Volume 609 Week 28 - Thursday 26 June 2003 
Volume 609 Week 28 - Thursday 26 June 2003 
[Volume:609;Page:6625] 
Thursday 26 June 2003 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Visitors 
Speaker of Legislative Assembly Queensland 
Mr SPEAKER 
: I have much pleasure in informing members that the Hon Ray Hollis Speaker of the Legislative Assembly of Queensland Australia accompanied by the Deputy Speaker is within the precincts of this Chamber. I am sure that members would wish that he be welcomed. 
The Hon Ray Hollis accompanied by the Deputy Speaker entered the Chamber and took a seat on the left of the Chair. 
Business Statement 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Next week in the House the first item of Government business will probably be the completion of the first reading of the Care of Children Bill. Urgency will then be taken. The likely business to be included in the motion is the remaining stages of the Fair Trading Amendment Bill (No 3) the Consumer Protection (Definition of Goods and Services) Bill the Hazardous Substances and New Organisms (Stockholm Convention) Amendment Bill the Imports and Exports (Restrictions) Amendment Bill the Biosecurity Amendment Bill the Crimes Amendment Bill (No 6) the Health Practitioners Competence Assurance Bill and the second reading of the Retirement Villages Bill. It is possible that the Wool Industry Restructuring Bill will also be included. The House will rise by 6 p.m. on Friday. 
GERRY BROWNLEE (NZ National—Ilam) 
: 
 Could the Leader of the House give us some indication of when the Responsible Gambling Bill might come into the House? He may remember that I asked this question during the last parliamentary sitting. A number of organisations around the country have applications pending. My understanding is that those applications are not being processed currently at the rate they should be because of the industry expecting changes to come. Although some of us do not approve of those it would be interesting to know when the House might get around to dealing with this particular issue. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I think the intention will be to try to pass that in the next mini-session of Parliament. 
Hon KEN SHIRLEY (Deputy Leader—ACT NZ) 
: 
 Could I seek clarification from the Leader of the House about whether it is possible that the foreshore and seabed legislation will be taken under urgency next week? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I have a feeling the process of consultation will take a little longer than that. 
Questions to Ministers 
Foreshore and Seabed—Crown Ownership 
1. Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: Did she say “Ownership of the foreshore and seabed has long been considered to lie with the Crown”; if so does that remain her position today? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: Yes and yes. 
Rt Hon Winston Peters 
: If that is the case what do the Prime Minister and her erstwhile deputy intend to discuss with the Maori members of the Labour Party caucus? 
Hon Dr MICHAEL CULLEN 
: What we intend to discuss with them and with others outside this Parliament is how to reconcile the traditional rights of all New Zealanders to access to the foreshore and seabed with the customary rights of Maori. 
Hon Bill English 
: Does the Prime Minister agree that legislation that confirms that the Crown owns the seabed and the foreshore will have the effect of extinguishing customary title—exactly the customary title that Maori members believe is the source of their customary rights? 
Hon Dr MICHAEL CULLEN 
: No. 
Hon Ken Shirley 
: Can the Prime Minister explain to the House why her Government is continuing to negotiate the transfer of ownership of the shore and bed of 14 Rotorua lakes when the public access issues there are a direct parallel to the foreshore and seabed issues? 
Hon Dr MICHAEL CULLEN 
: That is a specific historical claim and is very similar to the agreement arrived at by the previous Government in respect of Lake Taupo. 
Metiria Turei 
: Given the serious concerns raised by Maori over the foreshore issue and given the statement of opposition made by Labour’s own Maori caucus will the Prime Minister now commit to ensuring that the Government will now act honourably engage with Maori in a good-faith dialogue and as a sincere gesture of reconciliation withdraw its threat to use a legislative hammer against Maori customary title? 
Hon Dr MICHAEL CULLEN 
: The Government has acted honourably throughout and will enter into discussions with a range of people including the Maori caucus which is the only fully mandated body in New Zealand with full electoral representation. That will be designed to achieve an outcome whereby the traditional rights of all New Zealanders including Maori are reconciled with Maori customary rights. 
Hon Peter Dunne 
: Does the Prime Minister agree with the assertion of her colleague the Associate Minister of Maori Affairs that the outcome to be sought here ought to be one where mum dad and the kids can continue to go to the beach to have a barbecue in the way that they do today and if she does agree with that assertion will she give the House an assurance that any legislative changes will enshrine that right? 
Hon Dr MICHAEL CULLEN 
: Yes though I doubt whether that exact wording is likely to be used in the statute. 
Rt Hon Winston Peters 
: If the right lies with the Crown and therefore the Maori right is extinguished by that statement what is there to reconcile other than that her Maori members will play lapdog on this issue? 
Hon Dr MICHAEL CULLEN 
: As that member is Mr Bolger’s ex-poodle I can assure him that none of the Maori members— 
Mr SPEAKER 
: No the member will— 
Hon Dr MICHAEL CULLEN 
: I withdraw and apologise. If there was any suggestion— 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. He should withdraw and apologise. 
Mr SPEAKER 
: He said precisely that. 
Rt Hon Winston Peters 
: No he did not. He should withdraw and apologise. 
Mr SPEAKER 
: He did. 
Rt Hon Winston Peters 
: No he did not. 
Mr SPEAKER 
: I heard him. Please be seated. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: The member had better not challenge my word in any way. I heard him. 
Rt Hon Winston Peters 
: You might have heard him but I did not nor did anybody down here and they have just told me so. 
Mr SPEAKER 
: Please be seated. I heard the member withdraw and apologise. 
Hon Dr MICHAEL CULLEN 
: If any of my Maori colleagues are to be seen as lapdogs can I say they certainly have some bite! Might I say that the Government’s position remains what it is—that Maori customary rights are not to be extinguished. They are to be recognised and to be reconciled with the traditional rights of New Zealanders which previously have been expressed in terms of the assumption of a Crown title. 
Hon Ken Shirley 
: How can the Prime Minister claim that it is a win-win situation when for generations New Zealanders in this country have had free access to our coastline foreshore and seabed and there is now a proposal to have special privileged restricted use by one class of New Zealanders based on the arrival date of their forebears? 
Hon Dr MICHAEL CULLEN 
: The member is not aware that general freehold title can co-exist with other rights over land. I suspect he has never had even an easement over his own property. 
Rt Hon Winston Peters 
: Does the answer we have been given in this House today mean that there will be a different law for Maori as opposed to the rest of New Zealand on the issue of the foreshore and seabed—yes or no? 
Hon Dr MICHAEL CULLEN 
: My understanding is that Maori customary rights could pertain only to Maori. However I will seek any reports that might be available from the member that would suggest otherwise. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. I do not think we have to put up with smart alec answers like that. The reality is the riparian right is not restricted to Maori and many people know that—though he does not. I am asking whether there will be a different law and I do not need a smart alec answer of that type. He has not found a new way to answer the question. And he got it wrong in the law as well. 
Mr SPEAKER 
: The Minister addressed the question. 
Hon Bill English 
: As the Minister has referred in each answer to Maori customary rights in respect of the seabed and the foreshore can he tell us what those customary rights are? 
Hon Dr MICHAEL CULLEN 
: Obviously not. The purpose of any law—[ 
Interruption 
] Well what the Court of Appeal ruled if the member cares to think about it is that Maori could apply to have those customary rights recognised through the Maori Land Court. It is up to individual iwi and hapu to make a claim as to what those rights are in their case. It was a silly question. 
Mr SPEAKER 
: No. The last comment is to be withdrawn. 
Hon Dr MICHAEL CULLEN 
: I withdraw. I shall simply think that. 
Mr SPEAKER 
: No no no. Now the member will withdraw and apologise. 
Hon Dr MICHAEL CULLEN 
: I withdraw and apologise. 
Rt Hon Winston Peters 
: Does the Prime Minister’s answer mean that this Government thinks that the Court of Appeal got the decision wrong; if that is not the case what does it intend to legislate when the issue is related to title? 
Hon Dr MICHAEL CULLEN 
: What the Government intends to legislate is about how we reconcile the traditional rights of all New Zealanders—expressed very well by Mr Peter Dunne—with the fact of Maori customary rights. I am fascinated that parties opposite are arguing that property right should be extinguished by legislation—particularly the party which most stands by property rights. 
Hon Ken Shirley 
: I seek leave to table a website posting of the Prime Minister’s dated 22 June 2003 stating that ownership of the foreshore and seabed has long been considered to lie with the Crown. 
Document by leave laid on the Table of the House. 
Rt Hon Winston Peters 
: I seek leave to table an article dated 24 June in which the Attorney-General says that the Crown is going to clarify that in fact the seabed and foreshore are owned by all New Zealanders in the form of the Crown. 
Document by leave laid on the Table of the House. 
Budget 2003—Growth Targets 
2.  
GORDON COPELAND (United Future) 
 to the  
Minister of Finance 
: Is he confident that the growth targets projected in this year’s Budget can be met; if so why? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Strictly speaking the Budget sets growth forecasts rather than growth targets. At present I see no reason to believe that they will not be met. 
Gordon Copeland 
: Is the Minister concerned that significant effects on the economy such as job losses and reduced consumer demand will result from the downturn in the export education industry which is currently our fourth-biggest foreign exchange earner at $1.8 billion per annum given that the number of student visa applications from China Taiwan and Hong Kong in March were down 30 percent on last year; if so what solution does he propose? 
Hon Dr MICHAEL CULLEN 
: Yes. That has already been the subject of some discussion at Cabinet committee level. The Minister of Education has reported that significant efforts are being put in to widen the catchment areas for overseas education away from an over-dependence on the North Asian markets. 
Mark Peck 
: What is the growth forecast track in the Budget and how much confidence does the Minister have in it? 
Hon Dr MICHAEL CULLEN 
: The Budget forecast growth of 2.2 percent in the 2003-04 year followed by in effect 3.2 3.1 and 2.8 percent. The risks which were on the downside at the time of the drawing up of those forecasts have significantly reduced particularly around severe acute respiratory syndrome the electricity situation and the performance of the United States economy. 
Hon David Carter 
: Why should New Zealanders have any faith in his Government achieving even Budget forecasts particularly given Business and Economic Research Ltd’s release yesterday which said: “Economic mismanagement has choked out a perfectly sound period of growth and we are in for 2 to 3 years of a stalled economy.”? 
Hon Dr MICHAEL CULLEN 
: A slow-down to 2.2 percent growth will by international standards still be a very high level. Most of Europe is forecast to have growth of about 1 percent or less over the coming year. Of course part of that criticism was based on a view that the Reserve Bank Governor was operating monetary policy too tightly. It is clear that the present Governor loosened monetary policy earlier than his predecessor would have done. 
Gordon Copeland 
: Even if foreign students can be sourced from countries outside Asia and assuming that terrorist threats to travellers and a high dollar prove to be temporary dampeners on the export education industry does he agree that negative reports in the international media on our attitude to foreigners arising from New Zealand First’s xenophobic policy line pose a more enduring problem for the economy? 
Hon Dr MICHAEL CULLEN 
: I think there is little doubt that adverse reports of that sort do badly affect that industry. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I want to say that on reflection that question had an unnecessary comment in it. I would like the member now to ask it without that reference to New Zealand First in it so that I can hear it fully. Please re-ask the question. The Minister is not responsible for New Zealand First policy. 
Gordon Copeland 
: Even if foreign students can be sourced from countries outside Asia and assuming that terrorist threats to travellers and a high dollar prove to be temporary dampeners on the export education industry does he agree that negative reports in the international media on our attitude to foreigners pose a more enduring problem for the economy? 
Hon Dr MICHAEL CULLEN 
: Yes. That kind of negative reporting about our attitude to foreigners does not affect just the export education industry; I think it affects our general trade and investment relationships. 
Gordon Copeland 
: As State schools also rely on the income provided by foreign fee-paying students to finance capital works and extra staff has he made provision for additional pressure on the education budget as a result of the downturn in the export education industry? 
Hon Dr MICHAEL CULLEN 
: No not at this point because it is expected that the impact on the secondary system is not likely to be great in the short term as there will be students continuing on from previous years. But clearly we do keep monitoring the situation. It is one of significant concern to the Government. 
Foreshore and Seabed—Crown Ownership 
3.  
Hon BILL ENGLISH (Leader of the Opposition) 
 to the  
Prime Minister 
: Is it her Government’s policy that ownership of the seabed and foreshore lies with the Crown and does this mean that Maori will never gain ownership of the seabed and foreshore? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: It is the Government’s policy that we will act to uphold rights of public access to and use of the foreshore and seabed for all New Zealanders while at the same time protecting Maori customary rights. 
Hon Bill English 
: As the Prime Minister would not answer that question will she answer this one: is the Government’s proposed legislation intended to prevent Maori proving customary title to the seabed and foreshore? 
Hon Dr MICHAEL CULLEN 
: We are at a very early stage of discussions but what I can say is that there is no intention to use legislation to prevent Maori from establishing customary rights. 
Stephen Franks 
: Will the Prime Minister guarantee that the customary rights deal that the Government is seeking will not mean that a Pakeha might be stopped from throwing a fishing line off a beach while his Maori neighbour carries on? 
Hon Dr MICHAEL CULLEN 
: I think it depends on what his Maori neighbour is carrying on doing. 
Mr SPEAKER 
: On reflection I wonder whether the Minister— 
Hon Dr MICHAEL CULLEN 
: Mr Speaker “carries on” has a specific meaning that I was trying to avoid in that context. 
Mr SPEAKER 
: No no. I wonder whether the Minister could actually address the question. 
Hon Dr MICHAEL CULLEN 
: Customary rights may exist for some groups as they do in many societies. They are established by legal processes that we hope legislation will help to clarify. General rights of access and usage will be ensured by legislation. 
Rt Hon Winston Peters 
: Can I ask the Prime Minister to take some legal advice on this matter and understand that the Court of Appeal has said that a right of Maori ownership and title—and a customary right as well—may well exist now; if that is the case does the Government propose legislation to foreclose on that customary right and title in respect of all of the seabed that Maori are claiming on? 
Hon Dr MICHAEL CULLEN 
: Customary title can only arise out of customary rights. There is no intention to legislate to override customary rights. They are established historical rights and guaranteed by the treaty. 
Hon Bill English 
: Why cannot the Government just state inParliament what it has worked so hard to get New Zealanders to believe in public—that its proposed legislation is intended to prevent Maori from proving customary title to the seabed and the foreshore; and why cannot the Prime Minister say that here and now having dodged the answer five times already today? 
Hon Dr MICHAEL CULLEN 
: There is no intention to legislate to override customary rights. I note the member was unable to state his position at all describing it as “irrelevant in any case”. 
Rt Hon Winston Peters 
: Why are a number of editorial writers in this country firmly of the opinion and writing articles on the abolition of that right by way of law—a position the Prime Minister firmly planted in their minds—yet in this House she has not had the integrity to— 
Mr SPEAKER 
: No. That is an indictment on a member’s integrity and is out of order. The member will rephrase the question. 
Rt Hon Winston Peters 
: Why has she not shown sufficient respect for this institution to stand and give us a plain direct and honest answer of the nature she imparted to editorial writers in this country when the issue first broke? 
Hon Dr MICHAEL CULLEN 
: The Government bears no responsibility for editorial writers in New Zealand. 
Stephen Franks 
: Can I take it from the Prime Minister’s eventual answer to my previous question that she will not rule out in the deal she wants the possibility of areas of beach and seabed where Maori have rights that their Pakeha neighbours cannot share? 
Hon Dr MICHAEL CULLEN 
: If a group of people whoever they are have customary rights those rights pertain to that group. 
Hon Bill English 
: Given the Prime Minister’s refusal six times in this House today to answer a direct question about whether the Government intends to extinguish Maori customary title can we now draw the conclusion that the Government does not intend to legislate to extinguish Maori customary title? 
Hon Dr MICHAEL CULLEN 
: If the member cares to read the Te Ture Whenua Maori Act he will find that the Maori Land Court does not actually have the power to grant customary title. 
Rt Hon Winston Peters 
: Can the Prime Minister give the House for the last time one very clear answer—does the Government intend to introduce legislation to change the current import of the law as reported by the Court of Appeal to the extent that it will remove the customary title rights of Maori to the seabed and foreshore; yes or no? 
Hon Dr MICHAEL CULLEN 
: Members keep asking a question about something that does not exist—customary title. Customary rights exist in New Zealand. The Maori Land Court is unable to grant customary title. One of the issues required to be addressed is how legislation can provide clearly for Maori customary rights while preserving the rights of all New Zealanders for access and usage. 
Government Superannuation Fund—Unfunded Liability 
4.  
ROD DONALD (Co-Leader—Green) 
 to the  
Minister of Finance 
: What is the projected change in the net unfunded liability of the Government Superannuation Fund for the year to 30 June 2003 and how does this compare with the projected net change in the 2002 Budget? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Since the 2002 Budget Economic and Fiscal Update the unfunded past-service liability for the Government Superannuation Fund has increased by $2.4 billion. 
Rod Donald 
: How much did overseas investment losses contribute to the deterioration of the unfunded past-service liability of the Government Superannuation Fund in each of the last 2 years and how do these results compare with the performance expectations of the fund—that there is a no more than 1-year-in-6 chance of an unexpected deterioration of more than $200 million in any one year? 
Hon Dr MICHAEL CULLEN 
: Unfortunately I do not have those exact numbers but I can tell the member that the bulk of that $2.4 billion change is due to interest rate changes and the application of a discount rate that has reduced over the last year. Those tend to be cyclical changes which reverse out over time. The international markets have been bear markets for the last 3 years and as I heard somebody comment at the weekend if we all invested just in property—as a certain party does—we would not necessarily do any better over the long term. 
Hon David Carter 
: With the Government Superannuation Fund having made significant losses during the last 2 years how confident is the Minister that the New Zealand Superannuation Fund will achieve a greater than 9 percent annual return as he has consistently predicted? 
Hon Dr MICHAEL CULLEN 
: Those are not my predictions; those are Treasury’s numbers applied to—[ 
Interruption 
] It is not a matter of washing one’s hands. In my experience no Government in recent times has been responsible for the numbers. The basic numbers apply to the Government; Treasury produces the numbers. The board of guardians of the New Zealand Superannuation Fund—[ 
Interruption 
]I am interested to learn that that is what the National Party did. I shall go back and look with interest at some of their Budget exercises now. 
Rod Donald 
: Can the Minister confirm that the Government Superannuation Fund will now need to earn 9.6 percent after tax for the next 8½ years to meet its own investment target of 6.5 percent over its first 10 years; and is he concerned that the New Zealand Superannuation Fund will fail to meet its expected performance targets too given that the deputy chair of the Government Superannuation Fund is the chair of the New Zealand Superannuation Fund and that both funds use Frank Russell Co. as advisers? 
Hon Dr MICHAEL CULLEN 
: There are a number of questions there. The principal advisers to the board of guardians are not the firm of Frank Russell Co. It uses different advisers and has only subsidiary advisers in Frank Russell Co. The member should wait for the asset allocation before rushing to comment on it. The board has not made up its mind yet on that. This fund is not to be drawn down for 20 years so performance over the next few years is largely irrelevant—taking the longer-term view. I remind the member again as I remind members opposite that over the last 80 or 90 years on average equities have outperformed Government bonds etc. and any fund that takes a long-term view will be balanced between the two. 
Hon David Carter 
: With the Government Superannuation Fund having made significant losses during the last 2 years how confident is the Minister that the New Zealand Superannuation Fund will achieve a greater than 9 percent annual return—as Treasury had predicted and on which figure he then sold this package to New Zealand? 
Hon Dr MICHAEL CULLEN 
: That was not the basis on which the package was sold; the basis was securing the future of New Zealand superannuation. I note that only a couple of parties in this House are clearly prepared to sign up to that package in terms of both funding and payment. 
Rod Donald 
: Does the Minister agree that extending the 6 percent savings incentive currently available to employees earning more than $60000 to those hard-working New Zealanders who earn less than $60000 would be a better way to use taxes than the Superannuation Fund gambling them on the overseas sharemarket; and how much would such a policy cost? 
Hon Dr MICHAEL CULLEN 
: To extend what is proposed in the bill introduced this afternoon and go to that 6 percent differential would cost an additional $54 million a year—I think it is. But the member misses the point. That is about private savings. I trust that the Green Party is not now suggesting that there is a trade-off between private savings and New Zealand superannuation. 
Foreshore and Seabed—Crown Ownership 
5.  
GERRY BROWNLEE (NZ National—Ilam) 
 to the  
Minister of Maori Affairs 
: Will he be advising the Government that ownership or title to the seabed and foreshore should for the best interests of Maori be held by the Crown; if not why not? 
Hon PAREKURA HOROMIA (Minister of Maori Affairs) 
: 
 I will be working with my Government colleagues in the best interests of the country to find a balance between Maori customary rights and the ability of all New Zealanders to access the foreshore and seabed. The goal is to ensure that on the way to nationhood we get a positive result. 
Gerry Brownlee 
: When he and his Government colleagues meet with the Maori Council next week to discuss this issue will he be attending that meeting as a Government Minister representing the Crown and the Crown’s interests or as a Maori member of Parliament representing Maori interests in being able to claim the foreshore and seabed? 
Hon PAREKURA HOROMIA 
: We will firstly meet with more than the Maori Council. I cannot avoid being a Maori and I am also a member of a collective Cabinet. I will be at the meeting as both. 
Mita Ririnui 
: Is he confident that the interests of all New Zealanders will be accommodated in the Government’s process for dealing with this matter? 
Hon PAREKURA HOROMIA 
: Yes I am confident that in working through this process we will reconcile Maori customary rights with all New Zealanders’ ability to access the foreshore and seabed. 
Rt Hon Winston Peters 
: Does the Minister agree with the statement by Moana Jackson a lawyer who gave his view on this matter when he said:“To remove the right to title is actually to deny the customary right. If I can give an example a person who wants to put down a new lawn on their quarter acre section can only exercise their right if they have title to the land. If they don’t have title to the land then they have to get permission from the landlord and that is what Margaret Wilson is obscuring.”; does he agree with that point of view and is that point of view shared by his Maori colleagues? 
Hon PAREKURA HOROMIA 
: Mr Jackson is a well-respected Maori and has a skill that a lot of people in the Opposition do not have. Certainly he is welcome to his opinion and at the moment we are working through our opinion collectively in this Government. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. We have been asking questions on this issue all week. All that we have had is a whole lot of obfuscation and evasion. I have put to the Minister precisely the legal position asking him not what he answered but whether he agrees with that legal position—yes or no. Surely we can have an answer on that score. 
Mr SPEAKER 
: The member asked the question and the Minister said the Government was working through it. That addresses that question. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. I did not ask him for the Government’s view. I was particular about asking the Minister for his view. I do not want to be told that the Government’s answer is adequate in this case. I asked him for his view as the Minister responsible for Maori affairs and I think we deserve an answer. For you to say that the Government is working through it and it is the Government’s view is not what I asked him. I asked him what his view is and I think this House should have an answer. 
Mr SPEAKER 
: The Minister is a member of the Government and he can address the question in that way. 
Rodney Hide 
: Does he agree that legislation is needed to ensure that the ownership of the foreshore and seabed remains with the Crown or is he not prepared to tell the House the answer to that? 
Hon PAREKURA HOROMIA 
: The Government has formulated a group consisting of senior Cabinet Ministers and members of the Maori caucus to discuss that very issue. 
Mita Ririnui 
: How will the Government reassure Maori that their issues will be addressed? 
Hon PAREKURA HOROMIA 
: One of our Government’s greatest strengths has been its willingness to engage with Maori and to enter into dialogue with people from all sectors across the community and this issue is no exception—end of story. 
Gerry Brownlee 
: Does he agree with the statement by the Maori Fisheries Commission chairman Maui Solomon who says: “I think it is a bit contradictory—I think it is confusing actually—to say that you know there is going to be a clarification that ownership rests with the Crown but Maori rights customary rights are going to be preserved.”? 
Hon PAREKURA HOROMIA 
: If Mr Solomon was the chairman of the Maori Fisheries Commission I could understand that question. He is not the chairman of the Maori Fisheries Commission. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. I concede that this is one of those occasions where I have been caught out by that sharp Minister. Mr Edwards has earned his dollar today. I seek leave of the House to ask the question again without the wrong address being given to Maui Solomon. 
Mr SPEAKER 
: I will go halfway with the member. I will ask the Minister to assume that Mr Solomon is not the chairman of the Maori Fisheries Commission. Could he give an answer to the question? 
Hon PAREKURA HOROMIA 
: That is his opinion. One thing with this Government and this Maori caucus is that we respect the opinion of all Maori from Mr Jackson to Mr Solomon. 
Rodney Hide 
: Does he stand by his statement in this House yesterday that he as a Maori has customary rights to the seabed and foreshore not enjoyed by non-Maori; will he tell this House what he believes those rights are or is that something he is prepared to say only on a marae? 
Hon PAREKURA HOROMIA 
: I do not recall saying that. I say that some Maori have married Pakeha and some Pakeha have married Maori so we have to work out where everybody gets a fair share and a fair say in this and cut the marae business out. 
Rodney Hide 
: I raise a point of order Mr Speaker. We have a situation where the Minister cannot remember that he said in the House: “It has been my understanding that Maori have customary rights.” and then went on to speak about himself having those rights. Now he is saying that he cannot answer the question because he cannot remember saying that. Having reminded him of what he said I suggest he be asked to say whether he stands by that and to clarify that. 
Mr SPEAKER 
: No the Minister might have said that at the start of the answer but then he went on to address the question. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. With the greatest of respect to hear a little diatribe on the framework of this country and on the question of keeping away from the marae from the Minister did not address the question he was asked in any way shape or form. He was asked whether he stands by his words of yesterday. He denied his words of yesterday and left the whole thing alone completely. We have no answer as far as that Minister goes. I say to you Mr Speaker that I have spent some time in the last few weeks watching two Parliaments in operation: Australia’s which is on television and the British Parliament. Frankly this Parliament is an abiding disgrace when it comes to question time. You might have a different view but I am giving you mine. Over there the Ministers answer questions which are not questions on notice. These Ministers are given 4 hours’ notice and still they do not answer questions. 
Mr SPEAKER 
: Let me just say that I listen to the Australian Parliament too and very rarely is a supplementary question ever heard at all. The Minister has 3 minutes to answer a question and the questioner has about 40 seconds to ask it. That is an issue that every Government of Australia states it will change when it comes into office and never does. 
Hon Dr Michael Cullen 
: I seek leave that we adopt the Australian practice at question time. 
Mr SPEAKER 
: Leave is sought. Is there any objection? There is. 
Rodney Hide 
: I raise a point of order Mr Speaker. I do want to challenge your ruling because this is outrageous. There are two standards in operation for this Minister. That can in no way— 
Mr SPEAKER 
: Order! 
Rodney Hide 
: I am not sitting down— 
Mr SPEAKER 
: The member sits or he goes. 
Rodney Hide 
: No I want to— 
Mr SPEAKER 
: The member leaves. 
Rodney Hide 
: OK. I will leave. 
Mr SPEAKER 
: The member leaves. 
Rodney Hide 
: There is no point here— 
Mr SPEAKER 
: A member cannot challenge the Speaker’s ruling. The member will please leave. 
Rodney Hide 
: There’s no point in asking questions here. 
Mr SPEAKER 
: I will name the member if he says another word. The member will please leave. 
Rodney Hide 
: There is still no point— 
Question time interrupted. 
Naming and Suspension of Member 
Mr SPEAKER 
: I name the member. The question is  
That Rodney Hide be suspended from the service of the House 
. 
A party vote was called for on the question  
That Rodney Hide be suspended from the service of the House. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 46 
New Zealand National 25; New Zealand First 13; ACT New Zealand 8. 
Question agreed to. 
Rodney Hide withdrew from the Chamber. 
GERRY BROWNLEE (NZ National—Ilam) 
: 
 I raise a point of order Mr Speaker. On behalf of the National Opposition at least I express our disappointment at the activity that has just taken place particularly the quite quick decision to expel Mr Hide from the House. Today we have seen the Minister of Finance the acting Prime Minister stand in this House and be required to withdraw and apologise on three occasions. I think that lends some weight to the argument that the Opposition has a right to be frustrated. Although we can pick up newspapers— 
Mr SPEAKER 
: The member had better make his point tersely as required by the Standing Order. 
GERRY BROWNLEE 
: I am. Although we can pick up newspapers listen to the radio and watch television and see and hear contradictory positions from the Government on the issue relating to the foreshore and seabed we cannot come into this House and get a clear answer. We will not be asking any further questions on this matter today; we will revisit it at another time. But I tend to agree with Mr Hide: it is a bit of a waste of time. 
Mr SPEAKER 
: Let me just say this to the member. I did not suspend the member for any reason other than his disobeying the instruction of the Chair. I did not want to name the member—I do not ever like naming any member in this House. I asked him to be seated and to cease interjecting and he did not. I gave him a second chance; he did not. I gave him a third chance and at that point I did name him. As far as the quality of the answer was concerned or anything like that that was not the issue on this occasion. I said that the Minister had addressed the question and that is it. 
Hon ROGER SOWRY (Deputy Leader—NZ National) 
: 
 I raise a point of order Mr Speaker. I want to ask you to go away and reflect over the weekend on what has happened this week because this member is the second member who has been named. It is always to do with frustration over the same issue which is our not getting an answer. When Opposition members raise points of order you are very quick to stand on your feet midway through the point of order and sit them down—we saw that in the last case and we saw it just before with Mr Brownlee as well. In the last few weeks I cannot remember a time when you have ever asked Government Ministers to sit down when they are raising a point of order—you hear them out. I put it to you that you are in danger of being seen to apply different standards when telling people to sit down before they have made their point of order. You anticipate what is going to be said by the Opposition and I have not yet seen you do that with the Government. 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
: 
 Mr Speaker the reason that you do not do that is that Government members of Parliament do not raise points of order that are simply debating material. Mr Brownlee entered into a long debating speech and he got a long way through it. We on the Government side sometimes think you should intervene earlier. It is the nature of Parliament that those tend to be the views of the Government and of the Opposition. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 This matter arose simply because a member who quoted an answer given yesterday in the House got the answer: “I didn’t say that.” and then you said that the Minister had answered the question. How he could have done that having denied that he had made the quote in the first place is beyond me. From my point of view my party is looking very hard at the question of whether we should elect a new Speaker and get some straight-out neutrality in this House. 
Mr SPEAKER 
: I expelled Mr Hide because he started out by saying: “I do want to challenge your ruling …”. That is automatically out of order in this House. I try to be fair to everyone. When I count up the number of points of order that are raised—and I am happy to do that over the weekend—and announce the result to members they will find that the vast majority of points of order are raised by Opposition members. That is to be expected but most of them are political points; they are not points of order. 
Hon ROGER SOWRY (Deputy Leader—NZ National) 
: 
 I raise a point of order Mr Speaker. I cannot let that go in the sense that an Opposition member raising a point of order is our only avenue to try to get a Minister to give an answer. You yourself know that I have spoken to you outside this Chamber on the fact that the Opposition to get a Minister to address a question has to raise a point of order to get you to ask the Minister to address the question. I have appealed to you several times to intervene on Ministers before we raise points of order. For you then to stand up and say that you will count the points of order over the weekend and that will show that the Opposition raises too many is not right. We will not raise points of order if the Chair is proactive during question time in making Ministers answer. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 We are getting back to the stage where the Opposition is starting to threaten you in one way or another. That was an explicit threat from a previous speaker. The issue here is very simple. Members opposite seem to demand the answer they want not the answer they get. Today we had a question where the Minister was not quoted; the question actually went a good deal further than what the Minister had said. Members are complaining that the Minister said he did not say it. Well he did not say it. I listened very carefully both to the  
Hansard 
 quotation and to the question and the two were not the same. Your job is to ensure that a Minister addresses the question not satisfies the desire of members opposite for the answer they want. 
Mr SPEAKER 
: The only comment I would make to Mr Sowry is that twice today before any point of order I intervened and insisted that the Minister answer and he acknowledges that point. I will endeavour to do that in the future. 
STEPHEN FRANKS (ACT NZ) 
: 
 I raise a point of order Mr Speaker. While you are reflecting on this over the weekend I ask that you consider a matter that was raised 2 or 3 weeks ago and that is the possibility that where members are in effect urging you to require that a question be answered and where you judge that the question may have been evaded or that there is reason for Opposition concern you might indicate that another question will be allowed. It would be a help to us. You have indicated the possibility at times but we do not know when you might grant another question. If you were to indicate that another question will be allowed then it would be easier for us to accept that the Chair does not have the capacity to force an answer out of the Minister. 
Mr SPEAKER 
: I ruled on that and in fact I will ask the Clerk to give the member the copy of my rather extensive ruling on that very matter just recently. 
Question time resumed. 
Questions to Ministers 
Accident Compensation—Injury Reduction 
6.  
HELEN DUNCAN (NZ Labour) 
 to the  
Minister for ACC 
: Can she report any progress on the development of effective measures to reduce New Zealand’s injury rates? 
Hon RUTH DYSON (Minister for ACC) 
: 
 I had great pleasure today in launching the  
New Zealand Injury Prevention Strategy 
. The strategy has been developed after extensive public consultation and input from many people involved in injury prevention in our communities. It has two key goals of achieving a positive safety culture in New Zealand and creating safe environments. 
Helen Duncan 
: How will the strategy help to reduce injury rates? 
Hon RUTH DYSON 
: The strategy will enable better collaboration and integration of effort between a wide range of agencies and organisations. It will ensure there are no gaps in injury prevention activity. It will help to strengthen the capability of the injury prevention workforce and will promote better quality and dissemination of injury information. 
Dr Paul Hutchison 
: Why despite her Government saying for the last 3½ years that it would focus on accident prevention do the death rates of motor accidents in New Zealand remain over 50 percent higher than those in Britain and why did moderate to serious injuries rise by 14000 between 1999 and 2002; and why should anyone believe her new measures are any more effective than her past failed rhetoric? 
Hon RUTH DYSON 
: As the member should know—because I am sure he is a member who does read the information provided to his select committee—in fact the number of road fatalities has gone down. However the number of serious injuries—that is people who have been involved in serious incidents and have perhaps permanent or complex injuries—has increased and that is due to a variety of factors. The member should also note that in some of the accounts because of the classification of injuries the fact that the number has gone up is not necessarily a reflection of the fact that the rate of injuries has increased. The significantly increased participation in the paid labour market since the election of the Labour-led Government is a clear example of why that is the case. 
Taxation—Food Tax 
7.  
HEATHER ROY (ACT NZ) 
 to the  
Minister of Health 
: Will she rule out proposing a “differential food tax”; if not why not? 
Hon ANNETTE KING (Minister of Health) 
: 
 Yes. There is not even a “fat” chance that that will happen. 
Heather Roy 
: Why is the public health directorate working on a tax that the Government has no intention of introducing or is that just another example of how under this Minister precious health dollars are being wasted? 
Hon ANNETTE KING 
: A public health discussion document was released in October 2002 to look at new legislation for public health. Submissions were called for in thatdocument. A number of submissions said we ought to impose a “fat tax”. The Ministry of Health is providing advice on those submissions. 
Hon Dr Nick Smith 
: Can the Minister explain the difference in the Government’s approach to proposals by officials of the Ministry of Agriculture and Forestry for a flatulence tax—which have been heartily endorsed by the Ministers concerned—and the proposals by officials for a “fat tax”? 
Hon ANNETTE KING 
: No I cannot explain why there is a difference other than to say that the Ministry of Health and the Minister have no interest in a “fatulence” tax. 
Sue Kedgley 
: As part of her Government’s strategy to reduce the amount of high-fat high-sugar food that children eat will the Government be developing a healthy eating policy for schools that asks them not to sell promote or sponsor the high-fat and high-sugar foods that undermine our national nutritional goals; if not why not? 
Hon ANNETTE KING 
: Yes that work is well under way. The member I know is aware that health-promoting schools in New Zealand have already undertaken a lot of work to ensure that the food that tuck-shops sell and the food brought in children’s lunches is healthy food. That work is also backed up by the Healthy Eating – Healthy Action plan that was released only a few months ago. 
Judy Turner 
: Has the Minister considered funding parent education as a positive strategy for addressing child obesity issues? 
Hon ANNETTE KING 
: A number of parenting classes are funded—particularly by organisations like Plunket. Schools also carry out classes for parents in healthy eating.I do not have specific funding for such a programme but a number of agencies already provide it. 
Hon Dr Nick Smith 
: Why is it now OK to buy sex but not McDonald’s? 
Mr SPEAKER 
: That is not the Minister’s responsibility. 
Hon ANNETTE KING 
: I have never made any claims on that matter at all. 
Heather Roy 
: On what date did she learn that her officials were working on proposals for a differential food tax—as she confirmed in a written parliamentary question—and has she definitely put a stop to it? 
Hon ANNETTE KING 
: The Ministry of Health is not working on a Government proposal for a “fat tax” and the member should be very well aware of that. I have been aware for some time that the ministry has been working on the submissions on the public health discussion document since those submissions were first received. 
Drugs—International Trafficking 
8.  
CLAYTON COSGROVE (NZ Labour—Waimakariri) 
 to the  
Minister of Customs 
: Is the New Zealand Customs Service doing its part to stamp out the international trafficking of illegal drugs across the borders of our major trading partners? 
Hon RICK BARKER (Minister of Customs) 
: 
 Yes New Zealand Customs Service drug investigators recently responded to a call from Australian authorities in the investigation of large-scale cocaine trafficking into Australia possibly using New Zealand as a transit point. The operation resulted in the arrest last week of 20 people in Sydney Denmark and the United States for conspiracy to import cocaine. 
Clayton Cosgrove 
: Is there evidence that New Zealand is being used as a transit point to get drugs into other countries and what additional support is the Government providing in the fight against international drug trafficking? 
Hon RICK BARKER 
: Yes intelligence available to the Customs Service shows that New Zealand continues to be used as a transit point for bulk drug shipments into larger drug markets such as Australia and the United States. This Government has allocated an extra $1.9 million in this year’s Budget to boost a customs drugs team in Auckland Wellington and Christchurch—which means 12 specialist investigators and four intelligence analysts to help combat the worldwide drug problem. 
Hon Peter Dunne 
: Is the Minister concerned that rising instability in the Pacific—as the current situation in the Solomons demonstrates—is hampering efforts to curb international drug trafficking in our area; and if he shares that concern has he made specific proposals to his colleague the Minister of Foreign Affairs and Trade about ways in which New Zealand might act to alleviate that problem; if so what are they? 
Hon RICK BARKER 
: The issues raised by the member are of concern. As yet we have nothing to suggest that the instability in the Pacific has had an impact on the drug trade in New Zealand. However New Zealand and Australia continue to work through customs organisations—for example the Oceania Customs Organisation—to help ensure the quality and integrity of customs organisations throughout the Pacific. 
Prostitution Reform Bill—Policing 
9.  
Hon TONY RYALL (NZ National—Bay of Plenty) 
 to the  
Minister of Police 
: What reports has he received from the New Zealand Police regarding the ramifications of the passing of the Prostitution Reform Bill? 
Hon PHIL GOFF (Minister of Justice) 
 on behalf of the 
 Minister of Police 
: During the course of the debate on the Prostitution Reform Bill the New Zealand Police provided the Minister with four papers on the bill dated between April 2001 and February 2002. Those reports were all provided to the select committee. 
Hon Tony Ryall 
: In the light of the concerns reportedly expressed by a Tauranga prostitute called Sabrina who predicts increased gang involvement and the likelihood of more women working as prostitutes to support hard drug habits what specific parts of the Prostitution Reform Bill will prevent gangs from becoming involved in the vice industry; particularly what will prevent the Mongrel Mob from using a front-man without convictions to set up a brothel? 
Hon PHIL GOFF 
: It is noteworthy that the police report to the select committee made the point that there was already extensive gang involvement in prostitution. I can table the document if the member who shakes his head wants that; I have it in front of me. I shall answer the second part of the member’s question by saying that the amendment to the bill in the name of the member for Mt Roskill sets up a certification process that excludes from operation of places of prostitution anyone with gang offences or with serious criminal convictions. I refer the member to the definition of “operator” which under the amendment not only deals with the front-person but the people who pull the strings behind the scenes. That amendment has been very welcomed by the New Zealand Police. 
Sue Bradford 
: Can the Minister assure the House and the public that there will be no more police raids arrests or prosecutions relating to soliciting or brothel-keeping offences pending the implementation very shortly of the Prostitution Reform Act. 
Hon PHIL GOFF 
: Of course I cannot give that assurance. First I do not direct the police on operational matters and secondly it would be improper to direct the police not to enforce the law as it is until the law changes. 
Larry Baldock 
: What guarantees can the Minister give that the police will be able to keep gangs and criminals out of the brothel business—which the Minister of Justice considered to be unconscionable—given that they have not been able to keep them out of the massage parlour industry; and will he commit additional resources for the police to be able to monitor the new industry or will it be left to local government to take care of? 
Hon PHIL GOFF 
: It will not be left to local government. The only role that local government plays is in terms of the location of any such brothel. The assurance I can give to the member is that the legislation has been drafted quite skilfully to ensure that not only will anybody who controls a brothel as an operator be committing an illegal act but also the people with gang affiliations who stand behind that individual and there are severe penalties for it.The bill has the additional advantage that at the moment police have control only over massage parlours where half of prostitution takes place; they have no control at all for example over escort agencies. Under the new bill they do. 
Peter Brown 
: Specifically does the Minister believe that this Act will create a greater demand for police resources or a lesser demand? 
Hon PHIL GOFF 
: I think it means that we will have a redirection of police resources away from simply dealing with soliciting—which will now be legal under the law—to actual crimes including those crimes committed against prostitutes which are often very severe and the member knows that well. Now when prostitutes are raped or seriously assaulted they will have no fear of coming forward and being charged with other offences that were prostitution-related. That must be a good thing for New Zealand. 
Hon Tony Ryall 
: I seek leave to table a report in which the president of the Police Association labels the Goff amendments as unworkable and very very naive. 
Document by leave laid on the Table of the House. 
Peter Brown 
: I raise a point of order Mr Speaker. I asked a specific question whether there would be a requirement for more police resources or less police resources. The politics in the Minister’s answer did not come anywhere near addressing that question. 
Mr SPEAKER 
: No. I thought the member addressed the question perfectly satisfactorily. In fact he gave a lengthy answer that was probably too long. 
Petrol Tax and Road User Charges—Revenue 
10.  
PETER BROWN (Deputy Leader—NZ First) 
 to the  
Minister of Transport 
: How much has been collected in petrol tax and road user charges since February 2002 and how does this compare with the previous sixteen months to February 2002? 
Hon PAUL SWAIN (Minister of Transport) 
: 
 The figures I will refer to are for 15 months because the figures for June are not yet in. I am advised that since February 2002 approximately $1.4 billion was collected from petrol taxes compared to approximately $1.2 billion in the previous 15 months. I am also advised that since February 2002 approximately $817 million was collected from road-user charges compared to approximately $721 million for the previous 15 months. 
Peter Brown 
: Noting that answer is it the Government’s intention to reduce or remove the 4.7c per litre petrol tax imposed on motorists in February last year when it promised it would be in existence for only 16 months? 
Hon PAUL SWAIN 
: No because we never said any such thing. 
Hon Roger Sowry 
: How does the Minister reconcile Labour’s pledge-card promise of no extra taxes with work that he has going on in his ministry to impose a new petrol tax of up to 10c a litre? 
Hon PAUL SWAIN 
: Easily because we said there would be no rise in income tax for those earning under $60000. 
Dave Hereora 
: What has the increase in funding since February 2002 been used for? 
Hon PAUL SWAIN 
: I am advised that since February 2002 the extra funding has gone to improve the transport infrastructure including an extra $94 million for road construction; $30 million for regional developments such as logging roads and an extra $36 million for passenger transport. 
Jeanette Fitzsimons 
: Which New Zealanders will benefit from the extra funding spent since the moving-forward package? 
Hon PAUL SWAIN 
: All New Zealanders. 
Boating—Safety 
11.  
H V ROSS ROBERTSON (NZ Labour—Manukau East) 
 to the  
Associate Minister of Transport 
: What steps is he taking to enhance boat safety in New Zealand? 
Hon HARRY DUYNHOVEN (Associate Minister of Transport) 
: 
 This month I launched a new maritime rule requiring all recreational boaties to have a suitable life jacket for every person on board. Last year 18 of the 25 deaths that occurred during recreational boating could have been prevented if life jackets were worn. I believe that adherence to this new life jacket rule along with other safety measures will have a significant impact on recreational boating incidents. 
H V Ross Robertson 
: Acknowledging the large number of deaths caused through not wearing life jackets can the Associate Minister tell the House what other steps the Government is taking to reduce deaths in recreational boating? 
Hon HARRY DUYNHOVEN 
: The Government recognises that in themselves the new maritime rules will not guarantee a change in behaviour. However the Maritime Safety Authority continues to work hard to educate the boating community on the importance of life jackets through a television campaign run over the past 6 months. We are now able to add “and it is the law” to that message. 
H V Ross Robertson 
: Is there anything proposed to enhance safety in wakas? 
Hon HARRY DUYNHOVEN 
: The requirement to carry personal flotation devices does not apply if the training or the ceremonial event is supervised and if a support vessel is able to assist in an emergency remains nearby and carries enough personal flotation devices for everyone on board—in this case the waka. In practice the national waka safety guidelines established jointly by iwi and the Maritime Safety Authority in 2001 have meant that the use of support craft and the implementation of safety plans have become routine. 
Prisons—Protesters at Northland Site 
12.  
NANDOR TANCZOS (Green) 
 to the  
Minister of Corrections 
: Does any agreement exist between the Department of Corrections and the protesters who have been occupying the proposed Northland prison site regarding the terms on which the occupation would be permitted to remain? 
Hon PAUL SWAIN (Minister of Corrections) 
: 
 No not since the protesters broke the agreed terms. 
Nandor Tanczos 
: Does the Minister accept that the terms of the agreement were that the occupation must be peaceful must not impede traffic into and out of the site and must not create a public safety hazard; and can he explain how the actions of one individual in burning a disused ute in the middle of a field—actions that have been repudiated by the occupiers—break the terms of that agreement? 
Hon PAUL SWAIN 
: Since the occupation I am advised that protesters have set fire to a car blocked the access way cut fences blocked the main highway and ignored hygiene issues. The protesters were advised that they no longer had permission to be on the site and they were asked to leave. They refused. They were then advised that they were trespassing. Trespass notices were posted but were torn down. The police have now been asked to remove the protesters and they will be removed. 
Georgina Beyer 
: What positive benefits will there be for the community with the establishment of the Northland Regional Corrections Facility? 
Hon PAUL SWAIN 
: There will be many benefits for the local community with the establishment of this facility including the creation of 180 new jobs once the prison opens. It is expected that most of those jobs will be filled by local Northland people. 
Nandor Tanczos 
: Can the Minister confirm that despite attempts by the occupiers to achieve some mediation between the Department of Corrections the police and Te Taumata Kaumatua o Ngapuhi nui tonu the department has refused to take part in such mediation; and will he guarantee that no action will be taken to evict the occupation until the kaumatua have had an opportunity to hui which is expected to be next Wednesday? 
Hon PAUL SWAIN 
: No. Everybody’s patience has run out. 
Injury Prevention Rehabilitation and Compensation Amendment Bill 
Third Reading 
Hon RUTH DYSON (Minister for ACC) 
: 
 I move  
That the Injury Prevention Rehabilitation and Compensation Amendment Bill be now read a third time 
. The bill performs two main functions. Firstly it establishes an accident compensation petrol levy and provides for changes in the levy rate. Currently under the Injury Prevention Rehabilitation and Compensation Act an accident compensation amount is collected alongside the petrol excise duty. That amount is not literally a levy. Consequently it is not possible to change the petrol amount without either making legislative amendments to the Customs and Excise Act or by affecting Crown revenue. This bill amends both the Customs and Excise Act and the Injury Prevention Rehabilitation and Compensation Act to address those two issues. 
The second function of the bill is to reverse the changes to the accident compensation appeal regime that came by way of the District Courts Amendment Act 2002. That amendment Act will repeal section 162 of the Injury Prevention Rehabilitation and Compensation Act which requires that appeals to the High Court be either by leave to appeal being granted by the District Court or by special leave being granted by the High Court. Consequently people would be free to appeal to the High Court regardless of the circumstances. That will potentially impact on the High Court’s workload and it also has cost implications for accident compensation. So the bill preserves the requirement under the existing section 162 of the Act that leave of the District Court is sought prior to an appeal to the High Court. 
The key elements of the amendment bill before the House for its third reading today are as follows: formal establishment of the petrol amount as a petrol levy under the Injury Prevention Rehabilitation and Compensation Act; provision to enable the levy applied to petrol to also be applied to any other category of fuel that may be prescribed by regulations to enable future options for accident compensation levies on other fuels as described in schedule 2 of the Customs and Excise Act; provision to set the initial petrol levy rate at 5.08c per litre for the 2003-04 levy year and regulations to set the rate of the petrol levy; amendment of the Customs and Excise Act so that any future changes to the fuel levy do not require a legislative amendment to schedule 3 of that Act whenever the levy rate changes; provision for regulations to enable a fuel refund system as the levy will be subject to the levy refund provisions set out in the legislation; amendment to section 236 of the Injury Prevention Rehabilitation and Compensation Act so that challenges to levies do not apply because the accident compensation petrol levy will be included in the definition of “duty” in the Customs and Excise Act; and reverses to the changes to the accident compensation appeals regime that came by way of the District Court Amendment Act 2002. 
The need for changes in the way that the Accident Compensation Corporation’s motor vehicle account is funded is due to the cost increases that account faces. Those increases have resulted primarily from improved estimates of long-term rehabilitation costs for seriously injured claimants and underlying cost increases. As the motor vehicle account has the highest proportion of serious injuries of all accident compensation accounts the improved estimates affect the motor vehicle account disproportionately more than the other accident compensation accounts. The Accident Compensation Corporation has an legislative requirement to collect sufficient revenue to fully fund all the costs associated with the motor vehicle account for the 2003-04 levy year so the higher costs associated with that account need to be met by motorists. 
The Government considered the options for the best way to fund the motor vehicle account in December last year following public consultation. Previously increases in the motor vehicle account costs have been absorbed into the annual vehicle licensing fee levy. The Government considered that the cost of vehicle licensing may have reached a point where further increases could lead to adverse social impacts as some people already have difficulty in paying the licence fee. The funding of increased costs through the petrol levy is considered to be a fairer approach. That approach was certainly supported by a large number of New Zealanders during the Accident Compensation Corporation’s consultation on options for funding the motor vehicle account. It should also be noted that the proposed alignments align with the Government’s intention of reducing motor vehicle injuries and that further work is also being undertaken on the long-term funding of the motor vehicle account in the light of the New Zealand Transport Strategy. 
In conclusion I thank the members of the Transport and Industrial Relations Committee the officials of the committee and the officials of both the Department of Labour and the Accident Compensation Corporation for their constructive work on this bill. I support its further progress. 
Dr PAUL HUTCHISON (NZ National—Port Waikato) 
: 
 Thank you for giving me the opportunity of speaking on this so-called Injury Prevention Rehabilitation and Compensation Amendment Bill. I say “so-called” with reason because undoubtedly that is one of the most deceptive titles. One cannot call it a euphemism; it is outright deception because this is a levy a tax on the people of New Zealand. There is nothing to do with injury prevention associated with this bill. 
I call upon the Government to remember what its members said when they were in Opposition and bandied around their credit card. They said: “No more taxes.” yet we have had 15 different taxes since Labour has come into power. There have been 15 and this bill is all about introducing another one. It is very interesting also to recall that a former Prime Minister Mike Moore said several years ago while he was indeed at the forefront of this Labour Party: “A levy is a tax; a tax is a levy.” Undoubtedly this so-called injury prevention bill is nothing more than a tax grab. 
But more important this Government says it is focusing on economic growth to bring New Zealand into the top half of the OECD. This bill absolutely epitomises why the Prime Minister has had to admit that her Government’s policies have no date attached as to when New Zealand might ascend into the top half of the OECD. As I said before this tax is just one in a series of 15 increases in taxes that this Government has introduced after Labour had stated on its credit card that it would not do that. 
This bill’s 5.08c per litre increase comes on top of two other increases—one the year before and one the year before that. On 1 July 2001 the Crown revenue petrol excise tax increased from 17.8c per litre to 18.5c per litre. Then again on 1 March 2002 the road fund petrol tax was hiked from 13.5c to 17.7c a litre. This Government which said it would not increase taxes has introduced an increase for 3 years in a row. This measure is probably only the beginning. Members should remember that this was the Government that said it would focus on accident prevention. 
Let me go back a step. Let us look at how it has rationalised bringing in those taxes for 3 years in a row and this time round. The Government said it was because it had “better methods of calculating the costs of long-term injury claimants”. Well in actual fact just as it has brought in new taxes for 3 years in a row it has said for 3 years in a row that it has better methods of calculating the costs. How long will that go on? How good is the Government getting or how hopeless is it getting? Every year time and time again we hear: “Oh no we’re going to have to revise the costs to the poor old New Zealand motorist. We haven’t quite done our calculations right. We’re going to have to up the taxes a bit.” That is what the Government has done not only once but three times in a row. 
Let us again focus on this Labour Government’s record on accident prevention. It is not very good. Let us look at consequences at what accidents are doing to New Zealanders. Although it is true that the road death toll has come down marginally over the last few years and so it should in actual fact it is still shockingly high. It is in the order of 50 percent higher than that in the UK. But more salutary is the fact that moderate to serious injuries went up significantly between 1999 and 2002 under this Labour Government which says it is focusing on accident prevention. 
Darren Hughes 
: Prove it. 
Dr PAUL HUTCHISON 
: I hear the member from Otaki saying: “Prove it.” Well I tell Mr Hughes that the figures are in front of him in  
Consequences 
 a publication brought out by the Accident Compensation Corporation. Just to let him know I say that under the National watch the figures actually reduced from in the order of 82000 to 79000 over a few years and since then they have increased by 14000 extra moderate-to-serious cases. So yes I can prove that and it is an indictment on this Labour Government that despite its rhetoric of wanting to focus on realistic accident prevention policies it has failed. On the other hand there is no doubt that when it comes to collecting taxes this Government is absolutely rapacious. 
One of the other big questions relating to accident compensation is whether it is an effective efficient model. One of the very impressive records that we saw under the previous National Government when competition was brought in was an immediate effect on early case management and early rehabilitation and the galvanising of the corporation into working incredibly hard to improve workplace safety. It was an extraordinary effort of focus in terms of accident prevention in New Zealand and it was very successful—unlike the ideology of this Labour Government which when it came in carried out the absurdity of removing the competitive model taking competition away. Its old instincts of monopoly shone through and once again we are going to see in the long run a lack of efficiency and efficacy. Because of that in this bill we are seeing—not for the first time in 3 years not for the second time in 3 years but for the third time in 3 years—an increase in petrol excise tax. This Labour Government out of pure ideology has taken the competitive model away. There would have been a great deal of sense—and all the serious commentators say this—in continuing that model for at least 5 to 10 years in order to ensure that the big gains that had already started would continue. Sadly purely because of ideology that model has been taken away. 
I want to comment on two other points which come from the submissions made during the select committee process. Submissions came from the Automobile Association from Business New Zealand and from Federated Farmers. The most powerful I believe came from Business New Zealand when it made a fundamental recommendation. Business New Zealand submitted that setting the motor vehicle levy solely on the type of vehicle and the amount of fuel consumed was a poor substitute for a system that should take account of all risk parameters. It said that the Accident Compensation Corporation and the Government should therefore investigate alternative options for setting premiums for the motor vehicle account that would take into account all aspects of risk including driver vehicle and road characteristics in accordance with commercial actuarial practice. That has been absolutely ignored by this Labour Government with a consequence being the bill before us which grabs more taxes from the unsuspecting motorist of New Zealand. 
LYNNE PILLAY (NZ Labour—Waitakere) 
: 
 This bill establishes a formal Accident Compensation Corporation petrol levy. People get hurt really badly in motor vehicle accidents and that costs this country a lot. The damage lasts longer the vehicles cost more to repair and it costs more to rehabilitate the victims compared with any other class of injury. More serious injuries occur in motor accidents than in any other class of accident. This is a common-sense bill and I commend it to the House. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I was hoping that I could have my call before that member because I know that she is up with the play on this legislation—although she would not have given that impression with that speech. I would like her to tell me how the amount of 5.08c was arrived at. I can take an answer from her. Why the additional 0.08c? The average New Zealander could understand 5c 5.5c or 6c but why is it 5.08c? 
Hon Ruth Dyson 
: We told you at the select committee. 
PETER BROWN 
: The Minister is trying to give the impression that this Government has its finger really on the button. That is far from the truth. We have just had the Minister of Justice answering a question for the Minister of Police. He does not know whether the Prostitution Reform Bill will make a greater demand on the police or a lesser demand. Yet the Minister for ACC knows that this increase is justified down to a fraction of a cent! I have not heard any detailed argument about how that amount was arrived at. 
The way that this bill has been handled and is being pushed through the House gives the strongest argument yet for privatising accident compensation. My view is that the Government should set its sights on getting the standard of coverage correct and on stipulating the entitlements that an accident victim is entitled to receive. It should not necessarily have the responsibility of insuring the motorist. The way that this is being handled is by having a blanket increase right across the board. There is no recognition at all of driving record type of car or whatever except to say that those who drive more and put more petrol in their cars will pay more—never mind whether they have a good safety record and never mind looking at this on a regional basis or a company basis. There is simply a blanket increase in the tax on fuel. We say there was an opportunity here to look at this with a little bit more innovation. 
Our second concern is that the motorist is already paying over the top with 18-plus cents per litre of petrol going into the consolidated account. If we ask any of the members over there why they say it goes there to be used for hospitals or for this or for that. We believe there was a good opportunity here to take 2.7c out of the contribution to the consolidated account and put it into accident compensation. The Government should have said it has slugged the motorists long and hard ever since it has been in Government and now it will use this opportunity to give them back a little bit. It should have said it would do the right thing and take out a portion of the levy that goes into the consolidated account. 
New Zealand First understands the reasoning. We do not accept the way this is being conducted. We do not accept at this point in time that there has to be an increase in the accident compensation levy and we do not accept that the petrol-using motorist should be slugged yet again. For those reasons New Zealand First is opposing this bill. 
PAUL ADAMS (United Future) 
: 
 As I have previously stated to the House United Future accepts that the increased costs faced by the Accident Compensation Corporation do need to be met and we also accept that increasing the petrol levy is the most equitable way of achieving that as opposed to increasing the vehicle registration fees. However we think this increase should be absorbed into the total amount of excise duty taken by the Government rather than it allowing $785 million of the $1.7 billion collected in— 
Dail Jones 
: He’s agreeing with New Zealand First. 
PAUL ADAMS 
: —I am agreeing with New Zealand First—petrol excise duties road-user charges and motor vehicle licensing fees to be siphoned off into the consolidated account. There is no guarantee that this money will be spent on accident compensation and rehabilitation roads or anything else directly transport related. 
In Part 2 clause 6 raises the Accident Compensation Corporation levy to 5.08c per litre but when we consider that 18.5c of the petrol excise duty collected from motorists at the pump already goes straight back into the Government’s coffers we have to wonder why this increase is not taken out of that amount. That is in reality the purpose for which it is collected. Taking the Accident Compensation Corporation increase out of the money that goes to the Government would support this principle and would leave 15.7c to be diverted to the consolidated account. Then at least a greater proportion of the excise duty would be guaranteed for use for transport-related costs. That measure would I believe earn a lot of respect from the motoring public. 
During the select committee process Federated Farmers pointed out that the diversion of 18.5c a litre of fuel excise into the Crown’s account was initially justified on the basis that it was required to fund the medical costs of road accidents. Federated Farmers submitted that the subsequent introduction of the motor vehicle account invalidated this justification to which the Government replied that medical costs were not the only justification for the diversion of the excise. It cited a number of educational enforcement programmes to which the excise contributed but we would have to say that 18.5c for every litre of fuel purchased is right over the top of what could be called reasonable. In the meantime spending on Transfund was actually cut in the Budget at a time when the Government is running Budget surpluses and the New Zealand transport infrastructure is in dire need of investment. United Future cannot condone a further unnecessary increase in the tax burden already borne by New Zealand motorists when there is not enough to show for the money they already pay. 
The purpose of this bill is to bring into effect announced changes in the petrol levy because petrol use takes into account the amount of time the vehicle is being driven. It roughly corresponds to the consequent degree of exposure to risk of injury. The Government announced in December 2002 that for the 2004-05 levy year the petrol amount will be raised by 2.3c per litre to 5.08c per litre. The reason for the increase is that the Accident Compensation Corporation motor vehicle account has recently faced a significant cost increase. It is legally required to collect enough levy to meet those costs. Although the number of fatalities has declined this has had the perverse effect of increasing the medical and rehabilitation costs for those who survive but sustain serious injuries. The other practical option for raising the necessary levy is to increase the annual vehicle-licensing fee. However the Government considers that it has already reached a level whereby any further increase could have adverse social consequences. So in the Government’s view the only practical and equitable solution is to increase the petrol levy. 
United Future does not fault the Government’s reasoning. We accept that the increasing costs faced by the Accident Compensation Corporation need to be met. We also accept that increasing the petrol levy is the most equitable way of achieving this. However this runs counter to United Future’s view of the wider transport policy as expressed on many occasions by my good colleague Larry Baldock. United Future cannot condone a further unnecessary increase in the tax burden already borne by New Zealand motorists. We already pay more than $1.7 billion in petrol excise duties road-user charges and motor vehicle licensing fees but $785 million of this is siphoned straight back into the consolidated account. As I said it is not spent on accident compensation and rehabilitation roads or anything else directly transport related. As I asked previously at a time when the New Zealand economy is said to be under pressure from external factors and from national infrastructure deficits is this really a good time to siphon an extra $75 million out of the regions? That is what this bill does. The poor old New Zealand motorist gets hit again especially those who use our roads more often for their work. Many in my opinion do incredible mileage often with no accidents. The poor old employer with his salesperson on the road gets hit again. United Future will not be supporting this legislation. 
HEATHER ROY (ACT NZ) 
: 
 I rise to speak to this bill on behalf of ACT New Zealand which as I said during the second reading and throughout the earlier debates on the bill does not support it. ACT opposes the bill because it imposes an unnecessary tax on the motorists of New Zealand. If passed—and I presume it will be—it will create the third unnecessary increase in petrol levies since the Labour Government came to power. As we have been reminded at least once in the third reading debate Labour is the party that campaigned on the basis of no new taxes. Since that party came to power as we heard a moment ago the Government has introduced 15 new taxes and that almost became 16 with the proposal of the “fat tax”. Had it not been for the fact that ACT New Zealand raised that matter with the Government we might well have still been in line for that. Thankfully that proposal has now been squashed and the hard-working New Zealander who always foots the bill will not be subject to that tax at least. 
Unfortunately as we progress through the debate on the third reading of this bill it is becoming obvious that yet another petrol levy will be added. This legislation will increase the petrol levy used to fund the Accident Compensation Corporation from 2.3c per litre to 5.08c per litre. That is a massive increase in tax of 120 percent. Labour had hoped that motorists would not notice that; it has been snuck through as quickly as possible. We first heard about this bill in December of last year. The timing was perfect. It was Christmas time when everybody was too busy out doing the Christmas shopping to notice that yet another tax was about to be imposed. Then the bill was introduced to the House—with the proviso that the levy would start on 1 July which had already been predetermined before anything had come before Parliament—on 8 April in the middle of the Iraq conflict. At the time the oil prices were all over the place so our petrol prices of course were doing the same. They were fluctuating wildly and the Government timed the introduction of the bill precisely so that again nobody would notice it. Motorists did not know quite how much tax they were paying on their petrol at that time; it was not obvious from day to day. 
This is also the third petrol tax that we have had since Labour came to power. It comes on top on the Crown revenue petroleum excise tax increase on 1 July 2001 and the National Roads Fund petrol tax hike on 1 March 2002. Like the previous two increases this tax hike is totally unnecessary. We are talking here about injury prevention. Quite why we are I do not know. This tax has nothing to do with injury prevention as the National Party speaker said previously. The rate of serious injury and death over the past decade has steadily fallen by 30 percent and over the same decade the number of registered cars has increased by 30 percent. Taken in total we have had a drop of about 50 percent in the serious injury and death rate. So why exactly are we looking at this measure? It is just another excuse for a tax grab. 
If we look at the Accident Compensation Corporation’s motor vehicle account we can see it has run an underlying net surplus of more than $100 million per year before claim revaluation adjustments and changes in accounting treatments. Government members tell us that that is a way to cover rising health costs for road accident victims. Looking at the corporation’s annual accounts is also very instructive. We can see the corporation’s problems—or proposed problems—are actually due to the revaluation of the future cost of social rehabilitation which over the next 30 years will be $858 million rather than the $696 million that was stated. The accounts show that that is an estimate of future costs based on the assumption that social rehabilitation costs will rise by 20 percent annually. Quite how the corporation came to that figure I do not know but it is staggering. 
The submissions on this bill were interesting too and we should look at them. The bill suggests that it will be fairer to lift the excise duty on fuel rather than tacking the increased cost on to the registration fee. What that ignores is that the vehicles that use the least fuel often expose their driver or the operator to the greatest degree of risk of injury. Let me take for example motorcycles. They use considerably less fuel than cars but a motorcyclist is at a hugely greater risk of injury than a car driver or passenger.With small cars it is exactly the same situation. They use much less petrol—one can go a much greater distance on a small amount of petrol—than large cars yet when they have accidents the passengers and drivers of those vehicles often sustain much greater injuries because there is less protection for them. 
The New Zealand First member talked about privatising accident compensation and raised a very valid point. We should be looking at privatising that account. We saw great advantages when the employers account was opened to competition. [ 
Interruption 
] Why does Mr Benson-Pope not stand and take a call instead of muttering away? 
David Benson-Pope 
: What a good idea. 
HEATHER ROY 
: The member should do so. He should use his own time instead of the Opposition’s time. Privatising the employers account would bring great benefits. The submission from Business New Zealand actually suggested in relation to the fairness of this legislation that the Accident Compensation Corporation and the Government should investigate alternative options for setting premiums for the motor vehicle account that would take into account all aspects of risk including driver vehicle and road characteristics. What a sensible suggestion that was but it would be much too sensible for this Government to look at I presume. However privatisation would not have that problem. The private insurers would look at the fairness of the system. 
For those reasons and there is good support on the Opposition side of the House for those reasons—[ 
Interruption 
] Is Mr Benson-Pope going to take a call or not? 
Hon Member 
: Yes he is. 
HEATHER ROY 
: Good. Perhaps the member could be quiet. 
David Benson-Pope 
: Sit down and I will take a call. 
HEATHER ROY 
: My 10 minutes are not up yet. As I have already said ACT New Zealand opposes this bill which is just yet another tax from Labour which stated there would be no new taxes. How many times has it stated that now? We have had 15 new taxes to date. We see here an anti-motorist nonsensical tax hike that will hit every New Zealand motorist in the back pocket and we cannot condone that practice. For that reason ACT New Zealand opposes this bill. 
DAVID BENSON-POPE (NZ Labour—Dunedin South) 
: 
 I am delighted to have the opportunity to take a call on this matter. I had intended to make some brief comments even before that kind invitation from the preceding speaker. I would like to thank her for giving such a clear enunciation of the ACT party’s policy just as I would like to pay tribute on behalf of the community on the Government side of the House to Dr Hutchison who spoke earlier. He made it very clear that despite the National Party’s very small minority in Opposition and very small presence in this House its opposition tothis bill is not about the size about the levy. 
For both ACT and the National Party this debate is once again about privatising the accident compensation scheme which this Government was re-elected on the platform of renationalising in 1999. Any of the members on the Government side of the House who have electorate offices and who have people coming in with issues that they ask for help with can say that no issue has brought more misery than that associated with the privatisation of accident compensation by the discredited previous Government whose members are now in Opposition. That is why those people are so few in number and while they espouse policies of that kind they will continue to be few in number. 
MIKE WARD (Green) 
: 
 Whenever members oppose a tax or a levy that is as specific as this one the message I take from it is that they are opposed either to the thing that the levy will fund or to paying for their share of it. So let us look at the implications of the Opposition’s stance on this bill. The bill formalises the collection of a levy on petrol to meet the costs arising from New Zealanders being injured in road crashes. Are the bill’s opponents saying that they are quite comfortable with the notion of leaving people in their communities who are suffering from the consequences of a traffic accident—and perhaps an accident that occurred through no fault of their own—through which they may have been brain damaged paralysed or otherwise injured to such an extent that they can no longer care for their families? 
Even with accident compensation life after an accident is difficult. Without accident compensation the difficulties become tragic. The consequences are not about tax or accident compensation; they are about poverty with all its implications—the rent or the mortgage that does not get paid the children whose school fees cannot be paid and the children who are not fed as well as they might be. Are the opponents of the bill saying that they support the accident compensation concept but that funding for it should come out of a different bundle of money—that somebody else should pay? Coming from an Opposition that stoutly defends user-pays in other areas I find that stance a tad inconsistent. 
The Greens support this bill and are pleased that it includes the provision for levying diesel. Although we understand that the levy on registration is sufficient to cover the levy on diesel vehicles if it were paid on the fuel it would not be the same levy for a diesel-powered museum piece that gets driven slowly and rarely on rallies as for a diesel-powered workhorse or a “bull bar shopping basket.” We will be happier when the accident compensation component is levied on all fuels—when registration is made more affordable and a few cents per litre are added to fuels as an disincentive to those who might otherwise use their cars frivolously. 
Much has been said about injury prevention. Prevention is not a major component of this bill but if we are serious about prevention then we should look at the volume of traffic on our roads—the number of people who climb into their cars needlessly and the number of people who choose to live many many miles from where they work play and send their children to school. We should reduce the volume of cars on the road; it is a major component in traffic accidents. 
The Greens support this bill. Its intentions are good and it has our full support. 
RUSSELL FAIRBROTHER (NZ Labour—Napier) 
: 
 It is my pleasure to rise in support of this bill. Accident compensation is an outstandingly good scheme and this bill endeavours to finely balance the contribution to the scheme from those who cause the greatest cost. For that reason and that reason alone among the many others that I could identify I do support this bill. 
JOHN CARTER (NZ National—Northland) 
: 
 I am delighted to take a call on the third reading of this bill. There are a number of points that the House—and indeed the many taxpayers who will be listening intently to this debate today—need to know about this legislation. The first point is that it is named the Injury Prevention Rehabilitation and Compensation Amendment Bill but it is a tax bill. Other than one reference in the commentary there is actually no reference in the bill at all—not one jot—to injury prevention. It is silent with regard to rehabilitation and it certainly does not talk about compensation. What it does talk about is a levy—this Government is imposing another levy. 
There would be people in this House particularly from the Government who would say it is not a tax; it is only a levy. The fact is that when the Minister of Finance was in Opposition and accused the then National Government of trying to skirt round taxes by calling them levies he made it very clear indeed that levies are taxes. That is on the record.What we are dealing with right now is a tax and there can be no one in New Zealand who is uncertain about the fact that this Government is imposing yet another tax. I remind the House again that this is the Government that said on its 1999 election pledge card: “No more taxes.” 
Shortly there will be a list—indeed I believe it has already been published but it is worth publishing again—of the number of levies that have been put on by this Government in the 4 years it has been in power. I think there have been 15 so far and this is another one—from a Government that said there would be none. This tax is an addition to that. We now know that a number of others are in the pipeline such as a 10 percent regional tax a “fat” tax and all those sorts of things. In relation to this bill nobody can claim that it is anything other than a tax. 
The only other thing this bill does is refer to the way a person can appeal to the High Court on a question of law. Other than referring to it I do not intend to go through the detail of what that means because it is actually quite technical—other than to make the point that late on a Thursday afternoon towards the end of the week and after the House has had quite a busy week here we are again dealing with something that is quite complex quite important and very technical. The Government serves it up on a Thursday afternoon in the hope that no one will notice because we are patching up a mistake that Helen Clark’s minority Government has made. 
When issues like this are being addressed the people of New Zealand need to know that the Government tries its best to manoeuvre the legislative programme of this House so it can avoid scrutiny. It ain’t going to happen! This Opposition and the combined opposition here will not let those sorts of things slide by without bringing them to the attention of the country. The country deserves to know. When Governments make mistakes—and Helen Clark’s minority Government has made mistakes on this issue—they must be held to account and those mistakes brought to the attention of the country. Hear this New Zealand! This Government has made a mistake and today it is trying to correct it. It will not be the first mistake and it will not be the last. It is being addressed now and the people of this country need to know. 
Let me just get back to this whole issue of the levy. The problem with these sorts of things is that constitutents and taxpayers get confused because of the language we use in this Parliament. We should be far more forthright with the language we use when we draft legislation. The public has a right to know that when the Government is going to impose a tax a tax is what it is called. Members of the public deserve to know that when they pull into the gas station in a week or two a tank of gas in an average car will cost about $1 more. That may not be much but to the average family with young children looking at the increased cost of food bills medical costs etc. etc. $1 is a $1 and it is pretty important to them. It is not just a oncer—those tanks often need filling 3 4 or 5 times a week. We are talking about a tax that is likely to cost the average family—mum dad and a couple of kids maybe three—as much as $5 a week extra out of their pockets having already paid tax. Five dollars a week is a lot of money for a lot of families. Even if it is $3 a week it is a lot of money. 
This Government should have come cleaner and made it known to the public of this country that it is looking to impose an extra tax particularly on middle New Zealanders—on mums and dads with children they are trying to educate. Those who do the shopping will know that the price of food today is significantly more than it was just 12 months ago and another cost that families have to meet. If we add things like school fees the cost of getting one’s children educated—and most people want to achieve that for their children—the doctors’ fees that have gone up quite significantly for a whole number of families and the food bill of maybe $4 or $5—sometimes $10 or even $20 extra a week depending on the size of the family—we are now talking about $30 or $40 extra a week on average and now this Government wants to slam them with another $3 $4 or $5 a week. It is not good enough from a Government that absolutely promised that when it came to power there would be no more taxes. 
The people of New Zealand should beware. This is not the first time and it certainly will not be the last that we see this Government break its promises. This bill is another in which Helen Clark her Ministers her caucus and those who support them are out there breaking promises and members of the public will hold them to account in the coming election. They expect politicians to stand by their word. This is another example of where Helen Clark is letting this country down. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I intend to make just a very short contribution as I cannot let the words of that previous speaker go unchallenged. This Government enjoyed record success in the last election and enjoys record success in opinion polls of well over 50 percent because we do keep our promises. The people of New Zealand saw that in the last election. They have seen it as a hallmark of the Clark-led Government that it keeps its word to the people. In 1999 we promised—and we repeated that promise in last year’s election—that there would be no rise in income tax and there has not been. We have kept our promise. 
GERRY BROWNLEE (NZ National—Ilam) 
: 
 No new tax! No rise in income tax! Just levies on nearly everything that has anything to do with a Government service in this country—levies imposed by Helen Clark and her Ministers on electricity on petrol on roading on alcohol on tobacco and on various food products. In respect of the latter today we heard of the possibility of McDonald’s and other fast foods being additionally taxed. The Minister who stands up and says that the Government keeps its promises must know that by 2005 this Government will be one of those Governments that the people will wish to heck had never kept its promises. 
I want to tell members what this bill is about. It deals with the motor vehicle levy that used to be applied to the registration of motor vehicles each year. It is the accident compensation levy and it pays for the cost of motor accidents. One of the things about the old system was that if the accident compensation account had a good year vehicle registration went down and if it had a not-so-good year the registration went back up again. This Government has pegged the registration fee at the higher levels. The cost to register the family car I believe is now $212. This additional tax will be built into the cost of petrol and it will never come off. The registration fees will never go down and this levy will never come off. That means that New Zealanders are now paying far more for the cost of accident compensation cover on their motor vehicles. 
The worst of it is that we all get levied at the same rate. It does not matter whether people are 70-year-old pensioners who drive to where they do a few hours’ work every week or to the supermarket to church or to the bowling or golf club and who drive perfectly safely never causing any sort of an accident. Those people will pay the same amount as the boy racer who screams up and down Queen Street squeals his wheels around corners rams into people and in certain sad circumstances causes very severe injury. Under this system no distinction is made at all between a safe driver and a poor driver. That is because this Government has an ideological belief that we need a one-size-fits-all approach to everything. We have an accident compensation system that does not measure people’s worthiness as far as their accident records are concerned; it simply says that the worst person in the pool sets the fee. The unsafest driver will now set the fee that every one of us will have to pay for our motor vehicle registration. That is this Government’s promise of no new taxes. 
One of the things I observed when walking around supermarkets recently—and I do that frequently in my electorate— 
Hon Chris Carter 
: Ha ha! 
GERRY BROWNLEE 
: The member over there laughs. It is quite true I do. Looking at what is going through the supermarket tills is a very good indicator of how people are feeling. But the most telling thing is looking around supermarket shelves now and so often seeing something that someone picked up in aisle B being dumped somewhere in aisle C. That is because people are watching the pennies and have either found a cheaper product or decided that they simply cannot afford to take it. That is happening far more now than I have ever seen before. That tells me that New Zealanders—average hard-working New Zealanders—are starting to feel the pinch. They are starting to understand what it means for New Zealand to have $200 a week wealth per capita less than Australia—man woman and child. They are starting to understand what relative poverty is. They are starting to understand that under this Government all that is ever going to happen is that another levy or charge will be put on them—and all in the name of keeping a promise not to increase taxes. It is an absolute disgrace. 
I was thinking today about the extraordinary situation of a State-owned enterprise Meridian Energy investing some $1.2 billion initially and then a second tranche of $1.2 billion—so $2.4 billion of taxpayers’ money over a period of time—in Australia in order to make it a higher performing business. What is the advantage to any New Zealander in that? If that State-owned enterprise was doing so well if its balance sheet was in such a strong position might it not have repatriated some capital to the shareholder? It might have paid a huge dividend back to the Government so that the Government did not have to tax the living daylights out of poor hard-workers up and down the country so that we did not have to have this extra 4c on our petrol this time. Do members remember the other 4c in the dollar tax? The Deputy Speaker in the Chair would because it apparently all went to Auckland. I am from the South Island. Transit does not have a single roading project for the South Island on its books for the next 10 years and every time we go to the pump we are paying an extra 4c for Auckland roads. Now we are to pay another 4c or 5c for the accident compensation levy on every litre of petrol and it is never ever going to come off. 
As I said before people are starting to wake up. They are starting to realise that when Helen Clark promises no new income tax she is certainly not promising to keep her hands out of the pockets of hard workers because this Government has just gone fishing like one would not believe. We had the electricity crisis this year. That multi-billion investor in Australia—the company that could have returned a huge dividend to the taxpayer; a repatriation of capital but chose rather to put it all into Australia—was part of the electricity crisis here. Rather than saying let us get some more investment in New Zealand the Government’s only answer is to tax a bit more. Its only answer is to put a levy on to every consumer. Every time that consumer flicks on the lights he or she will be providing a few more dollars—cents in the case of a light but over a month it would be dollars—for a company owned by taxpayers to invest in Australia. I think that points to a Government that is out of steam and ideas. It has no idea at all of how to make life a bit easier for the average New Zealander. 
I note that today is Thursday. It is a payday for many hard-working people around the countryside. I wonder how many of them are just hanging out to get their hands on their pay in the hope that the Eftpos overdraft will survive through to midnight tonight. More and more people are being put in that position because this Government does not care about wealth creation. It does not see that a nation being prosperous is about individual citizens living well. Instead whenever it has to deal with an issue it simply comes up with another levy that is another tax. 
Is it not extraordinary that while the foreshore and the seabed are being discussed at the moment the Government performs the amazingly duplicitous act of saying on Monday that it would legislate away that right and then by Thursday saying that it is entering into negotiation? The Associate Minister of Justice is talking about compensation. Where will that compensation come from? It will come from the pockets of hard-working New Zealanders—the same sad group that will soon wake up to the Labour Government and realise that they have to abandon it if there is to be any hope of improving their lives. 
A party vote was called for on the question  
That the Injury Prevention Rehabilitation and Compensation Amendment Bill be now read a third time. 
Ayes 61 
Labour 52; Green Party 9. 
Noes 50 
New Zealand National 22; New Zealand First 13; ACT New Zealand 7; United Future 8. 
Bill read a third time. 
Taxation (Annual Rates GST Trans-tasman Imputation and Miscellaneous provisions) bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I look forward in this debate to actually speaking to the bill—unlike the position in the last debate—because there is a great deal of meat within the bill. I move  
That the Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill be now read a first time. 
 I shall be recommending to the House that the bill be referred to the Finance and Expenditure Committee for consideration. 
The major feature of the bill is the introduction of legislation that brings into effect New Zealand’s part in a joint Australia - New Zealand agreement to remove a tax impediment to trans-Tasman investment which we have just learnt from Mr Gerry Brownlee that the National Party opposes. 
Earlier this year Mr Peter Costello and I announced that Australia and New Zealand expected to be introducing legislation to deal with a longstanding tax problem involving trans-Tasman investment often referred to as triangular tax. The problem arises when investors in either country make equity investment in their own country for a company resident in the other country. Under current law both countries that are only tax-paid in their own country can generate imputation credits—what the Australians call franking credits—and only resident companies are allowed to pass on imputation credits to their shareholders. The shareholders in those trans-Tasman companies do not have access to imputation credits for tax that the company pays in the other country so they are effectively taxed twice on the same income. 
The legislative solution is to extend each country’s imputation system to include companies resident in the other country that want to take part and participation on the part of other companies is entirely voluntary. The bill before the House today achieves that for New Zealand making it possible for Australian companies to join New Zealand’s imputation credit rules. Meanwhile similar legislation before the Federal Parliament in Canberra will make Australian franking credits available to New Zealand companies. 
Given its necessary bilateral nature the solution to the triangular tax problem has been a long time coming. Over the years successive New Zealand Governments have tried to move things along so I am very pleased of course that we have finally progressed to the point of introducing legislation in both countries and I am pleased that Mr Costello has agreed to move this issue along in a way that previously had not been the case. New Zealand has always been seeking that movement. This long-sought change will remove an obstacle to trans-Tasman business and it is particularly fitting that it is happening in the year of the 20th anniversary of the signing of the closer economic relations agreement. 
The bill also introduces a better alignment of the GST treatment of the financial services sector with that of other sectors. This is a major change that will be particularly welcomed by the financial services sector. A wide range of transactions will be affected including the provision of loans taking deposits and trading in financial securities. When GST was introduced in New Zealand financial services were exempted because of the difficulty of including them within the rules—a difficulty that is acknowledged internationally. Being exempt from GST however can disadvantage the finance sector because it cannot recover GST on purchases related to the supply of services to other businesses which results in the overtaxation of the sector. The recoverable GST formspart of the cost of production and providers must raise the price of the services or absorb the GST cost. When they pass the cost on to other businesses those businesses face the same choice. 
The bill proposes a solution. Financial services supplied to registered businesses will no longer be exempt from GST but they will be zero-rated for GST purposes. That means that financial services will still not attract GST but providers of those services to other businesses will be able to recover GST on related purchases. Again participation in the new rules will be entirely voluntary. Registered suppliers who do not wish to take part may continue to treat the supply of financial services as exempt from GST. 
Another major change introduced in the bill ensures that GST does not unfairly disadvantage New Zealand interests at a time when we are making increasing use of electronic commerce and importing many more services than we did in the past. The problem is that under current law services purchased from New Zealand companies attract GST but similar services purchased from non-resident companies do not. That is because when GST was introduced our consumption of imported services was low so their exclusion from the tax base was not particularly distortionary. The later deregulation of telecommunications and financial services markets in New Zealand together with rapid developments in communication technology and electronic commerce opened the door to a wide range of services produced in other countries: such things as management computer and advertising services. Thus New Zealand service providers who must charge GST on services supplied in New Zealand face a competitive disadvantage. 
The bill proposes a solution to the problem in the form of a reverse charge in imports and services by GST-registered businesses such as financial institutions that would not be able to claim back the cost of the GST in those solutions. If a business requires services that would be subject to GST had they been supplied in New Zealand the recipients will be required to add GST to the price of the service. This measure will alleviate the current distortion in favour of imported services and align New Zealand’s treatment of imported services with that of most other countries that have a value-added tax or GST system. 
It will also introduce an important revenue protection measure to combat certain aggressive tax arrangements that are often mass marketed. These are arrangements that result in investors receiving more in tax deductions than the money they invest in the arrangement. Investors typically make a cash return regardless of whether the arrangement is a commercial success. A new rule would target arrangements in which investors are not at any real risk of having to repay associated loans raised for the purchase of high-value assets that diminish in value over time and the higher the purchase value the greater the tax deduction. The proposed solution in the bill is to defer tax deductions on loans to meet the criteria set out in the bill. Following initial consultation on the proposed rule its coverage has been tightened to ensure that it does not apply to genuine commercial transactions. 
The bill also introduces legislation enabling employer contribution to superannuation funds on behalf of employees earning less than $38000 a year to be taxed at a lower 21 percent rate. I acknowledge the pressure exerted by the Green Party for this measure over a number of years though that pressure was nothing like as large as the pressure exerted on the Minister and his officials to achieve this outcome. This measure is intended to reduce the over-taxation of retirement savings of low-income people and to remove a disincentive to saving. 
This is an omnibus bill covering a very wide range of activities so I do not have time in a 10-minute speech to cover all the areas available. For a detailed description of these and other measures in the bill I recommend the separate 123-page commentary on the bill as weekend reading. It has been distributed to all members. 
I do need to deal with one other matter. The bill has not had a positive New Zealand Bill ofRights vet because in common with the remainder of the Income Tax Act in certain key areas there are provisions where in effect old-fashioned definitions of a marital relationship apply rather than more modern definitions. That is in dealing with associated parties in certain connectionswe use the old-fashioned definition of marriage which can be regarded as discriminating in favour of de facto couples or same-sex couples. It is difficult to deal with this issue as a one-off in one particular amendment bill and the Government is working on full amending legislation covering the entire range of these issues some of which of course involve discrimination against some in favour of traditional married couples but it is fair to say—ironically given the views of some members in this House—that most of the current provisions of both social security legislation and tax legislation actually discriminate against traditionally married couples and in favour of de facto or same-sex couples—for example in the ability to access two single-level payments under social security as opposed to the combined married-level payments which is lower. 
I recognise this inadequacy. I am sure the select committee will want to address that and comment on it. If it finds that it is able to arrive at a solution within this area—which deals with the issue just within this area—I have no objection to that but I thinkit will find that it is impossible to deal with that within an isolated part of the Income Tax Act. The whole set of relationships needs to be dealt with across the board and work is proceeding as quickly as possible in those respects. 
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) 
: 
 The National Party will be supporting this bill to the select committee because it does have a couple of important and valuable measures in it. In introducing it though the Minister of Finance Dr Michael Cullen has just told us that there is a lot of meat in this legislation. I am interested in knowing how much more tax revenue is in it. I wish the Minister were able to stay around to respond because there are some measures in this bill that we are not happy with at all. 
Let me start right at the beginning. Part 1 sets the annual rates of income tax for 2003-04. This Labour Government has had 4 years in Government and is heading into its fifth and in that time frame has refused to adjust the thresholds for the different tax rates to apply on income tax in this country. As a consequence New Zealanders in the last year faced the second-highest increase in income tax of any country in the developed world. Only in the Czech Republic—according to OECD figures—did workers face higher increases in income tax than is the case in New Zealand. One of the main reasons for that is that this Labour Government has refused to adjust the thresholds. As a consequence Dr Cullen has grabbed millions upon millions of extra tax. The average income of New Zealanders has just moved above that $38000 threshold where the tax rate goes up to 33c in the dollar. 
As a consequence New Zealanders are now finding themselves paying a whole lot more money. When Dr Cullen brought in the top 39c tax rate he said that only 5 percent of New Zealanders would pay that 39c tax rate. Ten percent of New Zealanders are now paying it because of a process called fiscal drag. As salaries go up people move into higher tax brackets and the Government grabs more tax. We see that done unashamedly by this Labour Government. 
Its supporters do not agree with it. I know that Mr Copeland ofUnited Future does not agree with it. He thinks that the Government should adjust the thresholds for inflation. If United Future is prepared to stand up for what it believes in it should put some pressure on the Government to amend this part of this legislation. After 4 years as this legislation applies to the fifth year of this Labour Government it is time it eased the income tax burden on working New Zealanders. 
 It is not good enough to have our working people facing the second-highest tax increase of any country in the OECD after the Czech Republic. It is shameful and United Future which supports this Government on confidence matters should not support this measure without adjustment to those threshold levels because it is simply unfair to working people in New Zealand. So that is my first complaint about this legislation. 
Having said that let me be fair and congratulate the Minister on the first part of Part 2 the trans-Tasman imputation provisions because I know a bit about the history of those. As a former Deputy Minister of Finance and former trade Minister I tried hard to get Australia to agree to making these kinds of changes and I know from that involvement that it was not easy. It was quite challenging and I do congratulate Dr Cullen on achieving this. On the 20th anniversary of closer economic relations it is a good move. This part of the bill National supports wholeheartedly. 
I know that it was not easy to get it in place. In fact Dr Cullen did pick up from where National was in working this through with the Australians. It is not as though Dr Cullen started from scratch. National had done years of work on trying to get this measure in place but I do congratulate Dr Cullen on building on National’s work and bringing it to fruition. It will be very important for New Zealand businesses and help keep a number of companies registered in New Zealand that otherwise might have had to shift their head office to Australia to avoid the problems of trans-Tasman triangular taxation. 
While I am being positive about the Government I want to mention the second thing that we support in this legislation and that is the specified superannuation contribution withholding tax. What is a bit rich about it is that when National sought to introduce legislation like this back in the late 1990s Labour voted against it. We tried to do this when we were in Government but Labour voted against it. 
Hon David Carter 
: In the House and during the Committee stage. 
Dr the Hon LOCKWOOD SMITH 
: Yes. In the House and during the Committee stage Labour voted against it. I suppose this is the “Maharey principle” at work is it? The “Maharey principle” is to vote against something when one is in Opposition but to vote for it when in Government. That shows a Government of integrity does it not? It shows great integrity and great principle! It voted against the same measures when in Opposition but now in Government it will do it. Despite the—I cannot use the word “hypocrisy”—of that— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No. 
Dr the Hon LOCKWOOD SMITH 
: Let me say despite the—I am not sure I can find a word that says a similar thing because it is a bit like that when the Government flip-flops. Let me say that despite the flip-flop by the Government National endorses the move. We are not unprincipled like Labour. Despite the fact that we are in Opposition we will support this measure because it is the right thing to do. Labour should have had the integrity to do the right thing when it was in Opposition. Labour members should have had the you-know-what to do the right thing. They flip-flopped—but that is good because it is good for New Zealanders and that is why National will support that measure in this legislation. 
Let me now move to the measures that are just a little more tricky. This is where we need the select committee to look at some of the measures quite carefully because they are quite complex and we need to make sure there are not fishhooks in them that we are not aware of. 
Let me start with the deferred deduction rule which the Minister referred to. On the face of it it looks like closing a serious loophole that verges on the move away from tax avoidance towards the tax evasion scale of things whereby people are able to claim a greater tax deduction than they have actually invested. But it is interesting to note that this measure will net the Government between $400 million and $450 million. Let us not forget the very first thing: fixing the current tax rates nets the Government a whole lot of extra tax through fiscal drag or bracket creep as some people call it. This measure will add another $400 million to $450 million to the Government’s coffers. It cannot help itself. 
This rapacious Government and Michael Cullen love to collect tax and this measure will collect a whole pile of it for him. What we must make sure of at the select committee is that what this measure does is no more than is set out on the face of the bill. Although National accepts that there is a loophole we want to make sure that the measure proposed closes only that loophole and does not go further. 
Likewise there is the repeal of the sick accident or death benefit fund income tax exemption. Again I think that on the face of it that measure is possibly worth supporting but at the select committee we need to know for example how much tax will be grabbed from that one. Quite clearly there will be a further tax grab from that one and the Government has not told us so far about that. 
Finally let me mention the last issue and that is the zero rating of business to business supplies of financial services. Again National is likely to support that measure because of the cascading cost effect in the current arrangements. But again it is a measure that we need to examine in some detail at the select committee to make sure that there are not some unforeseen consequences in that zero rating of business to business supplies of financial services. On the face of it National would support that measure because of the possibility to reduce costs to businesses. 
But there we have it typical of a Labour taxation bill a couple of positive measures. The two most positive measures are the two things that the previous National Government had worked on. One of them I give credit to Dr Cullen for because he has taken it further than we achieved and that is the trans-Tasman imputation provisions but the bit that one cannot help but be cynical about is how the Government has flip-flopped on the specified superannuation contribution withholding tax. Labour had the audacity to vote against it when the previous National Government moved it and now it brings it forward itself. It is just as well that the National Party is more principled than the Government because we will support what is right in this legislation and we will fight the tax-grab bits of it that are unsatisfactory. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 It was so nice to hear some positive words from Dr Smith. I hope that that positive contribution will continue as this bill goes through the select committee process. This is just a short contribution to say that I fully support this bill and look forward to its passage through the House. 
CRAIG McNAIR (NZ First) 
: 
 New Zealand First will support this bill to the Finance and Expenditure Committee. Tax legislation is among the most important and relevant legislation that we debate in the House. Because New Zealand First believes so strongly that tax legislation is very important because of its effect on every New Zealander and the impact it has on the economy we will seriously consider submissions on this bill in the Finance and Expenditure Committee. The bill confirms the annual income tax rates that will apply for the 2003-04 income year. The annual income tax rates to be confirmed will be the same as the rates that applied for the 2002-03 income year. 
In terms of Part 1 which deals with annual rates of income tax for 2003-04 and to protect our nation’s tax base New Zealand First wants to reform the taxation system by simplifying tax processes clarifying tax legislation ensuring that the taxation laws of New Zealand are upheld and that all—large or small—pay their taxes. However our long-term objective is to see New Zealanders paying less tax. 
New Zealand First is opposed to any increase in general taxation. Following the achievement of intermediate growth goals and focused social expenditure we want to aim to reduce personal income tax levels. We also want to reduce tax compliance costs by monitoring evaluating and amending as necessary the measures introduced during our time in Government. Priorities remain—the streamlining of taxation analysis in preparation of returns processes in making the tax system as neutral and equitable as possible. 
I turn to the amendments to tax pooling provisions in Part 2. Four amendments are proposed relating to the tax-pooling provisions recently enacted. The most significant amendment is a change to the imputation provisions to allow taxpayers who through an intermediary deposit an amount in a tax-pooling account with the Inland Revenue Department to receive an imputation credit when the amount is deposited and not when that amount is allocated from the pooling account to the company’s income tax account. The amendment should remove a disincentive for taxpayers to pay tax through a pooling account. 
New Zealand First wants to do everything it can to help business in this country. We also believe in introducing an accelerated depreciation regime for specified industries and selected approved investments so as to assist business development. That is just one thing that we want to do. I look forward as the New Zealand First representative on the select committee to considering the bill. As I said we will support the referral of the bill to the select committee because we believe that taxation law is something that affects all New Zealanders. One does not have to be a rocket scientist to figure that out. Obviously we disagree with a lot of the Government’s rules and regulations placed on small businesses and the taxpayer in general so we want to look at this bill in its entirety. We look forward to hearing submissions on it. 
GORDON COPELAND (United Future) 
: 
 United Future also is pleased to support the first reading of the annual taxation bill. As the Minister said it involves some major policy initiatives and I would like to touch on a few of those. The first one is to do with GST and the zero rating of financial services which will reduce costs for banks and other financial organisations and lead in turn to reduced fee charges to customers—something that will be greatly welcomed. AsDr Cullen has done I want to touch on the trans-Tasman imputation system which is now being introduced. This is an initiative that I strongly support. It strengthens closer economic relations between the Anzac partners and will free up investment flows between our two nations. It is clear to me that New Zealand’s economic and defence future will remain strongly linked to that of Australia. Together we are just 24 million people—way way smaller than the state of California. We can continue to seek mutual advantage in doing many things together and by working together. Free and open labour markets already exist between our two countries and unlike Dr Cullen at least in his reported comments I would not rule out a future Anzac currency union. However before that can happen we need to continue to harmonise tax law. 
I also want to mention United Future’s absolute delight that this bill also sees an increase in the threshold for child tax credit and the threshold for parental tax credit. We warmly welcome these changes which we have worked hard with the Government to bring into being as well as the principle of consumer price indexation that they embrace. We hope that the Government will continue down this track. It is a small beginning but it is a beginning. I hope that the provisions will become a permanent feature of family assistance in the new measures to be announced in next year’s Budget. 
Raising kids is an expensive business but it is the most important business. Our beautiful children are our future and I know that all of us in Parliament of whatever political persuasion want to give them the best possible future. 
I want to comment too on the new rates of withholding tax for employer contributions to superannuation funds. I commend the Government for this initiative. Michael Cullen mentioned that the Greens had been talking to him about this issue. Well so has United Future. I do not expect that on its own it will be enough to boost superannuation savings in New Zealand. The reality is that savings rates in New Zealand are going backward and we are steadily becoming more and more indebted. For many New Zealanders the old Negro refrain is a reality: “one day older and deeper in debt”. Certainly as a nation we are also becoming steadily more and more indebted. Nothing short of behavioural change is now called for. I call on all parties in this House to exercise their collective wits to see how that might best be achieved. Our future prosperity or its lack demands no less. 
Lastly I want to say a word on the new deferred taxation rules. These are being brought in to prevent elegant tax evasion schemes. In my career before coming into Parliament I have seen the lengths that people will go to in order to evade tax. In principle when evasions are discovered it makes sense to close the loopholes—provided we do not go down the path of retrospective legislation with arrangements that are a matter of avoidance and therefore legal. It helps me always to keep in mind for example a nurse doing long hours in an intensive care ward and paying her full whack of tax. It is simply fair play to ensure that others do not rort the tax system. With those comments I have pleasure in signalling again United Future’s support for the first reading of this bill. 
Hon DAVID CARTER (NZ National) 
: 
 I rise also to support this legislation going to the select committee and I note the superb timing of the Government. After introducing a flatulence tax earlier in the week and announcing thoughts about a “fat tax” yesterday it is now introducing a further tax bill to which I now have the opportunity to speak. I want to start by referring to the move to adjust the particular tax rate on savings for people who earn income of less than $38000. I congratulate the Minister of Finance the Hon Dr Cullen on finally recognising this problem and on finally doing something about it. I listened earlier to a speech from the New Zealand First representative who also supported this legislation but I remind Dr Cullen and I remind New Zealand First that this is not the first opportunity they have had to adjust the tax rate on savings so that people earning less than $38000 would be taxed at a lower rate than they are currently—which of course is at a rate of 33c in the dollar. 
I am referring of course to the move made by the then - National Government in 1998 when we had legislation accepted into Parliament supported by Labour and New Zealand First in being sent to the select committee and returned from the select committee back to the House while still receiving the support of Dr Cullen and the Labour Party and at that stage of Winston Peters and the New Zealand First Party. But in its final stages as it went through the Committee stage there was a sudden change in point of view by both the Labour Party and New Zealand First. They then determined that it was not a good idea to deliver a lower but more true tax rate to income earners earning less than $38000; they voted against that particular clause at the Committee stage and so that opportunity was lost in 1998. 
So I say to Dr Cullen “Well done for doing it now.” But I say that if he had not changed his mind and if Winston Peters and his then-members of New Zealand First had not also changed their minds this significant benefit could have been delivered to New Zealanders earning less than $38000 5 years ago. So when the New Zealand First member laments the fact that New Zealanders are not saving enough—and I accept that—and when he laments the fact that one of the reasons New Zealanders are not saving enough is that until this legislation is passed they are in effect paying at a tax rate substantially higher than what they will pay on their personal income I say to him that there was an opportunity to correct that 5 years ago. If that opportunity had been accepted rather than being used for blatant politics—as it was at the time—then we would have made considerable progress. As I have said that was a move initiated by Dr Cullen and the Labour members of Parliament at the time and by Winston Peters and the New Zealand First members of Parliament at that time. 
I want now talk to other aspects of the bill. I note that this is a typically complex tax bill the type that Robin Oliver and his merry men manage to present to Parliament whenever they get together. I do regret that I will not have the opportunity of working in the select committee to iron out the many amendments that will be required to make sure we get workable tax legislation back before the House but I wish members of the Finance and Expenditure Committee well with their task. 
The second thing that has not been mentioned by speakers as we debate this bill today—and it certainly was not mentioned by the Minister of Finance when he introduced this legislation to the House—is that this legislation sets again the annual tax rates for another year. Even the Speaker turned a pale shade when we talked about the annual tax rates because the bill cements in place the “envy tax” of 39c that was passed in this House in the year 2000. 
Brian Connell 
: Talk about fiscal drag. 
Hon DAVID CARTER 
: I am going to talk about fiscal drag. 
Brian Connell 
: It’s a real drag. 
Hon DAVID CARTER 
: It is a real drag is it not? Over time we have seen that as the incomes of New Zealanders have moved up—and that is not surprising considering the amount of inflation we have had—people have found they have moved into another income tax bracket. It is that fiscal drag that has contributed significantly to the point made by my colleague Dr the Hon. Lockwood Smith when he said he can find only one country in the world that faces higher taxes than New Zealand and that is the Czech Republic. 
Simon Power 
: That can’t be right. 
Hon DAVID CARTER 
: I think it is right Mr Power and I think that is one of the reasons that this Government faces a real problem with those growth predictions. Many members of the House will remember those wonderful growth predictions that the Prime Minister pinned her hopes on. In fact she wrote a foreword. I think she signed the foreword but maybe she did not write it. 
Simon Power 
: Signs anything you put in front of her! 
Hon DAVID CARTER 
: Yes she signs anything. The prolific signature of the Prime Minister was attached to this promise that we would get our growth targets back into the top half of the OECD by the year 2011. One of the reasons the Government is now embarrassed by that target and has in fact forgotten it ever set that target is that we simply will not reach it when we are passing a tax bill like this that locks in tax rates of this magnitude. 
The very fact that we had a Budget presented in this House not so long ago that talked about surpluses around $4 billion or more causing the Minister of Finance to crow about his success and his acumen as a Minister of Finance belies the truth with regard to these tax rates. It is easy for any Minister of Finance to achieve surpluses of that magnitude if he taxes more than he needs to—and that is what the Government is proposing to do with the annual tax rates being locked in today. 
I say to the Government that if it is serious about lifting New Zealand’s economic performance; if it is serious about closing that significant gap that exists between us and Australia; if it is serious about making sure that the pay packets opened at the end of each week here in New Zealand compared with the pay packets opened at the end of each week in Australia do not show that Australians are $200 better off than New Zealanders; if it is serious about addressing those concerns it needs to rethink these tax rates. 
We have the concept of fiscal drag and the Government just refuses to look particularly at that $38000 threshold past which many New Zealanders have moved over the last 3 years because it likes these big surpluses. It likes the opportunity to spend money on things like the America’s Cup once we have lost it. 
Brian Connell 
: Doesn’t spend much on roading though does it? 
Hon DAVID CARTER 
: My colleague Brian Connell says it does not spend much on roading. He and I know that Transit New Zealand is not proposing any significant projects in Christchurch or other parts of Canterbury for the next 10 years and as that fact becomes more known I doubt whether New Zealanders are going to accept it. 
I want to finish by referring to question time in the House today when the Minister of Finance was questioned on the faith he has in the Budget forecasts it being noted that they are less than mediocre. I want particularly to refer to the Business and Economic Research release earlier this week which stated: “Economic mismanagement has choked out a perfectly sound period of growth and we are in for 2 to 3 years of a stored economy.” There is an opportunity to recognise that that comment has been made by Business and Economic Research there is an opportunity to do something about that comment and there is an opportunity to lock in sustained growth rates but it will not be done if the House has to address this bill coming back from the select committee unless that particular committee has bothered to address the oppressive tax rates we now have in this country. 
DAVE HEREORA (NZ Labour) 
: 
 I stand to speak in support of the Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill. The bill brings into effect New Zealand’s part in a joint Australia-New Zealand agreement to remove a tax impediment to trans-Tasman investment. The imputation systems of each country are being extended to include companies resident in the other country that want to take part. The bill will make New Zealand imputation credits available to Australian companies while similar legislation before Parliament in Canberra makes Australian franking credits available to New Zealand companies. I commend this bill to the House. 
STEPHEN FRANKS (ACT NZ) 
: 
 This bill has a number of provisions that ACT would be happy to support going through to the select committee. It has a number of provisions that some might say are overdue and others would say are part of the normal process of fine-tuning and updating a tax system. But of course we cannot support this bill and will vote against it because it also confirms this year’s tax rates which continue the envy basis of Labour Government fund-raising. 
 This bill confirms the 39c rate for people whom the Government considers wealthy. That started out being the top 5 percent of earners; now it is the top 8 or 9 percent of earners. There is no indexation in this bill. If the Government had wished to preserve any integrity in the promise it gave to New Zealanders in 1999 that the “envy tax” or the “wealth tax” would be for the top 5 percent only the rates in this bill would not have been set as they have at the same level for each of the years since then. They would have been dropped progressively to reflect the fact that inflation has been giving people an illusory higher income and that meanwhile the Government has been taking more and more tax. So ACT will not support this bill. We will vote against it. 
However I wish to comment on several other aspects that I hope the select committee will look at very closely. First is the trumpeted change to the flat rate deduction of 33 percent of specified superannuation contributions. The Government is rightly concerned that New Zealanders are not saving. The Government is probably privately panicking about it but publicly is still looking sanguine. Our savings rates will not change dramatically until New Zealanders get a Government that is willing to be honest with New Zealanders and say that Father Christmas will not be there when they retire. Father Christmas will not pop out of the woodwork to say that a country that has been spending more than it has earned for 40 or 45 years has ended up with enough income to support its elderly. There is no “them” who can support the enormous number of people in this community now expecting to live off what the Government will raise from “them” and distribute to those who do not have their own savings. The change to make superannuation savings slightly more attractive will probably have no effect whatsoever. 
Further it is mean-spirited. The Government is trying to reduce the taxation rate on superannuation savings to the employees’ top marginal rate but of course that is exactly what it does; it is the top marginal rate so although a person with an income of say $25000 has an effective tax rate that is well below 21 percent because that person’s tax is spread over two rates—I cannot do the calculation off the top of my head but it might be that the actual tax rate is something like 15 percent or 12 percent—that person’s superannuation will still be taxed at the rate of 21 percent. There is still a tax disadvantage. This Government which claims to look after those at the lower end of the scale is giving people on the top tax rate a continuing advantage. Those whose tax rate is 39 percent get the benefit of being taxed at only 33 percent on their superannuation contributions. Perhaps that is a small grudging guilt and embarrassment payment to those who are liable to the “envy tax”. 
Another little element that I trust the select committee will look into—it is a curiosity really—is the reference in the compliance cost statement section of the explanatory note to the new trans-Tasman imputation regime. Of course if it were a true regime to avoid double tax it would allow companies to take all the tax that has been paid in one country as a credit for the shareholders who ultimately get a distribution from that company. It does not. It goes halfway only. 
But more significantly although it is recognised that there are material costs—real costs—in administering this complex new scheme there is no estimate in this compliance cost statement section of whether New Zealand will be a net winner or a net loser. I suggest that New Zealand will be a net loser out of this because the owners of a company need to request that the company apply and go through the paperwork to benefit from this scheme. Although we can well imagine the Australian owners of a company incorporated in New Zealand saying: “Hey register under the Australian federal scheme so that we can get the benefit of this imputation regime.”. It is highly unlikely that New Zealand shareholders will have nearly the same clout in requiring an Australian company to provide the same benefit for them. 
I think it is curious that the Government has made no attempt to tell the House what it expects the uptake of this scheme to be. If the uptake of the scheme is differential we could see the New Zealand Government losing a considerable amount of tax with no corresponding benefit to New Zealand shareholders from the Australian exchequer. That is a matter that this House should have expected the compliance cost statement or impact statement section to give some commentary on. It simply states blithely that the compliance costs “are expected to reduce over time as Australian companies become more familiar with the New Zealand imputation rules.” That will happen only if Australian companies can be persuaded by their New Zealand shareholders to invest the time needed to become more familiar with the Australian Scheme and I cannot see very many Australian companies paying enough attention to their probably small New Zealand shareholding to think that worth their while whereas I can see a good number of Australian shareholders being in a position to require New Zealand companies to do just that. 
I also hope the select committee will take a very close look at the new provisions to get student loan repayment deductions running even if the student just forgets to mention that he or she has a student loan. That issue should very much be a trans-Tasman one in this situation. I imagine that because of the bad relationship that the New Zealand Government has established with Australia through its reneging on defence ties and through its unilateral abrogation of the understanding on immigration—its swinging open the back door to Australia and its tossing off at the Aussies for their contribution to Iraq—we would not get much sympathy or help from the Australian inland revenue department in relation to the collection of student loan repayments from New Zealand students and graduates in Australia but those provisions should mean something. 
 Lastly I hope the select committee will report on just exactly what the new charitable donee status for nine additional organisations means. That is a benefit for organisations that can give a direct tax refund to their donors. I wonder why the list starts off with Books for Africa. It almost sounds like a joke does it not? I am sure it is not a joke. We have the Bright Hope International Trust the Cheboche Area Trust—Cheboche sounds as though it is somewhere in Tibet—and the Greater Mekong Subregion Tertiary Education Consortium Trust. That sounds a highly communist name and I wonder whether it involves some kind of reciprocal relationship between the Labour Party and its communist mates in Hanoi. There is Plan New Zealand and there is the Sampoerna Foundation Ltd. Then amongst all the odd trusts that are going to get this Government handout there is the Sir Edmund Hillary Trust. What a sad remnant! The Hillary Commission was changed to Sport and Recreation New Zealand and now we at least get slight recognition of Sir Edmund hidden deep in the fine print of our tax legislation. 
ACT will vote against this bill proceeding further but if it does go ahead we hope we get some answers from the select committee to those questions. 
ROD DONALD (Co-Leader—Green) 
: 
 The Green Party will be supporting this bill going to the select committee if for no other reason than that it includes a significant victory for the Green Party. We have long campaigned to force the Labour Government to look after hardworking New Zealanders by giving them an incentive to save for their retirement. In March 2000 the Greens supported a tax bill to bring in multi-rate fringe benefit tax because it was a great help to employers with staff earning less than $38000. At that time we called on the Government to introduce the same multi-rate mechanism for the specified superannuation contribution withholding tax. The Government said it was too hard but we did not give up. We kept the pressure on as Dr Cullen acknowledged in his speech today. I do acknowledge the resistance that he faced from officials but I am glad that on balance he has moved in our direction. 
We were keen to keep the pressure up because we were concerned that Labour was penalising the very people it claims to represent—the hardworking low-income families of New Zealand. The vast majority of the people who vote for Labour were being rewarded for their support with a large tax penalty imposed on their employers and what is more Labour doubled the insult to its traditional supporters by introducing a 6 percent tax incentive for well-paid salary earners when the marginal tax rate increased to 39 percent and the specified superannuation contribution withholding tax remained at 33 percent. That meant that employers got a 6 percent tax rate on any subsidy they offered to their well-paid workers which is a great incentive to provide staff with subsidised superannuation but only those staff earning more than $60000 a year. Meanwhile good employers were penalised if they provided superannuation to staff earning less than $38000 and employers who were not offering any superannuation to staff earning less than $38000 were being given absolutely no encouragement by this Government to help those people save to have a more comfortable retirement. 
It is therefore no surprise that the number of employer-subsidised superannuation schemes is plunging and that the number of people who are members of those schemes is also plummeting. As I said in the debate on the Business Law Reform Bill earlier this week it is a sad indictment on successive Governments that at the end of June last year only 245003 people were members of employer-subsidised superannuation schemes—down from 310741 only 12 years ago. That is a drop of 65000 in workers who are members of employer-subsidised superannuation schemes. That is of significant concern to all of us in this country at a time when our saving rate is negative. Indeed the negative saving rate is actually getting worse. 
It is not that I am excusing employers from helping their staff to save for their retirement—and the pressure will now need to come on them—but I am simply saying that successive Governments have put too many impediments in the way of employers. There are others that are now also being removed. I acknowledge the Government for introducing Parts 10 and 12 of the Business Law Reform Bill which will also reduce compliance costs for employers in terms of both prospectuses and annual reports. Together these three moves are very much steps in the right direction. We acknowledge and support those steps because the Government is partially removing the disincentive to employers to offer subsidies to their staff. But the Government has introduced only a two-tier optional system not the progressive system that it is claiming. That means that workers earning between $9500 and $38000 will not be penalised any longer because the new rate applying to them will be 21 percent but anyone earning less than $9500 will still be paying a 6 percent penalty—or their employers will—on any contributions made to their retirement savings. 
Treasury might say that anyone earning less than $9500 cannot afford to save in the first place but we say why penalise them if they can. There are good people mainly women who work part-time to bring a second income into a home and who want to save for their retirement and they deserve the chance to do so without their boss losing 6c on every dollar he or she provides in subsidised superannuation. This bill discriminates against those people and must be changed. 
We look forward to working with all the parties on the select committee to amend the bill accordingly. Even the ACT party which says it will vote against the bill has highlighted—in the speech of its member—this discrimination. I hope the ACT member on the committee will stand by what Stephen Franks said in the House and will support an amendment to remove the discrimination against those earning less than $9500. I do not expect the cost will be significant. In fact I expect the cost will be minimal but the result will be beneficial. 
I will also seek multiparty support to extend the 6 percent superannuation savings tax incentive which is currently available to those earning more than $60000 right across the board to all income brackets. I note that the speeches made today by National New Zealand First United Future and ACT members give me confidence that we could have the numbers to have an amendment on that go through. I hope that parties will support such an amendment. Indeed I hope that the Government will have second thoughts on this matter and concede that that is a worthy measure. It is a measure that would bring in some equity and would not count against those people who are on middle or low incomes. I look to the members on the Government side and ask how in all honesty they can offer people who are earning more than $60000 a 6 percent tax incentive to save for their retirement and not offer the same incentive to those earning less than $60000. Why should every member in this House be in a position to benefit from that 6 percent incentive but the people who voted for us be forced to miss out on it? 
When we think about the money that is involved we realise it will not cost the Government a lot to make this change. Dr Cullen conceded today during question time that it would probably cost only about $54 million a year to extend that 6 percent incentive right across the board. That is a small price to pay to give employers a real incentive to provide their staff with subsidised superannuation. 
That is a very small cost when compared with the cost of the New Zealand superannuation scheme. The Government currently has $1.9 billion sitting in the bank for that scheme. Fortunately it has not started to gamble it on the casino economy yet. All one would need to meet this year’s cost of extending the 6 percent incentive right across the board is 2.8 percent of that fund and ongoing one would need less than 3 percent a year to do the same. We say that is a much safer bet in terms of tackling the negative savings rate in this country which is around 4 percent now and expected to climb to 6 percent in the next few years than to gamble that money on the international sharemarket. We have only to look at what has happened to the Government Superannuation Fund. It has lost hundreds of millions of dollars in the last couple of years because it invested in the sharemarket and now the New Zealand Superannuation Fund is about to jump over the same cliff. 
Make no mistake the Green Party supports universal provision of superannuation. We believe that every New Zealander is entitled to superannuation when he or she retires. We are concerned about providing certainty and security in retirement. We believe that the New Zealand Superannuation Fund will achieve exactly the opposite outcome because of the way that the Government plans to invest that money—putting it on a fragile and volatile overseas sharemarket. It makes far more sense to use a small proportion of that money to ensure that there are tax incentives right across the board to help all people save for their own retirement and to try to reverse the situation we are in now where net household debt accounts for 120 percent of annual income. That is an extraordinary indictment on this country. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 I rise to take a call on the first reading of—let me take a deep breath—the Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill. I think there is probably a compliance cost just in saying that name if one takes time into account. 
I am in a reasonably conciliatory mood and I acknowledge the Government for introducing this legislation. Essentially it is pragmatic. It supports business—yes I said that it supports business. Generally I do not think it is picking favourites and I think it treats all citizens fairly. Accordingly National will support this legislation going to the select committee. But I make the point that like my colleague Stephen Franks I think a lot of work needs to take place in the select committee before the bill gets our universal support. I might add that the bill’s pragmatism and the areas that support business that I have alluded to now make some sense my having listened to some of my National colleagues; in essence what I am talking about is legislation that the National Party initiated. 
I would like to take a bit of a walk through the explanatory note of the bill and in particular I want to start with the section on Part 2 “Amendments to Income Tax Act 1994” which includes the trans-Tasman imputation component. This is reasonably complex so I will read just the first piece for the sake of accuracy: “Australia and New Zealand are reforming their imputation laws to reduce a long-standing problem of the double taxation of certain trans-Tasman investments known as ‘triangular tax’.” It goes on to state: “As part of a joint Australia/New Zealand initiative amendments are proposed that permit Australian companies to join New Zealand’s imputation credit rules.” This is a significant step forward. Anything that helps to attract and retain investment in New Zealand is on the right path. It is sorely needed. However it will not be enough in itself. It is on the right track but unless we deal with and address the issues of the Kyoto protocol the Resource Management Act and in particular electricity we will not get the foreign investment that we are looking for. 
 I want to take a moment to expand on my concern about electricity. Business of course is concerned about cost but generally it is more concerned about certainty and guarantee of supply. The one component that will turn investment away from these shores is if we cannot give certainty on this core commodity. 
I expect that the Government now that it has started down this path will finish the job and start to write back some of its anti-business legislation starting with—but not exclusively confining itself to—its accident compensation legislation its employment relations legislation and its minimum wage legislation. I was going to take bids but there are not enough of us here so I will help out members. Some of the other things that I think might be of interest to note include some of the taxes or levies that have been introduced in the last 2 or 3 years that are hurting business. I believe that the Government has to turn its attention to those. We have touched on income tax and if we look at the fiscal drag—or bracket creep—in that component itself we see that it now attracts the 10 percent of the population who are now caught up in that higher marginal tax rate than was first intended. That is something the Government said it would not do. Fringe benefit tax has increased from 49 percent to 64 percent. The excise duty on tobacco has risen by 23 percent. I am not a fagger but I just do not know how people can afford to smoke under that type of regime. 
Hon Dr Michael Cullen 
: Good. 
BRIAN CONNELL 
: I agree with the Minister. I have been conciliatory—I am actually giving him some bouquets today. The levy on petrol and diesel has gone up considerably as have road-user charges. Members will remember that that was just a temporary initiative but it has now gone beyond its 18 months and is approaching its second year. I do not think that members of the House dispute that half that money has gone into the consolidated account. I know that people particularly in the South Island are concerned that no roading projects are due to start in the South Island inside the next 10 years. We have seen the accident compensation levy and we know where that is going—and Dr Cullen knows that a levy is a tax. We have seen the alcoholic beverages tax—the sherry tax. That I have to admit was not anti-business; it was anti-everybody particularly old folk. Accident compensation motor vehicle levies have gone through the roof. I have touched on just a few. 
The other thing I would like to commend the Government for is its work on the deferred deduction rule. That rule is designed to combat aggressive tax arrangements many of which are mass marketed. Members of the House know and accept that in the last 20 years in Australia a number of scams and schemes emerged that essentially exposed hard-working people and investors to rip-offs. A few that come to mind were the tea tree oil scam and some of the ostrich scams. Essentially they were funded by the taxpayer. I have to admit that I was nearly tempted to get involved in a couple but I did not. However I did see my friends get involved and they lost considerable amounts of money. When the Australian Taxation Office was forced to step in and do something about the matter the blood was on the streets for everybody to see. There was a real mess and the office had to exercise the courage of its convictions and work through it. Essentially those schemes are funded by taxpayers and that is not fair. 
The bill’s explanatory note gives a number of examples and I agree with most of them. But I suggest that the select committee has a close look at the rule because not all such schemes are bad. We do not want to discourage legitimate research. We do not want to discourage legitimate development legitimate investment or sensible risk-taking. I accept that on balance it is a problem. As one of my colleagues has already noted the amount of money that taxpayers are funding is in the vicinity of $400 million to $450 million and that is a major exposure. I refer to the last paragraph under the heading ”Deferred deduction rule” in the explanatory note. It is a steer to the select committee. It states: “Loans where the terms are on an arm’s-length basis where the lender regularly lends money on arm’s-length terms and carries on business in New Zealand are excluded from the definition of ‘money that is not at risk’.”—and I agree with that—“Also excluded are loans by associated persons who are not otherwise parties to an arrangement and whose money is genuinely ‘at risk’.” They are the people whom the select committee should look at carefully so that the bill does not kill the goose that lays the golden egg. That is my advice to the select committee. 
I note also that a number of the initiatives that this legislation looks at pick up compliance costs. I think there are some sensible and pragmatic suggestions here and they have my support. I finish by saying that although National supports the bill going to the select committee we will be looking at the select committee to be very cognisant of the issues that I and my colleagues have raised. On that basis I conclude. 
A party vote was called for on the question  
That the Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill be now read a first time. 
Ayes 103 
Labour 52; New Zealand National 21; New Zealand First 13; Green Party 9; United Future 8. 
Noes 7 
ACT New Zealand 7. 
Bill read a first time and referred to the Finance and Expenditure Committee. referred to the Finance and Expenditure Committee 
Care of Children Bill 
First Reading 
Debate resumed from 24 June. 
Madam DEPUTY SPEAKER 
: I call Metiria Turei. 
DAIL JONES (Junior Whip—NZ First) 
: 
 I raise a point of order Madam Speaker. The usual ruling is that the third speaker in a debate is from a Government party either the Labour Party or the United Future party and a New Zealand First member is the fourth speaker. I understand that it is possible for United Future or for the Labour Party to concede its position as to its speaker. If I am informed by the Labour Party or by United Future that that is the case obviously we will not get the call. However I want to make that clear so that we do not lose our position in this situation. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Yes indeed I can confirm that the Labour Party has conceded its speaking slot to Metiria Turei. 
DAIL JONES 
: It would have been nice to tell us that. 
METIRIA TUREI (Green) 
: 
 The Greens are very pleased to support this bill going through to the select committee. However I advise the House that I will be moving an amendment to the Minister’s motion: that the bill be referred to the Justice and Electoral Committee and not to the Government Administration Committee. As I have said the Greens are very pleased to support the bill. We are delighted with a number of its provisions. We will also be advocating for some issues in the select committee which we consider is the best place for those discussions to occur. 
The bill assists the members of a family that suffers a break-up that cannot be amicably resolved between the various parties. About 90 percent of families that for some reason or another do break down are able to resolve those sorts of issues without recourse to the courts for assistance. However when the family does need some assistance this bill will give it better access to justice for all members of the family—the child and the adults who surround that family. We are very pleased to see that the emphasis of the bill is on the best interests and welfare of the child as the first and paramount consideration. It is essential that children’s interests highly influence the decisions of the court. 
The bill explicitly addresses concerns raised by many fathers in New Zealand and in the community that the Family Court is biased against them. It does that first by expressly stating it must not be presumed that placing the child in the day-to-day care of a particular person will because of that person’s sex best serve the welfare and best interests of the child and then by providing that a biological father will be a guardian automatically if he is married to or living with the mother of a child at any time from conception to birth or if his name is on the child’s birth certificate with his and the mother’s consent. We consider those to be very good provisions in the bill. 
We are also very pleased that the bill will treat same-sex couples in the same way as heterosexual couples are treated. For example guardianship for 16 to 18-year-olds will end if the parents have consented to a de facto relationship the definition of which includes same-sex relationships. The bill provides for same-sex couples to have access to relationship counselling in the Family Court—a service from which the current legislation excludes them. Of course the bill also amends the Status of Children Amendment Act 1987 so that where a child is conceived using assisted reproductive techniques with the consent of her partner the partner of the birth mother is deemed to be a legal parent of the child. That provision includes de facto and same-sex partners. Under the current law same-sex partners must seek guardianship through the Family Court if they want to legally clarify their parental responsibilities. That can be particularly unjust where the same-sex couple has raised children together for some time with each partner equally committed to the role of parent—a role that the current law fails to recognise. 
The Green Party’s sexual orientation policy supports the elimination of legislative barriers to the full participation of same-sex couples in society and the elimination of institutional discrimination against anyone who is lesbian gay bisexual transgender intersex takatapui or fa’afafine. The provisions of the bill are an important step towards the elimination of legislative barriers and institutional discrimination. The Green Party’s fundamental values lead us to promote an inclusive society. In our view the human family encompasses a rich diversity of ages genders generations ethnicities abilities and sexual orientations. The current Guardianship Act is tightly focused around the traditional nuclear family and that is simply not appropriate in an increasingly diverse multi-ethnic society. 
The bill does not create artificial families nor does it redefine genders but rather it recognises the diversity of families that do exist in this country and ensures that the best interests of the child guide the court’s recognition of the responsibilities of the adults who surround that child. Those adults may be the child’s biological parents or they may be step-parents same-sex parents grandparents and other near relatives. The bill clarifies their respective legal responsibilities to the child where the family for whatever reason breaks down. It is crucial that the close adults in the child’s life are clear about their respective responsibilities and that those responsibilities truly reflect the reality of the child’s relationships with those adults. No law that attempts to mend the damage from the breakdown of a family will fit each family’s circumstance perfectly. But this bill at least recognises the realities of children’s lives and the diversity of the families in which they live. 
There are some issues that we will want to address and to have considered in the select committee. There will be a greater load on the Family Court through this bill—for example in the court’s expanded jurisdiction over paternity orders in its specific role in preventing disputes and in its increased enforcement powers. The court will require greater resources in order to deal with those changes. The court’s capacity is already stretched and the efficacy of this bill will depend on the court having sufficient resources and skilled personnel to meet the expectations of the families that need to use it. 
There are also other principles that it may be appropriate to include in the bill—for example an objective that children should be able to maintain ongoing and frequent contact with both parents wherever possible. That issue as an example raises very real concerns about how legislation in such a sensitive area can best enable a child-parent relationship to flourish without unduly restricting where a parent may choose to reside. In the select committee other difficult issues like that will be raised and I look forward to hearing the views of the people who are most affected by this legislation. 
In conclusion I urge the members of this House to support the amendment that I will put forward and reiterate that the Greens are very pleased to support this bill going to the select committee. 
DAIL JONES (NZ First) 
: 
 This bill will be opposed by New Zealand First. As I read the bill it really has only one agenda. That is to continue the Labour Government’s agenda of destroying family life in New Zealand by introducing to the concept of family life things that normally would have been regarded as deviant behaviour in our society giving them some sort of recognition by statute and saying oh well now that that behaviour is recognised by statute it must be normal. As the  
New Zealand Herald  
so aptly pointed out on 11 June this bill is really only about same-sex partners getting the rights of parents. I have read the bill from my own experience of doing legal work in this area. I started in 1962 as a clerk in the destitute persons section of the Auckland Magistrates Court and worked on family law through the 1963 Matrimonial Property Act the 1967 legislation the legislation of the late 1970s—and I took part in enacting that as a member of Parliament—and then worked in practice again from 1984 until last year in the family law area. 
This bill really has only one new aspect about it and that is confirmed in my view by the family law section of the New Zealand Law Society in  
LawTalk 
 No. 606 of 30 January 2003. All that this bill really does apart from introducing the same-sex agenda of the Labour Party is to change the terminology for various matters in the procedures before the Family Court. Where we used to have a custody order we will now have a parenting order. Really that is about it. The guardianship provision stays the same as it is now. The rule defining guardianship is much the same as it was way back in 1926; the Guardianship Act 1968 was much the same as that. This bill with its reference to the child’s welfare and best interests being paramount is the same as the legislation was in 1926 and 1968. Nothing has changed insofar as that is concerned. The only thing that has changed is that instead of having a custody order we now have a parenting order. 
This bill—if it is passed—and other legislation such as the particular wording in the Families Commission Bill reminds me of the way that the family will be destroyed in this country. Many people thought that the concept of the family was here to stay would last forever and was unsinkable. But in many respects one is reminded of the  
Titanic 
. No one thought it would sink—it was unsinkable—but then it was driven into the wrong waters too far north and came up against an iceberg. As a rule with icebergs only one-tenth of an iceberg is above the water and it is the nine-tenths that is part of the hidden agenda that does the real damage. That is what we are looking at with this legislation today. On the face of it we have just the normal family law - type legislation. In reality we have a bill that is hidden there like the hidden nine-tenths of an iceberg intending to do damage to the unsinkable the  
Titanic 
 and achieving that end. That is what this legislation is intended to do. 
Apart from changing the terminology and apart from its emphasis on same-sex marriages there is really not much difference in practice under this legislation. Of course I would have hoped that if the Government intended to do something worthwhile it would do something about the situation that applies say in the Family Court with regard to orders and proceedings under the Domestic Violence Act of 1995—as referred to in clause 49 of the bill. But there is no change. There will still be an application to the Family Court an interim protection order and an interim parenting order. It will not be called a custody order any more; it will be called an interim parenting order. The mother will once again be granted interim custody of the child—as she is in 91 percent of the cases—on no evidence other than an affidavit which is never backed up by anything until 2 months later. She will be granted custody of the children and once again the father will be locked out from that custody. It is a great shame that this bill does not confront that issue at all. It reinforces it. This bill does nothing in practice in family law that does not happen today. All that we have are a few fancy names for it. 
Certain clauses of this bill are badly drafted. I look at clause 49(2). I think the reference to section 45 there should possibly be a reference to section 44—to children under 16 rather than to children over 16. That is what seems to be consistent with sections 12(1A) and 12(6)(a) of the Guardianship Act. So I believe this bill is badly drafted. We have seen the great furore that has developed over the dreadful way of setting out that a mother is a father and suchlike in clause 17(2) and that is all I will say about that. But that type of clumsy way of defining things indicates the rushed manner in which this bill has been put together to achieve absolutely nothing other than the Government’s agenda with regard to same-sex marriages. That is a great shame because for years lawyers in the family area have been waiting for this legislation to come forward in order to bring a ray of hope a ray of light a Shekina to us all in order to show us that something can be done in this area. 
 But this is a very difficult area. It will never be resolved by legislation. It can be resolved only by the people who are involved exercising a degree of common sense. It will not be resolved by the parties shouting at and abusing each other when they go to court and being encouraged by lawyers to shout at and abuse each other. They need lawyers who are prepared to aim at reconciliation and none of that can be achieved by legislation. We can have as much legislation as we like but we will not achieve what we want to achieve if people continue to shout at each other. 
One aspect of the bill that I think is useful and that I believe should be extended is clause 131(2) regarding the publicity that may be made available. That is a small step in the right direction but I think the select committee should consider the Australian legislation as it gives more publicity to what has been happening in the court. So often I found as a lawyer involved in a protection case that a father would come in and say he was really up in arms about receiving a protection order. About 80 percent of the time fathers did not want custody of the children but the whole thing becomes blown out of all proportion. About 20 percent of the cases are defended. I have defended protection orders at an early stage and have been successful. I was successful on one occasion when the judge stopped the case halfway through the hearing and discharged the protection order straight away. I believe the lies and the perjury that are committed in the filing of interim protection order applications are utterly disgraceful and if a little more publicity was given to the types of things that are said in some of those affidavits then I suspect the applicants would be a little more ashamed about those procedures. 
Of course the question of legal aid has been touched on. Members should not forget that now we will have the father the mother the lesbian side the homosexual side all the whanau and Uncle Tom Cobbleigh and all being able to lodge an application. The amount of legal aid that may be required to give effect to this bill is colossal. I am sure that the Government has not given full thought to that. There is not only the question of legal aid but of the time it will take to resolve these cases. In a family law matter—or in any other legal matter—the sooner that people can sit down and try to resolve it the better it will be. The longer a case lasts the more expensive it is the more bitter people become and the harder they find it to get over the situation. 
We passed an amendment to the Guardianship Act stating in effect that fathers should not be disadvantaged. Today fathers are grossly disadvantaged. I had a case a little while ago where the father was not given custody because the mother had said she would commit suicide and take the child with her. That was a disgraceful statement. Three psychologists had reported on the case before finally I took it over. It was a year before I could get it to a hearing. The father had been granted access to the child only if it was supervised and he had to sit through supervision of that access by Mongrel Mob people and suchlike. Finally we took the case to court and we had no problem in convincing the judge—it was the first time a judge had actually heard the case—to grant the father access to the child. It was too late by that stage to get custody. The few fathers who really want to do something are greatly disadvantaged in my view in that situation by this type of legislation. 
I do commend the Government on the last aspect of this bill Part 4 which inserts new Part 2 into the Status of Children Act. The new part deals with the new artificial human reproduction procedures. It is a brave move and I will be interested to see what happens. 
JUDY TURNER (United Future) 
: 
 United Future members would usually support the first reading of a bill with the intention of using the process of the select committee to deliberate on any concerning clauses and any submissions in greater detail. We would reserve the right to re-evaluate our position after the select committee had presented a report. However we have some fundamental concerns about this bill which means that United Future will not be supporting it. 
This bill proposes changes to outdated and loaded terminology such as “custody” and “access” replacing it with new terms like “parenting orders” that should lend themselves to a more preferred equal-parenting approach to the care of children. However United Future believes that this bill stops short of delivering to children more equitable parenting arrangements and instead just upholds the old provisions with new less emotive language such as the terms “day-to-day care” instead of “custody” and “contact” instead of “access”. The old winner-loser outcomes still exist but under a new guise. Not enough effective change has been made to enable both parents to have an equitable chance of being involved in the raising of their children. 
United Future would prefer a bill that provides clear guidelines regarding the use of the Family Court and family lawyers with an emphasis on an assumed cooperation between the parents and on an assumed equity between both parents. This approach differs slightly from Ms Newman’s shared-parenting approach which had a more enforced approach to equal parenting. We believe that forcing an unwilling parent to be involved in his or her child’s life is unlikely to be in the best interests of the child. However if both parents want to have significant contact with their children and where both parents are safe caregivers then United Future believes that it is in the child’s best interest that guardianship laws facilitate an arrangement that reflects the value to the child of having both parents playing a constant part in the child’s life. Arrangements should be made that are appropriate to the age and needs of each child. Those arrangements need to be flexible changing as the needs of the child change. 
The essence of this bill is guardianship and although we agree that an overhaul is needed to update legislation that deals with the care of children we have grave misgivings about what has been proposed in this bill. The Minister believes that the Family Court will screen inappropriate applications for guardianship but United Future believes that clear guidelines are needed to facilitate this vital decision-making process. As things stand step-parents have to demonstrate a greater long-term commitment to a relationship to legally get their hands on half the furniture than they do to gain guardianship over the children in the relationship. 
We believe that time frames must be included in this bill to ensure that a certain amount of time or commitment has been shown before a person is appointed as a child’s guardian. If an additional guardian is to be appointed then it is surely in a child’s best interests that some sense of longevity and stability be established—at least as long as is required for property rights. 
For United Future the issue surrounding the care of children is bigger than just the guardianship issue covered by the bill. A single piece of legislation never exists in isolation from the tapestry of law that undergirds life in Aotearoa New Zealand. United Future believes it is vital that a child’s identity is clearly protected. The bottom line is a matter of pure biology—that is every child has a mother and a father. 
United Future has already demonstrated that with the broad definition of “family”—which has been included in the Families Commission—we accept the diversity of relationships that surround the care of children. However we advocate that where possible every child should have access to both its mother and its father regardless of whatever care arrangements exist. With the onslaught of new birth technology and advances in medical research heritage is at risk of being overlooked neglected and even rejected. The arrangement made for the care of children should never override the long-term best interests of the child which surely include preserving the vital link to his or her parentage. Confusing the terms “mother” and “father” and in particular the feminine and masculine aspects of those basic family relationships is ill conceived. Care arrangements that deliberately withhold information or neglect opportunities for safe contact with the natural biological parent do not reflect a child-focused approach. This concern is not about judging people’s ability to be caring guardians but it is a concern about obscuring a child’s chance to have contact with a mother or a father because it does not suit the living arrangements of the adults in the family. This is not a child-focused approach. 
The bill does differentiate between natural guardians—the biological parents—and appointed guardians. That is fine but then in an apparent contradiction it allows for a non-biological adult living with the mother during any stage of the pregnancy to be given guardianship rights that are equal to that of the biological mother. United Future will not support this bill because our concern is not that additional guardians can and should be appointed but that in certain circumstances this can be done to the deliberate exclusion of biological parents. 
Dr MURIEL NEWMAN (ACT NZ) 
: 
 The ACT party will be opposing the Care of Children Bill. We are extremely disappointed that this bill is the result of 2 years of work done by the Government in response to two member’s bills that I introduced into this Parliament. I introduced a member’s bill proposing shared parenting as the predominant outcome of family law disputes and another bill to open up the Family Court. This country is one of the very few in the world that have a secret court in an area that affects people more than anything else—that is children and families. It is about time New Zealand moved into the new age and recognised that justice has to be seen to be done. 
In the last Parliament we called for the Family Court to be opened up and for shared parenting to be introduced but the Government along with other parties in this House voted both those bills down. It told us to wait that it would introduce legislation to sort out the issues. It is a very disappointing day to be standing here looking at the result—this Care of Children Bill. One realises that this legislation is not only a dog’s breakfast with massive complexity and superficial changes—changes to words and terms that actually do not mean anything—but designed to meet a feminist agenda within this Parliament. It is paving the way for same-sex marriage and same-sex adoption. It is a bill that totally undermines the traditional family unit. It talks about family diversity—and I do not think that any member of this House would say we do not have other types of family in New Zealand today. But a Government has a responsibility to understand that the most successful child-rearing institution ever invented is the traditional nuclear family with a mum and a dad who are married. If we care about kids and if we care about our children doing well then we must support the sort of family unit that in general ensures children do better. This bill does nothing of the sort. What is really disappointing is that it goes further. Not only does it undermine the traditional family but basically it redefines fathers as a drafting error. If dads—separated fathers who are excluded from the lives of their children—think they have had it bad by the time this bill goes through they will have almost nothing. 
Like previous speakers I have talked to many non-custodial parents who cannot even get to see their children. They are whacked in the pocket with huge amounts of child support payments and they cannot even see their children. If they are lucky they will see them maybe once every 3 weeks under a 1-hour supervised access visit—and these are people who often have done absolutely nothing. But their partners have used the system to be able to have power over them and exclude them from the lives of their children. This Government knows all about that issue. Its members were lobbied so hard in the last Parliament that they cannot ignore the fact that so much hurt and anguish is going on out there. This bill has delivered no hope at all to those families and non-custodial parents. 
The real problem in New Zealand is that in this whole area of family law we are now going in exactly the opposite direction from our nearest ally Australia. I know we like to have a healthy relationship of competition with Australia but we have to admit that it is a pretty successful nation. In the area of family law it realised the damage being caused to children and sought to do something about it. Some years ago the Australians opened up their Family Court. They said that an open court meant that families could see what was ahead of them if they chose litigation. The majority actually decide to go through mediation so they do not have the endless costly battles that go on and on and damage children immeasurably. The number of false allegations plummeted—because how can a person make a false allegation when the other partner the family and the grandparents are all sitting there knowing that he or she is lying? 
So Australia has justice in the Family Court and it protects the identity of individuals. It exercises name suppression in general. I see nothing wrong with our Family Court in New Zealand using that model. We have tried so hard to get the Government to look at it yet the provisions in this bill are Clayton’s provisions. It is not opening up the Family Court. The Government is saying: “Yes sure you can have some more family members along.”—and that is good; I am not putting that down—and: “Yes we will publish some of the outcomes of the proceedings.” But they will be censored. We need proper open justice in the Family Court. All of this stuff about protecting identities can be fixed with name suppression. Family Courts around the world have done that. That is the first thing. 
This bill goes in the opposite direction. It pretends to be opening up the court but it does not do anything like it. If members look at the provisions that deal with the fiscal implications they will see that an extra $8 million a year will be spent on more judges more administrators more counsellors bigger database systems more supervised-contact providers—just name it! It is making family law more complex and more costly. There will be a huge increase in legal aid. Is that what New Zealanders want? The answer is no. They want family law to be simpler. They want people to be able to resolve their differences in a friendly fashion not through litigation. This bill will make our family law industry which is already one of the biggest in this country even bigger. 
I say to the Minister sitting over there and to all the other Government members that what they have done in this bill is not right. I hope that the select committee has the courage to make some sensible changes. Today I tabled in the House a petition signed by 600-odd people asking that a select committee look at opening up the Family Court. All we want is for New Zealand to follow the Australian model which works so well. 
The second issue is that the bill fails to address shared parenting. Shared parenting entitles children in the event of a family breakdown the right to frequent ongoing contact with both their mother and their father. In New Zealand we have a presumption of sole maternal custody. Mums get the kids; dads are excluded. We know now because we have had this system for so long that within about 2 years about three-quarters of those children will lose all effective contact with the non-custodial parent. I ask whether we as a nation can afford to have all those children who have gone through the trauma of family breakdown lose the access and support of the other person in the world who loves them more than anybody else plus the grandparents. I say “No”. 
I have been heartened in the last week to hear that the Australian Prime Minister John Howard is saying that his Parliament will have a proper look at shared parenting in Australia. It is looking at introducing it as the predominant family law. I can tell members that if it does that then the outcome of family breakdown will be improved dramatically because in countries such as the United States Sweden and Holland where shared parenting is the law kids do better and families do better. I ask the Government to allow the select committee that considers this bill to look at what goes on in those countries. Everyone will be surprised to see that the outcomes for children are better. 
This bill is called the Care of Children Bill and I that think the House has a responsibility to tackle what is a tough issue. The Government has not done a good job on the bill but I know that with our parliamentary process we can with the will of Parliament improve things. We can make things better. I appeal to Government members on the select committee to take heed of the submissions that come in. Where they think that perhaps the drafting of the bill has gone in the wrong direction then maybe they can change it and maybe New Zealand will end up with family law outcomes we can be proud of—outcomes that will do justice to our children to our families and to this Parliament. 
DAVID BENSON-POPE (NZ Labour—Dunedin South) 
: 
 I am pleased to rise very briefly in support of this legislation which is long overdue. I would like to join my colleagues on this side of the House and congratulate the responsible Minister for some very far-sighted legislation. 
Debate interrupted. 
The House adjourned at 5.59 p.m.