Volume 679 Week 8 - Thursday 5 April 2012 
Text is incorporated into the Bound Volume 
Volume 679 Week 8 - Thursday 5 April 2012 
[Sitting date: 05 April 2012. Volume:679;Page:1725. Text is incorporated into the Bound Volume.] 
Thursday 5 April 2012 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 Next week the House is in the autumn adjournment. When the House resumes on Tuesday 1 May the Government will look to progress a number of bills on the Order Paper including the remaining stages of the Appropriation (2010/11 Financial Review) Bill and the Committee stage of the Regulatory Reform Bill the Airports (Cost Recovery for Processing of International Travellers) Bill the Sentencing (Aggravating Factors) Amendment Bill and the Trade (Safeguard Measures) Bill. I have circulated to parties the bills that we hope to cover in the next parliamentary sitting. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I want to thank the Leader of the House for that and to ask him a little group of questions around one particular bit of legislation and that is the legislation to give effect to the proposed agreement with Skycity Casino. I seek an assurance that it will not be in the next 3-week sitting block that it will not be Budget night legislation that it will not be a confidence vote and that the personal vote that is involved will not be overridden by the National whips—that there will be a conscience vote for all members on it. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 The shadow Leader of the House is asking me to give confirmation to his proposal that the Government does nothing; I will not do that. 
Sittings of the House 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I just want to check through you with the Leader of the House whether he is proposing to take leave soon for the House to rise at 5 p.m. I do not think he has yet taken leave to give effect to that Business Committee decision. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 I had thought that was a Business Committee determination—it was agreed by the Business Committee. But as determined by the Business Committee I seek leave that the House rise at 5 p.m. today for the autumn adjournment. 
Mr SPEAKER 
: Leave is sought for that purpose. Is there any objection? There is no objection. 
Questions to Ministers 
Prime Minister—Statements 
1. 
GRANT ROBERTSON (Deputy Leader—Labour) 
 to the  
Prime Minister 
: Does he stand by all his answers to questions in the House this year? 
Hon BILL ENGLISH (Deputy Prime Minister) 
 on behalf of the Prime Minister: Yes. The Prime Minister has answered 36 primary questions covering a large range of topics and if the member wants specific answers then he will have to ask a more specific primary question. 
Grant Robertson 
: Does he still stand by his answers that Ministers involved in the ACC saga showed only a lapse of judgment and “not a terribly significant one” given that there are now five separate inquiries under way into the ACC saga and why does he just simply not appoint a judge or a QC to do a proper inquiry? 
Hon BILL ENGLISH 
: Well of course the member has taken the partial view of what the Prime Minister said. The quote the member used was in respect of the first letter I think that the Minister for ACC at the time had written. Of course in that case further evidence came to light and the Minister decided to stand down. We also need to bear in mind that the focus of a number of those inquiries is actually the privacy processes of ACC which of course are of great interest to all those who are claimants and might be claimants in the future. We believe that those matters are being adequately inquired into. 
Grant Robertson 
: Does he still stand by his answers around the appropriateness of chairing the committee and appointing his electorate chair Stephen McElrea to the board of New Zealand On Air given Mr McElrea’s attempt to intervene in the broadcast of a programme? 
Hon BILL ENGLISH 
: In answer to the question about appropriateness I did chuckle when I saw Mike Williams on TV going on about getting rid of cronyism when he was appointed by the last Prime Minister to I think five large public boards in which he interfered in every decision any of those entities made. 
Grant Robertson 
: How can he express confidence in all of his Ministers when his Ministers have stuffed up the reform of the Ministry of Foreign Affairs and Trade and stuffed up the Crafar farm decision and when his finance Minister can give only a guess as to the real value of the assets that are his only economic plan? 
Hon BILL ENGLISH 
: All I can say is that the Prime Minister has more confidence in his Ministers than the deputy leader of the Labour Party has in his leader. 
Grant Robertson 
: In reference to the Prime Minister’s answers in question time on 7 March on the provision of unconditional love by his pet and in light of what his own pollster has described as a “quartus horribilis” for his Government will he now reconsider his apparent decision to appoint his cat Moonbeam as the Government’s strategist? 
Hon BILL ENGLISH 
: No. I do not believe the Prime Minister would do that. The Prime Minister has great affection for Moonbeam and being the Government strategist is somewhat challenging and Moonbeam might not be up to it. [ 
Interruption 
] But he is available for the Labour Party. 
Mr SPEAKER 
: Order! 
Grant Robertson 
: Does he still stand by his answer that he has confidence in all his Ministers given that the Hon John Banks failed to declare a $15000 donation from Skycity in his electoral return for the Auckland mayoralty? 
Hon BILL ENGLISH 
: The Prime Minister is not aware of those issues and the inquiry should be directed to the relevant Minister. The Prime Minister would expect that all Ministers comply with the requirements of the Register of Pecuniary and Other Specified Interests of Members of Parliament and the  
Cabinet Manual 
. 
Grant Robertson 
: Would he still have confidence in the Hon John Banks as a Minister if he was aware that Skycity publicly stated that it had given $15000 to both main mayoral candidates in Auckland that it has a policy of asking those who get donations to declare them and that that donation to Mr Banks does not appear in his return for the Auckland mayoralty expenses? 
Hon BILL ENGLISH 
: The Prime Minister’s concern is that members comply with the Register of Pecuniary and Other Specified Interests of Members of Parliament and with the requirements of the  
Cabinet Manual 
 and any inquiries related to that should be directed to the relevant Minister. 
Grant Robertson 
: Would the Prime Minister continue to have confidence in a Minister who has not declared a $15000 donation from Skycity when running for the Auckland mayoralty given that the penalty for failure to properly declare a donation under the Local Electoral Act is up to 2 years in prison—enough to force a resignation from Parliament? 
Hon BILL ENGLISH 
: I can only repeat the answer I gave before and in that respect the Prime Minister is more demanding than the previous Prime Minister who tolerated a Minister who did not declare a $100000 donation that was arranged by the Labour Party from one of the Labour Party’s principal donors. 
Rt Hon Winston Peters 
: Does the Prime Minister recall the Hon Nick Smith telling this House at the same time that he made a declaration of his legal fund—identical to mine—to Dame Margaret Bazley only to have her tell this House that he lied that he made no such declaration? Does he recall that? 
Hon BILL ENGLISH 
: I am not familiar with the details of that. What I am pointing out is that the Prime Minister has a standard he expects Ministers to reach and that standard is higher than what was applied by the previous Labour Government to its Ministers. 
Rt Hon Winston Peters 
: If the Prime Minister is so keen on certain standards being upheld why is he not concerned as to what Nick Smith did when for an egregious reason being sued for defamation he had such a fund to his pecuniary advantage whereas the fund we had was for an electoral democratic purpose? 
Hon BILL ENGLISH 
: Well the purpose of the significant donation to New Zealand First by Labour’s principal donor was I think discussed at the time. Nick Smith was involved in a defamation action. The matters around his legal fees were all canvassed in detail at the time. 
Tax System Changes—Fiscal Neutrality 
2. 
TODD McCLAY (National—Rotorua) 
 to the  
Minister of Finance 
: What is the impact on the Crown’s finances of the Government’s tax changes since the 2008 election? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The Government has taken a number of steps to improve the incentives in our economy in order to encourage investment and savings and create jobs. As well as that in 2009 the Government cancelled tax cuts scheduled for 2010-11 that had already been booked in the Crown’s books. The 2008 election tax package and the 2010 Budget tax package both encouraged work and saving and discouraged spending borrowing and property speculation. We made further savings in Budget 2011 through changes to KiwiSaver and the Working for Families tax credits. Overall these changes will substantially reduce deficits and Government debt compared with the situation the Government inherited in 2008. 
Todd McClay 
: By how much will the Government’s tax changes reduce deficits and debt? 
Hon BILL ENGLISH 
: As we have explained many times the total revenue effect of the Government’s tax changes was negative in the first 2 years—that is 2008-09 and 2009-10. This provided appropriate support for the economy while New Zealand was in recession. However these changes now collect more revenue from 2010-11 onwards. In fact taking into account all the tax changes made by the Government it will collect $270 million more revenue in 2010-11 $1.5 billion more in 2011-12 $1.8 billion extra in 2012-13 and $2 billion more in 2013-14 compared with what was forecast when we became the Government. 
Todd McClay 
: What are the reasons for tax revenue falling as a percentage of GDP since 2008 as noted by the Inland Revenue Department in its briefing to incoming Ministers? 
Hon BILL ENGLISH 
: A good portion of that is due to the impact of the global recession. This reduced tax from banks financial institutions and investment funds as well as PAYE and GST. To the extent that tax policy changes have reduced this percentage they were overwhelmingly changes introduced by the previous Government including a fiscally negative cut in the company tax rate which it did not pay for until April 2008 and fiscally negative personal taxes under Labour in October 2008. 
Dr Russel Norman 
: With regard to Budget 2010 and the tax changes in Budget 2010 was Treasury wrong when it projected that the fiscal impact of those tax changes would be negative $1.1 billion over 4 years? 
Hon BILL ENGLISH 
: The Treasury forecasts were published at the time and as we said the tax package was roughly fiscally neutral with some cost in the first year and turning to a positive impact by about year 3 or 4. Of course the reason for those tax changes was fundamentally to bring an end to the bonanza of debt and spending that had driven the economy after change— 
Mr SPEAKER 
: Order! The member just asked whether Treasury was wrong not what the reasons behind the tax changes were. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. You have very helpfully assisted members in understanding Ministers’ answers. Did the Minister say they were right or wrong? I could not tell from the answer. 
Mr SPEAKER 
: It appeared to the Speaker that the Minister said those were projections at the time. The Minister appears to have given the House updated figures today. But I may be wrong in that matter and the Minister should correct me if I am wrong in that interpretation. It appears that I am not. 
Dr Russel Norman 
: Was Treasury wrong when it produced the Financial Statements of the Government of New Zealand for the financial year ended 30 June 2011 in which it gave figures for the updated impact of the 2010 tax changes and the updated impact appeared to be twice as bad as the projections in the Budget which would appear to be about $1 billion negative in the first 9 months of the operation of those tax cuts? 
Hon BILL ENGLISH 
: The member continues to mix up the effect of collecting less tax from lower growth in the economy or lower inflation in the economy—and sometimes both together—with the impact of tax rate changes. I might just point out to the House that the tax package has only just completed the first full tax year on 31 March. It has actually been wholly in place for only 1 year and it is a bit hard to tell from this close up just exactly what effects flow from the changes in rates and what effects flow from a slower economy or lower inflation. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. I am sorry the member may well have an opinion about my views on things and so forth but I am interested in whether he agrees with Treasury’s figures or not. That was the essence of the question and I did not really hear whether he did or he did not. 
Mr SPEAKER 
: If the Minister could give an answer in relation to those Treasury figures it would be helpful for the House. 
Hon BILL ENGLISH 
: Of course we agree with the figures. They are a record of the Government’s accounts and in that sense they are factual information. What we disagree with is the member’s analysis of them although I would have to say that he is much more astute and persistent about these issues than the four economics spokesmen of the Labour Party. 
Todd McClay 
: What other benefits are the Government’s tax changes delivering to the economy? 
Hon BILL ENGLISH 
: The tax changes were one part of a wider programme to tilt the economy towards savings exports and productive investment and away from the excessive borrowing spending and property speculation that had driven our growth through the previous 10 years. We need to tilt the economy so that in the next 10 years we build our capacity to earn a living from the rest of the world rather than borrow it as the previous Labour Government did and thereby damage the economy. 
Overseas Investment Rules—Prime Minister’s Statements 
3. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: Does he stand by his statement of 5 July 2010 that “I’d hate to see New Zealanders as tenants in their own country”; if not why not? 
Hon BILL ENGLISH (Deputy Prime Minister) 
 on behalf of the Prime Minister: Yes and the way the Government ensures that is to apply the Overseas Investment Act 2005. The Act sets out that foreign investment in land is permitted if a range of criteria are met including that it has economic benefits for New Zealand the prospective purchasers are of good character and arrangements will be in place to protect or enhance native bush birdlife historic heritage and walking access. 
Rt Hon Winston Peters 
: Why would the Prime Minister put up that as an example of compliance in respect of the 2005 legislation when in its major outing Mr Williamson and Mr Coleman were found to be dramatically sadly and appallingly wanting in understanding the law? 
Hon BILL ENGLISH 
: I just do not agree with the member’s statements there. The fact was that decisions made by Ministers of both the previous Government and this Government were based on a widely shared assumption backed up by legal advice that the appropriate test was the “before and after” test for investment. The judge has made a decision that says that is not what the legislation means; it actually means a “with or without” test. That is a change in the legal advice and the Government is responding appropriately by applying the test the court has directed the Ministers to apply. 
Rt Hon Winston Peters 
: Why is the Prime Minister in vain trying to defend two “rubber-stamp Ministers” when he knows that 71 percent of New Zealanders who feel betrayed by the way he has handled the Crafar farms issue appeared in a recent poll and when is he going to put New Zealand’s interest before that of China? 
Hon BILL ENGLISH 
: The member usually just goes a wee bit too far on these things. The fact is that New Zealand has an interest in lifting incomes and creating jobs and foreign investment has always been part of that process in New Zealand. Overseas investment in industries used to be in the meat industry at different times was in our infrastructure industries and now there is some foreign investment in our farming industry. It is part of the success of this economy. We would all be poorer without the foreign investment because we do not save enough to invest enough to create enough of our own jobs. 
Rt Hon Winston Peters 
: Does the Prime Minister not understand the difference between a corporate raid from overseas and true foreign investment in the case of Crafar farms when the Chinese company knows nothing about dairy farming and is seeking to use a New Zealand - owned corporation—[ 
Interruption 
] I beg your pardon? You know something about milking cows do you? [ 
Interruption 
] Oh we know who Michael Fay’s mate is. 
Mr SPEAKER 
: Order! When I am on my feet the right honourable gentleman will resume his seat or get off his feet. We do not need that kind of exchange. I do not think the interjection warranted that. I will let the member though start his question again so the members can hear it. 
Rt Hon Winston Peters 
: Does the Prime Minister not understand the difference between a corporate raid and true foreign investment—because in this case the Chinese company knows nothing about dairy farming and is seeking to use a New Zealand State-owned enterprise to act as tenants in its own country by paying at least $18 million a year in rental—and when will he start acting for the New Zealand interest rather than kowtowing as the Manchurian candidate for China? 
Hon BILL ENGLISH 
: I am pleased the member now knows the difference between an Asian language and a province in China. But look I do empathise with the member: it must have been a hard day when he got up and had to choose between the Chinese and Michael Fay. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. On a serious issue of the nature of true foreign investment surely the Prime Minister or his lackey can do better than that. That cannot be an answer surely. 
Mr SPEAKER 
: Order! The member will resume his seat. He will not refer to other members while raising a point of order as lackeys—never. Because the member has done that I will make it clear to him that if I could have understood the member’s question I could have perhaps insisted on an answer but it was quite beyond my comprehension. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. That is an answer when he accuses me of being some sort of— 
Mr SPEAKER 
: Order! The member will resume his seat right away. The question has been dealt with as far as the Speaker is concerned. The nature of the question got the answer it deserved and we are now going on to the next question. 
Hon David Parker 
: Did the Prime Minister tell New Zealanders nearly 2 years ago that his Government was tightening the rules to clamp down on farm sales to foreigners? 
Hon BILL ENGLISH 
: Yes because that is what the Government did. 
Hon David Parker 
: Is he aware that since he told New Zealanders he was tightening the rules his Ministers have approved the largest ever sale of dairy land in Southland to German investors followed by an even larger and more valuable sale of multiple dairy farms in Otago to American investors and how can he deny that these approvals together with his Government’s attempts to approve even larger sales of Crafar farms show that his earlier statements that he was tightening rules were untrue? 
Hon BILL ENGLISH 
: No. The Government introduced some new guidance to the Overseas Investment Office which made it clear that in making decisions the Government would take into account undue aggregation on the one hand and vertical integration on the other hand which was dealing with some legitimate concerns about very large-scale overseas purchases or totally vertically integrated operations which would not allow for participation of New Zealanders. Those criteria have been applied to the sales that the member mentions. We should keep this in proportion. Although the member can represent those as large sales he approved some very large sales of land and in both cases they are very small proportions of New Zealand’s land area. 
Mental Health Services Youth—Prime Minister’s Project 
4. 
Dr JACKIE BLUE (National) 
 to the  
Associate Minister of Health 
: What reports has he received about the Prime Minister’s Youth Mental Health Project announced yesterday? 
Hon PETER DUNNE (Associate Minister of Health) 
: 
 The addition of more nurses in schools has been welcomed by the Nurses Organisation as an ambulance at the top of the cliff initiative. The Chief Families Commissioner Carl Davidson applauded the initiative saying that $62 million spent wisely should go a long way to providing the support that vulnerable youth need to improve their overall well-being and make a difference in preventing youth suicide. The Prime Minister’s Chief Science Advisor Sir Peter Gluckman amongst other things said that the origin of these initiatives is an exemplar of how policy formation in complex areas can be based on informed scientific advice. Save the Children New Zealand has also enthusiastically welcomed yesterday’s announcement. 
Dr Jackie Blue 
: What was the genesis of the Prime Minister’s Youth Mental Health Project and how has it evolved? 
Hon PETER DUNNE 
: In 2009 the Prime Minister asked Sir Peter Gluckman as his Chief Science Advisor to advise on issues that young people have progressing through adolescence. The  
Improving the Transition 
 report highlighted a number of concerns. The Department of the Prime Minister and Cabinet was then asked to lead a cross-Government project to improve existing services and introduce better and more effective initiatives. Officials from the Ministry of Health the Ministry of Education the Ministry of Social Development Te Puni Kokiri and Treasury consulted with the front-line service providers practitioners youth mental health workers principals Whanau Ora providers and others and as a result the comprehensive package that was announced yesterday was developed. 
Skycity Convention Centre—Potential for Legislative Change 
5. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister for Economic Development 
: Does he agree with South Australian Treasurer Paul Snelling in relation to SkyCity that “there cannot and will not be any connection between any change to their regulatory arrangements governing the casino and their investment” and can he assure the House that a similar standard will be upheld by this Government? 
Hon STEVEN JOYCE (Minister for Economic Development) 
: 
 As I have told the member before the Ministry of Economic Development is negotiating with Skycity over the form of a potential commercial agreement. While these negotiations are ongoing it would be inappropriate for me to rule in or out what the Government might finally agree to. If there was to be any legislative or regulatory change required it would go through the usual public and/or parliamentary process in which that member of course is welcome to engage. The Government has however said that the overall economic benefit of any agreement would have to outweigh the potential negative impacts before the Government could proceed. In the case of the proposed International Convention Centre we are talking about a $350 million investment that would bring in 1000 new jobs during its construction and around 800 jobs once it was up and running. 
Hon David Cunliffe 
: Notwithstanding the ongoing negotiations does he stand by his statement on Sunday’s  
60 Minutes 
 programme that “If we get something which is appropriate we are prepared to change the law.”? 
Hon STEVEN JOYCE 
: As I said in answer to the primary question if there was something that required a change of legislation we would be prepared to do so. The member should note of course that this is a pretty unusual industry in that the size of the industry is dictated in primary legislation so it is quite difficult to change the size of the industry without changing the primary legislation. 
Hon David Cunliffe 
: Does he stand by his statement on  
60 Minutes  
that he was “not familiar” with the same casino company’s attempts to trade a convention centre for gambling law changes in South Australia and if he was unaware then what competence does he possibly have to oversee a selective trade in our gambling laws? 
Hon STEVEN JOYCE 
: I have some difficulty with the member discussing competence but anyway the— 
Hon Members 
: Oh! 
Hon STEVEN JOYCE 
: Only repaying the favour Mr Cunliffe. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. It is hard to be offended by that one but it is certainly outside— 
Mr SPEAKER 
: Order! The member could have raised a point of order—I had no problem with that—but he does not raise a point of order in that way. He knows that. There was an exchange there. In the member’s question he questioned the competence of the Minister and the Minister responded. If in asking a question a member questions the competence of a Minister I cannot stop Ministers from responding to that sort of thing. 
Hon STEVEN JOYCE 
: As I said in regard to the competence question that is open to some interpretation. But the reality of it is that at the time I was not aware of that particular thing. 
Hon David Cunliffe 
: Why did he tell  
60 Minutes 
 that he was again “not familiar” with the current gaming law that requires pubs and clubs to give 37 percent of their gaming profits to charity whereas Skycity pays only 2.5 percent and does he accept that since he is personally overseeing a shabby deal with Skycity he should have been so aware? 
Hon STEVEN JOYCE 
: The definition of “shabby” is quite interesting but perhaps the member’s beard might be some reference for us. The reality again is that there is a range of— 
Hon Trevor Mallard 
: I think that member’s jealous. 
Hon STEVEN JOYCE 
: I would be jealous if it was on my head. There is a range as we know of percentages and levies applied to the commercial gaming industry that is applied differently to the private gaming-machine industry. In fact probably the key point to point out is that the commercial industry pays company taxes whereas the private industry and the charities do not do so. 
Hon David Cunliffe 
: Does he stand by his statement in relation to the trading and gambling laws that “Actually different Governments in different countries have different priorities and I think that it is entirely legitimate for that to happen.” and how can he then explain what is legitimate about selling New Zealand’s laws when in the words of South Australia’s Treasurer Skycity would be “dreaming” to think that it would sell its law in exchange for an investment? 
Hon STEVEN JOYCE 
: Again I think the member is in an interesting space here for two reasons. One is that actually it is appropriate for different countries to have their own laws. If he is suggesting that somehow we should adopt all Australian law well that is an interesting point in itself. And secondly the so-called spokesman on economic development for the Labour Party is once again decrying something that would lead to growth in the New Zealand economy. On the one hand the Labour Party is always talking about more jobs more jobs but it wants to stop every single initiative that would lead to more jobs in this economy. 
Hon David Cunliffe 
: I seek leave to table a transcript of the  
60 Minutes 
— 
Mr SPEAKER 
: No we do not seek leave to table transcripts from recent programmes. 
Transport Funding—Value for Money 
6. 
JULIE ANNE GENTER (Green) 
 to the  
Minister of Transport 
: Did the Government compare the costs and benefits of the Roads of National Significance against those of other transport projects before announcing them to ensure that it is getting best value for public money; if not why not? 
Hon GERRY BROWNLEE (Minister of Transport) 
: 
 Yes. I think it is worth pointing out to the member that the roads of national significance were identified by the regions as being good for them. If the local roads etc. were adequate we would not have had to bring up this project. 
Julie Anne Genter 
: How did the Government weigh up the costs and benefits of the roads of national significance programme before announcing it when the benefit and cost analyses on many of the roads of national significance were not undertaken until 9 months after the programme was announced? 
Hon GERRY BROWNLEE 
: I do not think the member should get too hung up on the benefit-cost analysis on projects. Clearly she does not because the Green Party keeps pushing the Auckland central business district rail loop which of course has an appalling benefit-cost ratio but it does not stop the Green Party members saying it is a great thing. We have made our decisions and our determinations and put the programme in place by taking on board the requests of regions. 
Julie Anne Genter 
: Is he saying that it is this Government’s policy to commit billions of dollars to projects before knowing whether they will be of benefit to the country? 
Hon GERRY BROWNLEE 
: No but I was pointing out that her party’s policy does exactly that. 
Julie Anne Genter 
: I raise a point of order Mr Speaker. I was trying to clarify his answer to find out whether it was Government policy to commit billions of dollars on projects before knowing whether they were of benefit to the country. I was not inviting comment— 
Mr SPEAKER 
: Order! The Minister answered that very clearly; he said no. 
Julie Anne Genter 
: Has he read the Ministry of Economic Development’s latest petrol price forecast which has prices trending 20 percent to 30 percent higher than the prices assumed in the roads of national significance benefit-cost analyses and will he be reassessing the prioritisation of the roads of national significance in light of the long-term upward trend in petrol prices? 
Hon GERRY BROWNLEE 
: I have read those trends for a number of years. They do fluctuate and if they were to be the determinant of roading projects then we would never have built any roads in this country at all. 
Julie Anne Genter 
: So is the Minister saying that it is better to make a bad decision quickly and stick to it rather than to review a decision in light of evidence? 
Hon GERRY BROWNLEE 
: No. Let us be clear: there has not been a bad decision here and the public has endorsed our programme. 
Julie Anne Genter 
: What assurance can he give the public that the Government is making the best possible use of the taxes we pay for transport when his Government has decided to prioritise the roads of national significance without comparing them with other transport projects when there are many other projects that are significantly more cost-effective than the roads of national significance and when the business cases for the roads of national significance are now hopelessly out of date according to the Government’s own petrol price projections? 
Hon GERRY BROWNLEE 
: None of that is correct. 
Julie Anne Genter 
: I seek leave to table a document. It is from the New Zealand Transport Agency. It is the Puhoi to Wellsford project summary statement published in January 2010 which shows that the Puhoi to Wellsford project has a benefit-cost ratio of 0.8. 
Mr SPEAKER 
: Leave is sought to table that document. 
Hon GERRY BROWNLEE 
: It is available online. 
Mr SPEAKER 
: Well members can refuse. I have put the leave. Leave is sought to table it. Is there any objection? There is objection because it is available online. 
Hon GERRY BROWNLEE 
: I raise a point of order Mr Speaker. It is you who has set the rules for what can be tabled in this House. It is inappropriate to put members back on the spot turning those sorts of things down. That document is available online to anyone who wants to get it. [ 
Interruption 
]  
Mr SPEAKER 
: Order! Some order will come back to the House. I will take the point of order first from Gareth Hughes. 
Gareth Hughes 
: If you applied that rule as strictly as the Leader of the House is implying 99 percent of documents from the OECD to Government departments to university reports would be ruled out of order for tabling in this House to the detriment of members in this House. 
Mr SPEAKER 
: Order! I think this matter can be dealt with with a little sense. There are some documents for which I obviously do not put leave to the House because I want to discourage the practice of members seeking leave for them. However the Speaker does have to be careful not to take that too far because the decision on whether or not leave is granted is ultimately the members’. I am very conscious of that and that is why I do not want to take my ruling too far as Gareth Hughes pointed out. It might not have escaped the attention of some members that the Speaker once perhaps had a conflict of interest with respect to this document and therefore did not want to be seen to be ruling it out from being tabled in the House. I wanted to make sure that the House had the chance to make a decision on that. 
Julie Anne Genter 
: I seek leave to table the Ministry of Economic Development’s  
Energy Outlook 2011: Reference Scenario and Sensitivity Analysis 
 which was published in January 2012 and which shows petrol prices trending 20 to 30 percent higher than they were in 2009. 
Mr SPEAKER 
: Leave is sought to table this document. Is there any objection? There is no objection. 









Document by leave laid on the Table of the House. 
Mental Health Services Youth—Prime Minister’s Project 
7. 
MELISSA LEE (National) 
 to the  
Minister for Social Development 
: What recent announcements have been made to improve the way the Government deals with young people who have mental health problems? 
Hon PAULA BENNETT (Minister for Social Development) 
: 
 Yesterday the Prime Minister announced a number of initiatives to better support young people dealing with mental health issues. These are designed to provide significantly better earlier and more modern help for young people suffering from mental illness. The total contribution of the Prime Minister’s youth mental health package from Vote Social Development is $12.2 million over 4 years. 
Melissa Lee 
: How will this initiative better support secondary students in schools and in their communities? 
Hon PAULA BENNETT 
: Part of the package places specially trained youth workers into selected secondary schools and into youth one-stop shops as part of the youth mental health package. An extra 19 youth workers will be introduced. This will support an estimated 20000 students in 27 schools at a cost of $8.6 million over 4 years. 
Melissa Lee 
: How will these changes support parents families and friends to help young people suffering from mental health issues? 
Hon PAULA BENNETT 
: We know it is not always easy to work teenagers out in any forms actually but particularly when they are showing signs of distress and to know how to respond to that. Parents families and friends have an important part to play in identifying mental health issues in young people close to them and for many of them they are not sure what is a real issue and what is actually normal teenage behaviour. So an extra $1 million over 4 years has been allocated for a new contestable fund for non-governmental organisations to help them get better information out to parents families and friends who need it. 
Foreign Affairs and Trade Ministry—Implications of Proposed Changes 
8. 
Hon PHIL GOFF (Labour—Mt Roskill) 
 to the  
Minister of Foreign Affairs 
: What concerns if any have been expressed to him that proposed changes to the Ministry of Foreign Affairs will damage New Zealand’s promotion of its international trade and foreign policy interests? 
Hon CHRISTOPHER FINLAYSON (Minister for Treaty of Waitangi Negotiations) 
 on behalf of the Minister of Foreign Affairs: Concerns have been expressed about aspects of the proposed changes by ministry staff and external parties. The Minister has emphasised the need for the ministry leadership to pay close attention to all feedback before decisions are made and from the outset the Minister has made it clear that he will not permit changes that compromise New Zealand’s foreign affairs and trade interests. 
Hon Phil Goff 
: What was his response to the head of mission who came back to Wellington this week and said that his most able and talented staff had sought references from him because they were looking for jobs outside the ministry and to the collective statement by 46 heads of mission that said that the change proposals were botched and were undermining the ministry’s most important resource its competent and committed workforce? 
Hon CHRISTOPHER FINLAYSON 
: As I said in the answer to the primary question the Minister is very concerned to make sure that no changes affect the foreign affairs and trade capabilities of this country. He has had very useful discussions with the heads of mission when they returned to Wellington and is confident that there will be a positive outcome. 
Hon Phil Goff 
: If the Minister was so concerned why did he not call in his front-line staff to ask them how he could improve value for money in the ministry’s spending before he wasted over $9 million on expensive consultants in a grossly inflated change office who have only come up with proposals that even he admits will not work and will damage the morale and commitment of his ministry staff? 
Hon CHRISTOPHER FINLAYSON 
: Well change can often be a difficult and fraught exercise and this is a ministry that for some time in the opinion of this Government has required restructuring and modernisation. It is certainly not regarded as a bad use of money. It is a shame that Minister made no progress— 
Mr SPEAKER 
: Order! Had the member answered the main thrust of the question somewhat I would have been less concerned about the last comment. But if I remember correctly the main thrust of the question asked why the Minister had not consulted with the front-line officials of the Ministry of Foreign Affairs and Trade before deciding on the changes and I did not hear the Minister answer that main thrust of the question at all. Given the way the Minister departed at the end I invite the Hon Phil Goff to repeat his question. 
Hon Phil Goff 
: Why did he not call in his front-line staff to ask them how he could improve value for money in the ministry’s spending before he wasted $9.2 million on expensive consultants and a hugely inflated change office which have simply come up with proposals that even he admits will not work and will damage the morale and the professionalism of his ministry? 
Hon CHRISTOPHER FINLAYSON 
: As I said in the answer to the previous question I dispute that the sum is wasted money. As I said it was a fraught process and change and modernisation can be difficult but I dispute that it is a waste of money. I trust that answers the question. 
Hon Phil Goff 
: Does he agree with the Ministry’s briefing to him as incoming Minister that Europe is the world’s largest economic entity; our third most important export market; a major source for us of migrants capital tourists and innovation; and an important political and diplomatic partner; if so why is he now suggesting that we close nearly half of our embassies in Europe? 
Hon CHRISTOPHER FINLAYSON 
: It would be very difficult to disagree with those propositions in the briefing to incoming Ministers. The issue really is whether the resources are in the right place; whether having an embassy in Stockholm to satisfy Helen Clark’s wishes is a good use of money remains to be seen. But I would say this: his Cabinet colleague the Attorney-General opened an embassy in Vienna some years ago because it was regarded that that was a very important place and a jolly good time was had by all there. 
Hon Phil Goff 
: God knows what that answer meant— 
Mr SPEAKER 
: Order! 
Hon Phil Goff 
: —but my supplementary question is how will his proposal to close Madrid Stockholm Rome Warsaw and The Hague—nearly half of our total number of embassies in Europe—assist his intention to have a comprehensive framework agreement with Europe including freer trade access; and how will it assist embassies in Europe to get that message across to those individual countries? 
Hon CHRISTOPHER FINLAYSON 
: What the member seems to be saying is that once an embassy is opened it should never be shut; there should be absolutely no change. What has happened as illustrated by the Vienna example is that circumstances and needs change and embassies will be opened and embassies will be shut from time to time. That is all part of the business of running the Ministry of Foreign Affairs and Trade when one is a small country. There is nothing magical in that but the proposition that once an embassy is opened it should never be changed is with respect ridiculous. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. Of course I never made the suggestion that once an embassy is open it should never be closed. What I asked him specifically was how the closure of those five embassies would assist in the negotiation of a comprehensive framework agreement. I have had no answer to that at all—no attempt. [ 
Interruption 
] 
Mr SPEAKER 
: Order! I realise that these sorts of questions have no precise answer but the question is about a serious issue and it lists some embassies. I do not know whether they are actually slated for closure or not but it asked how that would assist the development of a comprehensive framework agreement with Europe which one understands is on the Government’s agenda. In the answer the Minister said that just because embassies open does not mean to say they should stay open and some open and close. But the question did ask specifically about the closure of particular embassies in relation to the development of a framework agreement with Europe. Some answer in relation to that would be helpful to the House. 
Hon CHRISTOPHER FINLAYSON 
: I said needs change depending on the particular circumstances and just because there has been an embassy in Rome since shortly after the Second World War does not mean that those particular strategic goals need to be reflected in an embassy in Rome forevermore. 
Hon Phil Goff 
: I seek leave to table a letter from the Minister of Foreign Affairs to the Secretary of Foreign Affairs suggesting that in addition to the proposed closure of Stockholm and Warsaw this would call for consideration of significant downsizing or closure of The Hague Rome and Madrid. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 









Document by leave laid on the Table of the House. 
Schools—Ultra-fast Broadband 
9. 
SIMON O’CONNOR (National—Tamaki) 
 to the  
Associate Minister of Education 
: What recent announcements has the Government made on the school network upgrade project? 
Hon CRAIG FOSS (Associate Minister of Education) 
: 
 This week I announced that an additional 90 schools will receive Government-subsidised internal network upgrades in readiness for ultra-fast broadband. This programme is a key part in ensuring that the Government’s significant investment in ultra-fast broadband delivers the expected benefits for schools and our young people. One-third of all eligible schools have now had their networks upgraded as we roll out our policy for 21st century schools. 
Simon O’Connor 
: What are the benefits of upgrading our schools’ internal networks? 
Hon CRAIG FOSS 
: These upgrades will allow our schools throughout New Zealand to realise the benefits of ultra-fast broadband. Having better access to ultra-fast broadband will contribute to our students achieving better educational outcomes. Making New Zealand’s schools some of the most connected in the world is a crucial part of building a more competitive and productive economy which is one of this National Government’s key priorities. 
Transport Funding—Value for Money 
10. 
PHIL TWYFORD (Labour—Te Atatu) 
 to the  
Minister of Finance 
: Have Treasury officials reviewed Ministry of Transport calculations including projected traffic volume growth per capita change in volumes over the last seven years and the alignment with GDP and if so is he satisfied that the currently planned transport spend is good value for money? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I am advised that Treasury has discussed information of this sort with the Ministry of Transport in producing the National Infrastructure Plan. The Ministry of Transport and the New Zealand Transport Agency have the expertise to review the specific data in this area. As part of Treasury’s ongoing work with the Ministry of Transport and other agencies it attempts to understand the economic case for all investment and in fact is working hard to set high standards for agencies to make the case for more investment. I do expect the transport spend to be good value for money as we expect with spending on behalf of all taxpayers. 
Phil Twyford 
: What is the projected growth in State highway traffic volumes used in calculations of benefit-cost ratios for the roads of national significance? 
Hon BILL ENGLISH 
: I cannot answer the member’s question. 
Phil Twyford 
: What has the per capita rate of change in vehicle volumes on State highways been for the last 7 years? 
Hon BILL ENGLISH 
: I cannot answer that question either. 
Phil Twyford 
: I seek leave of the House to table a table from the New Zealand Transport Agency that shows a 1.2 percent decrease in vehicle traffic in the last year and that vehicle volumes have been stagnant since 2004. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 









Document by leave laid on the Table of the House. 
Phil Twyford 
: As Minister of Finance does he endorse the Minister of Transport’s statement in the House today that the member should not get too caught up on the cost-benefit analysis when his Government is spending billions of dollars on State highway projects supposedly on the basis of benefit-cost ratios and does this reflect his Government’s commitment to value for money? 
Hon BILL ENGLISH 
: Of course the Government pays a good deal of attention to the cost-benefit ratios. I suspect the member is somehow taking the long way to getting to talking about the central business district rail tunnel and I must say the Greens do a much better job of that than Labour does. 
Phil Twyford 
: I raise a point of order Mr Speaker. I asked the Minister of Finance whether he endorses his colleague’s statement in the House today. He did not address it. 
Mr SPEAKER 
: What he said in answer is that the Government is interested in cost-benefit ratios for transport initiatives and I think that was a pretty clear answer for the member. 
Phil Twyford 
: Does he agree that spending on this scale—$10 billion over 7 years on projects with such poor predicted economic return—puts it right up there with Muldoon’s Think Big scheme in the 1980s and could this poor quality spending be the reason that this country continues to lag so far behind Australia? 
Hon BILL ENGLISH 
: No I do not agree with that. The roads of national significance projects do have significant economic benefit and I invite the member to try to shut down some of the motorways that have been built if he thinks they are a bad idea. If the member is going to focus on evidence and cost-benefit ratios he needs to understand that quite a lot of the favourite public transport projects have extremely poor cost-benefit ratios and negligible or negative economic benefits. 
Dr David Clark 
: What does he say to angry taxpayers in Dunedin and in all southern provinces who know that they are paying money hand over fist for the roads of national significance projects of dubious economic benefit when not one of these projects is south of Christchurch? 
Hon BILL ENGLISH 
: Taxpayers in Dunedin and regular visitors such as me are very pleased to see that— 
Hon Members 
: Visitors! Ha ha! 
Hon BILL ENGLISH 
: Well Dunedin is actually 150 miles from Dipton. They are very pleased to see the Caversham—[ 
Interruption 
] The Labour Party would not have a clue about the geography of the South Island because it has no members down there. They are very pleased to see the Caversham multi-lane project going ahead. It is the first significant roading project for a long time in Dunedin and the member should be supporting it not criticising it. 
Christchurch Recovery—Energy Efficiency and Conservation Authority Initiatives 
11. 
NICKY WAGNER (National—Christchurch Central) 
 to the  
Minister of Energy and Resources 
: What initiatives has the Energy Efficiency and Conservation Authority implemented to help support Christchurch’s Recovery? 
Hon PHIL HEATLEY (Minister of Energy and Resources) 
: 
 The Energy Efficiency and Conservation Authority has given a greater weighting to Christchurch applications for the authority’s business grant funding managed the initial phase of the chimney replacement programme and worked with the Canterbury sustainable homes working party to facilitate energy-efficiency improvements during house repairs and construction. 
Nicky Wagner 
: What is an example of an initiative to help improve the energy efficiency of homes as they are being repaired? 
Hon PHIL HEATLEY 
: I am pleased to tell the House that the Energy Efficiency and Conservation Authority has contributed $150000 to a joint project led by Beacon Pathways that will demonstrate opportunities to improve energy efficiency in homes at a marginal cost during the repair process. It is currently repairing 10 to 15 example quake-damaged homes to a better energy-efficiency standard than the like-for-like repair provided by the Earthquake Commission or insurers. We are hoping people will follow that example. 
Oil and Gas Exploration Kaikoura—Consultation and Environmental Risks 
12. 
GARETH HUGHES (Green) 
 to the  
Minister of Energy and Resources 
: Has he received advice on the economic impacts of a major oil spill off the coast of Kaikoura? 
Hon PHIL HEATLEY (Minister of Energy and Resources) 
: 
 No but I have received comparative advice on the economic impacts of the oil and gas industry off the Taranaki coast where the total industry contributes $2 billion to the local economy and provides 5000 jobs all without a major oil spill since 1865. 
Gareth Hughes 
: Has the Minister seen the letter from the Mayor of Kaikoura District Winston Gray which identifies all the environmental risks from the blocks right next to the marine mammal sanctuary including the significant depth 2.5 kilometres the fact that fault lines go though the blocks and the fact that we are talking about the location of protected species such as the Hector’s dolphin and which says the mayor does not have confidence in the capacity of New Zealand’s authority to react to an oil spill or does the Minister not think the environmental effects of an oil spill are important to look into? 
Hon PHIL HEATLEY 
: Yes. 
Gareth Hughes 
: Given that the extent of the Government’s consultation with the Kaikoura community has simply been a teleconference between the Kaikoura District Council and the Ministry of Economic Development and that the whole community has expressed significant opposition including people in six out of 10 households in Kaikoura signing the petition will the Minister commit to community consultation? 
Hon PHIL HEATLEY 
: I am advised that my officials are engaged with the local Kaikoura community. Certainly people—particularly those in leadership—have written to me. I have responded to them and I am going to continue engaging with them. 
Gareth Hughes 
: Does the Minister think a single teleconference is sufficient community consultation? 
Hon PHIL HEATLEY 
: I was not involved in the teleconference. I could not possibly comment. What I can comment on is the community engagement that my department is involved in with the Kaikoura community and with wider New Zealand. I enjoy the community’s advice. 
Gareth Hughes 
: I raise a point of order Mr Speaker. Surely the Minister can have an opinion on whether it is sufficient to teleconference or not— 
Mr SPEAKER 
: Order! It is difficult for me to ask a Minister to give a more comprehensive answer than the Minister did to that kind of question. I think we have to be reasonable. 
Kevin Hague 
: I seek leave to table the letter from Kaikoura District Council mayor Winston Gray calling for a moratorium on the block tenders and full community consultation. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 









Document by leave laid on the Table of the House. 
Appointments 
Independent Police Conduct Authority 
Hon JUDITH COLLINS (Minister of Justice) 
: 
 I move  
That pursuant to sections 5 and 5A of the Independent Police Conduct Authority Act 1988 and section 32 of the Crown Entities Act 2004 this House recommends His Excellency the Governor-General appoint Judge Sir David James Carruthers KNZM as chairperson of the Independent Police Conduct Authority for a term of five years from 16 April 2012.  
The function of the Independent Police Conduct Authority is to investigate complaints alleging any misconduct or neglect of duty by a member of the police or concerning any practice policy or procedure of the police affecting the complainant. The authority is also responsible for investigating any incident involving serious bodily harm or death notified to the authority by the Commissioner of Police. 
Independent agencies such as the Independent Police Conduct Authority are critical to democracy in New Zealand. They contribute to our strong and independent justice system and help to maintain high public confidence in our institutions. Section 5 of the Independent Police Conduct Authority Act prescribes that the authority consists of up to five members appointed by the Governor-General on the recommendation of the House of Representatives. Section 5A requires that one member is to be appointed as the chairperson of the authority. That person must be a judge or a retired judge. 
The authority has been ably chaired by Justice Lowell Goddard QC for the past 5 years and I would like to acknowledge the fine work done by Justice Goddard during her term in office. There are currently three additional members of the authority. There also exists the possibility of a legal challenge being made to the High Court in relation to a report of the authority and to that end I believe it to be preferable for the chairperson to be from a different bench or to be a retired judge. 
Judge Sir David Carruthers is a former Chief District Court Judge and former Principal Youth Court Judge. He was appointed a District Court judge in 1985. He has had an extensive and impressive judicial career. Sir David has been chairperson of the New Zealand Parole Board since 2005. I welcome the support of the parties in the House for this very important appointment. 
CHARLES CHAUVEL (Labour) 
: 
 The motion in respect of appointments to the Independent Police Conduct Authority is carefully worded. It refers first of all to sections 5 and 5A of that statute the Independent Police Conduct Authority Act and it does so because those provisions are carefully cast to make it clear that this is not an ordinary appointment. It is an appointment made by the Governor-General on the recommendation of this House. So unlike most of the statutory appointments that we see from day to day this is not a case of a Minister making a recommendation to the Governor-General but a case—in this independent Crown entity’s situation—of this House as a whole making that recommendation to His Excellency. That is why the wording of the motion is phrased the way it is. That is the first point that I want to make and it always is worth repeating. 
The Independent Police Conduct Authority is not a creature of the executive. It is a creature primarily of this legislature because we all have the opportunity to contribute— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! Could I just advise members that there is a longstanding convention that members should not conduct conversations in the House unless it is necessary to do so and then only in a way so as not to disturb proceedings. So if people are leaving the Chamber would they please show some courtesy to the member who is trying to address the business of the House. 
CHARLES CHAUVEL 
: Thank you Mr Speaker. Having made the point that the motion is carefully worded so as to respect the unique nature of the Independent Police Conduct Authority I want to thank the Minister of Justice for her consultative efforts around the House and to acknowledge those. She has taken up that role on behalf of the House in order to come to a recommendation that we can make to the Governor-General about the successor to Justice Lowell Goddard. 
It is informative to take a look at the wording of the statute apart from the appointment provisions that I have referred to because of course until 2007 the Independent Police Conduct Authority was the Police Complaints Authority and the changes in 2007 were more than of nomenclature. At that time the Parliament ensured that the body had its own investigative staff and that it could actually deal with complaints about the way in which the police conducted themselves without having to rely on the police themselves for that function. That was a very significant change and it does bear repeating as we remind ourselves of what we are actually doing today. 
We heard the Minister tell the House about her reason for taking the view in proposing a fresh appointment to chair the authority as to why it was not considered appropriate to propose an additional 5-year term for the Hon Justice Goddard. The reason was that Justice Goddard is a sitting judge of the High Court and if there were ever a judicial review application brought in respect of an investigation or a decision of the Independent Police Conduct Authority that application would be made in the first instance to the High Court itself. 
Obviously a High Court judge might feel some lack of comfort in considering whether or not that judge should entertain an application for review of what was effectively the decision of another warranted High Court judge so I accept the logic that was advanced although I think it is worth noting for the record that there are cases where this Parliament has dealt with the issue of what to do in respect of applications for review when the reviewee is a High Court judge or a High Court judge equivalent. In the Employment Relations Act for example applications for judicial review of Employment Court decisions which are regarded in our system of precedence as broadly equivalent to those of the High Court must be brought directly to the Court of Appeal. So there is an alternative mechanism that would be open to us as a legislature should we take the view that it was appropriate to continue to have the Independent Police Conduct Authority chaired by somebody of the stature of a High Court judge. We could actually provide in the statute and in statutes like this for any review applications to be made to the Court of Appeal directly. It might well be worth bearing in mind that precedent in future because I myself think it would be appropriate to preserve the flexibility to have a High Court judge heading a body as important as the Independent Police Conduct Authority. 
I just want to say a few words in praise of Justice Goddard. She is a very accomplished and well-regarded judge of the High Court. She graduated with her Bachelor of Laws from the University of Auckland in 1974 she was admitted to the Bar in 1975 and commenced practice on her own account as a barrister in 1977—one of the few women practising in that capacity in New Zealand at the time. Her trailblazing role in the law was further recognised in 1988 when she was appointed a Queen’s Counsel. Then she became in 1992 Deputy Solicitor-General for New Zealand when Craig Thompson as he then was was appointed a District Court judge. 
I worked with Justice Goddard at the Crown Law Office for a number of years. I enjoyed very much working with her as a colleague. As I said she was a very able and well-regarded member of the staff of the office and she held the warrant of Crown solicitor for Blenheim as well as effectively supervising all the criminal appeal work done by the Crown in her time at the office. This is what fitted her so well for the role of chair of the Independent Police Conduct Authority. She had been herself a prosecutor she had held a warrant as a Crown solicitor and she had supervised criminal appeal work. So she had worked closely with the police knew how the system functioned and also had the independence and the integrity that members at a senior level of the Bar are expected to bring to the position that she held. Her honour was appointed in 1995 to the High Court bench and she is thus the senior sitting High Court judge as far as service is concerned. I wish her well for her return to the bench and for any other roles that it might be thought appropriate for her to perform. 
In conclusion I want to say a few words about Judge Sir David Carruthers. The judge is an excellent recommendation from this House to the Governor-General. He was appointed a District Court judge in 1985. At the same time he held Family Court and Youth Court warrants. He has been the Principal Youth Court Judge and the Chief District Court Judge. Prior to his appointment to the bench he was a family law specialist. He was well respected in the profession and well regarded. He was an appropriately genial and collegial leader of the courts where he held principal judge roles and I have every confidence that he will bring the right sorts of attributes to the role of chairing the Independent Police Conduct Authority as Justice Goddard did in her time as chair. 
The appointment of Judge Sir David Carruthers to the Independent Police Conduct Authority will leave a vacancy in the chairpersonship of the New Zealand Parole Board. I think it is appropriate as we congratulate the judge on his pending elevation to the chairpersonship of the Independent Police Conduct Authority that we ask the Minister to bear in mind the importance of the need to make sure that the Parole Board is well led as it has been by Judge Carruthers in his time there. I join other parties in commending this motion to the House and wishing the judge well on his role in the Independent Police Conduct Authority. 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. I am pleased to take a brief call to support this recommendation that Judge Sir David Carruthers be appointed chair of the Independent Police Conduct Authority. As the Minister of Justice has pointed out even a very brief resumé analysis of Sir David’s career indicates he is an entirely appropriate appointment to what is a very demanding and a very important role and we are confident that he will perpetuate the integrity and the competence that have been displayed by his predecessor Justice Goddard. Justice Goddard was the incumbent head of the former Police Complaints Authority at the time legislation was passed that restructured and re-formed that body into the Independent Police Conduct Authority that we know today. 
The Greens are particularly pleased that the Independent Police Conduct Authority has demonstrated its worth given that the party and in particular our former MP Nandor Tanczos at the time was a very powerful advocate for the establishment of a genuinely independent authority. It was very clear in the early 2000s if not earlier that the existing model was functionally and structurally simply not up to the task of meeting people’s reasonable expectations of seeing good well-organised and well-conducted investigations into the actions and incidents concerning the police and the use of their powers. 
I believe that the Independent Police Conduct Authority has delivered on the expectation that it would improve the depth and quality of investigations remembering of course that it is called in only for the most serious matters where there are significant issues of public interest to be considered. I think it is to the credit of the Independent Police Conduct Authority under the leadership of Justice Goddard that it has on occasion exonerated police actions and has found no blame attached to police actions or decisions made in particular incidents and on other occasions has been very forthright in highlighting any shortcomings in police actions. I recall a speech made by Nandor Tanczos at the time along the lines that the Independent Police Conduct Authority was to be a watchdog. There was an expectation that it would occasionally bare its teeth and I believe that the Independent Police Conduct Authority has not resiled from doing that on occasion but also has offered very useful and clear recommendations about changes. And it is evident that those recommendations have almost invariably been adopted and taken up. It has been a successful organisation and I am sure that under Sir David’s leadership it will continue to be so. 
I would like to take this opportunity just to comment on one issue of the practice of the Independent Police Conduct Authority. With all due respect I would like to encourage the incoming chair and his board to consider change in a particular practice of the board to date. It has always been the practice of the board that the investigative teams it appoints to undertake investigations are drawn from police forces both in New Zealand and overseas typically from Commonwealth countries. It is entirely sensible of course that the investigative officers do have significant depth and breadth of experience in policing matters including firsthand policing experience. I would argue however that the work of the authority could be improved and enriched—enhanced in fact—if the investigative teams also routinely included people from professions from experiences from backgrounds and from disciplines other than front-line policing. 
Police Commissioner Marshall has recently talked of effecting change in the culture of the New Zealand Police particularly in relation to this new strategy around Prevention First which—I would comment as an aside—is an approach that the Greens wholeheartedly support. This talk of culture from the commissioner recognises that police forces in common with every other workforce and with every other workplace do have a particular culture and an underlying set of shared assumptions of beliefs of values and of principles. Given the uniqueness of police work we think it is fair to suggest that the culture of police forces in countries from which our investigating officers have been drawn is sufficiently similar that they would have more points of similarity than they would have points of difference. Although that is undoubtedly a strength that enables a high degree of compatibility it also potentially is a weakness. We believe that bringing into these teams individuals who come from different cultures and with different cultural frameworks would enhance and broaden the capacity of the authority to do a very broad and deep analysis of incidents to bring in different sets of eyes and different perspectives from those who have come from a policing culture. 
Having made those remarks I will finish by simply again reiterating that we commend Justice Goddard on a job very well done and we wish the incoming Sir David Carruthers every success. We are sure that he will continue the work that has been begun by his predecessor and will bring considerable regard to the authority. Thank you. 
KRIS FAAFOI (Labour—Mana) 
: 
 Taloha ni Mr Speaker. Thank you very much for the opportunity to speak to Government motion No. 1 which is that this House recommends that Judge Sir David Carruthers be appointed as the chairperson of the Independent Police Conduct Authority. I just want to pick up on a comment that my colleague Charles Chauvel made in that this is an appointment from the House to ensure the integrity of the Independent Police Conduct Authority. I do also want to acknowledge and Charles Chauvel has mentioned it on many occasions the consultation that the Minister of Justice has had with this side of the House in order to come to the decision that Judge Carruthers should take over as chair of the Independent Police Conduct Authority. 
As the Minister pointed out it is the role of the Independent Police Conduct Authority to investigate the conduct of the police and also to investigate any incidents of serious harm or death that may come about as a result of the actions of the police. I guess given that there was a release of a report this week into the fatal shooting in Auckland resulting in the death of Halatau Naitoko we do remember the importance of the Independent Police Conduct Authority in making sure that all the measures and all the procedures in place with the police are followed as closely as possible. 
I also want to take this opportunity to commend the work of Justice Lowell Goddard over her term as the chair of the Independent Police Conduct Authority. I understand both from the police and the staff at the Independent Police Conduct Authority that she was very well respected and the reports that she handed down over her time as the chair of the Independent Police Conduct Authority are very well respected as well. 
 The Independent Police Conduct Authority of course is very crucial in terms of making sure that there is public confidence in the police and ensuring that where the public question any actions taken by members of the police force they are fully investigated. That is as the Minister said critical to the democracy that we live in. Also given that in the last 10 or 12 years there have been some question marks around the culture of our police force the Independent Police Conduct Authority is there to ensure that there is a culture change within the police. I do note that a significant culture change has happened with the police force over the last 7 to 10 years and that the Independent Police Conduct Authority has gone a long way in making sure that work is carried out on the front line and at management level to ensure that that culture change does happen. 
In terms of our new chair Judge Sir David Carruthers again I just point out his achievements on the bench. He was appointed to the District Court as a judge and with Family Court and Youth Court warrants in 1985. In 1995 he was also made Principal Youth Court Judge and was also Chief District Court Judge from 2001 to 2005. As a number of speakers on this motion have commented he is well regarded by the legal fraternity and that is why it has been recommended to the Governor-General that he should take this position as chair of the Independent Police Conduct Authority. 
As a number of other speakers have also commented Justice Goddard has done a fantastic job in terms of her term at the Independent Police Conduct Authority. I do want to put on the record her last appearance before the Law and Order Committee just a couple of weeks ago. She said she was very proud of the work that she has done and also the way that she has ensured the integrity of not just the police force and police actions but also the Independent Police Conduct Authority and the appointments that she has made. During the select committee meeting there was some questioning around the number of former police officers who are employed by the Independent Police Conduct Authority to carry out investigations but Justice Goddard also pointed out that she has brought a lot of overseas experience and a lot of overseas expertise into the Independent Police Conduct Authority to ensure not only that independence away from the New Zealand environment but also that there is overseas experience in a policing environment. She has certainly made sure that the “Independent” part of the title of the agency which she has chaired for many many years now has been carried out. 
As I was saying before in terms of the confidence of the police force there is just one thing I would like to say in terms of the report that was handed down this week into the fatal police shooting in Auckland in January 2009. There were reports that one of the victims I guess you could say who was caught in the crossfire in that incident was not interviewed by the Independent Police Conduct Authority during its investigation. Maybe just one thing that I would like to ensure that Judge Carruthers looks into when he becomes the chair of the Independent Police Conduct Authority is that there is more involvement of those who are at the scene at the time of an incident more investigation and more communication with those people who are at the scene of the incident when things happen. I think it is a concern certainly on this side of the House that in that instance someone who was so close to the action was not actually interviewed as part of that process. His comments and his experience were just taken from the notes of the interviews that were carried out by the police force at the time. So maybe that is one message to Judge Carruthers as he is going forward. Maybe we could see more communication for those people who are intimately involved in some of these cases and not necessarily just have their perspective taken from notes that are gathered during a police investigation. 
Justice Goddard of course needs to be applauded for her work. I do not want to be too critical of that incident because she has done good work over her term as the chair of the Independent Police Conduct Authority. I do want to also note—I am not sure if this is appropriate but I will say it anyway—that during the financial review of the Independent Police Conduct Authority I understand it was said that the social club of the authority has a fully functioning ukulele band. I also understand that Justice Goddard has been at the forefront of making sure that the Independent Police Conduct Authority is a good place to work too and that is obviously something that has been noted in the financial review questions that came through to the select committee. We do wish Judge Carruthers all the best in his new term as chair of the Independent Police Conduct Authority. 
It is not an easy job investigating and ensuring the conduct of our police force. I hope it does become an easier job. But we also do thank Justice Goddard for the work that she has done. It has ensured that the public confidence over the last 5 or 6 years in our police force in our men and women on the front line has increased somewhat. I think that the Independent Police Conduct Authority in its investigation and in its ongoing work with our police force has gone a long way to making sure that public confidence in our policemen and policewomen has increased. We wish Judge Carruthers all the best. We thank Justice Goddard very much for the work she has done and we also support the recommendation in this motion that Judge Carruthers be the new chairperson of the Independent Police Conduct Authority. 
Motion agreed to. 
Offices of Parliament 
Address to Governor-General 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 I move  
That a respectful Address be presented to His Excellency the Governor-General commending to His Excellency the alterations to the appropriations for the 2011/12 financial year in respect of Vote Audit Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment and the appropriations and information for the 2012/13 financial year in respect of Vote Audit Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment. 
 In order to maintain the independence of the Offices of Parliament the Public Finance Act provides for funding for the Office of the Controller and Auditor-General the Office of the Ombudsmen and the Office of the Parliamentary Commissioner for the Environment to be determined by Parliament through the Officers of Parliament Committee. The House then presents an address to the Governor-General commending the appropriation. The Officers of Parliament Committee heard evidence from each of the offices and examined those submissions with evidence from Treasury. The Officers of Parliament Committee reached its decision on the funding required for the offices to carry out the duties required of them. The details for each vote are set out in the Officers of Parliament Committee report presented to the House on 3 April of this year. These parliamentary offices do a very good job inside our democracy. They are important in giving the public confidence in the scrutiny that comes upon Governments and indeed the parliamentary process in some cases. I think the ongoing support for them is overwhelming in the House and the public respect for these offices is extremely high. With those few comments I move the motion. 
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 I do want to begin by agreeing with those last comments from the Leader of the House about the importance of the role of the Offices of Parliament that we have. The Officers of Parliament Committee has looked at the work of the Parliamentary Commissioner for the Environment the Office of the Auditor-General and the Office of the Ombudsmen. These are very important offices. I might say the Auditor-General is going to be busy I think and certainly the extra resources being provided will be very important as the Auditor-General embarks on getting to the bottom of the ACC saga and mess which has been created by a whirlwind of National Party figures coming together in what can be described only as a saga and a mess. I have heard it called a schemozzle; there are probably other words as well. The Auditor-General will be needing every last piece of the resources that are being provided under this motion to be able to get to the bottom of that particular saga. 
In fact I wonder whether the Auditor-General will be able to get to the bottom of this saga because I suspect it will be very difficult to get into the minds of the Ministers who were involved in this of the senior National Party figures such as Michelle Boag and of the members of the board with National Party connections. This is a saga—a tawdry saga—that the Auditor-General now has to find her way through. I think she will find it difficult. There are four other inquiries under way. I am not sure even they will be able to get to the bottom of this mess particularly the role of Ministers the conduct of Ministers in this situation and the links to the National Party. But I wish the Auditor-General well in her inquiry. We on this side of the House hope that we can shed some light on some important issues of the conduct of an agency—ACC—that we regard very fondly. It is a very important part of our health and social welfare systems and the fact that it is being dragged through the mud by the involvement of these National Party figures in this saga is most unfortunate. I do hope that the Auditor-General will be able to get to the bottom of some of that. 
 The other thing I want to say before I get on to the Office of the Ombudsmen is just to congratulate the Parliamentary Commissioner for the Environment. I believe that her work has been of an excellent quality in recent times. Most recently today in the Local Government and Environment Committee we heard from the Parliamentary Commissioner for the Environment about her report on water quality or the science of water quality in New Zealand. This is a critical contribution to the debate on those issues and there are other reports that the Parliamentary Commissioner for the Environment is about to undertake; one is into the issues of fracking which I know other members in the House will certainly speak about in times to come. We welcome the Parliamentary Commissioner for the Environment undertaking that inquiry. There certainly are serious concerns in the community that will be dealt with by that inquiry. 
I think what we are seeing there is that as the public of New Zealand have an increasing awareness of the importance of the environment to our future in New Zealand and of the importance of the environment to our economy there will be more work for the Parliamentary Commissioner for the Environment. And I hope there is because she brings an independent voice to those very important issues. I hope that the Government continues to support her work encourage that work and make sure that it is part of the decision-making process of the Government. I certainly believe that the current report on water will be a significant contribution. 
I want to devote the majority of my comments however to the Office of the Ombudsmen. I want to say at the outset that it is good that the Officers of Parliament Committee has recommended a funding increase for the Office of the Ombudsmen. The funding increase of $300000 is welcome and I do think we need to have that on the record of the House as an important contribution to addressing some of the issues that the Office of the Ombudsmen is facing. But I think we need to reflect on the position that the Office of the Ombudsmen finds itself in now receiving that $300000 because in fact when the Chief Ombudsman went to the Government Administration Committee she did say that she would need about $1 million extra in order to meet the operating costs of the office and to employ two more investigators who are desperately needed to clear the backlog in the Office of the Ombudsmen. So although $300000 is a welcome addition in funding it is quite clear to me that the Office of the Ombudsmen is now in a situation where it has been grossly neglected I believe. 
I respect what the Leader of the House said about the independent nature of the way that these bodies are funded through the Officers of Parliament Committee but we have to acknowledge that that is in the overall context of the Government’s financial plan—for want of a better word—for the country. I know that the Leader of the House mentioned when he spoke just before that there is advice from Treasury as part of this process. Quite clearly the fact that the Government is squeezing the public sector finances and is making cuts in the back room the front office and anywhere you like has an effect on the amount of money that is available to the Officers of Parliament Committee to fund these kinds of agencies. So I understand the argument of independence but it is in the context of a Government that is starving the public sector of funds. It has acknowledged that it is not just about the back room—whatever that means; the Government does not have a definition of that. This week we heard from the Minister of Finance that front-line services are in the gun as well. Front-line services are now what are being attacked and New Zealanders are starting to notice that. The Office of the Ombudsmen sits in that context because although the Officers of Parliament Committee can find some additional funding it is operating in an environment where it does not get close to the million dollars that Beverley Wakem said she needed to run her office properly. 
 There is not much that is more important in our democratic structure than the Office of the Ombudsmen. It is the office that ensures that Government departments and agencies are accountable and that they are transparent. The Office of the Ombudsmen does not just look at Official Information Act requests. The office looks at the behaviour of departments particularly in the correctional space which is a very important area. Many New Zealanders will remember ombudsmen’s inquiries into things like the incredibly unfortunate death of Liam Ashley while in the custody of the Department of Corrections. There have been a number of examples of this and to see that office describing itself—the Chief Ombudsman describing the office itself—as being in crisis in front of a select committee really does call into question our collective commitment to having this agency do the work it needs to do. 
New Zealanders should be incredibly proud of the fact that we rank so highly in the Transparency International rankings. It is something that is great about our country but we run the risk when institutions like the Office of the Ombudsmen say that they are in crisis and unable to process the requests in front of them that we will lose that kind of ranking. It is important for me to put on the record of this House that the New Zealanders whom I talk to want to see New Zealand keep that transparency ranking want to see accountable institutions of Government and will be very concerned to know that the Chief Ombudsman feels that her office has been in crisis. As the Chief Ombudsman herself said to the Government Administration Committee justice delayed is justice denied and people are already distressed when they approach the office. That is what she said herself and I can only endorse that comment. If people are waiting years in some cases for their complaints to be dealt with by the Office of the Ombudsmen we have a serious problem and it is a problem that this Parliament needs to take more responsibility for over the coming years acknowledging as I do the increased funding that has come forward from the Officers of Parliament Committee. 
When the Chief Ombudsman arrived at the Government Administration Committee she spoke about the fact that the office would not meet its targets this year. This was due to a lack of resources. Cases were becoming increasingly complex and requiring longer investigation. The budget for the office had been established on the basis of a workload of 800 to 1000 cases. At the moment there are 1854— 
Hon Trevor Mallard 
: How many? 
GRANT ROBERTSON 
: —1854 live cases in the office. 
Hon Trevor Mallard 
: That’s more than twice what the budget is for. 
GRANT ROBERTSON 
: That was previously and there is now some increase but it still will not meet that caseload. In fact when the Chief Ombudsman went to the committee 300 cases were unallocated. That is 300 cases that have not even begun to be dealt with. This is not acceptable in an agency— 
Hon Trevor Mallard 
: That’s within the 1854? 
GRANT ROBERTSON 
: That is within the 1854 yes and that is unacceptable. 
One other point that the Chief Ombudsman made and that I do want to mention before my time runs out was about staff well-being and I acknowledge that some of the $300000 will go towards that. To hear the Chief Ombudsman talk about the fact that the office is worried about staff sickness high rates of serious illness and the stress placed on staff—it is extremely worrying that that situation had been created. We need to look after people who are working in the Public Service not put them under so much stress that they are unable to do their work. The Chief Ombudsman also recognised that the Government’s public sector reform programme—its cutting of funding to the public sector—will actually increase the amount of work that will come to the office. 
So although the additional funding is welcome there are still too many unallocated cases and there is more work coming down the pipeline from both public sector changes and the outcomes of the Canterbury earthquake which I think will have a significant impact on the work of the Office of the Ombudsmen. That means this office will no doubt be back next year seeking more funding and we need to take that seriously. I respect the constraints that the Government is working under but it is clear to me that the fiscal squeeze from the Government has had an impact on the amount of resourcing available to the Office of the Ombudsmen. That office is too important for our transparency for the accountability of Government agencies and for our democracy as a whole for us to see it starved of funding. We need to support it as a Parliament. I hope in the future we will discuss in more detail how we can get the resources to the office that it needs. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Speaker. Nga mihi nui ki a koutou. Kia ora. I rise on behalf of the Green Party to support the motion. The Green Party supports the appropriation through the report tabled by the Officers of Parliament Committee. We agree with the statement made by the Leader of the House Gerry Brownlee that it is important to maintain the independence and for the Officers of Parliament Committee to use its functions under the Public Finance Act to provide recommendations for the appropriations for these three offices. 
The Officers of Parliament Committee report tabled shows the detail for each of the three votes. The committee heard submissions from the three offices and essentially the Office of the Auditor-General the Office of the Parliamentary Commissioner for the Environment and the Office of the Ombudsmen received the funding they requested. Another member who is on the committee may like to clarify this point if I am incorrect but to clarify for the member Grant Robertson as I understand it the $1 million figure was raised in the financial review in the Government Administration Committee but the Office of the Ombudsmen requested only $300000 in the Officers of Parliament Committee. But I acknowledge the point made that there is a significant context and environment in which these offices are involved and that is we are seeing significant cuts to the public sector. That stress that we are seeing in those offices is also shared across the wider public sector with lowering morale at the moment. 
We would like to acknowledge the roles of the Auditor-General the two ombudsmen and the Parliamentary Commissioner for the Environment Jan Wright and also acknowledge the staff in the offices. We think they do good work. They are important to our democracy. Looking at the ombudsmen first up the two ombudsmen do important work for our democracy monitoring complaints for the Official Information Act and they have an important corrections role. I note that if we ever run into funding problems in the future and we have to have a sponsorship-run wooden spoon awards evening for complainants under the Local Government Act and the Official Government Act it would be the Prime Minister who would get the wooden spoon award presented by the ombudsmen for the record in the last financial year of 15 complaints. 
Unfortunately what we are seeing is very poor timeliness from the Office of the Ombudsmen. It wanted and aimed to complete 90 percent of all matters within a month but it completed only 66. Unfortunately in all those key performance indicators around timeliness the office is failing to meet them not because of the dedication of the staff—or because of the lack of dedication of the staff—but simply because of the lack of resources. What we are seeing—and what we heard in the financial review report of the Office of the Ombudsmen—is that it is quite literally sinking under the weight of complaints. The baseline funding works on the assumption that it will be dealing with 800 to 1000 cases. What we saw in the last financial year was 1854 cases and in some periods it was as high as 2000. It is sinking under the weight of complaints. Unfortunately for the staff they have not seen a pay rise since 2007. I think that is scandalous. They have not seen a pay rise since 2007 yet backbenchers in this Chamber over the equivalent period have seen a pay rise of 12.3 percent. It is not fair and what we want to see is good baseline funding so that we can pay these people appropriately. 
Thirdly what we are also seeing is the Office of the Ombudsmen unable because of a lack of resources to promote its services to the public. So we welcome the report of the Officers of Parliament Committee to advise the Government to amend section 17 of the Ombudsmen Act. We welcome that legislation. We welcome hearing submissions in the select committee as to how we can streamline it. But the key thing we cannot lose is that an ombudsman is actually the last place people can go. We have to make sure that last place is protected. 
Looking at the Parliamentary Commissioner for the Environment we would like to acknowledge the quality work of Jan Wright and also of her office. I was particularly impressed by the lignite report. The recent water report is a significant topical issue and it is good to see the Parliamentary Commissioner for the Environment engaged in that debate. I wholeheartedly welcome the fracking report. It is a pity we cannot see what would be the responsible step which is a moratorium until the Parliamentary Commissioner for the Environment reports back but we will keep campaigning on that. 
The biggest challenge the office is facing—and what the Green Party would like to offer to this debate in the Chamber—is the new role of environmental monitoring. It has been signalled well through the media that environmental monitoring will be shifting from the Ministry for the Environment to the Office of the Parliamentary Commissioner for the Environment. The Green Party thinks it is on balance a pretty good idea. You have got the Ministry for the Environment responsible for policy and regulation and it makes sense to have a separate body responsible for monitoring. It is an appropriate agency. I think it does have the skills but what it lacks are resources. The challenge for the office is that it is likely to be lumped with this task for next year but it has not been able to get any extra appropriation to start gearing up for the significant new workload because there is no legislation. So we would like to offer to the Government benches that we would like to support that legislation. We hope that we can see that legislation soon because we would like to engage with it get it cracking and get it passed so that we can see that office prepare for and do quality work on environmental monitoring. 
So in summary the Green Party supports the recommendations in the report—the appropriations—and we are glad to be essentially giving baseline funding and other additional funding increases to these offices. But like the Labour Party we also think they are not enough to do the important work needed and we would like in future years to be granting more significant funding increases to these very important offices. Kia ora. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I am happy to take a call on Government motion No. 3 which deals with the financial appropriations for Vote Audit Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment. I want to talk about each of those agencies respectively. 
I want to start with the Parliamentary Commissioner for the Environment. I begin by noting some of the really important work that the Parliamentary Commissioner for the Environment has been engaged with and is engaged with and the growing importance of many of the issues that she has been working on. If we look over just the last little while—the last couple of years—we have seen very useful and valuable reports from the commissioner on issues like 1080 biofuels and water quality and of course we have now got some work being undertaken in that area around fracking. 
I think that increasingly issues that the Parliamentary Commissioner for the Environment is working on monitoring and investigating are coming more and more to the fore in terms of the public’s consciousness and in terms of the range of political debate we are having. So I think that the role of the Parliamentary Commissioner for the Environment is potentially going to become a more and more prominent one in this institution and I think that is something we welcome on this side of the House very much. It is important that we ensure the Parliamentary Commissioner for the Environment is adequately resourced and this resolution before the House is one of the ways we can do that. 
The next agency I want to talk about is the Office of the Auditor-General whose funding is dealt with by this resolution before the House because the Office of the Auditor-General is a vital and very very important check on the use and potential abuse of power by the Government. I think we have seen some really good examples in recent weeks of why the independence of the Office of the Auditor-General is vitally important. It does provide the public of New Zealand with that vital check on the use of power. 
We have seen the Auditor-General announcing that she is investigating ACC. That is going to be a very very interesting investigation because it does cut to the heart of the use and potential abuse of power within this Parliament. Here we have a situation which will be investigated by the Auditor-General where we have a Minister of the Crown and the allegations are that he was potentially misusing his position as a Minister to procure some benefit for an acquaintance of his. That was very inappropriate. It ultimately cost the Minister his job but we have now got an ongoing saga within the Government that seems to be tearing the Government to pieces actually. It is an ongoing saga as to who was involved and who knew what when and that is something that I hope the Auditor-General will at least be able to shine a little more light on in her investigation. 
There are other areas where I would argue the Auditor-General should be involved and should be conducting some further investigations. The funding processes of New Zealand On Air and the management of conflicts of interest at New Zealand On Air is another really good example of where the Auditor-General could rightly be asking some very pointed questions. There are significant amounts of money being allocated by New Zealand On Air with significant involvement of the Prime Minister’s electorate chairperson in those funding decisions. That is something that the Auditor-General should be looking at and should be concerned about. These are not insubstantial amounts of money and it was in a highly political time—for example in the run-up to an election period. The appropriateness of somebody holding such a high political office being involved in decisions around which political documentaries are and are not screened in the weeks before an election raises real concerns and that is something that we on this side of the House think the Auditor-General may well want to look into. 
There is another contemporary issue before the House today—it was before the House during question time today—and that is the appropriateness of the Government’s actions with regard to the Skycity Casino. That is something that we could ask the Auditor-General at some future point to look into—whether in fact Ministers have acted appropriately at all times in that investigation and whether or not all of the decision making around that has met the thresholds of transparency and accountability that this Parliament should be demanding of its Ministers. Those are issues that could be investigated by the Auditor-General. It is all the more important that the Auditor-General is adequately resourced to do that and to be independent in its operations so it is the responsibility of this Parliament to make sure that happens. 
I want to turn now to the Office of the Ombudsmen and I have some real concerns that this resolution that we are debating now does not provide the Office of the Ombudsmen with sufficient resourcing to do the job that it is requiring. I know from the comments made by the Speaker in the debate that the Office of the Ombudsmen has been given all that it has asked for. I do not think it asked for enough and I am really surprised because the financial review of the Office of the Ombudsmen presented by the Government Administration Committee was actually very specific around this stuff. 
It was quite alarming when we read what the financial review said. It talked about the office considering itself to be in crisis. It has a budget that was established for a workload of between 800 and 1000 cases at any one time and it is now telling us that it is dealing with between 1600 and 1800 cases at any given time. That is significantly more than what its budget is established to deal with. It is so bad in fact that it has 300 cases that have not even been assigned to a case officer. In other words they are sitting in a drawer. No one is even looking at them because the office simply does not have enough resources to deal with that. That is something that this Parliament should be incredibly concerned about and we should be taking more action to deal with that. 
The Office of the Ombudsmen has 1854 live cases on hand as at the date of this report being presented by the select committee. It is failing to meet some of its deadlines. It is talking about a lack of resources. It has noted to the committee that cases are becoming increasingly complex and require longer investigation. So not only is the Ombudsmen’s office dealing with more cases but it is dealing with more complex cases and the Ombudsmen’s office has rightly argued that complainants would rather the office were right in its judgments than swift in its judgments. But that requires us as a Parliament to ensure that the office has sufficient resources to get it right and to be thorough in its investigations and it would appear from what the select committee is telling us that this Parliament is not living up to its obligation to do that. 
The Office of the Ombudsmen is also struggling to communicate what it is doing. The Government Administration Committee’s report notes that the Office of the Ombudsmen because of a lack of resources is not able at the moment to publish case notes or the  
Ombudsmen Quarterly Review 
. These are really important things that the Office of the Ombudsmen does. The case notes and quarterly review deal with a wide array of issues and provide really important guidance to Government departments Government agencies those dealing with official information and those dealing with really important processes. They provide very important guidance to them. 
The fact that the Ombudsmen’s office is unable to deal with these issues at the moment is something that we on this side of the House are very very concerned about. The increase in funding that is being allocated deals only with salary increases and administrative cost pressure. It does not deal sufficiently with this huge increase in case work that the Office of the Ombudsmen is facing. There has been no movement in staff salaries since 2007. I am glad that the request for extra money will help them to deal with that but it is not going to resolve the wider issue. 
The Office of the Ombudsmen is likely to face significant increases in its workload as a result of public sector reform currently being undertaken by the Government. With rhetoric coming from the Government about moving resources from the back office to the front line many complaints processes and quality assurance processes are what this Government would deem to be back-office services. So we are going to see more complaints coming through to the Ombudsmen as the resources to provide those vital quality assurance and complaints processes are being choked off from the Government sector. 
The Government Administration Committee’s report—and bear in mind that this is a unanimous report from a cross-party select committee which included National members—reports: “The office believes that reductions in agency complaint service staffing will reduce agencies’ ability to handle complaints and may adversely affect quality assurance in practice and process leading to errors or misjudgements maladministration and potentially corruption.” These are pretty strong words to be coming from the Office of the Ombudsmen. These are very strong words to be coming from the Office of the Ombudsmen and we are not resourcing it sufficiently to act as a safeguard to act as that check on the use and abuse of power as it was set up to do. 
So at the moment our rhetoric around the importance of the Ombudsmen looks very hollow unless we are willing to actually stump up and provide them with the funding that they need. We are not doing so at the moment. We are not resourcing the Office of the Ombudsmen sufficiently. That needs to be addressed. 
CHARLES CHAUVEL (Labour) 
: 
 It is not often that we get the opportunity as ordinary members of the House to rise to speak about the work of the Offices of Parliament and I want to take a brief call in this debate in order to be able to do that. 
First of all I acknowledge the importance of their work because it is not acknowledged often enough. In New Zealand we have an important series of constitutional safeguards that are all about transparency. We do not have entrenched rights except in respect of a few provisions of the Electoral Act so everything depends as far as public confidence in our institutions is concerned on the institutions that we have set up that are designed to ensure that transparency is working appropriately. And if we allow them to fail if we allow them to become under-resourced if we allow public confidence in them to diminish then we will reap the whirlwind and we will have no one to blame but ourselves as parliamentarians for not making sure that they were able to do their job properly. 
I support the motion in the name of the Leader of the House because I do think that we have come to a situation where there are some real issues around the funding of the Offices of Parliament as has been acknowledged in this debate to date. The motion will go some way to alleviating the situation but it may not go all the way and this is an issue that does require our constant vigilance in the House. 
 Turning first to the Office of the Controller and Auditor-General I really just want to say two things about the importance of the work of the office. The first is that every member of the House who serves on a select committee will I think want to record their gratitude for the excellent work that is done by the staff of the office in helping us prepare for the financial review and estimates process. There is a lot of documentation to wade through when we have a look at the performance of organs and agencies of the executive and it is absolutely invaluable to be able to know that in most cases except where there is some sort of statutory exemption or a very unique scheme that applies to the agency of Government we will have a member of the staff of the Controller and Auditor-General on hand speaking to a written report prior to the commencement of the examination of the performance of the entity pointing out in particular technical issues around performance that sometimes might escape members when they are looking at the bigger picture around what the political issues of the day are which might have excited debate concerning the environment of the agency concerned. I think it is as I say worthwhile just to place on record how valuable that function is and to record the hope that with the appropriation that will be effected as a result of this motion we will all be able to have that uninterrupted service. 
The other thing that I wanted to say about the value of the work of the Office of the Controller and Auditor-General is the power which we should never underestimate in the ability to take investigations up on her own motion. My colleagues already mentioned some of the important issues that the Auditor-General herself has decided to take scrutiny of. That again is an incredibly important function. Everybody knows that it is a function that is exercised completely independently of politics and politicians and that it is solely motivated by the desire to ensure that public money is being appropriately spent and that procedures that sit in place to govern the accountability of public entities are being followed. So from that point of view the office does an invaluable job. I am very pleased to be able to put that on record in the context of this debate. 
The second entity that is dealt with in the report is obviously the Parliamentary Commissioner for the Environment. I spent some time in the last Parliament working as the Labour Party spokesperson on the environment and I think what has to be said about the work of the parliamentary commissioner and her team is that they strive for and succeed in ensuring that their work is utterly independent and evidence based. So you get very valuable reports from the office. They are meticulously researched and they are also pragmatic as far as their outcomes and recommended courses of action are concerned. 
I think of the 1080 report in particular which made the point in the face of heated public debate that 1080 was simply the best option around to keep the dawn chorus going in our forests. If we wanted our forests to fall silent then sure we could stop using 1080 but unless and until a better solution comes along—and it is many years away—it is the only way that we can keep some biodiversity going in those areas that otherwise it would disappear from. 
I think an earlier speaker has mentioned the biofuels report the incredibly valuable forward-looking work that the parliamentary commissioner did in order to ask what the future of biofuels in New Zealand is in the long term. It is actually our wood resource. As soon as technology is available that will be something that we must not underestimate as far as the potential for renewables in the fuel sector is concerned. It is incredibly valuable forward-looking insight and research and is publicly funded and available to all members of Parliament and to the public. No one told the parliamentary commissioner to do that work; it simply came about because it was a piece of public-good research within her mandate. Again that is something we should all be very pleased about. 
Water quality was in the same position. We should also obviously remember that there was an announcement by the former Minister for the Environment last year that the Government had determined that the parliamentary commissioner should be responsible for environmental reporting. We are yet to see the legislation that would effect that change but at the time the Labour Party said that we would support it provided that taking on that new function did not involve compromising the existing ability of the parliamentary commissioner to process the important work that she does on a routine basis and to which I have already referred. It is very important to ensure that as the parliamentary commissioner looks forward to taking on that new mandate that the Government wishes to confer upon her—and that I think most Opposition parties are comfortable with—the office is adequately resourced. 
Finally on the Office of the Ombudsmen we have heard much talk in the debate already about the concerns around the funding of the office. I think it is conceded that much of the problem is created by the Canterbury earthquake situation and it is hoped that that will simply be a blip on the radar as far as the Ombudsman’s work is concerned. But there are real issues around what has had to give as a result of processing the problems that have been brought to the office by Canterbury and the terrible situation that is being managed there. One of those is the inability at the moment to process case notes which is very important for people who want to ensure that they can access official information in order to hold the Government to account. They need to know what the rules and what the precedents are. That cannot be allowed to give permanently nor can the existing number of unprocessed and unallocated cases be allowed to become a permanent feature of the system. 
 The problem that the Ombudsman has told the House about via the Officers of Parliament Committee is not unique to Offices of Parliament. We have a number of other watchdogs where there are crises either in funding or in powers. What we must not do is allow the Human Rights Commission the Judicial Conduct Commissioner or the Privacy Commissioner to be compromised either. So I commend this motion to the House but I do ask that we all bear in mind the importance of the work— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I am sorry to interrupt the honourable member. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I rise also to support the motion although I think it is fair to say not quite as enthusiastically as some of my colleagues. I frankly think there is a debate about whether this motion should be passed as it sits especially as we learn more of the range of views expressed by the Chief Ombudsman Beverley Wakem as to the amount that is necessary to run that office properly and as we read of the workload problems and the view of the Government Administration Committee—the unanimous view—that “reductions in agency complaint service staffing will reduce agencies’ ability to handle complaints and may adversely affect quality assurance in practice and process leading to errors or misjudgements maladministration and potentially corruption.” That is an area of considerable concern. I think it is fair to say that in New Zealand we do pride ourselves on being No.1 or sometimes No. 2 in the list of least corrupt nations and that is something we want to jealously guard. 
That is not to say that I think all spending on the part of all of these agencies is well spent. I think I have made myself slightly unpopular with a number of colleagues with my views—with a number of my views actually—[ 
Interruption 
] Thank you Rev. Dr David Clark! He knows that interjecting on me like that is—well he will find out that revenge is a dish best served cold and I will deal with him later on. But the question of the level of paperwork and of time spent supporting select committees although it may be appreciated by my learned colleague Charles Chauvel I think is something— 
Hon Dr Jonathan Coleman 
: Who? 
Hon TREVOR MALLARD 
: He is learned and the member should know that. The problem I have is that I think that for a lot of members it serves—listening to the Audit Office staff at the select committee in the quarter of an hour before the agency comes in for the review of estimate processes—as their homework. It means that too often members especially members from that quadrant of the House over there do not read through the annual reports they do not read through the questionnaires and they do not look at the issues properly. I know that it is not a good thing to hark back to the past but— 
Hon Dr Jonathan Coleman 
: Go on. 
Hon TREVOR MALLARD 
: I will. In the time that I was first a member of Parliament there was one select committee staffer for every two committees so there was either a Tuesday-Wednesday or a Wednesday-Thursday arrangement depending on what stage the bill was. The staffer of the select committee had two committees and if one was really busy one of the other people came and helped. Now we seem to have three staff and we have augmentation by Audit Office staff coming in. I think some members in a way think it is the job of the Audit Office to tell them what to think. I think that stops them from working hard in their constituencies to identify the issues that are important for estimates and for financial reviews and that for some people it means they do not read properly the background documentation that is available. So what I am saying there is that I am not for always having more money if we do not look carefully at how money is spent. 
There is another area where I will be later on seeking a level of assurance from the Speaker and that is that he will as the chair of the Officers of Parliament Committee work very hard to ensure that if in fact the mixed-ownership model legislation is passed the Office of the Auditor-General will retain the audit functions for those partially privatised State-owned enterprises. I think that that is important in having a level of assurance for the taxpayer—to make sure that we have people who have a reputation that I think sits above that of auditors generally who have that reputation for understanding what the public interest is involved on a continuing basis. I would be opposed to any reduction in their authority and their ability to investigate. 
I might also say—and it goes more to the Ombudsman—that I will be strongly fighting to retain the right of the Ombudsman to become involved in both Ombudsman’s cases and Official Information Act cases with regard to the partially privatised State-owned enterprises. I know that some people will find that pretty hard but I was involved with both the select committee that set up the State-owned enterprises and the Government Administration Committee where I chaired a review of the way that those Acts worked vis-à-vis the State-owned enterprises. What we found was that it had been almost no problem and that there was a very clear understanding of what is commercially sensitive. Frankly something that is commercially sensitive for Mighty River Power is about the same as for Contact Energy and there were places where information was not made publicly available. But there are some things that are in the public interest and where it is appropriate to ensure that the State-owned enterprises are doing what they should. My argument is that companies that are majority-owned by the Government certainly come into that category as well and we should make sure that that continues. 
 There are a number of areas where I think the Auditor-General can have a better look—than has currently occurred—at policy and developing policy. One of the areas is the private partnership type of model as far as roading is concerned and in particular more recently the arguments for charter schools. There is an enormous question in my mind that goes to value for money and it asks why we should be building new schools and different schools using some private financing system when in fact that money could be better applied to improving the schools we have already got. As many of my colleagues know—and some people have been involved when I have been reviewing schools in the past—I am certainly not of the view that everything should always stay the same. I think there is room for progress and there is room for change and I have some interest in models that can make improvements. But what does appear to be the case is that there is a fixation on the part of this Government and it should be checked by some property authority with an ability to make recommendations to this House on whether in fact these new models get proper value for money; I would support that. 
I note that the Hon Maurice Williamson—I understand he in the not too distant future is to be the Rt Hon Maurice Williamson—is sitting in the front row of the Government benches. What I am very keen on is that whoever replaces Mr Speaker in his role—when he moves to his new abode—is slightly more aggressive with the Minister of Finance and engages the team of the Officers of Parliament Committee more in ensuring that the organisations for which the Speaker is responsible get the money they need to properly do the job. I do not want this to be seen as any sort of reflection but I think it is important that when a parliamentary select committee is doing a job as this committee has done it has the full facts and we do not have Offices of Parliament coming with pre-arranged amounts to the committee. We need to hear what they say and what they think. I will support this motion without much enthusiasm. 
Motion agreed to and Address agreed to. 
Taxation (International Investment and Remedial Matters) Bill 
Third Reading 
Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery)  
on behalf of the Minister of Revenue: I move  
That the Taxation (International Investment and Remedial Matters) Bill be now read a third time 
. The bill continues the reform of New Zealand’s international tax rules by bringing our tax rules more into line with those of other countries and making it easier for New Zealand - based businesses and investors to compete more effectively in foreign markets. Previously a New Zealand company’s active income from its offshore subsidiaries was taxed by New Zealand. This placed New Zealand companies at a disadvantage in terms of tax costs that similar companies in other countries did not face. To overcome this obstacle foreign companies controlled by New Zealand investors became eligible for a tax exemption on income from active activities such as manufacturing as part of the international tax reform introduced in 2009. 
The main measures in this bill further extend the active income exemption to include joint ventures and other significant New Zealand shareholdings in foreign companies that are not controlled by New Zealand investors. Under the proposals in the bill New Zealanders with stakes of 10 percent or more in offshore companies will not be subject to New Zealand tax on those interests unless they earn passive income such as interest royalties or rents. To further rationalise earlier international tax reforms the current exemption on non-portfolio foreign investment funds in the eight grey list countries will be replaced with an exemption for non-portfolio foreign investment funds that are resident and subject to tax in Australia. 
The bill also introduces a nil rate of approved issuer levy for interest paid on corporate bonds that are widely traded in New Zealand and that meet other criteria. This is a targeted measure to enhance the development of New Zealand’s bond market. A 10 percent rate of non-resident withholding tax will continue to apply to related party loans such as loans from a foreign parent to a New Zealand subsidiary. A 2 percent rate of approved issuer levy will continue to apply to loans from foreign banks and bonds that are issued into foreign capital markets. The change is limited to bonds that are traded on the New Zealand bond market. Currently a 2 percent rate of approved issuer levy applies when these bonds are purchased by non-resident investors. There are concerns that this may limit the size and liquidity of the New Zealand bond market by making it more expensive for New Zealand businesses to issue bonds in New Zealand. The bill addresses these concerns by removing the tax impost on those interest payments. As a result it will become relatively cheaper for New Zealand businesses to issue bonds in New Zealand rather than obtaining a loan from a bank or issuing bonds in offshore bond markets. This very practical measure follows the recommendation of the Capital Market Development Taskforce. 
The remaining changes in the bill are largely technical or remedial in nature to clarify parts of the earlier international tax reforms and to correct minor drafting oversights. 
In bringing this bill to its third reading I wish to acknowledge those who have contributed to its successful passage so far. My thanks go to the policy officials and the drafters for their work on the detail of this very technical tax bill and to those who made submissions to improve the practical application of the measures it contains. I also wish to record my thanks to the Finance and Expenditure Committee for its detailed consideration of the bill and its recommendations for reducing compliance costs for businesses and making the rules proposed in the bill easier to apply. 
The process goes across Governments and by removing a further tax barrier to offshore expansion by New Zealand businesses this bill will make it easier for New Zealand businesses and investors to compete more effectively in foreign markets with resulting benefits to this country in the longer term. I therefore have great pleasure in commending it to the House. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 In speaking to the Taxation (International Investment and Remedial Matters) Bill 2010 I wish to start by acknowledging those members of the Finance and Expenditure Committee who did the select committee work on this bill. It was very remiss of me not to have done that in my previous speech. I also want to congratulate Simon Bridges firstly on his appointment as chair of the committee and subsequently on his elevation to the rank of Minister outside Cabinet. The Opposition colleagues and I believe John Hayes enjoyed his brief and able facilitation of questions and the opportunity to shape legislation positively for the benefit of all New Zealanders—something that Mr Brownlee just alluded to. 
Labour supports the bill but we will oppose the part that concerns the removal of the approved issuer levy. Our overall decision to support the bill is an on balance decision having assessed the merits and the demerits of the bill in its current form. The Labour Party’s concern in respect of the approved issuer levy relates to the further erosion of the tax base and this is at a time of falling Government revenue. This wider context matters. The Inland Revenue Department recently admitted in its briefing to the incoming Minister of Revenue that the Government revenues have dropped 4 percent in terms of a percentage of GDP from 35 percent to 31 percent. This is during the time of the previous National Government. It is estimated that about 60 percent of that drop in tax revenue is directly attributable to Government policy changes. This is of concern. People working hard in this country who are doing their best—they are saving they are trying to get ahead and they are involved in community activities—just do not feel like they are getting ahead and that is in part as a result of these tax changes that have benefited the very wealthy at the expense of everyone else. 
They have also affected the overall tax take. The Government continues to push the line that those 2010 tax changes were broadly revenue-neutral. I think entertaining the word “broadly” in this context is stretching the use of the English language beyond belief. Some members opposite might assert that it is plain English. I would certainly not be one of them. If it is typical English it is certainly not helpful English I would submit. 
What is clear is that blaming the widening deficit on the Canterbury earthquake or the global financial crisis is no longer a credible explanation for this $12 billion deficit. This is the result in part of the reduced tax take which this bill does not directly address as fully as it could. The $12 billion deficit that is projected this year will cost New Zealand households $7500 each—that is $7500 being borrowed on behalf of every New Zealand household to fund current programmes including the tax cuts for the very wealthiest New Zealanders. I do not think that is good enough. 
National members continue to repeat as an article of faith that the economy will improve with time but the reality is that they have no idea how they are going to achieve this. This is an article of faith. They have no plan. As revenues drop—and this bill does not guard against it—we cannot afford services that are important to the smooth running of the economy and of society. I think here of the police the Reserve Bank and other features of a stable democracy that is good to invest in which gets to the heart of this matter. As these services drop off it is likely to have a compounding effect on the attractiveness for investment in our country. 
Changes proposed in this bill favour foreign lenders of capital and large entities that borrow from them. Local lenders will not be able to match the rates that overseas lenders offer with their reduced tax rates—that is a fact—so domestic savings will be undermined further compounding the structural problems in our economy. “Joe and Joanna Public” who borrow through the banks will not see any savings but the foreign-owned banks will pocket the wedge. The potential undermining of domestic savings is of course a concern. In fact it is doubtful that the bill will do anything to help increase liquidity despite what the previous speaker Gerry Brownlee has asserted. The bill will not necessarily reduce interest rates or add depth to the capital markets. This was certainly the advice of a number of submitters at the select committee. They took issue with these assertions. 
It is also important to note that we in the Labour Party understand the value of internationally competitive tax rates. We do not wish to see New Zealanders who are competing overseas disadvantaged and we do not want to see those overseas who would wish to invest in and support New Zealand businesses scared off but we do in New Zealand believe in seeing everyone pay their fair share. That is something the Labour Party believes in. National is not happy with that but it is something that we think is a fair proposition. If there was substantial evidence of threats to the ability of New Zealand to fund its offshore borrowing requirements or of our banks and other corporate borrowers to fund their borrowings there might be a case for reducing the costs of overseas borrowers through taxes and approved issuer levies. Substantial evidence on that front I am afraid has not been presented. Instead it looks like once again a tax break is being given to the big end of town to the detriment of our tax base. 
When we are borrowing we New Zealanders all end up paying for this tax break through interest payments that subsume moneys that could otherwise be spent on public goods like education and health services. That is why we in the Labour Party are opposing this aspect of the bill. If it is to tighten up rules around the approved issuer levy it would be much more productive than simply dumping it. I guess an easy ride as it can be said with the approved issuer levy is at least consistent with the current Government’s policy of giving wealthy overseas interests an easy ride and indeed perhaps in some cases putting out the welcoming mat. We will see more of that when it comes to the issuing of shares in State assets I am sure. No one thinks that selling those revenue-generating assets overseas is a good idea and no one but no one thinks seeing those profits disappear offshore is a good thing. You cannot sell your way to a brighter future I submit. 
So to be clear Labour does not want to see tax rules that disadvantage New Zealand businesses and it wants to guard against dead-weight loss to the economy by reducing the proper tax burden for foreign-based companies where it will not affect investment decisions. The zero rate for the approved issuer levy on payments made by approved issuers to non-residents under some debt instruments is not something that we feel is prudent. We on this side of the House are concerned that in some cases the current tax system already effectively offers a lower tax burden to offshore sources of capital thereby providing an undesirable incentive for funds to be sourced offshore rather than to be retained or saved domestically. That is an important point to raise. Ensuring that tax treatment is as fair and balanced across jurisdictions as it can be is the Government’s responsibility. It appears that it could have done further work to allay fears but this is not the case. 
When submitters suggest that the removal of the overseas tax burden will have little effect on investment we should be concerned. But as I signalled at the beginning Labour will support the rest of this legislation. The alignments that will help New Zealand businesses compete in foreign markets by freeing them up from a tax burden that their competitors will not face are a good thing. Labour supports New Zealand businesses. Our capital gains tax proposal that we took to the last election for example would support investment moving away from the speculative sector to the productive sector and National will not consider it. It has no other ideas. This bill tinkers like many of the Government’s efforts. In this instance and on balance we think the tinkering is positive and that is why we will support parts of this bill apart from those that are concerned with the approved issuer levy. Shifting wealth to the big end of town is a theme. Borrowing without a plan to pay it off is unwise. There are much bigger issues to address before New Zealanders feel like they are going to get ahead through their hard work in the current situation. Although we support this bill we do I submit think it contains large elements of tinkering. 
JOHN HAYES (National—Wairarapa) 
: 
 I want to point out that the Labour Party has just indicated that it wants a fair tax system. I absolutely agree with that. It needs to hit everybody reasonably. The second thing Labour has done is that it has said it wants a system that does not disadvantage New Zealand companies operating offshore and competing with foreign ventures. That is what the Taxation (International Investment and Remedial Matters) Bill does. The bit that Labour members do not seem to comprehend is that it is only by lifting our economic performance that we can create jobs that we can boost incomes that we can improve living standards including in the Wairarapa and that we can then provide the world-class public services that Kiwis want particularly in the health and education areas. 
The centrepiece of the Budget in 2010 was the delivery of a major tax package which was about reforming the tax system to make it fairer as the Labour Party wants to make it more sustainable as the Labour Party wants and to provide better support for economic growth which this whole House wants. That is what this bill is about. The Taxation (International Investment and Remedial Matters) Bill promotes integrity across the tax system. Integrity means fairness so why would you stand against this bill or even parts of it? The point of the bill is that it is going to bring New Zealand’s tax rules into line with the practice in other countries. For example a New Zealand - owned manufacturing plant in China will now generally face the same tax rate once this bill is passed as other manufacturers operating in China. The changes will improve the competitiveness of the New Zealand tax system and encourage businesses with international operations to remain to establish themselves here permanently and to expand. 
I do not want to spend a long time this afternoon but I just want to make two more points. The bill modifies the thin capitalisation rules that apply to investors with controlled foreign companies so that these apply to investors in non-portfolio companies that use active income for the active income exemption or the Australian exemption. If we did not have such rules there could be an incentive for businesses to reduce their taxable income by stacking additional debt against their New Zealand operations when in fact they are using these funds to equity finance their exempt offshore investments. So the whole point of this bill is to make it fair. I support this bill unreservedly and commend it to the House. Thank you. 
Hon DAVID PARKER (Labour) 
: 
 Can I begin by responding to something that John Hayes said which was that the changes to the tax system made by National in its last term of Government made it fairer. Well the National Party has a different definition of fairness from this side of the House. 
Dr Russel Norman 
: The Tui billboard definition. 
Hon DAVID PARKER 
: Thank you Dr Norman. The Tui billboard response to that is “Yeah right!” because— 
Michael Woodhouse 
: You had the chance to campaign on reversing them. 
Hon DAVID PARKER 
: Well actually we did campaign on reversing some of them because they were so unfair: 40 percent of those income tax cuts went to the highest 10 percent of income earners in New Zealand. It was only— 
Paul Goldsmith 
: How does this relate to the bill? 
Hon DAVID PARKER 
: Well it actually relates to the comments that your own member unwisely made Mr Goldsmith in this debate. For him to say that that made the New Zealand tax system fairer does not stand scrutiny. 
In reality the only people who did substantially well out of the so-called tax switch were people who managed to switch their taxes by paying less while the overall proportion of taxation that was paid by the vast majority of New Zealanders went up: i.e. the proportion of total tax that was paid by the people who were already the wealthiest in New Zealand went down and the proportion of tax that was paid through GST and PAYE in respect of low and middle income earners—their proportion—went up. The relative position of high-income earners went up and everyone else relatively went backwards. So do not call those tax cuts fair please Mr Hayes because it does not stand scrutiny. 
There is another thing those tax cuts did as Dr Clark said—and we have had Russel Norman running this issue this week as well; thank you for doing that Dr Norman. We have had this fiction being run by National that the Budget deficit is not partially its own fault by having added to the deficit through its tax cuts which it pretends were broadly fiscally neutral by using a very loose definition of broad— 
Hon Member 
: And neutral. 
Hon DAVID PARKER 
: —that is right—and a very broad definition of neutral. The reality is that Treasury’s own forecasts in respect of the Budget package found that they were fiscally negative. The shame of it is that Treasury in New Zealand despite the fact that since then the deficit has got worse has not done any analysis as to why it is so much worse and how much of it relates to the tax package. Why is that? Well we actually do not know but the suspicion is that it is because on further analysis the National Party’s abuse of the English language as to “broad” is proven by the fact that the hole in the Government accounts is substantially caused by its so-called tax switch which was for the benefit of the top 10 percent of New Zealanders and under which everyone else went relatively backwards. 
I want to turn to another instance of tax unfairness and the lack of wisdom in the Government’s approach to tax legislation. Last year New Zealand had an $18 billion deficit. It was not all the Government’s fault; some of it was from tax changes but not all of it. This year it is about $12 billion and probably closer to $13 billion. We will know by the time we get to the Budget what the actual figure has been. Next year it will be about $6 billion and in the following year it will be gone to about zero. That is the case whether it is under National or Labour. We would have got back to Budget surplus at about the same time as well. 
But if you were running so close to the wind as the Government is and you had a deficit that large why would you be giving unfair and unnecessary tax breaks to foreign lenders into New Zealand? That is what this Taxation (International Investment and Remedial Matters) Bill does. The approved issuer levy is a substitute for paying tax. [ 
Interruption 
] It does Mr Bennett and if you do not understand that yet after having sat on the Finance and Expenditure Committee and heard all of the debates on this there is really not much hope for you. Perhaps you should give back your accounting certificate to the society because that is exactly what this bill does. If you do not understand that I am sorry but you were not listening to the submissions and you did not read the bill. 
What happens in New Zealand for some borrowers is that some lenders into New Zealand normally pay non-resident withholding tax so that when interest is paid to the lender to the New Zealand company to a New Zealand individual or to the New Zealand Government the interest that they earn incurs some tax. That tax rate is not set at the same rate that we pay on income tax on our income in New Zealand because overseas people do not get the benefits of everything under our tax system. They do not get a direct benefit from health services or education services they do not use our roads and they do not use the police. So they do not pay the full rate of tax in New Zealand just as in overseas countries New Zealanders do not normally pay the full rate of tax for income that they derive from those countries. But they do pay some tax because those overseas countries do gain some benefits from what Governments do in New Zealand. They get the benefit of an educated population they get the benefit of the enforcement of the rule of law and they get the benefit of a healthy population who can turn up to the workplaces that pay the people who work in the factories that pay the interest. So they do pay some tax and they pay it through non-resident withholding tax at a lower rate. 
There is another exception to that which we allow in New Zealand and have historically allowed in New Zealand. For some lenders into New Zealand instead of charging them non-resident withholding tax we charge them an approved issuer levy. That approved issuer levy is at an even lower rate than the non-resident withholding tax. It is not at a punitive rate now. What this legislation says is—look you can avoid that at the moment by legal means of tax avoidance for which loopholes have not been closed. So what does the Government do? Does the Government close the loophole and ensure that it has got a fair tax system with people who are receiving income from New Zealand paying some rate of tax albeit lower than the rate that is paid by a New Zealander? No the Government does not do that. Despite the fact that it is running probably a $13 billion deficit the Government says the answer is to take it to zero. It takes the approved issuer levy to zero. Well there will be no avoidance of that because there is nothing to avoid. 
This is absurd. We should not be reducing the tax paid on earnings by foreigners investing in New Zealand to zero. We should not be reducing it to zero. They do get the benefit of taxes that are paid in New Zealand by others. It is not going to increase in any material way the money that is flowing into New Zealand. If you were going to try to incentivise more money into New Zealand you actually would not do it by giving a tax break to these guys. You would do it by giving a tax break to someone who is going to be investing in a new company that brings new jobs. This part of the bill is just silly; it is just silly. Why would we give a tax break to these people taking their tax rate to zero? The National Party members are quiet because there is no answer to that. There is no answer to that; there is no logic to that. 
We would all love to have the benefit—well not all of us but lots of us would love to pay zero tax and have a bit more money in our pockets. We certainly need it because our wages are not going up at the same rate as they should be and a lot of people have not got jobs. But why give a zero tax rate to some lenders into New Zealand? And if we are giving it to those lenders why not give it to all of them? Where is the logic there? Why do we not give it to all of them? There is no logic to this part of the bill. It should be called what it is which is bad policy. It is another example of economic mismanagement by the Government. 
This is the same Government that this week blocked Treasury even being called to account for probably hundreds of millions of dollars of additional losses—additional losses—through the Crown Retail Deposit Guarantee Scheme. This Government pretends to be a good manager of the economy. Another example for you Mr Woodhouse—how about the Ministry of Foreign Affairs and Trade where $9.2 million was wasted— 
Michael Woodhouse 
: I’m trying to find it in the bill. 
Hon DAVID PARKER 
: —$9.2 million. Well it is actually another example of why there is such a hole in the Government’s accounts as to make it necessary that we have the Taxation (International Investment and Remedial Matters) Bill being passed in this House to improve our tax system when the economy is performing so poorly that the Government is not collecting enough tax to pay its bills.  
This legislation does have some good points. We have acknowledged that but that point in respect of the approved issuer levy is just nonsensical.  
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on behalf of the Green Party on the Taxation (International Investment and Remedial Matters) Bill. The Green Party is supporting this bill but we do have concerns about it. I want to talk about some of the issues around the bill. I would like to endorse the comments of David Parker—I thought Mr Parker made some very good contributions here—and David Clark. I think it is an important debate. 
The thing that I want to focus on firstly is the way that we think about the tax treatment of companies and investment decisions. There is a very simplistic almost ideological view that says that companies make investment decisions based on differential tax rates or that tax rates have a huge impact on investment decisions whether that is incoming investment or other kinds of investment decisions. There is no question that taxes do have an impact on investment decisions. The question is how significant it is. 
What was interesting about the Inland Revenue Department briefing—or I guess the IR briefing as it is now—to the Finance and Expenditure Committee was that the lowering of the company tax rate in New Zealand appeared to have very little impact in terms of incoming investment into New Zealand. Part of the rationale for lowering the company tax rate was in order to attract a greater level of foreign investment into New Zealand. The argument was that globalisation means we are competing with others so our tax rates need to be the same as or lower than other jurisdictions in order to attract investment. 
I am sure that differential tax rates are a factor. I do not think anyone can deny they are a factor. But to put so much emphasis just on differential company tax rates I think is a mistake. One of the underlying principles behind this bill actually suggests that it is a very very important issue. I would argue that it is an issue—and the reason we are supporting it is that giving some support to New Zealand companies that are investing overseas and affecting some of the implications of the tax system on them is important. But I do think we need to think again about how important differential tax rates are in investment decisions. There are a huge range of other factors that influence the investment decisions of internationally mobile companies. The tax treatment and the company tax rate is just one of them. I think if we do not put attention on those other factors which are much much larger then we can focus our attention on the small stuff rather than the big stuff. 
That is the second issue I want to raise in relation to this bill—it really is a principle that is running through a lot of the Government reform agenda—which is a focus on microeconomic reform. Microeconomic reform is important. The Government talks for example relentlessly about removing red tape. Some of the changes in this bill could be characterised I think as microeconomic reform. We know that microeconomic reform is important. There is no question that it is important but how important are microeconomic reform changes such as small changes in regulation or the burden of regulation as it is called and small changes in tax rates? How important is that to the overall performance of an economy? I think the Government does not really consider that question. 
When you look at for example our largest exporting company Fonterra we did not build Fonterra through a process of microeconomic reform. Fonterra came about through State intervention through Government intervention to build a company that is internationally competitive. Those people who believe that the market always delivers and that microeconomic reform to remove regulation results automatically in a well-performing economy do not pay attention to the way that real companies and real competitive commercial entities develop and become the size where they can actually compete internationally. Fonterra did not happen by accident. It did not happen because the State took a hands-off approach. Microeconomic reform by itself will not deliver the kinds of internationally competitive companies like Fonterra that New Zealand needs. 
I think that there is a fundamental misconception that kind of goes through the Government’s approach to bills like this—and tax policy in general but more generally in its economic strategy—where it believes that microeconomic reform by itself will solve the problem and that the New Zealand economy will suddenly perform really well if we just introduce a series of basically new-right microeconomic reform measures. It does not work. It does not work anywhere. When you look at economic development strategies they are not going to do it. And the changes in this bill—most of them are fine changes with the exception of those identified by David Parker—by themselves do not make an economic strategy that will result in a well-performing New Zealand economy. We actually do need to think larger. The Government has identified some areas of course—you know casinos—where they want to give special treatment but actually the focus on microeconomic reform is the overwhelming focus of the Government and I think that is a bit of a mistake. 
The third issue I want to touch on in this bill is the treatment of incoming and outgoing investment because this bill basically tries to make it easier for outgoing investment of New Zealand companies when they are going somewhere else that they are not effectively double-taxed and so the companies they are competing with are facing a level tax field. This is clearly an important issue—no question about it—and for that reason we are supporting it. What sits behind it is the effect of globalisation. Globalisation means that there are these internationally mobile companies and democratically elected Governments find themselves in the invidious situation where they are actually having to look at whether they should be lowering taxes in a bit of a race to the bottom in order to facilitate both incoming investment and the investment overseas of their companies which is what this bill is responding to—global competition around tax rates. 
The thing about that if you like conception of the problem is that what is happening internationally at the moment is that Governments are not in a race to the bottom any more around tax rates. Because of the fiscal pressures on Governments all around the planet at the moment many Governments actually are increasing tax rates. They are increasing tax rates because of the fiscal pressures on Government budgets. This Government does not seem to quite understand what is happening internationally. When you look at the changes the effect of the changes in the 2010 tax changes which were very fiscally negative you can see that the Government does not quite understand the international context of what is going on in terms of tax rates. 
 The second issue is around how to treat incoming foreign investment and I think this is obviously a very hot issue in New Zealand. The basic principle behind the bill is that there should be a level playing field between the treatment of incoming and outgoing foreign investment. The question is is that in New Zealand’s interests to have that philosophical approach—to treat them the same? We know that some incoming foreign investment when it brings new jobs new businesses and new technology and perhaps new networks adds something to the New Zealand economy. We know that other incoming foreign investment when it buys up pre-existing businesses particularly businesses that are operating in the oligopolistic sectors of the economy such as telecommunications or banking does not necessarily add a lot to the New Zealand economy. 
So we need I believe in terms of an economic strategy to differentiate between different kinds of incoming foreign investment. We should not simply have a level say of “Oh incoming foreign investment is good.” Some of it adds something and some of it does not. I think that we need to use whatever levers we have to actually facilitate the incoming foreign investment that adds something to the New Zealand economy but it does not necessarily add something to the economy if we simply allow the buy-up of pre-existing businesses that are simply earning monopoly or oligopolistic profits such as you know in some of the very mature sectors of the New Zealand economy with relatively low competition. The effect of doing that of course is that once those investments come in— 
Simon O’Connor 
: Give us an example. 
Dr RUSSEL NORMAN 
: —for example in the banking sector—the profits and dividends that come out of that sector simply flow overseas and add to the pressure on our current account deficit. So I think we need to be more differentiating in the way that we treat incoming foreign investment. Then there is the principle that underpins this bill which is to basically be non-differentiating—to have a level playing field between incoming and outgoing. 
None the less there are some positive changes in this bill. They are small; they will make a minor difference. There is some cost to the tax base and some of it is completely unnecessary cost to the tax base but it is a relatively minor cost to the tax base so we will be supporting this bill. But I do think that the Government needs to rethink its approach to how it treats differentiating in terms of incoming foreign investment. I think it needs to think again about relying completely on microeconomic reform in terms of an economic development strategy. I think that we need to think again about why it is that companies make investment decisions and not simply rely on company tax rates and think that somehow that is the solution to the issue we face in the New Zealand economy which is that we need to build competitive businesses based in New Zealand using our global advantages so that they can compete in a global market. And of course some of those are around clean jobs in the cleantech sector but I will not get into those because that is a long way from this bill. So on behalf of the Greens I say that we will be supporting this bill. Thank you. 
PAUL GOLDSMITH (National) 
: 
 I am very pleased to speak in favour of this bill the Taxation (International Investment and Remedial Matters) Bill. I am very relieved to hear that the Green Party does accept that at least some foreign investment is good for the economy. I just wish it did not have quite so much faith in the ability of bureaucrats to decide unerringly what good investment is and what bad investment is. You know I think the power of the market and the millions of voluntary decisions that people make every day about what they want to buy and what they do not buy is generally a more accurate description of how things go. 
The centrepiece of the Budget of 2010 was the delivery of the major tax package reforming the tax system to make it more sustainable and a better support for economic growth. This bill falls into our tax reforms and promotes integrity across the tax system. It builds on and extends earlier international tax reforms. The main proposal is to extend the active income exemption introduced in 2009 to offshore subsidiaries so that it also applies to joint ventures and other significant shareholding in foreign companies that are not controlled by New Zealanders. 
This is a formidably complicated area of law where the more fundamental law of unintended consequences usually predominates. The fact that we as members have to rely on the advice of officials so heavily in the development and wording of this kind of legislation only adds I think to the danger of passing international tax laws. We did that in the 1980s and 1990s and they had their own internal logic but since the rest of the world did not follow it proved disadvantageous to a lot of New Zealand businesses and the economy. 
So the point of this bill particularly in relation to the active income exemption is that it brings New Zealand’s tax rules into line with the practice of other countries. This gets us on to safer ground I believe and will help New Zealand - based businesses compete more effectively in foreign markets by freeing them from tax costs that similar companies based in other countries do not face. So it will improve the competitiveness of New Zealand’s tax system and encourage businesses with international operations to remain establish and expand and that is what we need. 
Why is that important? Because we want New Zealand businesses to grow into international businesses based in New Zealand. That is how we build an economy and earn the money we need to maintain the living standards we all aspire to. The tax laws have frequently made that very difficult in the past and in some instances have added to the pressure for companies just to leave New Zealand or more frequently just not to attempt international expansion. So if we can help in that area all to the better. I think I will leave it at that. I commend this bill to the House. 
ANDREW WILLIAMS (NZ First) 
: 
 Well I was not expecting to get a call with only about 2 minutes to go before the House rises before the adjournment but I will stand on behalf of New Zealand First to support the Taxation (International Investment and Remedial Matters) Bill even though we have a matter of only minutes left remaining. This will help New Zealand in terms of its corporates. It will help our companies compete on a global stage. It allows for income that has a source in New Zealand and for which relief from New Zealand tax under double tax agreement is unavailable. This bill serves to help improve New Zealand’s economic performance. It means that New Zealand enterprise is able to operate on a level playing field in markets where we trade and have investments. 
New Zealand First is well known for being the party that has stood up for fairer taxes over many many years with of course the Rt Hon Winston Peters being the most known in this House as being a champion of fair taxes for all exposing the likes of the wine-box situation where people were trying to avoid their taxes and relocate their businesses to other jurisdictions in order to avoid tax. I know we have not got much time left but I need to say that we do support— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I am sorry to interrupt the honourable member but leave has previously been granted for the House to adjourn at 5 p.m. 
Debate interrupted. 
The House adjourned at 5 p.m.