Volume 665 Week 48 - Thursday 22 July 2010 
Volume 665 Week 48 - Thursday 22 July 2010 
[Volume:665;Page:12603] 
Thursday 22 July 2010 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 When the House resumes on Tuesday 27 July priority will be given to the Committee stage of the Appropriation (2010/11 Estimates) Bill known as the estimates debate. Further in the week we would expect to make progress on the Ngati Tuwharetoa Ruakawa and Te Arawa River Iwi Waikato River Bill which will have its first reading. The expectation is that other bills on the Order Paper will be dealt with. 
Hon DARREN HUGHES (Senior Whip—Labour) 
: 
 I thank the Leader of the House for his update. I wonder whether there is any legislation resulting from the Government’s change of policy this week in respect of mining on schedule 4 lands. The Government announced that extra land would be included on schedule 4 of the Crown Minerals Act rather than being mined. Will that result in any amendments to that Act which is legislation that I know the Minister of Energy and Resources is all over. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 On the question of the latter I would expect some amendments to that Act to be introduced later in the year. On the question of the former work is proceeding. 
Questions to Ministers 
Community Max—Performance 
1. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Minister for Social Development and Employment 
: What reports has she received on the performance of the Community Max scheme? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 I have received many reports on the success of the Community Max programme and I will quote four of them: “It would be good to find a way to keep similar programmes going. There’s a real gap there that needs to be filled.”; “the Community Max scheme that I visited in Thames demonstrated positive gain for the community and individuals involved”; “a step in the right direction”; “Any initiative that creates opportunities for young people is to be welcomed”. Those are all direct quotes from Opposition members. 
Hon Annette King 
: Was one of those successful Community Max programmes in the Kaikoura electorate where the National member of Parliament Colin King claimed yesterday that 90 percent of the young people involved in that programme moved into full-time work; if so why did she refuse to listen to her colleague when he asked for it to continue and said: “my argument with the Minister for Social Development and Employment fell flat.” with the funding being removed; and do not the young people in Mr King’s electorate deserve the same support? 
Hon PAULA BENNETT 
: Let me be quite clear that the member came to see me. He specifically asked for a meeting to talk to me about that issue and I listened. Yes his request for Community Max to continue in that area and have additional resources—of course nothing had been cut; it was simply that the time and the money were up—did fall flat. To put it in perspective 81 young Maori people are on the unemployment benefit not just for Blenheim but for Blenheim Nelson and the whole of the West Coast. As the member would be aware there are about 21000 of them throughout New Zealand. So some other areas are in more need. 
Hon Annette King 
: What checks have been put in place to ensure Community Max projects using subsidised workers on short-term contracts do not undercut successful and legitimate existing businesses putting them at risk of having to lay off permanent staff? 
Hon PAULA BENNETT 
: There is always some tension there particularly when one is going into a programme. But as the member’s own colleagues have identified this has been incredibly successful and has been very very well-received in communities. There are some questions around contracts in so far as how we make sure they are community-based programmes and that they are doing stuff that would not normally be done. Certainly the reports I have seen to date have had positive results and it has been positive in that area. 
Hekia Parata 
: Can the Minister comment on the impact Government programmes like Community Max and Job Ops have had on youth unemployment? 
Hon PAULA BENNETT 
: The programmes are having an effect and in some areas it has been quite significant. For example in the last 7 weeks the number of young people on the unemployment benefit in Auckland has reduced by 7 percent. That may not sound like much but when unemployment is going up in other areas and for other groups that is incredibly positive and is the result of Job Ops and Community Max. 
Hon Annette King 
: What has been her response to Mike Tamaki who operates the Tamaki Heritage Group in Christchurch who wrote to her recently telling her that the Community Max programme there has put at risk the employment of his employees undercutting his successful business of 25 years and how can she claim that Community Max is a great success if all the scheme does is to employ 10 young people for a short term but throws 10 permanent loyal people on to the dole? 
Hon PAULA BENNETT 
: Yes I have seen that letter from Mr Tamaki. I think there is room for 10 extra young people in Christchurch to be doing cultural activities and to be learning on the ground. I think that there is room for that and I will encourage it. A few weeks ago this scheme was the greatest thing and we were being asked why were we not extending it and today it is not successful and Labour thinks it is the worst thing so I cannot quite work where Labour stands on it. 
Te Ururoa Flavell 
: Has she visited or received any visit from young people enrolled on the Community Max scheme and what has been their experience of the programme? 
Hon PAULA BENNETT 
: Actually a fine member of Parliament in this House corralled me about 2 months ago and wanted me to meet some young people who were here and who were seeing successes from the Community Max programme. That member was the member who asked the question himself Te Ururoa Flavell. There were 100 young people from the Otaki area who were here and the light was going on for them. A real difference was being made in their lives and positive effects from that and the representations from the member and his party meant that we extended the programme. 
Hon Annette King 
: If checks do exist could the Minister explain why a community project in Opotiki received considerable funding to build what has been called “an unsightly zigzagged path” up Makeo Mountain sacred to Ngati Rua hapu with no authorisation from the hapu and no authorisation from the landowner who was forced to take out trespass notices to stop the project? 
Hon PAULA BENNETT 
: To put that one into perspective we are talking about four young people and a supervisor. I will not get involved in local politics in a small area like that and make a judgment call on who did or who did not. I will say that that particular programme has finished; it has been completed. It went on for 6 months and all four of those young people are in work. 
Hon Annette King 
: In light of that answer what has been her response to Ngati Rua who wrote to her on 8 July—and as of 2 days ago she had not responded to them—setting out their concerns for her including asking for accountability for the damage done the illegal removal of flora and fauna the remains of an unsightly path desecration of a sacred site and the lack of respect shown for the hapu and the community in that area; has she responded and does she intend to? 
Hon PAULA BENNETT 
: That letter was received in my office on the Monday that has just been. I am advised that the department met with the parties involved yesterday and that it has been resolved and they all feel they have had a satisfactory outcome. They are all pretty excited that four young people who did not have opportunities are now in work and are moving ahead. That is the advice I have been given. 
Economic Challenges—Addressed by Economic Programme 
2. 
AARON GILMORE (National) 
 to the  
Minister of Finance 
: What is the main economic challenge facing New Zealand and how is this being addressed by the Government’s comprehensive economic programme? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 New Zealand’s main economic challenge is that our growth rate fell sharply from about 2005. The economy from about then became heavily reliant on unsustainable Government spending and excessive borrowing for housing speculation. So we went into recession before the global financial crisis. Our average per capita growth rate for the 3 years to 2008 was negative 0.5 percent per year. The Government has sought to address this challenge by means of a substantial tax reform programme a multibillion-dollar infrastructure programme sorting out the Government’s finances which were left in a mess improving skills and education and cutting red tape. 
Aaron Gilmore 
: What are the main symptoms of the significant imbalances that have been built up in the New Zealand economy over the past 5 or 6 years? 
Hon BILL ENGLISH 
: There are two main symptoms. One is that the tradables sector which is exporters tourism and import-competing industries—the earning side of the economy—went into recession in about 2004. There have been no net new jobs in agriculture and manufacturing since 2002. Since then however the non-tradables sector the spending part of Government and domestic industry has grown by about 10 percent. The second symptom is a sharp rise in New Zealand’s net external liabilities which have grown from about $100 billion in 2000 to about $170 billion this year. They are forecast to increase to $250 billion—or one-quarter of $1 trillion—by 2014. Both of these trends need to be turned round. 
Hon David Cunliffe 
: Given the cancellation of the much-touted programme to mine national parks and the failure so far to fund the roll-out of broadband can he confirm that the only comprehensive economic programme left for the Government is its policy to reduce or destroy labour rights? 
Hon BILL ENGLISH 
: No. Our programme needs to be comprehensive in order to turn round the mismanagement of the previous Labour Government which caused the significant imbalances that I just talked about. From 2002 there have been no new jobs in agriculture and manufacturing although on the other hand the Government sector and domestic housing spending and consumption spiralled out of control. 
Aaron Gilmore 
: What early signs of progress has he seen that some of New Zealand’s economic imbalances are being turned round? 
Hon BILL ENGLISH 
: First the economy is actually growing now instead of shrinking as it was in 2007 and 2008. The tradables sector has grown by 3.4 percent in the 9 months to March 2010—faster than the non-tradables sector. That would be the first time since December 2002 that our earning capacity has grown faster than our spending. Finally New Zealanders are being more careful with their spending. Per capita private sector consumption has grown by only 1 percent in the past year after consistently increasing at above 4 percent per year between 2002 and 2007. Household debt is also easing after a decade of rapid growth under the previous Government. 
Hon David Cunliffe 
: Is it not true that skills and technology are some of the primary drivers of productivity and that productivity is one of the key issues that is holding back New Zealand; if so why did the Government scrap the research and development tax credits cut the Skills Strategy cut education and cut the Fast Forward fund? 
Hon BILL ENGLISH 
: We ditched a whole lot of verbose meaningless strategies that the previous Labour Government spent millions of dollars on workshopping drafting redrafting and publishing because none of them had worked. The evidence for that is that under the previous Government growth virtually stopped our spending went out of control our earning capacity was throttled and New Zealand built up record amounts of debt. We are changing that. 
Aaron Gilmore 
: What economic policy prescription would put these early signs of recovery at risk and cost thousands of jobs? 
Hon BILL ENGLISH 
: Pretty much anything that the previous Labour Government did and anything that the current Opposition promises to do. 
Mining in Conservation Areas—GDP Growth Projections 
3. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: By what amount will the cancellation of the Government’s plans to mine sensitive conservation land reduce GDP growth projections in the next 5 years? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 It will not have any effect. 
Hon David Cunliffe 
: Why if there was no projected GDP impact from mining did John Key describe it as central to the Government’s plans for a step change in the economy? 
Hon BILL ENGLISH 
: Because we have a visionary and aspirational Prime Minister who can see what this economy needs over the next 10 years. That is backed up by a Minister of Energy and Resources who has done an excellent job of building a profile of that industry. After the Government’s decisions on schedule 4 investors now have certainty and encouragement to expand mining and resources significantly. I expect that it will show up in the GDP figures in the future. 
Hon David Cunliffe 
: What contribution to GDP growth projections will the proposed fire-at-will labour legislation make and is it true that the Government’s step change plan is now centred on reducing the cost of labour? 
Hon BILL ENGLISH 
: I do not know what legislation the member is referring to as “fire-at-will” but I can confirm for the member that the Government has announced that it will extend the 90-day trial period. We believe it will give businesses particularly smaller business more confidence to hire and give employees who need it a better opportunity to get their foot on the bottom rung of the ladder. 
Chris Auchinvole 
: How has the output of mining and related sectors changed in recent years? 
Hon BILL ENGLISH 
: Mining is one of the sectors that exports and competes directly with the rest of the world. This sector performed poorly under Labour’s mismanagement. Currently output from tradable industries remains below 2002 levels. By contrast output from non-tradable sectors has grown by over 20 percent. The mining analogy is apt. Labour mined the economy for all it was worth with no thought to the future. It left the country with a pile of toxic sludge and we are cleaning it up. 
Hon David Cunliffe 
: Given the cancellation of plans to mine sensitive conservation areas the tyres of the national cycleway going flat and the end of the 9-day working fortnight is the dangerous proposal to reduce labour rights now the centrepiece of the Government’s strategy for jobs and growth? 
Hon BILL ENGLISH 
: One of the centrepieces of the Government’s strategy for jobs and growth is the multibillion-dollar infrastructure investment programme which is employing thousands of skilled New Zealanders at a time when no one else would be employing them. Another policy at the centre of our plan to turn round the economy is the significant decreases in income taxes and a switch to consumption taxes. We believe unlike that party that savings investment work and exports are good and that over-consumption and too much borrowing are bad. I understand that the Opposition has the opposite view. 
Aquaculture—Improvements 
4. 
SHANE ARDERN (National—Taranaki - King Country) 
 to the  
Minister of Fisheries and Aquaculture 
: What recent announcements has he made about aquaculture? 
Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) 
: 
 The Government has today announced further steps of aquaculture reform which is a key priority for our economic growth agenda. These decisions will boost aquaculture’s potential to reach the industry’s goal of $1 billion in annual sales by 2025. They are about enabling the sustainable use of our natural resources to build the economy to create new jobs and to get more people into work especially in the regions. I thank the Ministry of Economic Development for working with the Ministry of Fisheries on this matter. 
Shane Ardern 
: What does this mean for the current backlog of existing aquaculture applications? 
Hon PHIL HEATLEY 
: Currently more than 60 applications relating to an area exceeding 8000 hectares are awaiting a decision. Under the previous Government they were waiting waiting and waiting. But now we will see those applications progress. This reform will effectively free-up the bottleneck that kept the industry’s growth in limbo for many many years while the previous Government talked talked and talked. 
Health Services—Cuts 
5. 
Hon RUTH DYSON (Labour—Port Hills) 
 to the  
Minister of Health 
: Is he comfortable with the numerous announcements of health cuts in the last 20 months? 
Hon PETER DUNNE (Associate Minister of Health) 
 on behalf of the  
Minister of Health 
: There have been no cuts in the health budget in the last 20 months. In fact Government funding for health services has increased by $1.3 billion in that time $1 billion of which has gone to district health boards. 
Hon Ruth Dyson 
: Does he think that the people who are waiting in corridors without even a corridor bed at North Shore Hospital’s emergency department will agree with him about no health cuts or will they find his total lack of action to help them rather confusing given his noisy attacks against health staff at that hospital on this very issue in the winter of 2007? 
Hon PETER DUNNE 
: I should point out to the member that funding for that particular district health board has increased by over $100 million in the last couple of years. The issue of how it deploys that funding is a matter for the district health board. Perhaps I could give the member an analogy. This is about reprioritisation in just the same way as the previous Government reprioritised $110 million out of the health system just before the last election. [ 
Interruption 
] 
Mr SPEAKER 
: The member has to have a reasonable chance to ask a supplementary question. 
Hon Ruth Dyson 
: What does he say to the nurses in Taihape at Otaihape Health who have been told to take a 30 percent pay cut or the hospital in which they work will be closed? 
Hon PETER DUNNE 
: The advice that I have received is that that matter is currently the subject of negotiations with the Whanganui District Health Board. It is grossly inappropriate for Ministers to intervene in an industrial relations process—something that I thought the members of the party opposite would well understand. 
Dr Paul Hutchison 
: What recent reports has he seen on improved front-line services? 
Hon PETER DUNNE 
: I have seen some reports that indicate a number of improvements over the last 20 months. For instance we now have shorter emergency department waiting-times a record rise of some 13000 patients getting additional elective surgery last year shorter waiting-times for cancer treatment higher levels of fully immunised 2-year-olds and over 240000 New Zealanders now getting access to medicines that they were not getting previously. 
Hon Ruth Dyson 
: What does he say to the good people of Taihape who face losing all their locally delivered front-line health services if their hospital is closed; or will he wash his hands of that responsibility as well? 
Hon PETER DUNNE 
: The member is jumping to a number of unwarranted conclusions. There is no suggestion that the closure of that hospital is in the pipeline. The reality is that the matter of the processes that are being gone through between the staff of the district health board and their employer should be left to resolve itself. 
Hon Ruth Dyson 
: What if anything will he do to support the elderly man who has dementia and Parkinson’s disease who is being held in Rimutaka Prison not because of his risk to the community but because nobody can find a health-funded home for him to live in? 
Hon PETER DUNNE 
: If the member cares to take up that case directly with the Minister’s office it will be addressed. 
Government Procurement—Reform 
6. 
JO GOODHEW (National—Rangitata) 
 to the  
Minister for Economic Development 
: How will the Government’s procurement reforms provide value for money? 
Hon GERRY BROWNLEE (Minister for Economic Development) 
: 
 Yesterday I announced the awarding of the first of a series of State sector - wide contracts with more to come into effect progressively during July. This will create great value for money and will save the taxpayer millions of dollars. 
Jo Goodhew 
: What is the targeted saving to the Government once the first four contracts are in place? 
Hon GERRY BROWNLEE 
: Once all of the contracts are in place they are expected to save more than $115 million over the next 5 years. This harnesses the collective buying power of the whole of the State sector. The benefit to the Government and to taxpayers will be significant gaining the best value for money. 
Clare Curran 
: What process did he use to ensure that New Zealand - owned companies were given full consideration as part of the tendering process? 
Hon GERRY BROWNLEE 
: I am confident that the department has used appropriate tendering procedures to ensure that New Zealand manufacturers had a fair go. But I would say that if the member can show me that she uses New Zealand - manufactured computers laptops single multifunctional printing devices photocopiers printers passenger vehicles—which I understand have not been produced in New Zealand for some years now—and office consumerables then I would be interested to know. 
Mining in Conservation Areas—Minister’s Intentions 
7. 
Hon DAVID PARKER (Labour) 
 to the  
Minister for Economic Development 
: Does he agree with the  
Dominion Post 
 article “From step change to a giant U-turn” regarding the Government’s plans for mining and what plans in his capacity as Minister for Economic Development does he have to replace that step change? 
Hon GERRY BROWNLEE (Minister for Economic Development) 
: 
 No; and if the member had been listening yesterday he would have heard a list of the initiatives this Government is undertaking to enhance the development of the New Zealand economy. Achieving an economic step change for New Zealand is not reliant on one single sector of the economy as the member seems to wish to suggest. We want a balanced economy with widespread markets and a broad range of products and services. The member should know that one swallow a summer does not make. 
Hon David Parker 
: Has the Minister seen the pages on his own Ministry of Economic Development website entitled “Regional Development” and “Industry Development” which list about eight initiatives all of which were put in place under Labour with no new additions from him? 
Hon GERRY BROWNLEE 
: I have seen the website. I am aware of those many initiatives but I would say that the one stark difference between this Government and the Labour Government is that where those programmes have been seen to have value and to be able to make a difference we have funded them; Labour did not. For 9 years it did not fund them. 
Hon David Parker 
: Has the Minister seen the very lonely update on his own ministry’s website under “NZ Economic Development—Recent Updates” which has only one entry the Large Budget Screen Production Grant introduced under Labour and retained without amendment under his busy watch? 
Hon GERRY BROWNLEE 
: The Ministry of Economic Development website is an excellent place to find out what that Government department is doing and I recommend others look as well. 
Katrina Shanks 
: How can the Government assist the development of the New Zealand economy? 
Hon GERRY BROWNLEE 
: The economic step change in New Zealand will be achieved by working towards developing a more dynamic economy with a diverse range of export sectors and a range of markets for those goods. I simply ask the member to consider exactly what is going on in the New Zealand economy at the moment. Prior to the election we had 5 years of going backwards 5 years of negative growth and 5 years of exports going down the tube. We now have projections of 170000 new jobs over the next 4 years and household incomes rising over that time by some $7000 and as Mr English explained to the House before for the first time since 2002 the tradable sector now exceeds the non-tradables. These people do not have a clue how an economy would work. 
Hon David Parker 
: Why when John Key last December said that there would be many new moves in the economic development space and promised a step change to catch up with Australia is there scant evidence of the plan and no targets or dates before 2025 against which National is willing to be judged? 
Hon GERRY BROWNLEE 
: I have just outlined two very very significant measures that New Zealanders tangibly feel. I think the member needs to stop believing his own rhetoric stop puddling around in his dream that one can change the economy by winning Lotto and look at some of the real things that this Government is doing. 
Hon David Parker 
: I seek leave to table copies of the pages of the Ministry of Economic Development website— 
Mr SPEAKER 
: We will not be doing that. It is available to all members. 
Violence Domestic—Police Safety Orders Issued Since 1 July 2010 
8. 
CHESTER BORROWS (National—Whanganui) 
 to the  
Minister of Justice 
: How many on-the-spot police safety orders for victims of domestic violence have been issued since the Government’s amendments to the Domestic Violence Act came into force on 1 July 2010? 
Hon SIMON POWER (Minister of Justice) 
: 
 I am advised that between 1 and 21 July the police issued 198 safety orders. These orders give the police the power to remove a potentially violent person from the home for up to 5 days in situations where there are no immediate grounds for arrest but where in their judgment there is a likelihood of further violence occurring. I see these orders as being a vital tool because they are designed to stop domestic violence from escalating and they tackle the problem before it could be too late. 
Chester Borrows 
: How many police safety orders have been breached so far? 
Hon SIMON POWER 
: Sixteen of the 198 police safety orders issued since 1 July have been breached. That means that to date in 92 percent of cases the orders are working as intended. I would like to make it clear that any breach is serious and unacceptable. However I am confident that these orders will continue to be vigilantly policed. 
Catherine Delahunty 
: Tena koe Mr Speaker. Tena koutou katoa. Is the Minister concerned that the Ministry of Justice is not able to provide statistics on domestic violence perpetrators who have been issued with protection orders more than once and that victims of domestic violence have to pay for their protection orders? 
Hon SIMON POWER 
: The original question was about police safety orders not protection orders. The two are different. But I am happy to take the member’s question and look more closely at it. 
Interest Rates—Lending Practices and Vulnerable Consumers 
9. 
CAROL BEAUMONT (Labour) 
 to the  
Minister of Consumer Affairs 
: Does she think that there is a serious problem with fringe lenders who are lending to vulnerable consumers at extremely high rates of interest or in an irresponsible manner? 
Hon HEATHER ROY (Minister of Consumer Affairs) 
: 
 Yes. 
Carol Beaumont 
: Is the Minister willing to work with Labour and other parties to find real solutions to the exploitation caused by loan shark activities? 
Hon HEATHER ROY 
: I am willing to talk to anyone and I have talked with the member on numerous occasions. The fact is that credit and fringe lending is a very complex area that requires comprehensive solutions. As I have said to the member although her Credit Reforms (Responsible Lending) Bill—which was debated in the House last night—had considerable merit it was too limited in scope. There would have been undesirable unintended consequences from its implementation that would have most affected the very people whom it aimed to protect. The Government already has a large number of measures in place to deal with the issues that were raised in Ms Beaumont’s bill. 
Carol Beaumont 
: Why has the Minister delayed work on the review of the Credit Contracts and Consumer Finance Act which she has consistently provided as an example of the Government’s work on dealing with the problem of fringe lending? 
Hon HEATHER ROY 
: The review of the Credit Contracts and Consumer Finance Act which the member is referring to has not been deprioritised as she has claimed a number of times. It has been reprioritised alongside the consumer law reform. We need to fix the issues in the Credit Contracts and Consumer Finance Act and the Credit (Repossession) Act that are not working and there needs to be thorough analysis of the impacts on credit providers and consumers. 
Hekia Parata 
: What legislative reform is the Minister considering that will provide enhanced protection against usurious lending practices for all New Zealanders and what assistance is currently available until these changes are implemented? 
Hon HEATHER ROY 
: The Government is looking at comprehensive measures to address these issues with real solutions. That includes a review of the Credit Contracts and Consumer Finance Act work in progress to address problems with credit repossession law and work in progress to extend the hardship provisions in the current law. There is also work as part of the securities law review that looks at measures to ensure that consumers are treated fairly. By 1 December financial service providers must be registered and belong to a disputes resolution scheme. My consumer law reform process is under way and the Minister of Commerce and I are working closely to ensure that fringe lenders and unscrupulous lending processes and practices are covered by these measures. 
Carol Beaumont 
: When will the Minister stop reviewing and start doing in relation to the harmful activities of loan sharks who cause damage to some of our most vulnerable families? 
Hon HEATHER ROY 
: I think the member did not hear the answer to the previous question. We have a number of initiatives under way. The financial service providers legislation introduced by the previous Government will come into effect on 1 December in relation to the registering of financial service providers. In order to register all financial service providers must belong to a disputes resolution scheme. The consumer law reform process is under way. 
Hon Ruth Dyson 
: What are you doing though? 
Hon HEATHER ROY 
: This is exactly what I am doing if the member would like to listen. The consumer law reform process will consider measures to protect vulnerable borrowers such as protection against unfair contract terms and unconscionable content. It is important that these things happen quickly and I am working as fast as I can to ensure that they do. 
Petroleum Resource—Customary Rights 
10. 
DAVID CLENDON (Green) 
 to the  
Minister of Energy and Resources 
: Does he agree with Crown Minerals’ testimony to the Waitangi Tribunal’s inquiry into the management of the petroleum resource which confirmed that the Crown has an obligation under international law and the Treaty of Waitangi to investigate claims of customary rights? 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
: 
 I understand that the comments referred to by the member came at the end of a very long cross-examination in front of the Waitangi Tribunal and I do not want to make any comment on that matter at all. But I say that New Zealand is a sovereign coastal State and the Crown is therefore the only legal person that has any right to explore exploit conserve and manage natural resources on the continental shelf as recognised by the United Nations Convention on the Law of the Sea and ratified by the Continental Shelf Act 1964. I suggest that if the member wants to argue that the United Nations has it wrong he needs to take that argument to a different forum. He may also like to consult with his colleague Dr Kennedy Graham who is an expert on the effect that United Nations declarations such as this one can have. 
David Clendon 
: Does the Minister agree with Crown Minerals’ testimony that the ownership of oil in the exclusive economic zone is “a live issue”? 
Hon GERRY BROWNLEE 
: No I do not. Section 10 of the Crown Minerals Act reserves all petroleum including that in the foreshore and seabed and the outer limits of the territorial sea. Section 5A of the Continental Shelf Act refers back to the United Nations Convention on the Law of the Sea which I spoke of before and makes it clear that all rights that are exercisable by New Zealand in respect of the continental shelf and its natural resources for the purposes of exploring the shelf and exploiting its resources are vested in the Crown. 
Rahui Katene 
: Is the Minister aware that in its 2003 report the Waitangi Tribunal found that the expropriation of the pre-existing Maori rights to petroleum arose from a context that was riddled with breaches of the Treaty; and what will he do to assure iwi that further breaches will not be created either through his actions or those of Crown Minerals? 
Hon GERRY BROWNLEE 
: Firstly there is no intention to overturn the 1937 Act that nationalised the particular minerals that the member mentions. As for ongoing participation I have given in verbal form my commitment to the aggrieved parties in the most recent case that we would do better in the future. 
David Clendon 
: Does the Minister agree with Crown Minerals’ testimony to the Waitangi Tribunal that the Crown does not own the oil in our exclusive economic zone? 
Hon GERRY BROWNLEE 
: No. I refer the member to the answer I gave just a few minutes ago. 
David Garrett 
: How can he possibly disagree with the contention that the Crown has an obligation under international law to investigate Maori claims to petroleum when he is part of a Government that has signed up to the United Nations Declaration on the Rights of Indigenous Peoples? 
Hon GERRY BROWNLEE 
: Quite simply because I do not entangle the requirements of both declarations. 
David Clendon 
: Is the Minister saying Crown Minerals was wrong when it said the Crown does not own the oil in our exclusive economic zone? 
Hon GERRY BROWNLEE 
: The questioner asks me to agree with the proposition he set out in his primary question. I made the point that I will not make a comment on that and I will not do so now. 
David Garrett 
: Can he rule out granting compensation to iwi for the confiscation of petroleum resources as required by articles 10 26 and 32 of the United Nations Declaration on the Rights of Indigenous Peoples; if not why not? 
Hon GERRY BROWNLEE 
: Quite apart from the fact that domestic law takes precedence over United Nations law although United Nations declarations can clearly give credence to domestic law I am afraid that I am not able to bind any future Government. 
David Clendon 
: Does the Minister believe he acted appropriately when he disregarded a claim raised by Te Aupouri iwi about ownership of oil off the Reinga coast? 
Hon GERRY BROWNLEE 
: No. 
Hon Nanaia Mahuta 
: How does the Minister reconcile his answers with the requirement to engagement effectively with iwi and with the Government’s expressed support of the Declaration of the Rights of Indigenous Peoples; and why is the Minister ignoring comments of support party MP Hone Harawira with regard to deep-sea mining in Northland? 
Hon GERRY BROWNLEE 
: The Government is currently engaged in a very very constructive dialogue with our support partner the Maori Party about the future of the foreshore and seabed. Quite clearly customary rights and territorial rights will be better recognised under the new arrangements than the previous Government was prepared to allow. 
David Clendon 
: Will the Minister commit to undertake a thorough investigation of Te Aupouri’s claim to ownership of the oil in the Reinga Basin and will he commit to reporting back promptly to them the findings of that investigation? 
Hon GERRY BROWNLEE 
: No. 
Biofuels—Biodiesel Grants Scheme 
11. 
CHRIS HIPKINS (Labour—Rimutaka) 
 to the  
Minister of Energy and Resources 
: How much funding has been granted to date under the Biodiesel Grants Scheme and is he satisfied with the scheme’s progress? 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
: 
 So far the figure granted is $230332. I do not want to express either satisfaction or dissatisfaction with that. Rather I wish to express my profound disappointment that an industry that promised so much has delivered so little despite such an extraordinary available subsidy. 
Chris Hipkins 
: How many of the 240 jobs he claimed in May last year would be created by the Biodiesel Grants Scheme have actually eventuated particularly given that only five companies have signed up for the scheme no new companies have signed up since July last year and less than $230000 of the $36 million has actually been taken up? 
Hon GERRY BROWNLEE 
: As I said I am extremely disappointed by the failure of this industry to respond to the Government’s stimulus. I think the fact that it has failed serves as testimony to the mistruths put in front of this House by the member and his colleagues. 
Chris Hipkins 
: Does he stand by his statement in the House that there is no doubt that biofuels will play a big part in our energy mix in the future; if so what is his response to Ecodiesel chairperson— 
Mr SPEAKER 
: I am on my feet. Whoever interjected just then is lucky; I could not see who it was. All of us at times get a frog in our throats and lose our voices. I invite the member to have a drink of water and I invite members to give him a reasonable chance to ask his question. 
Chris Hipkins 
: Does he stand by his statement to the House that there is no doubt that biofuels will play a big part in our energy mix in the future; if so what is his response to Ecodiesel chairperson Lindsay Fergusson’s comment that the scheme will work only for small-scale producers and those who “are not the future of the bio-diesel industry in New Zealand.”? 
Hon GERRY BROWNLEE 
: I stand by my statement that bio-diesel will play a bigger role in the future simply because I think that that is what will happen. I do not put a time frame on that. The reality is that if people do not buy the product we cannot sell it. That is the problem the industry has. It has failed to sell the product. 
Chris Hipkins 
: Why should the public of New Zealand have any confidence in anything that this Minister says when his Biodiesel Grants Scheme has been a total flop the revised Energy Strategy he has been promising for 18 months has not eventuated his Electricity Industry Bill has been panned by critics and his plan to mine national parks has been left in tatters; or is this just the usual standard of ministerial performance people can expect under a National Government? 
Hon GERRY BROWNLEE 
: I think the crackly voice performance we heard from the member before indicates that he is a very young man and none of what he said is true. 
Road User Charges System—Improvements 
12. 
TIM MACINDOE (National—Hamilton West) 
 to the  
Minister of Transport 
: What efficiency improvements is the Government making to the road transport system? 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 The Government has announced major changes to the road-user charges system that will simplify and modernise a key part of New Zealand’s transport operation. Changing the definition of licence weights removing supplementary licences removing the confusing time licence system and simplifying the list of exempted vehicles will all reduce compliance costs and simplify administration processes for industry and Government. This will reduce transport costs for our businesses and help make getting exports to markets cheaper. 
Tim Macindoe 
: What has been the response of the transport industry to these changes? 
Hon STEVEN JOYCE 
: The transport industry has been very positive about these changes. I have spoken to a number of operators who are very enthusiastic and the Road Transport Forum said the Government has “recognised the inherent waste and inefficiency in the current RUC system. It is very refreshing to be working with Government on these issues for the overall benefit of the economy.” Truckers already receive 6 weeks’ notice of any road-user charge increases which the previous Government refused to do and we have allowed for electronic distance recording and electronic display of road-user charge licences. In addition the revenue from road users is now largely invested back into the roading network. By our creating a modern fairer and more efficient road-user charge system the industry is free to get on with the job of helping New Zealand grow. 
Hon Darren Hughes 
: Why does he choose to put a— 
Hon Gerry Brownlee 
: It’s Youth Week. 
Hon Darren Hughes 
: I think you have had your day Gerry. 
Mr SPEAKER 
: I have to be able to hear the supplementary question and the member’s own colleague the Minister has to be able to hear the supplementary question. 
Hon Darren Hughes 
: Why does he choose to put greater emphasis on getting people to their holiday homes more efficiently at the expense of other transport modes that would also result in greater efficiency of the road transport system such as committing to an airport-to-city rail link for the city of Auckland? 
Hon STEVEN JOYCE 
: The member opposite once again shows a disturbing misunderstanding of economics and economic efficiency. The reality in this country is that 85 percent of passenger transport occurs in private vehicles and that will continue to occur. The highway that the member referred to is massively more used than almost the entire current rail system in Auckland. 
Sue Moroney 
: Is he aware that around 60 people met in Te Kauwhata this week to support the establishment of a passenger train service between Hamilton and Auckland and does he agree that that service could improve the efficiency of road transport for those stuck in traffic on Auckland’s southern motorway every morning and every afternoon? 
Hon STEVEN JOYCE 
: I am doing this from memory but my understanding is that the cost of subsidising a passenger on a train from Hamilton to Auckland is something like $15000 or $16000 per trip. It would be cheaper to hire a helicopter to fly someone from Hamilton to Auckland than actually to subsidise that train service. 
Food Bill 
First Reading 
Hon KATE WILKINSON (Minister for Food Safety) 
: 
 I move  
That the Food Bill be now read a first time. 
 At the appropriate time I intend to move that the Food Bill be considered by the Primary Production Committee. 
This bill restates and reforms the law relating to trading in food in order to achieve the safety and suitability of all food for sale in New Zealand. It does this by providing for risk-based measures that minimise and manage the risks to public health and by requiring the persons who trade in food to take primary responsibility for its safety and suitability. The bill also provides certainty for food businesses in terms of their obligations and of how their activities will be regulated. 
The food industry is vital to the New Zealand economy. It comprises 35000 to 40000 manufacturing importing retailing and service businesses and up to 200000 additional part-time food premises. It also provides jobs for 20 percent of the working population. 
The retail value of food and beverages is an estimated $13.8 billion per annum and the food service sector—restaurants cafes and the like—has been valued at an estimated $5 billion. New Zealand’s food sector accounts for at least 10 percent of gross domestic product. 
The export revenue from food products and food ingredients produced in New Zealand is estimated to be $15 billion per annum. This means that food exports represent more than 50 percent of the total merchandise exports from New Zealand. 
Significantly for an export-led recovery for New Zealand the domestic food regulatory regime is the platform for exports. The New Zealand domestic standard is used as the basis for negotiating access arrangements with our trading partners. This can minimise the often excessive importing-country requirements that may be imposed but which do not go towards food safety. 
The bill will replace the Food Act 1981 which at nearly 30 years old is outdated and inefficient. As a consequence the Food Act 1981 and its subordinate legislation—in particular the Food Hygiene Regulations 1974—have led to considerable inconsistency in application across New Zealand they have resulted in the imposition of unnecessary compliance costs and they do not do enough to protect consumers or to reduce food-borne illnesses. None the less the Food Bill maintains those aspects of the current regulatory regime that work well. For example it maintains the role of the Government as the principal regulator it retains a local government role in the regulation of food premises and there remains a role for independent third parties to act as verifiers for food businesses. 
The bill seeks to reduce the prescriptive nature of the existing system and to move to an outcomes-based regulatory regime. The new regime will require all food businesses to apply the risk-based measure assigned to their sector. The bill provides for a number of different risk-based measures. This will allow food businesses to be regulated relative to the degree of risk that a particular sector or food-selling activity generally poses. For example a baked goods fund-raiser will no longer have the same regulatory requirements that a bakery has. 
The bill proposes four risk-based measures. The most comprehensive of these in terms of compliance requirements is the food control plan and the least comprehensive is the food-handler guidance. The food-handler guidance is an educative measure for the food safety information that is particular to a food-selling activity. Food-handler guidance will be prepared by the New Zealand Food Safety Authority and provided directly to territorial authorities and relevant sectors. Those operating under the food-handler guidance will need to meet the requirement only of preparing or selling safe and suitable food. They will not be subject to any specific regulatory requirements. 
The bill will also introduce specific and in part new requirements for imported food. All persons importing food will have the duty to ensure that the imported food delivers the same safety and suitability outcomes and meets the same standards that apply to domestically produced food. Furthermore every consignment of food imported into New Zealand will now require a registered importer. The bill contains a regulation-making power relating the categorisation of imported food and the particular criteria that can be applied to each category. 
The combined effect of the provisions on the face of the Food Bill and the regulation-making powers will be the establishment of a comprehensive imported foods framework. The framework is capable of closely regulating and controlling food imports. It will ensure rapid responses to the specific risks that a particular food or food from a particular source might pose before that food enters the New Zealand food supply. Furthermore the framework places specific duties and obligations on the persons involved in the importation of food. 
Many food businesses will be required to be verified against their allocated risk-based measure. The amount of verification required will depend on the risk-based measure assigned to a particular sector. The bill enables the chief executive to recognise and approve both the public and private agencies and persons to conduct these verifications. 
The role of territorial authorities has been maintained and clarified. Among other functions territorial authorities will operate as a registration authority and an enforcement agency for certain food businesses. A territorial authority may also become a recognised agency and may conduct the verification of food businesses. It is anticipated that territorial authorities will have a 5-year window in which they will have the exclusive right to verify certain food businesses. This will help provide a degree of continuity for those businesses that are currently subject to territorial authority inspection. The bill will maintain the capacity in territorial authorities to undertake the full range of food safety and related activities and it will reduce transaction costs for businesses in relation to compliance and enforcement particularly during the transition period. The bill will also enable the Minister subject to appropriate consultation to set national outcomes relating to the performance of territorial authorities in carrying out their functions duties and powers. 
The bill continues the current provisions relating to the recovery of costs that are not directly or indirectly met by the Crown. The provisions require the Minister and the chief executive to take all reasonable steps to recover the costs associated with administering the new Food Act. New provisions for cost recovery also set out those functions and duties for which territorial authorities may recover costs. The bill will also require that any cost recovery undertaken must be equitable efficient justifiable and transparent. 
The bill modernises the enforcement and offence provisions and it substantially increases the penalties from those set almost 30 years ago. The low penalties currently available under the Food Act 1981 have been the subject of judicial comment in the past with one judge describing them as archaic. A number of cases over the years have involved serious harm and risk to consumers. 
This bill sends the clear message that the Government is serious about food safety by ensuring that the available penalties are appropriate to the 21st century food-trading environment. For example under the Food Act 1981 a prosecution for selling food that is unsound or unfit for human consumption or that is contaminated can involve a maximum penalty of $5000 for an individual. Under this bill a person convicted of a comparable offence could expect at the maximum a penalty of 2 years’ imprisonment and a $100000 fine. A body corporate committing the same offence under this bill could receive a monetary penalty of up to $500000. 
The bill also contains regulation standard and notice-making powers. Of particular importance is the ability for the Minister to adopt joint food standards to give effect to New Zealand’s obligations under the Australia - New Zealand joint food agreement. There is also the ability to adopt domestic-only food standards for those limited and exceptional circumstances in which New Zealand might need to opt out of a joint food standard. 
I commend this bill to the House. 
Dr ASHRAF CHOUDHARY (Labour) 
: 
 It is quite interesting to see Kate Wilkinson speaking in the first reading debate on the Food Bill. I am not really sure who the Minister for Food Safety is at this stage because the Food Safety Authority was merged into the Ministry of Agriculture and Forestry on 1 July. It is still not clear who is running the show on the Food Bill. Is it the Minister of Agriculture or is it the Minister of Conservation who is also the Minister of Labour? 
Hon Darren Hughes 
: Who would know? 
Dr ASHRAF CHOUDHARY 
: Who would know? This Minister Kate Wilkinson has mucked up the 90-day bill she introduced and she has mucked up the lives of many workers in New Zealand. This is the same Minister who was rolled over by Mr Brownlee in the mining area. The Minister of Conservation has been part of that mining plan in association with Mr Brownlee. 
This bill refers to imported and exported food in New Zealand. In New Zealand our main business is food. We produce food for about 60 million people. Of course we consume a very small proportion of that food. We have about $20 billion worth of food that is exported and about $22 billion worth of estimated annual turnover in the food area. We employ over 20 percent of the workforce in the food area—that is in production processing retail and all that. So it is very important employment for New Zealand. It is very important for New Zealand’s exports as well as for the social fabric of society. This bill is an important bill that has been in preparation for a number of years. Looking back I have to acknowledge the good work done by Lianne Dalziel a former Minister for Food Safety and Annette King who had been in the forefront of preparing this bill and doing the background work for a number of years. The bill has now come to the House after a number of years of preparation. 
I say that we support this bill being sent to select committee. We will have the opportunity in select committee to receive submissions from the wider sector. I hope the chairman of the Primary Production Committee will give submitters the opportunity to have plenty of time to submit on this bill because this bill is as the Minister just said a major review after 30 years. The bill is huge. At about 400 clauses it is a big bill. I think we need to give plenty of time for the submitters whether they are in manufacturing retail exporting or importing. I think we have to give enough time for people to submit on the bill. 
We welcome the introduction of this bill. When we were in the office we were proactive in recognising the shortfalls under the existing food regulations. We initiated the domestic food review which identified the major problem of food-borne illnesses we have in New Zealand. Clearly 18000 cases of intestinal illness a year with 1000 of those requiring hospitalisation is completely unacceptable. The review also identified the confusion resulting from three different food regimes and three different regulations operating simultaneously. Labour oversaw the first draft of the Food Bill which we now see introduced to Parliament. We support changes to improve business certainty and to ensure that compliance costs are kept to a minimum. Given the current economic situation it makes sense that food businesses that are subject to food control plans have the ability to sign up to a generic template that covers the whole sector. 
There are as the Minister said a number of key tools in this bill that are important. As the Minister highlighted one of the key areas is the food control plans. These plans are particularly related to high-risk businesses like restaurants. Every restaurant around the country and similar businesses will have to have food control plans. Secondly there has to be a national programme for the lower to medium-risk businesses—for example horticulture producers and meat producers. Those areas which are in the low to medium-risk business category will have to have some kind of national programme. Thirdly we need to have food-handler guidance particularly educational information for low-risk operators who for example do fundraising events like sausage sizzles as the Minister mentioned before. We have to have some kind of guidance and information provided to those people. Fourthly we must monitor programmes to determine safety and suitability of food. Those are four tools in the armoury of this bill to ensure that we have suitable and appropriate food for New Zealanders and for exporters. 
I come to a couple of specific areas. In terms of food plans we support the concept of a schedule to establish those high-risk businesses subject to food control plans those medium to low-risk businesses that will comply to a national programme and those low-risk operations such as fundraising activities that will have food-handling guidance through education will suffice. We will be seeking a guarantee on that point that this bill will have no impact on the cake-stall holders or the sausage sizzlers. I am particularly worried because clause 93(2)(b)—and I highlighted this earlier in a question to the Minister—states that a person or food business that is subject to food-handler guidance is liable to prosecution if they fail to comply with those requirements as it is an offence against the Act. There are issues like that and there are some fishhooks that we still need to look at. I am sure that some of those issues will come through at the select committee and we will look at the details. 
In terms of the costs to the operators we need to pay close attention to any increased cost incurred. According to documents released to Labour under the Official Information Act fees in Dunedin have already jumped by $300 for some operators after territorial authorities raised their charges when they found their current charges inadequate. We also note that in the interim many territorial authorities have eased up on forcing compliance because they know the new legislation is coming. We hope that when the new legislation begins to impact and the adjustments are made it does not bite too hard on the small operators that have been disadvantaged through the economic recession. In relation to importers I think this bill is very important for imported food. I am personally really concerned about some of the food we import particularly from some developing countries where food regulations and hygiene are not very good. This bill will hopefully take care of some of those issues that we face every day in small shops like dairies. 
The Food Bill requires every consignment of food to be imported by a registered importer. I think it is very good that those importers should be registered whether directly or as an agent for a person importing food. The bill requires the chief executive to keep and maintain a public register of registered importers. I think that is very good. There should be a register for people importing food. These requirements do not exist currently and they will enable more effective communication with and targeting of importers in situations that present risk and when otherwise necessary. In the final analysis I say that we will be very keen to pay particularly close attention to some of the costs incurred to ensure that there are not too onerous problems for the Kiwi sausage sizzlers and to address those kinds of issues. 
SHANE ARDERN (National—Taranaki - King Country) 
: 
 I rise in support of the Food Bill. I thank the Minister for Food Safety for showing confidence in the Primary Production Committee by suggesting that later on she will move that this bill be referred to that committee. I also assure the previous speaker Ashraf Choudhary that in the Primary Production Committee there will be a fair open process and we will give submitters fair time to submit. I think it is in the best interests of the whole of Parliament to get this bill right. 
As the Minister said in her opening comments 200000 small businesses across New Zealand are involved in the food selling and catering business—a domestic economy of $5 billion. Of course as an export nation—and New Zealand is an export nation—well over 50 percent of our exports come from primary sector industries despite figures that Treasury constantly puts out. Most of those primary sector exports are food in some form or another. It is essential that New Zealand get this right. 
As the Minister said a few issues need to be addressed. It is substantial legislation. We have had for some time in this country a whole range of different bits of legislation many of them outdated. The Food Act itself dates back to 1981. There are also of course the food hygiene regulations from 1974 the Animal Products Act 1999 the Wine Act 2003 and many many others that I am sure will be impacted by the passing of this bill and the work that the select committee does in terms of how that interface takes place. 
The previous speaker mentioned an issue that comes up politically all the time—he will make a fine contribution I hasten to add on the select committee. He has a science background a Massey University background and a whole life experience in the production I guess of food. 
One of the issues that come up all the time and that was raised by the previous speaker is the issue of the school barbecue the fund-raising event the cake stall and that kind of thing. We must ensure in our endeavours to make sure that we are thorough in our work around food safety and the marketing and sale of food both domestically and internationally but that we do not put in place a whole lot of costly compliance and regulation and unintended consequences for those who want to be involved in community activities such as the school barbecue or in the rural electorates the school calf day. Unfortunately the State has a bit of a reputation of being heavy-handed over the top and sometimes ridiculous in the compliance requirements that it places on those people. Putting in place a framework that can accommodate both that and also imported and exported food so that we absolutely guarantee our “100% Pure New Zealand” brand which is so valuable to us—in fact it is the No. 1 brand for New Zealand—is an essential piece of work for the Government and the select committee to carry out. 
The number of reported cases of illness in New Zealand in recent years related to food-borne bacteria or diseases has been too high. So there is a need for a stringent framework around those who work with and handle food and who work within the food industry in the catering of food for domestic consumption etc. At the same time our integrity internationally is at risk if we do not make sure that food exported from New Zealand meets the highest possible international standard that it is reasonable to expect an exporting nation to meet. 
There have been a number of claims—I know that as a constituent MP I field them regularly—that the compliance costs placed on our exporters because we are very determined to maintain the integrity around the “100% Pure New Zealand” brand are such that it seems unfair that importers of food into New Zealand do not appear to have to meet that standard. I do not know whether that is factual but it is often asserted. This is an opportunity I guess for those who feel as though they have evidence that there is a double standard in terms of what one must do to export from New Zealand as opposed to competitors for that same product importing into New Zealand to bring forward their claims and substantiate them. If they are proven to be correct I am sure there will be an opportunity to highlight some of that in the process that we have before us. 
This is a very important piece of work that Parliament will undertake. I suspect it is one of those pieces of work that will go on below the radar but one never knows. I give Parliament the assurance that the Primary Production Committee will carry out its work in a thorough open transparent and fair way. All of those who are involved in the process will no doubt have their opportunity to participate in it. Thank you for the opportunity to contribute today. This is a fine piece of work and I look forward to it going through the Parliament. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 It gives me a lot of pleasure to rise and speak this afternoon on the Food Bill. At first glance it looks like a fairly technical bill but nevertheless it has very important flow-on effects into other areas of legislation. It was very good to see the Minister for Food Safety get up and speak. She sounded so confident. I think she feels very secure in this area; it is a bit of a change from earlier in the week. It is nice to see the Minister looking so positive and secure on this Thursday afternoon after what has been it has to be said a bit of a rough week for her. 
It is also nice to speak following the previous speaker Mr Ardern. He is a good chair of a good select committee the Primary Production Committee. It was nice to hear that he was talking about an open and inclusive process—a bipartisan process I am sure. I know that one of the members opposite Sandra Goudie is on that committee. She could learn a thing or two from Mr Ardern. Lately she has had a few problems on the select committee she chairs the Law and Order Committee. There have been a few walk-outs by Opposition members due to the totally partisan unfair and opaque system that she has been running in that committee. Maybe those two members could sit down over a wine tonight and have a discussion about their relative positions. 
This bill provides a regulatory framework to enable businesses to take primary responsibility for the sale of safe and suitable food. Food businesses will be regulated relative to the degree of risk posed by the food-selling activity that they are engaged in. A number of risk management tools are included in this bill: food control plans for high-risk businesses such as restaurants; national programmes for medium to low-risk businesses such as horticulture producers; food-handling guidance and educational information for low-risk operators such as those engaged in fund-raising activities like cake stalls and sausage sizzles which probably every member in this House has been engaged in; and monitoring programmes set by regulation to impose measures in specific circumstances for determining the safety and suitability of food. 
The bill provides certainty for our food businesses in terms of their obligations under the law and how activities will be regulated. It introduces specific requirements for imported food. All persons importing food will have a duty to ensure that it meets the same standards as domestically produced food and every consignment of food imported into New Zealand requires a registered importer. Importantly this bill maintains the role of Government as the principal regulator. I think it is very important that we note that. It retains a local government role in the regulation of food premises. The bill has modernised the penalty provisions. The current provisions are out of date and inadequate for 2010 and beyond so that is an improvement. It sets out exactly what the base statutory requirements will be for each type of food and trading activity. 
Basically the bill takes a whole range of things that have been in different pieces of legislation tidies them up and brings them into one Act so that things are clear and understandable for the people who are operating within the framework of this bill. 
Labour is absolutely supportive of this bill as our previous speakers have indicated. Of course Labour initiated this process when it was in Government which is no doubt why the Minister feels so secure about it. It is a good robust and solid process that was started by the Labour Government unlike some of the dodgier more interesting things that the Minister has initiated under the National Government. I think Labour was proactive in recognising the shortfalls in the existing food regulations. Back in 2003 Labour initiated a domestic food review. That review revealed a number of shortfalls relating to the complexity of the regulations and the difficulty with enforcement. Although most food is controlled under the Food Act other food is regulated under the Animal Products Act 1999 the Wine Act 2003 and the Agricultural Compounds and Veterinary Medicines Act 1997. We have a whole host of regulations under those Acts as well so bringing everything into alignment under this one Act makes a lot of sense. 
A number of food premises are covered by the Food Hygiene Regulations 1974 and are inspected by territorial local authorities. Some businesses are exempt from this process because they have opted out and shifted into a voluntary food programme. These operators more often than not are supermarkets and manufacturers. They will probably be ahead of the game here; they will be prepared for this bill when it is enacted. These food safety programmes are administered by public health units and the New Zealand Food Safety Authority. Again bringing everything into alignment under one Act makes a lot of sense. There has been a lot of inconsistency duplication and complexity. Many operators apparently have not been aware that the Food Act 1981 existed let alone known who administered it. 
I will just reflect on a news story that came out of Palmerston North in the last few days. One of those people who may have been struggling with the food regulations is a character known as the naked pie man. He is a well-known celebrity in Palmerston North. He owns the Central Pie and Smoke Shop which is just up the road from Bootleggers—a popular student establishment. The naked pie man has been in Palmerston North for a number of years. In fact it has been so long that I can remember him from my student days at Massey University. I have been a customer of the naked pie man. The 2 or 3 a.m. pie just before jumping into a taxi to head home is a nice alternative to a kebab. 
The naked pie man has come into a bit of strife in the past few days. He was the only operator in Palmerston North to receive a D grading for his food-handling service. Apparently it all came down to a few lost bits of paperwork and a few hiccups in the process which he did not quite understand. Hopefully this legislation will make things a little bit more streamlined for our naked pie man and he will be able to get his rating back up to something a little bit more respectable. To be fair he will have to display that D rating but to be honest I do not think the students will be put off very much. I do not think his business will suffer too much. But it is buyer beware and everyone who walks into his shop will know that he has a D rating. I am quite sure that good streamlined legislation like this will assist in getting him back on track. 
It is important that we have food safety and food-handling regulations because there is a massive number of cases of intestinal illness each year; it is estimated to be about 18000 cases every year. Of those cases 1000 require hospitalisation which is not bad out of 18000. I suspect that a few more cases than that probably require people to go to their general practitioner. We know that an awful lot of those cases cause people to need a few days off work. In fact workplace absenteeism due to illnesses relating to poor food hygiene is estimated to cost about $86 million a year. 
A lot of those people would have a couple of days off the boss would not mind too much and there would be no requirement for a medical certificate or anything like that. But thanks to the Minister in charge of this bill who happens to also be the Minister of Labour all those poor people who have caught a bit of a tummy bug will now be sent along to their doctor for a medical certificate. They will clog up that service for all the people with genuine problems that their doctor could fix. That will slow down the process but hopefully the Food Bill will stop so many people from needing so many days off work and stop them from having to go to the doctor for a medical certificate and clogging up our medical systems. 
I have a concern. What will happen if someone gets one of these illnesses in his or her first 90 days in a new job? Does that mean that people might be out on their ear without any recourse whatsoever just because they got a little bit sick and had to have a few days off? Does it mean that they will be out the door with no recourse whatsoever? 
Again I think this is a very important bill. It is so appropriate that Kate Wilkinson is in charge of this bill because if it achieves its outcome— 
Hon Darren Hughes 
: In charge? 
IAIN LEES-GALLOWAY 
: It is a loose term to say that she is in charge. If the bill achieves its outcomes it may stop a lot of the problems that she has introduced to the New Zealand workforce through some of the other work she has been doing. 
Sandra Goudie 
: Talk about the Food Bill. Hello! 
IAIN LEES-GALLOWAY 
: I am talking about the Food Bill. I think it is an important bill that will hopefully stop people from getting ill which will be an important part of keeping people at work and productive. We will not lose $86 million a year in productivity. 
This is a good bill. It is an excellent bill because it was started under a Labour process. Labour is pleased to see it go to a select committee where people will have the chance to have their say on it. We look forward to its progress through the House. 
SUE KEDGLEY (Green) 
: 
 We have heard a lot of gobbledegook today about outcome-focused regulatory regimes reducing business compliance and so forth. I am quite sure that if anyone is listening to Parliament today that person would be none the wiser about what this 342-page Food Bill is about than they were at the outset of the debate. I thought I would begin by reading the Ministry of Health warning or concerns about a Cabinet paper on this bill a copy of which I obtained under the Official Information Act. 
The Ministry of Health said: “We have a concern that the options that were reviewed and the whole paper on this bill focuses very much on improving business certainty and reducing compliance costs with no discussion on any impact of achieving food safety.” It says the Cabinet paper makes no mention of the fundamental purpose of food safety which is to protect human health has no discussion of the extent of food-borne illness in New Zealand and no discussion of whether the proposed changes are good bad or neutral for human health. It says this is a significant gap in the paper which should say either that the changes will improve the protection of human health in which case it should say why whether it will make no changes—and again it should give a justification for this—or whether it will be worse for health in which case it should include a description of what this might mean in a practical sense in terms of the increased risk of food-borne disease and increased reputational risk for New Zealand producers. 
I think it is very important that we heed the warning of the Ministry of Health about this bill because as far as I can deduce the bill introduces a risk management model to food safety by shifting the responsibility for food safety from the Government to the people who produce food. Once the bill is passed it will not be the Government’s responsibility but the food producers’ responsibility to ensure food is safe and they will have to manage all those risks. That sounds fine in theory but if we look at other countries that have done this—and I think particularly of America—we see that they have essentially deregulated food safety from the Government to the food industry and as a result of that there have been some quite spectacular public health disasters. For example America got rid of its Government meat inspectors and said there would be no problem—that the meat companies would provide their own inspectors. Anyone who has watched the move  
Food Inc. 
 will recall the massive E. coli food poisonings and deaths that resulted from inadequate food safety practices in the companies that under this sort of regime were supposed to be guaranteeing that food was safe. 
Of particular concern in this context is the fact that in New Zealand we import such vast amounts of food. Despite being a food-producing nation we import $3.5 billion worth of food each year including 145000 tonnes of fruit 41000 tonnes of vegetables 34000 tonnes of meat and 9300 tonnes of fish. We have no idea where all of this ends up because if we went round the entire supermarket with a magnifying glass we would never find out where the 34000 tonnes of meat imported into New Zealand might have ended up in the supermarket. It is like a modern detective story. Well we will never find out that particular mystery because unlike any other Western country we do not have mandatory country-of-origin labelling. We cannot work out which is which. None of that imported food has to meet the standards that our domestic growers are expected to meet which is galling for them particularly when imported food can be passed off as New Zealand food. 
The other huge concern is that only a tiny fraction of the vast amount of food coming into New Zealand is tested at the border. Europe tests 10 percent of the imported fruit and vegetables and it rejects 10 percent of all consignments of imported fruit and vegetables. What do we test? No one will believe this but it has recently been verified in the Primary Production Committee that we test 0.25 percent. That is how much food we test and even that basically is tested just for high-risk items such as microbial contamination. We are not worried about things like illegal pesticides here. 
Another issue that is of extraordinary concern in the context of this bill is that we do not even have to import food from countries that have food safety regimes in place. We can import food from unregulated countries. I know that people will not believe that this is true but if they do what I have done and trawl through the New Zealand Food Safety Authority website they will come across this statement: “Not all countries have well developed domestic food safety regulatory systems and individual supplier safety practices can vary.” Although the New Zealand Food Safety Authority expects importers where possible to “source food from suppliers that are operating within a regulated environment … If the supplier is not operating within a … regulatory environment an importer should place more emphasis on asking questions about how the food has been produced.” That is code—or gobbledegook—for saying it is perfectly legal in New Zealand to import food from countries that do not have food safety regulations in place—and I might say there is nothing in this bill that seeks to amend that in order to require that we import food only from countries with regulatory systems in place. I ask how transferring the food safety risk to importers that are importing from countries without a regulatory system in place will work. 
The other issue is that the Minister for Food Safety said we have a rapid response to food risks. But let us look at our record. Just recently at the end of last year the state department of health in Texas found high levels of lead in dried plums imported from China. It immediately issued a recall of them all. I checked up and found that yes we import a large amount of dried plums from China. I wondered what the Food Safety Authority might do. Well what it did was to tell importers to check their dried plums to see whether they might be affected. That was the end of the matter; there was no recall and no action. Then 6 months later—let us wait for it—the authority released the results of some testing of a small sample of imported plums which I presume were from China. Can members guess what the authority found? It found illegally high non-compliant levels of lead in the plums but still it did nothing. It was all perfectly safe the authority said 6 months later. That of course was a typical response. It was almost a knee-jerk public relations response from the New Zealand food safety regime to downplay the results and assure consumers that there was absolutely no threat to their health. 
One really worries about the context of our incredibly slack approach to food safety particularly the safety of imported food. Until recently anyone could import food into New Zealand. It was open slather. We did not even need to know who the importers were. Then the authority finally began to require importers to list their name and address with it. The good thing that this bill will do is to finally set up a register of importers so that the Government will know who is importing food into New Zealand and will possibly be able to trace the food back to its source in the event of a food safety concern. But the truth is that despite all of the Minister’s talk about this outcome-focused regulatory regime—that is true; she said it is aimed at providing business certainty and reducing compliance costs—it is doubtful whether it will deliver the same level of food safety outcomes at a lower cost. 
The real purpose of this bill seems to be to deliver the same level of food safety outcomes as previously but at a lower cost. However the truth is that when we consider the context of the slack approach that this Government and previous Governments have taken towards food safety the vast amount of imported produce coming into New Zealand the infinitesimal amount of testing at the border the fact that we can import food from countries that do not even have regulatory regimes in place and the fact that until now we have not even known who has been importing our food I am afraid to say that we are not confident that this bill will really be the great leap forward in terms of food safety in New Zealand that many people have said it will be. The bill is 342 pages long. We will approve its referral to a select committee. I can assure the Government that I will be asking many questions and will seek to figure out whether any of the vast 342 pages of legislation will make a blind bit of difference in terms of improving food safety. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 From what I can tell this Food Bill talks about defining what is and what is not food—apparently cookware is not food. As if we needed to come to Parliament to find that out! It talks about establishing steps in the food safety chain it talks about providing greater consumer protection and it talks about promoting the positive endorsement of food safety—all of which should benefit New Zealanders both Maori and non-Maori on marae in homes and community facilities and in businesses right throughout the country. But I note from the comments from Sue Kedgley of the Green Party in particular that the bill still leaves a lot of questions about imports and standards unanswered. The Maori Party will support this bill at its first reading. We will watch for comments and submissions on the bill during the select committee process. 
SANDRA GOUDIE (National—Coromandel) 
: 
 I am pleased to take a call on the Food Bill. For the edification of Miss Kedgley from the Greens I say that this bill will make it easier for food businesses to understand how safe food needs to be produced—and that is exactly as it should be—with the least amount of bureaucracy and red tape to do that. 
I note that a hangi takeaway has just popped up in one of the bypasses of my electorate. I applaud that entrepreneurial spirit and hope that that takeaway’s owners did not have to jump through too many hoops to set themselves up as one of the many food businesses throughout New Zealand. 
I remind people that this Food Act has not been updated for 30 years and our current regulatory system is not as effective and as efficient as it could be. That is something that has been said time and time again throughout New Zealand by all sorts of people who want to do things within their communities. One of the keys things as Ashraf Choudhary said is that we do not want to penalise or obstruct in any way the community-based fund-raising activities like cake stalls or sausage sizzles which are a big part of many communities’ fund-raising efforts. I know that many share the same sentiment which is that none of us would like to see those efforts impeded in any way as we all enjoy backing our schools and communities in those events. 
One of the other areas mentioned is our export and our import sector. Shane Ardern made a great contribution on that so I will not speak for any length about that aspect of the legislation. 
The Food Act 1981 and its subordinate legislation particularly the Food Hygiene Regulations 1974 have led to inconsistencies in application across New Zealand. This is a wonderful opportunity to deal with those inconsistencies together and have much more comprehensive legislation dealing with all of those matters that have been raised in particular the issue of not penalising the efforts of our small communities in trying to ensure that we have safe food production in our large commercial enterprises. 
Hon DAMIEN O’CONNOR (Labour) 
: 
 The Food Bill is indeed substantive legislation—370 pages makes for quite a lot of reading. That is as it should be because the production of food is the key driver for New Zealand’s economic wealth and will be for many years into the future. It is appropriate that we have a bill that has been in the development stage for many years. The bill was initiated by the previous Labour Government and it has finally been brought to the House. 
Most people have said they welcome the bill’s introduction. Labour will support it because it does a number of good things in terms of alignment and improvement in the way that food is regulated in this country. 
I will go back one step and explain why it is so important that we get this right. The Federated Farmers conference in Invercargill not so long ago heard from a number of speakers that the opportunities for this country in the future in terms of food production are huge. We have a wonderful future in selling into the growing markets of China and India. These countries are growing in affluence and people want better-quality food they want to know where the food comes from and they need to know it is safe. So the opportunities are unlimited but we have to do it right. 
The issue is not just about exports. We need to have a best-standards regime in New Zealand—international standards that is—because it is very hard to tell the world that we export the best-quality food but do not have the best-quality food within our own shores. That is the reality. Many people in the agriculture and food industry will tell members that when manufacturing for export the standards are higher than the standards necessary for domestic consumption—and that is not the way it should continue. 
I guess that the misalignments and the number of pieces of legislation governing food production have been in part responsible for that. The previous Government saw the wisdom in bringing all food production under one piece of legislation. There was extensive consultation around the industry and for the most part the industry fully supports this door-stopper of a bill. I am sure that you Mr Assistant Speaker Barker like many members of Parliament will have read it. I am sure the Minister has read it from front to back and twice over. 
Brand New Zealand must be upheld; the integrity and safety of our food production must be absolute. No one can have any doubt that we should be and are the country of finest food production in the world. In this legislation we have aligned the standards and as the previous speaker said made the system easier. 
I am not sure that making it easier is the objective of the bill. It should not be; it should be making the system better—that is more consistent and more effective. It should guarantee that those from this country who go offshore or sell into the domestic market can say they know how the food was produced where it came from and that it is safe for consumption. As previous speakers have said there are far too many cases of food-borne illness in this country. They cost us something like $80 million a year. That is a huge cost to pay just for not eating the right food or not handling it correctly. We must try our best to reduce that aside from all the issues of our reputation. 
Let me go through some of the processes in the bill and the basic concept of companies having a food plan. If they are substantive producers of food they will have to develop their own food plan. There will be a template I understand which means that sectors or businesses do not have to keep reinventing the wheel and I think that is a very smart move. Too often through the Resource Management Act or other legislation we place an obligation on organisations to come up with their own safety plan or whatever. There will be a template and companies or organisations can have a look at that and see how it applies to them. There will be the ability for them to have their own food plan if they fall outside the basic parameters laid down. So no one will be exempt on the basis that they do not quite fit the square box and we welcome that. 
There will be some questions on the issue of self-policing. The basis of it is developing one’s own food plan having standards and maintaining those standards. The meat industry for example is under huge pressure at the moment. I am not quite sure whether we could rely on the meat industry to police its own standards of processing and export. We need in many cases to have an oversight body which will be a local body in many cases. It will have to monitor the food plans. 
Although we would be relying on self-policing ultimately there must be a penalty regime and an oversight body that can step in because when pressures come upon any business or organisation people tend to cut corners. We cannot afford to have any food business—be it a restaurant a takeaway bar or a major exporter—cutting corners in that area. As I have said our reputation is at risk here. 
A custom-made food plan—a plan that applies to a certain organisation and falls outside the ability to use a template—will be overseen by the territorial local authority or by the Ministry of Agriculture and Forestry ultimately. Of course there are some questions—and this may not be the time to raise this issue—but with the Food Safety Authority now being merged back into the Ministry of Agriculture and Forestry there are questions of expertise or a possible dumbing down. The Minister is shaking her head and I hope she is right. 
I know that the Ministry of Agriculture and Forestry is often consumed by its trade interests. It will on many occasions advise Ministers that we should not provide any assistance because it might impact on our trade reputation offshore. Well we have to make sure that the Ministry of Agriculture and Forestry does not compromise its advice to Ministers or its operation of policing the food legislation. It should not compromise that in any way. The ministry has to take a close look at itself and assess whether it can objectively maintain the highest standards and not be subject to issues of trade industry lobbying or whatever. 
The food handler guidance regime was of concern when Labour looked at this legislation. I am referring to the ability for people to have sausage sizzles and engage in fundraising activities. I know that there was a concern that we might have the food police—the food Nazis was the nasty term at that time—coming in to stop people selling sausages. That is not the case. Schools and organisations like St John Ambulance fire brigades or whatever who have sausage sizzles on a regular basis or sell other forms of food need to know they can continue to do that. We certainly intend that to occur. 
I am sure that the Primary Production Committee when following the process on this bill will try to uphold that but I have to ask the Minister the Ministry of Agriculture and Forestry and local authorities to ensure that we do not have overzealous people policing sausage sizzles. I know that people wear gloves at most of them. The old days of having a smoking wheezing enthusiastic school secretary handing us a sausage— 
Hon Maurice Williamson 
: They taste better with a bit of cigarette ash. 
Hon DAMIEN O’CONNOR 
: Well yes they did taste different and I guess they helped build up our immunity to many things but I think those days have long gone. We have to ensure that in upholding higher standards we do not open the door for an overzealous local council rep to come along and shut those events down. I think we reached a good compromise in that area and I hope we can maintain that during the select committee’s deliberations and finally back in this House. 
Labour supports the bill. We have been very proud to be part of its development. We support the Government in bringing it to the House and ensuring that we have in place the best system of food management in the world so that we can rightfully uphold Brand New Zealand and say that we will now and in the future produce the highest quality food for top-end consumers be they in China India the European Union or the US. I commend the bill to the House and I recommend and support its passage through the House. 
COLIN KING (National—Kaikoura) 
: 
 It is a pleasure to address the Food Bill at its first reading. Having listened to all the speakers who have spoken before me I say that I think those who are listening would come to understand that having somebody looking over the shoulder of everybody who is producing food for sale would be quite impossible and therefore we need to have a good solid reliable food plan that the business itself fully understands. On that basis this is why the bill is so good. It makes it easier for business to fully understand their responsibilities their requirements and their undertakings in the preparation of food for sale and food provided for a whole range of things. I just want to clear up that point because when we use the term “easier for business” it can be construed at times that we are actually taking shortcuts but really in this context in the Food Bill “easier for business” means that it is clear and understandable and well and truly articulated. Business can effectively take ownership of it they can write up their own food plans inside the framework that has been designed and then they can be audited by the local territorial authority against the food plan that they have designed. This all comes under the overall auspices of central government so that has to be very good. 
I will take a couple of moments to draw people’s attention to the parts of the bill that I think add value. Clause 94 clearly articulates the exemption for certain persons involved in community-based fund-raising activities. The only point I would raise is that the proposed transition from the existing food regulations to the Food Bill when it is enacted into law is said to take 5 years but I certainly hope that it does not take 5 years before we start sorting ourselves out around sausage sizzles cake stalls and preserves. 
On the other side of it I will turn to schedule 1 which covers food sectors subject to food control plans. I think this part clearly improves the bill considerably because again it enshrines in legislation those parts and the very purpose and intention of that framework. It does not give anybody the excuse or the opportunity to say that it was not clearly articulated. Obviously there have been considerable inconsistencies throughout the country in the way local authorities have insisted on standards. I believe that this bill certainly makes an improvement. The Government feels that this bill is indeed an improvement over the previous Government’s bill as it includes a massive schedule covering what the food control plans will look like. 
It is also worth noting that a considerable amount of this bill is set down for the purpose of articulating infringement offences. It goes right through the whole process which is considerable. Again the whole tenor of this bill puts the responsibility back on those people who are governed by it—those people who are in the food business. I think that that is very appropriate when we consider that just over a year from now we will be hosting one of the largest sporting events in the world and possibly the largest sporting event that New Zealand will host. 
Hon Darren Hughes 
: That sheep-shearing competition? 
COLIN KING 
: I would like to think it is but it is not. That competition is headed off by a nose by the Rugby World Cup. On that basis one’s mind is cast back to 1995 when we were over in South Africa. We had an incident that could have cost this country the second World Cup win. 
Hon Darren Hughes 
: It did. 
COLIN KING 
: I take the member’s comment that it did; I would not go as far as to say that. When we have our 85000 to 90000—maybe even 100000—visitors here in 2011 I am sure they will return home after having had a very very enjoyable experience after the Primary Production Committee has applied itself to getting out any gremlins from this legislation so that it works effectively and it serves possibly our largest industry now if not in the future which is tourism. If we have people coming here and they know that our lamb in the EU or the US is one of the highest protein value products they can buy they will also expect the exact same from our tourism industry. But if we do not have the food standards the food preparation and the certainty to present to our tourists then we are failing them miserably. It is with great enthusiasm and pleasure that I support this bill and I commend it to the House. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 It is my pleasure to take a call on the Food Bill. As has been said by others this bill has support throughout the House simply because it is good common sense legislation. There is a myriad of regulations and by-laws both at the local level and at the national level that regulate the sale and distribution of food. The key thing as other speakers have pointed out is that when we can attribute an estimated cost of about $80 million to lost work opportunities as a result of bad food-handling this legislation is all the more important. 
One of my colleagues pointed out that if people get a sickness such as diarrhoea as a result of poor food-handling and they have to stay home from work there will now probably be an obligation to go to a doctor to get a medical certificate. Let us touch on that matter for a moment. Let us face it: it is a waste of time for people who are sick for a day to have to get an appointment to see a doctor perhaps the next day and to front up with a medical certificate to their employer. Instead of 1 day off work they might need 2 or 3 while they go and get their medical certificate which is apparently much needed! So I congratulate the Government for coming up with a suggestion that will result in more people being off work rather than fewer. 
I come back to the key issue which is the need for the Food Bill. A myriad of by-laws and regulations exist at the moment which makes it extremely complicated and confusing for food sellers and operators. As has been pointed out this bill is not meant to apply to charity barbecues or sausage sizzles although I guess over time particularly as a result of this bill and the additional education related to its implementation we will hopefully see some improvement in that area. 
This bill was begun as has been pointed out by the previous Labour Government as a result of need and the way the existing legislation had grown holus-bolus. We will support the bill to go to select committee. There is an enormous amount of work to be done on this tome this door stop. We will be going through those issues in the select committee. 
I will highlight right now a couple of areas of possible concern. One is the amalgamation of the New Zealand Food Safety Authority with the Ministry of Agriculture and Forestry. This is important because I think that this Government is putting together agencies under the guise of efficiency and cost savings. I believe this will undermine their operations particularly those of the Food Safety Authority when it is under the Ministry of Agriculture and Forestry. With this amalgamation we are seeing no real cost savings whatsoever. There are zero cost savings yet a smaller organisation is amalgamating with a much larger organisation. Its key purpose and its key reason for being are possibly being threatened and undermined. That is an extremely important aspect of this move. 
This move is also found in the science and innovation area; I applaud the Government for its change of name. Its amalgamation of the Foundation for Research Science and Technology and the Ministry of Research Science and Technology in a new very good-sounding ministry—the Ministry of Science and Innovation—again does not really highlight enough what may happen as a result of this amalgamation. Let us see what might happen. We are looking at about $6.9 million to put these two agencies together. It will take at least 5 or 6 years looking at Treasury’s estimates before that becomes cost neutral in terms of the savings. We ask ourselves why we are doing this and the only answer I can come up with is that it makes the Government look like it is doing something for the sake of doing something. It is a great name but $6.9 million is a very big price tag to change the name of an organisation. 
More important it mixes the funding with the policy. Now policy and funding will be in the same agency. The great point about the Ministry of Research Science and Technology—and Labour itself looked at this—was that it was able to give independent policy advice to the Minister separate from its ability to fund different pieces of research. This change makes the Minister susceptible to the fact that funding will be mixed up with that policy advice. Funding could actually be directed by the Minister. That is not the intent of the legislation at all. 
Turning to another point the search for a new head of the Ministry of Science and Innovation was a great opportunity to get some of the best thinkers and innovators internationally to head this new organisation. This organisation can lead our innovation and can lead our economic drivers into the future. We have seen a 2½-week recruitment process to try to find a head for this new organisation—2½ weeks. That does not enable a comprehensive international search to occur. We want this new agency to drive our economic growth to get behind some of the science and innovation and to get behind some of the commercialisation of the fantastic ideas that are out there in New Zealand. What we are seeing is a very half-hearted “wink wink nudge nudge” recruitment policy to get the person who is going to be responsible for driving it. We could get somebody from Finland Denmark Singapore or Israel—the countries in the world that are really out there—at the head of our innovation. Instead we will be getting after 2½ weeks’ search a person who will probably come from within the bureaucracy but who I hope has great credentials. More likely it will be someone with the same thinking and very little new thinking and will therefore provide very little in the way of new opportunities for New Zealand to get ahead. 
I believe that is a very sad indictment on the way that this Government is going about its reorganisation. It is a very sad indictment on the way that we are trying to get ahead in our economic growth. We had an opportunity to recruit a really world-class leader to head up our export scientific and innovation-led industries. Instead we will get somebody from within the bureaucracy who will get a wink a nudge and a tap on the shoulder. That is a wasted opportunity. 
If we did a proper recruitment process if a local person was recruited on the basis of a wide international search and if a New Zealander who was already working within our institutions was selected from an international search I would say that would be a great pat on the back for that person. But we are not getting that. Instead after a 2½-week desultory narrow recruitment process we will be getting somebody who will not necessarily be the best. We will not know whether that person is the best. It is a bit of a shame. 
CRAIG FOSS (National—Tukituki) 
: 
 In speaking on the first reading of this 340-odd-page Food Bill I congratulate the Minister for Food Safety the Hon Kate Wilkinson on bringing this bill to the House and for the work clarity and productivity gains she is setting in place for New Zealand and for our families to enable further job growth in many of our lower-paid and lower-skilled industries. I genuinely congratulate her for some of the other work she is doing at the moment and on the way she is managing to steer New Zealand in the right direction. I also congratulate the new Opposition spokesperson on agriculture Damien O’Connor. It is an interesting admission of failure on the part of the Opposition. The previous spokesperson failed to land a blow on the Hon David Carter and with previous history I think Mr O’Connor will also struggle. I recall that a few years ago he—I think it was him—struggled through his ministerial role. 
Today is Thursday and a previous speaker mentioned the naked pie man in Palmerston North. Well that is very interesting and for the sake of  
Hansard 
 I had better not go there but it did bring up all interesting sorts of play on words and things. I note that Hawke’s Bay produces the best pies in New Zealand year after year. It is very interesting because after this bill the New Zealand Productivity Commission Bill will come up for debate. In fact this bill fits in very nicely with productivity gains for New Zealand. It simply provides clarity and certainty to those in this sector. As we all know as other speakers have acknowledged and as I acknowledge the bill originated under the previous Labour Government. The potential growth and New Zealand’s upside from anything related to food is very very large indeed—particularly from my region of Hawke’s Bay wine country—especially in emerging Asian markets. 
I note very quickly a couple of points. The Food Bill will go to the Primary Production Committee which I am on. The schedules in the back of the bill particularly schedule 3 on page 299 which is about horticultural producers who do direct sales of their own produce to consumers define that sector of direct sales. There has been a bit of mischief around that sector over time but it is a tradition in places like Hawke’s Bay Wairarapa and down south Nelson way to have honesty boxes out the front of orchards and places. The bill puts some perimeters around it that are not too stringent. 
I congratulate the Minister and her officials for the way they have managed to pull this together. I am sure the select committee will find some amendments it may want to put in the bill on its way through that process. A point of interest particularly to me is in schedule 7 on page 328 where there are various changes to other Acts particularly the Geographical Indication (Wines and Spirits) Registration Act. Being from the Hawke’s Bay we have a very large interest in all things wine and food as we are the food basket of New Zealand. I look forward to this bill passing through the House and contributing to it as it goes through the Primary Production Committee and I look forward to it coming back before the House. Thank you. 
Bill read a first time.  
Bill referred to the Primary Production Committee. 
New Zealand Productivity Commission Bill 
First Reading 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I move  
That the New Zealand Productivity Commission Bill be now read a first time. 
 This legislation is another step in the Government’s active programme to lift New Zealand’s economic performance in both the public and the private sector. In the long run productivity is the biggest determinant in wages and living standards of New Zealanders. 
At the appropriate time I intend to move that the New Zealand Productivity Commission Bill be referred to the Commerce Committee that the committee report finally to the House on or before 22 November 2010 and that the committee have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
The New Zealand Productivity Commission Bill is designed to establish a New Zealand Productivity Commission that will have a very broad mandate to investigate productivity-related matters in order to lift the overall well-being of New Zealanders. The commission’s role and functions are modelled closely on the Australian Productivity Commission which has an impressive track record in providing high-quality public policy advice. 
The Productivity Commission will have three key functions on referral from responsible Ministers. Firstly it will conduct inquiries into productivity-related matters. Secondly it will conduct one-off reviews of existing regulatory regimes and agencies and this process will include reviewing their efficiency and effectiveness. Thirdly it will undertake regulatory impact analyses of specific regulatory proposals. 
The terms of reference provided by responsible Ministers will provide the details of work to be undertaken and all will be made publicly available. These terms of reference will cover the scope of the inquiry the due date of the commission’s final report and consultation requirements. The last point is that there will be a general expectation that the commission will consult widely with stakeholders. 
Productivity has a broad definition that includes any productivity-related matters in the whole economy in both the private and the public sectors. This will enable the commission to investigate a range greater than its Australian counterpart. To give a few examples the commission would be able to investigate issues as diverse as disability care and support or the contribution of the not-for-profit sector in the same way that the Australian productivity commissioners looked into these topics. In addition to its inquiry functions the Productivity Commission will be able to on its own initiative undertake and publish research about productivity matters in order to develop its own knowledge and to assist its operations it will also be able to promote public understanding of productivity-related matters. 
The New Zealand Productivity Commission will be able to undertake joint inquiries in research with overseas agencies such as its Australian counterpart. It makes sense for the two commissions to cooperate given the Government’s strong commitment to a single economic market between New Zealand and Australia. We also expect strong informal links to develop between the two commissions. The commission will be an independent Crown entity similar to the Law Commission and the Commerce Commission. This will allow important policy issues to be examined at arm’s length from the Government of the day. It will have three to four part-time commissioners and it is expected to have approximately 21 full-time staff to support them. To give effect to its independence the commission will be able to determine its own procedures for its statutory functions and have access to statistical information like other Government departments under the Statistics Act. To ensure transparency the commission’s work programme will be publicly available and the commission’s reports must be tabled in the House of Representatives as soon as practicable after they are received by the responsible Minister. 
Once fully operational the commission will have an annual budget of approximately $5 million by 2012-13. No additional Crown funding will be needed to fund the commission as funding will be sourced from existing budgets of 29 Government agencies. 
The establishment of the Productivity Commission is a concrete step that the Government can take to help to lift the living standards of New Zealanders. In introducing this bill I acknowledge the contribution of my ministerial colleague the Hon Rodney Hide and his particular focus on this issue. I also acknowledge the contribution of the Labour Opposition in particular Lianne Dalziel who in her capacity as a Minister in the previous Labour Government did quite a bit of hard work in respect of improving a regulatory reform process. 
We see this Productivity Commission as an additional tool available in the service of public policy to help to lift the level of debate around what are increasingly complex issues. The days when it was possible for politicians to say that the answer was always to deregulate are over and many of the regulatory issues impinging on productivity that are dealt with now are quite complex. So this commission is intended to create a higher level of debate and an institution that is at arm’s length from the daily political hurly-burly of Government. In that respect I commend the New Zealand Productivity Commission Bill to the House. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I rise to advise the House that the Labour Opposition will support the New Zealand Productivity Commission Bill going to a select committee. However we will use this first reading debate to indicate to the Government the changes that we would like to see occur with the legislation in order for us to support it beyond a select committee. I hope we are able to achieve the changes that we want to see occur with this legislation because as the Minister of Finance stated in his introductory comments those of us on this side of the House who have played a role in economic policy commerce policy and regulatory responsibility have taken the view that one of the areas of commonality between New Zealand and Australia that we could use as a platform for mutual growth is a shared productivity commission on a trans-Tasman basis. The Australian Productivity Commission is something that I hold in very high regard. I have said on more than one occasion that I would have liked to see that as a core focus of any Government’s agenda and build up that relationship into a single focus on how we engage with our closest neighbours on improving productivity right across the board. 
This bill has an underlying flaw and that is probably in its genesis. When the Prime Minister stated after the last election in his promise to be ambitious for New Zealand that we should catch up with Australia I think there were some people who felt that that actually lacked ambition in its own right. But here we have an opportunity to catch up with Australia and we are missing the boat a wee bit in that regard. 
The Prime Minister agreed as part of the confidence and supply agreement with the ACT Party to look at the concept of a Productivity Commission. I think justifiably the Minister of Finance has paid tribute to the Hon Rodney Hide as the Minister for Regulatory Reform for promoting this as part of the confidence and supply agreement and then delivering on that in joint signatures to Cabinet papers with the Minister of Finance. I do not think it is fair to not give him full credit for that because I do not think that the Government would have introduced this legislation without the work of the Hon Rodney Hide. I certainly pay tribute to him for that. 
The 2025 Taskforce on the other hand which is led by Don Brash was given the task of the “catch up with Australia” part of the deal. It seemed a rather odd appointment to me. I do not know whether anyone else thought it was strange that one would appoint to that role the person who was the Governor of the Reserve Bank at the time that the gap was created. Why one would put him in charge of the 2025 Taskforce to reduce the gap between New Zealand and Australia seemed absolutely bizarre to me. 
When we look at all of the proposals that have been put forward in the first report to the Government from the 2025 Taskforce led by Don Brash we see that it is even more surprising because they are designed to take us further and further away from catching up with Australia. So it was not surprising to me when I read the Cabinet papers behind this bill that I found a very clear distancing between the proposal to have a Productivity Commission and the 2025 Taskforce. We are told in the Cabinet papers that they are in fact quite different. Let me quote the first Cabinet paper: “This work is distinct from the 2025 Taskforce. It is envisaged that a possible New Zealand Productivity Commission would be a permanent institution that carries out reviews and inquiries (and potentially other functions identified in the further analysis) based on a work plan agreed by the Government. The taskforce is an independent group of experts appointed for a three-year term to advise the Government on policies and institutions that will assist in closing the income gap with Australia by 2025.” 
The distinction that they are drawing is between having a work plan agreed by the Government which means that the Government gets to set the agenda for the Productivity Commission but the task force can do or say anything it likes and the Government can completely ignore it. Of course the Government is doing exactly that and I think I know why. When I picked up the  
Dominion Post  
last week on 16 July 2010 I found this headline: “Brash blows fees budget”. That is because he does not know anything at all about productivity. He has managed to spend the entire 3-year budget for his meeting fees in just 1 year. I do not know—how good is that! Don Brash is in this role and his meeting fees budget has been absolutely blown to smithereens in the first year. It is four times the amount earmarked for his first year on the task force. I do not think that this man can teach us anything about productivity which is probably not surprising given the contribution that he made to the mess that this country found itself in after his period as the Reserve Bank governor. 
If this bill has anything to do with catching up with Australia—I would like to think that it does—why is it narrower than its Australian counterpart? That is the question we have for the Government. We do not agree with the Minister who introduced the bill that this bill has a broader mandate. In fact we are absolutely clear that it has a much narrower mandate than the Australian mandate. In that regard this is a bill that lacks ambition. It is not ambitious for New Zealand. 
Let me run through the commission’s legislative instructions in Australia—this is for the Australian Productivity Commission: to “improve the productivity and economic performance of the economy;”—there is an understanding in Australia that productivity is not a narrow aspect of the work that a Government is required to have input into; it is very broad—“reduce unnecessary regulation; encourage the development of efficient and internationally competitive Australian industries;”— well I would love the Government to have a view on encouraging the development of efficient and internationally competitive New Zealand industries—“facilitate adjustment to structural change; recognise the interests of the community generally and all those likely to be affected by its proposals; promote regional employment and development; have regard to Australia’s international commitments”—read New Zealand’s commitments—“and the trade policies of other countries;” and “ensure Australian”—read New Zealand—“industry develops in ecologically sustainable ways.” Those are the terms of reference that this side of the House would like to see for a Productivity Commission for New Zealand. I want us to catch up with Australia but I actually would like us to have a slightly more ambitious target than that. We were caught up with Australia before Don Brash was the Governor of the Reserve Bank and other changes happened. 
I conclude by going to the regulatory impact statement; Minister Rodney Hide knows how much I love regulatory impact statements. I just remind this House of the problem definition that the Government formulated in order to justify the establishment of a Productivity Commission. It said: “Currently the Government seeks advice on productivity-related matters from Government departments … taskforces”—not very good ones in this case—“commissions of inquiry and international organisations”. But something was needed. There was “a gap for a new and independent institution with specialised internal investigative capacity and a mandate to actively survey the views of a range of stakeholders” and “to undertake inquiries … The case for such an agency is made in the context of New Zealand’s current economic challenges. These include: regulatory settings that are believed to be constraining investment and limiting productivity growth; R&D expenditure that is below the OECD average; future limits on resource use in relation to freshwater supply marine space fisheries and the assimilative capacity of the atmosphere soil waterways and groundwater; relative low rates of participation in education and training amongst some population groups (eg some age groups socioeconomic groups and Maori and Pacific Island peoples); inadequate infrastructure in some areas and; low domestic savings and shallow equity and bond markets.” That is the aspirational level of work that we want to see for a Productivity Commission and when this bill matches that aspiration we will support it. 
CRAIG FOSS (National—Tukituki) 
: 
 First I acknowledge our coalition partners in the confidence and supply agreement which is where the New Zealand Productivity Commission Bill originated in at least a legislative sense—I will touch on that in a minute. If I can be so bold it is great for our friends in ACT to be talking about their core business of lower taxation productivity and economic reform—perhaps more than some of the other issues we have been discussing recently. 
I had better make a couple of things clear. This bill is about not being afraid of debate. Traditionally some topics have supposedly been off the table. Well New Zealand actually needs to discuss some issues confront some issues and make some choices. For New Zealand to make those choices New Zealanders and various agencies have to be informed of the upside and the downside of the various decisions and priorities the Government—whoever the Government is at the time—is making. There is always a trade-off and those trade-offs tend to be the short term versus the medium to long term. Politicians often to fall into the short-term trap which is a mortgage and an expense in the long term. 
I will touch base on what the previous speaker Lianne Dalziel talked about. She talked about the origins of this bill. She may recall the report on the Inquiry into the future monetary policy framework that was done by the Finance and Expenditure Committee in 2007 and tabled here in September 2008. Charles Chauvel was chair and the majority was held by the Government of the time. The report covered much of what we are seeing in the debate today on this bill in terms of the inquiries for the Productivity Commission: inquiries into productivity-related matters one-off reviews for existing regulations reviews of the efficiency and effectiveness of regulatory agencies—that is risk and management—regulatory impact analysis on a number of proposed new regulations research into productivity-related matters to build up institutional knowledge within the organisation itself and promote public understanding of productivity-related issues. 
I will quote something from the conclusion of that very good report which the Finance and Expenditure Committee produced some time ago. This is why we need to look at productivity and at least put some of those decisions trade-offs and alternatives to the New Zealand public: “It is clear that increasing productivity in particular is critical to delivering non-inflationary economic growth. Such growth would boost the welfare of New Zealanders both directly by raising incomes and indirectly by providing resources for other welfare-enhancing activities. We consider that to the extent that it is consistent with the Government’s other objectives the Government should place a high priority on policy that supports the raising of New Zealand’s productivity performance. The weight given to these other objectives should also be considered in the light of any impacts they may have on productivity.” and it goes on. The conclusion is very important I think and members should keep it in mind as they are speaking: there is no silver bullet. 
New Zealand faces many issues and many challenges. For whatever reason we slid down to number 22 in the OECD. We cannot do much about changing where we were but we can change where we are going. As I said earlier some trade-offs from all sorts of sectors of our economy need to be looked at. 
I finally quote from the report: “There is no obvious ‘silver bullet’ that will ensure a substantial increase in productivity growth. We found that lifting New Zealand’s productivity performance will require us to get many different factors right.” As Minister English noted earlier this is but one of those dominoes that need to be lined up to be fixed to be addressed and to be debated with more information than we currently have. We need to strip out some of the political rhetoric and actually look to where we want New Zealand to go to and to how we can get there. I am sure that there will be a little bit of politics but I am confident that overall members will on the whole recognise some of the issues. The debate will probably end up in the political realm of how we get there and how quickly we get there and what political or economic trade-offs New Zealand has to make to start to regain its rightful place in the economic world. Thank you. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to support the New Zealand Productivity Commission Bill being referred to a select committee pending further revisions as a result of the select committee process to broaden the mandate of the bill and to bring it further into line with the Australian Productivity Commission. 
This is a Government bill. The establishment of a Productivity Commission was part of the confidence and supply agreement with ACT and I acknowledge from the outset the healthy consultation that has occurred with the Minister for Regulatory Reform the Hon Rodney Hide and through him with the Minister of Finance the Hon Bill English. I commend the leadership of my colleague the Hon Lianne Dalziel who spoke earlier. She has significant experience in this area and has made a major contribution already to the evolution of thinking. 
In my brief remarks today I will recap on the areas on which there is substantial bipartisan agreement: the issue of productivity and the need for a Productivity Commission. I will then outline some of the areas where we need to do a little more work to establish consensus that would enable the Opposition to support the bill at its second and third readings. 
Let me begin at the highest level by saying that the Labour Opposition fully agrees with Government parties that productivity is an absolutely crucial issue to take New Zealand forward. No economically literate person could disagree with the proposition that productivity is over time one of the most crucial drivers of our economic performance. The second point that I think we agree upon is the concept of having a Productivity Commission that is well resourced that brings together some of the best academic brains and business experience that is well staffed that is empowered to take a long-term view that has a strategic perspective and in so doing is above day-to-day politics. I think there is broad agreement around the House that that would be an extremely welcome addition to the country’s economic architecture and would potentially be in the public interest which is potentially a very good thing. Labour stresses the importance of the breadth of the mandate the long-term strategic view the independence of the Productivity Commission from the Government of the day and importantly the fact that it must be able to work from a full and proper definition of productivity. 
I will now speak about some areas where I think there remains work to be done to establish agreement. At the most fundamental level I believe consensus turns upon the respective definitions of productivity that are employed across the House. The classical definition which I think the Minister and I would agree comes from the old Economics 101 or 102 Cobb-Douglas production function for the aficionados there is that productivity is a function— 
Aaron Gilmore 
: That’s priceless. 
Hon DAVID CUNLIFFE 
: I thank Mr Gilmore; I am glad someone remembers it. Aaron wrote it; sorry. Mr Assistant Speaker I withdraw and apologise for an omission. It was the “Cobb-Douglas-Gilmore” production function so ably associated with the Hon Tim Groser who wrote the first corollary to it. We appreciate the esteemed input of those giants upon whose shoulders the Government now stands. But I come back to the point. Cobb-Douglas says that productivity is a function of capital skills which lead to a thing called multi-factor productivity and technology. In other words a broad and holistic view is required. The New Zealand Treasury—and the Ministry of Economic Development on a good day—agrees with that and extends the definition to include entrepreneurship and the use of natural resources which is particularly important for an agriculture-based economy like New Zealand. We think that that is perfectly fair reasonable and sensible and that there is now a literature that goes back a long way that has a strong evidential base which can allow us to have a good evidence-based bipartisan discussion about what is good for New Zealand. 
The same broad conception is exactly what underlies the Australian Productivity Commission. The Hon Lianne Dalziel read from the Australian Productivity Commission legislation and I will again quote from the commission’s legislative instructions: “Improve the productivity and economic performance of the economy; reduce unnecessary regulation; encourage the development of efficient and competitive Australian industries;”—so it has an industry focus—“facilitate adjustment to structural change; recognise the interests of the community; promote regional employment and development; have regard to Australia’s international commitments; and ensure Australian industry develops in ecologically sustainable ways.” That is big-picture thinking and it reflects the full range of the factors that are internalised in the “Cobb-Douglas-Gilmore” production function. 
I cannot help but point out that that stands in sharp contrast to the opening speech made by the Minister in charge of the bill Bill English. He talked about three functions of the commission. I lament the fact that all three were couched in terms of deregulation. The concept of regulation and deregulation is a bit like having a hedge. We need a hedge to keep the barbarians out or down sometimes but we want to prune the hedge so that it does not overgrow the garden. That is regulation in a nutshell. We agree with the fact that we have to keep pruning the hedge; otherwise the good old Civil Service has a tendency to add layers. That is bipartisan. But it is not bipartisan to take that a step further get the balance wrong and say that the primary—let alone entire—function of a Productivity Commission is to be some kind of razor gang against red tape in disguise. 
I note that the ACT Party was not able to get its regulatory razor gang up in another context. I believe well enough of the Minister Rodney Hide. I am prepared to give him the benefit of the doubt. I am prepared to go into this process with my colleagues believing that he has an open mind that he will read the literature that he will listen to the submissions as will Bill English and that this Parliament working together for the good of New Zealanders will come up with a commission and legislation that is above day-to-day politics that puts the long-term national interests first that picks the best out of the Australian model and that takes the best lessons from the literature including the third volume of thoughts according to Aaron Gilmore or Lord Maynard Keynes. I get the two mixed up. I think it was volume 3 of Gilmore. I believe we must do this outreach— 
Phil Twyford 
: Keynes was better looking. 
Hon DAVID CUNLIFFE 
: Keynes was better looking but Gilmore was more famous. We are truly honoured that he has sought to grace this Chamber with his presence today for this debate. 
I say to “Sir Aaron” as no doubt he will soon be known to all that we appreciate his condescension to come to the House on this matter and regret only that his colleague “Sir Timothy” is not able to similarly grace the Chamber today— 
Aaron Gilmore 
: I’m absorbing his presence. 
Hon DAVID CUNLIFFE 
: —but I know that “Sir Aaron” speaks for both and that he taught him everything that he once knew. 
In summing up I point out that this potentially is a very important step forward for New Zealand. Those listening at home will note that there is a degree of levity and good humour in the House because MPs contrary to public opinion enjoy the opportunity to agree with each other on some things. We are not hired killers. We do not come to Wellington simply to run each other down. Across the House we do want to put the national interest first and do what is right for New Zealand but sometimes we disagree about how to get there. 
Here is the opportunity for Parliament to agree on something that is bigger than politics. We are three-quarters of the way there already. We agree on the nature of the problem we agree on most of the definition of productivity we agree on the potential advantages of having a bipartisan or multipartisan enduring commission that rises above the day to day and can do the mahi which is good news. All that we have to agree on now essentially is the balance between the functions of the commission. I am prepared to go into the select committee with my colleagues believing that wisdom will prevail that we will hear from submissioners in a democratic process and that the Government will go to Cabinet with an open mind willing to listen to those submissions. 
But I offer this word of caution to the Government: if this is not that good-faith process if the consultation that we have valued is not honoured by a fair and balanced assessment of those submissions and if Cabinet does not listen to the best of the literature and the best of those submissions and show good faith on further revisions then the Opposition will more in sadness than in anger not be able to support this bill through to the second and third readings. Like my colleague I hope that will not be the case. I hope that we can reach out across the Chamber and do something that is patently good for New Zealand and put the national interest ahead of politics. Thank you. 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. The establishment of the Productivity Commission which we are debating in the New Zealand Productivity Commission Bill’s first reading today has been proposed by the Government in fulfilment of its confidence and supply deal with one of its support parties the ACT Party. It is entirely appropriate that the Government should honour a promise to a support party. We are told that the proposal will initially cost something over $2 million to establish and there will be an ongoing cost of some $5 million annually. From our view it is difficult to assess how expenditure at that level would generate much value to taxpayer of New Zealand given the proposed structure purpose and functioning of this commission. Regrettably we do not share the expectation or the hope expressed by the Labour Party that this bill could be amended and melded into something that would achieve some value purpose or positive outcomes for the taxpayer. 
Clause 7 tells us that the purpose of the commission will be to provide advice to the Government on improving productivity in a way that is directed to supporting the overall well-being of New Zealanders. It is a very short purpose that perhaps obscures as much as it reveals unlike the equivalent Australian body the Australian Productivity Commission which has been referred to. That body is tasked with fulfilling a much more comprehensively stated and better-developed purpose. This proposed organisation could simply be used as a mechanism to stifle some important regulatory change before parliamentary consideration. It could serve to actively promote cutbacks to Government spending with very little reference to long-term social economic or environmental cost. It could reinforce outmoded destructive and well-discredited neo-liberal approaches to economic growth. In the absence of a much more clearly defined purpose this bill will ironically simply create a new bureaucracy—a bureaucracy that could become little more than a publicly funded think tank for ACT Party policy and the advancement of that policy. 
In our darker moments we in the Greens considered whether it would be a good thing to have a well-funded well-resourced think tank with some millions of dollars from the public purse to further develop and advocate for Green Party policy. However our moral compass would deny us such a thing. It would preclude such an abuse of proper process and so too it should exclude the establishment of this proposed commission. We are told by Treasury in the summary to this document that the need for the Government to receive advice on productivity-related matters is not questioned and that the question is solely whether the source of that advice should be a new agency that is statutorily independent. The question of independence is a troubling one in the context of this bill. 
We are told that the design of the commission has been heavily influenced by the Australian Productivity Commission. There are certainly similarities but there are also some significant and interesting omissions from the current bill. For example the Australian Productivity Commission is obliged to recognise the interests of the community generally and all of those likely to be affected by its proposals. That is quite a powerful constraint on the Australian Productivity Commission obliging it to be much more focused than a New Zealand commission charged only with a quite amorphous and undefined obligation to support something called “overall well-being”. The Australian Productivity Commission is required to promote regional employment and development. Although a similar expectation might be implied from the text of this bill there is nothing that requires it to specifically address regional or provincial opportunities or concerns. 
A list of some 20-odd matters is described in the explanatory note to the bill that the commission may investigate or look into and natural resources including sustainability is one of those. The word “sustainable” does not otherwise appear in this legislation. If we contrast this with the Australian Productivity Commission we see that amongst its key policies and core principles it is obliged to “ensure Australian industry develops in ecologically sustainable ways”. Rather than having a very cursory passing reference to sustainability that is more about form than substance in the Australian example there is an absolute imperative to consider ecological sustainability. The Australian commission is also obliged and required in all its reports to provide a variety of viewpoints and options representing alternative means of addressing the issues in the report. That would give reports from such a commission some real value and substance. It would present a range of options and views that are well supported well researched and well presented. Nothing in this bill indicates that we can expect any such a broad view such an engaged view from this proposed commission. 
As I said we are told that this is to be an independent agency but the provisions of the bill suggest that it must be working to a very peculiar definitional view of what constitutes independence. The three or four commissioners who would head the commission would be appointed by the Governor-General on the recommendation of the Minister of Finance. Clearly they will be beholden to the Minister for their positions as the heads of the commission. Clause 9 tells us that the functions of the commission are to carry out a range of tasks and they will be carried out on referral to the commission by the responsible Minister in conjunction with relevant portfolio Ministers. So we have an organisation set up—manned by the Minister if you like or “personed” by the Minister—that will be given its marching orders by the Minister in terms of what it ought to investigate. We are told in clause 11 that the commission must perform its functions in accordance with a work programme which again is determined by the Minister. In the terms of reference in clause 12 the commission in carrying out its functions must act in accordance with the terms of reference set by the referring Ministers for each inquiry review and regulatory impact assessment. I fail to see any independence in a body established by the Minister when its agenda and work programme are set by the Minister and it responds to terms of reference that are also set by the Minister. 
We have heard some discussion from Mr Cunliffe about defining productivity which is a well-known well-rehearsed concept in economic terms. Interestingly though this bill does not seek to offer any definition of productivity so I ask which of the multiple definitions of productivity will it work towards. Our own statistics department which is clearly responsible for gathering information about productivity in New Zealand and for comparing and contrasting us with other countries has an interesting analysis. It offers a definition of productivity then quite usefully offers some statements about what productivity is not. The department states that productivity is not a measure of value for money. The concept is also not a measure of effectiveness it is not a measure of competitiveness or profitability and it is not a complete performance management tool. It is a very constrained a very limited mandate and a very limited definition and the commission would have an equally limited mandate—which returns us to my original point. We see this as being a very managed controlled thinktank that would be invited to present only very predictable and one-sided views. 
Rather than productivity which is a useful but also a very limited concept something we think would be of much more value and interest would be to assess the performance of our economy under the framework of sustainability. It is well proven and it is multifaceted. It is a framework that allows us to interrogate and evaluate the operation of the economy in terms of everything from the efficient use of resources through to the appropriate application and development of people skills and attitudes. It is a framework that allows us to look very closely at procurement which was mentioned earlier in the House this afternoon. It would allow us to generate whole-of-life costings rather than simply looking for the cheapest buy on any given day. It would allow us to incorporate measures and valuations of natural capital without which the rest of our economy would fail. In the absence of any consideration of the effect of economic activity on natural capital we would generate nothing but problems for ourselves. 
There is much more to be said and no doubt it will be said because it is apparent that this bill will be referred to a select committee given the support that it is getting from the House. It will be interesting to see whether the support from parties other than those in Government will be sustained when we see the final shape of this legislation. Kia ora koutou. 
Hon RODNEY HIDE (Leader—ACT) 
: 
 I rise on behalf of the ACT Party to support the New Zealand Productivity Commission Bill. The introduction of this bill is a matter of considerable pride for the ACT Party. We have long believed that if New Zealand is to close the income gap with Australia and other high-income OECD countries and is to achieve the living standards that we all aspire to we need to have policies and institutions within New Zealand that are of the highest quality. Developing these policies and institutions requires robust and rigorous analysis and also the involvement of the wider community. 
A focus on productivity is at the heart of the ACT Party’s confidence and supply agreement with the National Government. The 2025 Taskforce was asked to advise the Government on how New Zealand could work to close the gap with Australia and also to measure progress towards achieving that objective. But to really get to grips with these issues we need a detailed examination of the structure and performance of the various sectors of our economy and the institutions within which they operate. That is why we made the exploration of the concept of a New Zealand Productivity Commission a key objective in our confidence and supply agreement with the National Government. We saw the great work that the Australian Productivity Commission had completed across the Tasman and we saw a clear gap in New Zealand’s public sector. 
The Australian Productivity Commission has played a valuable role in tackling the complex and challenging social economic and environmental issues facing Australia. It has been used across the Tasman to evaluate the costs and benefits of existing policies and look at alternatives. Most important it has considered matters dispassionately and openly in consultation with the public and the various stakeholders—and this is important—at arm’s length from the Government. The results speak for themselves. The Australian Productivity Commission has consistently striven to make better policies that serve the long-term interests of the community. The New Zealand Productivity Commission Bill will produce similar outcomes here. 
As the Minister of Finance has said the intention is for a New Zealand commission to have the scope to explore a very wide range of issues across both the public and private sectors. The aim is also that the commission will work independently and transparently consulting with public and private bodies as it sees fit. It will be able to draw conclusions and make recommendations free from political interference. Most important the commission’s clear focus will be “the overall well-being of New Zealanders.” 
I am sure other members of the House will agree that no shortage of issues and challenges face New Zealand families and New Zealand businesses. This House will always be the pre-eminent body for deciding how we as a community respond to these challenges. The establishment of the Productivity Commission will give this House an additional stream of advice. It will also allow Governments of the day to have important matters concerning the future direction of this country considered in a non-political and non-partisan venue by experts. 
Working towards the New Zealand Productivity Commission I have had the pleasure of meeting the chair of the Australian Productivity Commission Mr Gary Banks who offered us some key insights. First to be useful the commission should focus on the issues of public policy that Ministers believe will be of most assistance to the Government of the day. The second insight was that the commission should start out modestly and build credibility over time through the quality of its work. 
These insights are reflected in this bill in two ways. First the terms of reference for the commission’s work will be determined by the relevant Ministers. Second the legal framework setting up the commission is deliberately minimalist. It will not interfere with the advice offered by the commission in its reports. A simple legal framework maximises the chance that this House will focus on the quality of the reports and not the structure of the commission itself. This should avoid the need to periodically update or change the legislation establishing the commission. That is why we have taken the approach of distilling the essence of the Australian legislation as best we can without all of the specific Australian detail. 
I record what a pleasure it has been to work with the Minister of Finance and my other Cabinet colleagues on developing these proposals for a New Zealand Productivity Commission. I acknowledge their hard work and commitment here today. I have appreciated especially the support from the Minister of Finance who has helped and supported me in this work right from day one. I am particularly proud that together we have managed to find the resources for a New Zealand Productivity Commission from within a number of current baselines thereby avoiding the need to place additional burdens on the taxpayer. 
I also acknowledge the contributions that the other political parties have made to the bill in particular the sterling work of Lianne Dalziel when she was a Minister and also David Cunliffe with whom we have had discussions. I can certainly say from the perspective of the Government that we are very interested in getting cross-party support for the Productivity Commission at the select committee. It is great that a Labour member will chair the Commerce Committee which will look at this bill particularly a member with the experience of Lianne Dalziel. I say though that it is important that everyone not just Government members approaches the issues around the Productivity Commission with an open mind. I hope that Labour members of the select committee will listen genuinely and openly to the submissions that are made so that we on behalf of the country can get the very best result for New Zealand. Thank you. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Kia ora tatou katoa e te Whare. The Maori Party will support the New Zealand Productivity Commission Bill which will establish a commission to ensure there is a greater emphasis on productivity in both the private sector and the public sector. We do so because Maori society is traditionally based on the principle of collective commitment and hard work. 
One of our better known whakatauki is “Me moe i te tangata ringa raupa”—marry a man with blistered hands—that is marry a man who knows how to work. There were no politicians back then. Indeed on sheer numbers alone the ability of marae to handle major events with responsibility for the catering accommodation entertainment safety health and hygiene of large-scale crowds is an impressive demonstration of the productivity that carries over into other spheres of Maori activity in tourism farming forestry aquaculture business and even politics. In fact we kicked off our 2008 election campaign with the slogan that we wanted to make the nation great again by investing in productivity on a grander scale to promote social cultural and economic development for Maori and for the wider public and we said that that was in the best interests of the nation and economy as a whole. 
A key interest for us is the non-profit sector. We note that the Government currently invests $3.5 billion in this sector every year through contracting out services to non-profit organisations. Whanau Ora aims to take that principle to another level again. At the moment providers survive on multiple contracts with multiple funders which means that they spend more time writing up contracts and trying to get them approved restructuring the operations to meet new standards trying to meet the compliance requirements and then worrying about whether they will get the next contract all of which limits their ability to respond to the needs of whanau. 
I commend Tariana Turia for Whanau Ora and her work on trying to reduce the logjam by collapsing contracts into one and ensuring that whanau actually get the help they need from the best people in the business. It looks like the Productivity Commission will be using the same model by pooling together its funding from the budgets of 29 Government agencies rather than by costing taxpayers new money. 
Mind you as with a lot of other things we are also interested in we ask who and what will define exactly what productivity is. We see that the Public Service Association supports the idea of having a body that can provide regular reports on efficiency effectiveness and service delivery in Government agencies across the whole economy. But like us it is also keen to know how State sector productivity will be measured and by whom. 
The Maori Party is also keen to know what the balance will be between the economies of scale going through the central administration and the benefits of contracting into local communities which understand local issues better than central government ever can. I say that because uncoordinated actions taken by different Government agencies are widely known throughout the country to be costly time-consuming effort-wasting inefficient and confusing and they often duplicate actions taken by other Government agencies. 
Finally talking about definitions of productivity we would also like to see the terms of reference include an audit of all service providers for their commitment to kaupapa Maori and an audit of all legislation for its commitment to Te Tiriti o Waitangi. Some great things are happening out there such as the Maori Health Innovation Fund which has invested $20 million in developing innovative Whanau Ora - based health services and in developing Whanau Ora itself. But there is also a need to put some focus on what works in other areas what does not work and how at the end of the day the Government can support services and initiatives that deliver high-quality outcomes for whanau everywhere. 
On that basis the Maori Party will support this bill at its first reading. 
JO GOODHEW (National—Rangitata) 
: 
 I rise to take what I can assure my colleague on the other side of the House will be just a brief call on the New Zealand Productivity Commission Bill. The commission will be an independent Crown entity with the purpose not surprisingly of improving productivity but in both the private and public sectors and improving the overall well-being of New Zealanders. 
What underpins this bill is an awful lot about what National is all about. National is working hard to secure a brighter future for all New Zealanders and by golly we got that mandate at the last election. We are focusing on lifting long-term economic growth to create jobs boost incomes raise living standards and provide world-class public services to Kiwi families who deserve nothing less. We want to ensure that growth is based on private sector investment and exports rather than unsustainable increases in Government spending and borrowing such as those we saw over the last decade. 
This bill is but one of a number of tools in the tool kit that the National-led Government has to achieve its goals to deliver a better future for New Zealanders and we are very happy to be working with coalition confidence and supply partners towards this end. “Productivity” is an oft-used word and sometimes I worry that when we say to New Zealanders that we intend to improve productivity they worry that we are simply telling them to work harder and work longer hours. That is of course not the case. We are saying to New Zealanders who already work well work long hours and work hard that we want to find ways for New Zealand to become more productive and for New Zealanders to take home a higher wage or salary. 
So without any further ado I commend this bill to the House. I know that other members have contributions to make as well and I am looking forward to this bill being as I have already said one more tool in our tool kit. Thank you. 
Hon DAVID PARKER (Labour) 
: 
 I rise on behalf of Labour. As earlier speakers have said we are supporting the referral of the New Zealand Productivity Commission Bill to the select committee. Before dealing with some of the issues that arise from it I will respond to one of the comments made by the previous speaker Jo Goodhew who asserted to this House that one of the things that went wrong in the last decade was an increase in borrowing. What a short memory she has. If that is the level of intellect that is going into the establishment of the detail of the Productivity Commission it really does not portend well for its future. The reality is that the previous Government reduced gross Government debt from 38 percent of GDP to 17 percent of GDP and net debt once we took into account savings through the likes of the Cullen fund was virtually zero. 
Of course that is the stand-out difference between the economic performance of New Zealand and that of countries like Japan the United States Great Britain Greece Portugal and Spain. All of those countries have high Government debt and as a consequence they have very little room to move in terms of what their Governments can do compared with New Zealand. The National Government inherited a position of low debt not high debt. So I say to Ms Goodhew that she was just wrong when she made that assertion. 
Parliament agrees on just about all sides that we need to improve our productivity output in New Zealand in order to improve the well-being of New Zealanders and fund the sorts of services that we think Governments should fund in terms of education health superannuation and the like. If I have a concern about the way in which the Productivity Commission may turn out it is that it will be focused unduly on deregulation. The Minister Bill English primarily talked about deregulation. I heard Rodney Hide comment that it will “begin modestly” using his words. I think that might be a code for there being an undue focus on deregulation. If the Productivity Commission is to work it must have a function that goes beyond deregulation. I really urge the Government to have a broader focus. 
I think it is absolutely clear that the Government needs some help in terms of building productivity because it has made some bloomers so far. It has certainly made some terrible mistakes. 
David Bennett 
: Get a life mate. 
Hon DAVID PARKER 
: Well we hear criticisms again from David Bennett saying that is not so. Well I ask him whether he thinks that the Australian Productivity Commission would have stood and commended National for reducing savings in New Zealand by cutting KiwiSaver at the very time that the Australian Government has been increasing savings in Australia. Currently 9 percent of gross salary or wages is saved in compulsory savings in Australia and that is going up to 12 percent. The Australian Government says it has an effective Productivity Commission and that move has certainly not been criticised by the Productivity Commission itself. But what did the National Government do here? It cut KiwiSaver contributions. What did it do in terms of public sector savings? It stopped making contributions to what colloquially used to be called the Cullen fund which could now be called the English fund because it is getting so small in terms of contributions. In terms of savings this Government has made some wrong moves. Let us hope that if it gets from advice from a Productivity Commission it will do better on that front. 
If we look at where else the Government is going wrong we see it is really focusing on an extractive economy. The National Government is focused on extractive industries be it agriculture which extracts value from the land or mineral extraction. Both of those industries are very important to New Zealand and I am not decrying their importance. But New Zealand will not approach the wealth of Australia or that of other more successful developed nations on the back of farming or extractive industries. Indeed it pains me to reflect on the fact that the first 18 months of this Government’s economic agenda have been so much focused on increasing mining in national parks and the like. According to the Prime Minister in his statement to Parliament at the start of this year mining was to be an important part of the economic step change for this country. It is absolutely plain that the Minister for Economic Development Gerry Brownlee saw mining as his cornerstone policy. Just this week we have seen that ambition dissolve. The Government has resiled completely from mining in national parks. That is a good decision because it was never going to make the major step change that is needed. It was inappropriate in any event as national parks should not be mined. However it shows that the Government does not have any plan as to how it will increase New Zealand’s productivity in a way that bridges the gap between New Zealand and Australia. 
I want to come back to that gap because we heard Rodney Hide make reference to it in his speech. The problem is that other than the mantra that we had at the time of the election that National would bridge the gap with Australia by 2025 we have had no deliverables and no articulation or specificity as to how we are to measure progress towards that goal. In fact Gerry Brownlee went so far as to say in Parliament this week that it is no longer a goal; it is just an aspiration. We had him at a select committee recently saying the Government had no subset by which it could be held accountable as to whether it was achieving that goal. We all know that by 2025 Gerry Brownlee will not be here and Bill English will not be here. I have no plan to be here; I do not think many of us plan to be here by 2025. 
Hon John Carter 
: Some of us do. 
Hon DAVID PARKER 
: Well what a sad life Mr Carter from Northland must have if he plans to be here in 2025—and it would be sadder still for the country. The reality is that the Government has no subset of that 2025 goal by which it can be held accountable. We have nothing to judge the rhetoric against. Maybe the Productivity Commission if well designed will provide a bit of input into the Government and at last give it some direction. Certainly the Government has none of its own. 
I have talked about some of the mistakes that have been made with regard to savings and an over-reliance on extractive industries. It is clear that we have to build productivity in our other export industries. Again I contrast what Australia has done under its Productivity Commission which ours is said to be modelled on with what the Government has already done. Australia has a research and development tax credit. It has long had a research and development tax credit in addition to savings to encourage depth in capital markets and therefore more money being available to businesses to borrow and spend on increasingly productive plant and equipment. Australia can do more of that because it has good savings. In addition to that it encourages businesses to take advantage of those savings and the availability of capital through a research and development tax credit. 
What did the current Government in New Zealand a National Government do after it took office? It did the opposite of what Australia does to improve research and development expenditure—to increase the sort of expenditure that improves productivity over time. The National Government went in the opposite direction of that and it removed the research and development tax credit that was legislated for by us pretending instead that we are better to just have tax cuts weighted to those who are already the more wealthy people in society as a substitute for a tax credit. If that was the answer why is that not the answer in Australia the economy of which has patently performed better than New Zealand’s recently? The Government abolished the research and development tax credit and has replaced it in the latest Budget with a sort of voucher-based system that goes some of the way but not nearly far enough. 
The other thing that the Government has done—and I am pointing out all of these things because it seems to me that the rhetoric of the Government about wanting to improve productivity flies in the face of common sense in a lot of areas—in the latest Budget is to cut the depreciation allowances for investments in short-lived assets. Short-lived assets are things like computers which we need to have for increasingly sophisticated service industries and productive industries. The Government reduced the rate of depreciation that a business can claim in respect of those short-lived assets. Again to me that measure seems to go in exactly the opposite direction of that which Australia pursues through its Productivity Commission. If I have a suspicion here—and we are embarking on this journey and voting for this bill at its first reading and we do want to see something put in place that is enduring if it can be agreed— 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the honourable member but his time has expired. 
DAVID BENNETT (National—Hamilton East) 
: 
 When we look at the New Zealand Productivity Commission Bill we see that it reflects a lot of the sentiment that the ACT Party has been pushing and that is part of the coalition agreement. 
I want to counter a few of the comments made by the previous speaker David Parker who said an absolute load of rubbish in this House. If anybody in the country needs a lesson on economics it is those Labour Party members. They put us in the hole before the rest of the world and in a bigger hole than the rest of the world. Now it is up to us to try to get us out of that hole. 
The Productivity Commission would have been great when Labour was in Government because it would have told Labour how stupid its ideas were about what it was investing in and what it was doing. It would have achieved its purpose best under the previous Labour Government because under a National Government we will potentially not have the degree of economic decline that we had under Labour with its way of mismanaging the economy. 
The previous speaker said that we will not get to where Australia is on the basis of extractive industries. What is the Australian economy built on? It is built on mining which is an extractive industry. What is the New Zealand economy built on? It is built on agriculture which is an extractive industry. We will get there on the basis of extractive industries. 
The Labour Party looks to some God-like company that will be founded in New Zealand and provide some kind of technology or visionary thing that will change the world and it will all be based in New Zealand. I tell Labour to get in the real world. When one earns money one earns it through hard work and doing the basics right. New Zealand does the basics right in agriculture. We do it well we do it with technology and nobody else can compete with us at this stage. That is how we will make money. It is not made by dreaming that something will happen. Nobody in the Labour Party has ever made any money anyway so Labour would not know what it is like to go out there earn something and try to build a country or an economy. That is the basis of it. 
The Productivity Commission is an idea that has been formulated. It is similar to what is in Australia. Its main functions will include inquiries into productivity-related matters and reports back to Ministers; one-off reviews of existing regulations; reviews of the efficiency and effectiveness of regulatory agencies; regulatory impact analyses of a small number of proposed new regulations; research into productivity-related matters to build up institutional knowledge; and promoting public understanding of productivity-related issues. Those are some very strong functions and broad aspects that this Productivity Commission will be engaged in. 
We look forward to the bill’s progress through this House and its implementation in the New Zealand economy. Thank you. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 Like other Labour speakers I note that we will be supporting the New Zealand Productivity Commission Bill being referred to a select committee. That is the extent of our support at this time and I want to go into why we are limiting our support and also to talk about some ideas for how we might be able to promote a productivity commission bill that we would support being passed all the way through the House. 
Ideally the three key elements that we need to talk about are an independent Productivity Commission a well-resourced Productivity Commission and a broadly mandated Productivity Commission. Those are the three areas where I have concerns about the current proposal. But overall Labour members want to support this bill because we share the view that has been expressed around the House today that improving the country’s productivity is critical to the future well-being of New Zealanders. 
It was interesting that in 2003 the OECD in one of its reports on New Zealand—it was looking back over a period in which both National and Labour had been governing—stated: “The mystery is why a country that seems close to best practice in most of the policies that are regarded as the key drivers of growth is nevertheless just an average performer.” The OECD went into various areas to talk about property rights the relatively small public sector compared with the rest of the world low levels of corruption low labour costs a flexible labour market and the ease of doing business in New Zealand being the second-best or best in the world through that period. All of those situations were in place in New Zealand but seemingly we could not get past what has been called by some academics as the “productivity paradox”. There are a number of reasons for that which have been talked about subsequent to that report. They are some of the kinds of issues that I think a Productivity Commission would need to take on. So this is an important aspect of the Government’s programme. 
It is somewhat ironic that a bill to create some new bureaucracy is driven by the ACT Party. Having previously heard from the ACT Party about the evils of backroom public servants and indeed from National as well it is ironic that we stand here today to promote a bill to create a new bureaucracy. Clearly backroom public servants have something to offer and I am sure we will all appreciate the work that will go into that from the Public Service. 
On that point I have some concerns about the question of resourcing. I appreciate the fact that nobody wants to add a great deal more cost on to the taxpayer to create a Productivity Commission. But simply by shuffling the money around from other agencies I am concerned about what will now not be done by those agencies and whether the Productivity Commission will be sufficiently resourced. With a budget of around $5 million to do that work as the Minister of Finance said at the start today that is questionable. David Clendon on behalf of the Greens asked whether the Productivity Commission would be able to do the things that we all want it to do. I think we need to ensure that we invest in creating a Productivity Commission that is able to undertake inquiries able to undertake studies and able to provide independent advice. We need to make sure it is resourced to do that. We cannot penny-pinch on that at the beginning because in the end it will not deliver to us in the way that we all want it to. 
A number of people have mentioned the importance of the Australian Productivity Commission its role and the breadth of its mandate. When we look at the bill and the Productivity Commission’s functions it is interesting to note that the second and third functions mentioned are all around the question of regulatory matters and they were the ones that the Minister of Finance highlighted today. 
It is vitally important that we put on the record of the House today that if this Productivity Commission is simply an exercise in deregulation and creating a smaller public sector—all of the messages that we hear consistently from the ACT Party—then it is not something that this side of the House can support. It must have a broad definition of what productivity is. 
Some people say that productivity is just output divided by hours worked—that will show how productive we are. I know that kind of definition is not the one that is understood by most people in the House today. But if we allow ourselves to be narrowed down we get drawn into debates about things that in the long term will not drive forward the economy. They will not make the economy more productive. That is understood inside the New Zealand Public Service. Both the Department of Labour and Treasury have their own areas of productivity that they believe that New Zealand should be working on. It is interesting to note that a couple of the really important areas that are picked up on by both Treasury and the Department of Labour are innovation and skills. 
I will talk about the skills matter now because the absence of a skills strategy from this Government has been one of the yawning gaps in attempts to drive forward the economy. We must have the people who are going to do that. We need a proper skills strategy and proper investment in skills and training. I would like to think that the Productivity Commission will look at the question of skills and training as one of its earlier tasks. I would like to think that it will look at workplace training the tertiary sector and secondary schools and about how we are developing a skilled workforce because that is now recognised as being one of the key drivers of productivity. We need to make sure that is included in the bill as well. 
Innovation I think is a particularly important part not only innovation in the workplace but the general place of innovation research science and technology in New Zealand. David Parker has already talked about that today. 
So those are elements of productivity that are much broader than the question of regulation. They are much broader than the question of how to shrink down the size of the State sector or the public sector. They are actually the drivers and the important issues that need to be addressed by the Productivity Commission. 
I have a concern that the level of independence of this commission as written down in this bill is not sufficient. I hope that is something that a select committee will take some time to look at to ensure that it will be able to act independently. Obviously somebody has to appoint the commissioners and that is likely to be the Government of the day. But I urge the Government of the day which is putting this bill through to ensure that a truly independent Productivity Commission is created. In order to do that it needs a broad mandate a flexible mandate— 
Hon David Parker 
: Don Brash. 
GRANT ROBERTSON 
: It will not be Don Brash at all I say to Mr Parker. 
But the Government also needs to make sure that the people who are picked as commissioners are people who are broadly acceptable to this Parliament. If the Productivity Commission is going to mean anything it needs to be able to have the confidence of this Parliament that it is truly independent. 
As my colleague Mr Parker said before it is hard to look at this bill and not see the background of the ACT Party and deregulation as its centrepiece. The Productivity Commission must be far broader than that. If we look at the Australian Productivity Commission’s instructions—my colleague Lianne Dalziel mentioned one or two of these but they bear repeating—we see that yes the Productivity Commission is to improve the productivity and economic performance of the economy and reduce regulation. But then the instructions go on to talk about efficient and internationally competitive Australian industries adjustment to structural change and regional employment and development. That is a critical element that needs to be discussed more and more in New Zealand. Under Jim Anderton’s watch regional development was given a real focus under the fifth Labour Government but that has slipped away with Gerry Brownlee’s role as the Minister for Economic Development. Trade policies are included in the instructions but here is the really interesting one: the last of the instructions ensures that Australian industry develops in ecologically sustainable ways. I echo the comments of David Clendon that we have to include that definition of sustainability and we have to debate how New Zealand can go forward as a country that continues its clean green reputation and to actually make that real. 
Hon David Parker 
: How do you do that when ACT doesn’t believe in climate change? 
GRANT ROBERTSON 
: Well that is right. There is yet again another risk of this being dominated by the ACT Party’s ideological agenda around regulation. 
This Productivity Commission needs a mandate that is both broader and more specifically outlined in law. We cannot afford to progress this bill through Parliament while leaving the definition of “productivity” and the functions as they are now. That is what Labour will focus on in the select committee. 
I conclude by saying that productivity in the State sector which will be a major focus for the Productivity Commission is not easily measured. It is pretty difficult to tell a nurse at Christchurch Hospital in the accident and emergency department to be more productive or to tell a teacher in front of a classroom to be more productive. When we look at the State sector we have to ensure that we are realistic that the outcomes we are looking for as a country—the health outcomes the education outcomes—cannot always be measured in hard-dollar terms. They cannot always be measured in ways that would suit the ACT Party. We need to have a Productivity Commission that supports and enhances New Zealanders’ well-being. 
On this side of the House we accept that a Productivity Commission is a good idea and we admire the Australian model whereby there is a broad set of areas that the Australian Productivity Commission can look into and that it is instructed to look into. We want an independent Productivity Commission that can continue to provide advice and provide advice to Government’s of all colours. But what we must not do is narrow down the agenda to that of deregulation and one party’s ideology. 
AARON GILMORE (National) 
: 
 It behoves me as the last speaker on the first reading of the New Zealand Productivity Commission Bill to talk a bit about some of the comments from the Opposition members and in particular to touch on some of the comments from the last speaker Grant Robertson. There seems to be some sort of fear and loathing from the Opposition members probably from not properly reading the bill. 
The first aspect of the bill that Labour is looking at is the Productivity Commission’s function to “hold inquiries into and report to the referring Ministers about productivity-related matters that are referred to it;”. That function is far broader than what Australia has—far broader. It means that Ministers can refer anything they want to the Productivity Commission to understand anything they want. Sure a whole lot of other regulatory worries and concerns flow from it. 
Equally there has been some paranoia from the Greens about the ability of Ministers to control the commission. The bill allows freedom for Ministers to refer to the commission to undertake independent analysis. I think that is a good thing. When we look at it in relation to the Australian rules we see that ours will allow a lot more freedom for the independent commission to do things. 
There is also a fear about whether the commission will be resourced properly. This commission gets about $5 million a year. There are 29 people; that is nearly $200000 a person. I think anyone out there who is paying taxes such as the butchers and the plumbers in my part of New Zealand in Christchurch would be thinking that is a lot of money to give to somebody to answer questions. That is $200000 a year to 30-odd people to undertake some good analysis on what are the big questions and issues for New Zealand. I think that is probably more than enough resources to ask for from the hard-working taxpayers of New Zealand. 
Earlier on we talked a bit about what this bill is all about. This is not about New Zealand working harder—we are the hardest-working country in the world; we work more hours than anywhere else—it is about New Zealanders working smarter and getting more out of less in terms of getting more capital and particularly more brainpower. We heard some fear from David Parker who talked about the reasons we made some changes to the tax system. It was to give more flexibility to employers to invest in things they see fit—not necessarily machines but minds. We cannot depreciate a mind but through the lowering of the tax rate there is a greater incentive to invest in human resources rather than capital resources. We think it is a good thing to give the choices to employers to do things that are right. 
The Productivity Commission in Australia has done some great work. I have read a number of its reports particularly on the work it has done on energy and on population and I think they are good pieces of analysis. I think if we can get the same level of analysis out of the work that might come out of this commission in New Zealand then that will be a neat thing for New Zealand. We would be able to have some highly useful bits of analysis particularly on social policy. 
I will segue a bit. I had the fortune to study at the University of Canterbury. It has just set up a new economics lab which specialises in exactly this issue. It is very much looking forward to working with this Productivity Commission to answer some of the big social policy questions that exist in New Zealand. I think that what we have set up is a good step in the right direction towards working with all those entities and agencies that do this sort of work in New Zealand. They can be disparate but this commission will bring them together to a position where they can undertake more detailed in-depth analysis of those big issues that New Zealand is facing over the next 20 years or more. 
Unlike Mr Parker and my colleague Mr John Carter I actually look forward to being here in 2025. I am young enough to be able to say that whereas we have heard from the Opposition members that they do not even want to be here in 2025. If we can get this commission up and running to answer those big questions it would be a great thing. I look forward to sitting here on the Government benches in 2025 looking at some of the great analysis the commission has done and putting it in place for a John Key - led Government for another 15 years. Thank you very much. 
A party vote was called for on the question  
That the New Zealand Productivity Commission Bill be now read a first time. 
Ayes 113 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 5; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Bill read a first time. 
Hon JOHN CARTER (Minister of Civil Defence) 
 on behalf of the  
Minister of Finance 
: I move  
That the Commerce Committee consider the New Zealand Productivity Commission Bill be referred to the Commerce Committee 
 and that the committee report finally to the House on or before 22 November 2010 and that the committee have authority to meet at any time while the House is sitting (except during oral questions) and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c).  
Motion agreed to. 
Infrastructure Bill 
In Committee 
Debate resumed from 21 July. 
Part 3 Amendments relating to New Zealand Railways Corporation ( 
continued 
)  
CAROL BEAUMONT (Labour) 
: 
 I am speaking to Part 3 of the Infrastructure Bill which amends the New Zealand Railways Corporation Act 1981. This amendment was relatively uncontroversial at the Transport and Industrial Relations Committee. In fact we did not have much by way of submission on it. 
Essentially Part 3 seeks to amend the Act by removing some of the statutory restrictions that negatively affect the running of New Zealand Railways Corporation business. Those changes include normalising the appointment and dismissal of directors changing the number of directors who can call a meeting to a simple majority establishing the power to appoint a deputy chairperson and streamlining arrangements for changes to Railways Corporation capital. Part 3 also removes the requirement to annually provide the Minister with a programme of capital works removes the limit on how much the Railways Corporation can expend in one year and permits it to effect insurance cover for or give an indemnity to a director or employee. Those amendments are consistent with the equivalent provisions in the Crown Entities Act 2004. 
For this side of the House anything that streamlines the operation of the Railways Corporation and ensures that it is modern and well managed is important. As members will know Labour strongly supports rail; we bought back rail and we want to see more use be made of rail. Rail has many advantages for our country. It is environmentally sustainable in comparison with roading it is safer and it has provided really important service to primary producers. 
What is happening with the Railways Corporation is interesting. We are all aware that a former Prime Minister Jim Bolger—a good man—was not reappointed to his role as chair. What was that about? He obviously—I give him due respect for this—believes in railways. He believes in the role of KiwiRail. Removing him has removed any impediment to the sale of KiwiRail in the second term of this National Government—if it gets one. We are worried about the sale of a whole lot of assets if the National Government is returned at the next election. I know that this will be a really important issue in the next election campaign. Across on this side of the House we will do everything we can to expose what is a clear agenda to start privatising in the Government’s second term if the Government gets one. KiwiRail is right up there on the blocks. That is why we believe Jim Bolger was not reappointed. He believes that there is a future for KiwiRail as a publicly owned organisation. 
Why would the Government want to remove the requirement to annually provide the Minister with a programme of capital works? What possible motivation could there be for that? Well from our perspective the Government is hiding the real state of the asset and is preparing KiwiRail for sale. Labour is very apprehensive about the future of KiwiRail. 
It is terribly worrying to us that this Government seems completely fixated on highways. We heard it again today in the House when Steven Joyce talked about highways. He was saying once again that there had to be so much investment in highways—we were talking about the Auckland scenario—because something like 85 percent of transport movements are in fact by road. Well nobody would dispute that figure but what gets me is that every time he is asked these questions he trots that figure out as if it is a given as if it is something we cannot control. [ 
Interruption 
] As if it is something we cannot change—exactly. We can do something about it but the only way we can do something about it is by investing in public transport investing in rail and ensuring that it is a viable option for both the movement of freight and the movement of people. 
We all know that the relative share of funding between public transport and roading has changed under this Government. It has changed from what was planned by the previous Government. That is another significant difference between the parties: on this side of the House we believe in investing in public transport and investing in robust infrastructure. Thank you. 
The question was put that the amendments set out on Supplementary Order Paper 151 in the name of the Hon Bill English to Part 3 be agreed to. 
Amendments agreed to. 
Part 3 as amended agreed to. 
Part 4 Amendments relating to affordable housing 
MOANA MACKEY (Labour) 
: 
 I am happy to stand and speak on Part 4 of the Infrastructure Bill. Although Labour will be supporting the Infrastructure Bill we will not be supporting Part 4. In fact I would like to point out the anomaly of even having Part 4 in this legislation. 
Part 4 repeals the legislation relating to affordable housing. The question that needs to be answered is why this repeal was hidden away in the Infrastructure Bill. A number of people out there probably would have submitted on this particular part of the bill if they had known to look in the Infrastructure Bill for the repeal of the legislation on affordable housing. It has become very clear that the Government did not want to make it obvious that once again it was backing down on an affordable housing issue so it hid it away in Part 4 of the Infrastructure Bill. 
There are a couple of amendments in my name on this part which I will speak to soon. I will first address the issue of restrictive covenants. When the Affordable Housing: Enabling Territorial Authorities Act was passed under the previous Labour Government one part of that legislation removed restrictive covenants where they were being used in order to stop social or affordable housing. When we went through that process the issue was raised with us that if we say one cannot have a restrictive covenant that stops social or affordable housing as its primary purpose then all someone would have to do is to say that the restrictive covenant is for another reason and the secondary purpose is that it stops social or affordable housing. The Local Government and Environment Committee back then decided to close this ginormous loophole. We did so by saying it was unlawful to have a restrictive covenant that had any purpose of prohibiting social or affordable housing. 
For reasons that I completely do not understand the Minister for Infrastructure has decided that he will go back to saying that only if it is the principal purpose will it be prohibited. We asked for and received some advice from the officials at the Transport and Industrial Relations Committee on the repeal of this legislation and why the decisions were made. They said: “Independent legal advice … indicates that there is a risk that the phrase ‘one of its purposes’ is too wide and likely to catch covenants that are entered into for legitimate purposes. For example covenants to preserve rural character open space … sunlight or views”. Opponents could argue that “an undeclared purpose of a covenant is to exclude social housing even though the wording of the covenant was quite different and”—apparently—“reasonable.” 
The point was that people who believed that a restrictive covenant was being used to stop social or affordable housing would still have to prove it. It was still a very very high hurdle to clear. But the Government changing it back to say that a covenant over land is void only if its principal purpose is to stop the provision of social housing on the land opens that loophole right up again. When we heard the original submissions on the Affordable Housing: Enabling Territorial Authorities Act we heard one from the Human Rights Commission. It told us of a case in Nelson where a developer had said that the purpose of the restrictive covenant was related to amenity values—the houses had to look a certain way—when the reality was that the developer did not want to provide disabled access to those houses. That stopped people from the disability sector putting in community housing in that area. The developer said that the principal purpose was related to amenity values; the reality was that it was to stop housing with disabled access going in. Now this Government says that that is OK and it can happen. That is completely unreasonable and completely ridiculous particularly given that we went through a full select committee process on this legislation under the previous Government. 
In this current Parliament we went through a very quick select committee process on the Infrastructure Bill. Naturally most of the submissions were on infrastructure and not on the repeal of affordable housing or the issue of restrictive covenants. That brings me to my next point which is that the Government has also decided to take out affordable housing from the legislation. It is saying that although it thinks there should still be some kind of limit on restrictive covenants against social housing it thinks it is OK that there are restrictive covenants against affordable housing. I am interested to hear from the Minister in the chair Nathan Guy as to why he thinks that restrictive covenants against affordable housing are OK. I certainly hope that he will take a call on that matter. 
I have an amendment in my name that restores section 277A to the way that it was under the previous Government. The legislation went through a full select committee process where the issue of restrictive covenants was first and foremost in the submitters’ minds. We asked for extra advice on that. It was not buried in legislation so that people did not know it was there. It seems to me that this amendment is an ad hoc decision made by the Government. I wonder who has got in the Government’s ear and said that now it is really hard for them to block out social housing and affordable housing so it would be nice if the Government got rid of those restrictions. 
It was pointed out to us by submitters who came to the select committee—submitters we contacted who had submitted last time—that they were very very concerned about the opening up of this particular section in the law. The Minister of Housing has made a big deal about this. He got up and said that he was great because he was keeping the provisions on restrictive covenants. Actually I say to the Minister he is not. He is opening them wide up to abuse as was reiterated by a number of submitters at the select committee. 
I now move on to my second amendment which is to remove Part 4 entirely. The reason for this is that I am happy to admit that Labour probably could have done better with the Affordable Housing: Enabling Territorial Authorities Act. If the Government were serious we would be happy to support its referral back to the select committee to go through a process where we could address any of the issues that the Government had with it. We have not heard about why the Government wants to get rid of it. 
This is kind of like the shared-equity affordable housing scheme which the Government told the Housing New Zealand Corporation to stop promoting after the election. There was a 2-year pilot on an affordable housing programme and for 20 out of the 24 months that pilot was running under the National Government which did not tell anyone it existed. What an absolute waste of money! If the Government was not going to continue with it it should have got rid of it. Why did it go through the pretence and the expense of running a programme that no one knew about? I suspect that affordable housing programmes are much more effective when people know they exist. That might be a stretch but I am pretty sure that if people know a scheme exists it will get a lot more uptake than if no one knows it exists. 
We have the same kind of situation with this legislation. National decided it did not like it from the start because it is not committed to affordable housing. It is not committed to addressing issues around affordable housing. National decided from the start that it did not like it. It has no interest in trying to improve it; it would like to get rid of it altogether. This is not a Government that takes affordable housing seriously. The Government thinks that the invisible hand of the free market will deliver homes to everyone and if we give tax cuts to the richest people eventually they will trickle down to those at the bottom and with their $3 a week tax cut they will be able to purchase a house. Of course the National Party’s No. 1 policy on affordable housing at the last election was tax cuts. Well I do not know how someone on the minimum wage will get into affordable housing on a $3 a week tax cut. 
I want to read something on Part 4 from the same paper that the select committee received from the Housing New Zealand Corporation. It concerns Government policy to address housing affordability. A number of submitters who came along were very critical again of the fact that the repeal of this legislation was buried in the Infrastructure Bill. The fact was that since the legislation had been passed affordable housing pressures had become worse not better. Probably more submitters would have liked to come along to have their say on affordable housing at that time but of course they did not know about it. When people look for an affordable housing bill they would not think to look at the Infrastructure Bill which deals with a code for utility operators and access to transport corridors. 
The paper that the select committee received said that the Government was getting rid of this legislation because the Government was doing so much on affordable housing. It had the Gateway Housing initiative and details of the initiative were expected to be announced in October 2009. It is now July 2010 and the mythical Gateway Housing programme has yet to appear. It received no funding in this year’s Budget so it gets a cross. Then—this is fantastic—one of the Government’s affordable housing initiatives is the sale of State houses. How is a programme that sells houses at market prices to people who cannot afford to buy them an affordable housing initiative? 
The other initiative is the Welcome Home Loan scheme which was a Labour Government scheme. So the only tick National gets for the affordable housing initiatives of this Government is the Labour Government’s Welcome Home Loan scheme. We have the Gateway Housing initiative which does not exist and the sale of State houses to tenants which is not an affordable housing initiative as we have seen because the uptake has been about 20 people. Despite the Minister of Housing saying that he thought it would be hundreds rather than thousands it has turned out to be tens rather than hundreds or thousands. The hopes and the dreams of a large number of people were raised even though the Minister knew that they would never be able to get into those homes because that programme is not an affordable housing initiative. 
Hon BILL ENGLISH (Minister for Infrastructure) 
: 
 It is a bit rich hearing Labour members go on about affordable housing. Under the previous Labour Government’s policies housing became less affordable than it has ever been. The reason that the Government is using Part 4 of the Infrastructure Bill to repeal the Affordable Housing: Enabling Territorial Authorities Act is that it was a nonsense. 
The previous Labour Government ran policies that drove housing to the most expensive levels ever relative to people’s incomes. It then thought that it would fix that problem by passing a law telling local authorities they have to have affordable housing. This was during the tail end of Labour’s time as the Government and it summed up the vague wishful and incompetent policy-making it applied to the housing area. 
The measure of the affordability of housing is the ratio between the average value of houses and the average wage. Under Labour’s watch it almost doubled in some cases and for the average person homeownership became unaffordable—not affordable but unaffordable. Labour needs to learn that saying that something should be affordable does not make it affordable. What would make it affordable? Sensible policies that stop driving up interest rates tax policies that stop driving up house prices unnecessarily and pushing people into excessive borrowing and resource management policies that prevent local government constraining the supply of land so much that it drives up the price of land considerably. 
The interesting thing is that Labour knew most of this. The Labour Government committed considerable resources to housing affordability. It is just that the result of a year-long working party across the whole of Government was a silly provision that said we would achieve affordable housing by passing a law that said that local government had to have affordable housing. There were simple issues with the legislation like what “affordable” is. Why have legislation where the key term “affordable” is not able to be defined or understood by anybody? For most normal people in the street an affordable house is the house they would have liked to buy but could not quite borrow enough money for and did not have quite a big enough deposit to get. So it was an unworkable provision. It was a triumph of incompetent wishful thinking over reality. It was a hope by the previous Government that it would be able to use aspirational legislation to fix what is fundamentally a microeconomic and policy problem. That is why we got rid of that provision. What has happened around housing affordability? It has started to improve. Surprise surprise with some more sensible policies that put a bit less pressure on interest rates it is starting to turn round. 
The other day I saw a table of international rankings of affordability. We have one of the most expensive housing markets in the world when compared with wages—one of the most expensive. That is the legacy that Labour left when it said it wanted there to be more affordable housing. It took us from the middle of the pack to being one of the most expensive housing markets in the world. I do not mean in the developed world or in the OECD; I mean in the whole world. 
The mountain that New Zealanders have to climb to homeownership is now steeper and higher than it ever was and that is why we got rid of that provision. It is time that we got rid of the muddled thinking about the affordability of housing that we took seriously the New Zealand dream to own one’s own home and that we implemented concrete policies to bring that about. That is what we are doing. 
Progress reported. 
Report adopted. 
The House adjourned at 5.55 p.m.