Volume 706 Week 18 - Thursday 4 June 2015Text is incorporated into the Bound VolumeVolume 706 Week 18 - Thursday 4 June 2015[Sitting date: 04 June 2015. Volume:706;Page:4331. Text is incorporated into the Bound Volume.]Thursday 4 June 2015Mr Speaker took the Chair at 2 p.m.Prayers.Business StatementHon SIMON BRIDGES (Deputy Leader of the House): Next week the House is in a 1-week adjournment. When the House resumes on Tuesday 16 June the Government will look to make progress on the Committee stage of a number of bills on the Order Paper including the New Zealand Superannuation and Retirement Income Amendment Bill the Social Assistance (Portability to Cook Islands Niue and Tokelau) Bill and the Environmental Reporting Bill.Questions to MinistersExtreme Weather Events—Dunedin1.METIRIA TUREI (Co-Leader—Green) to the Minister for Climate Change Issues: Does he agree that local authorities will face greater adaptation costs and find it more expensive to protect infrastructure and property as the climate changes; if not why not?Hon SIMON BRIDGES (Acting Minister for Climate Change Issues): Not necessarily in all cases. Good planning manages the risks from natural hazards including the impacts of climate change. Planning involves taking the opportunities of development as well as investing in long-term hazard mitigation. Protection is only one adaptation option.Metiria Turei: Does the Minister agree with the Intergovernmental Panel on Climate Change editor Professor Blair Fitzharris that as global warming continues Dunedin is likely to face more extreme rainfall events storm surges and extreme winds and that low-lying densely populated areas coastal communities and major transport infrastructure including Dunedin Airport are particularly at risk?Hon SIMON BRIDGES: Obviously I would want to see that person’s comments in the context in which they were given. What is also obvious I think in relation to the flooding in Dunedin for example is that it is not possible currently to estimate how much climate change contributes to a particular event. As I think we would all agree extreme weather events have always occurred and always will.Metiria Turei: Does the Minister agree with Dunedin City Council’s submission on New Zealand’s climate change target which says: “More effective mitigation could significantly reduce potential future adaptation costs” and that “the Government should consider investing more in climate change mitigation”; if not why not?Hon SIMON BRIDGES: Of course I agree that mitigation as well as adaptation is very important. That is why we have an emissions trading scheme and that is why there are many measures programmes and research projects that we are doing. Meanwhile I think that New Zealand will also play an important and productive role at the Conference of the Parties (COP21) in Paris at the end of this year.Metiria Turei: How does the Minister justify the National Government’s record on climate change which shows a 13 percent increase in net greenhouse gas emissions to the people of Dunedin and to the Mayor of Dunedin Dave Cull who said today: “There may be some areas with sea level rise that we end up retreating from and not putting any more infrastructure in and actually taking the buildings out of. That is the challenge going into the future with climate change.”?Hon SIMON BRIDGES: There are obviously many things in what the member has said some of which I disagree with. I certainly accept what Dave Cull says—that effectively we do need to have both mitigation and adaptation projects and programmes in place. The Government is certainly willing to play its part in that.Metiria Turei: Is the Minister taking into account increased adaptation costs for local councils when determining New Zealand’s emissions reduction target given that the Dunedin City Council estimates that engineering options to protect private property and infrastructure in high-risk areas against a 0.3 metre rise in the sea level will cost around $10 million and that protection against a 1.6 metre rise in the sea level will cost around $150 million?Hon SIMON BRIDGES: We are doing a lot with regard to adaptation at central government level. We are publishing climate change projections which are very important in terms of the baseline understanding of what is happening. We are providing guidance on adaptation—effectively the principles of planning and good process which are essential for local councils such as Dunedin in terms of how they do things. Of course we have got a New Zealand Coastal Policy Statement which sets out requirements that add clarity and certainty for councils. Indeed as the member will know we are spending $100 million over a decade on research which again is incredibly important. We are committed to collaborating with local government on these important issues.Metiria Turei: By not taking urgent leadership on climate change has his Government not abandoned the Dunedin City Council and the people of Dunedin to pick up the cost of more extreme rainfall events like yesterday’s when the city was swamped in 24 hours by 2 months’ worth of rain causing flooding electricity outages sewerage overflows the evacuation of rest homes and schools the Otago Peninsula being cut off and the side of State Highway 1 “looking like a canal”?Hon SIMON BRIDGES: It would be really good if the member would take a science-based approach to these things. It is simply not possible currently to estimate how much climate change has contributed to the flooding in Dunedin.Dr Megan Woods: Scientists do.Hon SIMON BRIDGES: I am sure actually that all scientists would agree with me on that. What I can say is that we have a comprehensive climate change policy in New Zealand which spans the full gamut of both mitigation and adaptation measures and we can hold our head up well internationally on that.Metiria Turei: Is the Minister not confirming by his dismissive attitude towards the science of climate change that someone is paying the cost of his doing nothing on this issue and that this week that just happens to be the people of Dunedin?Hon SIMON BRIDGES: This Government takes science very seriously; we wish the Green Party would.District Health Boards—Rural Health Services2.Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Health: What recent reports has he received this year on access to rural health services?Hon Dr JONATHAN COLEMAN (Minister of Health): I have received a range of reports mostly positive about improved access to health services in rural communities including positive reports about the Voluntary Bonding Scheme introduced by this Government which has seen more than 800 extra health professionals work in hard-to-staff communities. However there always remains more that can be done.Hon Annette King: If rural communities are getting their fair share of the health budget why did the President of the Royal New Zealand College of General Practitioners Dr Tim Malloy who comes from the rural chapter and has a wealth of experience look at the Budget and say: “I’m disappointed. It’s unclear what they think we do and we have heard the rhetoric around integrated care but the investment isn’t being made.”?Hon Dr JONATHAN COLEMAN: I talk to Dr Malloy regularly and we both agree that district health boards are well funded and have the responsibility for distributing funds to ensure that rural communities receive the funds they require to deliver the services needed by those communities.Barbara Stewart: What is the total amount of new money allocated to rural health services from Budget 2015 so that as previously stated by the Minister “all New Zealanders and their families have access to timely quality healthcare no matter where they live”?Hon Dr JONATHAN COLEMAN: There is $403 million of new money in the Budget and $320 million of that goes to district health boards. It is up to those district health boards to make decisions about how they distribute those funds to the communities they serve.Hon Annette King: If rural communities are receiving their fair share of the health budget and are having their health needs met why have 1700 people in the small towns of Wānaka Cromwell and Alexandra attended meetings unprecedented since the late 1990s to express their anger at the Government’s lack of funding for rural health?Hon Dr JONATHAN COLEMAN: I do not think that those meetings are about a lack of funding; they are about ensuring that the right services are provided to those communities. I can tell you that the population-based funding formula is the same formula that previous Governments have used to distribute funding across the country.Hon Annette King: What was his response to the letter he received from representatives at the meeting in Alexandra which said “We have resolved a vote of no confidence in yourself as Minister of Health. The funding of health services is ultimately your responsibility. You decide with your Cabinet colleagues on priorities. Quite clearly $26 million on the New Zealand flag is far more important than using it for rural health services.” and by the way—Mr SPEAKER: Order!Hon Dr JONATHAN COLEMAN: My response was I got straight on the phone to the gentleman who proposed that notice of no confidence. I told him I was not going to resign. He laughed. We talked through some of the issues and he accepted that there are some real challenges there that the Government is committed to facing up to and solving.Hon Annette King: Has he been told that the Southern District Health Board intends to push ahead with its cuts of 5 percent across the small rural health centres according to its latest board minutes which will lead to 50 percent of in-patient beds being closed the closure of the high-dependency unit at Dunstan and the loss of nearby cardiac acute care at Wānaka?Hon Dr JONATHAN COLEMAN: I have got very clear expectations of the Southern District Health Board and it knows that it has to provide the services required by those communities within the budget that has been allocated to it.Hon Annette King: Is it not rather pathetic for him and the local member to blame the district health board for mismanagement when taxpayers have been paying for intensive monitoring by the Government-appointed Crown monitor since 2010 for 5 years of intensive monitoring; when do you stop blaming the board and take responsibility?Hon Dr JONATHAN COLEMAN: What I think is rather pathetic is that we have got the former Minister from 10 years ago who was very much involved in the problems that occurred in Southland and Otago and who provoked a response from 45 general practitioners writing to the board in 2007 expressing their dismay at the Labour Government’s abysmal performance—and quite frankly we are still left picking up the pieces that Annette King left behind.Hon Annette King: I seek leave to table a Jonathan Coleman speech in the estimates debate in 2007—Mr SPEAKER: No the member will resume her seat immediately. That is not—Hon Annette King: I raise a point of order Mr Speaker.Mr SPEAKER: Is this a fresh point of order?Hon Annette King: Yes Mr Speaker. I notice that in the answer you allowed the Minister to raise when I was Minister in 2007—Mr SPEAKER: Order! The member will resume her seat and I remind her to have a look at the question she asked which led off by saying: “Is it not rather pathetic”. That gave the Minister a very wide avenue to respond. He took it. [Interruption] Order! The member then is using a point of order to table from Hansard a speech that was made. That is freely available to all members if they want to bother to look it up. Some might; I doubt whether many will.Budget 2015—Regional Economies3.ANDREW BAYLY (National—Hunua) to the Minister of Finance: As part of the Government’s wider economic plan how will Budget 2015 help families and businesses in New Zealand’s regions?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: Budget 2015 will help families and businesses in the regions by building on an economic plan that is working for regional New Zealand. Some Budget measures are specific to the regions and some will deliver benefits right across New Zealand. For example in science and innovation there is $25 million over 3 years for new regional research institutes which will support regional innovation. In addition there is an $80 million boost over 4 years to research and development growth grants which will support innovative businesses around New Zealand carrying out research and development.Andrew Bayly: What measures were included in the Budget to support the construction of modern infrastructure in regional New Zealand?Hon STEVEN JOYCE: Much more good news. As part of a $244 million school building package new schools will be built in Whakatāne Gisborne Hastings Rolleston and Hamilton. There will be significant school expansions in Papamoa and Queenstown. The Budget provides a $360 million boost for world-class internet connectivity in the regions. This includes $100 million to expand fast reliable rural broadband and $210 million for the next stage of extending ultra-fast broadband to smaller towns and to reach 80 percent of New Zealanders. There is $52 million for a new wharf on the Chatham Islands and the Government has signed housing accords with local councils in Tauranga Western Bay of Plenty Queenstown Lakes and Tasman and negotiations for further accords in areas such as Nelson are under way.Rt Hon Winston Peters: I raise a point of order Mr Speaker. With respect that was an extraordinarily long answer and frankly—Mr SPEAKER: Order! The member will immediately resume his seat. As I have pointed out to the House I judge the length of answers and what does determine that to some extent is the level of interjection that a Minister may be getting. Since we have started question time there has been an unacceptable level of interjection coming particularly from some members on my left. I am the one who deals with complaints from the public that the amount of cross chatter in this House is meaning that people who want to view Parliament and watch the proceedings are unable to understand the answers because of the level of interjection. A reasonable amount of interjection I fully accept but when it is a constant barrage from one or two members particularly then I will have no choice but to deal with it.Rt Hon Winston Peters: I raise a point of order Mr Speaker.Mr SPEAKER: I have dealt with the first point of order. If it is a fresh one I will hear it.Rt Hon Winston Peters: It is a new point of order. Am I to understand therefore that if there is what you would call untoward behaviour on one side of the House then all the rules about terseness of an answer are out the window?Mr SPEAKER: The member is raising exactly the same point of order but for his benefit I will explain. When an answer is being given by a Minister and there is a constant level of interjection many Ministers take the opportunity of responding to that interjection. I think that it is fair enough to then allow the answer to be longer. But as I said at the start of my ruling on the first point of order the member raised I am here to judge when an answer has become too long and I will make that judgment. I do not need assistance from any member in that regard.Grant Robertson: In light of that answer around the rebuilding of schools will he guarantee today the rebuilding of Northland College?Hon STEVEN JOYCE: That is actually a matter for the Minister of Education. But this Government is investing massive amounts into the Ministry of Education’s School Building Programme. As well as investing the money that is already in the Budget we are investing $1 billion—Mr SPEAKER: Order! [Interruption] Order! On this occasion the Minister did answer immediately.Andrew Bayly: How did Budget 2015 provide further assistance and support for transport and tourism in our regions?Hon STEVEN JOYCE: The Budget allocated $97 million as the first instalment into the Government’s $212 million additional regional roads programme. This allocation will focus on improving five regional highways in Northland the East Coast Taranaki the West Coast and Queenstown. In terms of tourism national cycle trails around the country are supporting tourism and local jobs across the regions and Budget 2015 provided another $3 million to help complete Northland’s Twin Coast Cycle Trail.Andrew Bayly: How does growth in the regions contribute to New Zealand’s international trade in goods and services?Hon STEVEN JOYCE: The regions are making a very important contribution to New Zealand’s international trading position. Statistics New Zealand yesterday issued its first analysis combining New Zealand’s trade in both goods and services. This comprehensive figure of our international trade showed that New Zealand earned $2.8 billion more from exports than we spent on imports in the year to March 2015. These included such things as dairy exports to China; a big growth in kiwifruit; forestry of course is a big contributor; and the meat sector. Of course these are very much products of regional New Zealand. Of course spending by visitors from Australia and the European Union also contributed and that is a big regional contribution as well.Housing Auckland—Housing Developments on Crown Land and Consultation with Iwi4.PITA PARAONE (NZ First) to the Minister for Māori Development: Does he stand by his statement “Ngāti Whātua has offered up a number of options to the Crown and we expect the Crown to deal with them in good faith”?Hon TE URUROA FLAVELL (Minister for Māori Development): Ā tēnā koe Mr Speaker kia ora tātau ki te mema i tuku i te pātai tēnā koe. Kai te whakaae atu au ki tāku i kōrero ai i nanahi nei ka tahi. Ka rua me pēnei rawa te whakamārama i kōrerohia tērā kōrero i raro i te korowai o taku tū ā-kaiārahi o te Pāti Māori. Ka toru i tōna mutunga kai te whakaae atu au mēnā ka hainatia tētahi kirimana i waenganui i te Karauna me ngā iwi he mana tērā me whakamana i tōna tinanatanga.[My thanks to you Mr Speaker to us and to the member who asked the question. Firstly I agree with my statement yesterday. Secondly I should explain that I made that under my co-leadership cloak of the Māori Party. Thirdly I will approve it eventually if an agreement is signed between the Crown and the tribes that is binding and must be put to effect upon its implementation.]Pita Paraone: Was he aware of the meeting between the Minister for Building and Housing and the Tāmaki Collective a month before the Budget and was he invited; if not does he believe he should have been invited to attend?Hon Dr Nick Smith: I raise a point of order Mr Speaker. There was no meeting with the Minister—Mr SPEAKER: Order! That is not a point of order at all. [Interruption] Order! The question has been asked. It was a legitimate question. I am not ruling it out of order. It is over to the Minister to respond.Hon TE URUROA FLAVELL: Kāore au i mōhio mō tērā hui.[I am not aware of that meeting.]Pita Paraone: Does he believe that Ngāti Whātua would be justified if they were to take court action against the Government for being denied the right of first refusal regarding Crown land?Hon TE URUROA FLAVELL: Mā Ngāti Whātua mā tētahi iwi rānei rātau e kōrero.[Ngāti Whātua or some other tribe will represent them.]Pita Paraone: Does he as Minister for Māori Development believe that NgātiWhātua and other tangata whenua would be better off economically and socially if the Crown land in question were to be offered to Māori first rather than being sold to foreign owners?Hon TE URUROA FLAVELL: Mā ngā iwi tērā take e kōkiri nō rātau te whakaaro kai a rātau ngā kirimana tōna mutunga kai a rātau te kupu whakamutunga.[The tribes will lead that matter. The viewpoint is theirs they have the agreements and they will have the final say eventually.]Future Investment Fund—Spending Commitments5.GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Did he promise to spend $1 billion on education and $1 billion on health from the Future Investment Fund; if so is there enough money not yet committed in the Future Investment Fund to keep his promise?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: I am delighted that the member now recognises the benefits of the Government’s share offer programme which he and his colleagues previously opposed—with quite negative consequences for New Zealand taxpayers. Yes we said we would invest those amounts and we will. In terms of final allocations from the Future Investment Fund they will be determined alongside decisions about recycling capital from other areas. The member can rest assured that there will be sufficient money for health and education.Grant Robertson: Does he stand by the statement that he made in the House earlier this week that he will borrow money in order to ensure that those funding promises are met?Hon STEVEN JOYCE: I am not in a position to verify that exact statementright at this moment but I can say that there are a number of options for the Government always to meet its capital commitments. One for example is recycling other capital. Two is spending money and growing debt. Three we have the Future Investment Fund and it is a thrill to see Grant Robertson now supporting the share offer sale that he so vehemently opposed.Grant Robertson: Why has the Minister said as he did in the House this week that he would borrow money to fund the shortfall in the Future Investment Fund when it was specifically set up by him so that he could “fund these things without borrowing from overseas lenders”?Hon STEVEN JOYCE: I am really enjoying this line of questioning—Mr SPEAKER: Order! Just answer the question.Hon STEVEN JOYCE: The Government has done exactly that. It has avoided borrowing $4.7 billion because we did not listen to the Opposition and refuse the Government’s share offer programme. That is a good success for this country for the education sector and for the health sector.Grant Robertson: Is it not the case that this is actually just one more broken promise to go with the broken promise that wages would go up by $6000 by 2017 the broken promise of the surplus this year and the broken promise of no new taxes? Is his Government really on the brink of something special or is it just teetering on the brink with no plan at all?Hon STEVEN JOYCE: The member can keep trying those lines if he likes but New Zealanders know that New Zealand is running a strong economy relative to the rest of the developed world that we are not in fact introducing new taxes that we are in fact running the country responsibly and its fiscal position is steadily improving despite the challenges of the world economy; and that there is not a snowball’s chance in the proverbial that they will turn to Grant Robertson any time soon.Budget 2015—Beneficiaries6.MATT DOOCEY (National—Waimakariri) to the Minister for Social Development: How will Budget 2015 help the Government meet its Better Public Services target to reduce the number of people on benefits?Hon ANNE TOLLEY (Minister for Social Development): Budget 2015 provides extra support to help more people into work and supports the Government’s Better Public Services target of a 25 percent reduction in the number of people receiving main benefits. We are committing $32.5 million in additional operating funding for a number of programmes and initiatives to ensure this. These are designed to remove barriers preventing people from working and to help them get off welfare and to thrive.Matt Doocey: What specific initiatives or programmes will receive this funding in 2015-16?Hon ANNE TOLLEY: Budget 2015 commits to funding 10000 extra places for intensive case management particularly for those with health conditions and disabilities who are at a high risk of long-term dependence. It also extends the 3K to Christchurch to other parts of the country. So far we have had 1300 people receive the payment to relocate to Christchurch since we introduced the scheme in 2014. We are funding 800 placements each year for the Limited Service Volunteer scheme to prepare young people for work and we are investing $8.6 million in new funding over the next 4 years for the out-of-school care and recreational subsidy to help families with the costs of before and after school care particularly for parents with work commitments.Matt Doocey: How does Budget 2015 build on the Government’s welfare reforms to support people off welfare and into work?Hon ANNE TOLLEY: We are making very good progress in reducing the number of people on benefits which is down by 38000 compared with 3 years ago. I think more important is that the number of children in benefit-dependent households has fallen by almost 42000 over the same period. Our welfare reforms have significantly reduced the number of people on sole parent support by almost 5500 in the last year the lowest number since 1988. The number of those on sole parent support aged 18 to 24 reduced by nearly 2000. That is 10 percent. Getting off a benefit and into employment or study reduces long-term welfare dependence and allows individuals and families to thrive.Refugees—Quota7.DENISE ROCHE (Green) to the Minister of Immigration: Will he increase New Zealand’s annual refugee quota from the current 750; if not why not?Hon CRAIG FOSS (Acting Minister of Immigration): The Government reviews the refugee quota programme every 3 years. That is coming up again early next year at which time the Minister of Foreign Affairs and the Minister of Immigration will make a recommendation to Cabinet. We are firmly focused on improving the settlement outcomes for those refugees who do come to New Zealand. New Zealand is one of only 26 countries that resettles refugees referred by the United Nations High Commissioner for Refugees and our programme is recognised by the United Nations High Commissioner for Refugees as a model of best international practice.Denise Roche: Is the Minister embarrassed that New Zealand is 87th in the world per capita for refugee intake and that this Government has accepted fewer than 5000 refugees in total from all the refugee categories since National came to power 6 years ago?Hon CRAIG FOSS: No. In fact I am proud that our programme is recognised by the United Nations High Commissioner for Refugees as one of the best in practice internationally.Denise Roche: I seek leave to table a document prepared by my office today that shows the number of refugees accepted by New Zealand split into categories between 2009 and 2014. The information originally came from the Parliamentary Library.Mr SPEAKER: Order! It is probably of marginal value but the House can decide. Leave is sought to table that particular document. Is there any objection to it being tabled? There is not. It can be tabled.Document by leave laid on the Table of the House.Rt Hon Winston Peters: I raise a point of order Mr Speaker. Was that an objective view of somebody’s sincere submission to the House?Mr SPEAKER: Order! If the member is going to test my patience he will get the opportunity to be leaving the place early. [Interruption] Order! Let me explain again for the benefit of the member. The purpose of tabling a document is not to make a political point; it is to further inform the members. On that occasion I think I would have been wiser not to have put the leave in the first place. It was an attempt by the member to reinforce a point she had made in the question that she had asked. I decided to give her the benefit of the doubt. At the end of the day when the leave is put it is over to the House as to whether it accepts that particular document. On this occasion no one saw fit to object. It has been tabled.Denise Roche: Are Amnesty International the Human Rights Commission the New Zealand Red Cross and the Refugee Council wrong when they call for the Government to do more and increase our refugee quota which has not increased in 28 years?Hon CRAIG FOSS: Yes I do note that it has not changed for quite some time across many Governments some supported by that particular party. I do respect the views of those various organisations but once again I refer to New Zealand’s programme as being recognised as an example of best practice. I also note that yes the numbers are very important but what is also important is the quality of resettlement in our country and the activity and work that many agencies and NGOs are doing to make sure that refugees are able to move in and be part of the New Zealand community as much as possible given some of the challenges many of them face.Denise Roche: Does he agree with the Prime Minister’s comments this week that not being able to help all 50 million refugees around the world is an excuse not to increase our quota which would make an enormous difference to the lives of those individuals we allow to settle here?Hon CRAIG FOSS: As I noted in my substantive answer the quota—the nominal number of 750—is up for review next year. I do note in fact that if we add in asylum seekers and families then actually that number is around 1100 in recent years. I do agree with the Prime Minister on behalf of the Minister.Roading Auckland—Pūhoi to Wellsford Route8.MARK MITCHELL (National—Rodney) to the Minister of Transport: What update can he give on the Government’s Pūhoi to Wellsford road of national significance?Hon SIMON BRIDGES (Minister of Transport): Construction of the Pūhoi to Warkworth highway has moved I am pleased to say—very pleased to say—a step closer with the announcement by the New Zealand Transport Agency that it will finance design and build the project as a public-private partnership. The Pūhoi to Warkworth project is the first section of the Pūhoi to Wellsford road of national significance. This critical link will provide opportunities for economic and social development in Northland providing a better connection with Auckland for freight tourism and motorists.Mark Mitchell: What update can he provide on the Warkworth to Wellsford section of the Pūhoi to Wellsford road of national significance?Hon SIMON BRIDGES: The Government is committed to completing the Pūhoi to Wellsford road of national significance. Options to progress the second section the stage from Warkworth to Wellsford are currently being considered as part of a wider strategy to identify a long-term programme of improvements to the entire State Highway 1 between Auckland and Northland. The Government expects to receive advice on the Warkworth to Wellsford section later this year.Rt Hon Winston Peters: Before we celebrate this magnificent news how does the Minister explain that the New Zealand Transport Agency website confirms that for the Warkworth to Wellsford section there is no start date for consultation that there is no start date for construction and that it does not have a recognised viable route past Warkworth through the Dome Valley?Hon SIMON BRIDGES: Let me reassure the member that we are committed to completing the full Pūhoi to Wellsford road of national significance. As I say we expect to receive advice on that second portion later this year.Rt Hon Winston Peters: If any of that pledge with respect to Warkworth to Wellsford is true why would it be that the New Zealand Transport Agency website has as we speak confirmation that there is no start date for consultation that there is no start date for construction and that it has no viable route through Dome Valley?Hon SIMON BRIDGES: Because I like to surprise the right honourable member.Housing Auckland—Housing Developments on Crown Land and Consultation with Iwi9.PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Housing: Can he confirm he intends to redesignate land held for transport and education as “land that is held for state housing purposes” so that under section 136 of the Ngā Mana Whenua o Tāmaki Makaurau Collective Redress Act 2014 he can circumvent the right of iwi to first right of refusal under treaty settlements?Hon Dr NICK SMITH (Minister for Building and Housing):No we will be following the longstanding process that has been followed by multiple Governments—that is where an agency no longer requires land it is first offered to other public entities. This process has always preceded either offers back to former owners or right of first refusal. I draw to the member’s attention that under this process land has been acquired for housing at Hobsonville from the Defence Force at McLennan Park in Papakura from the Ministry of Social Development at Weymouth and last year from the New Zealand Transport Agency at Awatea Roadin Christchurch. We will be following exactly the same process with the Government’s latest new initiative on housing.Hon Nanaia Mahuta: Did he seek Crown Law advice as to whether or not the right of first refusal provisions are prejudicially affected without following the process set out in the property redress provisions of the Tāmaki Collective deed?Hon Dr NICK SMITH: Yes I have sought legal advice to use the Housing Act 1955 to acquire land in areas such as Hobsonville—in the same way that the previous Government used exactly the same provisions. That was done by those members. They did the same at McLennan Park. They also may be interested to know that they used exactly the same provision at Weymouth. The double standard opposite is that when they use the process sometimes they think it is helping. When we use it somehow—Mr SPEAKER: Order!Hon Nanaia Mahuta: I raise a point of order Mr Speaker. The question was specific in that I asked whether Crown Law advice had been sought—Mr SPEAKER: Order! The question was answeredimmediately.Joanne Hayes: When was the decision made to acquire from other agencies under the Housing Act 1955 land for housing at Hobsonville Weymouth and Papakura and what progress was made on constructing houses in these areasand in what time frame?Hon Dr NICK SMITH: The decision to use the Housing Act 1955 to designate land for housing purposes was made in 2001 by Cabinet—Hon David Parker: That’s before the settlement.Hon Dr NICK SMITH: —and former Prime Minister Helen Clark turned the first sod in 2002. The practice at that time for the benefit of members opposite was that it was land banked if there was not a Treaty settlement in the area but that was not done either. The project became completely moribund and absolutely no houses had been built by 2008. What has changed is that yes they used the Housing Act powers to designate a whole lot of areas for housing like at Weymouth Hobsonville and McLennan Park. The only problem was that they did not build a single house.Hon Nanaia Mahuta: Was the meeting that took place on 23 April to outline the proposed Auckland Crown land housing programme and to identify the sites that were under consideration considered to be a notice to the limited partnership; if so why?Hon Dr NICK SMITH: The meeting that was held about a month before the Budget was with the chair of the Tāmaki Collective and it outlined the Government’s intentions for the programme. It was a preliminary heads-up because actually Cabinet had not made the decision at that point to make the Budget provision—it was about a couple of weeks before the Budget figures were finalised. I would also note that since that time there has been an exchange of letters and further meetings with the Tāmaki Collective.Hon Nanaia Mahuta: Does the provision of State housing on surplus Crown land in Auckland require all homes to be owned by the State and not available for private property interests?Hon Dr NICK SMITH: I draw the member’s attention to the definition of “State housing purposes” under the Housing Act. It says: “State housing purposes means the erection acquisition or holding of dwellings … for disposal by way of sale lease or tenancy; and includes … schemes of development and subdivision into sites for dwellings:”. The Act is very clear that it includes the provision of housing for sale.Phil Twyford: Why has he deliberately undermined the good-faith approach taken by his colleague the Minister for Treaty of Waitangi Negotiations when negotiating settlements with the same Auckland iwi that he is now trying to rort with his panicked land-deal stunt?Hon Dr NICK SMITH: A simple question that I have got for members opposite is: why did they vote for the Tāmaki Collective legislation last year which specifically provided for an exemption to the right of first refusal when the land was to be used for housing purposes and why was it not a “rort” which the member now calls it when Labour used exactly the same provision at Hobsonville exactly the same provision at Weymouth and exactly the same provision at McLennan Park?Phil Twyford: Does he regret that his smart-alecky manipulation of the law is likely to provoke legal action that could deny Aucklanders thousands of houses that they are desperate to have?Hon Dr NICK SMITH: When a specific section of the law and the longstanding practice of Government has been that when land is no longer required by an agency like the Ministry of Defence the Ministry of Transport or the Ministry of Education it is to be made available first for housing—something that the previous Government did repeatedly; something that was specifically included in the Tāmaki Collective legislation—I just see how desperate the Opposition has become.Phil Twyford: What advice has he sought or received regarding possible countersuit litigation from disgruntled property developers after the sweeping promises he is said to have made to them last Friday and what contingency has been made for any resulting compensation payouts?Hon Dr NICK SMITH: I know the member is jealous that last week we had a very constructive meeting of 250 developers who want to partner with the Government for housing. What I find difficult with this member is that he spends half his time arguing that the Government needs to do more on housing and then the other half criticising this initiative criticising HomeStart and criticising special housing areas. The fact is that this Government is making great progress as seen by the fact that we have doubled the rate of new house builds in Auckland.Phil Twyford: Why did he rush out his half-baked Budget announcement resulting in plans to build family homes on substations and cemeteries then slash his promised 500 hectares to only 30 hectares and now facing the likelihood that it will all end up in court try to blame everybody else for yet another self-inflicted housing fiasco?Hon Dr NICK SMITH: I remind the House that 18 months ago we signed the Auckland Housing Accord and the member opposite said that there was no way the Government would meet the targets. Actually we are running about a thousand ahead of those targets. What I find bizarre as well is that the member is all in favour of a more intensive Auckland except that he is opposed to houses being next to substations he is opposed to houses being next to railway lines he is opposed to houses being next to motorways—he is opposed to houses anywhere but somehow he still wants them.Emergency Services—Funding10.CLAYTON MITCHELL (NZ First) to the Minister of Internal Affairs: Does he stand by all his statements regarding the Fire Service?Hon PETER DUNNE (Minister of Internal Affairs): Yes.Clayton Mitchell: Will he consider including voluntary organisations like Surf Life Saving New Zealand in an umbrella organisation for all emergency service providers to ensure that they receive adequate funding for the important role that they play in New Zealanders’ lives?Hon PETER DUNNE: We are currently reviewing the activities of the New Zealand Fire Service in respect of its responsibilities. I am not quite sure where Surf Life Saving fits into that particular area but if the member wants to make a submission on the Fire Service inquiry he is perfectly welcome to.Education Council of Aotearoa New Zealand—Appointments11.MELISSA LEE (National) to the Minister of Education: What recent appointments has she made that will support quality teaching and leadership to deliver high-quality education for New Zealand children?Hon HEKIA PARATA (Minister of Education): After a public nominations process I am delighted to announce that I have appointed nine exceptional teachers and educational leaders to the Education Council of Aotearoa New Zealand. I have every confidence that Barbara Ala’alatoa as the chair Anthony Mackay Claire Amos Simon Heath Ripeka Lessels Iva Ropati Lynda Stuart Professor Helen Timperley and Clare Wells will excel in their new roles of lifting the quality of teaching for Kiwi kids. I am particularly proud of the mix of experience expertise and voices we have on this council from early childhood education all the way through to tertiary education north and south male and female and Māori Pasifika and Pākehā all of whom are going to be involved in raising the quality of teaching for all of our kids. Six members hold current practising certificates. The law requires that only five hold such certificates.Melissa Lee: How will the Education Council ensure that we are delivering the best-quality education New Zealand has to offer Kiwi kids?Hon HEKIA PARATA: While continuing to establish and maintain teacher registration criteria and disciplinary matters the council will also be the thought and practice leader in relation to quality teaching from early childhood education to senior secondary education and it will be setting standards ensuring a robust appraisal system commissioning research and championing informed debate. The Education Council will be all about the quality of our education profession.Animal Welfare—Livestock Exports12.Hon DAVID PARKER (Labour) to the Minister for Primary Industries: Is the Customs Export Prohibition (Livestock for Slaughter) Order 2013 still in force and how does it differ other than as to dates from the Customs Export Prohibition (Livestock for Slaughter) Order 2010 and the Customs Export Prohibition (Livestock for Slaughter) Order 2007?Hon JO GOODHEW (Associate Minister for Primary Industries) on behalf of theMinister for Primary Industries: Yes the Customs Export Prohibition (Livestock for Slaughter) Order 2013 is still in force. Other than the dates and clarification of the definition of “Director-General” which was updated in 2013 after the Ministry for Primary Industries was formed it is no different from the order from 2010 and the order from 2007.Hon David Parker: Was the primary reason for the original restrictions on the export of live sheep for slaughter the death and distress of many sheep while being shipped to the other side of the world?Hon JO GOODHEW: I am aware that there was certainly consternation about the deaths of the sheep which happened back in 2003.Hon David Parker: Did the reasons for subsequent extensions of the prohibition extend to the welfare of the sheep upon arrival including concerns that the method of slaughter would not meet the New Zealand animal welfare standards that apply to the slaughter of sheep in New Zealand?Hon JO GOODHEW: The welfare of animals leaving New Zealand has always been of paramountcy. In fact the prohibition order was extended by subsequent Governments after this issue arose under the term of the previous Government. Animal welfare legislation has subsequently been amended which will make the requirements even more certain in the future for any stock that are exported from New Zealand.Hon David Parker: I raise a point of order Mr Speaker. My question sought to clarify whether the extension was because of this rising concern about the welfare of sheep upon arrival because—Mr SPEAKER: Order! I heard the question. I listened very carefully. I listened to the answer. I suspect actually that the answer has addressed the question but for the benefit of this issue—it has been the focus of a lot of questions over recent weeks—I am going to allow the question to be repeated.Hon David Parker: Did the reasons for subsequent extensions of the prohibition extend to the welfare of the sheep upon arrival including concerns that the method of slaughter would not meet the New Zealand animal welfare standards that apply to the slaughter of sheep in New Zealand?Hon JO GOODHEW: Although I do not believe that I have in front of me the exact answer to the question the member has raised what I believe is that there was a continuation of concern about animals being exported for slaughter and the prohibition order was continued for that reason.Hon David Parker: I raise a point of order Mr Speaker. I am about to seek leave to table some documents but I think I need to raise the context first. The rules surrounding the release of Cabinet papers entitle former members of Cabinet to access those Cabinet papers but they do not entitle us to release those documents and that has to be determined by the Government under the Official Information Act. Yesterday the Prime Minister referred to two Cabinet papers in attacking the Opposition and did not release them and it is now my intention to seek leave to table those two documents but I want to alert you to this issue so that you can consider whether it is within the power of Parliament to order the release of those documents—[Interruption]Mr SPEAKER: Order! This is an important point of order and I wish to hear it.Hon David Parker: You might want to take other contributions from the House before you determine that but it is an important point I think which needs to be determined before I seek that leave.Mr SPEAKER: Can I just clarify with the member raising the point of order that he is saying to me that by convention he has no rights as a former Minister to table that—can I just have that clarified by the member.Hon David Parker: No I am not saying that. My understanding is that Parliament is in control of its own destiny. The difficulty the Opposition has is that we were attacked by means of these papers and we have not got the right to release them. I would like them to be released; I do not think there is any public interest that is served by their not being released. But because it is slightly unusual I want to seek some confirmation that Parliament is indeed in charge of its own destiny here.Hon Simon Bridges: I think there are two points at least on this relatively complex matter. I think that the first is the precedent effect. It would create I think a very bad precedent where suddenly any member could table or at least seek to table Cabinet papers of former Governments. I think actually as much for the Opposition as for the Government that would be truly unfortunate. Secondly I think there is a very proper process to go through on these papers outside of this place that needs to be gone through.Mr SPEAKER: Before I make a ruling on this can I just clarify—is the member going to seek leave to table the papers now or is the member intending to ask—Hon David Parker: Yes I have the papers here and I intend to seek leave to table them. The Government can of course refuse leave but I think I am entitled to seek it.Mr SPEAKER: I think the best way forward is exactly that. The member is attempting to in fact break what has been a Cabinet convention for a long period of time which serves both the purposes of Ministers who are in Government and the purposes of former Ministers who are now in Opposition and may potentially be back in Government. I think the best way forward for me is that I will be asked to put the leave I intend to put the leave and it would not be a surprise to me if the current Government did object to it. But that would be a choice for Parliament.Grant Robertson: I raise a point of order Mr Speaker. Just to clarify the point around the convention the important element in the convention is that former Ministers are given the opportunity to look at those papers and decide whether or not they can be given out. What Mr Parker is saying is that on this side of the House we representing those former Ministers are happy for the papers to be released. So that is the element of the convention. The second part of it is then what the Government chooses to do and that is what we will then be testing through the House. So the convention is met by what is being done here.Hon Simon Bridges: In order to be helpful what also occurs in my second point as to the process outside of this place is that there is a Cabinet Manual process and in terms of comity or respect between the executive and this Parliament the leave should not be put and I would put that to you. I think to propose a helpful alternative to that we would certainly be happy as the Government to see the Opposition seek to expedite the proper process on this so that the papers in a proper way can be released but I do not think that it is for this place to be doing that when there is a Cabinet Manual with rules that do need to be followed through. But they could and we could foreseeably be seeing that in the next day or two in terms of the process outside of this place.Mr SPEAKER: I accept what the Minister is saying and members may have a chance to exercise the right shortly.Hon Phil Goff: I raise a point of order Mr Speaker. The Cabinet convention is that there is confidentiality surrounding documents that are released to former Ministers. They have been released to me. My name and the name of the Hon Jim Anderton appear on them. Both of us are happy for these papers—Hon Steven Joyce: Well then follow the process.Hon Phil Goff: I am sorry—this is a point of order; can I be heard in silence please. Both of the Ministers concerned are happy for these papers to be released in full without deletions and the only procedure that normally follows is that the Government then formally does that under the Official Information Act. So we are not actually breaking the convention if the Government agrees to the release in the House now.Hon Steven Joyce: I raise a point of order Mr Speaker.Mr SPEAKER: This is the final point because I do not think I need further help.Hon Steven Joyce: I think that the House—and the House of course is in charge of its own destiny—needs to think through that there is a clear process in the Cabinet Manual for this. I think it is excellent that the former Ministers have made the call that they are prepared to have those papers released but an appropriate approach would be to respond to the executive and say they are happy for those papers to be released and for that to actually occur. Then we do not have any risk of upsetting the process of the Cabinet Manual or existing convention. I would suggest that that is the correct approach for the Opposition members to take rather than the approach they are seeking to take which is to circumvent that process.Hon David Parker: I seek leave firstly to table the paper Livestock Exports for Slaughter and Arrangements for Live Sheep Exports for Slaughter to Saudi Arabia dated 3 August 2007—paper ERD0714.Mr SPEAKER: On the basis that I am satisfied that the convention has been fulfilled by the points made by the former Ministersfrom the Opposition who have said they are happy with it I am going to put the leave and it is over for the House to decide. The House is the master of its own destiny in this case. Leave is sought to table that particular Cabinet paper. Is there any objection? There is objection.Hon David Parker: I seek leave to table the paper ERD0727 which is dated 16 October 2007 and is titled New Zealand’s Requirements for Livestock Exported for Slaughter.Mr SPEAKER: Leave is sought to table that particular document. Is there any objection? There is objection.Hon Steven Joyce: I raise a point of order Mr Speaker. Just by way of clarification can we now confirm that the Opposition has consented to that release and the executive can proceed without any further correspondence from the Opposition?Hon David Parker: I raise a point of order Mr Speaker. You have already heard that from Mr Goff.Mr SPEAKER: What the executive decides to now do with this matter is its business. Are there further supplementary questions? That concludes questions for oral answer. I call on Government Order of the Day—Hon David Parker: I am sorry; I had further supplementary questions.Mr SPEAKER: I thought there may have been some further supplementary questions; that is why I called for them. On this occasion we will step back 20 seconds.Hon David Parker: When the Minister renewed the prohibition on live sheep for slaughter exports in 2013 did he advise Cabinet that this would breach the rights of the Al Khalaf group or the Saudi Government?Hon JO GOODHEW: I have no information in order to answer that question.Hon David Parker: Has his ministry ever advised him in writing that New Zealand faced a credible claim of $20 million to $30 million from the Al Khalaf group?Hon JO GOODHEW: I do not believe that that question is addressed to the correct Minister and I certainly do not have any information to answer it.Hon David Parker: I raise a point of order Mr Speaker. I was not asking about Ministry of Foreign Affairs and Trade advice; I was asking about—Mr SPEAKER: Order! But the question was still addressed. The Minister in answering said she did not have that information.Grant Robertson: I raise a point of order Mr Speaker. As you noted in one of your rulings this has been a matter in front of the House for some time now—Mr SPEAKER: Order! Can I just have the point of order please.Grant Robertson: —with a range of questions. The Minister coming to the House and saying she does not have the information is I think not treating question time with the respect it deserves.Mr SPEAKER: Well I disagree. When a Minister is answering on behalf of another Minister and does not have the information I would far prefer to see the Minister take that approach than attempt to guess the answer and be found to be incorrect.MotionsReserve Bank—Ratification of Funding AgreementHon STEVEN JOYCE (Associate Minister of Finance)on behalf of the Minister of Finance: I move That pursuant to section 161(2) of the Reserve Bank of New Zealand Act 1989 the House ratify the funding agreement entered into by the Minister of Finance and the Governor of the Reserve Bank of New Zealand pursuant to section 159 of that Act on 26 May 2015 and presented to the House on 3 June 2015. The Reserve Bank’s operating expenditure is funded from its gross income and apportioned under a 5-year funding agreement. This funding agreement applies from 1 July 2015 to 30 June 2020. The Act provides that funding agreements apply for 5-year periods. The current agreement expires at the end of this month. The Reserve Bank makes a profit each year and a dividend is expected to be paid to the Crown after allowing for the bank’s capital requirements. Since 2008 the Reserve Bank’s responsibilities have expanded in a number of areas including prudential supervision of insurers and anti - money-laundering compliance as well as developing its macro-prudential policy capabilities and tool kit. Having acquired and invested in these capabilities a period of consolidation is planned for the next 5 years without compromising the quality of core outputs. The agreement reflects the bank’s recognition of the tight fiscal position.This agreement sees the Reserve Bank’s core operating expenditure profile which excludes the cost of issuing banknotes and coins increase marginally from $49 million in 2014-15 to $49.6 million in 2015-16 then increase to $52.1 million by the final year of 2019-20. The increase in core operating expenditure over the 5 years is modest averaging about 1 percent per year and below the target rate of inflation. Cost growth will be minimised as a result of cost-saving initiatives including a restructuring of the workforce and operational expenditure that commenced in February of this year. There are limited new initiatives included in the agreement and limited provision is made for contingencies to allow for unforeseeable priorities that are not of a scale to warrant seeking a revision to the funding agreement. The agreement includes funding for issuing banknotes and coins including the provision of an additional $35 million in total to upgrade the country’s banknotes. This would ensure New Zealand’s banknotes keep up with technological advances in security features. The transparency costs associated with issuing banknotes and coins are classified separately from core operating expenses.Over the course of the current agreement the Reserve Bank has continued to strengthen its performance developed a more integrated approach to policy and enhanced its infrastructure and risk management. The Government expects it to deliver excellence in outcomes while providing leadership across its entire range of activities. The governor understands the need to use the resources he has available to best effect. The Reserve Bank faces a full agenda in the years ahead to help position the New Zealand economy for sustainable expansion while maintaining price and financial systems stability. Ratification of this new 5-year funding agreement is evidence of a commitment by Parliament that the Reserve Bank remains operationally independent and that it is equipped to fulfil the range of roles that Parliament has given it. I therefore ask for the House’s support in ratifying this new funding agreement.GRANT ROBERTSON (Labour—Wellington Central): I rise on behalf of the Labour Party to support the motion and to support the Reserve Bank getting the funding that it needs. More than ever the Reserve Bank needs this funding because it is having to do the work that the Government is failing to do. It is having to effectively run housing policy in New Zealand today because the Government has abrogated its responsibilities in that regard. Do not let it be said that this is just Opposition parties saying this. What comes before us today is an agreement between the Minister of Finance and the Governor of the Reserve Bank but it has to be set in the context of recent announcements from the bank from the governor himself and from his two deputies around their urging for the Government to do something in the area of housing. It is unprecedented for the governor and his two deputies to launch wave after wave of urging of the Government to do something in housing to do something about the supply of housing and to do something about managing demand issues.In speeches by deputy governors Grant Spencer and Dr John McDermott we have seen the bank taking on the role of housing policy adviser for the Government which is an extraordinary position for the Reserve Bank to find itself in. When we look at what Grant Spencer said in his speech he isolated the Government’s complete failure to manage the question of the supply of housing in Auckland. What we know from the Reserve Bank’s visits to the Finance and Expenditure Committee is that it recognises the 20000 house shortfall in terms of what Auckland needs right now and the failure of the Government to create the supply or support the creation of the supply to reach the target of 10000 houses a year from there currently reaching around 7000 in terms of consent. The bank itself has clearly said to the Government: “You are not doing enough on housing supply especially when it comes to Auckland.” But then the bank also went on to say that in terms of demand issues it was now being forced to act because there was a Government that was unable to manage that demand. It had stuck its head in the sand.I warmly support the idea that the Reserve Bank and the Minister of Finance have reached an agreement on the funding that it needs because that is now needed more than ever if we are actually to have the Reserve Bank fulfil all of the roles that have been left to it. The Government has effectively outsourced housing policy to the Reserve Bank because of the complete failure over 7 years to create a sustainable plan for housing in the Auckland region and for housing policy that affects the rest of New Zealand. Never let it be said that this is not an issue that affects people outside of Auckland. It does. We know that right around New Zealand today people are paying higher interest rates than they need to because of the Government’s failure to deal with the Auckland housing crisis. The Reserve Bank Governor is the person who has been telling us he would like to lower interest rates but he is unable to do so for fear of pouring petrol on the overheated Auckland housing market. That failure by the Government to deal with the Auckland housing crisis has impacts right across New Zealand let alone if the Reserve Bank Governor’s diplomatic language of a sharp correction or as most people would know it the bursting of the Auckland housing bubble were to happen. The rest of New Zealand would then really understand just how little this Government has done and just how dangerous its inaction in the housing area has been.The Reserve Bank has found itself in the position as I say of taking on extraordinary measures to tell New Zealanders that the Government is failing it on housing and that more needs to be done. When the Reserve Bank Governor came to the Finance and Expenditure Committee after his last Financial Stability Report he highlighted the three significant risks to New Zealand’s financial stability two of which directly relate to this Government’s policy failures. The first of those as I have said is in housing. The second of those is in the risk to New Zealand of the massive decline in value from the dairy sector entering New Zealand. Although the Government is not directly responsible for the decline what the Government is responsible for is the failure to diversify the economy in the face of what it knew to be a 5-year glut in global dairy prices. We find ourselves with the dairy auction from this week seeing a 54 percent drop in the value of those dairy prices over the last year and 28 percent since February. This is a sector that makes up a third of our exports and the Government sits there on its hands and hopes for the best. It hopes it will be able to ride out the wave of commodity prices—Mr DEPUTY SPEAKER: Order! This motion is incredibly narrow. The member is wandering a long way away from it. Having read through it myself I am aware of that and so will the member be. So he should stick to the motion.GRANT ROBERTSON: Thank you Mr Deputy Speaker. What I am doing is assessing whether or not the funding agreement struck between the Minister of Finance and the Reserve Bank Governor is sufficient in order to meet the tasks that the Reserve Bank has. As I have indicated to you I do not believe that given that the outsourcing of housing policy from the Government has gone to the Reserve Bank. It would certainly need a high level of money. I see that it is looking at around $49 million for this year in the motion that we are debating. It is a legitimate question to ask—whether that is sufficient when the Government has outsourced housing policy and has left New Zealand’s financial stability exposed by its failure to diversify the economy. So it is a legitimate question for this House to ask whether or not the Reserve Bank is being funded sufficiently to do its job. What I would suggest to you is that the longer the Government goes on failing to do its job the more difficult it will get for the Reserve Bank to do the job that is required of it with the funding that is put forward in today’s motion.If I may move to another matter in this regard—the funding agreement is based around the idea of the policy targets agreement. That is specifically what one of the measures within the funding agreement is about which is to allow the Reserve Bank to implement the policy targets agreement. I want to say that it is in my belief high time for a review of that policy targets agreement and high time for a review of monetary policy in general which I do not believe is covered under the funding that is proposed in here today. We have reached a point where the policy targets agreement is all but meaningless. We heard in the Finance and Expenditure Committee that we are likely to have 6 years outside of the inflation band that is provided for in the policy targets agreement. We find ourselves asking what the point is of such an agreement if we are constantly outside of it. The Reserve Bank Governor himself has said to us that inflation expectations are simply not being met quarter after quarter year after year. Questions have even been raised as to whether or not we are measuring the right things when it comes to inflation.The question for this House is whether the Reserve Bank has the resources in order to be able to assess that. I think it should be funded for a comprehensive overview of monetary policy and of the policy targets agreement. On this side of the House we continue to believe that although we want independence for the bank provided for by this funding and although we want to ensure that the bank has a clear focus on price stability and on controlling inflation if that is all we get the bank to do and it does not meet it then we need to reassess what we are doing. So we want to see an overhaul of monetary policy to ensure that it works for all New Zealanders—that it works for exporters that it ensures and helps to control the exchange rate and that yes it controls inflation but not at the expense of the health of the overall economy.I want to raise one last matter that is relevant to me as a local MP actually and indeed to the operations of the Reserve Bank. This year or possibly early next year will mark the end of the operation of the Reserve Bank’s childcare centre—the creche that operates in the building at the beginning of The Terrace. It is with great regret as the constituency MP that I note that. This has been a service that has been well used by many MPs’ children and by the children of public servants and unfortunately because actually of some of the things in the funding agreement today around the tasks of the Reserve Bank that is no longer possible. It is my understanding that an alternative premises may now have been located and I want to thank the Reserve Bank Governor for his allowance for some extra time for that childcare centre in those premises. But it is with regret that something that has served the people of this city so well provided for by the Reserve Bank does not now seem possible.I want to conclude by saying that the Labour Party will vote for this funding agreement. We support a strong independent Reserve Bank but we cannot sit on the sidelines and let the Government push more and more work on to that bank by failing to have a housing policy that works by failing to diversify the economy and by not actually giving the Reserve Bank the kind of policy targets agreement that would enable a monetary policy that actually supports the exporters of New Zealand.Dr RUSSEL NORMAN (Green): I rise on behalf of the Green Party to speak in favour of the Government motion No. 1 with regard to the funding agreement between the Reserve Bank and the Minister of Finance. The kinds of activities that are financed by this funding agreement are of two basic natures. There is price stability and there is financial stability. For the first probably almost 20 years of the operation of the Reserve Bank of New Zealand Act—so through the 1990s and up to the global financial crisis—the main focus of the debate really was around price stability. The issue was around the operation of monetary policy and the way the Reserve Bank operated monetary policy.Essentially the Reserve Bank had a single tool to achieve a single objective. So it had the official cash rate and interest rates attached to the official cash rate in order to achieve a single target—inflation—within certain bounds. The debate that occurred around the Reserve Bank’s activities—activities that are funded by this funding agreement—was really that by targeting inflation with a single tool effectively what the Reserve Bank was doing was consistently crushing activity in the tradable sector and in the productive sector by driving up interest rates very high and by increasing the value of the New Zealand currency by having high interest rates or high official cash rates; that is that the tradable or productive sector of the New Zealand economy was consistently affected in a negative way by this particular approach.The question was whether it was it too narrow a target just to have inflation alone as the kind of activity funded by this agreement or whether the New Zealand Reserve Bank should be like pretty much every other Reserve Bank in having more than one target—essentially having an inflation target on the one hand and having some kind of other economic activity target on the other whether it was external imbalances whether it was employment whether it was GDP output. So the debate was about whether we were really restricting ourselves by just having one target for the Reserve Bank—inflation.The second question was whether the official cash rate was the right tool to tackle inflation coming out of particular sectors of the economy anyway. In particular as we came through the early 2000s when we had this massive housing bubble from 2002 to 2007 when the price of housing doubled in the space of less than 7 years the question was whether the official cash rate was actually the right tool to deal with the inflation that was coming out of the housing sector or whether we should have had tools that were specifically focused on asset inflation coming out in that sector.A lot of this debate then was superseded by what happened during the global financial crisis because the second part of the Reserve Bank’s activities which never received a lot of attention prior to that of course was financial stability. Post the global financial crisis and the collapse of the finance companies and with a global focus on financial sector stability that part of the Reserve Bank’s mandate has come to the fore.What we have seen is a very creative response in many respects by the Reserve Bank in which it has used its mandate under financial stability in order to try to tackle some of the asset bubble problems in the Auckland housing market. So we have seen the evolution of the loan-to-value ratios produced by the Reserve Bank targeting that problem and then more recently we have seen the restrictions on loans to investors going specifically into the Auckland housing market. So there have been some very interesting developments in terms of the activities of the Reserve Bank things that 15 years ago—or even 10 years ago—no one would have guessed that the Reserve Bank was going to be doing and that were part of the debate.The issue now is the crossover between the two kinds of activities of the Reserve Bank: the price stability activity and the financial sector stability activity because by targeting the Auckland housing market and trying to restrict asset inflation in the Auckland housing market it is actually also helping the other objective. It is targeting the Auckland housing market with the objective so it says of financial stability because we do not want the Auckland housing market to get out of control but it does also have other benefits in terms of price stability. So in the other kind of activity that the Reserve Bank is financed to do which is around price stability there is a synergistic kind of relationship by the targeting of the Auckland housing market in terms of inflation.Except of course that what has happened now is inflation is just not really a problem at all. We are seeing extremely low levels of inflation and so now it is really the targeting of the Auckland housing market by the Reserve Bank that has become one of its No. 1 focuses. In this respect I think it is important to see that the Reserve Bank’s activities really need to be complementary with central government and there needs to be a synergy between the Reserve Bank and the rest.The Government to give it its due has introduced a capital gains tax. It is of a very limited nature but it has some benefits in terms of controlling asset inflation in the Auckland housing market. Also some of the restrictions around foreign buyers—the requirement to lodge a tax number—I think will help a little bit as well. That will assist the Reserve Bank in its job in trying to control the bubble in the Auckland housing market.The Government says that it is increasing supply and the Reserve Bank has spoken repeatedly about the need to increase supply. The thing is when we had the Reserve Bank Governor in front of the Finance and Expenditure Committee recently he made the point that if you really wanted to increase supply rapidly and affordably in Auckland it had to be via apartments. This idea that we can get out of there and—David Seymour: That’s the point you made—it’s not the point he made.Dr RUSSEL NORMAN: It is the point I made and the Reserve Bank Governor agreed with that point and if you read the transcript you will see that that is actually on the record. The way to actually increase housing supply quickly in Auckland is through apartments not through sprawl. In fact you cannot beat the problem through sprawl; there is just no way that you can increase supply fast enough. So if you are actually going to deal with that supply problem and support the Reserve Bank in its activities—the Reserve Bank activities trying to control the Auckland housing bubble as is financed by this agreement that we are discussing today—then you need to deal with that problem. Compact urban form not sprawl is going to be much more helpful in terms of dealing with the Auckland housing problem.There is also the issue of foreign buyers which was discussed by the Reserve Bank Governor and we discussed it in the Finance and Expenditure Committee with the Reserve Bank Governor on many occasions. The issue is we do not really know the exact level of offshore demand for Auckland housing and there is a lot of conjecture as to what exactly it is. We do know it is very significant and in other markets similar to the Auckland housing market in Sydney Melbourne and Toronto we are seeing a very significant impact from offshore buyers—Mr DEPUTY SPEAKER: Order! I just have to raise with the member the point I made with the previous speaker and that is that the specific motion ratifies the Reserve Bank’s funding agreement between the Minister and the governor. So he needs to tailor his address in relation to that funding arrangement rather than the other mechanisms he has spoken about or appearances before select committees.Dr RUSSEL NORMAN: So part of what this agreement finances is the operations of the Reserve Bank including paying the Reserve Bank Governor. And the Reserve Bank Governor as part of his job appears in front of the Finance and Expenditure Committee on a regular basis and as part of his job has made many comments about foreign buyers of housing and has debated with pretty much everyone—Mr DEPUTY SPEAKER: And the funding—Dr RUSSEL NORMAN: —to try to figure out what the issue is. The funding agreement funds the Reserve Bank to do all of these activities. It could not do any of these activities were it not for this motion that we are debating right now. So I am discussing the activities financed by this motion that Parliament is currently debating. That is around the Reserve Bank’s interventions on financial stability. Part of that is about trying to control the Auckland housing market. We know that the foreign buyers are a big problem because there may well be unlimited offshore demand for housing in Auckland. So what on earth do you do about that? Can you build your way out of that on the supply side? It is not at all clear that you can.One of the issues that the Reserve Bank and all of us are trying to get our heads around is whether you can control the housing asset bubble in Auckland simply by building more urban sprawl. I think the answer is no. I think this is one of the issues that the Reserve Bank Governor has consistently brought up because financial stability is part of the mandate of the Reserve Bank as is paid for by this motion right in front of the House today. That is how it works. That is part of the history of the debate—how we have ended up now and the two components of the Reserve Bank’s activities which are price stability and financial stability. Price stability was the big focus of the early part of the history after the Reserve Bank of New Zealand Act got passed and then financial stability has been the real focus now.But we really do need the Government to help the Reserve Bank in what it is trying to achieve in the Auckland housing market. At the moment it is not getting as much help as it really needs and is having to carry a lot of the load using the money that we are talking about in this motion right now in developing policy in order to control housing price inflation coming out of Auckland. We need the Government to help out more.Mr DEPUTY SPEAKER: For the benefit of members I will just give a further indication that debate should address the level of funding contemplated in the agreement and its adequacy to support the bank’s activities rather than the actual activities and their wider impact on the economy. I offer you that in the interest of being an efficient Chair.FLETCHER TABUTEAU (NZ First): Thank you Mr Deputy Speaker. I will try to remain within the confines as you have set out. However this is a once-in-a 5-year opportunity to put on record the views of the New Zealand First Party with regard to that relationship and the funding as laid out in this agreement. So I will move on and please—Hon Paul Goldsmith: See how you go.FLETCHER TABUTEAU: Yes I will see how I go.Mr DEPUTY SPEAKER: I will just remind you that this debate may not provide that opportunity because it is to address the matters that I have just outlined. So we will listen with interest.FLETCHER TABUTEAU: Thank you. Most New Zealanders will not actually know much about the Reserve Bank aside from what they hear every several months about setting the official cash rate and interest rates. With regard to the funding we actually used to print the New Zealand money in Whangarei but in 1990 that work was sent offshore across the Tasman and jobs were lost in New Zealand. It is perhaps emblematic of the two-tier economy that seems to have developed of late.The Reserve Bank of New Zealand Act was passed in 1989 which actually seems like a lifetime ago. Perhaps it is for Mr Seymour. My point is that it was hailed as revolutionary and world-leading at the time. However times have changed and given the funding that this bill seeks to endow the Reserve Bank with we must in our opinion ask the question about the relationship that New Zealand has with the rest of the world. What is happening out there?It would appear that having set what was good legislation for its time the Reserve Bank and this Government have kind of got stuck in their ways and after 26 years are not willing to change their minds on how best to discuss an accord or go beyond the bounds of the agreements that are being debated today.Consider the staid nature of this agreement. Consider the fact that as spoken about today inside this House and outside there are actually discussions about change and the need for change. For example I refer to the comments of Michael Reddell ably reported by Hamish Rutherford who described the powers of our Reserve Bank Governor as one of the most powerful on Earth. Mr Reddell ought to know as he was the special economics adviser at the Reserve Bank until April. He describes the governor’s power to make the final call on both interest rate decisions and financial stability as “outdated risky and out of step internationally”. This motion is about our governor’s salary and the relationship that he has with this Minister of Finance.Since Mr Peters was Treasurer the Governor of the Reserve Bank has turned into some kind of monetary policy demigod. In other countries such power is not concentrated as it is here in New Zealand and these are not the words of an embittered former employee. Treasury has even lobbied for change itself. It has seen the inherent flaws in investing such vast powers in one individual. In April the deputy governor Grant Spencer called for fresh consideration of possible policy measures to address the tax-preferred status of housing investment. The nominally independent Reserve Bank—if you would picture this—walked across the street into the Beehive took the lift to level seven and essentially said to the finance Minister: “Take a walk. We are taking over.”Although my party has issues with this Government’s economic policies it is elected whereas Messrs Wheeler and Spencer most definitely are not although to be fair I can feel their frustration as this Government’s inaction particularly in the housing market and it has been very frustrating for all. It is engaging in public policy by stretching the definition of financial stability so far that you could bungy jump off the top of the building itself. What gives the Reserve Bank Governor a demigod-like power to say whatever he or she wants and to challenge an elected power? I put it to you: it is the Reserve Bank of New Zealand Act and the negotiations this agreement that we are discussing today. This agreement is enabling these powers and the relationship between the Minister and the governor has not been clarified in this agreement.New Zealand First is not advocating for something along the lines of creating a Bank of England - type committee. Unsurprisingly New Zealand First actually put a solution to the House when the Rt Hon Winston Peters put a member’s bill before the House. I will talk to some of the reasons for it. In November 2013 before sanctions in Europe cut heavily into our export commodities and before regional neglect was so blatantly exposed by the Northland by-election the Rt Hon Winston Peters put his member’s bill to amend the Reserve Bank of New Zealand Act in front of this House twice and it was voted down both times.Mr DEPUTY SPEAKER: That needs to be applied to the motion about funding for the Reserve Bank.FLETCHER TABUTEAU: I endeavour to do so Mr Deputy Speaker. If you will forgive me I am talking about policy as it relates to what has been allowed through this funding document.The policy initiative could deliver so much in terms of the benefits to the New Zealand economy. The amendments put forward to the House were coined in such a way that the changes were needed so much because there is no more important a piece of legislation that would benefit the rank and file provincial voters who hitherto have been voting for the National Party.The intention of this motion remains clear and compelling. The Reserve Bank Governor needs the flexibility to promote growth exports and employment as well as price stability. The reasons why an amended Act is urgently needed still remain. New Zealand is still not paying its way proving that some things never change. We still get the National Party line that everything is perfect and that it has got a plan that is working. It is clearly not when departments such as this go to war and former employees call for decisive actions to counter current operational activity.We are not paying our way in the world. Instead imports are up and exports are down. The Budget is not a tax and spend Budget; it is a borrow and spend Budget with tens of billions of dollars of extra debt written off balance sheets through student loans State enterprise debt and local government debt. The main factor underlying the current account deficit is a grossly overvalued dollar underpinned by a borrow and spend Government.We need to consider that the funding agreement between the Reserve Bank and this Government is insufficient in and of itself to provide New Zealanders with a good and positive outlook. This agreement does nothing to hold this Government to account. For example look at rural towns around New Zealand and our small rural cities—the provincial cities—and see how many shops are closed and how much there is a lack of action. National members tell us that we have got growth. Yes but when we talk about the Reserve Bank and what growth is we have to ask ourselves what the quality of the growth is and what is happening to the people who could save this country.This agreement serves a functional purpose. It is insufficient in and of itself. I do feel restrained in what I can say in the House today. This agreement does give rise to policy decisions and actions taken by the Reserve Bank—which I would have liked to elucidate on in more depth—but there is much more that is required. Thank you.DAVID SEYMOUR (Leader—ACT): I rise on behalf of the ACT Party in support of this motion. An honourable former member of this House once told me to come and listen through the debate so that I can respond to earlier speakers. I have to say I feel that Fletcher Tabuteau has let me down in that regard. But in all seriousness we should pay tribute to him for standing up and making a contribution to what is a very serious public policy debate that we do get to address only once every 5 years. You will forgive me Mr Deputy Speaker if I at the very least respond to some of the remarks made by other members whether or not you were attempting to rein them in from going off topic at the time—Mr DEPUTY SPEAKER: Order! It would be unfair to leave the member without me interjecting bearing in mind I interjected on everybody else. They are not the rules of the Speaker; they are the rules of the House. It is a very narrow motion. If the member wants to debate the issues such as the other members have there is the general debate to do that in and there are other opportunities to be able to do that. This particular debate is around a motion about the funding for the next 5 years. That is all it is.DAVID SEYMOUR: Understood.Mr DEPUTY SPEAKER: I have not yet sat a member down; other Speakers have.DAVID SEYMOUR: When we look at the agreement it is interesting to note that the annual funding allowance rises by approximately 0.75 percent each year—less than the current target band for the Reserve Bank. What an incentive that is for the efficient running of the bank. I think that when the House debates a motion as to whether or not we should be funding the bank and at what level it is worth paying tribute to the institution and its governing legislation. We have heard some criticism of the way that it operates. I think we should be clear that around the world tributes have been paid to our model again and again. The Bank of Canada is modelled upon our bank. The first Reserve Bank Governor to operate under this Act Don Brash was called the central banker of the year by The Economist magazine. He was also noted at length in the autobiography of Milton Friedman who won his Nobel Prize for his work on monetary policy. So although the world admires so much of this bank whose funding we are debating today there is still some confusion about what it can achieve back home.In response to earlier calls that perhaps its funding should be higher so it could do more I would say that there are fundamental limits to what it can achieve. For example there has been confusion around whether or not the Reserve Bank should have a mandate of trying to control the exchange rate inside or outside current legislation. I think it is important that the House is clear on our understanding that it is not possible—by printing money faster or slower—to change the real exchange rate. The Reserve Bank might well change the nominal exchange rate but domestic inflation will mean that that nominal exchange rate change is meaningless to those who would purchase New Zealand goods offshore.There are those who say that the Reserve Bank should have more tools and that perhaps that would be a cause for greater funding as raised by other members. However we know that economic stimulus is not something that central banks can do in the long term. Indeed monetary policy can achieve but one objective and that is price stability and certainty for people who wish to save and invest in a country such as New Zealand. That is an objective that is well worth funding thoroughly and something that I completely support today.Central banks that do have divergent objectives—or more tools as some members have mentioned—create terrible perverse incentives and actually it would be bad expenditure to give the bank more money to do such things because they lead to broader economic instability. For example the Federal Reserve the central bank of the United States has multiple and conflicting objectives such as controlling employment. By reducing the price of cash in the early 2000s it has increased the value of long-term durable assets—i.e. houses—and that led to a mortgage bubble that sunk the world into global turmoil from which we are still recovering.It would not be wise to give the Reserve Bank additional objectives other than price stability and financial stability. None the less as Grant Robertson noted it is being forced into a position where it feels it must act on the Auckland housing market. It was the contention of the member that actually the bank should be funded at a greater rate in order that it should play that role. I would respond to the member by saying that in actual fact when you are in a hole you should stop digging. We clearly have a regulatory failure. We have evidence from around the world that it is the price elasticity of supply of housing in markets such as Auckland—those that take on prescriptive and constraining land use regulation—that led to inelastic supply speculative investment and a redirection of resources out of the other sectors of the economy for which the Reserve Bank would prefer I suspect to lower the interest rate and into the housing market.So rather than going further and further down the track of having a Reserve Bank funded to use “more tools” to intervene further and faster into the housing market we should be taking up the cudgel and fixing the regulatory environment and therefore the price elasticity of supply in that market. Was it not ironic that Russel Norman decided to go into the issue of how cities should grow? He said that the only way to get supply was to build more apartments. I feel it should be put on record in the House that he misrepresented the governor and he also misrepresented his own party’s position because—I will finish this thought in two seconds—only weeks earlier one of his own colleagues had said that an expansion of the city at the fringes would be so rapid in its effect on supply that it would collapse the Auckland house price market.It also was referenced that perhaps the Reserve Bank with more tools and greater funding could do something to help with diversifying the economy which would help the tradable sector and boost exports. I think that when we fund this bank we should consider the effects of our current monetary policy settings in our current bank on what exactly has been the history of the tradable sector in New Zealand. From 1988—the year before the current Reserve Bank of New Zealand Act—right through to 1999 and resuming from 2001 through to 2004 the merchandise exports of goods and services exceeded imports for New Zealand.Anybody who says that the Reserve Bank should be playing in that particular sandpit is not cognisant of the facts. But what happened next? Again we could either be funding the Reserve Bank to use more tools and do more things or we could monitor other aspects of our behaviour when we prioritise funding. What happened from 2005 on was an explosion of Government expenditure which put the brakes on the tradable sector put pressure on the Reserve Bank and ultimately put us into a tradable goods deficit in New Zealand.Todd Barclay: A lolly scramble.DAVID SEYMOUR: It was—it was very much a lolly scramble.Mr DEPUTY SPEAKER: Back to the motion.DAVID SEYMOUR: The motion is about funding a Reserve Bank with very robust policy settings—a bank that is facing some other external challenges that would be better addressed through other policy settings. With that in mind I would like to support this motion as one that funds the Reserve Bank for its proper purpose and I refute the idea that the Reserve Bank should be pursuing multiple and divergent objectives with greater funding because those of us who have studied the history of monetary policy in the New Zealand economy know that that would be a great disservice to all New Zealanders. Thank you.Motion agreed to.Electronic Monitoring of Offenders Legislation BillFirst ReadingDebate resumed from 2 June.Bill read a first time.Bill referred to the Law and Order Committee.Gambling Amendment Bill (No 3)Second ReadingDebate resumed from 27 May.Hon RUTH DYSON (Labour—Port Hills): I am really pleased to be able to continue my contribution which was so rudely interrupted when we last debated the Gambling Amendment Bill (No 3). This is quite a significant date for Parliament in terms of gambling legislation. I cannot recall the last time that we did not have a gambling bill of some description either on the Order Paper or with a select committee—it has been a long time. It is great that we have progressed to this stage but it is an indication that gambling legislation in New Zealand will have to keep changing in order to keep up with changing technology and the increasing awareness of the public health issues surrounding problem gambling.I want to commend the Minister of Internal Affairs the Hon Peter Dunne for just about all that this bill contains. Certainly many of the 126 submitters who contributed on this bill during the select committee consideration said that they supported the overall intention of the bill. Many shared one single concern which I will elaborate on in a moment. But my primary purpose with that comment is to say that I think this bill moves a little further in the right direction. This bill could have gone a lot further and I hope the next bill does but it certainly went in the main in the right direction. I am hoping that all of Parliament will agree to its progress perhaps with some changes at the Committee stage. I am certainly going to contribute more on that in this second reading but also at the Committee stage.This is a big change. The fact that Parliament is more or less united over this bill is a big change from how divided the House was—and in fact the whole of New Zealand was—over the last Government intervention in the gambling space which was the outrageously dodgy deal that the National Government did with Skycity. It said to Skycity: “Oh well let’s forget about the law. We’ll change it for you and you can have quite a large number of new pokie machines.”Mr DEPUTY SPEAKER: That is not part of this bill either.Hon RUTH DYSON: Pardon?Mr DEPUTY SPEAKER: All of the Skycity matters that the member is referring to are not part of this bill. It has been kept as a very narrow debate so far and I would like the member to continue in that vein.Hon RUTH DYSON: Mr Deputy Speaker of course I accept absolutely your ruling. I was comparing the response of Parliament to this Gambling Amendment Bill (No 3) with the response of this Parliament to the dodgy deal that the Government did with Skycity and actually I did refer to it in the earlier part of my contribution to this very same reading. That dodgy deal was not supported by Parliament; the Gambling Amendment Bill (No 3) certainly is.I want to refer more specifically though to the provisions that are mentioned in both the Green Party minority report and the Labour Party minority report. I trust that the Minister will give further consideration to the issue that was raised in both those minority reports and that was the primary concern of the overwhelming majority of the 126 submitters—that is we agreed over the issue of payments to pokie-machine operators being currently not good enough. They are quite bureaucratic. They are quite expensive. They are not all that transparent. We thought that we could do better in respect of the payments. Everyone agreed on that. The problem is that in the bill that we are now debating as it has come back from the select committee the new payment regime is not a significant improvement and in fact increases the possibility of there being an incentive for the operators to increase the use of pokie machines. So there is the potential for increased harm due to a provision in this bill. It is that point that I hope will be reconsidered when we go into the Committee stage of this debate and I hope that the Minister will consider the fact that we all agree that the current system is not good enough and that the replacement that is proposed in this bill—it will be an improvement in some areas—will run a huge risk of incentivising increased problem-gambling and increased use of pokie machines. I do not think that anyone in the House wants to go down that track.As I said earlier we had 126 submitters on this bill and a very fine contribution by a large number—particularly from those organisations that work so hard in our community—in response to the harm that pokie machines do to some people. Some people are not able to stop gambling; that is a fact. Some people change their whole life and risk their whole family situation because they are not able to stop gambling. That issue of public health and problem-gambling harm was certainly a consistent message. We heard some very sad stories. We heard from some very courageous people who told of their addiction to gambling and explained to us at a full public hearing the harm that they had caused to their families and what had turned their lives around. They did that in an effort to make us focus on the lost opportunity in this bill—the lost opportunity in this bill—and that is the opportunity to further protect people from the harm that excessive gambling can do.Overall this bill moves in the right direction. That is what all of the submitters said as well as the report from the select committee. We are concerned that the commission-based payment that is now being proposed runs a real risk of incentivising problem gambling and increasing it and we do not want to see that. I will be supporting changes to that and I know that Denise Roche from the Green Party also expressed that view consistently and strongly and was backed up by the overwhelming majority of submitters throughout the select committee process. I hope that our concerns are heard by the Minister. He has shown an interest in listening to the views of members in the past. In fact he and I along with three other members of Parliament were on a panel yesterday with the Business and Parliament Trust and we discussed this very point: the fact that Ministers are generally quire dislocated from the process because the select committee wants to own the legislation.But actually in the end the Minister calls the shots on policy determinations. That we need to get those roles better clarified is my submission to Parliament—not a submission on this bill but you will allow me a little leeway I am sure Mr Deputy Speaker because on Thursday afternoon you are clearly feeling more relaxed than other presiding officers sometimes do on a Thursday afternoon. Some of them are much stricter and I am glad that I am taking my call with you in the Chair rather than my colleague the Hon Trevor Mallard. I look—Mr DEPUTY SPEAKER: Sorry. It is tragic that I have to interrupt the member especially when she was on a roll but unfortunately her time has expired.MARK MITCHELL (National—Rodney): I just want to acknowledge the previous speaker the Hon Ruth Dyson. I think it is probably fortunate that she stopped there. You were starting to blush a bit Mr Deputy Speaker.Hon Annette King: See if you can make him blush.MARK MITCHELL: Ha ha!Mr DEPUTY SPEAKER: Do not bring me into it.MARK MITCHELL: It is a pleasure to take a call on this Gambling Amendment Bill (No 3). I do want to acknowledge Ruth as the chair of our Government Administration Committee which received this bill. She did do a very good job as did the deputy chair Sarah Dowie and the other committee members. One thing that I do actually agree with is the fact that we are probably going to have to continue as a House of Representatives coming back to revisit make changes and tweak this legislation as time goes on just because of the sheer nature of what we are actually dealing with and that is pokie machines which I acknowledge can inflict some harm on people when they develop gambling addictions and issues around the addictive nature of things like pokie machines.I just wanted to address some of the issues that we did deal with in the committee on this bill. The reduction of red tape—this part of it was actually very important to me because I have had some experience overseas with NGOs and organisations that are tasked with delivering aid. If you bear with me just for a moment there is a little bit of relevance that comes back to the bill and that is in terms of the money that is available. We should always be focused on making sure that it is dispersed and it gets to the people the organisations and the charities that actually are going to benefit from it and that it does not actually get tied down in a whole lot of admin expense. Normally the rationale and the excuses that are given around high admin expenses of course always relate and come back to heavy compliance and red tape - type issues. So I think this was actually a really important part of the bill.Getting back to what I saw overseas often there are some very very good and very efficient NGOs that are responsible in the way that they treat donor funds and they make sure that as much of that donor funding actually finds its way on to the mission field or into the area or the project that they are focused on. But there are others unfortunately that can run with anything up to about 70 or 80 percent of that money being absorbed in admin and back-office services which to me is a complete and utter disgrace and a total waste of that money. I think that if people actually understood or knew that they were donating to an organisation like that they would probably review those decisions.So there is a reduction in red tape. A new regulation-making power will specify venue operators’ payments and the prohibition on commission will be lifted for payments to venue operators. That was a very very good clause that we were able to get into and deal with on the committee.There were a couple of other things that we spent a fair bit of time on. I just want to highlight the fact that I was disappointed that I missed the submissions that were heard in Auckland but I was certainly here for the submissions that we heard here in Wellington. One of the things we spoke about was getting a better definition around the term “key person” which I think was really important because we were at risk of actually trapping people who in actual fact were not key persons. We recommended amending clause 4(2) by extending the exception provisions relating to a key person in the new section 4(1). In the bill as introduced licensing trust board members and trustees of community trusts would be captured by the new definition of “key person”. This was unintentional and the amendment we proposed did remedy it. What we proposed was that we also amend paragraph (b)(ivb) of the definition of “key person” in section 4(1) by removing the words “or who may reasonably be perceived to have that ability.” We believe that a reasonable perception provision is unnecessary as only those who could in fact exert undue influence on a key person needed to be captured. I think that was a very important change that we made and recommended through the committee process.One thing that I found really interesting and fascinating comes back to the point that Ruth made earlier which is that we are going to continue to have to review and make changes in terms of the technology that is changing around the use of gambling machines. One of the submitters made what I thought was a pretty compelling submission around the advancement and the development of facial recognition technology which is at a point now where developers are approaching very quickly to a place where they will actually be able to attach—the real issue around it is probably cost—a facial recognition system on to an existing pokie machine. That means that someone who has been identified as being at risk with their gambling can go through a facial recognition process and then be flagged as someone who is actually at risk. I really like that. With the current system—and it works—you are relying on the employees working on the premises to monitor it and a system like this is going to relieve some of the stress and potential tension that can be created between someone with a gambling problem and the staff who are trying to manage and monitor it.So we are going to keep watching that. That is going to keep being developed and I am sure they will come up with some cheaper options and I think that it is probably not too far in the future that we will see this type of facial recognition system being implemented. And that means of course that we will have to come back here and pass legislation in all likelihood to be able to use that technology.The pokies are important. I know that we discuss them a lot in this House. I know there are strong feelings about it. I can tell you now that I am very proud to be the patron of the Ōrewa Surf Lifesaving Club in my electorate of Ōrewa and the funds that we receive through pokies are actually quite important. They get used to buy things like for example new defibrillators and new equipment that can be used by our young surf lifesavers on the beach to save lives. So I do want to highlight the fact that these funds are actually quite important not just for organisations like surf clubs but for lots and lots of organisations and groups such as sporting organisations in our communities.Finally I would just like to say that I personally felt that it was a very good process by which the committee was able to identify and make some good recommendations that will make it an even better bill. Of course I also want to recognise and commend the Minister Peter Dunne for bringing the bill to the House. Thank you.DENISE ROCHE (Green): I rise to take a call for the Greens on the Gambling Amendment Bill (No 3) at its second reading. I am not usually a member of the Government Administration Committee but given that I am the gambling spokesperson I sat in on that committee for this bill in Mojo Mathers’ place. I have to say that it was a well-run committee and I thoroughly enjoyed the robust debates we frequently had there. We received 126 written submissions and heard in person from 33 different submitters. They can be roughly grouped into three different categories. First of all there are the gambling societies and venue operators; second there are those concerned about the impact of gambling on their communities; and third there are the individuals who have been impacted on by gambling as well.I always find it useful when I am looking at a bill particularly an amendment bill to look at the original Act it is amending look at the purpose of the bill and see whether the original Act is going to be impacted on at all by the amendment bill. And that is what I have done in this case as well Mr Assistant Speaker if you will bear with me. The Gambling Amendment Bill (No 3) as introduced to the House was described as having the aims and I think there were four of them of increasing transparency of grant-making from the proceeds of class 4 gambling; reducing potential conflict of interest situations between class 4 gambling operators—societies—venues and grant recipients; improving transparency surrounding management companies that provide societies with services such as for example contract negotiation with venues administrative and financial management or grant application processing; simplifying compliance and reduce costs for societies and venue owners in some areas; and lastly the fifth one was ensuring the efficiency of the appeals process is not undermined. It sounds great—this bill sounds great—and actually most submitters agreed that increasing transparency in the grant-making process reducing conflicts of interest improving transparency with management companies and having a more efficient appeals process were all worthy causes. But many submitters shared the concern that I also have about the aim of the bill that is intended to “simplify compliance and reduce costs for societies and venue owners in some areas;” and I will talk about that more in a minute.If we measure the aims up against the original Act the 2003 Gambling Act the purpose—in part; these are just a few of the purposes that I will outline here—is to: “(a) control the growth of gambling; … (b) prevent and minimise harm from gambling including problem gambling; and … (d) facilitate responsible gambling; and … (g) ensure that money from gambling benefits the community;”. Many submitters were extremely worried that if the select committee were to remove the section in the original Act that prohibits commission-based payments for venue operators under the guise of simplifying compliance and reducing costs for societies and venue owners the bill would undermine the original intent of the Act to prevent and minimise gambling harm facilitate responsible gambling and ensure that the money goes to the community. Basically if venues can be paid for by commission there is an incentive for the venue operator to ensure that people continue to gamble as much as possible. It means that host responsibility programmes could easily be compromised by unscrupulous venue operators wanting to maximise the returns on the machines that they have got on their premises.We already know that in class 4 venues host responsibility offered to gamblers on pokie machines can be sadly lacking. Many submitters pointed to the mystery shopper experiment carried out by the compliance teams in the Department of Internal Affairs at the end of last year. This was the experiment where mystery shoppers went to 102 different gambling venues and pretended to display the kind of behaviour that you would see with someone experiencing problems with their gambling or having little control over their gambling behaviour. Only one out of those 102 venues actually intervened and displayed good host responsibility. I think we have to congratulate the Department of Internal Affairs on taking that proactive response on compliance.Hon Ruth Dyson: Not funded enough to do anything else are they?DENISE ROCHE: Yes. Without a doubt the current system of paying venues which is covered by very strict regulations that can be very complicated relies on venue operatorsbeing paid actual reasonable and necessary costs.I also want to note that the Department of Internal Affairs has been very busy since 2009 working with gambling societies on standardising venue cost schedules during what it called its resubmission project. Its 2013 report included recommendations around the calculation ofvenue payments including calling for a full review into initially adjusting limits to cover wage increases and inflation. The recommendations however did not in any way suggest the radical and really risky move of removing the restriction on payingvenues by commission. I note also that the department’s project resulted in the best data it said that it had ever received but it also said that the work it did on that was set aside when it started to work on this bill.I think we have to remember that the money that goes tovenue operators and gambling societies is money that is not going to the community. It is money that is not going to the lifesaving club. It is money that is not going to sports or education organisations. This bill presumably is about wanting to increase the amount of money that the community uses so it does not really make sense to have a commission-based payments system. The Greens are also very concerned about extending licences to operatorsfor 3 years as an incentive for good behaviour. I guess we would feel a whole lot better about that if there had been more pokie venues displaying good behaviour during the mystery shopper experiment. We know that compliance can be very poor in this sector. I would suggest that those provisions in the bill be set aside and put on hold until the industry shows that it can be responsible.When the bill came to the House my colleague Kevin Hague spoke on it as I was away. He said that commission-based payments would be a deal-breaker for the Greens. Despite the convincing arguments from submitters the select committee has by majority decided to keep those provisions in. We will be putting forward Supplementary Order Papers on this issue as will colleagues from Labour because we are really concerned that the venue commission payments system will without a doubt increase problem gambling. We have got an estimated 40 percent of the money—all the money that is lost on pokies—coming from people with little control over their gambling behaviour. This is how the money for communities and charities is made. When we have got 40 percent of that coming from people with gambling problems then I think we need to do better than we are doing in this bill in not opening those people up to more gambling rather than less.Equally bad is the fact that this bill is a lost opportunity to actually really do something about problem gambling—like introducing a pre-commit card system which would allow people without harmful behaviours to have a flutter without the risk of becoming problemgamblers. It would become a huge handbrake for anybody who was at risk of becoming a problemgambler. This is a better and cheaper solution to problemgambling than facial recognition technology which actually acts as a way of stopping people who have already got problem-gambling behaviours. The pokie machines have already sucked them dry. We have lost that opportunity to introduce some good gambling harm prevention measures and things like real-time player tracking which would also look at how people are behaving while they are at the machines.If this Government was serious about dealing with gambling harm then it would take the opportunity to fix what has become a dangerous product. As it stands we cannot support this bill and we encourage every other party to also vote against it.CLAYTON MITCHELL (NZ First): I rise on behalf of New Zealand First to take a call on the second reading of the Gambling Amendment Bill (No 3). It is a bill that I have been excited to stand up and speak to. In fact the last time I stood up and spoke to this piece of legislation Mr Iain Lees-Galloway got himself into such a state that at one stage I thought he was going to have a coronary. So before coming into the House today Mr Iain Lees-Galloway I checked that we have actually got a defibrillator on standby. In case you raise your temperature we can actually resuscitate you. I would like to also say we would like to be able to support this piece of legislation. New Zealand First would like to be able to support this piece of legislation and with a little bit of mild tweeting—to use Judith Collins’ terminology; just a mild bit of tweaking—I think we could possibly get to a state where New Zealand First could get to a position where we do actually support this.There are a number of clauses in this new piece of amending legislation that do actually benefit the community and the overall need to return as much money as we possibly can to the people within our community who need it the most which is a big topic of recent times. In fact in question time today we spoke about the volunteers in the rural fire brigades who are out there accessing some of the money that is gained by class 4 gambling to buy those defibrillators which Iain Lees-Galloway I hope will not have to use today. There are those surf clubs that Mark Mitchell has spoken about that use it to buy equipment that saves lives. There are also community groups church groups and schools. Just about every sector of our community receives a massive benefit from class 4 gambling.New Zealand First is not standing up here condoning class 4 gambling. We are not out there saying: “Goodness me you should take up gambling. It’s a fantastic pastime.” but certainly gambling has been around for hundreds and hundreds of years and the vast majority—the absolute vast majority—of New Zealanders are gambling responsibly. I will talk about harm minimisation and some of the ideas that Denise Roche and some of the other parties have put forward about harm minimisation which is of course the buzzword. In fact there have been a number of members in the House who struggled with actually pronouncing the words “harm minimisation”. Some of the ideas are just very impractical. They actually do not do anything towards assisting class 4 gambling or the Gambling Amendment Bill (No 3) by reducing harm.In actual fact what you are looking at doing if some of the ideas are implemented is driving people out of their little wee rural spots their urban sanctuaries their homes their little wee local pubs and the RSAs and having them head into the large casinos. None of this legislation captures anything to do with Skycity and the big corporations which are gaining the biggest benefit out of those small closures in those little wee townships the hamlets around the country. If we talk about harm minimisation we should look at how 27000 gaming machines have been reduced over the last 10 years down to under 17000 gaming machines and of course there are 1300-odd licensed premises around the country. That is around 13 machines per venue if you average it out.What we do support in this piece of legislation is openness transparency and of course reducing bureaucracy. But some of the legislation that is being proposed now—although this Government and the select committee have taken steps towards making it more palatable. Like I say New Zealand First is getting close to being able to say: “Yes that is a sensible common-sense approach to gambling in this country.” However we will be putting some Supplementary Order Papers forward in the Committee stage of this bill which we hope if they are sensibly supported—we certainly have been out there speaking to the people.I know there were 126 people who submitted on this bill. It was moderately supported. However there were some serious concerns and I will talk about those serious concerns because one of those concerns is around section 118 and conflicts of interest. The conflict of interest provision which is around the key persons really with the size of New Zealand is going to restrict firstly a lot of people in this country from receiving funding and support for their community organisations and secondly the organisations themselves being able to support the people who are providing this service to the community. So that issue is pertaining specifically—I am just going to have to go to my notes to read this out. The proposed amendments to section 118 of the Gambling Act will make it a criminal offence for gaming societies’ key persons to purchase a meal or drink from any of the 1300 bars and restaurants that host gaming machines offer or accept a ticket to any event stay at a hotel chain if the hotel chain has gaming machines at one of its hotels have a game of tenpin bowling if the tenpin bowling venue has gaming machines purchase an Anzac poppy—for goodness’ sake—from an RSA if the RSA has a gaming machine place any form of bet with a TAB or with the New Zealand Racing Board if it has gaming machines at some of its venues or purchase a bottle of wine in an area that is controlled by a licensing trust.This piece of legislation makes it a criminal offence that encapsulatesnot only those people within that bill but also the people serving. So now it is a criminal offence for an innocent staff member at one of those venues—buying or supplying that person with a poppy or giving them a beer makes the staff member criminally liable. That is a serious piece of legislation. With the size of this country being 4.5 million - odd people six degrees of separation does not actually work in New Zealand. It is more like two degrees of separation in New Zealand because you do not have to go far down the road to find somebody who knows somebody else in the country. It is pretty much going to implicate and involve people in illegal activity inadvertently. That is not the intended part of this bill; we know that. But unless this part is tightened up even more than it has been with the adjustments that have made we cannot support this bill.The other part that we support is the commission-based payments. We have heard from a number of members. In fact Mark Mitchell says that this will actually reduce the red tape. I actually support the idea that paying commission-based payments at 16 percent makes sense but when I hear other members in the House saying—and we did hear it the other day from Adrian Rurawhe—that they want that commissioned payment capped that does not make sense. To me capping something with increased turnover comes with increased costs to run the establishment. If we talked about wear and tear on the facilities for example—Mr Assistant Speaker I see there is a little bit of a perplexed look. I thought maybe you did not understand where those increased costs will come. There will be increased costs. More staff will be required. As the costs go up that 16 percent should stay where it is. It should not be capped because there are more costs involved with it. This piece of legislation is not about creating wealth for those venue operators. It is about making it to a point where it is actually viable enough to maintain it and sustain it.When I look at the gambling around this country which brings $300 million—$300 million—into our communities our schools and our sports clubs I see that we need to make sure that we look after it notwithstanding some of the fears and concerns that the House is having around problem gamblers. We need to be doing more to assist them. At the moment they make up 0.03 of a percent. It is minor but I am not saying we should discount them. I am just saying that there is far more good that is coming out of this piece of legislation. The actual reasonable and necessary cost of conducting gambling is at 16 percent for a commission-based payment and it makes sense to not cap that. If you talk about nine machines which is a reasonable number of machines for a new venue opening up and we talked about $5000 of turnover within that gaming lounge at 16 percent that is going to give you a return of around $800. Under the current standing it works out to be about $100 per machine. So in actual fact the vast majority of licensed venues around this country under this proposed legislation without the 16 percent cap—16 percent as a commission-based payment—will actually take a drop in turnover. This is not about making money; this is about a sensible approach for long-term sustainability of gaming in New Zealand.It was not that long ago—I can go back to the 1990s—that there were discussions in this House with regard to the future of gambling in New Zealand. It was centred on the model that was happening in Australia and the deregulation of gaming machines over there. It is fair to say that taxes went up over there but its system works. In fact huge amounts of money were invested in New Zealand by Australian companies and by some Australian Government organisations because they thought New Zealand was going to go down that track and we have not. I am currently comfortable that what we are setting up in this country for gambling providing we are being sensible about what we are doing is going to look after the vast majority of the people who need the money the most—those people who are in those community groups and organisations. We cannot support this current legislation as it sits on the Table today. I hope that when we get to the Committee stage we will have a good robust discussion about what we can implement and change. Perhaps I might need to get around and socialise some of those ideas with our people across the bench there. If we can get a little bit more sense out of them then we may be able to support this in the future. We cannot support the bill as it stands.JOANNE HAYES (National): I rise to take a call in the second reading of the Gambling Amendment Bill (No 3). I am really pleased to do this. I have a background in a programme called the problem gambling contract and the member across the way there Adrian Rurawhe knows that programme very well. It was a problem gambling contract. Part of that contract was about working with the venues that had pokies and making sure that they upheld the rules and regulations of each of their venues and working with the retail sector as well.While we were doing that some issues that came up around that for staff training were around how you identify a problem gambler and how you work with that problem gambler to make sure that they get the proper counselling opportunities. The second area that we looked at was making sure that the Department of Internal Affairs was keeping up with its audits of these premises. The third area was supporting the Wanganui District Council at the time with its sinking-lid policy that it had put in for gambling venues so that once they had closed their renting out of pokie machines no more pokie machines were introduced into Wanganui.When I looked at this bill even though I was not on the committee when it came to it I could see that there are so many more advantages for the people who have the problem gambling contracts in New Zealand from implementing this bill. The bill like my colleagues have said aims to increase the transparency of grant making from the proceeds of class 4 gambling venues. While I was working for this organisation in Wanganui this was some of the feedback that we were getting from some of the community providers there. It was about their inability to know whether or not their applications would be successful how that was actually going and how they would be advantaged by that.I want to talk about a particular provider that was based out of Taihape. They would apply for funds from the community grants for uniforms for their kuras or their kapa haka groups and most of them were declined. When we started looking at that they did not know why they were declined. So I believe that increasing the transparency around that grant-making process is going to be very good for small providers in rural areas that have hotels with a gambling venue attached to them. It is going to be a very good policy section to this bill because they will understand exactly where all the money is going to and why they actually missed out.In terms of reducing potential conflicts of interest and the “key person” definition I do not want to go any more into that. I think that Mark Mitchell and others in the House have discussed that quite well. But the bill allows small providers and community groups to have an understanding also about conflicts of interest. As I said I am not delving any more into the key persons but the bill gives some clarity around that. Obviously it is up to the Committee during the Committee stage to debate that further.The bill also provides for improving transparency surrounding management companies that provide societies with services. I think this is very good for the societies. I think that having those organisations being able to come in and support them and to provide the services through increased transparency of the types of services that they are receiving is good for the societies and will support them.Another aim of this bill is to simplify compliance and reduce costs. I was pleased to see when I was reading the information around the bill advertising for when the grants process is coming up. At times it would cost the various societies quite a lot of money to advertise that but to be able to actually do that via the internet is a good way of reducing costs. This means that having less money used on advertising and things like that is good for the community because that means that more money can be invested back into the community to do good things for that particular community. Ensuring the efficiency of the appeals process is not undermined is also a really core part of this bill.When I start to look at the allocation of funding—which I understand from listening to the speech just before me through the member Clayton Mitchell around how proceeds of the funds are allocated—about $200 million is allocated out. I got that information out of this guide Pokies in New Zealand from the Department of Internal Affairs. About $200 million is invested into the communities but that is only a portion of it because the gaming duty percentage for the total amount of funds gained through the takings of pokie machines actually goes on gaming duty. Sixteen percent is the maximum venue payment. We have a problem gambling levy which is 1.51 percent and that levy is what these problem-gambling organisations are actually funded from. At the organisation that I worked with that is where it got its funding from to be able to deliver the services to the people in the Wanganui area.The ASSISTANT SPEAKER (Hon Trevor Mallard): I am going to interrupt the member and ask her now to address the bill—not problem gambling or gambling generally. Thank you.JOANNE HAYES: Yes I was just talking about the allocation of class 4 gaming machines because that is about investing back into the community. It is about this bill being able to free up funds through the reduction of the various costs that it takes to advertise the grants process. I will tell you that when I worked in that sector people thought that all the funds the machines made would come back to the community. They had no understanding of where it all came from and where it was all going to and that was really key. Obviously the distribution for authorised purposes is about 40 percent of that.I will carry on with this bill. We want to make sure—again I am going to say this—that local communities benefit from this bill. It is so key because the Government cannot keep funding everything so this is an opportunity for the communities or organisations that are class 4 gaming machine societies or organisations to actually help to do that and help to grow their communities. It does bring about a close community.In terms of the policy framework of the Gambling Act 2003 a purpose of the Act obviously as I said is to raise funds for our community and for the societies that they belong to. A little bit more around transparency of the grant making by societies—I am going to talk a little bit about that because it is to make available more comprehensive information as I said on grants to communities so that communities understand what it is that they can actually apply for and how successful they will be.I have talked about the visions of reducing conflicts of interest and I have talked a little bit about alterations to improve transparency of management companies. But I just want to say a little bit more about that because some societies use these companies in their gambling operations. These companies provide societies with services like contract negotiations and that is a key thing with some of the venues. It may not be a skill that these venue people actually hold. Some administration and financial management skills which are really key to be able to make sure that their business is financially operational—some of the owners may not have the full skills so that is what these management companies actually do especially around grant application processing. It is really important. I have sat on funding and planning organisations where we had to have a robust system for being able to deliver funds out to the community that was equal and fair. But it is not exactly a skill that you can just pick up a book on and read about. It has to be fair and it has to be transparent.Also another key area is that the bill provides the Secretary for Internal Affairs with the ability to be able to audit the companies and also the ability to actually give licences out to class 4 venues which is very good and helps to reduce some of the funding that goes along with it.In wrapping up I think this is a very good bill. I am pleased that I have had a chance to be able to get up and talk a little bit about my experience within the problem-gambling area and about gambling minimisation. I commend the bill to the House and thank Mr Dunne. Thank you.The ASSISTANT SPEAKER (Hon Trevor Mallard): Jenny Salesa—I call Catherine Delahunty.CATHERINE DELAHUNTY (Green): I think it is my call. I would like to take the opportunity to speak briefly about this bill with a great sense of disappointment. My colleague Denise Roche laid out very clearly why it is that we will not be supporting this bill. A number of bills around the issue of gambling have come to this Parliament with the weight of community expectation that we would make the situation better for this scourge on our communities and I am afraid that once again the Government has failed to do that.Problem gambling is a scourge on our communities and basically what this bill does is make a couple of useful administrative changes but it also opens up the gate to some practices that will enhance what we would call the human misery industry. The human misery industry is the industry that creates dependency on pokies dependency by venue owners on getting the pokie money and dependency on community groups having that money. All of that is encapsulated by some of the changes in this bill particularly the one about moving away from a prohibition on commission-based payments. That is a significant shift and is one of the main reasons that we cannot support the bill. We cannot support that shift in the bill that will allow commissioned-based payments to take place because what it will do is incentivise the pokie venue owners to see those machines—because they get a commission per machine—more heavily used. So we are promoting more gambling harm in this bill.I do not suppose we should be surprised. After all this is the Government that brought you Skycity and traded off our moral perspective on gambling in exchange for more machines. It is also the Government that has stopped the ProblemGambling Foundation’s money until September. So this bill is actually in a context of a problem-gambling Government. I would argue that the Prime Minister is a problem gambler but that is another topic. I shall return to the bill.One of the reasons we are concerned about this is that it is not supporting the right of Kiwis to have a safe flutter but morethe opportunity to dive into an abyss. I think that is the reason why we are so concerned about it: because this is a dangerous product. Although we support the clauses in this bill that will increase transparency—any form of transparency around funding is good—we are opposed to its premise particularly around the assumption that we should reward people who stick by the rules when we know particularly from the mystery shopper study that those problem-gambling venues where gamblers gather are not sticking by the rules. If they are going to be able to benefit further from the addictive behaviour of vulnerable individuals no one is going to benefit.I have heard previous speakers talk about the bill in terms of how marvellous it is that our community groups can access this money—the money of addiction the money of loss the money of family tragedy which is what problem gambling is. Any of us who has worked in the field of trying to set caps on pokies—as I have myself in the town of Tūranga in Gisborne—has seen the struggle that families have trying to avoid this addiction. This bill should have been about that—harm minimisation; pre-commitment cards face recognition technology—to ensure that through legislation the venues would be required to set up harm minimisation. But unfortunately this bill does not do that. It is actually stepping closer to incentivising the venues to want to make more money out of people who are addicted. So we are very concerned about that.We believe that it should have been about greater consumer protection and mitigating the addictive design because we know that the pokie machines are designed to assist people to be addicted. It is a bit like asking the brewers to run drug and alcohol counselling. It is counter-intuitive for brewers to run drug and alcohol counselling and it is counter-intuitive to expect the venues to be the ones that actually manage and police this. We know they are not doing a good job so for all the tutu-ing around in this bill all the little administrative updates and all of the little reassurances about the Department of Internal Affairs having audit powers and being able to enforce compliance it is not going to happen if you actually allow this commission-based payment system. It is not going to be safe for everybody and it is not going to have coverage.We are going to oppose the bill and we are going to put up some Supplementary Order Papers to try to address some of the weaknesses in it. We know we speak for a large proportion of submitters. We know that the specialists who came to the select committee—actually most people referred to the mystery shopper project and many of them were very disappointed when they saw where we had got to. So we will not be supporting the bill. Thank you.The ASSISTANT SPEAKER (Hon Trevor Mallard): Thank you. I am just going to try to correct a situation that we have got ourselves into in the absence of Government support partners who would normally take this call. The call would normally fall to the Labour Party. I think in an excess of politeness between Ms Salesa and Ms Delahunty we have ended up with a situation where one might have had Jenny Salesa having had a call but she sat down politely to let Ms Delahunty take the normal slot. So I am going to seek leave of the House for Jenny Salesa to take a call at this point. Is there any objection? There appears to be no objection.JENNY SALESA (Labour—Manukau East): The Gambling Amendment Bill (No 3) is one that is crucial to me. This bill is important to me personally because even though a large proportion of our people Pacific people do not gamble unfortunately the ones who do are at a really high risk of becoming problem gamblers. I would like to acknowledge the speaker just before me from the other side of the House Joanne Hayes as well as the Hon Ruth Dyson for their speeches. I agreed with both of their speeches.Greater harm minimisation measures should have been included in this bill to mitigate the addictive design that gambling machines have. Pacific people are four times more likely than others to become problem gamblers. This is when you compare Pacific people with the general population. Pacific people make up 6.5 percent of our population. However they make up 21.1 percent of problem gamblers in this country. Studies have shown that Pacific gamblers are also spending large amounts of money when compared with Māori when compared with Asians and when compared with Europeans. The annual average that Pacific people spend on gambling is around $13648 a year. However the average spending of a European by comparison is about $1761. There is a huge difference between these two figures.Last year the New Zealand Herald on 14 August 2014 reported that the funds that people put into pokie machines are by far being spent by those who live in the poorer parts of Auckland. However those funds from gaming grants do not usually go back to those poorer parts of Auckland. What the data shows is that it is the wealthiest parts of Auckland—it is the most affluent parts of Auckland which do not gamble as much—that are the ones that take the majority of the grants from these gaming machines. So the saying goes “The poor get poorer andthe rich get richer.” Unfortunately this also happens with the distribution of gaming funds back to the community. The research that was covered by the New Zealand Herald last year was conducted by Auckland Council. The council challenged the Government to consider a fairer way of distribution of these grants back to the community and I actually agree with the council. It would be really really great to have a system that would actually make sure that those who are most deprived—the poorest parts of Auckland actually including the electorate I represent Manukau East—have better access to this funding. This would actually happen if the system was a fair one. My sincere hope is that this bill the Gambling Amendment Bill (No 3) actually addresses this issue.The research that the council conducted also showed that those who gamble the most unfortunately actually live in my electorate of Manukau East. The comparison that the study showed is that those who live in Ōtara or Papatoetoe spend about $274 per person per year on these pokie machines and this is compared with say someone who lives in Ōrākei who spends about $49 per person per year on the pokie machines. So when you look at the distribution of these funds what this study showed is that those who live in Ōrākei get a return from these gaming machines in terms of grants at a rate of about 152 percent and those who live in Albert-Eden yet another wealthy place in Auckland get a return of 176 percent from these gaming machines. Yet places like Ōtāhuhu—and I am the MP for the Ōtāhuhu area—get only 22 percent by way of grants from these gaming machines. This is absolutely not a fair way of distributing these funds. The funds are supposed to go back to the community. I would actually strongly argue that yes they should go back to the community but how about getting these funds back to the community that they actually come out from which are the most deprived places in Auckland including Manukau East Ōtara Papatoetoe and Ōtāhuhu? Thank you so much.The ASSISTANT SPEAKER (Hon Trevor Mallard): Jono Hayes.JONO NAYLOR (National): This is a really important piece of legislation. It is really important that we have this conversation in New Zealand about how our gambling venues are managed because as so many of the speakers on both sides of the House have already indicated today how we deal with this is a really important thing for New Zealand society. There are definitely problem-gambling issues. There are also definitely issues surrounding the distribution of money that has been raised through gambling and it is really important that we try to do the best that we can to get this right.The majority of the amendments in this bill deal with gaming machines and pokies which are generally in bars pubs and clubs. I just do not know how these things work. I kind of know how they work but I do not think I have ever put a single coin in one of those machines in my life and probably never will. That is probably something that is a good thing. I guess I grew up in a family where that was never part of our culture. It might have been my Presbyterian minister father but that is how it was.I think the tenor of what we have heard today has been almost indicating that we want to sort of wipe gaming machines out. I guess even though it is not my thing—I do not think as I say I will ever be into putting money into slot machines—if we were going to go around and start banning everything that I was not into we would probably have a pretty boring society for some of the others. So I am not going to inflict that on people. I believe that we do need to have things in place that allow people to make choices for their own lives. That said we do need to have some pretty good guidelines around how these machines operate in our country.This form of gambling through these class 4 machines generates a significant amount of money. New Zealanders spend about $700 million through these machines in these venues across the country each year. What we want to do in passing this legislation is ensure that as much of the proportion of that $700 million as possible goes back into the local communities from which it came. I think we just heard a very compelling proposition there in terms of the way that those statistics look currently around Auckland from the member opposite Jenny Salesa when she talked about what happens in terms of the amount of the money that is generated from this in Manukau East compared with the money that goes back into that community. I think that is a very compelling argument as to why we need this legislation to ensure that that happens.As we have heard already this afternoon a significant amount of that $700 million is already going to the 40 percent levy that comes back into the Government coffers which we would argue will benefit New Zealanders because it is money that is going to get invested back into New Zealand. Actually ultimately less than half of the money that comes through these machines will go back into local communities. Over time it is something that I have heard a fair amount about from people. There is a bit of cynicism about some of the gaming trusts and a bit of cynicism about where the money goes to. You get accusations at times of: “It just goes to their mates.” or otherwise. Certainly over the years members of the public both in this role and in the role I had previously have I guess talked to me about their concerns in that regard.So it is important that we have these new proposals that are coming through in this legislation to make things more transparent so that the public can have confidence that the money is going where it needs to go. I am very supportive of that and I think it is critical that we do that. I think we have got to make sure that we limit in those processes the opportunities for crime and dishonesty associated with gambling. We need to make sure that we are following through on what the purposes if you like of gambling are. We have had Denise Roche talk about a number of those purposes already in the House this afternoon. I just want to reiterate that again one of those purposes is that money raised from gambling will be invested back into communities so therefore it is supposed to be operated in a not-for-profit way. Sorry I say “gambling” but I mean that which occurs outside casinos. For the public to know that the proceeds are going to go back into the community is vitally important.To tackle this we are going to restore the ability of the Department of Internal Affairs to cancel or suspend class 4 licences as a penalty. I guess that is the stick part of the approach. It is important that we have significant penalties so that when operators of these class 4 machines are in breach of the way they are supposed to be operated when they are not being as transparent as they should with the way they are dispensing the money and when it is not going back into the communities where it should be going back into we have appropriate measures in place so that the Department of Internal Affairs can take significant action and hold these people to account.But with any type of proposal it is clearly important that we do not just have a stick and that there is also a carrot involved. So there are provisions contained within this bill that will ultimately for those operators who operate well give the opportunity to have a 3-year licence rather than the 18 months that it is currently. I have heard from other members this afternoon their concern over the mystery shopper - type arrangement. There does not seem to be a really good record within the industry of their being very good operators. I think what we need to do is incentivise those people to be better. I am certainly not suggesting that everybody is doing this as well as they could. In fact let us face it: if all the operators out there were operating in the way that we really hope that they would we would not be putting this amendment bill through the House. So we are taking those steps. We are ensuring that by putting these things in place we are going to do that.I think there has been some great work done by the Government Administration Committee. I am not a member of the committee but I understand that some good work has been done. It heard the 126 submissions and as has also been alluded to this afternoon these came from a really wide variety of people. I was encouraged to hear that the vast majority of the submitters liked the direction that this was moving in. I understand that not everybody is going to get everything they want from an amendment bill. We have got many submitters who are coming from quite different angles quite different ways of looking at this but I think that having such broad support for the direction of this bill suggests that we are making some good progress.I want to commend the committee too for some of the suggestions that it has made to bring back. I guess it is a great endorsement of the parliamentary process that when bills are brought forward they do not always just follow exactly the same form from the start to the finish. It is really important of course that we have the select committees where we get cross-party involvement everybody gets involved and hopefully we produce even better legislation perhaps than what the Minister brought in in the first place. So the strengthening of the description of the key person role within this is I think a really good initiative that has come from the select committee. Again it helps to improve the accountability helps to improve the transparency and ensures that we are actually achieving exactly what it is that we are wanting to achieve in this space.I guess I just want to wrap up now by saying that what is really important here is that the public have confidence in the system that is in operation that they do not become cynical about the way these funds are being distributed in our community and that in fact they can be confident about this. Let us face it: I personally think it would be really great if so many of our community organisations were not so dependent on money that was derived from this source but the reality is that they are at the moment. While that is occurring we need to ensure that those communities that are contributing to this source of funding are the ones that are benefiting from it. So from that perspective I happily stand here to commend this bill to the House and look forward to the Committee stage when I am sure there will be some more robust debate and perhaps some more fine-tweaking of this document.The ASSISTANT SPEAKER (Hon Trevor Mallard): Just before I call the next member I do want to apologise to the last member. I had a bit of a shocker when I called him.POTO WILLIAMS (Labour—Christchurch East): I rise to take a call on the Gambling Amendment Bill (No 3). I want to start my comments by just saying that those who have had experience in the community sector know that there is a natural tension between community organisations that receive funding through pokie machines and through gambling and those organisations that actually treat people who experience harm from problem gambling. It is an interesting tension because many of the community organisations cannot do the work that they do without the support that comes through pokie machines. Just today I was having conversations with some people who know that the funding environment is such that they walk a fine line between what their values base is as an organisation and the work that they want to do in terms of the social good that they provide in our communities.This bill is supported by Labour but there are a couple of concerns that we have. It does continue the good work of the original Gambling Act but through the course of discussion and through the submissions there have been a couple of key concerns that have arisen. One of those of course that has been traversed quite widely across the House this afternoon is around the commission-based payments. I admit I had to seek some advice from members of the Government Administration Committee—which is ably chaired I might say—and they have had some robust discussions about the removal of the prohibition around commission-based payments.It is interesting because currently the venues that have these machines have a mechanism in place under which they can get paid the costs to run the gambling machines. Going to a commission-based payment—and here I want to pick up on a point that the New Zealand First member made—does not necessarily mean that the payments will be only to cover the costs. I presume that the more machines you have in a venue if you have a commission-based system the more likely you are to be able to attract more in terms of your commission and the more frequently those machines are used and the more money that is put through those machines also increases the commission that you are likely to receive.So I disagree with the New Zealand First point of view—and this is our view in Labour—that putting a cap on those commissions means that you will actually bear the cost if you are the venue holder. I disagree completely. It is really clear from the submitters who are concerned with problem gambling and the harm that is caused by problem gambling that they really feel significantly that the commission-based payments then go on to incentivise those venues to maximise the amount of money that is pushed through those machines. Currently the venues are paid for the costs incurred with gaming but more commission-based payments will likely mean a higher use of the machines.I also want to pick up on a comment that my colleague Jenny Salesa made about the harm that is caused to particular groups of people. There is no doubting that Māori and Pasifika populations tend to experience the harm from problem gambling more than other population groups. I also want to acknowledge the work that has been done in South Auckland and in Manukau in particular around reducing the availability of these machines because of the harm that it causes those populations which are most vulnerable to the harm from problem gambling.The Labour Party has a minority view of course that is consistent with the view of many of the submitters. Further it talks about the compliance examination conducted by the Department of Internal Affairs that showed there is an inconsistency in the practices across gaming venues. Here I want to point to the mystery shopper intervention that occurred where the mystery shopper was to mimic the type of behaviour of a problem gambler in venues. In over 102 venues where this mystery shopper intervention happened there was only one venue that provided the type of support that would be consistent with good host responsibility. I think that is quite significant—only one out 102 of the venues. It goes to show that good host responsibility is not a practice widely used across these venues.The submitters agreed with the Labour committee members that the bill should actually provide for greater harm minimisation measures within the bill itself. I want to speak about the submitters who came from Christchurch in particular from the Christchurch Methodist Mission and also the Canterbury and West Coast branch of the Public Health Association. They said very clearly that the bill would enable a commission-based payment system for venues. The Public Health Association is not supportive of this measure saying that “Allowing for venues to profit directly from the spend in their gambling machines may incentivise problem gambling and this is a public health risk.” The Christchurch Methodist Mission said that its stance would be to advise against a commission-based model and encourage the incorporation of harm prevention measures based on known harm caused by class 4 machines in our communities—especially low-income communities where class 4 machines are concentrated. We do agree with that.Further one of the concerns we have is the introduction of regulation-making powers so that processes controlling the commission-based payments are governed by regulation. Of course if it is done through an Order in Council we would be unaware of what changes would be made to that regulation until that Order in Council appears.So just to conclude and wind up and just to confirm we are supporting the bill. We have concerns around the commission-based payments to venues as opposed to the current method. Commission-based payments would be acceptable if there was a cap involved in that. We are concerned that measures for harm minimisation are not part of the bill and we are also concerned with the process around regulations. On that note thank you very much for the opportunity to speak.BRETT HUDSON (National): I rise in support of the Gambling Amendment Bill (No 3) in its second reading. May I start just by saying that it was an absolute privilege to serve on the Government Administration Committee and to hear submissions on this amendment bill. I would like to take the opportunity right now to acknowledge all of the submitters particularly those who work in the areas of problem gambling and with people affected by issues around gambling. Particularly we heard from a number of individuals who themselves have experienced all of the trauma upset stress and financial misery that does unfortunately afflict some in our community with problems around gambling. They were extraordinarily courageous to share their very private and traumatic stories with the committee. I thank them for showing that courage and I would like to take this opportunity to reiterate—as I think other members have done—that the committee listened very closely to what they had to say and took that into consideration as we worked through the evidence on the bill.As I think has been covered—but I think it is important—we should look at the nature of what class 4 gambling adds to New Zealand. New Zealanders spent around $700 million a year on pokie machines in the year 2013-14 and about $246 million of funds are distributed through non-club societies—to community groups sporting groups and other very very worthy recipients—across our society. This is an entertainment activity that helps to fund many groups and needs. I think it is important within that to look at the statistics of problem gambling because I think that is where the submissions either in opposition to or expressing concern about these changes were raised. So for instance in the data from 2012 supplied by the Department of Internal Affairs 0.7 percent of New Zealanders are listed as having problem-gambling issues with a further 1.8 percent being at moderate risk.So what that is saying to us is that for that number of people there is a very real and deeply affecting issue—one that this Parliament ought to give real consideration to. But as with most things in the legislative process there is a balance and the balance that we also need to bear in mind here is that for 99.3 percent of people gambling in this form of gambling does not represent a clinical or defined problem level of gambling and its associated problems. So we do need to bear that in mind and the committee members did as we worked through the evidence we heard and as we reached the amendments that we recommended which are reflected in the bill as it was recommended back to the House for this reading. I would also note just in finishing on that area that we saw the greatest reductions in problem gambling in the 1990s and the data shows us that that level has remained fairly stable since then. So great work has been done and as I say the vast majority of people gamble responsibly and without issues arising from that.The main purposes of this amendment are to increase transparency of grant making which is very important; to reduce potential conflicts of interest which are of great concern around our communities; to simplify compliance and reduce costs; and particularly there was an issue around the appeals process. I may deal with more than one or two of those but what I really want to spend some time on right now is this area of potential commission-based payment for venue operators. I will acknowledge that certainly most submitters themselves were not either corporate societies or venue operators. Most submitters were submitting in opposition to a move to commission-based payments but although they all expressed concerns about what might happen it is very important that we note that not one submitter—and I will particularly reference Professor Bill Abbott the pro vice-chancellor and dean at the Auckland University of Technology who himself was very open that there is no evidence to suggest that a commission-based payment would result in higher levels of problem gambling or incentivise inappropriate behaviours. I will acknowledge that Professor Abbott was opposed in principle. He did not want to see a commission-based approach but he did acknowledge that there is no evidence in New Zealand or around the world that actually demonstrates that a move to such a system would in fact incentivise improper behaviours or lead to worse outcomes.I would like to have a wee look at what leads the department or this Parliament to even consider the possibility that we might allow through regulatory powers a commission-based system. Quite frankly the venue cost at the moment is a highly complicated set of formulae that is difficult and costly for venues to manage and is difficult and costly for the department as the regulator and overseer to actually also oversee and manage from a compliance perspective. In reality if you are a reasonable or large sized venue it has actually led to a situation where these venue operators are getting what amounts to a capped commission of 16 percent of takings per machine. So we actually have by de facto—or you could argue by design—the nature of the complicated means that we have. There are four different limits that are used in determining what the venue machine costs are today. Three of them are mutually exclusive but the fourth one can operate with any of the other three. What they have found is that option D the final one has actually become that de facto standard—16 percent when you get to a sizable operation.So we are further challenged in determining that by the regulations around the cost inputs. The legislation as it stands demands that the costs are reasonable actual and necessary but how the costs are determined is subject to the decisions of the department as the regulator. The department determines what tasks can be included in the actual real and necessary cost inputs and the amount of time each of those tasks will take and the reasonable value therefore of each of those tasks. In fact a couple of submitters highlighted to us that those talks the durations and more important the employee pay scale for delivering those have not been looked at for years and the pay scale has not been adjusted even to meet inflation. Although inflation might be at 0.1 percent now it has been running in previous years particularly prior to this Government at much higher rates than that. So we have a potential situation that the costs that are being allowed to be claimed at the moment may not actually be truly reflective of the costs to run those machines in the venues.Those submitters also pointed out that they just take into account a tiny tiny portion of an employee which the business still has to fund for the rest of their time of employment. So it can actually create a real challenge for them. The options that were in front of the committee were to retain the status quo which would be bad as it is complicated and unwieldy and to go to a set charge per machine which we also discovered though discussions in committee would mean that some venues would come out winners and some venues would come out losers. We do not I think overall want to see that either.But in the commission there is more than one way to skin the proverbial cat. We could just have an open commission that says that the more that you collect the more you will get ad infinitum. We could have a tiered commission based on whether you have a small number of machines at your venue or a medium or a large number or we could in fact just have a cap that said that you charge a commission but that it goes to a certain level—it could be that 16 percent even—and then stops. As a committee we did determine that perhaps the best way to address this was actually to go through a consultative process through the regulator and therefore that is really what drove the decision the recommendation to do it through regulation rather than through the principal legislation. That is why we have come back proposing that.Just as I close off on this issue of commission-based payment I would just like to make this point because I think it is very important. If it is the venue operator that is getting commission based on the takings it is the behaviour of the operator that is in question not the behaviour of the gambler. It will not affect the gambler at all. Just simply with something like Lotto we see evidence that it does not necessarily—in fact it does not—see a rise in bad behaviour by the operator. This bill has been returned and I think it is very sound and pragmatic and I commend it to the House.The question was put that the amendments recommended by the Government Administration Committee by majority be agreed to.A party vote was called for on the question That the question be agreed to.Ayes 93New Zealand National 59; New Zealand Labour 32; ACT New Zealand 1; United Future 1.Noes 28Green Party 14; New Zealand First 12; Māori Party 2.Question agreed to.A party vote was called for on the question That the Gambling Amendment Bill (No 3) be now read a second time.Ayes 93New Zealand National 59; New Zealand Labour 32; ACT New Zealand 1; United Future 1.Noes 28Green Party 14; New Zealand First 12; Māori Party 2.Bill read a second time.Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment BillSecond ReadingHon Dr NICK SMITH (Minister for the Environment): I move That the Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment Bill be now read a second time. This bill makes a technical amendment to the 2012 Act. It ensures that the four existing petroleum production operators in New Zealand’s exclusive economic zone have a smooth transition into the regulatory regime established by the Act.It is worthwhile to first give an overview of the legislative framework. Prior to National coming into Government there were no—no—environmental laws—Hon David Cunliffe: How about prior to the Magna Carta or William the Conqueror or something like that?Hon Dr NICK SMITH: —within the exclusive economic zone. It may seem to members opposite that that is not very significant. Well actually New Zealand has had oil and gas and other activities operating in the exclusive economic zone for over 40 years without any requirement for assessment of environmental effects.I know that members on this side of the House are proud of the fact that that enormous area which is more than 25 times the land area of New Zealand now has an environmental assessments process. I further point out that the view members on this side of the House take is that there are economic opportunities in that huge ocean area but they should be taken in a way that is responsible and with proper environmental assessment and this bill is about improving that regime.This bill was referred to the Local Government and Environment Committee on 26 February this year and I want to acknowledge the work of the chairman Scott Simpson and the other members of the committee for the work they have done on fine-tuning this bill. The committee received five submissions and I think that in itself indicates that there is actually pretty broad support for this measure. Only two submitters sought to be heard in person. I do want to thank those submitters for their submissions and input.The transitional provisions in the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act currently require that existing petroleum operators are able to undertake their marine consenting process before their pre-existing mining permits or privileges under the Crown minerals regime expire. So if a marine consent has not been granted by the Environmental Protection Authority which the National Government established before the expiry date existing operations would have to cease. That is not consistent with other transitional provisions in the law and it inadvertently compromises the supply of New Zealand’s oil and gas.The Environmental Protection Authority is currently considering a marine consent application from Shell Todd Oil Services in its Māui operations. The Māui gas field operates about 35 kilometres off the Taranaki coast. It has been in operation for 35 years. It currently produces about 20 percent of New Zealand’s natural gas. I am expecting the decision from the Environmental Protection Authority in the next few days.Shell Todd Oil Services is the first of four existing operators to begin the full transition into this environmental protection regime and it has been required to undergo a robust consent process. This includes submitting an impact assessment outlining the effects of the activities on the environment the impacts on other interests as well as identifying measures that it would undertake to avoid to remedy or to mitigate any adverse environmental effects. The marine consent application was publicly notified giving interested parties and the public an opportunity to provide input towards the Environmental Protection Authority’s consideration of its application.This bill simply allows those activities in the Māui field to continue if for any unforeseen circumstance the Environmental Protection Authority decision is delayed or in the event that it is appealed. It eliminates any possibility that New Zealand’s energy supply could be put at risk from the Māui field. The implications for Shell Todd Oil Services having to cease its Māui operations would be hugely significant to the New Zealand economy. This situation would have an impact on gas consumers as well as on the Crown’s royalties and tax take. It is estimated that between 2008 and 2013 the Crown received approximately $550 million in royalties in resource levies and company tax from that Māuijoint venture.The Government would have preferred that Shell Todd Oil Services had applied well in advance of the expiry date of its mineral privilege so that this bill would not be needed. We want to ensure the situation is not repeated when the other three existing operators are required to apply for a marine consent transition to the new exclusive economic zone regime.For this reason I am pleased with the refinements that have been made by the Local Government and Environment Committee and that have been recommended in the bill. The select committee has unanimously recommended amending the bill to specify that any of those existing operators must lodge their consent application accepted as complete with the Environmental Protection Authority at least 9 months before the expiry of that operation’s mining permit or privilege. This requirement provides an incentive for operators to engage early with the Environmental Protection Authority well before their mining permit or privilege expires. This is because existing operators will have to ensure that their information and application is in full when it is lodged and is able to be processed by the Environmental Protection Authority.This requirement also addresses the concern expressed by some submitters at the committee that the bill as originally drafted gave petroleum mining operators an open-ended time frame in which they could apply for a consent. The new 9-month time frame in the bill encourages existing operators to submit their marine consent application early and provides sufficient time for the Environmental Protection Authority to consider the application in line with those statutory time frames. The marine consent process will be well established by the time the existing operators come up for the marine consent process with the first not until 2025 so I do not expect that operators will have any difficulty in meeting the time frames in the bill.As New Zealanders we all value our marine environment and the resources that it provides. We need to ensure that New Zealand’s oceans are sustainably managed to support a strong economy and the natural environment as well as our great Kiwi lifestyle. I remind the House that until this Government passed the 2012 Act there was no requirement for an environmental assessment. We have a regulatory regime that is in my view one of the most robust in the world in ensuring that we follow best international practice.This bill is going to ensure that there is not any potential hiccup around the supply of that essential gas. It ensures that it is done in a safe and responsible manner and that we respect the integrity of the process and the courts that may be subject to an appeal. It is now only a matter of providing the additional incentives for future operators as their consents come up for renewal.I am sure we are going to hear long howls of protest from members opposite that the bill was not necessarily perfect the first time round. Let us just simply say that we could have a blame game as to whether the fault is with Shell Todd Oil Servicesfor not applying early enough or whether we should always have provided for consents continuing in the event that there is an appeal. A common-sense Parliament would say that actually having had more than 100 years without any environmental rules in this vast area of ocean this is a huge step forward. This is a relatively minor sensible amendment and I will be surprised if members of this House will not support it.I will finish with one closing point. Labour promised in 1999 that it would pass a law. It did nothing in its 9 years in Government. We have passed a bill and a law that is world’s best practice and I am more than happy to be the Minister who has to make a minor tweak such as this to ensure that it is a robust and fair regime. I hope the House will support the bill.Dr MEGAN WOODS (Labour—Wigram): I am happy to take a call. Labour is supporting this legislation because we need to. If we do not the consequences are simply far too great. That was a shocking speech by a Minister who has had a shocking week. What we had in that speech is a whole lot of excuses a whole lot of justification and certainly what you would say is a defensive game. It was an absolutely defensive game. We have a Minister who claims that before the passage of the exclusive economic zone legislation there was no regulation in terms of how we governed activities in our oceans. This is simply not correct. It would be more helpful if the Minister were to come into the House and deal with facts.I want to deal with the facts of what we are calling a simple tweak to an imperfect piece of legislation. If we have a look at the principal piece of legislation that we are amending here the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act this is a technical amendment to allow for the transition of four existing operations into the regulatory regime outlined in the exclusive economic zone legislation. Let us have a look at this not-so-perfect legislation. When the not-so-perfect legislation was first introduced it had to be sent back to the select committee for an entire rewrite because it was such shoddily drafted legislation. Even after the select committee had completely rewritten this legislation and had got it into a form that could be brought back to the House that was fit for purpose and that might actually do something about providing a thorough regulatory regime in terms of protecting our oceans the Minister then had to introduce a 14-page Supplementary Order Paper with even more fix-ups to the principal legislation. And 1 month later there was an amendment bill with 37 pages of amendments to the principal legislationback in this House.This is the second time that we have had to come back into this House and use valuable House time to play fix-up for a Government that cannot run a legislative agenda or pass legislation that is fit for purpose.Hon David Parker: It’s the amendment to the amendment to the amendment.Dr MEGAN WOODS: That is quite correct Mr Parker; this is the “Amendment to the Amendment to the Amendment Bill” because this Government cannot legislate.When we had the bill at the first reading we supported it and said that it needed to be sent to the Local Government and Environment Committee to be examined. I would like to acknowledge the submissions that we received on this legislation. There were not many of them but they were incredibly important submissions. I think there were five of them. Through the select committee process we stopped yet another disastrous piece of legislation. There had to be an amendment to the amendment to the amendment to the amendment at the select committee because what we had was yet another very shoddy piece of work by this Government coming before this House.What this bill does is provide for the four current operators to be able to transition into the new regime. The first of these operators with permission to operate under the old regime—yes Minister there was a regime unlike what you would like to say—has a consent that expires on 27 June 2015. That is the Māui gasfield which provides a significant portion of this country’s gas. In fact the department’s own report informed us that it provides 26 percent of New Zealand’s gas supply. When the Māui field had a 5-day shutdown in operations in 2011 the Ministry of Business Innovation and Employment calculated a gross cost to gas consumers of $200 million over that 5-day duration. This is a Government that passed legislation that could have potentially seen the Māui gasfield shut down for an unknown period of time before it could transition into the regulatory regime. I would have thought that when there are four operators operating you could put in place a transition provision that would see those four operators come within the principal Act in a reasonably seamless way. It does not seem like rocket science.When we had the amendment to the amendment to the amendment come before the House in order to play fix-up on this what we had was a completely open-ended transitional arrangement fix up for these operators. The Māui gasfield—fine; its transition date was 27 June 2015. But for the last of the operators needing to transition into the new regime the permission to operate expires in 2031. The legislation that this Government brought into this House was going to create an open-ended time frame in which these people could lodge their consent. They would have been able to operate potentially for ever and a day without any onus on them to have their homework handed in or their consent processed by a certain date. It was only the select committee process that picked up yet another failure by this Government to understand why it is that you need to put in place a proper regulatory regime.This is a Government that has shown that it has made mistake after mistake after mistake when it comes to this legislation. This is not legislation that has been on our statute book for a lengthy period of time. This is legislation that was passed only in the 50th Parliament in the last Parliament and already we are amending it in such fundamental ways—well not fundamental ways; these are things that you think about when you are thinking about putting in place a new regulatory regime. You think “OK there are some people already operating. How do we bring them in? What are the time frames? How do we make sure that that happens smoothly?”.It is my hope that this is the last time that we have to use this House’s time and this House’s resource—Grant Robertson: Oh I’d be very surprised.Dr MEGAN WOODS: Grant Robertson is saying that he would be very surprised.Grant Robertson: Well it is Nick Smith.Dr MEGAN WOODS: It is Nick Smith; you are correct Mr Robertson. But I am ever the optimist. I am ever the optimist.Grant Robertson: The sun always shines.Dr MEGAN WOODS: The sun is always shining when I see things and I am hopeful that this is the last time that we will have to play patch-up on bad legislation.The 9-month period that we agreed on at the select committee seems to be a sensible length of time that an operator now has to have their completed application in before their consent expires. It is hardly an onerous obligation on the operators especially the one whose consent does not expire till 2031 for them to have that consent lodged 9 months beforehand. We looked at a range of options—whether it should be 6 months 9 months or 12 months that we have a look at those applications that need to be lodged. We settled on 9 months in the collaborative way in which we looked at this because that would allow the full 140 working days statutory time frame for the Environmental Protection Agency to consider the marine consent application with 15 working days to lodge an appeal. That is approximately 8 months in total. Nine months seemed to the select committee to be a sensible period of time in which to put this in.I think that this legislation needs to serve as an important lesson to this House and to the people drafting legislation about the need to examine legislation thoroughly when the Government brings such important legislation that could have such dire economic consequences such as denying the country 26 percent of its gas supply actually because of a botch-up in the legislation. Really more homework needs to be done. There needs to be a more thorough examination of the legislation that is brought forward. The Minister in his speech introducing this bill tried to spray blame around everywhere except where it needs to fall and that is on a Government that is making mistakes. It is losing its way and it is failing to meet the needs of New Zealanders. Certainly it would not have been meeting the needs of New Zealanders who are dependent on that operation for their jobs. We believe that we need to have a managed transition away from fossil fuels but it needs to be just that—managed—not shut down on 27 June because the Government made a mistake in the drafting of its legislation and could not understand the ramifications of a regulatory regime.This is a Government that is completely out of touch with what it needs to be doing in terms of putting in place the right base. The Environmental Protection Agency has made some very sensible decisions under the exclusive economic zone legislation. We have seen some decisions where the environment has been considered and the Environmental Protection Agency has actually weighed up that the activity that an operator has applied to do will be far too detrimental to the environment. A classic example of this was on the Chatham Rise. When Chatham Rock Phosphate applied to mine there under this legislation it was seen that there would be inadequate benefit to the country and too much environmental risk. Labour will be supporting this bill. We have to; the economic implications are simply far too great.SCOTT SIMPSON (National—Coromandel): As chairman of the Local Government and Environment Committee it is a pleasure to rise in support of this second reading of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment Bill in the name of my colleague the very good and capable Minister for the Environment Dr Nick Smith. Notwithstanding the very energetic speech of the previous speaker Megan Woods I am delighted to hear that Labour is going to support this bill and this reading as we discuss it and move it through the House this afternoon.The simple fact is that energy is important to us all. It is essential to every aspect of our daily lives in this modern world we live in. It is used in factories in hospitals for the production of fertilisers and chemicals for manufacturing and construction and for every kind of enterprise known to a civilised and modern society. We use it for heating we use it for cooking and we use it pretty much in every aspect of our day-to-day lives. New Zealand has been fortunate to always have a secure source of energy mostly provided by our hydroelectricity network. But in times of low rainfall we have been able to rely on the gas-fired turbines that are powered by the gas that comes from the Māui gas field off the Taranaki coast. This field which has now been in operation for nearly 50 years I think is a significant part of the energy network that supplies New Zealand’s energy needs.It is important as we discuss this bill that we note that it is a technical tweaking of the principal Act which came into effect in 2012. The purpose of this bill is to amend the principal Act so as to allow existing operators who have applied for marine consent to continue their operations until that application is decided and any subsequent objections or appeals have been determined. As the Minister said in his speech a few minutes ago this is a process that literally did not exist prior to the principal Act being passed. There are four other operators that in due course as their consents come to an end as their current licences come to an end will require new marine consents and need to go through the process. As part of the requirements of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act Shell Todd Oil Services will be required to have its marine consent to continue operations approved by the Environmental Protection Authority by 27 June. That is why we are moving this technical amendment bill through the House this afternoon in its second reading.Marine consent is an approval granted by the Environmental Protection Authority to undertake managed activity under the principal Act. What might some of those activities be that a consent of this sort that is being discussed this afternoon include? It includes all the marine operations related to the existing Māui project—for instance the upgrading and maintaining of facilities both existing and those that are planned for the future. The consent would also include the actual requirement for drilling itself and of course for the actual extraction of the gas. A consent would include matters relating to environmental monitoring. It would also extend to covering logistics such as the use of helicopters and support vessels that service the actual Māui gas field platform off the coast of Taranaki. It covers of course as I said the extraction of the gas itself and the condensate.Shell Todd Oil Services is a longstanding corporate citizen of the Taranaki area. It has been active in operating in New Zealand for more than 50 years. It is a company that is owned by Shell Petroleum Mining and Todd Petroleum Mining each of which holds a 50 percent stake in that entity. During that more than 50 years of operation Shell Todd Oil Services has set its operational mandate and provisioning at extremely high levels. It pays enormous attention to environmental control and to safety benchmarking and it is considered to be a very prudent careful and successful operator in the gas and condensate field. As an oil and gas operator for more than 55 years it has got an active and ongoing relationship with the wider Taranaki community. The company currently employs I am told more than 300 direct employees and then of course there is a wide range of other people who provide services and support to the enterprise.At the select committee this bill was considered in the collegial manner in which most things are considered at the Local Government and Environment Committee. I want to take this opportunity to thank members from across the House for their careful and considered contributions to the debate at the select committee. We received five submissions on this bill and I think it is fair to say that they all made good points. We as a committee did suggest a couple of amendments and they are to be incorporated as we work this bill through the House. Megan Woods in her contribution prior to mine made comment about the requirement that the select committee has introduced for those existing four other licence holders to have their applications completed in a full and acceptable state before their current licences expire. In some cases that is up to 20 or 30 years hence. But their application for renewal to the Environmental Protection Authority should be in a full and proper manner 9 months before the expiry of the existing licences.We considered options for not placing any time frame on that application process but we settled on a period of 9 months based on advice from the ministry and also from submitters who were keen to raise this matter with us. I think that when we looked at the dates we considered 3 months; we also considered 12 months and 6 months but 9 months seems to be about right. It is largely academic because I think that any sensible professional corporation in its right mind would probably ensure that its application was in place well in due course. I cannot imagine that any senior executives of any of the companies involved would allow a situation to occur where they did not have their application in on time. But there was a question relating to the completeness of that application prior to the end of the existing licence and it was that issue of completeness that I think really swayed the committee’s thinking on this matter. It was a matter that was compelling and logical and I was pleased that the collegial nature of the committee endured on the day and that we got to a place where we could all agree.This is a piece of legislation that as the Minister said is a largely technical adjustment to the principal Act. Shell Todd Oil Services if it does not have this piece of legislation passed before 27 June this month—in fact enacted before 27 June this month—will be required to cease its operations. The potential impacts of that occurring are not ones that I think this House would want to consider for any moment at all. So I am hopeful that as we go through this debate we will find that there is support across the House for this technical adjustment and technical amendment to the principal Act. It is a good logical thing to do and I commend it to the House.Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to take a call in the second reading of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment Bill. It may as well be called the “Tidy Up Bill” because that is what it is.For people listening into or viewing us this afternoon there is an old law about Parliament that on “Thank God It’s Thursday”—in the dark last hours of Thursday afternoon just before the House rises—it is the oldest trick in the book for the Government to try to push through things that it really does not want people talking about too much. The Government members must be hugely embarrassed about this bill—terribly embarrassed about this bill—because we told them when they passed the original exclusive economic zone legislation that they were doing it in a rushed manner with incomplete consideration and new terms that had not been properly designed which my colleague David Parker reminds me interrupted a whole lot of jurisprudence of settled law around the Resource Management Act. We warned the Government then and the public that if the Government rushed the bill through we would be back in the House tidying up its mistakes—and lo and behold here we are.One can only imagine the phone call from the shy retiring chief executive of Shell Todd Oil Services to Minister Nick Smith where he said: “Jesus Nick we’re gonna have to close down Māui.” Nick said: “What do you need?”. And he said: “Well I need you to change the law because if an appeal was lodged we haven’t got time to get our appeal through before we could be closed down because your law does not provide a guarantee of continuity while an appeal is being considered.”I actually agree with Shell Todd Oil Services on this one. I think it is fair enough that on an asset like the Māui gas field platform there ought to be business continuity while an appeal is being heard because the law—Hon David Parker: That’s what would happen under the RMA.Hon DAVID CUNLIFFE: And that is what would happen under the Resource Management Act. That is a perfectly fair thing to expect. The alternative as well as it being strategically incomprehensible for New Zealand that we would have the Māui gas field close down is unfair and flies in the face of settled jurisprudence as my colleague David Parker reminds us. But that all begs the question of why the law is as the law is and why we therefore have to be here in the dead of Thursday afternoon fixing up the Government’s mistakes.This is a Government that is increasingly accident-prone. That is the charitable way to put it. This is a Government that is lurching from stuff-up to broken promise. We have just had a Budget where the Government could not find the magic surplus again—zero for seven compared with Labour’s nine of nine. It is a Government that broke its promises on affordable housing on its targets for growth and—very relevant to this bill—on its external balance. Of which balance you will recall our hydrocarbon exports are a very important part for which this platform provides a cornerstone. The Government thought it was going to be able to get our exports as a percentage of GDP up from 32 percent to its target of 40 percent by 2025. How is it going? It is going backwards is how because exports as a percentage of GDP are now forecast to go down from 32 to 26 percent and that is even assuming that this bill goes through and the Māui gas field platform is not closed down.This measure this bill is a pooper scooper of a law change: a “Mr Fix-it” a last-minute save a caught-the-egg-before-it-hit-the-floor kind of bill. I see National members are giggling with delight at the plight of their Minister. They know that is one more space in Cabinet for the class of 1999 or whatever it is over there—the class of 2011. Hope springs eternal on the face of the young. There is Peseta Sam Lotu-Iiga thinking well there are a couple of slots up the Cabinet ladder he can scramble when Nick Smith becomes the tea boy. Imagine for a second we were not passing this bill. Imagine Nick Smith’s parliamentary future—The ASSISTANT SPEAKER (Lindsay Tisch): Order! Come back to the bill.Hon DAVID CUNLIFFE: Slim down the Minister he is saying.The ASSISTANT SPEAKER (Lindsay Tisch): No no.Hon DAVID CUNLIFFE: Well we can slim down the debate by coming back to the content of the bill. The bill is accepted on several points. Firstly that if this law change is not made Shell Todd Oil Services could be vulnerable to a mischievous or vexatious appeal which would potentially suspend production while the appeal was being heard even if it did not result in it being upheld. That flies in the face of previous jurisprudence and it would be an inappropriate and very unwanted effect for New Zealand and one that I think Shell Todd Oil Services has a legitimate expectation that the law would protect it from.The Government has tried to shift blame to Shell Todd Oil Services saying that it was too slow putting in its application and that it left it too late. It is kind of interesting to see the honey dripping from the mouth of the Minister for the Environment as he is heaping praise on Shell Todd Oil Services on the one hand and then actually putting the boot in with the other to try to spread blame for this legislative incompetence that has got us here on a Thursday afternoon. It is not difficult to imagine that a Government that was trying to import the principles of the Resource Management Act into the exclusive economic zone legislation would in doing so import the principle that business does not stop on appeal unless the appeal is upheld. Otherwise the consent is taken as granted especially if it is an ongoing one.This is not the only example of haplessness around these issues. It is my privilege to be the Opposition spokesperson on the innovation and scienceportfolio and as part of that I get to look pretty closely at the grants made by Callaghan Innovation. It has made a grant to Chatham Rock Phosphate which was one of the applicants whose appeal for subsea mining rights was declined by the Environmental Protection Authority under this law. I am not going to comment on whether that was a good decision or not—Catherine Delahunty: Great decision fabulous.Hon DAVID CUNLIFFE: —because that is an independent juridical body. It may well have been a good decision; some of our colleagues certainly see it that way. But my point is that there is such uncertainty under the law—because the drafting quality is so poor and we are back amending it yet again the amendment to the amendment—that who would know? And what is that uncertainty doing for business confidence in New Zealand? How do investors feel when they look at this shambles of a Government that cannot even continue existing Resource Management Act precepts into the exclusive economic zone legislation? It has a chilling effect on investment which is why the Government has had to go cap in hand to the mining and energy industries and give them a few lollies in the Budget—at the expense of the environment it might be said. Environmental research has gone down; mining and energy research subsidies have gone up I guess perhaps in part to make up for this shambles.Trans-Tasman Resources the sand mining proposal off Taranaki was also declined by the Environmental Protection Authority. And again without commenting on whether that was the right decision or not—it is an independent juridical body so I am not going to go to the substance. But I am going to say that there is a lot of surprise in the business community about the uncertainty that is attached to this law. However it is interesting to see what happens then. I note that the Chatham Rock Phosphate managing director Chris Castle told the Otago Daily Times that he had been in to have talks with “key Ministers”. And here is what he said when he discussed this Act with those Ministers: “Changes will be made soon; the wheels are already turning … Then it’s going to get easier”.Well let us just consider that. Here we have a law passed by the democratically elected Parliament of New Zealand. The law may be a shambles—that is the fault of the Government—but it is the law. The law is then passed to an independent agency the Environmental Protection Authority to administer. It makes decisions based on the facts. Those decisions are subject to appeal. What happens during the appeal is the subject of this debate but it is an independent process. Then when a company—and I make no comment as to the nature of the company or its work—does not get the decision it wants it beats a path to the door of the Ministers and then says publicly it is going to get easier. Well what does that say about the independence of the Environmental Protection Authority process? What confidence can New Zealanders including other members of the business community have that the law is robust sound easy to understand and impartial? That should be the objective whoever is holding the Treasury benches.To sum up the Government imported considerable legal uncertainty when it did a quick and hashed-up job of taking parts of the Resource Management Act into the exclusive economic zone legislation—new terms legal uncertainty and a breaking down of jurisprudence. As part of that the protection of existing operations under appeal was forgotten and we are back today to fix up that omission. We believe that Shell Todd Oil Services has a right to continue to operate in those circumstances and we certainly do not wish to see Māui gas field stop production. That is why we support this bill.TODD MULLER (National—Bay of Plenty): I rise to speak to the second reading of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment Bill. There has got to be a quicker way of saying that.This is actually the first time I have had the opportunity to stand up and speak after David Cunliffe has held the floor with his rather wide-ranging comments. One thing I did find really interesting is that there is a bit of hypocrisy in my view—The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member will sit. The member will withdraw that comment. You cannot use that word. I ask the member to withdraw that comment.TODD MULLER: I withdraw Mr Assistant Speaker. There is a bit of irony—irony rather than other things—that the Labour Government in its time in office had a thousand amendments without notice on environmental legislation and then whilst it was in power did nothing to protect our exclusive economic zone over 9 years. So to stand up here and have a rather interesting debate around this very very tight amendment I found very interesting and ironic and perhaps just that.This is obviously a very very technical amendment and it assists us in ensuring that our economic zone is appropriately protected. That economic zone is actually quite extraordinary. It is 21 times the size of our land mass covering over 500 million hectares in total. That is huge economic potential.Hon David Cunliffe: Come back to the bill.TODD MULLER: You are not the Speaker. There is huge economic potential and the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act enables that potential to be unlocked in an environmentally sustainable way.I very much look forward to continuing this conversation when we next debate this bill because it has had a very very interesting period through the select committee process. I think that particularly the debates we had around section 162 of the current Act and what we could do in terms of tightening clause 4 of the amending legislation which amends section 162(5) deserve quite a lot of coverage. Certainly next time we get the opportunity to continue this through I will really dive into that debate that we had amongst ourselves really when we put in that period. Should it be 6 months? Should it be 9 months? A number of us thought that the current provisions were fine. We had quite a robust debate over whether it should be 6 months or 9 months.Debate interrupted.The House adjourned at 6 p.m.