Volume 646 Week 70 - Thursday 20 March 2008 
Volume 646 Week 70 - Thursday 20 March 2008 
[Volume:646;Page:15121] 
Thursday 20 March 2008 
Madam Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Speaker’s Rulings 
Personal Reflections—Member’s Right to Object 
Madam SPEAKER 
: Yesterday a number of members raised points of order about personal reflections. I ruled on this matter on Tuesday. In my ruling I pointed out that “Members’ freedom of speech should not be curtailed unless members’ remarks are offensive on the face of it or are strongly insulting.” 
The Leader of the House made an allegation about another member’s support of a past political regime. Such a statement is not offensive on the face of it. It may not have been correct but that is not for the Speaker to judge and the Speaker cannot intervene on that basis. 
In a later supplementary question a further allegation was made. This allegation referred to a matter that had been the subject of a personal explanation. Where a member makes a personal explanation denying something the member’s word must be accepted and it is improper for another member to pursue the matter. The Chair will look to protect the member. On this basis the Leader of the House was asked to withdraw and apologise and he did. I note that Mr Locke was subsequently given leave to make a further personal explanation in which he denied supporting the political regime in question. Further references of the type made initially by the Leader of the House would now not be in order. 
Subsequently allegations of “cheating” and “stealing” were made against the Government. Ministers took exception. The Government consists of members. Therefore a term cannot be applied to the Government that cannot be applied to other members generally—Speaker’s ruling 47/6. The allegations that were made imputed improper motives on the part of the Government. They were a personal reflection in the terms of Standing Order 116. Ministers upon taking an objection were entitled to the protection of the Chair. 
Business Statement 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Next week the House will go into a 1-week adjournment. When the House resumes priority will be given to the remaining stages of the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill the Securities (Local Authority Exemption) Amendment Bill the Social Assistance (Debt Prevention and Minimisation) Amendment Bill the Human Tissue Bill and the Copyright (New Technologies) Amendment Bill. The first Wednesday back is a members’ day. The maiden statement of Su’a William Sio will take place at approximately 5.30 p.m. on Tuesday 1 April. 
Sittings of the House 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Following an agreement of the Business Committee on Tuesday I seek leave for the House to adjourn at 5.45 p.m. today. That will assist some members with provincial seats to get flights home for Easter. 
Madam SPEAKER 
: Is there any objection to that course being followed? There is no objection. 
Points of Order 
Personal Explanation—Keith Locke 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Madam Speaker. I raise this point of order because in some ways you have dishonoured your ruling at the start of the House today. As of late there has been on the part of a member of the Green Party a tendency to get up to deny what is a fact and to protest that he did not say something when the evidence that he did has been tabled—and tabled for a number of years now. 
Jeanette Fitzsimons 
: I raise a point of order Madam Speaker. 
Rt Hon WINSTON PETERS 
: I have not finished my point of order yet. 
Madam SPEAKER 
: We will hear this point of order then we will take a response to it. 
Rt Hon WINSTON PETERS 
: That is typical of it without even being— 
Madam SPEAKER 
: That is unnecessary. 
Rt Hon WINSTON PETERS 
: I am being interrupted already. The fact is that as one reads the last paragraph of the article that has been tabled which is headed “Cambodia liberated: victory for humanity” one sees a boast in it in the second to last sentence that the writer of that article one Keith Locke cannot deny. In short he supported it. If we are for ever to be challenged by his denying what has been tabled in this House and substantiated not just by me but by other members from across the House and across the political divide then we surely will bring this House into disorder. No one should be asked to apologise or withdraw for the allegations against Mr Locke because he did write that. They are his words. Like all politicians we live with what we have said in the past and so should he. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 It is a longstanding point of order in this House that a member’s word is to be taken. That word has been given. What is more by way of a personal explanation my colleague Mr Locke explained that there is a big difference between welcoming a change of regime when an oppressive regime is turfed out and then later supporting what the new regime turns out to do. That is an entirely consistent position. It has been pointed out more than once in this House and the member’s point of order is a fabrication. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 It is worth recording that yesterday I did not accuse Mr Locke of supporting genocide. I said he supported the Pol Pot regime and that headline seems to me to be conclusive as to that fact. One may of course change one’s mind subsequently about that in the light of experience. Now Mr Locke does place us in difficulty and I said to him after the House rose when he approached me somewhat upset that I could have taken a breach of privilege given his claim that he never had supported the regime at all which seems to me to be denied by the fact. The difficulty with the personal explanation is that it then becomes a means of denying what seems to be an unavoidable fact. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 This is a very small typed note but it reads this way in the words of Keith Locke: “When they discover the real gains that the revolution brings for the Indochinese people they will start to question many things.” Now there may have been no gains at all which is a fact—in fact it was an absolute disaster—but Mr Locke wrote those words. He supported the regime and he cannot get up and gainsay it now and ask that his verbal word be taken while his written word is not. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 There is a very big difference between supporting an incoming regime as having got rid of a repressive earlier regime and supporting that new regime full stop when it turns out that it is doing outrageous things. I supported the election of Robert Mugabe in Zimbabwe because of the regime he replaced. I do not think anybody could legitimately accuse me of supporting what Robert Mugabe has done since. 
Madam SPEAKER 
: It has been long accepted in this House that once a member’s word is given then that must in fact prevail when it comes to these matters. However I would also note to members that when leave is sought to make a personal explanation there is always the opportunity for members to deny that leave. So there is a balance there. 
RON MARK (NZ First) 
: 
 I seek the leave of the House to make a personal statement. 
Madam SPEAKER 
: What about? 
RON MARK 
: On positions taken on Mugabe—my position on Mugabe. 
Madam SPEAKER 
: Leave is sought. Is there any objection? Yes there is objection. [ 
Interruption 
] Would members please settle. Interventions like the one that was made before come very close to trifling with this House. I warn members of that. 
Questions to Ministers 
Mortgages—Fixed 2-year Rates 
1. Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: Does he agree with recent media reports that fixed 2-year mortgage rates are likely to exceed 10 percent? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 If we had a National Cabinet with Roger Douglas in it I am sure that would be very likely. Luckily the combination of the two together is a self-controlling prospect. 
Hon Bill English 
: Does he agree with recent media reports that fixed 2-year mortgage rates are likely to exceed 10 percent? 
Hon Dr MICHAEL CULLEN 
: My previous answer referred to a hypothetical future which is unlikely to happen; I am sure indeed that it will not happen. The member like many others is referring to other possible hypothetical futures. 
Charles Chauvel 
: What reports has the Minister received on factors that do drive mortgage interest rates in New Zealand? 
Hon Dr MICHAEL CULLEN 
: I have received reports—[ 
Interruption 
] So the National Party does want to slash spending; we have got that clearly on the record. Thank you. I have received reports of the continued fallout from the subprime mortgage crisis in the United States and the subsequent unravelling of credit markets is putting direct pressure on the New Zealand banking system in terms of its ability to lend. The banks are finding it difficult to access affordable credit and are raising mortgage rates as a consequence. 
Hon Bill English 
: Does the Minister agree with the Prime Minister that mortgage rates are not going through the roof; and if an increase in a 2-year rate from 8 percent—just 18 months ago—to 9.5 percent now is not a big increase in mortgage rates then what would be? 
Hon Dr MICHAEL CULLEN 
: What would be is what the Prime Minister was referring to is what would have happened if Mr Key had had the chance to introduce $11.5 billion worth of tax cuts a year and the impact that that would have had on the need for credit and indeed on a fiscal stimulus forcing extremely contractionary monetary policy as a consequence. I thank the member once again for a patsy question where I can attack his leader. 
Hon Bill English 
: Does the Minister recall warning his Cabinet colleagues in the 2007 Budget that they needed to stick to their spending cap because they risked an interest-rate response from the Reserve Bank the exchange rate staying higher for longer and a more pronounced economic slow-down; and is it not correct that they did not stick to their spending cap and we have ended up with an interest rate response from the Reserve Bank the exchange rate staying higher for longer and a more pronounced economic slow-down even if more recent events have made that worse? 
Hon Dr MICHAEL CULLEN 
: What I can confirm is that this Government has consistently run a tighter fiscal policy than the Opposition has suggested it should be running. Every year the National Party has proposed a looser fiscal policy than the Labour-led Government then said that interest rates are too high. 
Charles Chauvel 
: Has the Minister received any reports on views about the future prospects for the economy and for mortgage rates? 
Hon Dr MICHAEL CULLEN 
: Yes I have. I received the following report from Mr John Key: “Um I was I was out there actually being a bit negative or saying saying you know look I was a bit concerned about the the economy but I mean one of the things and I often say this to business audiences particularly when I get up that look I it’s very easy when you are the Leader of the Opposition to sort of see shadows because you know quite honestly in weaker economic conditions Governments often get booted out um so you’ve got to be careful you don’t get too negative on things when an Opposition politician because you can you can see bad things in in a lot of things and that may not always you know always be right so um.” And that was the finish. 
Hon Bill English 
: Can the Minister explain what the Prime Minister meant when she said that mortgage rates are not going through the roof when in fact mortgage rates are rising more quickly than they have for a very long time such that people who borrowed money 18 months ago will find themselves rolling it over in another 6 months at 2 percent higher than they borrowed it and on the average mortgage that will cost them over $100 per week from their household budget? 
Hon Dr MICHAEL CULLEN 
: Firstly the Prime Minister in her speech at the start of this year acknowledged that people were facing increased mortgage rates and that was causing stress to some people. Secondly the member opposite when discussions occurred around monetary policy said that the Reserve Bank of New Zealand should be allowed to do its work and indeed attacked the Governor of the Reserve Bank for not raising interest rates earlier and faster. Thirdly interest rates have been much higher in New Zealand in the past which can be remembered under indeed Sir Roger Douglas who is now looking for a job in a National-led Cabinet. 
Heather Roy 
: When a 1 percent increase in interest rates on a $200000 mortgage costs a family an extra $40 a week—and there have been plenty of 1 percent increases while he has been Minister of Finance—what action does he intend taking to alleviate this problem affecting hundreds of thousands of Kiwis as a result of his actions? 
Hon Dr MICHAEL CULLEN 
: The Minister of Finance whoever he or she may be cannot be blamed for international oil prices for international food prices for an international credit crunch or for running the strongest fiscal position in New Zealand’s history which has taken the pressure off monetary policy. Unfortunately the members opposite including that member’s party have consistently called for tax cuts which could not be afforded and indeed today Sir Roger Douglas called for cuts in spending of $3 billion to $5 billion which would whack the most vulnerable in New Zealand but called for tax cuts which at a rough guess on my estimate are about $7 billion to $8 billion a year. 
Hon Bill English 
: Why is it that for 8 years the Minister has been willing to take credit for every international tide that has flowed for him such as higher commodity prices and plenty of low-cost easily available credit but as soon as circumstances turn on him suddenly it is everyone else’s fault? 
Hon Dr MICHAEL CULLEN 
: What we have done during that period is take advantage of that situation so we have the lowest unemployment rate that we have measured. Secondly we have paid down debt as a proportion of GDP. Thirdly we have built up the New Zealand Superannuation Fund for the long-term future. Fourthly we have introduced Working for Families to help low-income families through this period of time. Fifthly we introduced a whole range of other social policies. Sixthly we introduced the KiwiSaver scheme in order to help people prepare better for retirement. Every one of those policies was opposed by the National Party. 
Hon Bill English 
: Can he confirm that the things that are going up under Labour are mortgage interest rates the exchange rate the number of people leaving for Australia which has just gone up again today food prices petrol prices the proportion of income people pay in tax household debt and office space occupied by the Government which is projected to increase by 50000 square feet in Wellington over the next 2 years; and the things that are going down are growth productivity New Zealand’s ranking in the OECD and his polls? 
Hon Dr MICHAEL CULLEN 
: What I can confirm is that things going up include things such as the number of people in jobs—far higher than under National. Things going up include the proportion of the workforce that is in paid employment. What is going down is the number of people of working age on social welfare benefits the number of people who are unemployed and the number of children living in poverty. What is going up is the number of people who are saving for their retirement. What is going up is the support for early childhood education. What has gone up is the level of New Zealand superannuation under this Government. We are proud of that record. 
Early Childhood Education—Availability 
2.  
DIANNE YATES (Labour) 
 to the  
Minister of Education 
: What support is the Labour-led Government providing to increase the availability of quality early childhood education? 
Hon CHRIS CARTER (Minister of Education) 
: 
 This month the Prime Minister and I announced $6 million of new funding to build new or expanded early childhood centres across the country—around 20. Four of the centres that will receive funding are in Mangere which has been identified as a priority community for new services. Among them is the Akoteu Lotofale’ia early childhood centre which the Prime Minister and I visited and which is using a $470000 grant to increase its roll by 50 percent. All of the centres funded will offer the Labour-led Government’s incredibly popular 20 free hours and are part of a $90 million investment through the discretionary grant scheme by the Labour-led Government to build up the capacity of the early childhood sector. 
Dianne Yates 
: What reports has the Minister seen about the impact of Labour’s excellent policy of 20 free hours’ early childhood education? 
Hon CHRIS CARTER 
: I have received an email from a parent that notes how important the policy of 20 free hours’ early childhood education is for her family. She said: “I am just wanting to write a note to thank the Government for the 20 free hours childcare initiative. Since our 3-year-old turned 3 in December the relief of our reduced kohanga fees have already made a huge difference to our family and the things that we have struggled with. Thank you thank you thank you.” The 20 free hours policy is extremely popular with Kiwi families so it is strange that National does not seem to have a position on it. Paula Bennett said National would scrap free early childhood education and John Key said he would keep it. Which policy can we believe? 
Paula Bennett 
: Can the Minister of Education confirm reports that at a recent early childhood sector meeting where he was being questioned on policy he had to turn to his officials to ask at what age children have to start school? 
Hon CHRIS CARTER 
: I cannot confirm that. What I can confirm is that a discussion was had about Montessori education. Montessori centres want to keep 5-year-olds in their centres and to have them qualify for the 20 free hours. So the member of course is being quite duplicitous in her question. 
Hawke’s Bay District Health Board—Conflicts of Interest 
3.  
Hon TONY RYALL (National—Bay of Plenty) 
 to the  
Minister of Health 
: On what dates did the former Minister of Health Hon Annette King meet with Mr Hausmann in the last term of office and what was discussed on each occasion? 
Hon DAVID CUNLIFFE (Minister of Health) 
: 
 I am no more responsible for the private diaries of former Ministers than I am for example for those of district health board chairs or indeed Opposition members. 
Hon Tony Ryall 
: When did the then Minister Mrs King first discuss with Mr Hausmann an appointment to the Hawke’s Bay District Health Board? 
Hon DAVID CUNLIFFE 
: Neither do I have that information nor would I necessarily expect to have that information. 
Hon Tony Ryall 
: Is the Minister aware that official documents show that Minister King met with Mr Hausmann on numerous occasions including on 8 September along with a number of other senior Ministers and is he aware of whether there she discussed Mr Hausmann’s plans for a joint venture with the Hawke’s Bay District Health Board? 
Hon DAVID CUNLIFFE 
: I am not aware of any formal meetings during the last term of office that I have been able to find information of to date. However I am aware of some interesting meetings involving the former chair of the board and National MPs. 
Hon Tony Ryall 
: Has he seen reports that Mrs King was a guest in the family corporate box of Healthcare New Zealand’s Mr Catley on two occasions along with Mr Hausmann and that despite spending some hours with a couple of the biggest private sector players in health according to Mrs King “they did not discuss health matters on those occasions”; and how believable is that? 
Hon DAVID CUNLIFFE 
: An extensive forensic analysis using the full search powers of the State has revealed this article in the  
Sunday Star-Times 
 of 16 March in which Mrs King is quoted as saying she was present in a corporate box. I am pleased that the Opposition is now taking a stronger interest in behaviour in corporate boxes. 
Rt Hon Winston Peters 
: Is it part of the Minister’s objective as a good Minister of Health to promote a sound work-to-life balance and would such a thing have a Minister go off for example to a corporate box for a sporting occasion and to spend his or her whole time talking not about the sport or something to do with the social occasion but rather about his or her personal portfolio business—and what sort of wuss would do that in the first place? 
Hon DAVID CUNLIFFE 
: I hope that the Opposition will discover an interest in sports and I hope that the Opposition’s spokesman gets a life. 
Hon Tony Ryall 
: Why in the full knowledge that Mr Hausmann was seeking a multimillion-dollar contract with the Hawke’s Bay District Health Board did Annette King appoint him to that board? 
Hon DAVID CUNLIFFE 
: As I have said to the House on previous occasions firstly because it was clear that the gentleman had extensive skills and knowledge in the health sector and secondly because the appropriate Cabinet disclosure processes were gone through. Almost 2 years ago those papers were made available to no less than the National Party. 
Hon Tony Ryall 
: Is the Minister aware that the Greens the Maori Party ACT and National all support this issue being referred to the Auditor-General and given that the Minister is so supremely confident that this matter has been adequately dealt with by the review panel why will he not refer it to the Auditor-General to give the people of Hawke’s Bay a clear answer? 
Hon DAVID CUNLIFFE 
: Firstly let me reaffirm that it is for the Auditor-General to make such decisions as he considers fit and proper. I am aware that the Auditor-General has an ongoing programme of work in respect of the Hawke’s Bay District Health Board as with other district health boards around the country. We would expect his office to be working on that district health board within months. I am sure that the Auditor-General would not thank the spokesperson opposite for implying that he was subject to political pressure from parties in this House. 
Hon Tony Ryall 
: I seek leave to table an internal Healthcare New Zealand document showing that the Minister Annette King was briefed about and supported the Hawke’s Bay District Health Board innovation. 
Document not tabled. 
Hon DAVID CUNLIFFE 
: I seek leave to table a document showing that chairman Atkinson met with MPs Foss and Tremain but would not allow the chief executive to do so. 
Document by leave laid on the Table of the House. 
Sustainable Land Management—Research 
4.  
Dr ASHRAF CHOUDHARY (Labour) 
 to the  
Minister of Agriculture 
: What recent research initiatives has the Government approved to support sustainable land management? 
Hon JIM ANDERTON (Minister of Agriculture) 
: 
 I am pleased to announce today that the Labour-Progressive Government has approved over $5 million in climate change research funding as part of the $175 million  
Sustainable Land Management and Climate Change: Plan of Action 
. This funding supports 45 different projects covering mitigation of agricultural emissions and adaptation mechanisms to cope with climate change as well as forestry and carbon sequestration research. 
Dr Ashraf Choudhary 
: Who will benefit from these initiatives? 
Hon JIM ANDERTON 
: This research is being conducted in partnership with a wide range of organisations including four universities the Foundation for Arable Research Crop and Food Research AgResearch the National Institute of Water and Atmospheric Research Landcare Research Scion New Zealand Winegrowers Canterbury and North Otago Irrigated Farmers and many many more. All of these organisations are delighted that this Government is making climate research a serious priority which is why it is truly extraordinary that last week the leader of the National Party John Key said: “The Government is doing no real research on climate change … um … R and D—I mean they’ve done very little in that area.” The leader of the National Party— 
Hon Dr Nick Smith 
: It’s true though—absolutely true. 
Hon JIM ANDERTON 
: —joined by Dr Nick Smith—obviously has no idea that the Government’s record is as good as it is but everyone else in New Zealand seems to know except him. Mr Key is just hoping that no one will notice the hole he has dug for himself on this matter. 
Dr Ashraf Choudhary 
: How is the Government informing stakeholders of its research initiatives? 
Hon JIM ANDERTON 
: The Government has established a peak group of industry representatives from the land management sector to provide liaison and partnership between Government and industry over its research initiatives. In this spirit of partnership last week I offered the Leader of the Opposition a briefing on the New Zealand Fast Forward innovation initiative. Last Friday his chief of staff advised that Mr Key would like to take up this offer of a briefing and would provide a time for this to happen this week. Unfortunately I must advise the House that Mr Key after receiving repeated phone calls and emails this week is now ducking having such a briefing. I can conclude only that he does not want to confront the cold hard reality that he got his facts wrong about New Zealand Fast Forward and his reaction has put him completely out of step with the largest companies and industries and with the whole of the rural sector that he lays claim to represent. 
Dr Ashraf Choudhary 
: Has the Minister seen any commentary on the Government’s research and innovation initiative? 
Hon JIM ANDERTON 
: Yes I have; it would be hard to miss. I have seen extensive commentary including editorials in a well-known Government-supporting newspaper the  
New Zealand Herald 
 and in the  
Dominion Post 
 praising the Government’s latest research and innovation initiative New Zealand Fast Forward. I have also seen comments from the Leader of the Opposition saying he would scrap the fund. That has taken aback many New Zealanders including the president of Federated Farmers Charlie Pederson who is another well-known supporter of the Government! Charlie Pederson said: “I am a little surprised by Mr Key’s position and I would like to understand the reasoning behind his statement.” So would we all! 
Hon David Carter 
: Can the Minister confirm that the funding from the Fast Forward fund that will be available next year is only $20 million which is a far cry from the $85 million to $100 million that Helen Clark claimed would be available last week? 
Hon JIM ANDERTON 
: If Mr Carter is the answer it must have been a really horrible question. That is all I can say. The amount of money that comes from the $700 million capital sum upfront will be determined by a governance group of equal representatives of industry and Government. That body will make the decision on what the projects are and how much they will get. The National Party says that its policy will be revealed and that we will know all but I ask when that will be. I would like to know when because our policy is upfront but that party’s is nowhere to be seen. 
Rt Hon Winston Peters 
: How comfortable would the Minister be if for example he stood for and was not nominated for the Rakaia electorate—a farming electorate I might add—then tried the same with Banks Peninsula and Lyttelton and was fired from there and was described recently by a farming publication as the “invisible man”; how would he feel about being the Minister of Agriculture if that is what his description was? 
Madam SPEAKER 
: The Minister has no ministerial responsibility for that. 
Rt Hon Winston Peters 
: I raise a point of order Madam Speaker. A report on an agricultural publication describing some spokesperson as “invisible man” is a report. The Minister has responsibility for quoting it because it is inside his portfolio of published interests. That is why it is relevant. Unfortunately it might be embarrassing to Mr Carter but it is a fact and he is not denying it. 
Madam SPEAKER 
: No I have ruled on the matter. 
Election Advertising—Financial Agent Authorisation 
5.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Justice 
: Has she been advised of a joint statement from the Chief Electoral Officer and the chief executive of the Electoral Commission stating that election advertisements promoted by financial agents must contain a statement setting out the name of the financial agent and the full address of the place where that person usually lives? 
Hon ANNETTE KING (Minister of Justice) 
: 
 Yes it was issued on 7 March and can be found on www.elections.org.nz. 
Hon Bill English 
: Does the Minister believe that Government policy intended that authorisation statements on election publicity should be visible clear and legible; if not why not? 
Hon ANNETTE KING 
: The Parliament decided what would be in the Electoral Finance Act and every party in this House needs to abide by it. 
Hon Bill English 
: Has the Minister seen copies of the large billboards that the Greens have put up around the country—including the one I am holding up—that contain an authorisation statement written so small it can hardly be seen and does she believe that this conforms with Government policy on election advertising? 
Hon ANNETTE KING 
: It is not my role to decide whether it is appropriate and I do not intend to give an opinion as to whether it is appropriate. It is up to the Green Party to ensure that it abides with the Electoral Finance Act. 
Hon Bill English 
: Does the Minister have some sympathy with the Green Party when it is required like every other party to conform with the ridiculous requirement that a financial agent has to put his or her residential address on a billboard and does she agree that to make this billboard legal the staff person from the Green Party has to put his or her residential address on it; why should that person have to do that and when will she admit that her policy is stupid and impractical for—and probably dangerous to—the individuals concerned? 
Hon ANNETTE KING 
: This Parliament decided what would make up the Electoral Finance Act. Every time this question is asked the National Party forgets that in this House there is still a democracy and the majority vote wins. 
Hon Bill English 
: Has the Minister seen the application by the Public Service Association (PSA) to become a third party which includes material where the association’s financial agent who is a private citizen has put down the PSA’s building address as what the agent believes is the correct address when in fact Ms Pilott will have to put down her own residential address of an apartment or a suburban street and every New Zealander who looks at PSA material will know where she lives and be able to track her down and do some of the crazy things that all sorts of people do these days? 
Hon ANNETTE KING 
: No I have not. But I know that many members in this House actually have their name and address in the phone book. 
Hon Bill English 
: Why is it Government policy that every billboard newspaper ad TV ad T-shirt and balloon that is put out by any political party or third-party campaigner in election year has to include the home address of an individual New Zealander—the place where his or her partner and children live—and why did the Government believe that that is the best way to frame our election law to put individual New Zealanders at risk by identifying their place of residence for everybody? 
Hon ANNETTE KING 
: I am afraid I will sound like a cracked record— 
Hon Phil Goff 
: No you’re not. 
Hon ANNETTE KING 
: Yes I am very very sorry but I will sound like a cracked record. This Parliament decided that that is what the Act would be. 
Hon Bill English 
: Will the Minister support an amendment to the legislation that would allow the financial agents of political parties and third parties to put an organisational or corporate address on election publicity or will the Labour Party insist on its ridiculous and vindictive policy that anyone who wants to campaign against it has to have his or her residential address made public while the Labour Party deliberately broke this law with the publicity it put out this year? 
Hon ANNETTE KING 
: Of course Mr English is well known for his selective memory. In this Chamber no less than 2 weeks ago my colleague held up the photograph of Mr Key’s DVD which he issued this year at a fair in Auckland—[ 
Interruption 
] One of his members did. There was no authorisation no name and no address on the DVD. So it is very good to come in here and point the finger at the Labour Party but if the member wants to take this issue seriously instead of throwing insults around I say to him he should put up an amendment and see what this Parliament thinks because at the end of the day it is this Parliament that will decide. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. I wonder whether we could clarify just what the Minister meant by that. Can we get an indication whether if Mr English were to seek leave to introduce a bill amending the Electoral Finance Act the Government would in fact support that leave. 
Madam SPEAKER 
: As the member well knows it is not for the Speaker to try to understand what the questions or answers are or to give an opinion on them. 
Question time interrupted. 
Members’ Bills 
Procedure 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 I seek leave to introduce an amendment to the Electoral Finance Act that would allow financial agents to use a corporate or organisational address as authorising an election advertisement on the next sitting day. 
Madam SPEAKER 
: Leave is sought. Is there any objection? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 This is a member’s bill I take it? It will be set down as a member’s bill. 
GERRY BROWNLEE (National—Ilam) 
: 
 I raise a point of order Madam Speaker. 
Madam SPEAKER 
: No we have a clarification here. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 The fact that he said “on the next sitting day” does not matter; if it is a member’s bill it is not dealt with until the next members’ day. The member has been here long enough to know the Standing Orders. 
GERRY BROWNLEE (National—Ilam) 
: 
 The House can do anything by leave. 
Madam SPEAKER 
: It can do anything. 
GERRY BROWNLEE 
: Mr English has responded to Annette King who said— 
Madam SPEAKER 
: Yes I understand. We have a clarification; we do not want to confuse it any further. Leave is sought. Is there any objection? No objection. 
Question time resumed. 
Questions to Ministers 
Prisoners—Mental Health Needs 
6.  
BARBARA STEWART (NZ First) 
 to the  
Minister of Health 
: Has he received the report from the Controller and Auditor-General titled  
Mental health services for prisoners 
 
which states that the Ministry of Health estimates that prisoners are three times more likely to need specialist mental health services than members of the general population; if so is he satisfied that everything possible is being done to meet these needs? 
Hon DAVID CUNLIFFE (Minister of Health) 
: 
 Yes the Minister of Corrections and I have received the report and I thank the Auditor-General for his office’s thorough work. The report states that the delivery of mental health care to prisoners is a complex and challenging area. Although the report notes that there is room for improvement overall it states that “The needs of prisoners with severe mental health issues are generally well catered for”. Both the Minister and I are working towards addressing the issues raised in the report and are committing resources to improving services overall. 
Barbara Stewart 
: When does the Minister expect his ministry and the Department of Corrections to finalise their policy for managing prisoners with personality disorders? 
Hon DAVID CUNLIFFE 
: The Ministers have signalled to both departments that work on personality disorders is although a very complex area a matter of major concern and a priority for both departments. 
Dr Jonathan Coleman 
: Does the Minister understand that with two unexpected deaths in the last 48 hours at Hillmorton Hospital in Christchurch following on from another unexpected death there 2 months ago public confidence in the hospital is now zero and does he realise that an inquiry that has no report-back date is a completely inadequate response from a pretty inadequate Minister? 
Hon DAVID CUNLIFFE 
: I am well aware of the very tragic events at Hillmorton Hospital and I am also well aware that the Canterbury District Health Board has commissioned an independent investigation. I suggest that the member like his colleague his senior spokesperson on health wait for the results of an independent process before displaying further personality disorders. 
Hon Tariana Turia 
: Tena koe Madam Speaker. What specific action will the Minister be taking to ensure that prisoners with mental health needs receive the same level of mental health care as they would in the community and how will those services be targeted and responsive to the needs of Maori inmates? 
Hon DAVID CUNLIFFE 
: I and my colleague the Minister of Corrections are looking at increasing the number of forensic beds across the country the number of specialist drug and alcohol treatment units has doubled to 500 places per year a new programme called First Steps has been developed to provide treatment for drug or alcohol-affected offenders a better screening system is being developed to assess prisoners’ mental health and finally we are increasing resources to train corrections officers to help manage prisoners with mental health issues—Pakeha or Maori.  
Barbara Stewart 
: Is the Minister aware of the Auditor-General’s recommendation that the Ministry of Health should set up regular progress reviews within its forensic planning cycle to ensure they are meeting prisoners’ mental health needs; if so will he act upon this recommendation? 
Hon DAVID CUNLIFFE 
: Yes we have the greatest respect for the work of the Auditor-General and we will be giving it very serious consideration. 
Hon Tariana Turia 
: Does the Minister agree that the limited provision of mental health services for 50 percent of the prison population who are Maori constitutes a national crisis of care for all related agencies and what steps is he taking to recruit staff to deliver kaupapa Maori services in this area? 
Hon DAVID CUNLIFFE 
: I believe that the member raises a very important issue. Nobody could doubt that Maori people are overrepresented in our prison statistics and that therefore the issue of mental health services for prisoners has a very significant bicultural dimension. I assure the member that workforce planning and capacity building in Maori health including forensic mental health is a very important priority for the Government. 
Barbara Stewart 
: Is the Minister satisfied that the interface between regional forensic psychiatric services and general mental health services is satisfactory; if not what is being done to improve it? 
Hon DAVID CUNLIFFE 
: The member also touches on an important issue which is that although in general we are well served by the local nature of our district health board system there are occasions where there is excessive variation from region to region and it is my intention as Minister to see enhanced collaboration on both a regional and national level to reduce that level of variability. 
Biofuels—Sustainability 
7.  
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Minister of Energy 
: How can he be confident that the biofuels requirement to come into effect on 1 July 2008 will be met from sustainable sources? 
Hon DAVID PARKER (Minister of Energy) 
: 
 The Biofuel Bill includes a regulation-making power to set environmental standards. That was initially requested by the Greens and is supported by the Government. Some submitters to the Local Government and Environment Committee have suggested that the bill should go further and set out sustainability criteria and I expect that the select committee will consider that issue further. 
Hon Dr Nick Smith 
: How can we have any faith in that provision given that officials have advised us that the earliest that it could come into effect legally would be 2009 and that they are programming not to be able to introduce regulations until 2011; and is it not the truth that from 1 July any old biofuel will qualify including biofuel produced from corn which takes 50 percent more energy to be produced and produces more carbon emissions than normal mineral fuel does and biofuel from other parts of the world where people are bowling over forests to produce it? 
Hon DAVID PARKER 
: I have asked officials to explore the possibility of including more criteria in the bill itself and I have also asked them to consider whether there should be mandatory reporting provisions for the providers of biofuel so as to have them report on their source of biofuels. 
Hon Marian Hobbs 
: What is the current European Union biofuels target and are the Europeans also introducing sustainability criteria? 
Hon DAVID PARKER 
: I am advised that the European Union target is for 10 percent of land transport fuels to be biofuels by 2020 and yes Europe too is now in the process of adding sustainability criteria. 
Hon Dr Nick Smith 
: Does the Minister stand by the advice of his officials that it is not legally possible to introduce a standard by 1 July this year and that a reasonable timetable to produce the sustainability regulations would go through to 2011; and does that scenario have New Zealand in a position of forcing biofuels when there is good evidence to show that they will be produced by methods that make the whole environmental problem worse not better? 
Hon DAVID PARKER 
: It is true that some biofuels are produced in unsustainable ways. I think that issue has been more and more acknowledged around the world in the last year. The way to address it is through having sustainability criteria and we are in that transition just as fast as the rest of the world is. 
Hon Dr Nick Smith 
: How will the environment benefit from the biofuel sales obligation when Shell BP and Caltex have all told the select committee that they will be sourcing ethanol from South America and when that biofuel is produced as a consequence of the clearing of over 2 million hectares of Amazon forest per year; and can he explain why New Zealanders should pay more for their gas in order to subsidise the clearance of forests in another part of the world? 
Hon DAVID PARKER 
: It is clear that part of the solution to climate change and indeed oil security issues is biofuels. It is only part of the solution but it is part of the solution. It is clear that in order to start to incorporate biofuels we actually have to have in place the infrastructure to do so. The amounts of biofuels that will be included in New Zealand’s fuel under the mandatory obligation in the early years are admittedly very small so the consequences should there be a proportion of unsustainable biofuels at the starting point would not be dire. In terms of the suggestion that all the biofuels are likely to come from South Africa I am advised— 
Hon Dr Nick Smith 
: South America. 
Hon DAVID PARKER 
: South America. I am sorry; I thought Dr Smith said South Africa at one stage. 
Hon Dr Nick Smith 
: I think the Amazon is in South America. 
Hon DAVID PARKER 
: No I thought the member said South Africa; I misheard him. I was going to make the point that most biofuels are likely to come from South America from sugar cane production. Not many countries in the world—in fact I am not aware of any—are proposing to outlaw ethanol from sugar cane because it has a good energy balance and much of it is actually produced quite sustainably. 
Hon Dr Nick Smith 
: Can the Minister give an absolute assurance to this House that he will not introduce a biofuel sales obligation until such time as he has a standard to ensure that those fuels are produced by sustainable means? 
Hon DAVID PARKER 
: I do not think the proportion of liquid fuels to come from biofuels reaches 3.5 percent until 2013 or thereabouts. In the early years it is a very small amount. I am confident that as we go through the transition towards biofuels the issues relating to sustainability will be sorted out. In actual fact doing that will also advantage New Zealand because our sources of future biofuel production will be sustainable. 
Hon Dr Nick Smith 
: Is not this biofuels policy which comes into effect on 1 July this year although we will not have any standards till some years down the track turning into the sort of policy flop we have seen with the billion-dollar bungle over the Kyoto numbers; with the animal emissions levy—[ 
Interruption 
]—that was a big success I say to Ruth Dyson; I am sure she was behind that one—with the negotiated greenhouse gas agreements which the Government has abandoned; with the carbon tax which the Government introduced then abandoned; and with the solar water heating subsidy which has resulted in the first drop ever in the number of solar water heating installations? Is not this policy just another policy botch-up by this Government on climate change? 
Hon DAVID PARKER 
: I am absolutely clear that the answer to reducing greenhouse gas emissions does not lie in “sexy coal” which is promoted by the National Party spokesman on energy; nor does it lie in increasing rates of deforestation which the National Party seems to be favouring; nor will we make progress on reducing agricultural emissions by reversing the investment in research and development to reduce emissions. This Government has the country on the way to 90 percent renewables in electricity the sensible introduction of biofuels and many other sensible initiatives. 
Hon Dr Nick Smith 
: I seek leave of the House to table photographs of the 2 million hectares of deforestation per year in the Amazon. 
Madam SPEAKER 
: Leave is sought to table those documents. Is there any objection? There is objection. 
Hon Dr Nick Smith 
: I seek leave to table the advice from the Ministry of Economic Development saying that—[ 
Interruption 
] I raise a point of order Madam Speaker. The last time I interjected on a point of order I was biffed out. Both Annette King and Winston Peters interrupted my point of order. 
Madam SPEAKER 
: Yes. That was after a warning so this is the last warning. I do find sometimes though that if members pause for quite a long time there is an irresistible urge to fill in the gaps. So could the member please move on. 
Hon Dr Nick Smith 
: I seek leave to table the advice from the Ministry of Economic Development that it will not be able to introduce a standard for biofuels until 2011. 
Document not tabled. 
Peter Brown 
: Does the Minister accept that there is an increasing degree of concern among members of the general public when it comes to biofuels largely around their future cost and the ability of the public’s vehicles to use them; can he advise where he thinks the cost is going and to what degree and the current percentage of the vehicle fleet that would be able to use biofuels? 
Hon DAVID PARKER 
: I do know that Gull has been selling 10 percent ethanol blends in Auckland to very happy customers this year. Presumably those customers’ cars are running pretty well on them. I think some of the fleet disadvantages are overstated by people who do not want biofuels to proceed. In respect of cost it is expected that second-generation biofuels will be more cost-effective and more environmentally sustainable than some first-generation biofuels. I think that answers the question. 
Moana Mackey 
: Is the Minister aware that although Dr Smith has chosen to focus on the submissions from the oil companies the select committee also heard from a number of other groups including biofuel producers who thought the bill was both reasonable and achievable? 
Hon DAVID PARKER 
: Indeed I am. I understand that Gull has been quoted in the newspapers as saying it thinks that some of the costs have been exaggerated by the oil companies. I am also aware that some proponents of biofuels—notably New Zealand producers who want to produce biofuels from tallow—think the bill is a very good advance for the New Zealand economy and the environment. 
Hon Dr Nick Smith 
: I seek leave to table submissions from both Biodiesel and Ecodiesel companies that say they thought the lack of a standard until 2011 was a— 
Madam SPEAKER 
: Leave is sought to table those documents. Is there any objection? There is objection. 
Breastfeeding—Promotion 
8.  
LOUISA WALL (Labour) 
 to the  
Associate Minister of Health 
: What is the Government doing to encourage more mothers to breastfeed? 
Hon STEVE CHADWICK (Associate Minister of Health) 
: 
 Lots. Yesterday my colleague Damien O’Connor helped launch the draft National Strategic Plan of Action for Breastfeeding which is out for public comment. This plan aims to improve breastfeeding rates by ensuring that the Government the district health boards health providers and communities are all working together to improve breastfeeding rates. 
Louisa Wall 
: Why is the Government launching a national breastfeeding promotion campaign? 
Hon STEVE CHADWICK 
: Breastfeeding gives babies the best possible start in life and we all agree with that. Evidence also tells us that there are health benefits for both the infant and the mother. Breastfeeding is important for bonding and infant growth provides optimum nutrition assists infants’ physical and emotional development protects against infectious disease and may also reduce the incidence of chronic conditions such as obesity. That is why our message to mothers is “breast is best”. 
Judy Turner 
: Is the Minister concerned that the district health boards which are currently trying to ascertain how many maternity beds they may need to provide are receiving expert advice that includes strategies that they themselves admit will have a possible effect of reducing breastfeeding rates in that district health board district? 
Hon STEVE CHADWICK 
: I think the issue the member raises does not have an influence on the support that mothers require to breastfeed and also their ongoing support. It comes from their relationship with their lead maternity carer. The issue is not where the mother is breastfeeding but whether she gets the information and the support she needs both at hospital and at home to ensure good breastfeeding rates. 
Louisa Wall 
: What response has she received to the launch of the plan? 
Hon STEVE CHADWICK 
: The World Health Organization nutrition specialist Randa Saadeh yesterday endorsed the plan saying that it would ensure that mothers get good support when they need it. However although professionals are backing it we are yet to hear anything from the National Party on breastfeeding. Maybe National members think it is just another pointless strategy; if so would they abolish it? I think mothers deserve to know. 
Debt Beneficiary—Increases 
9.  
JUDITH COLLINS (National—Clevedon) 
 to the  
Minister for Social Development and Employment 
: Can she confirm that total current and non-current beneficiary debt is now $763.8 million and in dollar terms how much has total beneficiary debt increased since 1999? 
Hon RUTH DYSON (Minister for Social Development and Employment) 
: 
 Yes; in total debt which covers fraud overpayment and recoverable assistance has increased by $313 million. That is why in the last 12 months we have had more than 346 data-matching programmes comparing more than 12 million records; visited more than 15000 clients to check their entitlement; completed 39000 individual investigations and reviews; and prosecuted 905 fraud cases with a 95 percent success rate. There is a bill before the House that will enable us to continue this good work. I thank the member and her party for supporting it. 
Judith Collins 
: Does she stand by her predecessor’s answer to an oral question on 16 May 2007 that confirmed that beneficiary debt had increased by more than $300 million under Labour and can she confirm that the current debt owed by current beneficiaries is actually increasing by $1.25 million every month under her stewardship? 
Hon RUTH DYSON 
: I can confirm the accuracy of the answer given by my predecessor to the member’s question. I cannot confirm the accuracy of her interpretation of the percentage of that figure because tragically she put the wrong denominator against the answer to that question. I am not surprised that she got it wrong when she said that 70 percent of beneficiaries are now in debt. That is not correct at all. I am not surprised because it would have been accurate under the previous National Government when total beneficiary numbers were more like 400000 as compared with the current numbers. 
Russell Fairbrother 
: Why does the Government provide recoverable assistance to beneficiaries? 
Hon RUTH DYSON 
: Although people can live off a benefit it can be difficult for them to meet unexpected costs or to pay for expensive but necessary items. In those circumstances they can and should be able to apply for a loan from Work and Income. They might need to replace their fridge or they might need petrol money to go to their mother’s funeral or maybe even to pay for the tow truck company that towed the grandmother’s car while she was visiting her sick grandchild at Starship Children’s Health. Is it the policy of the National Party that those families should have to go to loan sharks instead? I hope not. 
Sue Bradford 
: Does the Government recognise that one of the main reasons for ever-rising beneficiary debt is that benefits are fundamentally too low for people to live on particularly at this time of rising food and fuel costs; if so what is the Government going to do about it? 
Hon RUTH DYSON 
: We have maintained and delivered on our commitment to ensure that the CPI adjustment is delivered to beneficiaries every year. 
Judith Collins 
: Why did Labour promise in 1999 to provide budgeting advice to all beneficiaries but instead it has abolished the compulsory budgeting advice referral system that the previous National Government had set up in 1995 and now in 2008 the Ministry of Social Development cannot even advise how many if any beneficiaries have received any kind of budgetary advice? 
Hon RUTH DYSON 
: The member confuses the provision of services with an obligation imposed in order to receive a benefit. That is not our policy at all. In fact I can demonstrate that that policy was not successful. In the 3 years from 1996 to 1999 the size of debt for Work and Income was growing at over 10 percent per year; last year it was growing at 2.5 percent—a big difference. 
Judith Collins 
: Is she worried that her Government’s decision to abolish the compulsory budgeting advice referral system depriving beneficiaries of good budgeting advice has resulted in many of them turning to loan sharks and that in an environment of increasing demand by food banks sky-high living costs and soaring interest rates many of these beneficiaries are under immense financial pressure? 
Hon RUTH DYSON 
: No. 
Judith Collins 
: Does she stand by her answers to written questions that confirm that the debt owed by women on the domestic purposes benefit has increased from $67 million in 1995 to almost $120 million today and what responsibility does she accept for the dire financial situation of these women? 
Hon RUTH DYSON 
: Yes I can confirm the answers to the written questions to which the member refers. I just want to compare percentages because the member consistently puts in the wrong denominator and therefore gets the wrong percentage. Of total current clients’ debts— 
Judith Collins 
: I raise a point of order Madam Speaker. It is quite irresponsible of the Minister to mislead the House and talk about percentages and to say that I am referring to percentages when she knows that I am not. She should just stick to the truth. 
Madam SPEAKER 
: I think we will hear the Minister’s answer. As members well know they cannot require a particular answer to their question. 
Hon RUTH DYSON 
: The current percentage owed by clients to Work and Income is 19.8 percent and in 2000 it was 18.8 percent. So I would not get too upset about the accurate figures as opposed to the ones that that member makes up. 
Judith Collins 
: I seek leave to table the answer to question for written answer No. 11509 2007. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Judith Collins 
: I seek leave to table the answer to question for written answer No. 01531 2008. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Judith Collins 
: I seek leave to table the answer to question for written answer No. 257 2008. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Judith Collins 
: I seek leave to table the answer to question for written answer No. 18715 2007. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Judith Collins 
: I seek leave to table the answers to questions for written answer Nos 17688 17689 17690 17691 17692 17693 and 17699. 
Madam SPEAKER 
: Leave is sought to table those documents. Is there any objection? Yes there is objection. 
Judith Collins 
: I seek leave to table the answers to questions for written answer Nos 12111 12112 and 12113. 
Madam SPEAKER 
: Leave is sought to table those documents. Is there any objection? Yes there is objection. 
Tibet—Independent Observers 
10.  
KEITH LOCKE (Green) 
 to the  
Minister of Foreign Affairs 
: Will he today in the House support Amnesty International’s call and demand that independent observers be allowed into Tibet to assess the situation and protect Tibet from further violence; if not why not? 
Rt Hon WINSTON PETERS (Minister of Foreign Affairs) 
: 
 The appropriate channel for dialogue about developments in Tibet is the Chinese Government. We are engaged with that Government and have made our views clearly known as have many other Governments. We continue to follow developments closely. 
Keith Locke 
: How can the Minister refuse to add our voice to calls for international observers when all around the world people are protesting the brutal Chinese crackdown and outside our Parliament yesterday Karma Tenzin a Tibetan now living in Christchurch told us that some of his family members had been imprisoned and killed and that he had seen pictures of bodies with gunshot wounds; if the Minister will not support the call for international observers why not? 
Rt Hon WINSTON PETERS 
: The United Nations has not made such a call—that would represent an international response. I say to that member over here that he is asking for the precise things that would do the very least for the people of Tibet or for anybody else around the world. He wants boycotts of all sporting economic and cultural ties with China in order to address human rights issues. That would do the very reverse to what the rest of the Western World—and New Zealand—has sought to do in these last 30 years. We intend to go on with the proven method of change to a stance of a country rather than take this knee-jerk reactive response that the Greens so irresponsibly take which was best epitomised by their spokesman himself when he supported Pol Pot back in 1975. 
Madam SPEAKER 
: The member knows that the last statement was inappropriate. Would he please withdraw it. 
Rt Hon WINSTON PETERS 
: I withdraw. I raise a point of order Madam Speaker. If he can get up and talk about other members in this House as not having a good conscience as though he has a mortgage on conscience as the Greens regularly do on so many issues like they care more than the rest of us—us not having seen one evidence of proof of that—why can I not raise the issue about his good conscience? 
Madam SPEAKER 
: As the member knows he cannot because a personal statement has been made and the member’s word has been accepted. 
Hon Trevor Mallard 
: I raise a point of order Madam Speaker. I think that in the member’s personal statement he indicated that he welcomed the change of regime but not later events. I think to say that he welcomed Pol Pot in 1975 is not in fact going against the personal explanation that the member gave. In fact I think it was confirmed by the member. 
Madam SPEAKER 
: I will have to check the record for that. 
Keith Locke 
: I raise a point of order Madam Speaker. I would like to correct the Minister. I do not call for a sporting boycott of China. In fact the Green Party supports the New Zealand team going to the Olympics. 
Madam SPEAKER 
: That is not a point of order. It is a debatable matter. 
Keith Locke 
: Does the Minister agree with the editor of the  
Dominion Post 
 who this morning wrote: “For New Zealand there may be short-term benefits to turning a blind eye to events in Tibet but in the long run this country’s interests will be better served by a stable open transparent China that respects human rights and the rule of law than a repressive regime.”; if not why not? 
Rt Hon WINSTON PETERS 
: It will come as no surprise to members that I do not agree with the editor of the  
Dominion Post 
 and the reason is that he does not have a very good grasp of history. The reality is that economic freedom has usually been the beginning of political freedom and the growth of human rights. That has been the record of history and that is what we and other nations including the United Nations seek to persuade to be the course of China rather than this short-term knee-jerk populist reaction that the Green Party is famous for. Mr Locke in particular is famous for having no coherence to his policy and no past promised historical record of it ever working but it makes him feel good. 
Hon Peter Dunne 
: Supplementary question. 
Madam SPEAKER 
: There are no further supplementary questions for United Future. 
Hon Peter Dunne 
: I seek leave to be able to ask a reasoned supplementary question of the Minister on this matter. 
Madam SPEAKER 
: Leave is sought. Is there any objection? There is objection. 
Keith Locke 
: Does the Minister of Foreign Affairs agree with the leader of New Zealand First who recently told an audience of elderly people: “Let me be clear. Our policy position has not changed; we do not favour FTAs with low-wage economies.”? 
Rt Hon WINSTON PETERS 
: To an audience best described as legend the New Zealand First leader did get up and say that our policy in respect of low-wage economies—for many many decades not just conveniently lately—remains the same. However we were prepared to await the detail— 
Gerry Brownlee 
: I raise a point of order Madam Speaker. 
Madam SPEAKER 
: Yes Gerry Brownlee; I think I know what you are going to say. Please proceed. 
Gerry Brownlee 
: You are anticipating it Madam Speaker. It is to do with the way in which the Minister is answering. He was asked a question as a Minister of the Government and is now answering as the leader of New Zealand First. We have been told many many times that the Prime Minister answers as Prime Minister but not as leader of the Labour Party. 
Madam SPEAKER 
: The member is quite correct. The question has to relate to ministerial responsibility. So the Minister should respond to that but not as leader of a political party. Do you wish to proceed Mr Peters? 
Rt Hon WINSTON PETERS 
: In fact I advised my audience that on such matters they should consult Phil Goff Minister of Trade but in other respects the audience was delightful and happy with the event. 
Keith Locke 
: I seek the leave of the House to table an editorial from this morning’s  
Dominion Post 
 headed “No time for silence on Tibet violence”. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Clean-coal Technology—Progress 
11.  
GERRY BROWNLEE (National—Ilam) 
 to the  
Minister of Energy 
: Does he stand by his statement made to the New Zealand Petroleum Conference on 11 March 2008 that “There is a degree of wishful thinking and exaggeration around how close clean-coal technology really is.”; if so why? 
Hon DAVID PARKER (Minister of Energy) 
: 
 Yes. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. The Minister may not have heard me but I did say: “if so why?” 
Hon DAVID PARKER 
: It is because it is so self-evidently true. 
Gerry Brownlee 
: Has the Minister seen the comments of his Associate Minister of Energy the Hon Harry Duynhoven who spoke at the same petroleum conference a day before the Minister spoke and said that carbon was now being captured and stored around the world that the Americans the Germans and the Austrians were doing it and that he thought clean coal “is here”; and do those totally conflicting statements made by two energy Ministers in the space of 24 hours indicate the reasons for industry concern about this Government’s energy policy? 
Hon DAVID PARKER 
: Mr Duynhoven is quite correct that carbon is being stored underground. The trials in respect of carbon capture and storage are small except to the extent that it is being used as an oil recovery technique where carbon dioxide is being pumped into oilfields to increase the recovery of oil. In terms of carbon capture and storage in respect of coal-fired generation which that member seems to find sexy Mr Duynhoven and I both agree that that technology is not yet here and that it is expensive. 
Gerry Brownlee 
: When the Minister said in respect of clean coal “A dose of reality is required” did he mean his version of reality which is to rely on  
New Scientist 
 magazine editorials or was it a criticism of Harry Duynhoven or of any one of the Government’s own agencies—Solid Energy Genesis Energy the Ministry of Research Science and Technology Crown Minerals—and the many other organisations mentioned by Mr Anderton in his answer to question No. 4 today? 
Hon DAVID PARKER 
: There are more complexities to this issue than that member obviously understands. We are supporting Solid Energy Genesis Energy and other companies to do their bit to advance the work that needs to be done before carbon capture and storage can even be considered in New Zealand. One of the things we have to do is actually work out whether we have the necessary underground reservoirs to store it even if it were economic to capture it from a coal-fired power station’s exhaust flume. There are many barriers to be overcome before carbon capture and storage is economic in New Zealand. 
Peter Brown 
: Is the Minister aware of the statement that “If we are serious about climate change we have got to be serious about clean coal and if we are serious about clean coal we have got to put in half a billion dollars to make it serious to make it worthwhile and that is what this proposal is all about.” which was made by Kevin Rudd just before he became Prime Minister of Australia and in which he went on to say that “Coal and coal-fired electricity is critical for our economy.”—he said that more than once in his statement—and does the Minister believe that Kevin Rudd who is now the Prime Minister of Australia is guilty of wishful thinking and exaggeration? 
Hon DAVID PARKER 
: No I do not. The two statements—his statement and my statement—are perfectly reconcilable. Australia generates about 90 percent of its electricity from coal. Finding a solution through carbon capture and storage is fundamentally crucial to Australia’s economy not just for its electricity production but also for the value of its coal exports. It is far less important for New Zealand. Australia needs to spend half a billion dollars as the member said. The Americans have just pulled back from projects because the costs are escalating past them. It is for those countries to develop that technology and we will adopt it. We will do related research so that we can adopt it but we will not lead it. We will spend money on getting to the level of 90 percent renewable electricity—that will be far cheaper and far quicker. 
Gerry Brownlee 
: Why does the Minister continue to have such a Dickensian view about clean-coal technology when the Government’s own State-owned enterprise Solid Energy is investigating coal-seam gas coal gasification coal to liquid and carbon capture and storage—all with a focus to lower carbon dioxide emissions that are likely to come from the Minister’s own mandated biofuels obligation? 
Hon DAVID PARKER 
: The Government does not oppose carbon capture and storage as a technology but it makes the point that it is not here yet and that New Zealand will not be at the forefront of its development which will cost many billions of dollars. 
Gerry Brownlee 
: Is it because of the Minister’s “slightly unusual thinking” that he insists New Zealand should not benefit from a fuel resource that could with full mitigation against excess greenhouse gas provide us with an energy source for 800-plus years? 
Hon DAVID PARKER 
: It is obvious that someone read my speech to the New Zealand Power Conference and the New Zealand Petroleum Conference for Mr Brownlee and that he did not read it himself. If he had read it he would have seen that I actually acknowledge that the coal resources New Zealand has are enormous and a very important future source of energy that could be an economic source. But I made the point that there are environmental hurdles to be overcome and that is true. 
Scientific Research—Funding 
12.  
MOANA MACKEY (Labour) 
 to the  
Minister of Research Science and Technology 
: What action is he taking to improve funding for New Zealand’s world-class researchers and scientists? 
Hon PETE HODGSON (Minister of Research Science and Technology) 
: 
 The Government is moving to a greater proportion of some of our bigger research funding areas from a purely contestable past to a negotiated future. On average the negotiation will deliver funding certainty for 8 years although in some cases it will be as much as 12 years. From 1 July $155 million will be available for this purpose. 
Moana Mackey 
: Why is negotiated funding of this nature important for researchers and scientists? 
Hon PETE HODGSON 
: Negotiated longer-term contracts give researchers more certainty that funding will be available in the long term self evidently. It allows them to focus on outcomes rather than the next funding round. It reduces transaction costs and it improves their ability in the appropriate areas of science to deliver world-class science for our economy and our society. 
Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill 
Second Reading 
Hon JIM ANDERTON (Minister for Biosecurity) 
: 
 I move  
That the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill be now read a second time 
. I will start by acknowledging the work that submitters to the Primary Production Committee have put into this bill. For reasons that I will come to shortly submitters had a period of just over a week to prepare submissions and the select committee effectively had a period of only 2 weeks in which to consider the bill. Despite these constraints 53 submissions were received from a range of interested organisations and individuals. Many of the submissions were substantial and the select committee was therefore required to consider a number of significant issues in a short period of time. I thank submitters for their input and I thank the committee for its hard work and its careful consideration of the issues raised by submitters. 
I am also very conscious that the bill has generated substantial concerns particularly in the bee-keeping and pig farming industries. The Government acknowledges those concerns and is happy to support the mechanisms for independent review that the select committee has recommended in its response to them. 
I understand that a number of key concerns were expressed in submissions on the bill including whether the bill is even necessary or whether it is necessary to pass it urgently. The full implications of the Court of Appeal judgment in the Beekeepers’ Association case last December are captured in the following statement by the court: “… if there were other known new organisms which might incidentally be imported in other products then as we interpret the legislation approval for them would be required from ERMA.” 
Some submitters considered that this statement by the court does not create significant problems and that the facts of the case taken by the Beekeepers’ Association were unique or uncommon. The Ministry of Agriculture and Forestry sought advice from the Crown Law Office immediately after the court’s judgment was released in December. This advice led to the freeze on issuing any new import health standards under the Biosecurity Act and on amending any existing standards. This freeze on new or amended import health standards is what makes it necessary for the bill to be passed so urgently. 
In considering the implications of the court’s interpretation it is important to bear in mind that for many different kinds of imported goods there are a large number of known new organisms that might be incidentally imported. I give but one example: there could be hundreds of known new micro-organisms imported in or on horses—in their intestines on their coats or in their noses. If the law as stated by the Court of Appeal was left unchanged then all of those organisms would require an approval under the Hazardous Substances and New Organisms Act before horses could be imported into New Zealand. That is clearly unworkable to say the least and impractical because the approval processes in the Hazardous Substances and New Organisms Act were not designed for assessing the risk posed by passenger new organisms. As a result they are not suitable for that task. 
Given that some submitters had questioned the need for the bill the Crown Law Office advice was made available to members of the select committee. I have also become aware that other members were interested in the reasons for the bill and for that reason I sent a copy of the Crown Law Office advice to all members of the House at the end of last week. 
A second and related concern has been around why this bill needs to be progressed so urgently given that there has been awareness of the problems related to the interface between the Biosecurity Act and the Hazardous Substances and New Organisms Act for some time. Officials had been working on issues relating to the interface between the two Acts before the bee-keepers’ legal challenge was commenced. The High Court judgment in the litigation found in favour of the Crown’s arguments to an extent that no law changes were considered necessary. But the Court of Appeal however found almost completely the reverse of that judgment which has triggered the need for the legislation before the House today. 
Another key issue raised by some submitters was their questioning of why the approval processes in the Hazardous Substances and New Organisms Act could not be used to assess the risk posed by passenger new organisms. This has been looked into thoroughly by officials from the Ministry of Agriculture and Forestry the Ministry for the Environment and the Environmental Risk Management Authority as part of the work that was done before the bee-keepers’ litigation. The conclusion they reached was that the Hazardous Substances and New Organisms Act approval process was not appropriate for this task. 
I set out in some detail why the Hazardous Substances and New Organisms Act approval processes are not suitable for assessing passenger new organisms during the first reading debate. I will not repeat them in detail here but I will make some more general observations. The first point is that the Hazardous Substances and New Organisms Act has a decision-making process based on the particular new organism that is applied for. The Biosecurity Act has a decision-making process based on the kinds of goods that are proposed for importation. The latter has therefore clearly been designed to consider the unwanted pests and diseases that might come in with imported goods and the measures that should be applied to mitigate those risks. 
Secondly the sheer number of new organisms that are known to be associated with imported goods of various kinds would make it impractical to carry out a Hazardous Substances and New Organisms Act assessment for each of them. The biological reality is that many new organisms cross our border as incidental importations on a regular basis without posing any significant risk to New Zealand. 
There are various reasons why the incidental importation of a new organism might present very low risks to New Zealand. Some examples are those where the organism may enter New Zealand in low quantities in imported goods and as a result there is a very low likelihood of it becoming established here; where an organism would not survive or reproduce in New Zealand because for example the climate is unsuitable; where the organism is inconsequential and would have negligible adverse effects even if it did become established in New Zealand; and where an organism requires a particular insect in order to spread and that insect is not present in New Zealand. In as much as it is more sensible for these kinds of organisms to be assessed by the Ministry of Agriculture and Forestry in an analysis of the risk posed by a particular kind of imported good rather than have each and every one of them assessed using the criteria proposals in the Hazardous Substances and New Organisms Act this is what this bill is about. 
That touches on a third general point which is that the risks posed by an organism when it is imported incidentally are different from the risks posed by an organism if it is deliberately imported. Some submitters questioned this and pointed out that the effects of an organism are the same if it becomes established in the environment regardless of whether it was imported deliberately or incidentally. That is correct of course but what needs to be remembered is that an organism entering the country as an incidental import may have a very low probability of actually becoming established in New Zealand. Therefore if overall risks are different and in many cases significantly different this is the kind of reason why the job of assessing risks from organisms that might be incidentally present in imported goods is quite different from the job of assessing an organism that is proposed for deliberate release. The likelihood of establishment must be considered in the case of incidental importations whereas establishment in New Zealand must be assumed in the case of deliberate importations. 
A number of submitters accepted that some legislative response to the Court of Appeal decision is necessary but they considered that the bill should make more substantial amendments to the Biosecurity Act. The common theme behind these submissions was the view that there needs to be a more statutory process and criteria to guide the Ministry of Agriculture and Forestry in the process of developing import health standards. Some of the suggested amendments to the Biosecurity Act proposed that elements of the Hazardous Substances and New Organisms Act be adopted such as the precautionary principle and the minimum standards. Other suggestions were for some kind of independent review of the Ministry of Agriculture and Forestry’s decision or an appeal right. 
I would have been concerned if the select committee had sought to make major amendments of this kind to the Biosecurity Act. Adopting elements of the Hazardous Substances and New Organisms Act into the Biosecurity Act could have significant implications for the way that those decisions are made under the Biosecurity Act. A range of different stakeholders would have an interest in any such amendments and I note that the select committee heard from submitters concerned about two specific import health standards when in fact over 400 import health standards are currently in effect. 
This bill was introduced as a measure specifically to address the problems resulting from the Court of Appeal’s decision and it needs to be passed promptly. Therefore I am pleased that the committee has maintained a focus on those essential elements. However the select committee has recommended that the Biosecurity Act be amended to make provision for an independent review process that can be used in cases where there are significant or supposedly controversial concerns and when those have arisen during the consultation over the import health standards. 
The Ministry of Agriculture and Forestry already seeks independent peer review of its risk analysis. However I believe that the new provision recommended by the committee will be of value in helping to move forward in relation to those few import health standards that become contentious. The details of the review process will be developed by 1 July in consultation with affected parties so I am accepting that recommendation. I also understand that the Director-General of the Ministry of Agriculture and Forestry will shortly be offering the bee-keeping industry a targeted review of the ministry’s interpretation of the science in dispute around the  
Paenibacillus alvei 
 which was the key organism of concern in the bee-keepers’ legal challenge. 
The last topic I will address is the validation of the import health standard for honey from Australia. A number of submitters saw this as the Government legislating to deprive bee-keepers of a court victory. I can certainly understand that perspective and why members of this House would be concerned about that. As I said in the first reading debate the Government did not take lightly the decision to validate the standard. I will not repeat in detail the reasons for validation that I referred to in the first reading but I would like to emphasise that the bill is based on the Crown Law Office advice that I have made available to members. The select committee also received advice on this issue from the Legislation Advisory Committee which concluded that the retrospective validation of the import health standard can be justified. 
I also note that the review to be offered by the director-general of the ministry concerning the science and dispute around  
Paenibacillus alvei 
 is in some way a reflection of what the bee-keepers considered they won from the Court of Appeal decision and that the committee has recommended a solution whereby there will be no imports of Australian honey for 90 days during which time the independent review can be carried out. I endorse the committee’s proposal to provide a practical way forward although still being responsive to calls for an independent consideration of the dispute over the effects of  
Paenibacillus alvei 
. 
In closing may I thank submitters for their input and the members of the Primary Production Committee for their hard work on the bill and the sound judgment that I think they have brought to bear on some very difficult and complex issues. These are difficult matters to contend with and we will not always make everyone happy. That is a major understatement! Indeed biosecurity management at the border is a difficult balancing act with a range of competing interests and it is essential that we do it as well as we possibly can. The current situation of an unworkable statutory regime for assessing the passage of new organisms and a freeze on the issuing or amending of import health standards is quite simply unsustainable. Therefore I urge members of this House to pass the bill promptly. 
Hon DAVID CARTER (National) 
: 
 The National Party supports the second reading of the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill. I will start by saying that this would be one of the more interesting pieces of legislation that I have seen and seen pass through the legislative process under a very rapid timetable. I want to acknowledge first of all the cooperation I received from all members of the Primary Production Committee who worked hard in studying a complex issue and constructively coming up with the amendments which I note the Minister has accepted. I want also to express my thanks to the select committee staff who under pressure also managed to help us through this process. Finally I express my thanks to the officials. The officials often do not get recognition for the work they do. We found them to be extremely cooperative. They acknowledged there were some difficulties with the legislation as first presented to the select committee but were prepared to entertain ways to address them and they worked with us to find a solution that I think is most appropriate in the circumstances. 
The first point I want to comment on is the need for urgency around this legislation. It went before the select committee process with us perhaps being unsure of the need for urgency in the first instance. We quickly became aware that as a result of the Court of Appeal decision—which I think was on 4 December last year—and of a subsequent Crown Law opinion the Ministry of Agriculture and Forestry was inevitably in a difficult position. I want to quote just one paragraph from the Crown Law opinion dated March this year: “The director-general and chief technical officer must therefore hold off issuing further import health standards unless satisfied that the proposed import health standard will not amount to an approval for the introduction of a new organism into New Zealand without ERMA approval.” Clearly with the proviso added to that statement the ministry was in a position whereby it could not continue to issue any further import health standards or amend the existing ones. That meant there was an overriding aspiration from all members of the select committee to work rapidly to address the situation. 
The key aspiration that I had in working through this legislation was to make sure that we still maintained effective biosecurity control in New Zealand. Having said that the second thing we had to balance with that was that we do need to have a biosecurity regime in this country that is fair and reasonable in terms of allowing trade to occur. We are a country that has talked about free trade for a long period of time and it is becoming generally accepted by most political parties here in the House that the balance between fair and free trade and maintaining our biosecurity interests is the very essence of any good biosecurity legislation. I think that with the amendments that have been proposed we get that balance as close to being correct as is indeed humanly possible. At the end of the day the balance in the development of any import health standard must be based on science not on emotion. 
I will also talk later about the two difficult cases that have received a lot of attention through the select committee process: both the bee-keepers concerns around the import standard for honey and the pork industry’s concern. But I want now to express my concern around a comment I made in the first reading debate on this bill. At that stage I felt a lot of the developments in terms of those two import health standards in particular were almost erring towards a gung-ho approach—I think that was the word I used—towards the importation of other products. Having had the opportunity to liaise with the officials I now no longer hold that view. I think the ministry has done a very creditable job in talking to the industries concerned as it has developed the import health standards in those two particular cases. But where I think the difficulty arises is that as the Minister alluded to a minute ago an independent review process is utilised by the ministry in the development of import health standards but it appears to be judge and jury on the issue. Therefore I think the improvement that we came up with—the insertion of the amendment into the bill—now means there is more independence than there was previously. 
I pick up the comment made by the Minister—and this became very evident to the members of the select committee—that hundreds of import health standards have been developed after discussion between the parties involved and generally they have been accepted by industry. We have had two quite high-profile cases where the import health standard has not been accepted. I think we now have a process whereby those industries can achieve some independent review. But at the end of the day as I said earlier the decision must be made. It must be made based on science and not on emotion. How else can we continue to argue our case against the Australians on the issue of New Zealand apples not being allowed access into Australia? 
The groups of submitters we heard fell I think into two or three categories. A relatively small group of submissions argued that there is not a problem and that new organisms that arrive incidentally with intentional imports should go through a Hazardous Substances and New Organisms Act process. We spoke with the  
Environmental Risk Management Authority through the select committee process and the authority said itself that that would simply not be practical. I also pick up on the original intention with regard to the legislation both the Biosecurity Act and the  
Hazardous Substances and New Organisms Act legislation when it went through the House. I do not believe as I read through the  
Hansard 
 of the time that there was ever an intention that if a passenger organism was coming in on an intentional import that process should then go through an  
Environmental Risk Management Authority - type process. It was always intended that that should be addressed by the Biosecurity Act. So we certainly gave consideration to that particular line of submission but at the end of the day the select committee did not agree with it.  
We then got another group of submitters whom I would describe as the importers. They correctly pointed out that they are in a no-win situation because of the Crown Law advice. I think they were probably unaware of the Crown Law advice so I am pleased it has been made publicly available. They simply wanted the trade in and importation and export of products to continue unabated without impediment. They deserve satisfaction.  
We had an interesting group from the equine industry where there is a long-established import health standard that allows the trade of horses into New Zealand particularly from Australia. Australia had an outbreak of equine influenza late last year which meant that the  
Ministry of Agriculture and Forestry quite correctly wanted to amend the import health standard. Because of the Crown Law opinion it was unable to amend that standard. The result was that a lot of horses are stranded in Australia and New Zealanders are trying to bring them into New Zealand. That could not occur until this legislation proceeded through the select committee and through the House. I think we have largely addressed their concerns. 
I will move now to the honey situation and to the bee-keepers’ concern around the development of their import health standard. What became evident there is that the bee-keepers had had a win in the court. Our first wish within the select committee—and of all select committee members—was to try to achieve a mechanism to allow them to retain the fruits of their victory. Why could the bee-keepers not go through the  
Environmental Risk Management Authority process? We considered that but as mentioned in the commentary on the bill it was just not practical because of the particular  
Paenibacillus alvei  
organism. We have therefore acknowledged that the bee-keepers need to work quickly with the Ministry of Agriculture and Forestry and we have an assurance from the ministry that it will develop a review process specifically for them. We have delayed the final validation of the import health standard in order to allow that process to occur. It is for the bee-keeping industry to pick up that opportunity. It is certainly for the Ministry of Agriculture and Forestry to provide the opportunity and it must be provided with some urgency.  
Finally there is the pork issue which has caused a lot of concern. The risk of the introduction of another disease would be devastating to the pork industry. It now has the ability through the final stages of the development of its import health standard to go through the review process that has been established.  
The final point I will make is that in hindsight the situation addressed in this legislation was an accident waiting to happen. The Minister had received information on it in the briefing papers he received as a Minister in 2005 but it took a court case that went against the Government at the time brought by the bee-keepers for this bill to be urgently rushed before the House. But I certainly support the legislation as it has arrived back from the select committee. 
Dr ASHRAF CHOUDHARY (Labour) 
: 
 Aleikum salaam. After hearing the background to this bill from the Minister for Biosecurity Jim Anderton and also from the Hon David Carter chair of the Primary Production Committee there is not really a lot one can add to what has been said. So I will take just a brief call on this bill. 
The Minister has very clearly highlighted why the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill was necessary. There was clearly the need for clarification between the Biosecurity Act and the Hazardous Substances and New Organisms Act particularly with the issue of importing honey from Australia in relation to the  
Paenibacillus alvei 
 organism which has been mentioned before. The court case has been won by the honey industry in relation to the process at the time not to the organism itself. 
This bill is now fully supported not only by the Ministry of Agriculture and Forestry but also by the  
Environmental Risk Management Authority the  
Ministry of Foreign Affairs and Trade Crown Law and the Legislation Advisory Committee. This clearly shows that there were issues that have now been fixed by this bill. I am delighted that the Opposition the National Party supported this bill through the select committee process and will be supporting it going right through. 
Clearly this bill is designed to highlight the fact that any passenger—what I would call stowaway—organisms that come to the country unintentionally should be dealt with through the Biosecurity Act rather than through the  
Environmental Risk Management Authority. This bill also validates any of the import health standards in relation to honey imported from Australia. I am delighted.  
The Primary Production Committee heard 15 submitters out of the 53 who sent submissions some of whom were quite emotional at times. There were very strong views held particularly by the bee industry. We also heard from importers who had quite a different view. 
I think that through this bill we have clearly set up a mechanism if you like for the bee-keepers through the independent scientific panel. Being a scientist myself I was very pleased that this issue was dealt with in a scientific manner rather than emotionally. I am pleased that the Director-General of Agriculture and Forestry will set up the scientific panel to look at this issue within 90 days of the enactment of this bill to give peace of mind to in particular the bee-keepers in this country. 
The Government takes particular pride in dealing with biosecurity issues in this country. I am delighted that these issues come up for us so that we can make sure that our border control people are doing their job in terms of preventing any of the organisms coming to this country. These organisms could be damaging to our agriculture because we depend on agricultural exports and commodities. Clearly we have to be on the lookout for any dangerous organisms that could come into this country. 
I think setting up this review panel is a great improvement to the original bill. There are not too many bee scientists and honey scientists in the country and it appears that the Ministry of Agriculture and Forestry will probably have to get someone from overseas on to this panel to make sure that the process takes place—if the bee industry wants it. Obviously it is up to the bee industry if it wants some kind of review of this honey import to seek it. In the meantime the committee has recommended that the import of honey be banned for 90 days so that this process can take place if the industry wants it. 
Overall I think the bill is much-improved from that which came to us in the Primary Production Committee. It was a process that we had to do in a bit of a hurry but I am delighted that the select committee members on both sides of the House supported this bill. As usual we worked very closely as in any issue relating to primary production and the farming community. I thank the Opposition members and the committee for their cooperation on this bill. With those few words I commend this bill to the House. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 National supports this bill and by and large we support the comments of the Minister in his opening remarks relating to the history of this issue and what needs to be done going forward. In this case there has been an indecent rush to bring the bill before the House. Submitters had only 10 days to put in their submissions. Despite this lack of time there were 53 submissions representing most of the large industries in this country. That is because there is widespread concern in this country in relation to biosecurity matters and I want to highlight some of those concerns. 
The need for this legislation came about as a result of the National Beekeepers’ Association winning a Court of Appeal case and we have already heard a lot about that so I will not canvass it any further other than to say that the particular organism  
Paenibacillus alvei 
 which was highlighted in the Court of Appeal case is a new organism. The Court of Appeal rightly highlighted that it does not matter how any new organism arrives in this country—whether it is an intentional import or an accidental import or an unintended consequence of an import—the effect on the environment is likely to be the same. Therefore the overlap in the legislation makes no sense and something needed to done about that. 
On the other hand the import health standards that were in the pipeline which the Crown Law Office advised the Ministry of Agriculture and Forestry could not proceed without potential further litigation were then held up. So there was a stand-off on one side where major industries had import health standards that they had worked on and agreed with that needed to be amended were being amended or were new that were held up and on the other side there were a couple of industries that were very concerned around the process by which their import health standards had been developed. That is the background. 
My concerns are that if industries had more confidence in import health standards not being breached like they have been in recent times then they would not potentially have raised these concerns. If someone used incidentally as a main scientist for the Ministry of Agriculture and Forestry such as was the case with Dr Mark Goodwin in the bee industry does not have the scientific background to justify the position then who does? We can understand the industry being somewhat concerned about the import health standard going ahead in light of his evidence. In the last few days a nurseryman in the Waikato came to me with coconut ground-up potting mix that has been imported from Sri Lanka that has thus far imported 34 weeds. That is 34 new plant species imported into this country and we have no knowledge of their potential damage or consequence to the economy. As recently as today I have received an email from a concerned person who is anxious about the importation of brush fence a type of plant that comes out of China and claims that the import health standards set by the Ministry of Agriculture and Forestry are being breached in this regard. We can understand that there is some great concern out there amongst the importing and exporting industries of our country. 
If we take that into account this legislation gives the Ministry of Agriculture and Forestry more potential to ignore some of those concerns so that is an issue of grave concern to me. I want the Minister in the House today to give a reassurance that concerned stakeholders can get an independent review. The legislative process we have implemented in the select committee outlines that but the Minister needs to state that those in the bee and pork industries in particular which have been the two industries that have brought this to a head can get a fair review. I also need a clear statement from the Minister or from Government that Biosecurity New Zealand officials will not rush through the import health standard for the pork industry before this legislation comes into effect. That is still unclear and I think we need some further assurance in that regard. 
Ministry of Agriculture and Forestry officials advised the select committee that about 400 import health standards have been implemented or put in place in the last 5 years and there have been only two contentious ones. So members can see by that—those figures bring it into context—that this is not as big an issue as some would have us believe. Having said that I also say that those who are directly affected want to be sure that they have an independent review. I think it is in the best interests of Biosecurity New Zealand and the officials who—I mention at this point in time—were very helpful and very obliging to the select committee. This process has not been about beating up the Ministry of Agriculture and Forestry; I think the ministry has an international reputation. It has been about bringing an element of independence that people like those in the bee industry and in the pork industry can have confidence in. 
Our import health standards such as the ones being developed to import pork into New Zealand were also discussed in the select committee. The industry has reason to have concerns and again I am seeking the Minister’s reassurance that members of the industry will get their chance before this independent panel. I understand that officials have already—in the last few days—been talking to the pork industry about restarting discussions with that industry as a result of this bill coming to the House. This has raised a number of fears in the industry and they are understandable. I cannot emphasise enough how important this issue is not just to importers not just for trade but for the future of New Zealand. Yes we are a trading nation and yes we will import goods that can as the Minister pointed out carry with them massive amounts of new organisms. The Minister used the example of horses. Of course we trade in tourism which is another major industry in this country. Every time another planeload of tourists from some exotic destination arrives the potential for a biosecurity breach is there. 
I understand the difficulty that Biosecurity New Zealand has. We must continue to increase our trade and we must continue to promote the industries that support our economy. But at the same time we are an island nation at the bottom of the South Pacific with a unique habitat that is unknown in terms of the way that certain organisms plant species animal species insect species or other such will develop and prosper in this environment. We have to be absolutely vigilant at our borders. 
I understand the problems that the Ministry of Foreign Affairs and Trade has with people who are currently involved in negotiations around the world to assist New Zealand exporters in breaking through some of the old trade barriers—tariff barriers and non-tariff barriers. I can understand their anxiety when various members of Parliament are talking about further restrictions on biosecurity or other such. But I also want to say to them that under our World Trade Organization obligations under our phytosanitary obligations we do have the right to reject things that can be harmful to New Zealand as long as it is based on good science. The reality is that in both these cases there seems to be a high degree of science to substantiate the arguments put forward. 
New Zealand has an enviable reputation internationally for being transparent and robust in our biosecurity approach. Our procedures sell and are accepted overseas because they help to maintain our clean green image which is one of our major trading advantages. It is ironic that honey is in dispute here. In New Zealand we have one of the purest forms of honey. In respect of the whole debate about organic exports we have in this country organic honey and we can export it to the world. Why would we risk that for the sake of a debatable scientific position? I understand the concerns that the Ministry of Foreign Affairs and Trade has but equally I say to the ministry: “Toughen up. We are in world negotiations. The Australians have been able to ban imports of apples from New Zealand on grounds that could never be scientifically substantiated and we need to make sure that there is an even playing field there.” 
If this legislation does proceed and has the outcome that Parliament clearly desires then I can assure members that this debate will be back in the Parliament before very long. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 The Green Party voted for the introduction of the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill on the basis of a briefing from the Minister’s officials because we thought it needed some debate. We did however very strongly oppose the truncated select committee process that followed because we believed the bill needed proper consultation. However even that very truncated select committee process has been enough to convince us that we should oppose this bill vigorously at its remaining readings and we do so today at its second reading. 
I am amazed that the National Party which puts itself forward as the protector and promoter of our primary industry is prepared to put it all at risk for some free-trade ideology promoted by the Ministry of Foreign Affairs and Trade and for some fear of international obligations under the World Trade Organization. Mr Ardern actually put his finger on it. I could not even contain myself; I asked audibly: “Then why are you voting for it?”. The arguments he put forward are quite correct. But once again this shows that there is little if any difference between National and Labour when it comes to selling out our biosecurity for the sake of free trade. 
This bill amounts to a serious weakening of our biosecurity controls at the border. The import health standards were described by one submitter as being a fig leaf of protection and that is true. 
Shane Ardern 
: I think that might have been a select committee member. 
JEANETTE FITZSIMONS 
: That is possibly so. The process under the Hazardous Substances and New Organisms Act is at least rigorous evidence-based and open to public scrutiny. The process under the Biosecurity Act is much more sloppy and slapdash. 
We now have the very inconsistent position being put forward that the deliberate introduction of a new organism requires an approval under the Hazardous Substances and New Organisms Act but the known hitchhiker of that same organism attached to another organism gets through with only the scrutiny of the Biosecurity Act. 
It has already been stated that however an organism comes in it does the same damage to the environment and to the economy. Why would we have two different standards for assessing it depending on whether the virus is brought in deliberately or comes in as a known hitchhiker on some other organism? 
There were 51 submissions on this bill and most were opposing it or raising serious concerns. The bill was opposed or seriously questioned by Meat and Wool New Zealand; the deer industry; the pork industry; the Abattoirs Association of New Zealand; the Dairy Companies Association of New Zealand; Fonterra; the National Beekeepers’ Association of New Zealand particularly; the Pig Veterinary Society; Retail Meat New Zealand; and even our friends Federated Farmers generally for not providing adequate standards of protection for new organisms under the Biosecurity Act compared with the Hazardous Substances and New Organisms Act. 
It is bizarre that both the Government and the National Party are completely ignoring those concerns and are rushing this bill through. The bill makes it easier to import new organisms and this creates a greater risk for the biosecurity of our export industries and for our native flora and fauna. In particular I have to refer to the honey industry. The honey industry is very vulnerable to imported organisms. I know—I lost my bees to the varroa mite. In the North Island honey cannot now be produced to organic standards because people have to use chemicals to control the varroa mite that are banned by those standards. That was a serious fault and failing of MAF Biosecurity and it knows it. Is it any better now? I have yet to see the evidence. 
There is a news report that the honey producers won a concession. Well if granting a man on death row a haircut before he goes to the gallows is a concession then maybe we can call this a concession too. The review process that is being proposed here means that honey producers have to take on trust that such a process will exist before the 90 days expires. It will not. There will not be a review process for them to use before that time expires. 
There was no public consultation on this bill before the truncated select committee process. We know that the Department of Conservation although its view was well known was deliberately not consulted. The Department of Conservation was sent a draft early on and its response was a resounding “No don’t go there.” Department representatives said in January 2007 that the Department of Conservation does not support the proposal that it believes there are significant gaps in the analysis and that the document fails to meet the criteria identified by the working group. Department representatives said in December 2006 that the bill is likely to reduce the quality of risk assessments and would therefore expose New Zealand to greater risks from new organisms that it would create an inconsistent system and that it is unwarranted relative to the scale of the problem. 
It is very disturbing that after those damning comments from the Department of Conservation had been made known Cabinet was advised in a Cabinet paper in December last year that: “Attempts were made to brief the Department of Conservation but it was not possible to properly consult it.” I will be tabling the email that states that at the end of this speech. 
The department has a statutory responsibility for involvement in biosecurity issues as part of protecting New Zealand’s natural heritage and our precious indigenous flora and fauna. It should be noted that the Department of Conservation did not make a submission to the select committee. This is not the first time I have become aware of the department holding strong views on Government policy and not being allowed to state them publicly. The department is not represented in papers to Cabinet and it is not allowed to make submissions to select committees. So once again we are not simply playing Russian roulette with our primary industries but also with our natural heritage which we rely on so much to sell our trade and tourism image of being clean and green and 100 percent pure. 
Finally the bill currently makes an exemption for genetically engineered organisms which incidentally or intentionally all have to go through a Hazardous Substances and New Organisms Act approval process. Although we are glad that genetically engineered organisms are not to have the bar lowered disastrously by this legislation we know that that will not last very long. One of the arguments for the necessity of the bill is that the Act does not have the processes to evaluate passenger organisms; therefore it must be done by biosecurity. Well if that is true of ordinary organisms then it is true of GE organisms. 
So why would the Government make an exemption for GE organisms? I will tell members why the Government is making an exemption for them. It is making an exemption because it knows that 70 percent of New Zealand as expressed many times in polls will be up in arms if they know that this is an attempt to get genetically engineered organisms into the country without any proper assessment by the Environmental Risk Management Authority. 
We know there is an agenda here. The draft discussion documents in February and November 2006 were entitled  
Fixing Problems in New Organisms Including Genetically Modified Organisms Unintentionally Introduced into New Zealand 
. It is quite clear from the papers that the intention was always that GE organisms should be included but they have been excluded now because it is election year and the Government does not want to upset the voters. Once the election is over the intention is that they will be put back in with the rest of the organisms. 
That would be reason enough for the Green Party to oppose this bill but it is certainly not the only reason. In fact the Government’s intention was inadvertently clarified by the Minister this afternoon when he used the example of horses with equine flu and mentioned that they cannot be brought into this country because they have an organism that might hitchhike in with them. Was he talking about the flu organism? I do not think he was because one would not allow a horse into the country if it was infectious. That would be controlled by normal health standards anyway. He meant that some of those horses will have been vaccinated in Australia by a living genetically modified virus which is not permitted to enter this country. To bring it into the country and use it to vaccinate horses here one would have to go through an Environmental Risk Management Authority process. It will be the first release of a living genetically modified organism at large into the New Zealand environment. It will attract considerable submissions. It will involve long hearings. But if we can sneak it in on the horses with only an import health standard and no proper examination under the Environmental Risk Management Authority then we have got it here it has been released and one does not even have to apply. The Green Party strongly opposes this bill. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker. Tena tatou katoa. There is a popular television commercial starring a young boy asking his dad where he comes from. His father launches into a comprehensive and dramatic story of the birds and the bees to the utter astonishment of his son who really just wanted to know the name of his birthplace rather than the details of his creation. The Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill reminds me of that ad and unfortunately the affected industries may well be stung. On one hand we are told it is an uncontroversial confirmation of the original intentions of Parliament when it passed legislation in 1996—all very innocent so it seems. On the other hand bee-keepers and other concerned parties are telling us that this bill could easily cause a massive increase in unwanted organisms being imported into Aotearoa. The Maori Party has been searching through the myths to find the meaning of this new raft of biosecurity legislation. 
One of the strange quirks of bill-making in this House is when as in this case the majority of the 53 submissions oppose the bill yet the conclusion of the Primary Production Committee was to unanimously recommend that the bill be passed. It is like when the Foreshore and Seabed Bill came before this House: 2171 submissions; 186 presentations; 10 consultation hui which were unanimous in their opposition yet well the rest is a legacy that this Government will have to live with. 
Is the opportunity to receive free and frank advice from those most affected in the sector simply a farcical act of pretence? When it comes to the crunch is the advice of Crown Law or the Ministry of Agriculture and Forestry the only word in town? Why make out that the experience of bee-keepers farmers and horticulturalists is going to be treated with respect when the legislators hold the upper hand? 
The other point to stress about the façade of consultation is that as other speakers have noted a 1-week deadline placed enormous pressure on the industry the agricultural producers and the environmental and conservation non-governmental organisations to be able to deliver the substantive analysis required. What the Sustainability Council emphasised is that this bill establishes a fundamental change of biosecurity law that will undermine border protection. It was its considered view that the removal of standards to assess organisms not present in Aotearoa would weaken not only the economy but also our most treasured native species. The New Zealand Pork Industry Board has long argued that it is critical that the Ministry of Agriculture and Forestry set border standards to maintain our human plant and animal status. The Waikato branch of the National Beekeepers’ Association spoke of the need for the bee-keeping industry to be protected against the importation of new diseases and organisms—diseases and organisms that could also detrimentally affect the flora and fauna of this land. 
I could go on but the point is that there was a remarkable synergy amongst the submissions. They painstakingly detailed the risks that the proposed regime might introduce to the economy. They shared their concerns about the environmental threats that would result from biosecurity breaches. The bee-keepers forewarned Parliament of a crisis state called Colony Collapse Disorder where literally most of the bees disappear from the beehive. It is a bit like this place on the Thursday session before the Easter break. 
The United States Government is facing a cost of over $100 million over the next 5 years in researching Colony Collapse Disorder. The threat must not be underestimated. At this stage Colony Collapse Disorder is killing approximately 30 percent of beehives in the United States and the future prospects are not good. By far the most consistent message throughout the feedback was the concern about the unseemly haste of rushing this legislation through. Virtually all of the submitters put forward the argument that in light of the complexity of protections available under the Biosecurity Act and the Hazardous Substances and New Organisms Act careful and considered policy work must be undertaken to ensure the two are in alignment. 
We will support the introduction of a sunset clause that would basically ensure that the amendment will be repealed within 12 to 18 months of enactment. We concur with the advice put forward that there is no need for rash urgency concerning the process by which import health standards will be considered. A sunset clause will enable the Ministry of Agriculture and Forestry to continue to work on the import health standards without ensuring the additional risk of jeopardising our environmental protection. 
In essence the Maori Party’s approach to environmental policy focuses on problems arising from human impact on the environment with retroacts on to human society. This effect is felt in understanding the way in which the intervention threatens good health or well-being in the clean green environment. We consider that the provisions of this bill give priority to World Trade Organization obligations ahead of the protection of our native flora and fauna. Such a decision places a wide range of animal and plant industries at considerable risk of contamination. We have heard from Shane Ardern this afternoon of two such issues—the brush fences imported from China and a product that I cannot quite remember from Sri Lanka that brought in quite a number of new plant species—and that is shocking. 
This issue is about much more than the birds and the bees. It is also about the value and necessity of pollination which is critical for grass crops trees and flowers. But instead it appears that the decision to import honey is related to trade agreements with Australia particularly in exchange for being able to export our apples there. 
In practical terms the bill revalidates the health importation standard that was issued to allow Australian honey into Aotearoa. Another amendment that we believe could be helpful would be in relation to the 90-day exemption period that is proposed for the Australian honey standards. The bill seeks to suspend imports from Australia for 90 days from the date this bill receives the Royal assent. The 90-day exemption is designed to allow bee-keepers the opportunity to invoke the independent review procedure yet the classic joke of this bill is that if we assume the bill receives the Royal assent by say 1 April 2008 as all indications lead us to believe then the 90-day exemption will have expired before the criteria for setting up the new panel has even been published. 
An amendment will be placed before the House during the Committee stage that seeks a change to this 90-day exemption period. The proposal is that 90 days moves from as in the current wording the commencement of this Act to instead after the date on which the independent review panel is established. 
A particularly compelling case was put to the committee by Russell Berry representing the National Beekeepers’ Association. Despite the fact that his advice and that of his peers seems to be resisted or perhaps because of this fact I want to leave the last word to him as to why the Maori Party is voting against this bill. He said: “We reject the notion that free-trade principles can or should take precedence over New Zealand’s right to establish and maintain the strongest protection against known risks of exotic pests and diseases. Finally it is very important to maintain some areas of the world as free as possible of diseases of bees and we could very well be called on in the future to supply bees to countries such as USA when all their own honey bees die from such disasters as CCD.” 
So from one “Beehive” to another we must do all we can to ensure the legislation will protect us our flora and fauna and our environment also against known new organisms. This legislation does not meet the grade and we therefore will not be supporting it at the second reading. 
I seek leave to table an email from the chief executive of the Department of Conservation to the chief executive of the Ministry for the Environment. 
Document by leave laid on the Table of the House. 
LINDSAY TISCH (National—Piako) 
: 
 I wish to take a short call on the importance of the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill for the racing industry. 
The racing industry was caught out when the Ministry of Agriculture and Forestry suspended all Australian horse imports. This happened on 25 August 2007 following confirmation of the outbreak of equine influenza in Australia. Prior to this there had been very free trans-Tasman involvement of horses as both countries had been free of all significant equine diseases. Since then the ban has meant that all New Zealand thoroughbred horses that competed in the 2007 Victoria Spring Racing Carnival have been stranded in Australia and have not been able to return to New Zealand to race. More New Zealand horses will be impacted at the upcoming Sydney Autumn Racing Carnival and the Brisbane Winter Carnival unless this bill is passed and the restriction can be lifted. 
Many of New Zealand’s high-quality mares are periodically sent to Australia to be served by visiting international stallions. Most of those mares subsequently return to New Zealand so that their progeny can be reared and sold at New Zealand sales or retained for racing purposes in New Zealand. A large number of New Zealand mares and racehorses have been prevented from returning to New Zealand—approximately 200 plus foals born in 2007. Even when the import health standards are issued the large backlog of horses awaiting transportation means that many of our high-quality mares will remain in Australia for another year and be served by stallions there. 
International trade is significant and underpins the viability and performance of the New Zealand thoroughbred racing breeding industry. In 2007 1900 New Zealand thoroughbred horses with a total value of approximately $145 million were exported from New Zealand and a total of approximately 1500 horses of all breeds were imported into New Zealand. 
This matter affects not only the thoroughbred industry but also harness racing. All New Zealand harness horses that compete in the Interdominion Championship currently being conducted in Victoria would be unable to return to New Zealand to race until the new import health standards were issued so that code is similarly affected by these provisions. 
The New Zealand racing industry is a major contributor to the New Zealand economy as well as to local communities across New Zealand. Racing generates around $1.4 billion in economic activity each year and creates the equivalent of 18300 full-time jobs. On top of that about 40000 people derive their livelihood from the New Zealand racing industry not to mention the accommodation travel fashion and entertainment providers who benefit from the industry’s economic wellbeing. This matter is a major issue for the racing industry. National will be supporting this bill because it addresses those major concerns. 
ERIC ROY (National—Invercargill) 
: 
 I would like to take a call on the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill as well. I am a member of the Primary Production Committee and I would like to think that I played my part in some of the solutions that came out of it. In fact I passed a note to Shane Ardern at the very first meeting and said: “We need to deal with the aspect of retrospectivity and of review.” and that is exactly what we have ended up doing so I would like to think that I have certainly contributed to the solution. 
I begin by responding to the remarks of Jeanette Fitzsimons. I just need to say we do not live in utopia and the only basis upon which we can operate trade is on the basis of science. We have a number of known zoonoses in New Zealand for which we would be subject to a similar countervailing activity if we did not do that on the basis of science. 
The rules of world trade are simply not fair. We might want to stop let us say $2 million worth of import honey out of Australia on the basis of this bill but the World Trade Organization means they can choose any product as a reciprocal reaction on a similar basis. So we could lose out to $500 million going the other way. Those are the rules of world trade. The only basis is science and I will come back to that in a minute. It is important that we get the science right. When we are selling our produce we want absolute assurance that importers will trust our science on various zoonoses from which there could be a significant impact. We know we have them and under Codex Alimentarius and the various sanitary and phytosanitary regulations we have that assurance. We support that and that is the basis we come from. Let us stick precisely to science. 
The other thing I could say in response is that the Environmental Risk Management Authority and the hazardous substances and new organisms legislation are not set up to deal with every single item. What the member is saying is we should put all the responsibilities for importation to the hazardous substances and new organisms legislation. That is where the conclusion to those statements comes to. It is not simply set up to do it in that way. 
The previous speaker Lindsay Tisch gave the example of racing whereby 3600 horses a year cross the Tasman. They are sitting there now; they cannot be moved not because of equine flu as the member rightly said but because the import health standard cannot now be issued. That is following on in a whole lot of ways. So we come to the situation where there is a stalling of activity and potentially that will mount up as each month goes by. So the select committee said we need to do this and what we are actually doing with this bill actually locks in what was the practice beforehand. It is only this court case that has sought to change that practice for however long. 
I share the member’s concerns in every respect about keeping our borders clean and stopping unwanted things coming in. I am as passionate about that as anybody else. But we have to trade and we have to trade within World Trade Organization rules or we are taking ourselves out of the play. 
So let me deal now with the two substantive issues that I mentioned right at the beginning. The first is retrospectivity and the second is the review process. We said quite clearly that the bee-keepers have had their day in court and they have won. They won on a matter of process not on a matter of science. So in order that they might have the opportunity of validating that decision on science we sought assurances from officials that the honey import standards from Australia would be held up for 90 days and that process whereby they can have that scientific review of the import health standard is under way. It is not a case of happening when the legislation is enacted; it is under way now. 
In terms of review for everybody else yes it will take a while to get those protocols in place and again I say it is on the basis of science. That is the only way it can be. So we have new section 22A in clause 5A but members ought to be aware that although we have this new provision—and this needs to be said for further interpretation—it is not a “get out of jail” card to hold up stop or prevent trade from occurring unless there is a bone fide reason. 
Members ought to look at the Biosecurity Act 1993 for an interpretation of “standard” because under section 22(6) of that Act there is a provision that I think needs to be read into the record of the House. It states that the director-general must “consult with those persons considered by the chief technical officer to be representative of the classes of persons having an interest in the standard.” So it does not mean that any individual can enact this review process; it is the umbrella organisation. That is my interpretation. It is quite important that the umbrella organisation of anybody with a concern needs to be able to set up that review process. 
So this is a very fine balance. Yes the science is important. It is the only basis on which this can happen. But we cannot have every single individual triggering or attempting to delay for 90 days every single import health standard that comes in. So I think we got the balance about right on this. It is quite important that we have the mechanism that it is fair and that is based on science. Those are the principles this review panel allows. 
The Hon Tariana Turia talked about Colony Collapse Disorder and I saw the DVD that was handed to us. I think we need to say that at this point that disease is not known to be in Australia and the import health standard that brought about the Court of Appeal decision is about an import health standard to Australia. Bees are important and the bee-keepers have a justifiable gripe about how things are going. They are in the middle of a drought right now and there is nothing for the bees to make honey or pollen out of so these people are under more pressure than almost any other sector of the primary industry. As was mentioned they have had a lapse of varroa and that is something they have to contend with. Probably the crucial issue is  
Paenibacillus alvei 
 and this is why the select committee cannot make this decision on the basis of science as I understand it on the presentations we had before us. If that comes into the country what it will actually do is stop the markers of other alvei like American foulbrood disease which we might want to be able to trace. Is this a justifiable reason? Quite frankly I am not equipped to make that decision. That is why we set up an august robust scientific process to assess whether that is a justifiable reason for that import health standard not to be enacted. 
There are a lot of delicate issues here in the balance of this legislation. In reality it puts us back to the practice that was occurring before but beefs up the ability to have a process to look at those import health standards. I have received a lot of communication from a number of those people who put in submissions and who have an interest saying that we have actually done the job pretty well in terms of getting the balance right on all of those delicate issues. So I recommend that the House supports this bill as National does. I think the select committee works well together. There are some issues that by and large the Parliament—certainly the two main parties—has in common and both parties have a desire to make our biosecurity as robust as possible. The other issue is trade—there is a linkage between those two things. I support the bill. 
A party vote was called for on the question  
That the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill be now read a second time. 
Ayes 109 
New Zealand Labour 49; New Zealand National 48; New Zealand First 7; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 10 
Green Party 6; Maori Party 4. 
Bill read a second time. 
Commerce Amendment Bill 
First Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Commerce Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be considered by the Commerce Committee and that the committee report finally to the House on or before 22 July 2008. 
This bill comprises a new Part 4 of the Commerce Act replacing Parts 4 and 4A and amending related sections of Parts 5 and 6 of the current Act. In summary the new Part 4 puts in place a forward-looking purpose statement for the regulation of services not faced with competition. The bill improves the test and processes for considering whether to regulate such services. It provides for the upfront development of rules processes and procedures—which we call input methodologies—so that businesses can get certainty over what to expect. It provides for alternative lighter-handed forms of regulation as fit-for-purpose alternatives to price control and it puts in place improved regulatory regimes for our electricity lines gas pipelines and the three main international airports. The bill also upgrades penalties offences and remedies provisions and it improves the working of some parts of the restrictive trade practices provisions. 
This bill is primarily a back-to-basics rewrite of the price control provisions of the Commerce Act 1986. It has drawn on best-practice regulation in other OECD countries and it has benefited greatly from three rounds of consultation with stakeholders over the last 18 months. The main objective of the bill is to provide for efficient and cost-effective regulation of the price and quality of goods or services that are not subject to competition. In practice there is a very limited number of services that fall into this category and they are the important infrastructure services—electricity lines gas pipelines and airports. 
All countries in the OECD regulate these types of services because they are essential and because in the absence of regulation suppliers could charge excessive prices or provide poor-quality service. So the issue is not whether we need powers to regulate these types of services; rather it is whether we have in place the appropriate regulatory framework to ensure that we get the benefits that consumers would expect from a competitive market as well as the investment in innovation and infrastructure that this country needs. In other words how do we balance the need to protect consumers from excessive prices while ensuring that suppliers have incentives to invest to innovate and to improve efficiency so we can be assured of reliable efficient supply over the long term? I believe that the new bill gets the balance right and that it makes significant improvements to the current legislation. 
For the first time the bill puts in place a purpose statement for economic regulation. The absence of a purpose statement in Part 4 of the current Act has led to uncertainty as to the objective of this form of regulation. The new purpose statement makes it clear that the objective is the long-term benefit of consumers of goods or services that are not faced with competition or the likelihood of a substantial increase in competition. The bill aims to do this by promoting outcomes consistent with those produced by competitive markets including providing incentives to invest innovate and make efficiency gains while requiring suppliers to share gains with consumers and to limit excessive profits. 
The bill upgrades the test for when regulation may be introduced. Specifically it requires that there is little or no competition and no likelihood of a substantial increase in competition. In the bill there is substantial scope for the exercise of market power taking into account the effectiveness of existing regulation or arrangements—including ownership arrangements—and most important the fact that the benefits of regulating clearly exceed the costs and risks of regulating. In contrast to the current Act goods or services may not be regulated under the proposal unless the Minister has the benefit of advice from a full inquiry by the Commerce Commission. Decisions on whether and how to regulate will rest with the Minister of Commerce in consultation with the relevant sector Minister. 
A major improvement to the current regime is the proposal that we will require the Commerce Commission to develop as a matter of priority the rules requirements and procedures collectively called input methodologies for regulation. Businesses have complained about a current lack of certainty and predictability in the rules on crucial matters like how to calculate the cost of capital to value assets and to allocate common costs. The bill requires the commission to set input methodology for electricity lines gas pipelines and airports by 30 June 2010. 
In recognition of the importance of the rules we are providing for merits review by way of a right of general appeal on input methodologies. Appeals will go to the High Court which will sit with expert lay members. Appeals must be submitted within 20 working days and will be limited to consideration of the material and documentation before the commission. The original Cabinet decision had a narrower form of merits review. However I was persuaded to broaden the criteria particularly as the input methodologies had been the focus of all the litigation in the past and it is important that we get those right. There is a question about why there is no second right of appeal on individual cases but I believe that that would create a serious risk of gaming. This is why we have provided for appeals on only points of law for final commission decisions relating to specific firms. 
Most disputes about final decisions are in fact disputes about what the rules or input methodologies should be so it is much more important to provide full appeal rights on the rules rather than on the implementation of the rules. We also saw the need to retain a balance between providing accountability for the regulator and allowing it to get on with its job rather than being tied down with litigation. 
One of the limitations of the current Act is that it provides for price control as the sole response to the exercise of market power by suppliers with natural monopoly characteristics. The Government considers that other more appropriate regulatory options should also be available. Accordingly the bill provides for the power to put in place the following alternative forms of regulation. The first is information disclosure. This is a relatively non-intrusive form of regulation which requires regulated firms to disclose information to the light of day about their costs and prices asset management plans future intentions and the like. 
The second is a new negotiate/arbitrate form of regulation. This requires a supplier to negotiate prices and supply agreements with its customers with mandatory arbitration if they cannot agree. This form of regulation has proven successful overseas in encouraging the parties themselves to hammer out agreements that best suit their requirements. The processes and procedures for the negotiation and any arbitration would be set by the Commerce Commission and the commission would also appoint an arbitrator if the parties cannot agree on one. 
Third the bill provides for a new form of regulation called default/customised regulation. This replaces the current thresholds regime in Part 4A. This requires the Commerce Commission to set a default price-quality path for regulated suppliers for 5-year periods. The start prices may be existing prices or amended prices with the rate of change in prices to be determined by the consumer price index less a requirement for productivity improvement based on long-run productivity improvement rates for the sector. Suppliers may apply to the commission for a customised price-quality path if they have special requirements such as needing to make significant new investments. 
The bill provides specific subparts covering the three sectors that are currently subject to economic regulation—namely electricity lines businesses gas pipelines and airports. First on electricity lines businesses the Government has decided that 100 percent consumer-owned businesses—numbering about 16—should be subject only to information disclosure requirements. This is because consumers as owners are able to influence rates of return and price-quality trade-offs made by their businesses. However as a safeguard consumers will be able to petition the Commerce Commission if they consider that a business should be put on the default/customised regime. The remaining lines businesses—about 11 in total—will be subject to the new default/customised regime as well as to information disclosure instead of the Part 4A thresholds regime. The replacement of Part 4A is expected to provide much more certainty for businesses including giving them an upfront opportunity to get approvals for customised price-quality paths to cover the cost of a step change in investment requirements for example. 
Second in relation to gas pipelines I tell the House that the pipelines of Powerco and Vector will continue to be under price control until 2016 or until any earlier date agreed with the Commerce Commission at which time they will go on to a default/customised regime. Other gas pipelines will be subject to a default/customised regime in a new information disclosure regime from 1 July 2010. Third airport companies are currently subject in varying degrees to information disclosure under the Airport Authorities Act. I think it has been welcomed and well-received that they will come under the jurisdiction of the Commerce Act in future. 
This bill is a major improvement in the way we think about and regulate basic services that are not subject to competition. It applies best-practice approaches from around the world. I commend this bill to the House. 
SIMON POWER (National—Rangitikei) 
: 
 The National Party will support the passage of the Commerce Amendment Bill at its first reading and its going to the Commerce Committee in order for the committee to undertake some further work in some of the key areas the Minister has outlined today. The Minister is right when she says we are dealing with a complex area of law and what is proposed is quite a major change. It is quite a major change from the regime that we have had up until now; in fact it significantly alters existing Parts 4 4A and 5 of the Commerce Act. 
The bill introduces a new purpose statement for Part 4 in new section 52A(1) inserted by clause 4: “to promote the long-term benefit of consumers in markets … by promoting outcomes …” that ensure “suppliers of regulated goods or services—(a) have incentives to innovate and to invest”. That in itself is a worthy statement and in National’s view it would be very difficult to disagree with it because it includes the replacement and upgrading of new assets. It also makes sense that those suppliers have incentives to improve efficiency and to provide those services at a quality that reflects consumer demands. 
Equally important to the new test is that the supplier shares with consumers the benefits of efficiency gains including through lower prices. Indeed we add to that particular purpose statement a limitation on those suppliers’ abilities to extract excessive profits. The reason for introducing this statement is that the general purpose statement for the existing Commerce Act of promoting competition is considered to be unhelpful for sectors where competition is not viable. So a new test relating to the long-term benefit of consumers requires inclusion and clarification but equally important in many respects is the incentive for these organisations to invest in the long-term infrastructure of New Zealand. 
A new test for imposing regulation is also contained in the legislation. The test for imposing regulation has been changed from whether competition is limited and control is necessary or desirable in the interests of acquirers to a new test where goods or services may be regulated only if they are supplied in a market “where there is little or no competition and no likelihood of a substantial increase in competition.” We know that that test also needs to include the substantial scope for the exercise of market power and whether the benefits—and this is actually extremely important—of regulating the goods or services and meeting the purposes of the Act exceed the costs of regulation. 
The two separate review processes for deciding whether to regulate and how to regulate will be rolled into one process. As I read it the Minister’s existing right to impose regulation without the commission undertaking an inquiry will be repealed. 
The new tools for regulation are an important step. Before I start to go through that particular work I take this opportunity—and I should have done this in my opening remarks—to thank the Minister of Commerce and her officials for taking the time to keep the National Party informed throughout the select committee process and for making the officials available on more than one occasion for briefings and the like. This has not been an easy path to tread for the officials or for those engaged in the political arena. It is a pretty delicate area of the law. I want to put on record my thanks to the Minister for making sure that we were fully involved in that process. 
I return to the new tools for regulation. The alternatives to imposing price control that the commission is to be provided with include as the Minister said stricter information disclosure and that includes asset management plans investment proposals prices projected regulatory accounts and projected quality out-turns; a second negotiate/arbitrate regime; a default customised price quality path—and I will come back to that because there may be some further discussion in the select committee about some of the dates around the click-in period for that new path—and the customised price quality control for individual businesses. It is fair to say that the new regulatory regime proposed by the Minister is more light-handed than full price control. We want to be sure that the availability of more light-handed measures does not result in more regulation overall. That will be a test to be looked at a discussion that we will need to have just to ensure that we are not replacing a rarely used heavy-handed lot of regulation with a more readily used but light-handed series of regulations. We will be looking at that issue pretty carefully on the select committee. 
The bill requires the commission to set the input methodologies. They include things like weighted average cost—valuing assets and allocating common costs. According to the bill the commission is going to develop generic and sector-specific input methodologies. It is those input methodologies that will initially be subject to merits review. This is a difficult and tricky part of the proposal. A merits review will generally take the form of an appeal to a High Court judge assisted by two expert lay members. But as the Minister knows I have had some concerns that an appeal is available only for challenging decisions on the input methodologies. That may seem to be a bit of an abstract concept to the people who are listening to this debate but it means that if those regulations or input methodologies are determined the only opportunity to challenge them by way of merits review relates specifically to the way the input methodologies came about and the way they were determined. In other words there is no ability to seek a merits review for implementation issues or the practicalities around seeing through the decisions that have been made post the input methodology decision-making. 
I understand why the Minister wants there to be only one level of merits review—I think I do anyway. I think it is because the Government and the Minister want to avoid a whole lot of gaming between the commission and the people who are making applications or who are subject to the arrangements by the commission. But I have signalled to the Minister on more than one occasion that I think that when the merits review kicks in and whether one or two merits reviews are appropriate will be matters that the select committee members should spend some time on forming a view on to convince themselves that they are not going to limit the ability to protect the consumer and the issues around investment in infrastructure by having only one merits review at first instance—to use a clumsy phrase—following the determination of input methodology. 
I will quickly mention the airports issue. My view is that transferring the regulatory regime from the Airport Authorities Act to the Commerce Act is of merit. We should have a good look at that during the select committee process. 
This legislation is technical and difficult and the industries affected by it will be extremely interested in its passage. I signal to the Minister now that I am interested in some of the dates around the continuation under price control until the default customised regimes are negotiated and come into place. I will be very interested in testing some of those dates and finding out why they were chosen and in having a discussion about what is significant about 2016 and 1 April 2010. I will be interested in having those discussions at the select committee. 
It is actually misleading in some respects to call this bill simply the Commerce Amendment Bill. It does indeed amend the Commerce Act—or purport to—but it has far-reaching consequences around competition price control consumer protection and new disclosure regimes and it needs to be treated with the seriousness at the select committee that it deserves. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 Firstly I agree with the member that this kind of legislation is incredibly complicated. It is difficult and I say that with some experience as a former Minister of Commerce who left the hard decisions particularly on airport matters to the present Minister Lianne Dalziel—probably because it was a bit beyond me to be fair although other people say that I just ran out of time. The truth is that the Commerce Amendment Bill is enormously difficult and complicated and it will take the time of the Commerce Committee to look into it in great detail. 
Before the select committee at the moment is the Electricity Industry Reform Amendment Bill which looks at issues to do with lines companies and whether they should be allowed to extend their involvement in energy generation and at the relationship between retail and lines businesses and another issue that was raised at the select committee this morning is what the relationship is if any between the legislation we are looking at there and this bill in relation to lines companies. That is something that both the chair and I are keen to investigate to see whether in fact there is a relationship and if there is to make sure that the two are somehow in sync. So it is enormously complicated and we will obviously have to spend a lot of time on it. 
I want to get to some of the important bits and as the Minister has said the bill is about providing efficient and cost-effective regulation of the price and quality of key goods and services that are not subject to competition. In fact as she said there are not many such services. The bill is primarily aimed at electricity lines gas pipe lines and airports. When it comes to airports the problem we had when we were looking at the issue particularly with Auckland airport was the complaints from the airline industry that an airport like Auckland obviously had airlines over a barrel. It could charge whatever it liked and it was charging on its landing charges in order to boost up its facilities within the airport. There was a lot of cross-subsidising going on or so airlines said. It was always difficult to know because the airline industry was not exactly an enormously poor cousin in this issue. When we look at the situation across the world the only thing we can say with any certainty is that airlines accuse airports of ripping them off and airports accuse airlines of not being sympathetic to their development needs. Airports also argue that they are not a monopoly because airlines can fly somewhere else. So this was part of the issue when we came to look at whether airports should be regulated and it was enormously difficult. 
One of the issues that I think is being fixed in this legislation is the issue of how to value the asset. We got into great discussions for example about what the value is of a sea wall around an airport. It is a necessary piece of work but is it part of the airfield or part of some other form of infrastructure? Asset valuation is an enormously difficult thing. Of course at the time a lot of these things were under the Airport Authorities Act. Although the Minister of Commerce and the Commerce Commission could have conducted inquiries into these matters the next point was that there was available the use of only a very blunt instrument—one either regulated or one did not. That was enormously difficult and trying to get to the bottom of it all—trying to get decent information trying to have a methodology on what to do with that information and then coming up with a formula to regulate in an area as complex as the airline industry—was really really difficult. 
Hon Lianne Dalziel 
: It was two separate processes. 
Hon PAUL SWAIN 
: Well it actually was two separate processes; the member is right. Of course the whole issue really concerned what the relationship was between airport activities on the one hand—air field activities which was really the very narrow view that one could take when looking at these inquiries—versus other things like specified passenger terminal activities which was always the issue in what was a cross-subsidy issue. At that time it was clear that there was an interest in the whole thing but the legislative response was inadequate. I think that that was ultimately the point we all came to. Now the Minister is bringing forward this legislation which looks at things like the specified airports services—which is always the issue of dispute—and at what the nature is of the market one is actually talking about and are listed in the bill under new section 56A(1) substituted in clause 4 as including “(a) aircraft and freight activities: (b) airfield activities: (c) specified passengers terminal activities: (d) any other services that are determined by the Governor-General by Order in Council made on the recommendation of the Minister … to be specified airport services for the purposes of this Part.” Basically those four bits and anything else that she likes to consider should be included. I think that will help. I am not sure whether it will make the ultimate decision any easier but I think it will certainly help in the ability to try to deal with the really complex issues and the dispute between those two groups. That is a really important issue. 
Having looked through the bill—and I must say I have had a brief look at it but have not studied it at any great length—I think that one of the other things the Minister mentions is the ability to introduce some new fit for purpose regulatory powers. As I said before we had a kind of on-off switch under the previous regime. She went on to say in her speech that the current Act provides for price control as the sole response to the exercise of market power by suppliers with natural monopoly characteristics. I suppose that the person out in the street interested in this kind of thing is very keen on regulating monopolies. In fact regulatory economics is something that has only come into play again given that it was out of the lexicon for about 2 decades under previous Governments—and I say “Governments” advisedly—and everybody wants to drop straight in and regulate. The difficulty with regulation is that it does have perverse effects and we can send strange signals. For example if we regulate lines companies too hard the potential is they do not reinvest and then the lights go out. Of course lines companies then usually blame the Government because it is the regulator. On the other hand if we do not regulate hard enough then lines companies take monopoly rents and they achieve that by ripping off the poor consumer. So it is actually an enormously difficult thing to do and in a country the size of New Zealand it is enormously complex. 
The Minister is adding in some other powers that might be useful. One is information disclosure. That is a non-intrusive form of regulation because it means that people have to be a bit more upfront about their activities so that everyone can have a look. The general idea is to shine light in the dark corners although my experience in information disclosure is that it depends on who has the best accountants: usually an information disclosure documentation is about 894 pages the appendices 1 2 and 3 are usually about 300 pages each and the real answer is on about page 43 of appendix 2—if one can fight one’s way through it. The matter ends up in enormous debate and argument about whether in fact something applies to this or to that. However information disclosure is obviously really important. 
The negotiate/arbitrate form of regulation is a really critical thing and in the end it is quite a difficult thing. We are actually after commercial outcomes and if we can get some sort of negotiation/arbitration that is much better in my view than a Second World view which is that of Governments coming in and trying to determine the price of something that is enormously difficult to determine. Then there is the default/customised regulation which I am not 100 percent certain of I must say. I hope to be more the wiser on that during the select committee process. 
I thank the Minister for doing this work; perhaps if the previous Minister had actually got on and done the job a little harder we would not be in this position but I do thank her. I am going to enjoy spending some time looking at this legislation in the select committee. 
Dr RICHARD WORTH (National) 
: 
 The Commerce Act and the Securities Act are two significant statutes that touch individuals’ business activities and transactional arrangements more closely than perhaps any others. Here we are dealing with far-reaching changes to the Commerce Act in the Commerce Amendment Bill and as the previous National Party speaker said National supports this bill going to the Commerce Committee. 
The Commerce Amendment Bill is very much challenging and high-stakes legislation. The challenge can be seen in the fact that the bill itself is 84 pages long. It is very tightly worded legislation and in many cases there are issues within the clauses on which reasonable people can justifiably hold differing views. I do not doubt it will be the subject of intense and perhaps robust debate. 
When the Minister of Commerce was making her opening comments she said that this bill had “drawn on best-practice regulation” from other countries. I express the hope that in addition to doing that drawing we have actually reflected in this bill such best-practice regulation. A number of philosophical questions have to be debated. Is the regulatory framework appropriate? Is it protective of appropriate interests? Is it sufficiently robust? And finally is it sufficiently practical? 
One of the challenges that the Commerce Committee faces is that the advisers who assist the committee in its determination of the merits of legislation are very much in-house advisers; they are steeped in knowledge I do not doubt but nevertheless are committed to implementing Government policy. I believe that this is the type of bill where there is a clear need to appoint external advisers. Why? Firstly external advisers so often have the necessary practical experience which may be lacking within the ministry and second they set up a foil that the committee can sit in judgment on as to which is the preferred policy outcome. 
Hon Darren Hughes 
: I heard this argument about another bill today. 
Dr RICHARD WORTH 
: It is an argument that is often run on a number of bills and we saw how successful it can be in the Limited Partnerships Bill. One needs only to look at the concessions that were made by the ministry officials to see that in some areas when practical consideration is taken of particular provisions change may well be justified. I am certain that that will be the case here. 
It has been said that the Commerce Amendment Bill gives better incentives for infrastructure investment and that infrastructure businesses—like electricity lines companies and airports—will gain improved incentives to innovate and invest while consumers will be given protection from excessive prices and poor quality. As others have said the bill amalgamates Parts 4 and 4A of the Act which apply to sectors where there is little or no competition or prospect of competition such as electricity lines gas pipelines and now airports. Sectors like these are regulated as the Minister of Commerce said in other OECD countries. 
A number of instances may well have triggered the need for the types of changes that we see in the bill—particularly in the electricity industry. For example in January 2006 the Commerce Commission announced that it intended to take control of Transpower’s prices. The State-owned enterprise needed to spend staggering sums—perhaps in the order of $4 billion. It had submitted some of those projects to the Electricity Commission for approval. The Electricity Commission’s job was to satisfy itself that the proposed spending was efficient and Transpower—with some justification I would say—assumed that if it got the tick-off from the Electricity Commission it could reasonably get past the other taskmaster the Commerce Commission. But that was not to be; the Commerce Commission leapt in effectively overriding not only Transpower’s board but also the Electricity Commission. 
We also saw the impact of intervention in the market and how that can produce inappropriate impacts in connection with events touching Vector that members of the House may recall. Several years ago Vector’s shares had closed at $2.41. The Government issued two policy statements to which the Commerce Commission had to have regard effectively telling the regulator to ease up on the electricity lines industry. The next day Vector shares jumped 24c adding $240 million to its market value. A day later the commission announced its intention to take price control of Vector. It said Vector would make excessive profits of between $13 million and $70 million in the next year; the share price plunged 27c wiping $270 million off Vector’s value. It will be recalled that some analysts described the commission’s action as bizarre. Whether it was or was not is not really the issue in debate here but it does point to the need for a better-developed regime. 
The bill also introduces a purpose statement specifically for this part of the Act to give clearer guidance to the courts and the regulator that the aim of regulation is to promote investment. 
As I see it there are seven main changes to the bill. Firstly for the first time there is a clear emphasis on the importance of incentives for regulated businesses to invest. Second there is a requirement for the Commerce Commission to clearly set out the regulatory rules which are called input methodologies applying to these businesses and to complete this work by 30 June 2010. As others have said these rules will be subject to merits review by the High Court. Merits review is a review as to the merit of the decision as distinct from whether there are errors of law disclosed in the reasoning process. Clearly specifying the rules will greatly improve certainty and predictability for businesses and improve business confidence. 
Third the main changes will allow what one could call “fit for purpose” regulation such as information disclosure and a negotiate/arbitrate regime as an alternative to full price control. Fourth there will be a much simpler and more predictable regime for electricity lines businesses removing the threat of relatively heavy-handed regulation for minor breaches of thresholds and with time limits for commission decisions. Fifth there is a more appropriate regime of information disclosure for small electricity lines businesses owned by local consumers where the customers are essentially the owners of the business. That is obviously going to lower their compliance costs; it will result in savings to consumers. Sixth there is an enhanced regime for gas pipelines which enables the proposal of a price path to the commission. Seventh there is a more robust information disclosure regime compared with that of the Airport Authorities Act for the Auckland Christchurch and Wellington international airports with monitoring by the Commerce Commission. 
Finally the bill also includes some tidying-up relating to the clearance or authorisation of business mergers. I think probably the most significant changes centre on section 69. There is a new provision to enforce undertakings that are made by parties to the proposed merger. 
I welcome the further debate on this bill and its merit. These regulatory frameworks are particularly important. 
DAIL JONES (NZ First) 
: 
 New Zealand First supports the Commerce Amendment Bill going to the Commerce Committee. I believe I recently heard a comment from the Commerce Commission that it would be giving more attention to competition issues. I think that is a very responsible attitude and a very modern one—one that has been around in Europe for quite some time with the attitude of the European Union to big companies—and it is about time something like that happened more vigorously in New Zealand. 
Of course this legislation the Commerce Amendment Bill relates to provisions enabling price and quality control being imposed where competition is limited and control would be in the best interests of acquirers. The gas pipelines of Powerco and the Auckland pipelines of Vector are currently under such control. 
The reasons why price and quality control are required are mentioned in the explanatory note. The key reason given for providing for price and quality control or economic regulation is to counter the ability of firms that are not faced with competition or the threat of competition to charge excessive prices and/or reduce quality. 
I expect words like that will be music to the ears of many of the struggling families in New Zealand who constantly see their power prices going up and wonder whether anyone is trying to do something to make sure that electricity companies and gas companies do not just keep adding on and making sure their shareholders get substantial profits especially when many of those shareholders are overseas and the profits go overseas. New Zealand First is always very concerned to make sure that people in that situation do get some protection and this bill offers a strong ray of hope to those people in our community. 
Some reasons are given as to why the principal Act requires amendment and I want to mention a couple of them. The explanatory note of the bill states: “there is uncertainty about the rules governing regulatory decisions (such as the cost of capital):”. We are always against having things that are uncertain in legislation. Certainty is always important especially to a lawyer. It also states: “the lack of a credible information disclosure regime to constrain the exercise of market power by 3 international airport companies in the supply of aeronautical-related services:”. Again one is always very concerned about a monopoly-type situation where airport companies just seem to add on and add on charges to their users. Inevitably it is always the customer trying to get through the gate who has to pay despite what everyone else might say and New Zealand First is very concerned that the average traveller does not get ripped off by companies that want to make substantial profits and once again send them off overseas where they have substantial interests. 
The various forms of regulation have been mentioned such as information disclosure a negotiate/arbitrate regime a default/customised price-quality regime and individual price-quality regulation. But then the specific sectors are also referred to and I want to make a few comments about them. 
The bill states that electricity lines businesses—called “ELBs” in the bill—which are currently subject to Part 4A are to be subject to various arrangements from 1 April 2009. It is good that a select committee will be looking into these issues. I hope that all those ordinary users of electricity or gas pipelines and suchlike who complain about the Government and members of Parliament not doing something to protect their interests will take the opportunity to get their various interest groups to make submissions to the select committee. There is nothing worse than being a member of Parliament and one has put some legislation before the House and it has been passed and about 6 months later someone comes along and complains and says: “Why didn’t you do this?” and one says: “Well 6 months ago we did it. Where were you at that time?”. Of course it is always terribly frustrating when one has actually supported a particular viewpoint and people supporting the other party come along and say: “What are you going to do about it?” when one has actually done the work and the other party is opposed to it. That is always frustrating as every member of this House will know. So I hope that all those people who are interested in electricity and gas prices will take an interest in this legislation and make submissions to the select committee. 
We in New Zealand First are very interested in the situation at the airports. One of the most difficult things to do is to get information from limited liability companies that have their own rules and regulations and the provisions of the Companies Act and various other legislation to protect the disclosure of information—commercial or otherwise—and that are monopolies. As has been indicated the bill imposes information disclosures on the Auckland Wellington and Christchurch international airports from 1 July 2010. The bill is almost euphemistic when it says that these airports have strong natural monopoly characteristics. I would have thought that either something is a monopoly or it is not. But no the bill states that they have strong natural monopoly characteristics. They are currently subject to information disclosure under the Airport Authorities Act but this bill’s regime which has been explained already will set up a different form of regime that does not appear to be as harsh in the sense of the methods that have to be utilised to give effect to issues but will be faster and more appropriate in terms of the Commerce Act remedies. 
One of the things that always interests me with regard to legislation—and it is something that has not been touched on today—is the penalties. I think it is useful for the public to know that when things go wrong and people do not comply with the law as passed by Parliament there are substantial penalties that can be imposed. Just flicking through the bill I see that for example proceedings for pecuniary penalties can be commenced and some of the penalties relating to contravention of undertakings must not in respect of each act or omission exceed $500000. That does not sound terribly high but they are increased in respect of offences relating to information disclosure and regulation with fines not exceeding $200000 in the case of an individual or $1 million in the case of a body corporate. So that is getting tougher. There are also pecuniary penalties for contravening price-quality requirements. The legislation states that the amount of pecuniary penalty must not in respect of each act or omission exceed $500000 in the case of an individual or $5 million in the case of a body corporate. 
So it seems that this bill has a very worthwhile objective. It seems that the method of remedying problems is being improved and for those companies that wish to try to bend the rules there are reasonable penalties. Of course in this area there is such a substantial amount of financial gain to be obtained that one wonders whether the penalties are adequate and whether consideration should be given to inserting a penalty if a default continues on a daily basis—a daily-basis penalty rather than a broad figure. On the face of it this bill seems to be a reasonable bill and New Zealand First will support its referral to the select committee. 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: Just before I call the next speaker I draw the attention of the members to the level of noise here. I can hear people chatting from the other end of the Chamber. 
Dail Jones 
: So could I. 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: I did notice the speaker looking round as if he felt just a little bit pressured by the amount of noise. So can we have some consideration for the speakers. 
NANDOR TANCZOS (Green) 
: 
 My apologies; it may well have been my voice that was upsetting the member. The Green Party is pleased to support the Commerce Amendment Bill. We think it represents significant revisions to New Zealand’s anti-trust legislation which was inherited from a time of laissez-faire economic ascendancy and is entirely inappropriate in the modern world. 
The bill will create incentive-based regulation for sectors where natural monopolies exist. Of course it is absolutely essential that there be such regulation because those monopolies are not subject to normal market disciplines of competition. The bill addresses in particular lines companies gas pipeline companies and airports. It creates a number of new initiatives to broaden the purpose of the legislation: to control prices to incentivise investment to mandate efficiency gains and to enforce better disclosure. Those are all things that we absolutely support. 
Section 54Q “Energy efficiency” which is to be inserted in the Commerce Act by clause 4 of the bill states: “The Commission must provide incentives to improve energy efficiency and demand side management and to reduce energy losses when applying this Part in relation to electricity lines services.” We are very pleased to see that in the bill and we are very happy to support it. It is absolutely essential that the regulatory framework for lines companies incentivises energy efficiency and demand reduction. 
Section 52A “Purpose of Part” which is also to be inserted in the Commerce Act by clause 4 states: “(1) The purpose of this Part is to promote the long-term benefit of consumers in markets referred to in section 52 by promoting outcomes that are consistent with outcomes produced in competitive markets so that suppliers of regulated goods or services—(a) have incentives to innovate and to invest including in replacement upgraded and new assets;”—that is absolutely vital and it was lacking in the previous framework—“and (b) have incentives to improve efficiency and provide services at a quality that reflects consumer demands; and (c) share with consumers the benefits of efficiency gains in the supply of all or any regulated goods or services including through lower prices; and (d) are limited in their ability to extract excessive profits.” That is vital. 
It is interesting to reflect just as a little aside—and I am aware of course that telecommunications are regulated through other legislation—that the mindset behind the current legislation which was regulating Telecom until this Government introduced some new regulations is the same mindset. It just did not address the need to deal with those things that I have just said. Both of the sections I have just mentioned mark a sea change in Government thinking and a return to a more humane economic model. It is a move away from the failed laissez-faire economic policies of both Labour and National during the past two decades and it is very welcome. 
The bill starts well by having a purpose. The original 1986 Act had no purpose statement which is bizarre. Secondly the new purpose is to promote the long-term benefits of consumers. It is much more humane than the soulless criterion of economic efficiency in the original Act—a criterion that still holds sway in Treasury and with many members of this House. The benefits must be long term not short term and they must be for consumers not for some fictional “New Zealand Inc.” or multinational corporation. Personally the Green Party would have preferred to see the documents talk about the citizens of New Zealand but it is a bill about markets and the way in which we regulate natural monopolies so we can live with “consumers”. 
The second provision is that the Commerce Commission must provide incentives for energy efficiency which I have mentioned. Finally after years of the Green Party’s calling for efficiency measures throughout the economy we will have them considered as part of any cost-benefit analysis in this legislation—at least as far as the lines companies are concerned. The only improvement that we think could be made to this clause would be to mandate that the discount rate for energy efficiency as outlined in the New Zealand Energy Strategy be used for this purpose. We will discuss that at the select committee as well and we will be keen to see some movement on it. It would guarantee a transparent and level playing field for all parties and would encourage efficient investment that benefits both society and the environment it relies upon. 
The bill brings New Zealand into line with current best practice for managing natural monopolies. It will benefit business with greater certainty while enhancing the powers available to the Commerce Commission to regulate. Significantly the bill broadens the purpose of the legislation to encompass much more than the former narrow-interest purpose of efficient markets. As I have said its purpose now is to promote the interests of consumers and share with them any benefits of the efficiency gains and that is important. 
The bill also allows the Commerce Commission to define critically important input methodologies—the methods used to calculate the cost of capital value assets and allocate costs. This will help to clarify the true business position of natural monopolies thereby removing another avenue for stalling the implementation of price control. As I say the Green Party is very happy to support this bill and we thank the Minister for introducing it to the House. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Tena koe Madam Assistant Speaker. Any bill that needs an explanatory note of 48 pages is cause for concern particularly when it is slipped into the House just when everyone is gearing up for a long weekend so we had a good look at this one. 
The purpose of the Commerce Amendment Bill sounds good: protecting consumer interests by promoting competition incentives for investment and innovation sharing efficiency gains with consumers quality services etc. etc. and limiting excessive profits—yeah right! But to understand why we are in the position we are in at the moment one has to look back to the 1980s and 1990s and the obscene rush of successive Governments to flog off the nation’s assets when we got rolled by big business and transnationals swooping in buying up all the infrastructure cutting back on people and services and shipping all the profits back overseas. 
That continuing privatisation of State assets and trading activities was the focus of the Privatisation by Stealth conference held in Christchurch last week to highlight the attempts by transnationals to swoop on Auckland International Airport and the Lyttelton Port Co. and the continued push for privately owned toll roads road construction State housing projects rubbish collections—the list is endless. 
Emanuel Savas an adviser to both Ronald Reagan and Margaret Thatcher said in his 2000 book  
Privatization and Public-Private Partnerships 
: “privatisation is like dismantling a bomb—it must be done very carefully for wrong decisions can have nasty consequences. There are obstacles to be overcome arguments to be rebutted proponents to be mobilised and opponents to be thwarted”. Yet we have allowed the very core sectors of our economy to be taken over by transnationals—our rail our power our transport infrastructure and even our banks—and the Government has been so hopeless at regulating those monopolies that we have been locked into price increases reduced service quality and infrastructure run-down. 
Electricity of course is the classic sector. There have been mergers and takeovers at grossly inflated prices; our electricity supply has been allowed to end up in the hands of transnational big business; and there are empty dams while everyone points his or her finger at everyone else instead of owning the problem and dealing with it. The big sweetener of course was supposed to be cheaper power but what we got were price hikes of 5 to 15 percent and the Government having to pass more legislation in 1999 to try to rein in those power companies. People were dying in 2007 because corporate profit was considered to be more important than people’s lives. 
Sue Kedgley 
: It went up 600 percent in 10 years in Wellington. 
HONE HARAWIRA 
: That makes me glad I live in Kaitaia. In  
Reclaiming the Future: New Zealand and the Global Economy 
 Jane Kelsey says that the electricity market model was supposed to be based on consumer control but what we got were power companies doing back-door deals to ensure their interests got higher priority than those of New Zealand’s own citizens. The ultimate example is an older one of course but it is the deal that Comalco got for cheap electricity for its aluminium smelter at Bluff. This was an arrangement where Comalco got a lock on cheaper electricity than any of us have seen for decades and exclusive access to nearly 17 percent of the nation’s total electricity output. People are allowed to die in South Auckland so multinationals can profit. That is what it was all about back then and that is still what it is all about now. That is why the key to our future lies in rolling back the nasty consequences of the nation’s privatisation programme. 
The Maori Party’s position on this bill is also determined by the fact that most of the privatisation of the nation’s infrastructure and corporatisation of the nation’s assets has impacted deeply on the Treaty of Waitangi settlements that many of our people are going through now. We welcome regulation that will open up markets to competition and promote greater choices and better prices for consumers but given the recent history of rampant transnationalism and inadequate parliamentary oversight we do not know that putting all the decision-making authority in the hands of a single Minister will lead to any more certainty transparency and predictability for consumers. We will be interested in hearing the views of beneficiary groups energy watchdogs the Child Poverty Action Group and other consumer bodies as to how they see this bill either helping or harming their constituents’ futures. 
In closing let me just remind the House that tomorrow is the International Day for the Elimination of Racial Discrimination a day when our hearts and minds go back to 21 March 1960 when police killed 69 black people for daring to demonstrate against the hated apartheid “pass laws”. Yet today is the day we take steps of our own to help the poor black people of this country fight the discrimination of corporate greed. Kia ora. 
KATRINA SHANKS (National) 
: 
 It is a pleasure to stand in the House tonight and talk to the first reading of the Commerce Amendment Bill which National supports. 
This bill is quite complex. When I picked it up this morning I thought I would have a quick look through it to get a feel for it but I realised that it is not as simple as that. The debate has been very interesting. I know that many of the speakers before me including the Minister of Commerce the former Minister of Commerce—Paul Swain—and Simon Power have all had briefings on the bill and have quite a lot of background knowledge. When they got up to speak I learnt so much. It is kind of shocking when one is about to speak to a bill to be sitting here learning about it. But that is one of the great things about Parliament and the process of bills before the House. That is how we learn and much as we think we should know it all when we get here we do not. The opportunity to hear everybody debate legislation is actually quite important. 
I would like to acknowledge the previous speaker Hone Harawira. Although I did not agree with absolutely everything he said it was interesting to hear his viewpoint. That is the great thing about the country we live in the democracy we live in and the Parliament that we have today. 
Again I say it is my pleasure to stand here tonight to talk to this bill. But first I would like to say good evening to all those people in Auckland in peak-hour traffic. They probably have another hour before they get home— 
Nathan Guy 
: And Wellington. 
KATRINA SHANKS 
: The same goes for Wellington and those travelling up to Kapiti. I will be joining them shortly in the back of the queue with Nathan and a Labour member from across the Chamber. I say to those people to keep on listening. We have about 3 minutes to go and then we are finished for the night. National supports this bill going to the select committee because hopefully we will see a lot of submissions and get some really good advice from people in the sector. 
Bill read a first time. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Commerce Amendment Bill be referred to the Commerce Committee 
 and that the committee report finally to the House on or before 22 July 2008 
. 
Motion agreed to. 
The House adjourned at 5.45 p.m.