion I think the work on this bill was a really good piece of work from the committee which I enjoyed sitting on. The issues in the bill are complex. Simon Power and I had some interesting arguments and debates with Gerry Brownlee taking sometimes a more bombastic approach to the work in hand. But in the end we engaged in a good debate—a good argument—and came to the point we are now at with regard to this legislation. It was one of the times when select committees work well. As the member said the committee was chaired by a member of the Opposition. This bill is a good piece of work. I think the industry will be happy and well satisfied with it. We listened to the submissions and have come back to the House with a better product and that is due largely to the work of the officials and to some very active work from members of the select committee.  
I recommend that the bill proceed. 
LINDSAY TISCH (National—Piako) 
: 
 Thank you Madam Assistant Speaker for the opportunity to share with colleagues this very important legislation. As Simon Power and Paul Swain indicated we were very much guided by the officials and I need to pass on my thanks to them for their expertise and guidance. 
It is interesting that probably the most controversial debate we had surrounded airports and whether they should be included in the Commerce Amendment Bill. Some argued that no they were a late inclusion and should have been left out. The airlines and Barnes Group which represented the airlines believed that they should be part of the regime. As Paul Swain has just shared at the end we decided they should be part of the disclosure of the bill. 
It is interesting also that this is only a second reading debate—and we do not get a chance to talk in the Committee stage—and that things like optimised deprival valuation methodology the value of assets the weighted average cost of capital and such things will have to come up at a later stage when we will be able to ask the Minister more about those particular aspects. Also the Commerce Committee has just concluded looking at an inquiry into the valuation methodology of State-owned enterprises. Just as we have talked throughout the debate on this bill about how assets should be valued we have also had that other inclusion with State-owned enterprises. 
As others have said this is very complex legislation. It has wide-ranging implications making it difficult for policy makers to predict the outcome. The question has been identified as being whether the Commerce Commission has the ability to implement the changes that we are looking at here. Does it have the resources? We will be watching very closely in terms of the regulations. We are after light-handed regulations. We believe in a self-regulatory regime so we will be looking very closely to make sure that the regulations are able not only to be enforced but also to be fair. 
New Zealand needs to focus on its commercial law and on fostering innovation and investment and we believe that this bill goes towards that. The bill also includes a wider range of regulatory tools with much lighter-handed options than previously existed and that is the point that I have just made. However the Government needs to be careful that it does not merely replace rarely used heavy-handed regulations which is what we have had. We want to make sure that those regulations that are being brought in are not too light-handed but in fact measure up. Good commercial law depends very much on sound and reliable implementation both by the independent agencies and by Ministers. 
This bill gives better incentives for infrastructure investment. Infrastructure businesses like electricity lines companies and airports will gain improved incentives to innovate and invest while consumers will be given protection from excessive prices and poor quality. Also the purpose statement of the bill gives a clear guidance to the courts and the regulator and the aim of this regulation is to promote investment. 
I want to move specifically to the area of the airports because I think that the three airports mentioned in the bill—Auckland Wellington and Christchurch—are at the forefront of investment. With tourism they are the gateways into New Zealand. We want to make sure though that there is fairness and equity in the way they operate. I for one have spent time with Auckland International Airport on the Business and Parliament Trust. I was privileged to have a 2-week secondment with it back in the year 2000 and again in 2003. 
Hon Clayton Cosgrove 
: 2 weeks? 
LINDSAY TISCH 
: Yes 2 weeks—1 week then a following week 3 years later. So I have seen the progress that that company has made and it is certainly a leader in what it does. When it comes down to looking at the fairness and equity that was proposed by the airlines and their representative Barnes Group it is important that the disclosure previously mentioned will actually operate. So they are being regarded as monopolies and the bill moves to make sure that monopolies do not exceed their responsibilities. 
In the case of airports one would say that they are not operating as a single till which was a phrase used constantly during the submission process. Each entity within the airports was operating and charging separately. So the point was that they should really be charging as a whole. The information that was supplied to the Commerce Committee indicated that some airport companies over-recovered in regards to airfield activities. They over-recovered in the charging under the Commerce Commission scenario based on historic cost of specialised assets and also under the Commerce Commission scenario of using the optimised depreciated replacement cost for specialised assets.  
In the bill the regulatory regime for setting airport charges moves into the Commerce Act. I will just quote here from one of the submissions because it probably crystallises and articulates quite clearly what the bill is designed to do. It requires the Commerce Commission to develop mandatory input methodologies covering matters such as how to value assets and treat asset revaluations for information disclosure purposes. Secondly it moves the current information disclosure requirements for the three airports that I mentioned before from the Airport Authorities Act to the Commerce Act and it strengthens the requirements and gives the Commerce Commission the responsibility for monitoring what those airports are disclosing. Thirdly it provides for a transitional review by the Commerce Commission where the commission thinks from its monitoring that an inquiry should be held to see whether some regulatory controls should be introduced. So airports will be able to treat information disclosure separately from pricing and will be able to continue to set prices as they see fit. If they do this at the price reset at 2012 the Commerce Commission could look at what they have done and if convinced that they are monopoly pricing could recommend to the Minister of Commerce that an inquiry be held. Inquiries take 2 to 3 years so it could be 2015 or later before anything is done to address a situation of gross overcharging that could be occurring. It is unlikely therefore that any changes would take place before 2016 or 2017. So those were the points that came up from the airlines in particular. 
On the other side of the equation of course were the airports which have argued that the current regulatory regime has been in place for 20 years; it has worked well so why change it? That was a strong argument that they put up. They also said that this would be a disincentive to major and new investment. If we go back to what the purposes of the regulations are which are contained in new section 52A set out in clause 4—I will not go through it because time does not permit—it clearly identifies what the nature of the legislation is designed to do. The airports also said of course that in some jurisdictions there were no regulations. They mentioned Scotland. They also mentioned that in the UK the Civil Aviation Authority was looking to take regulations off its Stansted and Manchester airports although it might be difficult in the Stansted case. They also said that Sydney has a deregulated environment. So those were strong arguments that came up from the airports. 
I guess where we are coming from is that we will be watching very closely these developments once the bill is introduced and the Act is in place because as Simon Power said we will be watching the role of regulations to make sure that they actually work. Although this legislation is replacing those heavy-handed regulations with much light-handed regulation we want to make sure that they are fair and equitable. Those are the points that I will be talking about and asking the Minister about during the Committee stage because we want to make sure that the Commerce Commission which is now going to be given a very important task is actually going to enact this legislation in the manner in which the select committee has worked very diligently to make sure is fair and equitable to all. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I intend to take only a short call because New Zealand First was not on the Commerce Committee and reading this bill is awfully technical. I listened to Simon Power and I can imagine that anybody on the select committee would need extensive briefings to be up to speed with the legislation. I see that both National and Labour are supporting this bill and that pleases New Zealand First no end. 
The area about which I am particularly concerned and particularly delighted is that of airports because the first bill I handled when I came to this House was the Airport Authorities Amendment Bill. I was brand new to politics— 
Simon Power 
: I remember that. 
PETER BROWN 
: I think it was before your time. 
Simon Power 
: No. 2. 
PETER BROWN 
: Oh the member remembers No. 2; this was No. 1 in 1996 or 1997. When I read that bill I thought “This is not good enough.” New Zealand First was in coalition with the National Party. It wanted to have no regulation whatsoever but there I was brand new saying “This is not good enough.” I do not think it is being unkind to say that the bill was of low priority. Even my own colleagues thought “Will you please get on with it and settle it.” but there I was saying “It is not good enough.” I was hauled up to Jenny Shipley who was Minister of Transport at the time and she said how important it was to have a deregulated environment. But I sensed the danger of monopolies having worked for quite some years in seaports. Then I got hauled up to Bill Birch. He had an army of young up-and-coming Treasury officials with him and they gave me the lecture on how one does this with no deregulation whatever. In the end Winston Peters and I sat down one night and worked out the best compromise we could sell to our coalition partner a compromise that was based on consultation. But we know now that it has not worked.  
So we are delighted—and I am particularly delighted because of that personal experience—that both National and Labour have come together and said that airports need some form of control. The control is modest—it comes under an information disclosure regime and monitoring—but it is a significant step forward. The control probably does not go as far as the airlines would like it to go but that is not a bad thing and it goes probably a little bit further than the airports want to go which is a good thing. So I think the select committee has reached a reasonable compromise. 
I understand that an international aviation consultancy Jacobs Consultancy has measured the performance of 50 international airports around the world. Auckland Airport came out on top for aeronautical revenue as a percentage of total costs it came out on top for operating profit as a percentage of revenue and it came out on top for operating profit per passenger. That should tell us all that something has to be done. Those are the areas where one does not really want to be top of the pops. 
New Zealand First will be supporting this bill probably all the way through. We and I on a personal basis are absolutely delighted that we are finally doing something about airports. I congratulate the National Party on going down the road to Damascus and having an enlightening experience. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Madam Assistant Speaker. Tena tatou katoa. The purpose of this bill is to amend the Commerce Act 1986 in order to reform its regulatory control provisions to do with the important services of infrastructure providers of gas and electricity and the airports. As others have stated it is a complex technical piece of legislation not easily understood particularly if one has not been a member of the Commerce Committee. I have always had some issues with the concept of consumer or client as if it is a meaningful term. If we were to turn to the  
Oxford Dictionary  
to find out what a consumer is in real terms it describes services products expected to have a long useful life; goods or as in consumerism the preoccupation of society with the acquisition of goods. Well in the Maori Party we are a little bit different and we talk mostly about people—a radical concept I know.  
So we have turned to the amendments made by the Commerce Committee to see how the people have reacted towards proposals to introduce even lighter non-price forms of regulation than were previously in force. The purpose statement in new Part 4$ is to be amended to safeguard consumers from excessive prices. There is nothing we would disagree with there. In explanation the commentary on the bill describes the inherent tension in the bill with some submitters more concerned about incentivising investment than about consumer protection. The so-called solution is seemingly more to focus on profit and investment rather than as I said before to promote consumer protection. So the level of protection is not to ensure affordable prices but to limit their ability to extract excessive profits yet curiously there is no definition of what is described or defined as excessive.  
That one specific example is indicative of the emphasis in this bill which appears to be about competitive markets more than it is about consumer protections. I am reminded of the warning from American economist Milton Friedman who said: “Many people want the Government to protect the consumer. A much more urgent problem is to protect the consumer from the Government.” One of the disappointing features of the consultation process that was undertaken for this bill was that although a total of 39 submissions were received not one was from the end consumers whom this bill is supposed to protect. All of the submissions were from service suppliers and one from the Hon Justice Randerson of the High Court who was consulted for specific advice on appeal clauses.  
So really how can one protect the consumer from the Government if the people are not being heard in the first place? The Maori Party believes that there needed to be some mechanism other than submissions to the select committee to get feedback from consumers given their key role. Maybe focus groups of consumers should be considered as an important mechanism for gaining the thoughts of that group. A bill that ostensibly enables price and quality control for the purpose of improving outcomes for consumers should logically have sought the feedback of those people in the first instance. The bill would look quite different if it had consumers at the centre and if they had been guaranteed some kind of voice in the process. Failure to involve the people who are supposedly to benefit from the outcomes of competitive markets is a huge risk which works to the benefit only of the corporations—the moneymakers—rather than the unsuspecting public.  
Another key issue other than the lack of robust consultation mechanisms is the failure of this bill and indeed successive Governments to adequately regulate monopolies following the privatisation process. Dr Geoff Bertram an economics lecturer up at Victoria University stated that privatisation has been notoriously unsuccessful in New Zealand. In his contention there are many horror stories of big transnational organisations trying to buy up our infrastructure and similarly monopolies that do not care about service delivery quality or affordability but just about their profit. His conclusion therefore is that natural monopolies—public or private—need to be kept on a leash; and there is no escaping the need for proper regulation.  
What we have seen in successive Labour and National Governments is that they have failed to adequately regulate monopolies following privatisation. That has resulted as we all know in price increases reduced service quality and run-down infrastructure. I recommend to members that they read Jane Kelsey’s critique of the Commerce Act entitled  
Reclaiming the Future: New Zealand and the Global Economy 
. In that analysis Jane described the Act as one of the Labour Government’s earliest moves towards light-handed regulation. She concluded that because New Zealand has such a permissive merger and acquisition regime it needed a robust mechanism to prohibit anti-competitive behaviour and her report concluded that this was lacking.  
So we in the Maori Party came to this bill thinking the policy failure would be acknowledged but it was not to be. With the introduction of even lighter non-price forms of regulation it will be less likely that price and quality will be regulated as there will be other options for the commission to steer towards. We believe that if we do not have price regulation well then we really do not have any regulation. We do not consider self-regulation will work. Our analysis of the amendments by the select committee further underlines the effect of even lighter non-price forms of regulation in fact. So we will be opposing this bill and not on behalf of consumers and clients but on behalf of the people. Kia ora.  
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to the Commerce Amendment Bill this evening as we move through urgency towards 12 a.m. The bill has a very strong focus on regulatory certainty and accountability which is very important to modern world-leading economies. Without regulatory certainty and regulatory accountability it is very difficult for companies involved in infrastructure like electricity line or gas line companies to have certainty in regard to investment. I will give the example of Vector Energy to provide members with some idea as to why world-leading regulation in this area is important. It has to do with Vector Energy looking overseas to refinance its balance sheet last year. A number of its directors went to the UK as I understand and looked to secure funding for gearing or leveraging the company’s balance sheet. The financiers whom they spoke to told them they would be required to pay a premium in terms of funding costs because it was felt that the regulation in New Zealand around those types of infrastructure was cumbersome and unwieldy. As a result they were required to pay a premium on the cost of funding for their balance sheet. Where do we think the premium for the cost of that funding ultimately ends up? Well it ends up in the cost of the distribution of power the cost of the distribution of gas the cost of all sorts of things within those infrastructural companies. At the end of the day it ends up with the consumer facing increased prices. 
There is no doubt that modern world-leading regulation in this area is critical. It will ultimately lead to better opportunities for our companies to fund themselves lower premiums for their interest rates and I think ultimately better prices for consumers. This is legislation that the National Party supports and I acknowledge the work of our team—particularly Simon Power and Gerry Brownlee—and I certainly know that members of the Opposition worked diligently on what is complex legislation to bring it to this point in the second reading and to have all parties with the exception of the Maori Party agreeing at this stage. 
For those who are listening to this debate the objective of the legislation was to provide a more effective more credible regime to address the potential exercise of market power where competition is not possible. We are talking about the likes of gas lines and electricity lines where to bring two or three players into the market is simply unrealistic and impossible. So we get these monopolistic organisations by the very fact that it is impossible to have competition there. The problem with monopolies of this nature is that we need to make them as efficient as possible and the danger is that without competition they become unwieldy and bloated and they increase the costs to consumers quite unnecessarily. 
The second objective of the legislation was to improve the certainty timeliness and predictability for regulated firms. I know that within my own electorate of Napier our lines company Unison has had significant problems with regulation. It has faced major changes in its prices or in the negotiation of its prices with uncertainty in the regulation and how it would value its capital assets. It has just been an ongoing nightmare for them. There is no doubt that the lack of certainty and the lack of clarity in the regulations have meant there have been higher prices for consumers than would otherwise be the case. 
The third objective of the legislation is to provide for incentives for regulated firms to invest in infrastructure and that is what we need to do. If we want a modern economy and if we are serious about growing the wealth of this nation and about lifting wages then there is no doubt that our basic infrastructure has to be world-leading. If the companies that are involved in this space are not investing in that infrastructure then we will not go forward. We will not have the types of infrastructural assets that New Zealanders believe are necessary for us to drive a modern economy. So providing those incentives is critical. 
The last objective of the bill is to minimise the regulatory costs involved in addressing changes and increases in prices and addressing the other regulations. There is no doubt that the compliance costs around this type of regulatory regime go into the millions of dollars for these companies as they address changing their prices with the Commerce Commission and the various other organisations that affect prices. Those are some of the key objectives in the bill. 
I will not take a long call as I was not involved in the select committee and it is indeed complex legislation when we come down to the detail. I just want to summarise effectively what I have said. Regulatory certainty and accountability is critical for these types of infrastructural assets within the country. It is great to see that this legislation is taking that step forward. It is providing certainty and clarity for these types of companies and I think that that is indeed a step forward and that is why the National Party will be supporting this bill. Thank you very much. 
A party vote was called for on the question  
That the Commerce Amendment Bill be now read a second time. 
Ayes 112 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 4; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 4 
Maori Party 4. 
Bill read a second time. 
Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill 
Second Reading 
Hon RUTH DYSON (Minister for Disability Issues) 
: 
 I move  
That the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill be now read a second time 
. This bill forms part of the steps that will enable New Zealand to ratify the United Nations Convention on the Rights of Persons with Disabilities. The Justice and Electoral Committee has examined the convention and recommends ratification of it. I am pleased that the committee also supports the bill being passed without amendment. I acknowledge all the other parties that have participated in this process and also the officials who have worked hard over many months on the preparation of this legislation. 
The bill does not in itself provide for ratification but instead removes some obstacles in existing legislation. Historically New Zealand has set a very high standard for ratification of international human rights treaties. We ratify when the Government is satisfied that our laws policies and practices are not inconsistent with the treaty at issue. Passing the bill will reinforce the Government’s confidence that New Zealand meets this high standard. 
The bill seeks to achieve two outcomes. Firstly it removes outdated and discriminatory provisions in some legislation that automatically disqualify a person from certain public or fiduciary offices on the grounds of being mentally disordered within the meaning of the Mental Health (Compulsory Assessment and Treatment) Act 1992 or being subject to a compulsory treatment order under that Act. Instead the bill proposes amendments that will ensure that a person’s capacity to perform a role or a function is able to be individually assessed. Secondly the bill clarifies the provision of reasonable accommodation under the Human Rights Act in certain areas where it is uncertain. This is not a new obligation. 
New Zealand has made strong progress in removing barriers experienced by disabled people living their lives. However much more work remains to be done before we can say we are a fully inclusive society. The convention is a useful tool to help us in this work and to ensure that all New Zealanders enjoy their rights of citizenship and lead highly valued and productive lives. Passing the bill will enable us to proceed quickly with ratification of the convention. I look forward to our building on our strong reputation as a human rights champion by putting our commitment into action. I commend this bill to the House. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you for the opportunity to speak on the second reading of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill. I very much also appreciated the fact that there was unanimity within the Justice and Electoral Committee on the need to put this bill through. In fact all submissions were in support of the bill and in some cases in passionate support of it. I think I see that Wendy Wicks and some people from DPA (New Zealand) are in the gallery and indeed they articulated a most passionate and convincing submission. The DPA submission urged all different political parties to “embody the spirit of the UN by cooperating to ensure that the rights of disabled New Zealanders remain paramount. This will be demonstrable by ratification as quickly as possible.” So indeed it is good that the National Party along with all the other parties in Parliament is able to support this bill to go through. 
National did have some reservations however with the fact that there appeared to be no time for other interested parties to be able to submit on this bill and I will come to that aspect later. It seems to me that if we are going to realistically implement the sorts of things we want to in the way of the New Zealand Disability Strategy then it is really important that organisations like unions businesses around the country and the general public do have the time and opportunity to participate in this process. Unfortunately there was a rush of circumstances and I do not know why that was absolutely necessary because the initial convention was signed I think back in March 2007. But it would have been good if those organisations had had the opportunity to make submissions and to talk to them as well. 
I was particularly struck by the submission from the Human Rights Commission which clearly had put a lot of thought into studying the convention. The Human Rights Commission was set up by the National Government in the 1990s. It says that the declaration is a set of principles designed to “promote and encourage respect for human rights and for fundamental freedoms for all without distinction as to race sex language or religion;”. Although the international instruments apply to every person there is no explicit recognition of people with disabilities except in the United Nations Convention on the Rights of the Child. It is so important to have this specific bill go through the House so that the convention can be ratified and the agreement signed. 
The commission also makes the note that ratification of an international treaty is a significant undertaking and that when a State ratifies a treaty it accepts that it will be bound by its terms and accepts an obligation to deliver the rights in the treaty to its citizens. I think that this provision should not be underestimated in its importance. That was one of the reasons I was concerned there was not a greater opportunity for other people as well as for directly interested parties—such as the DPA the IHC and the Human Rights Commission—to participate in the submission process. This convention will undoubtedly raise expectations; it is very important that we have a realistic response in New Zealand and that those expectations do not go unfulfilled. There has been a feeling that the New Zealand Disability Strategy in many respects has not been implemented at the pace or in the way that was originally envisaged and that feeling certainly came out in the submissions to the select committee inquiry on disability services. 
The Human Rights Commission went on to say that the commission shared the concerns about the adequacy of domestic legislation relating to the obligation to accommodate disabled people. It made the very important point that as the definition of discrimination on the basis of disability “includes all forms of discrimination including denial of reasonable accommodation;” the concept of reasonable accommodation is pivotal to the convention. This sort of thing actually happens quite often in everyday life. One of the examples we were given was that an airline had charged more for someone who needed some extra oxygen. One would have expected that any reasonable airline would accommodate a disabled person without having to go to that extra length of making them feel even more uncomfortable by charging them for the oxygen they needed. 
The law around the concept of accommodation as I understand it has not been well developed in New Zealand whereas in the United Kingdom quite a lot of work has been done on it. The commission cited the case of Baroness Hale of Richmond in  
Mayor and Burgesses of the London Borough of Lewisham v Malcolm 
 where it was stated as follows: “But if the object of the disability discrimination legislation is to ‘level the playing field’ to enable disabled people to do things that they otherwise would not be able to do then simply ignoring their disability and asking that they be treated in exactly the same way as non-disabled people will not do. A reasonable adjustment has to be made for the special difficulties which their disabilities present.” 
One of the other areas that the Human Rights Commission was concerned about was the sustainable transport discussion paper that was brought out several years ago. The commission was very concerned that in actuality little progress had been made on improving the accessibility of public and land transport systems. I remember very clearly when a wheelchair-bound constituent came to me. He had gone down early one morning to the Pukekohe railway station but was left on the platform because the guard was not prepared to help him into the train. This is the sort of thing that apparently happens in practice in everyday New Zealand and certainly we have to make every effort we can to redress it. Hopefully it is the sort of discipline that the convention will impose upon us. 
I do not think that the point I made earlier on about the cost to New Zealand of compliance with the Treaty should go unmentioned. It was of concern to me to see that the report from the Government considered that minimal financial costs would be incurred by New Zealand as a result of implementing the convention. I believe that that is unrealistic which is one of the reasons that I felt it was important that we had realistic economic evaluations of the implications of the convention. In fact the report went on to say that “the primary cost for departments will be in contributing to new reporting and accountability requirements every 4 years. It is considered that existing Government mechanisms will facilitate the new reporting requirement and that it will operate similarly to the existing mechanisms for the other core United Nations human rights treaties. This process can be adapted for the purpose of reporting to the convention thus any additional costs are expected to be able to be met through existing baselines.” Well I think that this is one of the areas where the Government has worn slightly rose-tinted glasses. 
Nevertheless the signing of this convention will hopefully be a start on the discipline to ensure that we address much better accommodation in New Zealand—or much more reasonable accommodation—of disabled people than we have in the past. The National Party is very glad to support this bill in its second reading. Thank you. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I am very proud as the chair of the Justice and Electoral Committee to speak in support of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill. I speak in support of the bill not because we did a great amount of work on it but because we made a conscious decision—well the majority of us did—that this bill needed to turn around in the select committee very very quickly. We did that because we knew that New Zealand had taken a real leadership role in terms of rights for disabled people and it was really important in terms of the very tight time frame that this bill went through. 
I was really proud that when the bill came to the committee a decision was made by a majority of the committee that we would not go through the usual submission process but that we would progress the bill as quickly as possible. We did that because we were confident that all that work had gone in beforehand. Sadly that position was not supported by the National Party but fortunately Labour and the Greens had enough members on the committee to make that happen. I am really proud that that happened. 
I also want to say in respect of the submissions process that we asked people to come and give submissions within something like a week. People did that and they gave the most compelling fantastic submissions so that we ended up with unanimous support for the bill to go forward. Why? So that when the time was right which was very very close—we are talking about next month are we not Minister in terms of the United Nations? 
Hon Ruth Dyson 
: Yes. 
LYNNE PILLAY 
: So when the time was right New Zealand would be there playing its full part it would be taking a leadership role and it would be able to participate fully so that ratification could take place and the bill would be able to go through. One could say we took a punt but we did not. We knew that we had the support in the sector of every person who had put so many years into this work and we knew that that was the right thing to do. So the turn-round was very quick. 
I note from the select committee report—and I heard Dr Hutchison talk about it just now—that there were views that a realistic appraisal of the financial implications of this bill was not considered. I say that is absolute nonsense. The Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill sits alongside and builds on what this Government holds dear and that is the right for disabled people in this country to participate fully. It was never about financial implications. The good sound advice we were given was that there would not be detrimental financial implications. It was good sound advice. It was not just a whim or an emotional thing; it was good advice for doing the right thing. 
I note from the Justice and Electoral Committee’s report and this is the reason I talk about the National Party’s minority view—which is a strange thing perhaps for a Government member to do—that it acknowledges those people who did the work. When the National Party members talked about the financial implications they had concerns about their final words in their minority report were: “Despite these shortcomings National is moved by the sincerity and strong calls by the disability sector that supporting this bill will help their lives and others elsewhere around the globe.” 
I say in this House that I am really pleased and proud that we had a truncated process and that the bill went through but I think the full tribute should be paid to the members of the sector for their courage and for their sheer hard work which moved us to a position where we had a unanimous decision from the select committee. I am very proud to commend this bill to the House. 
CHRIS AUCHINVOLE (National) 
: 
 I will acknowledge particularly through you Mr Deputy Speaker the people who are gathered here in the gallery this evening. I say to my friends up there who have been bravely sitting throughout the evening that they are now right up with the play with biofuel technology having listened to the debates. They have heard all about the recent amendments to the Commerce Act and they did not even look bored. They have been waiting for their time and through you Mr Deputy Speaker I wish to give them a verbal salute: tena koutou tena koutou tena koutou katoa. This is their time for the purpose of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill is to amend legislative provisions that are inconsistent with the United Nations Convention on the Rights of Persons with Disabilities and to amend the Human Rights Act 1993 to clarify the scope of its provisions and thereby enable a person with a disability to be accommodated in certain areas of activity.  
This is an area of social as well as physical consequence. According to UN figures 10 percent of the world’s population have to live with a disability. I have to say the closest I have ever had to a physical disability is when I broke my Achilles tendon and it gave me a considerable shock because that was the first time I had had any sort of incapacity. That gave me a sharp personal understanding of what for others is a daily situation. Nineteen percent of less-educated people suffer disability compared with 11 percent amongst those with access to good education. This is a huge area of human stereotyping conveying all sorts of myths such as the assumption that people with a disability are in some way not the same as other people when it comes to work and daily life.  
The sincerity of the submissions received by the Justice and Electoral Committee was very very moving. It was very very sincere. The most sincere thing the most poignant part of all was that the submitters each asked that as members of the committee we listen to them. That was all they asked we should do that we let them be listened to. It was a privilege and a pleasure to do so because New Zealand needs to be up front and to front up to being a land of equal opportunity—more than just a part of a Labour Government’s rhetoric.  
We all have a right to self-determination to enjoy full and equal entitlement of all human rights and fundamental individual freedoms intellectual and physical. I remember getting an excellent lesson in how to be of assistance to people who suffered a disability. It was from a guy called George Phiskie. 
I was very young at the time. It was in the 1970s and he was up in Waipu. He had been totally blind since he was 11 and he ran his own dairy farm. As a fully sighted person I rushed to help. He said: “The best help you can give me is to let me put my hand on your shoulder as we walk along. You can be my eyes.” He explained to me—and he trained a lot of people—about how to assist blind people. Instead of trying to take their arm and help them let them take your arm and decide for themselves.  
There are a number of ways in which we can assist each other in life. There are very many ways in which some people try to erode the dignity and the rights of individuals even in this House even in this Chamber and even in the presentation of this bill. There are those who are so insecure in themselves that they seek every opportunity to denigrate the reputation and work of others. I take no pleasure in that particular aspect of this House. [ 
Interruption 
] I say to the member opposite that no I am not joking at all. It is sad but we live with it. Imagine what it is like then to have a disability and to encounter someone with a negative mental attitude towards others. We still have a way to go in our lives in educating the public towards losing their stereotypes. We cannot do that in a hurry but what we can do in this House is make sure that the legislation reflects a level playing field and a fair attitude towards others.  
This UN convention was signed on 30 March 2007. Minister Ruth Dyson spoke fulsomely about bringing this “into force as quickly as possible” yet legislation was not introduced into Parliament until 8 July. I am sorry for that. I am sorry for that delay. Why do we now have to have a rushed series of submissions? It has been decorated and painted up as trying to do things quickly with a short period between the opening and closure of the opportunity to make submissions. I do not know why that was. The bill is now being hurtled through in urgency. It was urgent way back in 2007. Actually this is not a good look no matter how it is painted by members opposite but it is in keeping with what those of us on this side of the House have become used to over the past 3 years.  
National supports the excellent submissions on this bill from the disability sector. We agree there are advantages to having the covenant ratified in an expeditious manner. The provision of reasonable accommodation is agreed with but it needs to be more than just a phrase of convenience and to make it work it has to have a wide level of shared understanding between those who are and who are not disabled. To be meaningful the financial implications of this bill have yet to be made—again in spite of the rhetoric and the objections from Government members.  
Lynne Pillay 
: It’s always about money. 
CHRIS AUCHINVOLE 
: I have just been told that it is all about money. To be disabled on one’s own is bad enough; to be disabled and financially unsupported is not much better; and to try to be supported by legislation that is not underpinned with financial consequences does not quite have the same meaning. To be meaningful the financial implications of the bill have yet to be made clear. This should be a responsibility of the Government and without it an important mechanism is missing. We need to be careful that we are not just being heavy on rhetoric and light on action. Thank you Mr Deputy Speaker.  
BARBARA STEWART (NZ First) 
: 
 On behalf of New Zealand First I am absolutely delighted to support the second reading of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill. It is a very positive bill. I must say that we in New Zealand First are very sorry that we did not have a member on the Justice and Electoral Committee. Obviously we would have enjoyed hearing the submissions from the submitters. New Zealand First has to say that the efforts of the Minister for Disability Issues in this very important area and all of the work she has done to ensure that we are leaders on the world stage have to be acknowledged. Importantly the Minister has shown that she has consulted extensively with the disability sector in so much of her work in this particular area. We applaud her efforts. The winning of the prestigious Roosevelt award truly is recognition of the steps New Zealand has made. They are very important steps. 
The New Zealand Disability Strategy has been in place since 2001. We have to acknowledge the sector for all of the work it has done to ensure that the voices of people in the sector are heard in the decision-making process. That is a very big step forward and is very very necessary so I say thanks. We as politicians have been to many forums over the past few weeks to discuss our party policies in this particular area and we congratulate the sector on the work it has done to raise the awareness of all of us here in this House in order to ensure that its priorities are listened to and its needs are on the agenda of every political party in this House. I see many people from the sector up in the gallery and I thank them very much for that. It is very rare for a bill to receive unanimous support in this House. In addition the report from the select committee states that the bill was strongly supported by all of the submitters as well and that is very very positive. 
The report from the select committee states that the financial cost of implementing the convention that we have heard so much about tonight will be minimal and that any necessary increases in funding will be met by increases in the baseline funding of agencies already working to implement the New Zealand Disability Strategy. That is how it should be—a solid platform on which to build. In New Zealand First we are certain that with the level of support from all parties and the disability sector this bill is as right as it can be. Like the select committee we regard the UN convention as a very important step forward. The convention will complement the outcomes-oriented objectives of the New Zealand Disability Strategy by providing some much-needed practical advice on removing the barriers that prevent disabled people from enjoying rights on an equal basis with others. 
I was interested to read in the report that for New Zealand to participate in the first conference of party States the convention must be ratified by 3 October 2008—hence the need for urgency on this particular bill. We applaud the fact that this date will be met. I was also interested to read—and this is for the edification of the previous speaker—that the Justice and Electoral Committee urged the House to pass the bill as soon as possible thereby enabling ratification of the convention. So it was a move that had to be carried out. 
New Zealand First recognises the right of every New Zealander to equality of opportunity. The view of the disability sector that this bill ensures that this equality is recognised in law means that the support of New Zealand First for it is absolutely essential. Many of the previous provisions in the law were outdated and I must say that I was totally amazed at the discrimination in some of our laws. I read out some of those in my first reading speech. Those laws needed to be changed urgently and at last they will be changed. 
In conclusion New Zealand First supports this bill. We are pleased to see it proceeding rapidly through the House. 
METIRIA TUREI (Green) 
: 
 The Green Party is also very proud to be supporting the bill tonight in its second reading and through the rest of its stages. We are very pleased to have supported the Justice and Electoral Committee’s expediting the bill going through that process. It is very unusual for the Greens to do such a thing. There is no doubt that the community as a whole supported this legislation so there was simply no need to delay it any further. I think the Minister for Disability Issues has done a very good job in bringing this bill to the House in good time. Other members of the select committee and other members of political parties that support disabilities issues particularly the MMP parties of New Zealand First United Future and the Maori Party have done a great job in supporting the sector and this bill. I do not see any reason to make a meal out of it at this late hour. I am very pleased that people from the disability sector are in the gallery tonight to oversee our behaviour and hear our views on this bill but I know there are still more stages of the bill to proceed. I am very pleased that the bill is at this stage in the House. Kia ora. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Mr Deputy Speaker. First of all I acknowledge the members of the Disabled Persons Assembly who are in the gallery—kia ora. I also acknowledge the Minister Ruth Dyson for bringing the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill before the House tonight. The Maori Party has been happy to support this bill throughout its stages in the House. It amends a number of Acts in order to make them consistent with the United Nations Convention on the Rights of Persons with Disabilities and as such it receives our full support. As a party we are utterly committed to addressing discrimination and social inclusion and barriers to employment education and access to services; the various amendments in the legislation will enable that. 
Our belief is to ensure that disabled persons and their whanau are able to access support in order to have a life of their own and to achieve that vital sense of purpose that we all need. Many Maori are missing out on entitlements to health and disability support. We in the Maori Party are calling for a review of income support to ensure full participation in family and community life. The Maori Party believes that information and communication that is tailored to the needs of Maori could be highly useful. We would also advocate for the development of a media campaign to address social stigmas around disabilities and impairment. We are committed towards addressing barriers in education employment and access to services to ensure that people with disabilities have the same employment rights as any other people. The Disabled Persons Assembly urged the House to ensure that no barriers were erected to delay prompt gratification of the United Nations convention and the convention allows disabled people to “confidently claim our human rights that other New Zealanders have …”—again we wholeheartedly support that. 
I am pleased to rise in this debate also to bring a very important challenge to the fore. A fortnight ago I was stopped by a woman in a shopping mall in Hamilton. That led us to discover a whole new pathway of thought regarding the relationships of health and disability providers including Maori with our haua—our disabled persons. That woman happened to be the indigenous persons’ representative on the United Nations International Disability Caucus steering committee a solicitor and human rights consultant Dr Huhana Hickey. I could not help but be struck by the anomaly that although in the passage of this legislation we are supporting the United Nations Convention this woman the indigenous people’s representative on a United Nations international disability association remains unacknowledged and unfunded by New Zealand. Huhana has expanded our knowledge of indigenous disability identity issues through the work she has done based on models of disabilities on indigenous well-being. She challenges us in this legislation to recognise how well this convention will take into account the issues of whanau whakawhanaungatanga—family relationships—interdependence within the community and collectivity identities. These concepts she argues are central to indigenous thinking yet are largely ignored by law and policy. 
Collective rights and individual human rights are inter-relational and interchangeable with one another. Within the Maori Party we share that concern. We believe there is a need to review the current organisations within the health and disability sector to assess their effectiveness in relation to Maori clients. It is about valuing the concept of self-determination of a collective wanting to determine their own rights as groups not just as individuals. As an example of such thinking we believe there needs to be integration of disabilities funding as opposed to the current silo approach and an integration of solutions to address issues faced by whanau with disabilities. The question we must then address is whether there is appropriate acknowledgment and recognition in this United Nations convention of the role and status of indigenous peoples. I think it is extremely relevant to bring to the debate the concept that as recently as August 2006 the United Nations International Disability Caucus working group was still debating the rights of women and girls not to be sterilised on the grounds of disabilities. If the issues of identity and whakapapa—or genealogy—are still so current in the international debate that reminds us all to be wary of areas we would not want to compromise on in our own domestic scene. New Zealand’s compliance with the United Nations convention will ensure that any discrimination against a person’s disability is prohibited. What we in the Maori Party want to be assured of is whether the unique and specific issues of indigenous peoples with disabilities are also fully considered. 
In our own land the Disability Strategy has many strengths and positives that might give us a steer as to the international context. However Maori whanau with disabilities want to be able to create their own solutions and to be self-determining. But providers have told us that Maori whanau with disabilities did not have enough input to produce a strategy specific to the needs of Maori. In their view the result is a generalist strategy whose implementation fails to address Maori-specific issues particularly kaupapa Maori services and access to Te Ao Maori including marae. Further providers have said that specific funding for Maori whanau with disabilities is quite inadequate. I heard that the Te Roopu Waiora Trust came to the Justice and Electoral Committee with precise detail as to how the issues of discrimination and marginalisation already identified around indigenous peoples are even more marked in the context of disability. 
We believe that it is essential that whanau Maori determine solutions to address the following issues: one indigenous deprivation including a lack of access to Maori language and knowledge particularly as residents of institutions such as deaf schools blind institutions and residential facilities for people with intellectual disability; two barriers to Government services including the fact that inadequate policies and rigid service menus have not included Maori-specific needs or input in community services both cultural and non-cultural; three lack of access to service and resource knowledge including health and disability supports; four processes that assume comprehension sight hearing and literacy at levels beyond many Maori disability communities; five physical access restrictions to public facilities both internally and externally; six attitudinal discrimination and institutional racism; and seven under-utilisation by Maori of advocacy and grievance processes. Fortunately we come armed with some solutions as well. We believe the solutions lie in working with whanau hapu and iwi and also with the Maori-specific expertise available across this community including groups such as Tamaki Ngati Kapo the Maori community of vision impaired/blind members and whanau; Mana Tangata Turi the Maori deaf community; the National Steering Group of Maori Disability Services; the Aotearoa Whanau Carers Network; and the Taikura Trust. 
In the conclusion to her doctoral thesis Huhana Hickey recommended that one of the aspects of providing full autonomy for those with disabilities was to ensure that Maori with disabilities are at the centre of the decisions around their resourcing. Understanding that disability representation is not only about impairment but also about the representation of all the diverse identities within the disabilities world is key to participation by those groups who have been traditionally under-represented. We must be able to place the choices and direction of life back into the hands of whanau with disabilities. We must ensure that service delivery is whanau-friendly minimising the number of agencies traipsing through their lives. We seek to build the strength of whanau capability and reduce the reliance on formal and specialist support structures. We want to extend the knowledge and strategies whanau can access to give them greater resilience in times of stress. Finally we look to encourage relationships of trust between both services and whanau and between services and the State. Kia ora. 
Debate interrupted. 
Speaker’s Rulings 
Maori Affairs Committee—Attendance 
Mr DEPUTY SPEAKER 
: Before I call the next speaker I will deal with a matter that was raised before the dinner break by way of a point of order. The Hon Tau Henare raised a point of order immediately before the Committee stage of the Biofuel Bill. I indicated that I would consider the matter and I have done so. The House has no cognisance of anything taking place before a select committee unless it is reported to the House. It is not in order for a member to raise a point of order in the House on a matter taking place in a select committee. If a committee requires a Speaker’s ruling it should resolve to obtain the ruling and the chairperson should do so privately. I refer the member to Speakers’ rulings 82/4-5 and 83/1-4. The member should raise his concern with the chairperson of the select committee. The Speaker has no authority to become involved. However I am advised that the meeting the member referred to is at 1 p.m. tomorrow. Nothing prevents a chairperson from calling a meeting at that time. 
Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill 
Second Reading 
Debate resumed. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 I stand on behalf of United Future to speak in support of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill. United Future does not enjoy representation on the select committee that heard the submissions but I have no doubt that they were robust and passionate. What I celebrate in this bill is the fact that people will finally have an opportunity to participate in governance options based on their individual merit and will no longer be blocked from participation because they fit into a particular category of person. I think there are some exciting opportunities that will come off the back of that. For instance there are organisations like school boards of trustees and tertiary institution councils and there are opportunities to serve on juries local authorities Maori Trust Boards boards of directors the New Zealand Council for Educational Research scholarship boards licensing trusts—the list goes on and on. A famous pop song came out a few years ago where the songwriter encouraged people to get physical. I would suggest that one of the consequences of this bill passing in the House is that people from the disabilities sector can now be encouraged to get political.  
Some of the areas in New Zealand where we still want to see a much better connect between policy and practice will be better facilitated when people with disabilities are able to serve on boards of trustees without question similar to what has happened previously with tertiary institution councils and local authorities. Frustration has been expressed by people around transport issues for instance and there has been a feeling that sometimes certain bodies are slow to take up their responsibilities to ensure the active participation of people with disabilities and to pull down those barriers that exclude participation. People will no longer be able to be do this without having to sit across the table from somebody who lives day in and day out with that barrier and they will have to continue to oppose it or neglect it while eyeballing that person across the table. I think that is an extremely good thing and I encourage the ongoing development of further participation by people within the sector. 
I was really interested to note that one of the Justice and Electoral Committee’s considerations was the financial cost of implementing the bill. United Future believes that every change will cost us and any change that does not cost us is probably not worth the paper it is written on. Of course this bill will cost—it should cost. United Future is less concerned about that aspect than obviously some members of the select committee are.  
One of the great things is that this ratification will increase the scrutiny of compliance with obligations by both the private sector and the public sector. The select committee noted in its report that it considers it “imperative that organisations companies and institutions should consider the convention when any pertinent changes are being made or policies are being developed to avoid having to make changes to comply retrospectively.” I think the great thing about what this bill does tonight is that from hereon in we should not be constantly having to retrospectively apply new gains for this sector and that those in the sector should start to see in a much more proactive way their needs for inclusion considered right at the beginning of every new issue as it comes before both national government and local bodies.  
United Future does not want to prolong this but we are very excited. We congratulate the Minister on ensuring that this bill is passed by 3 October for all the good things that come off the back of it and we congratulate and thank all the people from the Disabled Persons Assembly for being here to oversee tonight’s proceedings. 
CHRISTOPHER FINLAYSON (National) 
: 
 I will take just a brief call because other members have really said it all. The aim of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill as we know is to make amendments to certain New Zealand enactments including statutes and regulations and this will enable New Zealand to ratify the United Nations Convention on the Rights of Persons with Disabilities. As the Minister said New Zealand signed the convention at the United Nations on 30 March 2007 along with 80 other States. Since then 129 States have signed the convention and 28 States have ratified it. The convention came into force in May 2008 when the convention received its 20th ratification by a State party. 
Part 1 which we will come to in a few minutes deals with certain amendments to Part 2 of the Human Rights Act 1993 which deals with unlawful discrimination. Part 2 deals with disqualification from certain public or fiduciary offices commonly on the grounds of the Mental Health (Compulsory Assessment and Treatment) Act 1993. As the previous speaker Judy Turner observed when one goes through the bill one sees that there is a very interesting miscellany of statutes like the Juries Act 1981 the Taranaki Scholarships Trust Board Act 1957 and the River Boards Act 1908. Finally Part 3 deals with some amendments to certain regulations like the Child Support Rules 1992. 
I congratulate the officials on the work they have done. It must have been a very exacting task to trawl through the statute book to identify the statutes in Part 2 and to make the consequential amendments but it is an important task if the job is to be done properly. Much of the legislation needing change—and I refer to the statutes in Part 2—are older enactments that have not been amended for some time and that carry over wording from the past. An example is the River Boards Act 1908. I refer to section 29 which provides that certain persons may not be members of river boards. The bill refers to section 29(1)(b) where a person is detained in a hospital under the Mental Health Act 1969. I observe in passing that this legislation was last amended in 1986 and it could be that it should have been amended in 1993 when the statute to which I referred was passed—that is the Mental Health (Compulsory Assessment and Treatment) Act 1993. But it is that kind of reference that needs to be dealt with if we are to have legislation that complies with the convention. 
What the convention does not do is create new rights for disabled people; rather it builds on conventional understandings of what is required to implement existing human rights as they relate to disabled people. 
National supports the first reading and we will support the bill through all its stages. The sooner it is the law the better. I observe that in March 2007 when signing the convention the Minister Ruth Dyson stated: “It is important to bring the Convention into force as quickly as possible so as to fill the gaps that exist without it and to redress some of the discrimination and injustices that persons with disabilities have faced over many years.” However legislation was introduced to this Parliament only in July 2008. With those comments I say that National will support the legislation and we can take a closer look at Parts 1 2 and 3 in the Committee stage. 
LESLEY SOPER (Labour) 
: 
 I wanted to take a short call on this Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill particularly after it seemed to me that a National member who spoke earlier was less than wholehearted in supporting it. I remind National members that they did try to delay the process of this bill. I offer my congratulations to the submitters. I acknowledge the people from the Disabled Persons Assembly whom we have here tonight and who I believe helped to change the National Party’s mind on the importance of this bill for the disabilities sector.  
I pay a tribute to the Minister for her consultation with the sector for her promotion of this very important bill and for her dedication over a very long period to removing barriers for disabled people and to working towards a fully inclusive society. I can say that as someone who was for some years the chair of the committee of my local district health board that dealt with the disabilities sector and I know of the very good work this Minister has done over many years towards building a fully inclusive society. The debate on this bill tonight provides an opportunity to offer congratulations to the sector and congratulations to the Minister on some very good work on an important acknowledgment about just how important it is for the sector for us to address discrimination in New Zealand and in other countries.  
This bill does several things that are really important. It removes outdated and discriminatory provisions in some of our New Zealand legislation that automatically disqualified people from certain public offices on the grounds of their being mentally disordered. What we will now have is a situation where a person’s capacity to perform will be important—and that for the sector is a very important change. Secondly the bill clarifies the provision of reasonable accommodation in the Human Rights Act in certain areas where this provision is currently rather uncertain. That is pretty important and it is very important for the sector. The removal of barriers is important. We have put a lot of dedicated work into saying to the sector that we recognise the barriers we recognise the importance to these people of removing those barriers and we will deliver on doing that.  
This Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill delivers something very important: an acknowledgment to the sector. I am proud that I can support the bill tonight. I offer my congratulations to everybody who has been involved in it. Again I offer my congratulations to those submitters who actually convinced the National Party to change its attitude and to acknowledge how important it is with regard to the legislation to get to this point in time for that date in October.  
I say in closing to those people who have come here tonight to actually listen to this final passage just how important it is for them to be involved to have their voices heard to be on the committees to tell us as parliamentarians what they want and to be part of the important consultation that helps us to deliver to a sector as important as theirs. So I thank them for being here tonight. I thank them for having submitted and having been part of the process. I look forward to working with those people in the future on what is important on removing those barriers and on addressing discrimination and I say to them that they are part of the population of New Zealand whose lives we work to improve. Everything we do in this House is important in their day-to-day lives. I am really proud to see so many of them here tonight and I thank them very much for the work they have put into what we are delivering.  
Bill read a second time. 
In Committee 
TIM BARNETT (Senior Whip—Labour) 
: 
 I seek leave for the Committee stage debate to be taken as one question with separate votes on the provisions of the bill. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Leave is sought to do that. Is there any objection? There being no objection that is how we will proceed. 
Clauses 1 to 32  
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 It is a pleasure to speak on Parts 1 2 and 3 of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill. National agrees entirely with it. We very much cooperated with the Government during the process of this bill. It was right that we questioned the Government from time to time on its processes. We had a rather mealy-mouthed interpretation from the Labour list member who emanates from the deep south Lesley Soper. I thought it was a bit mean in spirit compared with the very generous spirit of the National Party towards this bill and its supporters. 
If we look at Parts 1 2 and 3 we see that a huge number of pieces of legislation have to be amended by the bill in order for us to fulfil the various requirements of the convention. There are not only amendments to the Human Rights Act 1993—an excellent Act brought in by the last National Government—but also a variety of amendments to a huge spectrum of other statutes ranging from the Community Trusts Act to as my learned colleague Chris Finlayson pointed out such unlikely legislation as the Soil Conservation and Rivers Control Act the Taranaki Scholarships Trust Board Act the Te Ture Whenua Maori Act and a whole variety of others. 
I shall for a moment concentrate on some of the issues around those suffering from psychiatric disabilities. We had a very strong submission from the Mental Health Commission which pointed out that ratifying the convention was important because the vulnerability of disabled people including people with psychiatric disability demanded international safeguards at the highest level. The convention enables disability to be understood and addressed at a social level and will serve as a positive framework for positive reforms of New Zealand law Government policies and community attitudes that promote social inclusion of people with psychiatric disabilities. There are many areas of exclusion of people with psychiatric disabilities. For instance they are excluded from education boards. There is no question that many people with a mental disability are able to make a very positive contribution to such boards but under the present statute they are not able to participate to be elected or to be appointed to those boards. These changes will make it possible for them to participate and I think that is very positive indeed. 
I think it is also important to point out how significant the prevalence of mental conditions in New Zealand is. This was very much emphasised by the Mental Health Commission. It said that about 20 percent of New Zealanders are currently experiencing or have recently experienced a mental health alcohol-related or drug-related problem. Out of the 20 percent 4.7 percent of the survey population were assessed as currently having a serious disorder. Once again that points out how very important it is that the stigma prejudice and discrimination that exist at so many levels of society towards those with mental health conditions are corrected. This legislation which will help correct that situation is very welcome.  
Hon RUTH DYSON (Minister for Disability Issues) 
:  
I want to take a brief call in the Committee stage of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill but before I do that I thank the Committee for agreeing to have this debate in one part.  
The reason I want to take a brief call is to say first of all I have two Supplementary Order Papers in my name and I want to ensure that members are aware of their production and their content. Given that every party has signed up to supporting them this is probably an exercise in futility because we have already ensured that. But I would like to do that formally and put it on the record. Supplementary Order Papers 234 and 235 will be voted on as part of the bill.  
The second reason I want to take a brief call is to acknowledge the comments made by Christopher Finlayson in the second reading in which he acknowledged the huge amount of work that has been undertaken by officials and others in order to prepare what is actually quite a small bill. I thank Mr Finlayson for his acknowledgment of the officials. A huge amount of work has gone into a very small bill. As well as the officials of course we have had disabled people themselves being part of the discussion from the very start of the process that is the reason why we have this bill. We have developed a convention that we want to ratify and the role of disabled people in actually developing the convention was not only a reflection of the principles of the Disability Strategy but also a role model and it changed the way the United Nations operated. I just want to put that on the record.  
The final point I want to make is that the reason I want my contribution to be short is that the people who are listening to this debate have a life and actually they want to spend some of it tonight by sleeping There is no debate to be had; every single party is in agreement with this bill. I urge its rapid progress. 
CHRIS AUCHINVOLE (National) 
: 
 I take note of the incredibly popular suggestion that the Minister for Disability Issues has just made and I shall speak quickly! 
I would like to add my voice to those expressing the pleasure associated with this bill being a unanimous decision of the House. I note the huge number of pieces of legislation that have to be adjusted. Even in these days of computer technology I am sure it is a massive task. I say to my colleague Paul Hutchison that I misled him: the bill does involve trout because I notice that freshwater fish legislation is included—so yes trout are there. 
The ratification of the United Nations Convention on the Rights of Persons with Disabilities is particularly important for vulnerable members of society and particularly for sufferers of psychiatric illness. Twenty percent of New Zealanders we have just been told are currently enduring some form of mental disorder. With modern psychiatric medicine I guess we can say that in most cases it will be of a temporary nature—a temporary disorder—and thank goodness for that. None the less we need legislation that prevents people from being marginalised excluded or isolated from normal life. 
Schoolchildren with special needs are worthy of special attention. I have noticed as I have gone round the New Zealand Educational Institute meetings that I have been invited to recently the difficulty associated with the Government’s decision that 1 percent of schoolchildren be regarded as needing special-needs support. How on earth can a Government decide that a particular percentage of people will be worthy of assistance? 
There is still a way to go yet in making this legislation the practical tool that I am sure everybody in the gallery hopes and expects it will be. I have enjoyed my exposure to this bill to the information it has provided and to the work of the select committee. I have enjoyed my involvement and I feel that I am a wiser person as a consequence of having been involved. It is with pleasure that National members express support for this bill. 
CHARLES CHAUVEL (Labour) 
: 
 I want to take just a brief call because Dr Hutchison made one comment that I really cannot let pass—and I am sorry to spoil what has been a multipartisan mood in the House. The Human Rights Act 1993 is excellent legislation but members opposite have no right to claim any credit for its pedigree as far as disability is concerned. The Minister of Justice at the time Doug Graham would not put disability in the Act as a ground of prohibited discrimination. It took the courage of Katherine O’Regan to put forward a Supplementary Order Paper to put that ground as well as that of sexual orientation into the Human Rights Act as the National Government of the time would not do it. Let it not be forgotten that that Supplementary Order Paper went through only due to the support of most members on this side of the House. 
I am sorry to say it but the debate I have heard tonight from members opposite is really disappointing. Those members still do not get it—this is not about trout and it is not about river boards. When there are people in the gallery whose quality of life is at stake it is really insulting to go on about the minutiae of bills like this. This is about their rights and those members need to get that. 
Part 1 agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 234 in the name of the Hon Ruth Dyson to Part 2 be agreed to. 
Amendments agreed to. 
Part 2 as amended agreed to. 
Part 3 agreed to. 
Clause 1 agreed to. 
Clause 2 agreed to. 
The Committee divided the bill into the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill and the Human Rights Amendment Bill (No 2) pursuant to Supplementary Order Paper235. 
Bill reported with amendment. 
Report adopted. 
Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill 
Human Rights Amendment Bill (No 2) 
Third Readings 
Hon RUTH DYSON (Minister for Disability Issues) 
: 
 I move  
That the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill and the Human Rights Amendment Bill (No 2) be now read a third time 
. Passing these bills will enable New Zealand to proceed to ratify the United Nations Convention on the Rights of Persons with Disabilities. This action will reinforce our leadership role with other States in the promotion of human rights for all people and continue our leading role with regard to the convention in particular. Passing these bills will result in New Zealand being confident that our legislation our policy and our practice are not inconsistent with the convention and that its ratification can proceed. I appreciate the support of other parties in the House which has made this possible. The commitment of the whole House sends a clear signal about the value that must be placed on the inclusion of disabled people in our society.  
I commend these bills to the House. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you Mr Deputy Speaker for the opportunity to speak on the third reading of this very important and benchmark legislation the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill and the Human Rights Amendment Bill (No 2). It is a great day when all parties in Parliament support legislation such as this. It is however really important also that when there are concerns about process they are taken in a constructive light. And there were concerns about process with this legislation. However the National Party has done everything possible at every stage to make sure we are in full cooperation with the Minister. And I must say the Minister has also done a great deal to ensure that we were well informed beforehand and that we were able to do what we wished to do.  
However we were of course concerned about the fact that a broad range of parties were unable to have time to submit on this legislation and that was something that I think does require a reality check. This is very serious legislation and this convention is very serious and we take it seriously. We do not want to have false expectations. We want to ensure that the aspirations of this sort of legislation can indeed be translated into reality. That is why we were concerned that people like the Certified Builders Association the unions and businesses that are affected and have to make the real practical changes to their buildings or their access ways and that do indeed have financial implications imposed upon them are appropriately consulted so that indeed I say to Mr Chauvel these expectations can be realised. I hope the member takes it on board that this is not a rose-tinted pass to everything happening suddenly. It must be done piece by piece stage by stage in a practical sincere and appropriate way. That is the way the National Party would have appreciated it being done if we possibly could have.  
However I am absolutely delighted with the way everybody has worked to get this legislation through. I too thank all of the officials because I know they have had to do a tremendous amount of hard work over this very short time span. I understand there is still more hard work to come in order to achieve the realisations that the legislation promises.  
I also sincerely want to thank the disability sector for the tremendous amount of work it has done for many years in order to bring this about. I know that it has spent on its part year after year lobbying all sorts of different people including the National Party and I must say that it has been for me a source of constant inspiration and learning to have had connection with the whole disability sector whether it be CCS Disability Action or IHC or of course DPA. It has been a great pleasure and a real privilege to be involved with the thinking and the sincerity that have been behind bringing this about tonight.  
Indeed it is a great occasion that we come to the third readings of this legislation. It is quite complicated in its background; it has heavy implications in a whole variety of legislation including the mental health legislation that I mentioned earlier on. There are quite subtle changes in the way things are changed to ensure that people who are suffering mental illnesses are able to fully participate in a whole variety of circumstances—such as on school boards—that they have not been able to in the past.  
Passing this legislation is indeed another step in terms of implementing the New Zealand Disability Strategy and in terms of going along the pathway to accessibility and ensuring that New Zealand becomes a fully inclusive society. So it is with great pleasure that the National Party supports this legislation’s passage in its third readings. 
BARBARA STEWART (NZ First) 
: 
 On behalf of New Zealand First I rise to support the third readings of the Disability (United Nations Convention on the Rights of Persons with Disabilities) Bill and the Human Rights Amendment Bill (No 2). This legislation has been an absolute pleasure to be involved with. It is a really great occasion to see it passed tonight. We have to say thank you to the officials who have done the job very well and we appreciate that. 
We in New Zealand First believe that this legislation is a very positive move forward for the disability sector and is very worthy of support. Of course it has that support from all parties in this House. That universal support I must say is very rare and when attained it can actually be celebrated. It can be seen as the result of some very successful and useful discussions with all parties involved. I counted up the number of Acts that are affected by this legislation and it is 23 so it is quite a significant number. 
I also thank the Minister Ruth Dyson. Her advocacy and dedication has ensured that all parties now have a disability policy and are aware of disability issues. 
Hon Ruth Dyson 
: No. National doesn’t have a policy yet. 
BARBARA STEWART 
: It should have. I also thank the disability sector for following up this issue with politicians and for the work that it has done. It has not been easy and I can assure the sector that we have all learned much from it. So I thank the sector for continuing to work with us. 
We in New Zealand First believe that we have made a lot of progress with the recognition of equal rights for all people but we are aware that there is still quite some way to go. We are happy now that the legislation and the strategies are all in place. Now we need to move forward and we will be looking forward to monitoring progress in this area. 
Just in closing I would like to say that New Zealand First congratulates the disability sector on the work it has done to ensure that its voices have been heard. It is a big step forward and we are looking forward to further progress. New Zealand First supports this legislation. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 I will take only a very brief call on the third readings of this legislation. It is sufficient to just say that United Future sees this legislation as not a small but a significant legislative step. But it is a step in a journey that still has some measurable distance to be covered so I say our commitment to this step tonight goes with a larger commitment to the ongoing need for policy development and the delivery of services that empower people to live lives of their own choice. We are committed to that. I thank all parties I thank the officials and I thank those in the sector who have taken the time to get into United Future’s face over the last 3 years in order to ensure that we listened to them that we continue to listen to them and that we continue to learn so that everything we advocate for on their behalf reflects what they want. Thank you. 
CHRIS AUCHINVOLE (National) 
: 
 These third readings are I guess are an opportunity for members in company with their colleagues to express thanks to those who have been involved in the preparation of this legislation. It certainly was useful to have that degree of preparation. This is also an opportunity to acknowledge again the support for the legislation from the disability sector. 
I am sorry that Mr Chauvel my colleague on the Justice and Electoral Committee was not present to hear earlier speeches. To some extent I felt he tried to cheapen the debate. Mr Chauvel should know that trout actually do play a part in therapy and on more than one occasion I have fished on the banks of the Arnold River in Westland by arrangement with people recovering from mental illness. 
This legislation has a very wide reach and it is important to ensure that it is fully and effectively developed rather than it being just a much vaunted piece of rhetoric. We have to reach beyond the disability sector to create an understanding and awareness amongst people who through no fault of their own do not have a clear understanding of the implications of this legislation. For the disability sector this legislation is a line that it has been waiting to reach and I congratulate it on reaching that line. For the rest of us it is just a beginning. The work begins now. I am sure the work and preparation that has been done by the present Minister Ruth Dyson is a tribute to the way things can be done. The rest of us must make sure that it is followed through so that the real benefits continue on well beyond this evening’s celebration. Thank you Mr Deputy Speaker. 
CHRISTOPHER FINLAYSON (National) 
: 
 I am delighted to take a brief call in the third reading stage when we analyse the legislation as it has emerged from the Committee stage. The Committee stage tonight was fairly brief but it is worth mentioning just one or two things. 
The first is that we had an extraordinary contribution from Mr Chauvel toward the end of the Committee stage. It is worth noting. He took exception to something Dr Hutchison had said about the provision in the Human Rights Act 1993 to prevent discrimination on the ground of disability. He said that the provision came not from the National Party but from Kathy O’Regan who was then the MP for Waipa. He failed to acknowledge that Kathy O’Regan was the National member for Waipa and that it was the National Party members who pushed issues of discrimination. 
The next issue from Mr Chauvel’s funny little outburst that I want to address concerns his suggestion that we on this side were focusing on the words of statutes rather than on concepts. I know that an analysis of the words of statutes is not exactly Mr Chauvel’s strong suit but when we look at the words of particularly the statutes contained in Part 2 we see how pervasive discrimination against disabled people has been and why there needs to be detailed analysis of statutes to enable that discrimination to be overcome. The point is that the amendments in Part 2 which I referred to briefly in the course of my first reading speech are primarily concerned with statutes that seek to disqualify certain people from public or fiduciary offices in a wide variety of ways be it from juries from boards from river boards or from the various other institutions that are created by the statutes referred to in Part 2. We all know that most statutes creating those sorts of bodies provide for automatic disqualification on grounds such as bankruptcy or criminal conviction but another common ground that pervaded all those statutes was disqualification—automatic disqualification—where a person was mentally disordered and there was reference to the Mental Health Act 1969 and more recently the Mental Health (Compulsory Assessment and Treatment) Act 1992. What the changes seek to achieve is to do away with automatic disqualification for mental disorder and rather to replace it with a test based on the exercise of certain powers under the Protection of Personal and Property Rights Act of 1988. 
That is why for example the officials undertook a detailed analysis of the various sections of the Juries Act where this discrimination was pervasive—for example section 8 which prohibits certain people from serving on a jury. The legislation removes the prohibition on people with a mental disorder serving on a jury but retains the prohibition on people with certain other disabilities. 
So the words are very important. Of course if we as parliamentarians are to do our job justly we need to focus on the words because it is the words that matter and it is the words that create the discrimination that the United Nations convention seeks to address. As we ratify it into our domestic law we have to deal with those pieces of legislation. 
I found it incredible as I was reading through the legislation in the course of the select committee hearing to note that the discrimination even extended to regulations as Mr Auchinvole said. The issue of course is not trout as Mr Chauvel would have us believe in that rather demeaning manner of his; the Freshwater Fish Farming Regulations 1983 actually contain extraordinary regulations that allow the manager of a licensee’s estate appointed under the Mental Health Act 1969 or the Aged and Infirm Persons Protection Act 1912 to transfer and operate a licence in certain circumstances. That is the kind of thing that needs to be swept away and it certainly happens with this legislation. 
I once again congratulate all those who have been involved in all stages of this legislation from those in the Ministry of Foreign Affairs and Trade who represented the New Zealand Government and people when the United Nations Convention on the Rights of Persons with Disabilities was being discussed to the Ministry of Justice officials who dealt so carefully with the various pieces of legislation to ensure that this good-quality product was achieved. 
I end by saying that yes National members had some concerns about process but we swept those to one side because we were more interested in dealing with the substantive matters and out of deference to the good people who made very powerful submissions to the select committee—and I do not think there was one member on the committee who was not very interested in those submissions and did not follow them closely. But there were shortcomings. For example the closing date for submissions was 21 July 2008 but the original bill was referred to us only on 22 July. The proper analyses that should have been done were not done. 
Putting all of that to one side the National Party was supportive of this legislation because in an incremental way it sweeps away some of the law that has formed the basis of discrimination against disabled people over the years. But that is only the first step as Mr Auchinvole said. One can deal with the words in a statute or the words in regulations and that is the foundation on which we can move from statutes and regulations to practices to the way that people with disabilities are able to contribute to New Zealand society to the fullest extent. National members are pleased to support the third reading of this legislation and the sooner it is passed into law the better. In fact a very good argument could be made that because the convention was ratified in March 2007 the Government could have moved much more quickly on this matter and it could have been law before now. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I share the sentiments or some of the sentiments of Chris Finlayson—certainly that the sooner the legislation is passed the better it will be. I know that it will be passed this evening and I think it is great that we have the support of all members in the House for it. As I said earlier some members were a little reticent about coming forward in terms of making money into a little more of a consideration than I think it needed to be. But with good advice and certainly with compelling submissions this is the point we are at now.  
This is the time when we should acknowledge as we did before all the work that has gone before us. This is the final stage in the process and as important as it is I say much has been done by many people in leading us to this point. I particularly want to acknowledge all the work that went in—work that actually made New Zealand a leader in terms of these rights. There are too many people involved for me to name them all but in particular I want to acknowledge Don Mackay who really played a huge leadership role in this area. Certainly I know that everyone in this House and those who have seen the work that Don has undertaken will join me in acknowledging him in this House.  
I think this legislation is historic—and I am looking at the clock because I am not going to let so much time go by that this legislation does not pass tonight. I would very much like to add along with everybody else my full support for this legislation to go forward. Thank you very much. 
LINDSAY TISCH (National—Piako) 
: 
 It is obvious that the support of the House for this legislation tonight is important. We have heard some very good speeches on the whole area of the United Nations Convention on the Rights of Persons with Disabilities. We have had people here who have expertise in this area and although I was not on the Justice and Electoral Committee I certainly realise the importance of this legislation for those people who are in the gallery tonight. National has much pleasure in supporting this legislation. 
Bills read a third time. 
Sitting suspended from 12 midnight to 9 a.m. (Thursday)