Volume 621 Week 71 - Thursday 21 October 2004 
Volume 621 Week 71 - Thursday 21 October 2004 
[Volume:621;Page:16381] 
Thursday 21 October 2004 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
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 on Tuesday 2 November priority will be given to the first reading of the NgatiTuwharetoa (Bay of Plenty) Claims Settlement Bill and to the remaining stages of the Parental Leave and Employment Protection Amendment Bill the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill and the Care of Children Bill. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 Can the Leader of the House give us some assurance that despite the current political environment the Government will not use urgency excessively to avoid question time? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 No. We will simply use urgency moderately to get business through the House. 
Tabling of Documents 
David Henderson—Letter Refuting Allegations 
RODNEY HIDE (Leader—ACT) 
: 
 I seek the leave of the House to table a letter to Michael Cullen from Mr David Henderson and copied to me which clearly refutes the allegations Michael Cullen made against Mr Henderson on Tuesday and again yesterday. 
Document by leave laid on the Table of the House. 
Points of Order 
Replies to Written Questions—Timeliness 
RON MARK (NZ First) 
: 
 I raise a point of order Mr Speaker. I stand to raise it on an issue that I have raised with you twice in this House and twice again in writing. This time it has come to my attention that the Minister of Education has once again not answered a written question within the stipulated time frame according to the Standing Orders— 
Mr SPEAKER 
: I actually replied to the member this morning. Perhaps he would care to get hold of that letter and then contemplate whether he wants to take the matter any further—after he has seen the reply. 
RON MARK 
: This concerns a different Minister. 
Mr SPEAKER 
: No no. I can assure the member that I have replied to the letter the member wrote me. I wrote to him this morning. 
RON MARK 
: Yes Mr Speaker but this concerns another case that has just been brought to my attention. As you have just pointed out you have responded to me in a letter which I have yet to receive but now we have the Minister of Education failing to respond to question for written answer No. 14929. Staff from New Zealand First rang the Minister’s office today expressing concern and got a very blunt and terse response as to what they should do with themselves. This has now got to a stage where I believe that Ministers are trifling with you Mr Speaker and with the Standing Orders. You have made it very clear that Ministers must abide by those Standing Orders. I will read your letter but I ask what we are to do. Where does the protection for the Opposition lie? 
Mr SPEAKER 
: The protection lies with me. The member can be sure that I have taken up matters on behalf of him and other members used pretty strong words and had pretty well immediate action. If the member writes to me about this he will get action. 
Questions to Ministers 
Education—Centralised Services 
1. HELEN DUNCAN (Labour) 
 to the  
Minister of Education 
: What services to improve the quality of education are delivered centrally and why? 
Hon TREVOR MALLARD (Minister of Education) 
: 
 Professional development is provided centrally in order to ensure that teachers have access to high quality professional learning opportunities to ensure that there is consistent high quality across schools and to ensure that all schools and teachers can access a wider range of quality providers. Recent key professional development strategies that have lifted achievement in literacy and numeracy have been centrally provided. Curriculum support is provided centrally as is the supply of teaching and learning materials to ensure that they are of a high quality. There is also central purchasing of computers and software which achieves economies of scale. It means that schools have access to things that they could not otherwise afford. 
Helen Duncan 
: What reports has the Minister seen about nationally coordinated programmes for schools? 
Hon TREVOR MALLARD 
: I have seen a report that promises to scrap nationally coordinated programmes for schools and in particular to scrap the curriculum support that schools receive and the professional development programmes that are provided to lift the quality of teaching. Those programmes help thousands of teachers to improve how they teach reading writing and maths with the ultimate benefit going to children around New Zealand— 
Mr SPEAKER 
: That is sufficient. 
Hon Bill English 
: What will the Minister do about the widespread perception among schools that all the new money for schools is being spent on education bureaucrats and his favourite projects and when will he front up to the campaign by the School Trustees Association to improve the funding of schools rather than filling up the ministry with even more cash that it cannot use? 
Hon TREVOR MALLARD 
: There are two points to be made. I do plead guilty to having literacy and numeracy as pet projects. I have poured tens of millions of dollars into them. That is necessary and has been necessary for a long time as we can tell from the spelling mistakes in that member’s press statements. I will not apologise for spending $200 million on putting teachers into New Zealand schools over and above roll growth. That member does not like it. He does not like extra teachers going into schools. He wants bulk funding but he will not get it. 
Hon Brian Donnelly 
: Given the recent report on the wide variance in activities of resource teachers of learning and behaviour has he considered bringing them under Special Education? 
Hon TREVOR MALLARD 
: In brief there is work to do in that area to work out how the administration and reporting functions can be improved for resource teachers of learning and behaviour. They are certainly not working evenly around the country. 
Bernie Ogilvy 
: Does the Minister think that the quality of support staff is best served by funding through the operations grant or will he consider funding support staff directly with teachers thus acknowledging the vital role that they play? 
Hon TREVOR MALLARD 
: It would be relatively easy to take the money from operations grants which are currently used to pay support staff and to employ them directly. I am not sure that it would be consistent with the general thrust of Tomorrow’s Schools which has generally worked pretty well in New Zealand. 
Member for TamakiMakaurau—Waipareira Trust 
2.  
GERRY BROWNLEE (Deputy Leader—National) 
 to the  
Prime Minister 
: What is her response to today’s statement from the deputy chair of Te Whanau o Waipareira that the Hon John Tamihere received the $195000 golden handshake for “particular issues … which he was expected to deliver on”? 
Hon Dr MICHAEL CULLEN (Acting Prime Minister) 
: 
 My response is that the nature of the payment is part of the inquiry being undertaken by Douglas White QC. I do note that the chair of the trust issued a statement that clarified what the payment was for. 
Gerry Brownlee 
: Has the Prime Minister seen the statement of the deputy chair of the trust that Mr Tamihere was paid for “some things that were expected in terms of supporting Waipareira in its Waitangi 414 claims” an assertion that Mr Tamihere was paid a success fee for negotiating access for Waipareira to taxpayer funding; and does the Prime Minister accept that any such arrangements would be quite wrong? 
Hon Dr MICHAEL CULLEN 
: I have seen a couple of statements from the deputy chair. One was in response to the question: “Can you confirm right now that it was not for stuff that John Tamihere would do for the trust while he was in Parliament?”. “No it was not while he was in Parliament.” Also there was another statement this morning in the same interview: “Yes it was a net payment as far as we were concerned. We were the ones who were expected to pay the tax.” 
Gerry Brownlee 
: I raise a point of order Mr Speaker. I do hope that in answering that way the Minister is not leaping to conclusions before Douglas White QC does. 
Mr SPEAKER 
: Please be seated. The member cannot make those sorts of parenthetical comments. If he has a point of order it is a point of order not a comment. 
Gerry Brownlee 
: My point is that the transcript we are dealing with has many parts to it and the most damaging part is the suggestion that Mr Tamihere was paid to advance Waipareira’s Wai 414 claim through to the Waitangi Tribunal in the hope that it would get the same recognition as other iwi and therefore access to considerable Government funding. I simply asked whether that was wrong. Is the Acting Prime Minister not prepared to make a comment on that? 
Hon Dr MICHAEL CULLEN 
: I have made a comment on that. The deputy chair made it clear that the payments were not for anything that Mr Tamihere would do for the trust while he was in Parliament which is directly contrary to the assertions made by members opposite. 
Gerry Brownlee 
: I realise we are supposed to table documents at the end of a question but the Acting Prime Minister is choosing to suggest we have it wrong. For that reason I seek leave to table the transcript now. 
Document by leave laid on the Table of the House. 
Rodney Hide 
: Following the deputy chair’s comments on  
Morning Report 
 this morning did John Tamihere alert the Prime Minister that he had drawn up the terms of reference for the Deloitte inquiry and that he had also sent a letter from his ministerial office alleging “incompetence negligence or corruption” within the Waipareira Trust; and would the Prime Minister think that a Minister who had evidence of incompetence negligence or corruption would raise that with other Ministers and indeed with the authorities? 
Hon Dr MICHAEL CULLEN 
: I can confirm that Mr Tamihere did start the process that led to a review of the trust on the grounds of negligence incompetence or corruption. There appears to be a certain amount of biting back as a consequence of that. 
Rodney Hide 
: I raise a point of order Mr Speaker. My question was whether Mr John Tamihere had alerted the Prime Minister to his involvement in drawing up the terms of the inquiry and alerted his ministerial colleagues to his view that there was incompetence negligence or corruption. All that Dr Cullen did was to affirm my question not answer it. 
Mr SPEAKER 
: No he addressed the question. 
Gerry Brownlee 
: Has the Prime Minister in light of today’s most revealing comments from the trust asked Mr Tamihere for an assurance that he did not take money from the trust or any other external organisation for the purpose of “delivering on particular issues”; if so what was Mr Tamihere’s response? 
Hon Dr MICHAEL CULLEN 
: No I have not talked to Mr Tamihere since the interview. I repeat: what Ms Glavish said in an interview that seemed to fall over itself in a number of contradictions was that Mr Tamihere was not paid for anything while he was in Parliament. That is the nature of the charge the Opposition was originally making. It is now shifting its ground during this week to a different claim. 
Rodney Hide 
: My question to the Prime Minister repeats my first one: did John Tamihere alert the Prime Minister or his ministerial colleagues that he had evidence of “incompetence negligence or corruption” within the Te Whanau o Waipareira Trust and would the Prime Minister expect him to do so? 
Hon Dr MICHAEL CULLEN 
: I cannot answer that question. I do not know whether Mr Tamihere made that information available to the Prime Minister. I can certainly say that at some point and I cannot tell when I was aware that Mr Tamihere was taking action in that respect because of his concerns about mismanagement at the trust. 
Gerry Brownlee 
: How can the Acting Prime Minister expect the House today to accept the view from him that Mr Tamihere did not take the payment while he was in Parliament when he made it clear to the House yesterday that Mr Tamihere did take the payment in 2001? 
Hon Dr MICHAEL CULLEN 
: What I said yesterday was that he received a payment in 2000 or 2001. The question is when the payment was first offered and what it was for. What both the chair and the deputy chair of the trust have now said is that it was not for anything that Mr Tamihere was to do or had done in Parliament. We now have the Opposition questioning both the opponents of Mr Tamihere and Mr Tamihere. They are the only people who know what was in anybody’s mind at the time. 
Rodney Hide 
: I raise a point of order Mr Speaker. I put the same question twice—in different ways it is true—to the Prime Minister. The first time I did not get anywhere near an answer. The second time— 
Mr SPEAKER 
: What is the point of order? 
Rodney Hide 
: I am coming to that. 
Mr SPEAKER 
: Well come to it immediately. 
Rodney Hide 
: Be patient. 
Mr SPEAKER 
: No I am not. Come to it immediately or the member will leave. 
Rodney Hide 
: The second time I put it— 
Mr SPEAKER 
: Come to the point of order. What is the point of order? 
Rodney Hide 
: If you let me explain I will tell you. 
Mr SPEAKER 
: It had better be pretty concise. That is the Standing Order. 
Rodney Hide 
: The second time I asked the question the Minister said he did not know. Now it would have helped if he had said that the first time but usually it is helpful if the Minister says that he or she will get back to the member and provide the answer. I am asking through you Mr Speaker whether it would not be acceptable for the Prime Minister to do that. 
Mr SPEAKER 
: That is not a point of order. 
PILLARS Family Programme—Inmate Reintegrative Support Services 
3.  
MARC ALEXANDER (United Future) 
 to the  
Minister of Corrections 
: Is he satisfied with the outcomes of the PILLARS family programme run as part of the reintegrative support services to inmates and their families pilot; if so why? 
Hon PAUL SWAIN (Minister of Corrections) 
: 
 I am advised by the Department of Corrections that the PILLARS programme has met the requirements of the contract. However the pilot programme of which PILLARS is a part is currently under review. A decision on the future shape of reintegrative support services is expected shortly. 
Marc Alexander 
: How can the Minister claim to maintain his confidence in the PILLARS programme to the extent that he recently requested a further $2.3 million rollover of funding for the next 2 years—the third since the pilot started in 1999—when the only evidence he could provide to the Minister of Finance that such continuance is justified is “anecdotal” and he could give only a flimsy assurance that overseas research supports that broad type of programme? 
Hon PAUL SWAIN 
: Firstly I think the figure the member quotes was the global sum across both programmes—one in Auckland and one in Christchurch. The initial evaluation for 2002-03 showed encouraging results. Across both programmes there was at one time an indication that something like 90 percent of inmates were finding employment so the results were encouraging. But on the basis of the evaluation of the programme decisions are to be made shortly about what we should do in the future. 
Martin Gallagher 
: What plans does the Government have to improve reintegration and resettlement of prisoners once they are released? 
Hon PAUL SWAIN 
: Reintegration of ex-inmates into the community is a key priority over the next 12 months. If we can ensure that people are resettled properly and do not return to prison that is a good outcome. I will be launching three new initiatives in this area in November. 
Nandor Tanczos 
: Can the Minister confirm that the unsuccessful other tenderer for reintegrative support services funding was the Family Help Trust an organisation that Marc Alexander has personal links to including his donating to it part of the proceeds from the sale of his book—a book which is advertised on its website and in its newsletter? 
Hon PAUL SWAIN 
: Firstly I cannot confirm that but I am happy to investigate it further if the member so wishes. As for the second part I have not had a look at the website but I certainly take the member’s word as to what is on the website and in the newsletter. 
Hon Tony Ryall 
: If the Minister’s reintegrative policies are so successful why has the reimprisonment rate of released offenders increased? 
Hon PAUL SWAIN 
: As that member would know reintegration and resettlement into communities is a very difficult thing to achieve; he would know that from when National was in power. But my having said that the current performance is not good enough and the focus of the next 12 months is on this particular issue of resettlement and reintegration. I will be launching some initiatives in November that I am sure will find support from the National Party. 
Ron Mark 
: Is it not a fact that of all the reintegration and rehabilitation schemes that the Department of Corrections has been running over the last 20 years the only two that he can point to as having any notable successes at all are orientated towards sex offenders and on that basis does he not think it is about time he went into his own department and gutted it of all the sociologists and thumb-twiddlers who have been wasting taxpayers’ money on rehabilitation for year after year; if he does think that when will he be doing it? 
Hon PAUL SWAIN 
: No and no. 
Marc Alexander 
: Does the Minister believe that his officials’ 2003 evaluation of the PILLARS programme that it “did not provide any substantive evidence of the effectiveness of the model” constitutes the kind of full evaluation that his predecessor Matt Robson promised in exchange for a rollover of a million dollars of pilot funding in 2002; and can he explain why when a further sum of a million dollars was agreed to last year strictly on the condition that a final evaluation of the programme would be conducted that evaluation has not yet been done? 
Hon PAUL SWAIN 
: Yes I concede that the full evaluation has not been done but I will say that evaluation of these kinds of programmes and projects is very very difficult. The member will know that it takes a long time after these programmes start to evaluate for example their long-term effects on how people reintegrate back into the community obtain log-term jobs reintegrate with their families etc.—all of which are important. However as I said to the member this issue is currently under review and decisions will be announced shortly. 
Marc Alexander 
: Why when $4.5 million has been spent on this pilot to date—that is nearly $12500 for each offender involved—does he continue to refuse Ministry of Justice advice that this pilot must be formally evaluated which is the accepted notion of what a pilot scheme is supposed to be all about in the first place? 
Hon PAUL SWAIN 
: Firstly I have not “refused” the ministry’s advice. I do not do the evaluation; it does. I am hoping though that the member thinks that programmes such as this which allow people who come out of prison to reintegrate into the community re-settle with their families and get jobs are a good thing. I am hoping the member supports that kind of approach. 
Ron Mark 
: Given his answer to my supplementary question is he telling the House that he thinks it is a hallmark of success that 85 percent of all prisoners released into the community go back to jail for reoffending within 5 years and does he expect to get United Future’s sign-off and support on supply and confidence for his budget for the next year? 
Mr SPEAKER 
: The first part of the question is relevant to the Minister’s portfolio. 
Hon PAUL SWAIN 
: Well no. 
Nandor Tanczos 
: I seek leave to table a couple of pages from the Family Help Trust website showing where we can find Marc Alexander’s book. 
Documents by leave laid on the Table of the House. 
Member for TamakiMakaurau—Polytechnic Financial Practices 
4.  
Hon BRIAN DONNELLY (NZ First) 
 to the  
Associate Minister of Education (Tertiary Education) 
: Is he able to follow through with his indication on 6 October 2004 to check whether the Hon John Tamihere did say at a recent New Zealand Association of Private Education Providers function a comment to the effect that if we want to find real rorts in the tertiary system we need to look no further than the polytechnic sector; if so what was the outcome of his investigations? 
Hon TREVOR MALLARD (Minister of Education) 
 
on behalf of the Associate Minister 
 of Education (Tertiary Education) 
: I think it is fair to say in answer to the substance of the question that it is an ongoing matter. As to Mr Tamihere’s comments he did reflect the fact that the private education providers sector which was previously the focus of concerns about quality has put a lot of effort into this area. The focus of concerns—both some real concerns which I think the member and I share—and some unreal concerns that Bill English has seem to have moved elsewhere. 
Hon Brian Donnelly 
: Is it not true that there is no person in his caucus more qualified to know a rort when he sees one than John Tamihere? 
Hon TREVOR MALLARD 
: I am told that the comments were made in a light-hearted manner and that the person who giggled the loudest and the most vigorously at the comments was Brian Donnelly. 
Lynne Pillay 
: What measures has the private training establishment sector taken to take responsibility for addressing quality concerns in relation to its sector? 
Hon TREVOR MALLARD 
: It has set up a quality commissioner and I understand that the Associate Minister congratulated the sector on this initiative. 
Hon Bill English 
: Is the Minister aware that one of my what he calls “unreal concerns” has been about 13298 students at Christchurch Polytechnic —for whom there is no evidence that they even started a course for which they were enrolled—and when is the Associate Minister going to honour his promise to this House to get the money back from Christchurch Polytechnic which would amount to some $12 million? 
Hon TREVOR MALLARD 
: I understand that the Associate Minister has reported as to the collection of some of those funds already. 
Rodney Hide 
: How can this Government—[ 
Interruption 
] 
Mr SPEAKER 
: There was a comment from both sides. That is the one warning. 
Rodney Hide 
: How can this Government have any credibility chasing down rorts as long as John Tamihere is in Cabinet and caucus? 
Hon TREVOR MALLARD 
: About the same as the pyramid financier can. 
Hon Brian Donnelly 
: Does the Associate Minister agree with the statement made by Mr Tamihere about rorts in the polytechnic sector or was Mr Tamihere talking bunkum? 
Hon TREVOR MALLARD 
: The Associate Minister is aware that the Minister of Education who is in charge of the education budget is concerned about the explosion in some areas of 5.1 and lower-level courses and is working very hard to reduce this. 
Hon Bill English 
: Is the Minister aware that Christchurch Polytechnic has repaid $80000 which it had spent on book vouchers to induce enrolments but that it has not yet paid back 1c for 13298 students who enrolled in a course that they never started or completed for which the Crown paid around $12 million and when is he going to recover the money as he promised? 
Hon TREVOR MALLARD 
: I think that member was the Minister of Finance who set up the financing arrangements for that very approach. The other point is that there is another question hanging around and that is when he is going to apologise to Aoraki Polytechnic ? 
Mr SPEAKER 
: The Minister will now address the question. 
Hon TREVOR MALLARD 
: This Government is working very hard to stop the rorts of the sort that were set up by that member. 
John Carter 
: I raise a point of order Mr Speaker. The Minister still has not answered a very clear question from the Hon Bill English asking when the Minister will recover the money. It was a simple question it needs a simple answer. 
Mr SPEAKER 
: I thought the Minister did address that with the last answer that he gave. 
John Carter 
: I raise a point of order Mr Speaker. No he did not. I listened very very carefully to the answer given by the Minister. He did not address the question. It was a simple question: when is he going to recover the money? 
Mr SPEAKER 
: Well I respect the member as a member who rarely raises points of order unless they are justified. I think the Minister could make a further comment. 
Hon TREVOR MALLARD 
: I will elaborate with a further comment. I hope some money is recovered but it appears that the system set up by the previous Government allowed that rort. 
Hon Brian Donnelly 
: Is it not true that the work that the Minister has been doing to prevent those rorts of 5.1 funding has in fact set arbitrary caps on institutions which has advantaged those that have been involved in the rorts and disadvantaged those that have been playing by the book? 
Hon TREVOR MALLARD 
: Yes and it will not last. 
Local Government—Resource Management 
5.  
LIANNE DALZIEL (Labour—Christchurch East) 
 to the  
Minister for the Environment 
: What recent steps has the Government taken to support the resource management processes of local government? 
Hon MARIAN HOBBS (Minister for the Environment) 
: 
 This week I launched the Making Good Decisions programme for councillors and commissioners. All chairpersons and most hearings panel councillors or commissioners will have to have training. The programme will help secure good environmental outcomes and ensure more timely and efficient hearings. 
Lianne Dalziel 
: What responses has the Minister seen to these and other proposals to improve the implementation of the Resource Management Act? 
Hon MARIAN HOBBS 
: These proposals have won wide support from local government business and community groups. I also note that the environmentalist Guy Salmon a high-ranking National Party list candidate in 2002 has removed from the Internet any links between himself and the National Party presumably because of National’s stance on the Resource Management Act climate change and the environment generally. 
Hon Peter Dunne 
: Would the Minister agree that one of the big problems that local government has faced since the original Resource Management Act was passed in 1991 in terms of being able to institute proper processes has been the complete failure by every Government since 1991—with I think one exception—to put in place the framework of national policy statements that the Resource Management Act originally envisaged; and does she have any plans for change in that regard? 
Hon MARIAN HOBBS 
: I totally agree with some of the points raised by the questioner. I remember that in 1991 the then National Government gave no central support or leadership to local government. It changed the entire planning world and left local government to deal with it all by itself. This Government has already introduced national environment standards and we have planning and funding for many more. 
I seek leave to table printouts no longer available on Guy Salmon’s website in which he criticises Nick Smith. 
Document by leave laid on the Table of the House. 
Member for TamakiMakaurau—Assurances to Prime Minister 
6.  
GERRY BROWNLEE (Deputy Leader—National) 
 to the  
Prime Minister 
: Has the Prime Minister received an assurance from the Hon John Tamihere that he has done nothing to embarrass her or her Government; if so on the evidence to date does she believe that Mr Tamihere has lived up to such an assurance? 
Hon Dr MICHAEL CULLEN (Acting Prime Minister) 
: 
 Mr Tamihere has repeated to the Prime Minister what he has said publicly—that he has done nothing that would bring shame on him his family or the Labour Party. A process is under way to look into the allegations that have been made. 
Gerry Brownlee 
: Can the Prime Minister tell the House why anyone including Helen Clark should have any confidence in assurances given by a man who publicly stated that he would never accept a golden handshake and who we now know secretly accepted at least a $195000 golden handshake when he thought he could get away with it? 
Hon Dr MICHAEL CULLEN 
: The latter matter is one that will be dealt with by the inquiry. But certainly the Prime Minister would give no weight to accusations by a man who pushed a pensioner downstairs. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. It is not acceptable for the Acting Prime Minister to give the answer—and it is the first part of his answer that I am referring to; I am not worried about the second part. 
Mr SPEAKER 
: Well I am but I will deal with this. Personal comments like that are not in order and I would caution the Minister about making them. 
Hon Dr MICHAEL CULLEN 
: I raise a point of order Mr Speaker. We have had a week and a whole range of accusations have been made against a member including accusations relating to past conduct. I was referring to a matter that is on public record and has been in the courts. If that cannot be raised in this House what on earth can? 
Mr SPEAKER 
: That is true. What the Minister says is perfectly true. However this is question time and not debate time. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. The question was asked because the Acting Prime Minister stated in the House yesterday that Mr Tamihere got his payment in 2001. It would seem that the House should take the Acting Prime Minister at his word that Mr Tamihere got a payment. How can it be fair for him to address the question today by saying that this was a matter still under consideration—in other words putting doubt on the fact that Mr Tamihere ever received a payment when it is plain and clear he said on the one hand he would not take it and then when he thought he could get away with it took it? 
Hon Dr MICHAEL CULLEN 
: The issue the inquiry is looking at is what is the nature of the payment and what the payment was for. I invite the member to join 82 percent of New Zealanders in suspending judgment until the inquiry is completed. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: No please be seated. I want to say something to members. Points of orders are matters concerning procedures in the House in which I can take action—for example by giving a ruling or putting a request for leave. It is not a means of making a statement or asking another question. I cannot resolve this issue because this issue goes to debate not to my rulings as Speaker. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I would like a point of order this time. 
Gerry Brownlee 
: I seek leave of the House to respond to the Acting Prime Minister’s invitation. 
Mr SPEAKER 
: Leave is sought to respond. Is there any objection? There is. 
Rodney Hide 
: Does the Prime Minister find it embarrassing that John Tamihere took a golden handshake after saying that he would not when Helen Clark stated in the Address in Reply debate in this Parliament on 8 February 2000 that her Government wanted to abandon the culture of golden handshakes negotiated in secrecy or is there now nothing that can shame Helen Clark and this Government? 
Hon Dr MICHAEL CULLEN 
: The one thing that is clear—and nobody has tried to argue this—is that Mr Tamihere received no payment to get rid of him from a job that he was not wanted in. If we are to talk about doing deals in secret then I invite that member to finally tell this House who has been paying him money since he became an MP. 
Gerry Brownlee 
: Does the Prime Minister still stand by her statement: “I want politicians to say what they mean and mean what they say.”; and how would she characterise the actions of Mr Tamihere who said one thing publicly and did the opposite when he thought the coast was clear? 
Hon Dr MICHAEL CULLEN 
: As I have said many times the issue of the nature of the payment and its purposes is a matter for the inquiry. I again invite the member to wait until the inquiry is completed just as 82 percent of New Zealanders said should be the case. Sixteen percent of New Zealanders are supporting the Opposition’s position. 
Gerry Brownlee 
: Noting the Acting Prime Minister’s suggestion— 
Hon Dr MICHAEL CULLEN 
: I raise a point of order Mr Speaker. Why are we having a question starting with “Noting” in his statement again? 
Mr SPEAKER 
: The point is well made because it was the member himself who raised the point of order. Would he please start with a question word. 
Gerry Brownlee 
: Is the Prime Minister indicating to the House that Douglas White QC is likely to determine that the known payment of at least $195000 to John Tamihere in 2001 a couple of years after he said he would never take it is to have a new name—a name other than “a golden handshake”—and will she find that acceptable and somehow manage to line it up with her statements that the culture of golden handshakes will go under this Government? 
Hon Dr MICHAEL CULLEN 
: The Prime Minister has an open mind on the inquiry and will accept its conclusions—unlike members opposite who have hung drawn and quartered somebody before the evidence has actually been presented. One thing is clear: no payment was made to get rid of Mr Tamihere from his job. In fact it is the opposite: people wanted him to stay on in that job—unlike members opposite and their leaders one after the other. 
Rodney Hide 
: Does the Prime Minister accept that the payment Mr John Tamihere said he would not take was authorised in May 1999 and afterwards he said he would not take it and that that is precisely the payment he then took? 
Hon Dr MICHAEL CULLEN 
: My understanding is that the board authorised a payment in 1999 but Mr Tamihere declined to accept that. Something like 1 year later the board reaffirmed that offer. [ 
Interruption 
] 
Mr SPEAKER 
: I say to Mr Hide that he is very lucky because after his comment he had just said the first word. The member is the one who has called attention to it and I am listening. 
Gerry Brownlee 
: Could the Acting Prime Minister speculate or give us his view on why a charitable trust that did not want to lose a chief executive officer would decide 12 to 18 months after he had gone to pay him a sum of this size? 
Hon Dr MICHAEL CULLEN 
: As I said it is a matter for the inquiry to determine what the nature and the purpose of the payment was. But there is no question that Mr Tamihere succeeded in lifting the Waipareira Trust from a small organisation of 12 people to about 200 people whereas the member opposite is part of a caucus that has shrunk in size with each successive election. 
Painted Apple Moth—Aerial Spraying Programme 
7.  
SUE KEDGLEY (Green) 
 to the  
Minister for Biosecurity 
: Will he follow the recently published advice of the scientist who was the lead author of the Wellington school of medicine report into the health effects of the painted apple moth spray programme that it would be prudent to avoid aerial spraying of biological insecticides such as Foray 48B over populated areas until the results of detailed follow-up of exposed populations are available; if not why not? 
Hon JIM SUTTON (Minister for Biosecurity) 
: 
 I have not seen that advice so I cannot comment on the specifics of it. However I note that the spray  
Bacillus thuringiensis kurstaki 
 that the member refers to has been used in populated areas for more than 50 years without verified serious health effects. I note also that the school of medicine reported not on verified health impacts but on perceptions which may well have been influenced by the relentless scaremongering of certain parties. 
Sue Kedgley 
: Surely if a leading expert in this field is so concerned about the health effects of aerial spraying that he is calling in a peer-reviewed international journal for a halt to spraying until— 
Mr SPEAKER 
: The member cannot start a question with “surely”. I want to hear a question please. The member is quite entitled to ask the question. Please ask it. 
Sue Kedgley 
: Does the Minister agree that the Government has an obligation to heed the advice of a leading expert in the field who is so concerned about the health effects of aerial spraying that he is calling in an international peer-reviewed journal for a halt to spraying until detailed follow-up work has taken place and that the Government should guarantee that it will heed the advice and not carry out further spraying until these studies have taken place? 
Hon JIM SUTTON 
: I certainly do not accept that the person concerned is a leading expert. 
Clayton Cosgrove 
: Why are sprays such as Foray 48B used in New Zealand? 
Hon JIM SUTTON 
: These sprays are used for significant economic and public health reasons. The potential damage that the white spotted tussock moth the painted apple moth and the Asian gypsy moth would cause if they got into our forests would run into hundreds of millions of dollars and there are also potential health risks from the caterpillars of these moths. 
Judy Turner 
: Will the Minister clarify whether the contingency plan for further aerial spraying if the existence of a residual moth population is discovered as referred to in the answer to question for written answer No. 15097 includes the tactic of spraying over populated areas and if this plan is called into action tomorrow can he give those affected by the spray the assurance that adjustments will be made to comply with the findings of the Wellington school of medicine report? 
Hon JIM SUTTON 
: There certainly are contingency plans to resume spraying should there be a further outbreak of the pest concerned. The advice is as I understand it that the concerns of the Wellington school of medicine report relate not to people occasionally exposed to the spray but to people exposed to the spray for many hours a day over many years. I am referring to occupational exposure such as that experienced by organic market gardeners. 
Sue Kedgley 
: Are there any detailed follow-up studies of exposed populations under way to assess whether there are any long-term health effects of the spraying as the expert is calling for; if not why not? 
Hon JIM SUTTON 
: As I mentioned before this spray has been used over populated areas for at least 50 years and there have been many studies. Indeed there is ongoing monitoring and evaluation in New Zealand of any impacts. 
Sue Kedgley 
: Now that the lead author of the Wellington school of medicine study is calling for a halt to spraying— 
Mr SPEAKER 
: No no. Please start the question with a question word. I have to apply the rule fairly to everybody and that means questions must be questions otherwise they will not be allowed. 
Sue Kedgley 
: Thank you Mr Speaker but I would— 
Mr SPEAKER 
: No no—just start the question or there will be none. 
Sue Kedgley 
: I raise a point of order Mr Speaker. I request that this rule that you are applying to me applies to every single member of this House. 
Mr SPEAKER 
: It does and in fact it was raised originally by Mr Brownlee and the first person I picked up today was Mr Brownlee. 
Gerry Brownlee 
: Congratulations! 
Hon Trevor Mallard 
: Five other people helped him! 
Mr SPEAKER 
: Now we will have the question. 
Sue Kedgley 
: Will the Minister instruct the Ministry of Agriculture and Forestry to stop pursuing the $8000 court costs against the Hamilton community group WATCH—Waikato Against Toxic and Chemical Hazards—and bankrupting them in the process when the group was simply seeking an injunction to halt the spraying of Hamilton with Foray 48B on the grounds that it would expose them to health risks which the recent reports seem to suggest it may have; if not why not? 
Hon JIM SUTTON 
: I certainly will not be instructing the Ministry of Agriculture and Forestry in that way. The ministry will take professional advice from appropriate quarters. However I would comment that when people rush to court they must take responsibility for their actions. 
Sue Kedgley 
: Was the ministry aware when it went to court last year over the spraying of Hamilton with Foray 48B that the affidavit it presented claiming there were no new concerns about the health effects of the spray was in fact incorrect and that 7 days earlier the Ministry of Health had received a report raising serious concerns about health effects? 
Hon JIM SUTTON 
: Certain parties raise concerns about spraying over populated areas every time it happens. That could not in itself be grounds for us not to spray. The Ministry of Agriculture and Forestry the Government and I take very seriously our obligations to public health and safety and we obtain the best possible professional advice on these matters before we act. 
Sue Kedgley 
: I raise a point of order Mr Speaker. I asked a quite explicit question as to whether the ministry was aware that the affidavit it presented claiming there were no new health concerns was incorrect when 7 days earlier the ministry has received a report outlining new health concerns. The Minister did not answer that question. 
Mr SPEAKER 
: The Minister might like to comment on that. 
Hon JIM SUTTON 
: Of course I do not accept that the affidavit was incorrect but how could I know who was aware of what. 
Sue Kedgley 
: Does the Minister agree that as there is now clear evidence that the affidavit the ministry presented to court was misleading and that there was new evidence of health risks in the possession certainly of the Ministry of Heath it would be unfair and indeed immoral for the Ministry of Agriculture and Forestry to pursue court costs and bankrupt the community group WATCH which was merely seeking to protect the health interests of Hamilton residents? 
Hon JIM SUTTON 
: I am certainly not aware of any new evidence of health risks. I certainly am aware of plenty of new allegations—and the member should learn the difference. 
Lincoln University—Payment to Vice-Chancellor 
8.  
Hon BILL ENGLISH (National—Clutha-Southland) 
 to the  
Minister of State Services 
: Did the former Lincoln University vice-chancellor who resigned last year receive a golden handshake; if so what was the value of that payment? 
Hon TREVOR MALLARD (Minister of State Services) 
: 
 I am advised that the total remuneration reported in the recent annual report of the State Services Commissioner included salary from January to October 2003. Other contractual entitlements at the last day of duty end in an ex gratia payment made at the discretion of and within the authority of the council of Lincoln University after it had received legal advice. I understand that the council decided to make that payment rather than to pay extended sick leave to someone who had that entitlement. I was briefed on the matter after it became clear that there had been an inappropriate relationship with a student and that— 
Judith Collins 
: Obviously not sick enough. [ 
Interruption 
] 
Hon TREVOR MALLARD 
: Members might think that these are laughing matters but I take them seriously. I was briefed on the matter after it became clear that there had been an inappropriate relationship with a student and that the State Services Commission was not informed of that relationship when it was consulted on the proposed ex gratia payment. I should note however that there was not a statutory requirement to consult on that payment; it was something that was entirely at the discretion of the council of Lincoln University. 
Hon Bill English 
: When the Prime Minister said: “This Government wants to abandon the culture of golden handshakes negotiated in secret” did the Minister think that she meant that anyone who was leaving a job under a cloud would still be entitled to “payment of contractual entitlements at last day of duty” instead of a golden handshake and is this the terminology we can expect to hear from Douglas White QC? 
Hon TREVOR MALLARD 
: Some of us are very concerned about the payment made to Dr Wood. Some of us think it was inappropriate. Unfortunately in this case there was no requirement for concurrence from the State Services Commission or from any Minister. I regret that the payment was made. 
Hon Bill English 
: Can the Minister then confirm that Mr Wood as the former vice-chancellor of Lincoln University did receive a golden handshake which was against the known Government policy and that he was the Minister responsible? 
Hon TREVOR MALLARD 
: I am the Minister responsible for the commission and I am the responsible Minister for payments in universities. I regret the fact that the university attempted to bring forward the resignation of Dr Wood who at the time was suffering from a life-threatening illness and was wanting to move forward. I think we should make it clear that Frank Wood was appointed to the job at the New Zealand Qualifications Authority by the previous Government and we do not condone his behaviour even if it does. 
Petroleum Exploration—Government Initiatives 
9.  
JILL PETTIS (Labour—Whanganui) 
 to the  
Associate Minister of Energy 
: What reports has he received indicating the success of Government initiatives to increase petroleum exploration? 
Hon HARRY DUYNHOVEN (Associate Minister of Energy) 
: 
 I have received a report from the Ministry of Economic Development that shows that for the year to date a total of 23 wells have been drilled in New Zealand with seven more expected to be drilled before January. This is more than double the number of wells drilled in 1999 and reflects the success of the Government’s exploration incentives package which has generated international interest in gas exploration in New Zealand. 
Jill Pettis 
: Can the Minister advise the House what impact the increase in exploration activity is having at a regional level? 
Hon HARRY DUYNHOVEN 
: A report released on Tuesday by the operators of the Kupe gasfield in South Taranaki indicates that this project alone will employ around 800 workers. I expect to see more positive spin-offs such as this for local communities in what has been described in newspaper reports as a boom period for the exploration industry. 
Rod Donald 
: What is the annual fiscal cost of the Government’s tax concessions for its oil and gas exploration strategy and how many times greater is this cost than the amount the Government spends for example on developing alternative fuel such as bio-diesel on energy efficiency and conservation encouragement and on helping to foster greater development of renewable energy sources such as wind and solar? 
Hon HARRY DUYNHOVEN 
: I thank the member for his question; I do not have the details to answer it. I can tell him that $15 million has been set aside for seismic work. The rest of the costs of the incentive package are probably more than offset by increased expenditure in the economy taxation of wages GST etc.. However in terms of renewable energy the member will be well aware that the Government has a comprehensive package. I agree that it is never enough—nothing ever is in this field. But I am very encouraged by the reaction from the exploration industry. I would also add that his co-leader has said that we should concentrate on small gas wells. 
Gordon Copeland 
: Can the Minister clarify that the incentives are aimed at gas rather than oil; if so will he extend the scope of the incentives to cover oil given the huge benefits to the New Zealand economy and the enhancement of our national security of such discoveries? 
Hon HARRY DUYNHOVEN 
: The exploration incentives package while focusing on gas also incentivises oil exploration as obviously the two are inextricably linked. This means that funding for additional data acquisition allowing the deduction of prospecting and exploration costs against the accounting profits royalty and the lifting of the 183-day tax rule on drilling rigs will apply naturally to both oil and gas. 
Member for TamakiMakaurau—Register of Ministers' Interests and Assets 
10.  
RODNEY HIDE (Leader—ACT) 
 to the  
Prime Minister 
: Are Ministers required to make accurate disclosures of property payments and gifts over $500 in the Government’s  
Register of Ministers’ Interests and Assets 
 and does Mr Tamihere’s “nil return” in the register as at 31 December 2003 mean that he had no property and had received no payments or gifts that year? 
Hon Dr MICHAEL CULLEN (Acting Prime Minister) 
: 
 Ministers are required to make accurate disclosures of the categories of interests and assets that are laid out in the  
Cabinet Manual 
. Mr Tamihere’s return means that he declared a nil return in terms of those categories of interests and assets. 
Rodney Hide 
: If a Minister does not disclose significant assets and gifts such as property and shares is that grounds for dismissal from Cabinet; if not why not? 
Hon Dr MICHAEL CULLEN 
: I think that would depend upon the nature of the circumstances. Obviously if there was a wilful failure to declare then that would be a very serious matter indeed as I hope it will be when the Members of Parliament (Pecuniary Interests) Bill is passed and the member does what he says he will do and not declare his interests and assets. 
Peter Brown 
: Will the Minister clarify the position of what penalty a Minister faces for not making an accurate disclosure who does the checking and which court or committee administers the hearing process? 
Hon Dr MICHAEL CULLEN 
: I think the last point is the crucial one. The court as I understand it is a one-person court. 
Rodney Hide 
: Is it the standard of this Government for Ministers not to declare assets and gifts and then to say: “Oh well John Tamihere has a good explanation for this.”? 
Hon Dr MICHAEL CULLEN 
: If the member wants to make a specific accusation I invite him to do so then I can respond. 
Gerry Brownlee 
: Has the Prime Minister or any other person acting on her behalf asked for any advice or reports from the Secretary of the Cabinet on matters relating to Mr Tamihere’s declaration of assets and interests; if so what specific advice was received? 
Hon Dr MICHAEL CULLEN 
: I have sought advice from the Cabinet Office this morning about certain declarations of interest to satisfy myself and what I can indicate is that in 1 year Mr Tamihere made a return of assets that he did not need to make which is why they did not appear in the return the following year. 
Peter Brown 
: Are any spot checks ever taken on Ministers’ disclosure statements; if not does the Prime Minister believe it would be worthwhile in order to give the public an assessment of a Minister’s integrity or is that a risk that Ministers would not be prepared to take? 
Hon Dr MICHAEL CULLEN 
: I can speak only on my own behalf in that respect. I am perfectly happy for anybody to check my return which is a half share in property. My other two major assets a Kiwibank savings account and a BNZ managed fund are not required to be returned and that is specific in terms of the advice of the Cabinet Office. 
Question No. 9 to Minister 
Hon HARRY DUYNHOVEN (Associate Minister of Energy) 
: 
 I apologise I should have sought leave at the time to table a sheet with data from the activity and expenditure reports of the Crown Minerals website from 2001-02. 
Mr SPEAKER 
: Leave is sought to table that. Is there any objection? There is. 
Question No. 11 to Minister 
JIM PETERS (NZ First) 
: 
 I raise a point of order Mr Speaker. This question was addressed to the Minister of Internal Affairs whose department’s statement of intent this year had specific provision for policy advice and information on local government issues. I am wondering why that has been changed. 
Mr SPEAKER 
: If the member reads the Standing Orders he will see it is the Government’s call to do that. Would he now ask the question. 
Local Government—Election System 
11.  
JIM PETERS (NZ First) 
 to the  
Minister of Local Government 
: Is he satisfied there was adequate preparation to ensure electors would be fully informed regarding the STV style of voting in the latest local body elections; if so why have there been so many problems? 
Hon CHRIS CARTER (Minister of Local Government) 
: 
 Yes but frankly the delay in some of the results caused by a failure of this magnitude in the contractor’s software systems was not anticipated. 
Jim Peters 
: Has the Minister read today’s  
Taranaki Daily News 
 which notes: “In Afghanistan donkeys carrying ballots continue to step along winding mountain footpaths almost matching the computers calculating winners in New Zealand.”; if so will this Government-organised final election result be announced ahead of Kabul’s and should following this electoral shambles the Minister still be Minister will his ministry give further consideration to the “ADS” system—the Afghan donkey service? 
Hon CHRIS CARTER 
: No I have not read the article but I can assure the member that I will read the report the Justice and Electoral Committee will prepare on this with keen interest. 
Dave Hereora 
: What has the Government done to promote public understanding of the single transferable vote (STV) system? 
Hon CHRIS CARTER 
: The Government allocated $1.2 million to a public information campaign to help electors understand how to cast an STV vote. The campaign conveyed that message through television radio and press advertising. There was also a website media publicity interviews and brochures in seven languages. 
Sandra Goudie 
: Why will the Minister not take responsibility for the voting shambles given that he was specifically voted money to ensure the successful application of the STV system which was described in the July 2003 Estimates examination as “a critical current issue faced by Government”. 
Hon CHRIS CARTER 
: The questioner seems to be confused between the accuracy of the STV calculator and the failure of software. There is no question but that the STV calculator has worked perfectly. 
Rod Donald 
: Does the Minister now regret that he failed to respond to and failed to act on the Justice and Electoral Committee’s 2001 inquiry into the 2001 local elections which unanimously recommended that an Electoral Commission - type body is needed to provide a voter education programme and to act as a monitor of local authorities’ electoral practices; if not why not? 
Hon CHRIS CARTER 
: The issues the member raises will be looked at by the Justice and Electoral Committee. I look forward to reading its recommendations. 
Dail Jones 
: Will the Minister be prepared to attend the hearing of the Justice and Electoral Committee himself and will he be ready to accept the decision of the committee if it finds that he was responsible for the total farce and failure of the recent local body elections; and will he resign as a result? 
Hon CHRIS CARTER 
: I will of course cooperate fully with the select committee in its inquiry. 
Sandra Goudie 
: I seek leave to table the Vote Local Government estimates examination in which the successful application of the STV system is described as a critical issue faced by Government. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is. 
Question No. 10 to Minister 
RODNEY HIDE (Leader—ACT) 
: 
 I seek the leave of the House to table two title reports of houses that Mr John Tamihere owns with his mate Michael Tolich. 
Documents by leave laid on the Table of the House. 
RODNEY HIDE 
: I seek leave to table another title report of a house that John Tamihere has just bought which would not need to be disclosed in this year’s result. He has bought the house with Mr Michael Tolich. 
Document by leave laid on the Table of the House. 
Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill 
Second Reading 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I move  
That the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill be now read a second time 
. The Finance and Expenditure Committee has considered the bill and recommended a number of changes some of them minor to ensure the legislation operates effectively. The bill confirms the annual rates of taxation and that is probably the only part of the bill that is reasonably significantly controversial. The rest of the bill is pretty widely supported. Some would argue that it should go further in some respects. I do not think anybody argues that changes should not occur. 
The bill removes the tax barrier to unlisted New Zealand companies gaining access to offshore private equity including venture capital. Private equity investments encompass everything from the funding of new companies—the early expansion capital—to management buy-in and buy-out transactions for established companies. Investment is usually into unlisted companies. At present there are no special tax rules for venture capital investment so investors who purchase shares in an unlisted New Zealand company may be taxed on any gains in accordance with ordinary tax concepts. If they hold the shares on revenue account they will be taxed on their share profits. That could create uncertainty for non-residents who may be contemplating venture capital investment in New Zealand. 
The changes proposed in the bill are targeted at non-resident venture capital investors who are considered sensitive to the imposition of New Zealand tax. They are usually investors who are tax-exempt in their countries which means that they cannot claim tax credits there or make use of them with the New Zealand tax they have paid. A number of institutions that have invested in venture capital internationally such as US pension funds are in that situation being tax-exempt in their home countries. The bill introduces venture capital rules that are similar to Australia’s and that should help us to compete effectively with Australia for venture capital investment. 
The main change introduced in the bill is that certain non-residents who sell shares in certain unlisted New Zealand companies will be exempted from New Zealand income tax. The change will apply to foreign investors who are resident in one of 28 countries with which New Zealand has a double tax agreement and who cannot claim tax credits for tax they pay in New Zealand. It will also apply to foreign funds that invest on behalf of foreign venture capital investors who are generally exempt from income tax in their own countries. The committee has recommended extending the second aspect of the exemption to foreign funds established in one of 28 countries with which we have a double tax agreement. The original proposal limited the exemption to funds established in countries representing our main trading partners. The change will remove tax barriers to a greater range of venture capital investment. 
Another important feature of the bill is the introduction of changes to improve the legislative framework within which disputes between taxpayers and the Inland Revenue Department are resolved. The current framework for resolving those disputes introduced in 1996 was established to ensure that tax disputes are handled fairly efficiently and quickly before they end up in court. The changes introduced in this bill are the result of the Government’s post-implementation review of the legislation to see if it is achieving that. 
Several of the changes proposed in the bill either ensure that the disputes process is completed as the legislation intended or due to the costs involved re-preparing the necessary documentation. Others affect the timing of various stages. The committee has recommended a number of changes to clarify the proposed amendments. For example a proposal to improve the rules where Inland Revenue may exceed the 4-year statute bar for disputes is being removed from the bill for further consultation. 
The bill contains amendments to protect the tax base against transactions that allow deductions to what are in substance repayments of loan principal contrary to policy intent. Some concerns were raised in submissions that normal commercial leasing transactions that do not raise tax base concerns could be inadvertently affected by the amendments. Therefore the committee has recommended a more targeted approach to ensure that the legislation operates as intended. 
 The bill also deals with the tax treatment of replacement plantings of fruit trees and vines following consultation with the fruit-growing industry. It will give the industry certainty about when deductions can be claimed for orchard plants and provide amortisation rates that reflect the useful lines of different kinds of plants. The changes are intended to ensure that the most commercially desirable varieties are used. The Finance and Expenditure Committee has recommended that wine growers be excluded from the proposed treatment at the request of the wine industry and that they continue to operate under the existing tax rules for vines. 
The bill introduces the first of a series of changes as a result from the publication last year of the Government discussion document “Making Tax easier for Small Businesses”. There is a 6.7 percent discount for self-employed people who make voluntary payments of income tax at any point during their first year of business to reduce the financial strain of paying 2 years’ tax in their second year of business. The measure has enjoyed a relatively wide measure of support both in industry consultation and in submissions on the bill and I emphasise of course it is a voluntary measure by business. 
The main change recommended by the committee is that the proposed measure be tightened to prevent it from being misused. During the committee’s consideration of the bill I asked it to consider the inclusion within the bill of changes proposed on two Supplementary Order Papers. The committee has recommended that the provisions on the Supplementary Order Papers subject to minor amendments be incorporated into the bill. The first deals with a legislative loophole through which New Zealand residents receive income from Australian unit trusts that is taxed neither in New Zealand nor in Australia. The changes will close a technical gap in the way the New Zealand dividend tax rules operate. The committee recommended some useful changes including limiting application to offshore unit trusts. 
The second Supplementary Order Paper is in response to the February storms and floods in the lower North Island and deals with issues such as the tax treatment of trading stock that was donated because of the disaster. The committee has recommended extending these amendments as well as the disaster relief provisions enacted in March to taxpayers affected by storms in the Bay of Plenty in July. The March legislation enacted under urgency as members will remember gave the Inland Revenue Department greater flexibility in dealing with business taxpayers who were badly affected by the disaster and was part of a Government package of relief measures for the agricultural sector and wider community. 
Those are the main changes the committee has recommended to the proposed legislation contained in this bill. There are several other measures to which the committee has recommended no major change so I shall not describe them here. I want to thank the committee for its careful consideration of the bill. I commend its report to the House and I commend the substantial improvements in this bill in the taxation regime. I have no doubt that most of the debate will concentrate on why we should lower tax rates. I simply remind the public that it is quite a simple issue: if one wishes to lower tax rates one either lowers expenditure or one will face higher interest costs as a consequence. We have seen a recent election fought on the issue of higher interest rate costs so I invite the Opposition to propose them over the coming period of time. 
JOHN KEY (National—Helensville) 
: 
 It is somewhat ironic that we are discussing taxation and the payment of taxation in the very week when the House has been dominated by a member of Parliament who looks like he possibly has not paid taxation on his golden handshake. I have no doubt that in the taxation annual rates provision of the bill there is quite some discussion about the fact that tax should be paid on a golden handshake. It is also may I say it somewhat ironic that the Finance and Expenditure Committee spent some time considering the discussion document on small businesses headed: “Making Tax Easier for Small Businesses”. No doubt the Minister for Small Business Mr John Tamihere read that with eager interest and recognised the first part of the document which discussed that one should pay tax. 
National will be opposing the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill for a number of reasons. The first is as I noted before that the bill seeks to reconfirm the annual rates of taxation. Immediately we are struck by the fact that the top rate of taxation at 39c will be confirmed in this bill; at a time when in the last 5 years the Labour Government has enjoyed an additional $34 billion worth of tax revenue—$34 billion collected from hard-working taxpayers in New Zealand and from businesses up and down the country; at a time when the Government is running the largest surplus in New Zealand’s history; and at a time when many New Zealanders could do with that tax because they surely could spend it better than any Government would. 
Just today I heard from someone who came to see me in my office just exactly how awash with cash Government departments are. They are so flush with cash they do not know how to spend it while hard-working New Zealanders are having to work an extra few hours and stay up a little bit later because the Government wants to keep the cash and does not want to give any of it to the hard-working people of New Zealand. They will enjoy too the economics lesson no doubt that Dr Cullen tried to give the Opposition in the last part of his speech. 
I want to turn for a moment if I may to the venture capital aspects of the bill. The Minister rightly pointed out that some progress has been made in this area. Venture capital of course is a very significant area in New Zealand and venture capital payments are growing. Venture capital is equity that is put into a small and fledgling business where it is often seen as relatively high risk. Nevertheless they are the seeds of commerce from which all around the world some tremendous operations have grown and flourished. So it is very important for New Zealand businesses to have access to that capital. We have as most people will be aware a relatively low savings rate so it has been quite difficult to get access to that capital in New Zealand. Despite the fact that there has been the emergence of a number of players in the venture capital area it has still been quite difficult to get those funds within New Zealand although I was pleased to note in yesterday’s  
Dominion Post 
 that direct capital 
was oversubscribed 
in an issue that they have just undertaken in the New Zealand market. Nevertheless the reliance on foreign capital in the area of venture capital is increasingly important. In one sense we welcome the steps to change the taxation laws in New Zealand in relation to venture capital and the way that taxation treatment will be issued on the ownership of those shares by non-resident investors. We make the point however that the bill fails to progress the issue where it is meaningful. 
A number of submitters came before the committee and they all made the main point which is that the bill will not work because it does not include two very important aspects of investment by non-residents in venture capital. The first was that it does not include funds that operate in a grey-list country. It includes the eight or 10 non - grey list countries but the others are excluded. The second issue was an issue around limited partnership structures which are not recognised by the Inland Revenue Department. That is quite a significant issue because again it is a vehicle that has been used and not recognised in New Zealand. It is extremely important if one wants to compete internationally for access to venture capital that one has to be able to put in place structures whereby the tax treatment of those structures will be recognised in the home country. Otherwise it simply becomes too difficult and too challenging to attract that capital. We welcome the fact that this provision is a step in the right direction but we really ask the Minister to do the job properly by reassessing the matter. 
I turn now to Australian unit trusts. Quite simply there was a capacity for investors to get around the intention of the legislation that previously related to these unit trusts. The way it worked was that New Zealand investors invested through an Australian unit trust that bought New Zealand Government stock. In normal circumstances if that New Zealand investor had directly bought New Zealand Government stock then he or she would have had a tax liability on the interest dividend that came off the Government stock. Instead the way it worked through Australian unit trusts was that special bonus issue shares were issued in lieu of the dividend payment that would have been received. They could then be sold by the investors and of course would be tax-free in New Zealand because there is no capital gains on them. So we in the Opposition would acknowledge that in one sense there was some mischief shall we say and that there was a need to close that down. But once again it seems as if the Minister is allowing this bill to go through in a very Mickey Mouse fashion quite frankly. There are quite a number of structures that are similar to Australian unit trusts and differentiate largely only because of country of domicile. If we look at the United Kingdom situation with open-ended investment companies—a relatively similar type of transaction vehicle—we see that our Inland Revenue Department has chosen not to close down that area at this point. 
I have no doubt that the department will come back to the House at some time in the future and seek to address that issue but it has failed to do so at this point. The industry talked to the Finance and Expenditure Committee about that situation and in my due diligence on this again we looked at it. We spoke to quite a number of industry players who said: “We don’t mind the rules but we do want them to be consistent.” This bill closes down one small area while a whole lot of others will continue to operate. That will lead to other members of the industry seeking to go out there and change into for instance United Kingdom - based unit trusts for want of another term. 
The second issue is that the Government has been undertaking quite a significant amount of work through a review undertaken by Craig Stobo. He is looking at advising the Government on the onshore and offshore tax treatment of collective managed funds. He is due to report back very soon I think by the end of October. Dr Cullen in his speech to the Institute of Chartered Accountants last week made reference to the fact that the Government is likely to accept Mr Stobo’s work in this area. I would argue quite strongly that the Government rather than forcing what is an inappropriate solution by means of this taxation legislation should have waited and done the job properly in totality. 
I want to mention the sale and leaseback of intangible assets. This was a structure put in place by investment banks to allow essentially what looks like a loan-type facility to take place or an asset to be stripped out. The most obvious example was when APN used this structure to buy the  
New Zealand Herald 
 amongst others here in New Zealand. What subsequently happened and the reason why this provision is in this taxation bill is that Fairfax indicated when it was going to buy the New Zealand operations which included the  
Dominion Post 
 that it was going to use the similar sale and leaseback of intangible assets. Of course the Minister said that was unacceptable that he was not happy with the structure and that he would therefore change the law. Again we respect his decision to do that even if we do not always agree with it. But what he has done is effectively retrospectively gone back and changed the position that was in place when APN bought the  
New Zealand Herald 
. We on this side of the House do not favour retrospective legislation in the tax area. It leads to a great deal of uncertainty and a great deal of concern among investors but particularly foreign investors. We do not like the fact that that is happening in this particular way. 
I want to comment about the incentive for early payment for tax for individuals starting a business. It is quite true that as the Minister said currently the situation with a new business is that that tax is payable in the second year for 2 years and that some new companies when they start up do not recognise that fact and therefore make no provision for it and when they come to make the tax payment 2 years on they obviously face financial difficulty. So the Minister has offered the 6.7 percent discount through this legislation. We welcome that change but what we would really welcome from the Minister is a complete reduction in tax rates in New Zealand. National will oppose this legislation. 
Hon DAVID CUNLIFFE (Associate Minister of Revenue) 
: 
 It is a pleasure to rise and take a very brief call in support of the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill. In so doing I note that it is an omnibus bill—and part of the Government’s busy tax-work programme—that contains several important themes around promoting growth and innovation; tax simplification especially for small business; reduction of compliance costs; and in the case of the issue referred to by the member who has just resumed his seat protection of the tax base. 
It is to the sale and leaseback issue that I first wish to draw the House’s attention. I note that the member who has just spoken from the National Party said that he did not necessarily agree with the Government’s policy intent on this matter. I ask the Opposition exactly which part of a sale and leaseback proposal that is designed essentially to defraud the public of taxation—which it needs and which it is legitimately entitled to—does it agree with? I do not concur with the construction that has been put on this matter—namely that it is retrospective. Indeed the Government’s policy intent on this matter was well signalled and was necessary in order to avoid a sequence of major transactions ricocheting through some of the country’s largest corporations with major risks to the tax base. So I think once again we can see with some clarity the contrasts between the approaches taken by both sides of the House on that matter. 
With regard to the Stobo review on taxation of savings which the previous speaker raised may I say that that is a much broader work programme than the very specific issue that is contained herein on venture capital and a matter that I was pleased to help the Minister work on. 
 It is well recognised that New Zealand does not attract its fair share of international venture capital flows. As it does not there is no risk of tax loss to the country because those flows that would not be taxable in New Zealand under this legislation currently do not come to this jurisdiction. Unless we have a measure like this we will simply not be able to get our share of those flows at least vis-à-vis Australia. So this is a very important provision and it is part of a very systematic attempt by the Government to improve the accessibility and continuity of capital availability to companies right through their life cycle from set-up until maturity. 
Finally can I mention briefly the 6.7 percent rebate to small businesses in their first year of operation. We hear so much from the Opposition about corporate tax cuts. When we give an effective tax cut to small businesses it is gracious of Opposition members to say that they agree with that. But I want to suggest that this is but a small part of an ongoing programme—which again has been well signalled—that is about making life easier and better for small businesses and simplifying the tax structure. We are pleased to see this. 
The Government is very grateful for the work of the Finance and Expenditure Committee chaired by my colleague Mr Cosgrove. The committee worked through the bill in detail and has recommended a number of minor changes. The committee accepted two Supplementary Order Papers from the Minister and this is a very good example of the tax process working as it should. I believe indeed that the generic tax policy process in New Zealand is regarded as a model worldwide. 
CRAIG McNAIR (NZ First) 
: 
 New Zealand First will be voting against the bill for a few main reasons. We have some concerns that go to the very foundation of this legislation. New Zealand First has always had the philosophy that we will support legislation that is good and oppose legislation that is not quite as good. I like Rod Donald disagree with giving certain non-residents a tax advantage on profits from the sale of shares in unlisted New Zealand companies because it disadvantages New Zealand resident venture capital investors and undermines the tax base to a certain degree. Even John Key pointed out that it would still not attract the appropriate capital needed for the purposes and reasons for which this part of the legislation was created. So that is one reason but there are many others that I do not have time to go into. 
I want to touch on Part 1 “Annual Rates of Income Tax 2004-05” in terms of inflation adjustment for personal marginal tax rates. The Labour Party will have to face the fact sooner or later that it told the electorate in 1999 before being elected that the highest marginal tax rate would affect only 5 percent of the earning community. 
Hon David Cunliffe 
: Which it did. 
CRAIG McNAIR 
: Which it did then but I am telling the Associate Minister with respect that the threshold has expanded. Some people argue that it is not quite 20 percent; that it is around 18 percent or maybe 17 percent. Whatever the figure whatever side of the argument one is on the percentage has expanded and sooner or later the Government will have to address this matter. That is all I am going to say to the Government and the Minister. 
While I am on that subject I note that the United Future member Gordon Copeland has put in a Supplementary Order Paper and we will be supporting that. I am interested that United Future has put in a minority report on the bill. I do not know whether it will be voting against the entire bill although this issue is quite a major part of it. New Zealand First supports the notion that in order to preserve the present tax thresholds in terms of purchasing power the present tax bands should be expanded from $9500 to $10750 from $38000 to $43000 and from $60000 to $68000. That issue forms a pretty major part of the bill and I will be interested to hear what that member has to say as far as supporting the entirety of the bill is concerned since his party has put in quite a lengthy and I must say substantial minority report. I thank United Future for doing so. 
In talking about income tax and confirming the annual rates of income tax as we are in this bill I believe that this country faces an even greater problem. I have mentioned the issue in the House before but I believe it needs to be addressed again. Instead of thinking that a lowering of the rate of income tax is the answer to all our problems as some in this Chamber believe we should be looking at other alternatives as well. We need to be looking at tax incentives for exporters. If one looks at Singapore—and I do not want to spend any time on this because it is not directly related to the bill—one will see that that country exports around $60000 per man woman and child. Ireland exports around $40000 per man woman and child but New Zealand exports around $8000 per man woman and child. I think right there our Government needs to say: “OK we must provide tax abatement and concession policies to ensure that viable exporting and innovation opportunities are not lost.” For example a 20 percent tax rate on new export net income would be a great start. 
If we are to protect our nation’s tax base then we ultimately need to reform the taxation system by simplifying tax processes clarifying tax legislation ensuring that the taxation laws of New Zealand are upheld and ensuring that all companies large or small pay their taxes. 
 Another issue faced by this country and the Minister of Finance and the Associate Minister sitting over there is that our big banks sadly are owned by foreign enterprises. One of the biggest tragedies of our nation is that our big banks are owned by Australians mostly and only a very small percentage such as Kiwibank and the Taranaki savings bank are New Zealand - owned. That is sad enough but the foreign-owned banks are not paying something like an estimated $360 million in tax. I know we are going through a process to correct that which is great. Hopefully we will get more New Zealand - owned banks in the process as time goes on. While I am on the subject New Zealand First’s long-term objective is for New Zealanders to be paying less tax. As a Parliament we need to remain opposed to any increase in general taxation so supporting Gordon Copeland’s Supplementary Order Paper would be a good start. 
There are positive aspects to the bill. I want to touch briefly on dispute resolution. Last year we focused a bit on that and we do need to improve the legislation every year. This bill amends the framework for resolution of tax disputes between the Inland Revenue Department and taxpayers. The amendments to the bill follow on from a discussion document about resolving tax disputes. A report on a legislative review was released in July 2003 and the three main stages are intended to ensure that all relevant evidence facts and legal arguments are explored before a case goes to court and are essential to the disputes resolution process. I do not think the House wants me to read them out verbatim. I think the House knows exactly what I am talking about. It is a positive move that new section 89N inserted by clause 84 prevents the commissioner in cases where a dispute has not been resolved between the parties from amending the assessment without first completing the disputes process. 
There is one other issue and we talked about it at some length in the Finance and Expenditure Committee. Last year the House enacted the Taxation (GST Trans-Tasman Imputation and Miscellaneous Provisions) Act which allows employers to use accredited intermediaries to assume the employer’s PAYE obligations. This bill includes several small amendments to those rules to improve the operation. 
New Zealand First is opposing the bill. 
ROD DONALD (Co-Leader—Green) 
: 
 This legislation has some good features but we have two principal concerns about it which means we cannot support it. It also totally lacks the measures we believe are necessary to put New Zealand’s tax system on to a sustainable basis as well as to provide the appropriate carrots and sticks to achieve an ecologically sustainable and socially just economy. 
Hon David Cunliffe 
: It doesn’t achieve world peace? 
ROD DONALD 
: We could have a go at world peace too if the member would like. I like to set high goals and aspirations. But I will come back to world peace later. 
I would like to explain why we cannot support this bill. The two key reasons are outlined in our minority report. First and foremost the bill will give certain non-residents a tax advantage on profits from the sales of shares in unlisted New Zealand companies but it will not offer that same advantage to New Zealand shareholders. That is not what we are asking for. We do not think that any shareholders should get those tax advantages but the particular measure in this bill undermines our tax base and discriminates against New Zealand resident venture capital investors. 
Hon David Cunliffe 
: There’s no such thing. 
ROD DONALD 
: If Mr Cunliffe does not agree with me I will quote what PricewaterhouseCoopers said to me in an email: “Those resident investors who hold shares on revenue account are liable to tax on any gain on sale of the shares and are therefore prima facie disadvantaged in comparison to those foreign investors who meet the requirements of the new rules.” The member should not believe me; he should talk to the tax experts at PricewaterhouseCoopers. 
We think it is ironic that the Government has introduced this venture capital measure because it claims that New Zealand is not attracting enough venture capital. It also says we need to do it because Australia has that rule. Well excuse me why should we be letting foreign investors make tax-free capital gains in New Zealand especially when the Government is determined to throw our hard-earned taxes at the global sharemarket through its New Zealand Superannuation Fund. It is not amazing that we supposedly have a shortage of venture capital in this country because at the same time the Government is putting at least $2 billion a year into the superannuation fund which in turn tosses most of that at the global sharemarket. 
 The remedy surely is in the Government’s own hands. All it needs to do is to use some of the $2 billion it puts into the Superannuation Fund to set up a venture capital fund in New Zealand. It does not need to give tax incentives to foreign investors. 
Our other concern about this change—and I highlighted it in my minority report—is that it could lead to pressure to remove tax on other capital gains. I am afraid to say that my premonition has been proved correct because only this week Dr Cullen signalled that he plans to remove the capital gains tax that applies to superannuation schemes and actively managed unit trusts. The Green Party supports a level playing field for Kiwis to invest their savings but instead of removing capital gains tax from superannuation funds the Government should investigate introducing a capital gains tax on all realised capital gains. 
The absence of such a tax encourages investors to sink their savings into property instead of productive enterprises. No such perverse incentive currently exists for superannuation funds because they have to pay capital gains tax. I should say “we” because the Green Party does have its own superannuation fund and our members are very happy to pay capital gains tax on any realised capital gains we make. But the point is that superannuation funds do have to pay capital gains tax. However if Dr Cullen removes that tax he will open the floodgates for superannuation funds to shift their investments from equities into property. That would have a disastrous effect both on the property market because it would artificially inflate prices and on the sharemarket because it would cause share values to plummet. 
New Zealand already has a savings crisis. The Reserve Bank reports that our Kiwi savings rate is minus 11 percent. In simple terms we are collectively spending more than we are earning. We will not turn that unsustainable behaviour around by removing a capital gains tax on superannuation funds. As I said before such a step would only encourage more property speculation and more spending because it is clear that people are borrowing against their property values. That is fine when values are high but it becomes a disaster when they drop and investors face a situation of negative equity. 
Hon David Cunliffe 
: Wait and see. 
ROD DONALD 
: Well I tell the member that we want a soft landing surely rather than a crash-landing. The last thing one does is dig up the runway just because the rest of the airfield does not happen to have any tar-seal. That is exactly what Dr Cullen is doing here by removing the capital gains tax on superannuation funds. 
I move to the second issue that we have raised as a concern—and it is very much a related issue—which is the lack of serious incentives to encourage people to save for their retirement. As I said in my minority report the Green Party believes that the 6 percent tax differential between the specified superannuation contribution withholding tax rate of 33 percent and the top PAYE rate of 39 percent should be extended to all salary and wage earners. 
It is an indictment on this Labour Government that it introduced a 6 percent tax incentive for the most well-off wage and salary earners in this country while for a long time it left a penalty in place on middle and low income earners. At least it has now removed that penalty tax by making the superannuation withholding tax a flexible rate that ties in with a person’s top rate of tax. However it still creates the unfairness of low and middle income earners having to pay the same marginal tax rate while those of us on the top income tax rate are paying only 33 percent on our savings. 
So the Green Party will be putting up a Supplementary Order Paper to this bill to amend the rates to 9 percent for incomes up to $9500 15 percent for incomes between $9500 and $38000 and 27 percent for incomes between $38000 and $60000. I would like to thank Treasury officials for drafting that Supplementary Order Paper to make sure it is sufficiently robust to be worthy of passage and I hope that other parties in this House particularly those that encourage people to save for their retirement will support that Supplementary Order Paper. 
However I would like briefly to say that by far our preference would be for the Government to look seriously at the “t’s and e’s” of superannuation. We believe that the logical step forward is to make contributions exempt so that they come out of gross salary and to tax what people withdraw at the time they realise their superannuation savings. That would both create for the Government a tax deferral to a time when it will need it more and give people the upfront incentive to save that they should have right now. 
In talking of incentives I say that the Government is not doing what it needs to do as far as making our economy and its tax base more sustainable. It should be introducing eco-taxes right now. It should be bringing the carbon tax forward from 2007. It should certainly pass the Customs and Excise (Motor Spirits) Amendment Bill that creates the facility to bring in an extra petrol tax and it should not delay bringing that in while waiting for the equilibrium price to drop to $19 a barrel because that will never happen. So I hope Dr Cullen does not delay for too much longer. At the same time the Government does need to bring in an excise tax on diesel. There are other eco-taxes that I will talk about when we get to the other tax bill. 
In closing I would like to observe that United Future wants to give all its MPs a $1155 tax break by shifting tax levels when at the same time its MPs have just received a 3 to 3.5 percent increase in their salary. I do not think that that goes down well with working people in this country. I urge United Future to back the Green Party call for the minimum wage to be lifted to $12 an hour so that the people who really need an extra $50 a week get it and not just members of Parliament who are already doing very well thank you very much. 
GORDON COPELAND (United Future) 
: 
 This bill makes a number of positive incremental improvements to the current New Zealand tax regime. In particular I welcome the new tax rules in relation to venture capital. If the New Zealand economy is to continue its growth and expansion then it will need for the foreseeable future to attract capital investment from overseas. 
This is particularly true for venture capital which can be defined as high-risk high-reward investment. It is exactly such new venture investment that has the potential to take new technology and biotech breakthroughs from the laboratory into the domestic and international marketplace. In that regard New Zealand competes for venture capital with the rest of the world. We cannot afford to remain non-competitive. New rules set out in the bill will bring New Zealand into line with Australia and I am hopeful that as a result we will see New Zealand’s share of the venture capital pool enhanced in the years ahead. At the same time I am conscious that this is still a work in progress. Much more can be done to make New Zealand a venture capital destination of choice. However this bill represents an important beginning. 
The bill also updates and enhances the framework through which disputes arising between the Inland Revenue Department and individual or corporate taxpayers are resolved. This is another important improvement on the current position. By any standards New Zealand tax law has become extremely complex. In that environment notwithstanding the many tax practitioners in both the legal and accounting professions it is clear that disputes will remain a feature of the New Zealand tax system long term. Given those realities we need an effective disputes resolution system that at least provides certainty of process if not of outcome. At the same time the opportunity has been taken to clarify the Inland Revenue Department’s obligation concerning refunds of excess tax paid—yes the taxpayer rather than the Inland Revenue Department is occasionally right—and the period for claiming input tax credits for GST. 
As one who grew up on an apple and pear orchard I am also pleased to see that the bill incorporates new provisions in relation to the tax treatment of horticultural plants to clarify the correct tax treatment in relation to the replacement of trees and other issues. Again this is a step forward and will create greater certainty for orchardists in New Zealand. 
I am pleased too that the bill introduces an early payment discount in relation to business start-ups. It is an unfortunate fact of life that many new businesses that start up do not make it through the third year of their operations because of the double-whammy tax effect that arises in the second year when the business owners are endeavouring to meet both provisional tax payments and terminal tax obligations from the first year of their operations. Anything that assists business to survive through that critical period is therefore to be welcomed. 
The bill is also accompanied by an extensive Supplementary Order Paper in relation to the taxation of investments by New Zealanders in Australian unit trusts. This closes a loophole that allows those investments effectively to be classified as tax-free in both Australia and New Zealand. That is clearly an unacceptable outcome. As a result of the tax loophole predictably huge amounts of money have been invested by Kiwis in these Australian unit trusts and the Government has my support in moving to close that loophole. It is unfair and unwarranted. It is extremely important that the taxation on different kinds of investment be it investment within New Zealand or overseas does not act to distort market signals. Investment that is driven purely by tax advantages normally turns out to be poor-quality investment in the long term. On the other hand if the tax outcomes between different classes of investments are neutral and we have a level playing field then distortions are eliminated and investment will flow to where the highest returns can be gained consistent with risk. To put it another way the market itself will operate to incentivise investment in those areas of the economy that have the greatest potential for growth because they are providing goods and services that relate to and meet the needs of the community. 
This bill also establishes the rates of income tax for the current 2004-05 income year. These remain unaltered from those established on 1 April 2000 which is now some 4½ years ago. United Future does not support that element of the bill although consistent with our supply agreement with the Labour-led Government we will be voting for the bill as a whole. I want to make one point clear—because I know that Pansy Wong will have a crack at United Future on this issue. When United Future now or in the future—and in the future it may be with another party in this House—signs its name saying it will give confidence and supply to the Government for 3 years it actually intends to follow through on that promise. I believe that that is a very important principle that we are demonstrating because it gives certainty to business. I tell Ms Wong of the National Party in case she wants to have a crack at us on this that our stand on that is well understood by the business community and is very popular. 
To make that distinction clear however I will during the Committee stage introduce a Supplementary Order Paper that would see tax rates cut from 1 April 2005. By that date we will be past the time for a cut in income tax rates. Under a progressive taxation system if the tax threshold limits are not adjusted to take account of inflation then in real terms taxes are being increased. That is the factual position and it is really beyond dispute. I will put it another way: it means that unless the Government brings a bill into this House reducing tax rates by default it is allowing tax rates to increase. In my view the Government continues to expose itself to a certain moral hazard in that regard as those members clearly said prior to being elected to Treasury benches in 1999 that they would not having put in place the new 19.5c 33c and 39c progressive tax system thereafter increase taxes. It is becoming harder and harder for the Minister of Revenue to sustain his obscurantism and smoke and mirrors exercise in that regard. Come 1 April next year 5 years will have passed since the current rates were established. The rise in the cost of living over that period will be about 13 percent and people’s pay packets have gone up accordingly. Thousands of people therefore who previously were paying a maximum of 19.5c have now moved into the 33c bracket. Thousands of others who paid the 33c maximum are now paying 39c. 
One can when in Government fool some of the people some of the time and some of the people all of the time but Dr Cullen and the Government may yet find that even they seemingly invincible in the polls cannot fool all of the people all of the time. In United Future’s view it is time for a tax cut. 
LUAMANUVAO WINNIE LABAN (Labour—Mana) 
: 
 I have much pleasure in participating in this debate on the second reading of our Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill. I also want to thank United Future for having the vision and commitment to support our Government on this omnibus bill. The bill reflects several important themes of our Government’s tax policy work programme in the context where we are looking at measures to promote growth and innovation to simplify the tax system—especially for small businesses—to reduce compliance costs and to protect the revenue base. 
The bill will help New Zealand to compete more effectively with Australia for venture capital. It will introduce a rebate of income tax for small-business taxpayers who pay tax on their self-employed or partnership income during the first year. It introduces amendments to the legislative framework governing the resolution of disputes between taxpayers and the Inland Revenue Department to improve the process for both parties. It looks at the closing of a loophole involving the sale and leaseback of intangibles such as trademarks and newspaper mastheads. As my colleague Gordon Copeland said it sets the income tax rates that will apply for 2004-05. 
The Finance and Expenditure Committee has recommended a number of minor changes to ensure that the legislation is tightened up and operates effectively. The two Supplementary Order Papers introduced by our Minister of Finance Dr Michael Cullen concerning Australian unit trusts and the February 2004 storms were also considered. I also want to thank the chairperson Clayton Cosgrove members of our select committee and our Inland Revenue Department officials and Government officials for the hard work they have done on this bill and especially for engaging with the key stakeholders. 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 I will make just a brief comment on United Future. One of my colleagues described that party as having a bob each way; I would describe it as having a bob in every direction anyone can think of. United Future is going to vote for and against the main provisions of this bill—the main provisions being the ones by which New Zealand sets its tax rates. United Future will vote for those provisions when it votes for the Government but against them when it puts up its own Supplementary Order Paper. This is a pattern of behaviour. United Future members told Unitec that they opposed the Education (Establishment of Universities) Amendment Bill then went to a select committee yesterday and voted with the Government to make sure the bill will be jammed through before Christmas. 
Pansy Wong 
: It’s a decent party. 
Hon BILL ENGLISH 
: It is a very decent party and at least its definition of consistency aligns with Helen Clark’s definition of consistency. What United Future does not understand is that its promise to support the Government on confidence and supply guaranteed the passage of a whole series of social measures to which its voters are totally opposed. 
Gordon Copeland 
: I raise a point of order Mr Speaker. We are actually having a debate about taxation in terms of annual rates and venture capital. I do not understand what social engineering has to do with taxation. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: No no. That is not a point of order. 
Hon BILL ENGLISH 
: I think the United Future member’s reaction points to those members’ fundamental problem of how to stay relevant when they vote for a Government that does all the things they are opposed to. 
I have not been on the Finance and Expenditure Committee for some time but I see in this bill though that there is one matter on which I could have contributed some expertise—that is the section of the report that is on the use of the colon in tax legislation. I believe quite seriously that that section about the meaning of the colon in our tax legislation will have much greater impact on our tax law than all those other measures put together. I make that as a serious point. But I do struggle with the conclusion that the committee came to which raises doubts about whether its members understood the rest of the bill. We have now found out what the definition of the colon is. The reason for the use of the colon is that it is not “and” nor “or”. 
Lindsay Tisch 
: Can you explain that? 
Hon BILL ENGLISH 
: Well I will. It is an indication that the statements in the items are not linked conjunctively or disjunctively. That is what it means: it is not “and” and it is not “or”; it is a colon. Then we find that that is unique in the world. Well why do we not just get with it? Everybody else in the world uses a semicolon. We now have to follow world accounting standards and world other standards so why do we not just follow world tax law grammatical standards and settle for the semicolon? 
The only other thing in this legislation that is more important than the use of the colon is the way that it sets our tax rates. A simple phenomenon has occurred over the last 5 years. New Zealand has had a growing economy and it has also had rising inflation. A tax base is defined by the nominal size of the economy not the real size of it; as the simple number of dollars grows the tax base grows. What has happened is that Dr Cullen has kept more than his fair share of that growth in the Government bank accounts and working families and small businesses have had less than their fair share. I invite the Minister to go and look at the change in net wages over the last 5 years. I can tell the Government that its surplus and tax take have grown many times faster than net after-tax wages. How can Government members go out and say to the ordinary people of New Zealand the battlers struggling to pay their mortgages that we have had the best boom in a generation but the Government has got more than its fair share and they have got less? What should have happened is that people’s net incomes their net after-tax wages should have grown at least as fast as the Government surplus has done and they have not. 
 Now we have the ridiculous situation where the tax rates in this bill mean that when Dr Cullen wants to make a long-term investment he pays for it out of this year’s cash; when anyone else wants to make a long-term investment they have to do it the hard way because they are not allowed to keep the proceeds of their work. They have to get a mortgage—a long-term loan to match their long-term asset. That is a measure for ordinary people of how much cash Dr Cullen has. He has enough such that when he wants to make a long-term investment he pays for it out of this year’s income. While he is doing that working families are struggling to pay their interest rates and their mortgages and superannuitants are struggling to pay their rates. Working families are buying raffle tickets to pay teachers while Dr Cullen is using tax rates to collect money that he is wasting on a huge scale. 
I shall speak about my own portfolio of education in which the Government is wasting hundreds of millions of dollars. We heard an example today in the House. The Government spent $15 million on one computer course in Christchurch. Out of the 15000 people who enrolled in it 13000 never did it. There is no evidence that they did the course. That means the Government paid out $12 million for something that never happened. It told us today that it did not get 1c of the money back although it had promised the House that it would. Why does the Government believe that this House will support tax rates that allow the Government to behave in that way? It has kept much more than its fair share of the growth dividend and it is wasting it. 
It is also sitting on this cash and adopting the course of action that has come through in this debate today and that came through in the Finance and Expenditure Committee yesterday. Instead of having cuts in tax rates that treat everybody fairly and that are open transparent clear-cut and predictable it gets the cash in a pool and makes a series of targeted political decisions. For example the Minister has now decided that the centrist Labour Government should favour small business as it goes into an election year. But instead of reducing the tax rates of small business it will come up with a series of tax concessions. It will change the depreciation rates on technology. It might change the depreciation rates on other things. It might change other aspects of the tax system and the Minister has signalled some of those already. So he is turning the business of setting tax rates into a political auction. He will have a stream of people coming in and out of his office as he uses our money to dispense political favour. 
There are other detailed aspects of this bill some of which are positive but I will raise one in particular with which the Government is cleaning up another mess of its own making. I refer to the provisions that relate to the deductibility of costs for resource consents. That looks pretty desirable. This bill states that if a person spends money on a resource consent and does not get it the expense is deductible. Who is the biggest spender on a resource consent that never happened? Meridian Energy—a Government-owned company. By my estimate which is pretty rough Meridian Energy spent at least $40 million on getting a resource consent for Project Aqua which never happened. The biggest impact of this provision will be to affect the tax status of one of the Government’s biggest State-owned enterprises. That is what the provision is for. A few other little bottom-feeders out there will get some benefits as well but the Government is trying to cover up a massive waste of money by one of its own companies with an apparently obscure provision in this bill. I invite the next Government speaker to tell the House what effect this bill will have on Meridian Energy and the $40 million of expenses that it incurred for Project Aqua—a project that will never happen and for which consents were never gained. 
As my colleagues have said we will be voting against this bill because it locks in the current tax rates. Those rates have collected $34 billion in extra tax in the last 5 years and the Government has wasted a significant proportion of it. 
Dr MURIEL NEWMAN (Deputy Leader—ACT) 
: 
 I rise on behalf of the ACT party to speak on the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill. The ACT party will be voting against this bill because essentially it is legislation that allows New Zealanders to remain overtaxed. We are overtaxed. This Government is running a surplus. It is a very simple matter. If the Government took just as much as it needed we could say that it was not greedy. But we do have a greedy Government that takes far too much money from working families and is spending it essentially on trying to win the next election. We all know what it uses a lot of that money for. It is simply vote buying. 
I will start by saying that as I sat here quietly listening to this debate I found it absolutely unbelievable that United Future claims on one hand that taxes are too high in New Zealand and on the other hand will vote for this bill. It is the worst example of double standards that I have seen for a very very long time. I think it is appalling that there can be a party sitting in Parliament today agreeing with the Government to pass the laws that keep New Zealand’s tax rates too high and that then says it will campaign in the next election on lowering taxes. 
We have to remember that voters out there have a great deal of common sense and that they will look at the antics of United Future which is in cahoots with the Government and ask whether that is a party that they can trust or hold to its word. The answer is no. If on one hand one says one wants lower taxes and then votes with a Government that is keeping taxes high then clearly that is not a very clear statement from a party. 
I say to voters that we have a situation here whereby the only reason taxes are being kept high is that United Future is voting with the Government. If United Future were to do what it said and vote with the side of the House that says taxes are too high this bill would fail and New Zealand could look forward to a tax regime that is much easier to take because it would not be such a greedy regime. 
The bill reconfirms the annual tax rates in New Zealand. We have already heard in the debate that since Labour has been the Government it has taken $34 billion extra in tax. It is keeping tax rates high up there at 39c. Since Labour has been the Government we have seen a 38 percent increase in the number of working New Zealanders who now pay the top rate of tax—the number of New Zealanders who now have to pay that rate has gone up from 185000 to 255000 in spite of Helen Clark’s credit card promises when she was elected in 1999 that the top tax rate would apply only to 5 percent of New Zealanders. That rate is going up. The Government has not looked to adjust it in any way at all. United Future can talk all it likes but it is not doing anything to help so more New Zealanders are now being stung by taxes that are too high. 
The result is not the rising standard of living that we would all expect. If we look at the numbers—the growth rates—we should be seeing families who are feeling wealthier and who are more prosperous today than they were 5 years ago. But they are not. They are struggling harder. We have a situation whereby working couples can no longer choose to have one parent stay at home to raise the kids. They are both having to work because they are struggling just to get ahead—to pay the mortgage to pay the bills and just to get by. 
I say to the Labour Government that it is meant to be looking after workers in New Zealand. We have an appalling state of affairs. The surplus each year is $6 billion to $7 billion but instead of just giving it back to those families who are struggling so hard the Government keeps it as a windfall gain. We on this side of the House see all sorts of spending that we think is irresponsible—like the $21 million the Government is going to use to sell last year’s Budget. It will spend most of that next year in election year. It will be wrapped up with Labour Party branding that states: “What a great Labour Party we are—and by the way this is how your family support package is going to work.” It is an outrage that it has even been able to get away with doing that. That is a gross misuse of public money. 
I think if we cut through it all we come to this point: in the last week or so we have heard of people dying on hospital waiting lists. We have heard of emergency services in hospitals that are having to be closed down because they cannot afford to provide the health care that New Zealanders absolutely deserve. Here is a Government that is allowing that to happen on its watch—while it takes $6 billion or $7 billion extra in tax it is not able even to provide the basic services to New Zealand that New Zealanders deserve. I think it is absolutely disgraceful that that is happening under the watch of this Government that likes to say how much it cares. 
It is ridiculous really. How can we trust a Government when that sort of thing is going on? How can any New Zealander trust the Labour Government when it is allowing people to die and when it has $6 billion or $7 billion in its coffers with nowhere to go? The Government is looking for a home for the surplus—it is sitting on it and keeping it so that it can try to spend it next year to win votes to get it elected. 
I think that by next year the public of New Zealand will look at that situation and say that it is a disgrace and that this Government is too greedy by far. The public will be demanding lower taxes—as much of the Western World is demanding that taxes come down. 
Earlier on last year Treasury did a report about how we could bring taxes down to 20c in the dollar. A low flat tax would create a prosperous New Zealand and it would not cost any more than the surplus. We could leave all the other spending in place—just take the surplus and drop taxes down. Treasury did not even refer to the incentive effect that would drive this economy to growth rates we cannot even imagine. 
In Ireland the company tax rate is 10.5 percent. If a person in Europe is thinking about where to build a factory the place to go is Ireland because its tax rates are so low that they generate a whole avenue of productivity and growth. New Zealand could do that if it had the political will. 
This Government is a socialist Government. It certainly will not do it. But if we think hard about New Zealand in the future low taxes should be what we as a country should look forward to. In this bill are a whole lot of provisions about venture capital. If we had low taxes New Zealand companies would not need to look offshore to try to get money to support their new businesses. We could look internally. If families had more disposable income they would put money into venture capital funds. They would put money into saving for their retirement. They would put money into buying health care so that they did not have to trust the Government system that is being underfunded by Labour. 
ACT opposes this bill and we suggest to the Government that it should take note of some of these ideas that have been raised by the Opposition and lower taxes. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I sat on the select committee that considered the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill. It was interesting that both the National Party and the ACT party spokespeople who have spoken in the debate before me were not on the committee and know nothing about the bill. I wonder why Pansy Wong who was on the committee had to be relegated behind Bill English. It was largely because we heard that ridiculously political speech that concentrated his entire intellect on looking at the use of colons in one part of the bill. It is interesting that the once-great National Party as people have described it used to be there for business people and farming people. 
Did we hear one thing about what this bill does in respect of helping people affected by those terrible floods earlier this year? There was not a scrap. Nothing. The bill also deals with the tax treatment of replacement plantings of fruit trees and vines. Did we hear the party that used to represent rural New Zealand say anything about those good provisions? No not a thing. No wonder people in those parts of New Zealand have abandoned the National Party in such great numbers! And then the pretenders to the throne at 1 percent—who will be pretending for a very long time—the ACT party which is supposed to be here in the interests of consumers and sometimes taxpayers: did we hear anything about the improvements for new businesses starting up the discount for early payment? Did we hear any of that from Muriel Newman? No! No wonder that party is dead in the water and cannot even get its finance spokespeople to turn up and debate these sorts of issues! 
This is a good bill. It deals with a lot of issues that have been raised by taxpayers and business people in the past. One of those things was dispute resolution. I heard the submissions and I watched the work of our advisers who are from the industry and who are expert in the area. We took notice of it. The bill has been changed and it is now a very good bill. That is why United Future is supporting this legislation. It helps business the rural community and the people who make this country great and National and ACT are opposed to that. It is so sad that those parties that pretend to be here representing the interests of business the rural community and taxpayers completely fail to do so and will vote against the bill. That is shocking. That is why the ACT party is at 1 percent and dropping rapidly so that Bill English’s result will look pretty good next time. 
PANSY WONG (National) 
: 
 The Labour member Mark Gosche thinks that the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill is a good bill—so good that he took only 2 minutes to tell the public how good it is. That is all Mark Gosche had to say—2 minutes’ worth. 
National opposes this bill. We lay down a challenge to United Future which I will detail later. Since the minority Labour Government came into office in 1999 it has increased the tax take by $34 billion—$34 billion dollars’ more tax is being taken off ordinary hard-working New Zealanders. Where as Muriel Newman asked has it been spent? The hospital waiting lists get longer. Recently we heard that Wellington is the second big city to announce that the emergency clinic would no longer take night calls. People have to queue up in the hospital’s emergency department. 
Hon Bill English 
: And they have to pay. 
PANSY WONG 
: They have to pay. We also learnt that the Ministry of Health has now relaxed the criteria on the waiting time it is deemed acceptable for people to wait in the emergency departments of our hospitals. Where has that $34 billion extra tax gone to? The Labour Government announced in its latest Budget its biggest spend-up—the so-called family package. It is so complicated that nobody understands it so it has to throw another $21 million at it to promote it. But $34 billion additional tax was taken from ordinary New Zealanders. That is a big part of this bill. 
When the public looks at this legislation they may get confused. This tax grab bill was recommended to pass by a majority of members on the Finance and Expenditure Committee. It is not unanimous. When I flicked to the end of the commentary on the bill I became a bit confused because the parties holding a minority view include ACT New Zealand First and United Future and we do not support it. Where is the majority? If we are all against it where is the majority that supports the bill? But more than that United Future’s Gordon Copeland has tabled a Supplementary Order Paper to index the increase of the tax threshold. Although National does not believe that is the total answer we will make a commitment to support United Future’s Supplementary Order Paper. I know that New Zealand First will support it. I think ACT will support it and the Greens probably will. Now all that is missing is Labour’s support and I think that United Future should be able to demand that its Supplementary Order Paper be supported by Labour. Then a lot of taxpayers will get instant relief. 
Dail Jones 
: Yes. 
PANSY WONG 
: I hear from my colleague from New Zealand First that they will support United Future’s Supplementary Order Paper. In looking forward to the Committee stage and the third reading we now lay down the challenge to United Future to show that it is a decent party—a party that would represent its constituents by coming to Parliament to keep the Government honest. We look forward to seeing it vote against this “Tax Grab Bill” if Labour does not support its Supplementary Order Paper. If United Future exercises its power in this way taxpayers would not continue to be overtaxed by this “tax and spend” Labour Government which likes to redistribute hard-working New Zealanders’ hard-earned money. 
Much has been made of the big step taken in terms of the amendment relating to attracting foreign funds to invest in New Zealand’s venture capital. I do not think the public should be misled. The three groups of submitters who came before the Finance and Expenditure Committee basically represented 100 percent of the venture capital industry. They were unanimous in telling the select committee that the amendments included in this bill were not worth the paper they were written on. I quote from New Zealand Venture Investment Fund Ltd: “In summary the tax changes proposed in the April tax bill will not attract the targeted offshore investors because the eligibility criteria are too restrictive.” 
New Zealand Venture Investment Fund Ltd has taken a very responsible step. It went out and surveyed nine substantial foreign fund investors and gauged their opinions on whether the amendments included in this tax bill would lead them to invest in New Zealand. I am afraid the answer is that these amendments are far too narrow and restrictive. They spelt out the most effective approach to ensure that foreign investors would be interested to invest in New Zealand. They said that the amendments would have to contain certain features. For example a tax-exempt status was needed for offshore investors who invest in New Zealand ventures through appropriate venture capital investment vehicles regardless of their domestic tax status. That is not included in this bill. The types of mechanisms they are looking for are a new limited partnership vehicle and mutual recognition between Australia and New Zealand of partnership structure and tax structure. I am afraid that as usual the minority Labour Government is all light and no heat. It continues to waste the time of Parliament by passing legislation that feels good but that in substance will not do much. 
We do not have much of a problem with the Government introducing the amendment to close down the so-called loophole in respect of Australian unit trusts. However we do think it is a problem that the Government is once again having a knee-jerk reaction and is not at the same time tackling the same issue in respect of Britain. I quote a salient point that was made by the submitter: “Ultimately the existence of investors looking for mechanisms such as the Australian unit trust was because of the tax regime in New Zealand. While New Zealand continued to tax the pool investment fund at 33 percent our investors will be looking at loopholes and setting up vehicles to do that.” Instead of taking up the opportunity to make New Zealand competitive we are debating piecemeal legislation that has the effect of plugging one hole with another one opening up very soon somewhere else because of the underlying principle that New Zealand investors are being overtaxed. 
DARREN HUGHES (Labour—Otaki) 
: 
 I rise to take a very brief call to support the second reading of this bill. The thing I find interesting having listened to Dr Cullen the Minister of Revenue and Minister of Finance explain why the tax rates will be set at these levels and what the effects of this bill will be is the absolute crocodile tears from National Party members who will oppose this bill but have not told us what tax rates they would like to see put in place. Despite having all these calls in the debate they have not told us nor disclosed to the public what tax rates they would put in place. The public knows by the passage of this bill the tax rates that the Labour-Progressive Government will be setting for the coming year. They know what we will do with their money. We will provide strong public services for our communities and for our families which is very important in terms of securing fairness and opportunity for ordinary New Zealanders. All we know from the National Party is that it would slash taxes for its rich mates and cut public services for ordinary Kiwis. 
A party vote was called for on the question  
That the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill be now read a second time. 
Ayes 62 
New Zealand Labour 51; United Future 8; Progressive 2; Maori Party 1. 
Noes 55 
New Zealand National 27; New Zealand First 13; Green Party 9; ACT New Zealand 6. 
Bill read a second time. 
Parental Leave and Employment Protection Amendment Bill 
Second Reading 
Debate resumed from 19 October. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 New Zealand First is determined to make some amendments to this bill. My colleague Bill Gudgeon has a Supplementary Order Paper which provides for self-employed women to receive paid parental leave. We say that it is totally unfair that this bill should apply only to employed people. I notice that United Future was sympathetic to that amendment and I know that the Greens are sympathetic but they say that it would take too long and could not be done in the time frame of this bill. 
I asked Jeanette Fitzsimons afterwards and she was quite genuine about it and said we need a definition of a self-employed person. Well New Zealand First has fixed it! We have a definition. It took us all of 5 minutes but we have got it. In the Committee stage we will put forward a Supplementary Order Paper in my name which defines a self-employed person. I take this opportunity to read it out: “For the purposes of this Act a self-employed person is a person whose work routine and time frame are usually not controlled and who may hire others to do the work. They are seldom paid at a set rate e.g. hourly weekly or by units of production and do not work set hours or a given number of hours each week or month. Those contracting them do not pay them sick pay holiday pay overtime or penal rates.” New Zealand First thinks that is a good definition. We know that it is acceptable because the Inland Revenue Department operates to that definition of a self-employed person. As that department will pay out for this provision we think it is only common sense that the same definition should apply to those who collect the money and to those who pay it out. 
So I look forward to total support from the Greens because this amendment is in response to Jeanette Fitzsimons’ comment and to total support from United Future. United Future says it is a family-based party and it has made a lot of noise about self-employed workers so I am very confident of its support. I am sure the National Party will support such an amendment. I am very very confident that when this bill has gone through the Committee stage it will come out providing for paid parental leave for self-employed people and this Parliament will have achieved something that the Government members only dreamt about. New Zealand First will have fixed it. 
A party vote was called for on the question  
That the amendments recommended by the Social Services Committee by majority be agreed to. 
Ayes 84 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 33 
New Zealand National 27; ACT New Zealand 6. 
Question agreed to. 
A party vote was called for on the question  
That the Parental Leave and Employment Protection Amendment Bill be now read a second time. 
Ayes 84 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 33 
New Zealand National 27; ACT New Zealand 6. 
Bill read a second time. 
Care of Children Bill 
Second Reading 
Hon DAVID BENSON-POPE (Associate Minister of Justice) 
: 
 I move  
That the Care of Children Bill be now read a second time 
. This bill repeals and replaces the Guardianship Act 1968. It is nearly 36 year since the Guardianship Act became law and that Act has not kept pace with the change in diversity of this country’s families and equally attitudes towards children have changed significantly. This new legislation will affect the lives of many New Zealand families. 
 I would like to begin by thanking the Justice and Electoral Committee for its valuable contributions towards improving the bill including a number of recommended amendments that are detailed in the commentary. I acknowledge the presence of Mr Tim Barnett my colleague and the chair of that committee in the House today. I would also like to acknowledge and thank my colleagues Margaret Wilson and Lianne Dalziel for their work in the past in advancing these most important reforms. 
Family break-ups affect many New Zealanders directly and indirectly and children are particularly affected. Research has shown that children can be remarkably resilient to change but the long-term effects of unchecked conflict between separating parents are not so easily shrugged off. Too often the bitterness between separating parents can prevent them from reaching agreement over sensible and enduring care arrangements for their children. The Care of Children Bill will encourage parents to focus on the best interests and welfare of their children and will emphasise the ongoing role that both parents as guardians have in a child’s upbringing. How the parenting roles change will depend on the family’s individual circumstances. 
The bill make it clear that a parent who is a guardian of a child continues to have the authority and responsibilities of a guardian whether or not she or he lives with the child. The Justice and Electoral Committee has helpfully made a number of amendments that highlight that guardianship responsibilities should be exercised jointly involving consultation aimed at reaching agreement. The bill also provides some examples of the role of the guardian to clarify the sorts of decisions both parents as guardians should be involved in. For example both guardians should have a role in deciding a child’s name where a child lives and its medical treatment education religion culture and language. The list remains open-ended so that guardianship remains a flexible concept able to respond to different and varied approaches to parenting. 
Clause 4 states the cornerstone principle which is that the welfare and best interests of the child must be the first and paramount consideration in decisions made under the Act. This recognises that each child is different and any decisions made must take into account that child’s welfare and best interests. The Justice and Electoral Committee reaffirmed the importance of this principle and has included a set of principles to assist in determining what is in a particular child’s welfare and best interests. This set of principles in clause 4A does not prevent other matters from being taken into account and all are ultimately subsidiary to the paramountcy principle. 
Research has shown that extended periods of parental conflict and uncertainty have lasting effects on children. The committee has therefore elevated the importance of decisions being made within a time frame that accords with the child’s sense of time. Resolving care arrangements with this in mind is much more likely to minimise the detrimental effects on children. 
The bill also strengthens the existing requirement that a child must be given a chance to express his or her views in proceedings. As children mature they should have increasing opportunities for a role in decision making about things that affect them including decisions about where and with whom they live. 
Too often children are caught in a tug of war between estranged parents each seeking exclusive custody of the child in a win-lose scenario. In this bill the old custody and access orders are replaced with parenting orders. There are two reasons for this change. First many people see the current terminology as treating children as a commodity—an outdated approach that is at odds with the rise of children as participants in rather than the subjects of proceedings. The second reason is to change attitudes about the relationship of parents to their children and to place greater emphasis on the responsibilities parents have for children in their care. The worst symptom perhaps of the current split between access and custody orders is that many people wrongly assume that a parent who does not have custody is excluded from other parenting and guardianship decisions about his or her child. A parenting order will set out the times during which specified persons will either have a role of providing day-to-day care of a child or have contact with that child. The wide variety of care arrangements can be covered in parenting orders and the bill explicitly acknowledges that the day-to-day care responsibilities for a child may be shared. 
The select committee has made some useful amendments to deal with interim parenting orders. Such orders sometimes mean an indefinite break in a relationship between parent and child. The new clause 51A sets down some rules that will hopefully encourage parties to seek final orders sooner and minimise the risk of healthy parent-child relationships being damaged. A number of other changes are proposed to better reflect the reality and variety of family relationships in New Zealand today. The bill also removes some unfair distinctions between married and unmarried fathers by recognising their position as a guardian although if the father has not been in a relationship with the mother it would be up to him to actively seek guardianship status. 
There has been a great deal of public debate about the privacy or openness of Family Court proceedings not all of which has been constructive particularly the misleading assertions that Family Court judges operate in a “secret” court. Clause 130 will enable people who have participated in any earlier Family Court counselling or mediation to attend subsequent hearings. The Justice and Electoral Committee also considered the benefit of media attendance and permitting other support persons to attend with the permission of the presiding judge. The Government supports the resulting amendments to clause 129 which allow accredited news media to attend Family Court hearings as of right and allow support people to attend with the judge’s permission. The Government will closely monitor the impact of these changes on matters such as accommodation and security. 
In a similar vein clause 131 permits wider publication of reports about guardianship proceedings while ensuring that the families involved cannot be identified. I also intend to promote a Supplementary Order Paper that will amend clause 131 to permit fuller reporting of care of children cases in professional publications such as law reports. I hope this will lead to better understanding of the Family Court’s decisions. 
Where parents bring children from previous relationships into a new relationship a new partner who is providing day-to-day care of the parent’s child sometimes faces difficulties because he or she is not a legal guardian of the child. The bill enables each parent to appoint with the agreement of the other parent and guardians one new partner as an additional guardian for a child. The bill also includes numerous safeguards to avoid appointments of people who may pose a risk to the child or in family situations that are too complex. Contrary to criticism this new appointment process actually empowers parents and guardians to extend the group of adults with legal care responsibilities for a child. The committee has also made some helpful amendments to the process of appointing additional guardians such as broadening the types of criminal offences that exclude a person from being appointed and requiring the intending additional guardian to provide a copy of his or her criminal record. 
Clause 37 re-enacts law that has been in place and worked well since 1977 and makes no change to the existing law. A number of organisations with expertise in adolescent health issues have voiced their strong support for retention of this provision. Those organisations include the Royal New Zealand College of General Practitioners the New Zealand Medical Association Unicef New Zealand and the Family Planning Association. It is important that clause 37 is retained to offer a protection to some of our more vulnerable young women. The inevitable consequence of any proposed amendments involving parental notification is that some of those young women might be forced either to have abortions or to continue a pregnancy against their own wishes. For the majority of pregnant young women the love and support of their parents and families will be an important factor when faced with decisions about their pregnancy. However it is a fact that some young women do not live in such a supportive environment and may be placed in danger if without their consent their parents or guardians are notified of a pregnancy or of the intent to seek an abortion. Research consistently shows that confidential health services for adolescents are an essential ingredient for improving their sexual and reproductive health. 
For parents who do not have day-to-day care of their children maintaining contact can be difficult. In some cases involving violence the judge may direct that that contact be supervised. Clause 56 provides that the Government will fund fees for approved supervised contact between providers where a court has ordered that there can be only formal supervised contact between a parent and child because of violence. The bill also provides an enhanced framework for making court orders work addressing concerns about how Family Court decisions are enforced. Clauses 50 and 57 to 69 focus on preventing disputes arising facilitating early resolution and if required enforcement. When making a parenting order the court will be required to specify the obligations that the order creates and ensure that the possible consequences of contravention are made clear. A similar obligation is placed on the representatives of parties to the order and any child affected by it. If a parenting order appears to have been contravened and the parties cannot resolve the dispute unassisted they will have the option of requesting further counselling from a Family Court registrar to facilitate resolution. 
The select committee made some useful amendments to clauses 64 and 65 also to help the execution of warrants in situations where a child is to be collected and returned to another person. I propose to augment those amendments through a Supplementary Order Paper that will give police the power to arrest a person for resisting the execution of such a warrant. 
There is also a useful amendment to the Status of Children Act that will remove barriers for men seeking court orders about paternity. On a related subject the committee has amended the legislation to give courts the power to recommend buccal samples are provided to help determine parentage. I hope the prospect of providing buccal samples will be less distressing for parents and children than the provision of a blood sample. 
The bill also includes a range of changes to the law some big and some small but all with the purpose of improving the situation for children and their families. I am delighted to recommend the bill to the House. 
JUDITH COLLINS (National—Clevedon) 
: 
 A bill of this nature is one that would normally be expected to have the support of every party in this House. This particular bill however has the support from the select committee of the Greens and the Labour members. It was my privilege to be one of the members of the Justice and Electoral Committee which held the hearings on this bill. 
I take this opportunity to mention and pay tribute to some of the members of that committee. Certainly I will start with the chairman Mr Tim Barnett. He was a very good chairman and he dealt with this matter—which is a very sensitive matter and was very emotional for a lot of the people who came to the select committee—in a very kind and caring way. Mr Stephen Franks was the deputy chair and Lianne Dalziel Russell Fairbrother Dave Hereora Dail Jones Moana Mackey Murray Smith Nandor Tanczos and Richard Worth were all members of the committee for the purposes of this bill. 
When I read out that list members might have noticed that several lawyers are on it. Actually only three of us have any experience working as lawyers in the Family Court and they are Mr Dail Jones Mr Murray Smith and myself. I think we are the only lawyers in this Parliament who have had any experience working in the Family Court and it is very interesting that not one of us supports this legislation. Perhaps that is because we happen to have had a bit of a taste of life and have had dealings with people who are extremely distressed and do all sorts of silly things to themselves their families and their children because they are hurting so. 
Parts of this bill are very good and I am really pleased that an effort is being made to open up the Family Court. The Family Court is a secret court. It is however a court where some very very good people are working particularly the Family Court judges. Over the years I have found Family Court judges to be in the main extremely caring and kind people who are very sensible and do not like to see people using their children to beat up on their former life partner and they have been greatly assisted by the appointment of Judge Peter Boshier as Chief Family Court Judge. He had a reputation of trying to have as open a court as possible when he was sitting as a Family Court judge rather than Chief Family Court Judge. Frankly it is refreshing that a new person will bring in new ideas and openness. He has been very open to opening the Family Court. 
One concern that I certainly have in relation to the opening proposed in this particular bill is that relating to accredited media. I am very concerned that we have a term like “accredited” in relation to the media. The media should be accepted warts and all in my opinion. They do have a role that is incredibly important to a democracy. Sometimes we do not like everything they do. Sometimes we do like everything they do but mostly we do not. Having said that I have to say that I think that having a media person present and able to report what has happened in the court without actually naming names—without letting people know who is involved—adds a whole lot of credibility to the Family Court and its processes. To say that the media have to be accredited concerns me. If a media person a journalist happens to report a proceeding and in that report is critical of the judge’s decision or of something else that happens in the court then that person could be under the threat—in his or her mind anyway—of being thrown out and not allowed to report Family Court proceedings. That is a concern I have in relation to the bill. 
One of the problems with the Family Court is that people expect the court to solve their problems. The Family Court can never solve people’s problems. All that the Family Court can ever do is to try to help people through a process so that they can solve their own problems. For some people that will never happen and unfortunately it is their children who lose every single time. It is well known in this House that Ms Dalziel and I are not always the closest of friends. Having said that I noticed all the way through that we did agree on one thing—and that is what we thought about parents who use their children to beat up on each other. Certainly we agreed in that area. Some of the things we thought should happen to such people would never be able to be put into this bill—they are probably against the law. 
Having commented on some of the things about the bill that are good I want to point out that some things about it are bad. It is bad that guardianship will now be so easy to get. The current situation requires that for someone to be appointed a guardian there needs to be a hearing of the Family Court. Papers and affidavits need to be filed and people need to be investigated to a degree. The process being promoted in this bill is that a parent can appoint as a guardian a short-term—as in 1 year—partner of that parent simply by completing a form and registering that form with the court registrar. No one else gets to look. That is a huge concern to me. The obligations and responsibilities of a guardian which are incredibly similar in law to those of a parent should never be taken lightly. For someone simply to be able to fill out a form and get that position is downgrading the role of guardians and it is downgrading the role of parents. Parenthood and guardianship are extremely important and should never be left to the whim of people who think that just because someone happens to have been living with them for 1 year that will turn them into happy families. It will not. It never does. Children have never been able to turn things into happy families. Children are themselves and are simply part of families no matter what the rest of the family looks like or acts like. 
This bill is predicated on a view that the current law the Guardianship Act does not reflect families as they are today. That is bunkum. It is wrong because families have always been mixed. It has always been a fact that they have not performed to  
The Brady Bunch 
 ideal. In fact  
The Brady Bunch 
 ideal was not the ideal either. This bill starts off on a PC bandwagon—the PC bandwagon of saying: “We’re going to have to change it.” We know what this bill is all about. There are some quite good things in it but mostly it is about making it easier for people to become guardians for taking away concepts of custody and replacing them with terms like “day-to-day care” which reduce parenthood and guardianship down to a level slightly less than a caregiver in a childcare centre. Yes custody does imply a sort of ownership and that is because parents have rights and responsibilities in relation to children. A parent will say: “Yes my husband and I are in charge of our child. Yes we do make decisions for our child. We don’t just provide day-to-day care.” We cannot do that as a parent—we cannot say as in this particular provision: “Oh this is great because as the Minister said more people can now be responsible.” Responsibility by committee means that nobody is responsible for a child and that is one of the biggest problems for children in this country. So many people are interested but who is responsible? My answer is that mum and dad are responsible or their legally appointed guardian is if they are not there. That is who it must be. Certainly wider whanauainga family must be there too but all children are born with a mum and a dad somewhere and it is those people who must have the primary responsibility for their children. If they do not nobody eventually will be responsible. 
So unfortunately I do not feel able to support this bill. Unfortunately it contains too many provisions. I have not even dealt with the provision dealing with consent to medical procedures because I will deal with it more fully in the Committee stage. This bill could have been something we could have supported—if the Government had listened to us. But unfortunately the Government has not listened to those of us who have been family lawyers and have had actual experience—Mr Smith Mr Jones and myself. 
TIM BARNETT (Labour—Christchurch Central) 
: 
 At the last three general elections fathers’ groups in Christchurch have called meetings of local candidates from different parties where they have berated us for our failure collectively to reform the guardianship law. So I was proud to be chair of the Justice and Electoral Committee that was able finally to handle this matter—a matter that had been left for a long time. I am proud to be part of a Government that bit the bullet and it was great to be part of a select committee that succeeded in making what I think are a lot of positive and constructive changes to this legislation. 
The committee as reported in the commentary on the bill had the bill for 1 year. It received 277 submissions and it heard 102 of them over a period of 38 hours. We were also extremely fortunate to be sitting at the time when Judge Mahoney the Principal Family Court Judge retired. We heard from him both before and after he retired. The new judge Judge Boshier took over. We heard from him as well and saw some of the subtle differences in terms of his approach. But both those eminent people from our judicial profession were able to influence the shape of the legislation. 
 We considered the bill for a further 34 hours which gives the House some idea of the detail into which we went. I want very quickly to trace some of the changes and I reiterate that at all times we returned to that key phrase and that key question: what will best meet the welfare and best interests of the child? 
We looked at the purpose of the bill. We strengthened it around the area of children’s rights. We added in guiding principles to give the courts some guidance when making those crucial decisions. We led on the issue of openness of Family Court proceedings and I am sure that that will be built on in time to come. We looked at the area of parenting orders and we focused very strongly on mechanisms to ensure voluntary agreement between parents. We added in access to counselling for disputes and we added in the bonding system. 
We heard from many submitters about the pain caused by endless delays in the area of interim orders. We set time frames in order to ensure that the decision about whether the final order should or should not be put in was made sooner rather than later. 
We added new elements to the definition of “guardianship”. We looked at the process of appointment of additional guardians which was referred to by Judith Collins and we added in a series of checks on convictions and a time element to try to make sure that at least some guarantees were in place. 
The themes of all those changes I think were children-centred and came back the whole time to the issue of the welfare and best interests of the child. Caution and conciliation were the two themes we followed. Judith Collins began her comments with the polemic statement that these are issues on which one should get cross-party agreement but that that was not possible. The reality is that there actually was cross-party agreement on an awful lot of what is in the legislation and on the changes that were needed. 
It is also great as a select committee chairperson to report that we could point in nearly all those changes to submitters who had actually put forward those proposals. We were taking the evidence of people on the ground and reflecting them in the legislation. 
There are three more issues to mention. One is the issue of shared parenting. There was a section on that matter in the commentary on the bill. I would have liked us to have fuller debate on that one. It was an issue we could return to only occasionally and unfortunately one of its most incessant proponents had a bit of an absence during parts of the select committee process for other very genuine reasons. But I think that that debate is one that will continue. 
Secondly regarding the phrases “day-to-day care” and “contact” I can tell members that we agonised over whether we could think of better language for that and we ended up keeping what is in the legislation. Again that debate may be returned to later. 
The very last point is that of consent to abortion. I want to read out one sentence from the commentary that was agreed to by all parties on the committee: “Although the submissions we received contained many opinions about the clause we did not receive any evidence of the provision being abused even though it has been operative for 27 years.” Every party on the committee supported that wording I have just read out. 
I would like to thank the other members of the committee—those who were there just for this legislation and also our regular members who did actually include a fourth lawyer not mentioned by Judith Collins: Russell Fairbrother. He has some experience in these matters as well. I also thank our excellent and devoted officials who kept us going through those many hours. 
I would like to say that although we are bound to debate some of the issues in this legislation it is great and it makes a once-in-a-generation change to a fundamental area facing lots of people’s lives. This has been an excellent opportunity to make the legislation even better. I commend the bill to the House. 
DAIL JONES (NZ First) 
: 
 I join with the Labour Party member Tim Barnett the chairman of our select committee in thanking the officials for all the work they did on this bill. We worked under a degree of pressure from the public and we put the officials under considerable pressure from time to time no less from me from time to time and I do appreciate all the effort and assistance they gave the Justice and Electoral Committee. 
New Zealand First will oppose this bill as we have done from the very beginning. It is one of those very politically correct pieces of legislation that is meant to be a showcase but actually does nothing at all. The present legislation would still be far superior—other than in respect of the openness of the courts—than is this particular bill. Members will recall that when this bill was first introduced into the House we had that politically correct clause 17(2) which would have had the effect of permitting a lesbian to be referred to as “the father of a child”. That was never going to be a great start for this legislation and of course the select committee had no trouble in getting rid of that subclause. The Labour Party had to concede that it was wrong there as it has been wrong throughout this bill. 
Unfortunately of course we were not able to remove all types of wording in that fashion. I refer members to page 118 of the bill—a bar 2 copy—where we have a similar type of wording for the procedure referred to there. Clause 167 inserts new Part 2 and I am reading from section 14(2) which states: “A woman who is not the birth mother of a child but who by operation of this Part”—an artificial human reproduction procedure—“is a parent of the child must … be treated … in the same manner as the father of … the child.” So we still have a provision in this bill where a mother is treated as a father. Really that is absolute nonsense. 
The Auckland District Law Society subcommittee requested the deletion of the words “the father of” but this Labour Government did not do that. It is quite a simple amendment but no the Labour Party with all its resources still has this provision that a woman a mother through an artificial human reproductive procedure ends up as the father of the child. I am reminded of the words of the Prime Minister of Italy in referring to a certain group as being anthropologically diverse from the rest of humanity. Well I would suggest that a mother who in these circumstances is a father must certainly be anthropologically diverse from the rest of humanity and the Labour Party must take all the credit for creating a new type of person in New Zealand. That was one amendment that could have been made with all the resources of the Labour Party but it was not which highlights the ridiculous nature of this legislation and the careless way in which the Labour Party has approached it. 
Of course if this Government were serious about doing something for all those fathers in distress that Mr Barnett referred to it would have done something more than is contained in this bill. It would have taken the domestic violence legislation and incorporated it into this one bill so that we would have had one item of legislation for children who are at risk rather than having fathers who care for their children but do not get custody of their children having to refer to domestic violence legislation on the one hand and this bill on the other hand. There are contradictions between the two which is always regrettable because of the rush in which these things are done by the courts and that works against fathers. Efforts were made to try to improve this bill but this select committee really should have done as New Zealand First wanted—that is it should have looked at the domestic violence procedures within the context of the Care of Children Bill. Without that there was really no point in undertaking this legislation at all because that was the real defect in our society and it still remains the real defect. 
That has been done before in 1981 or 1982 when I was in this House. When I was chairperson in 1982 of a similar committee there was a bill from 1981 that partially looked at the issues of domestic violence and non-molestation orders. We decided that they should be put together. We came back to the House in 1982 sought a recommendation of the House that those issues should be taken together the House gave us that approval and we went back to the select committee and incorporated them into legislation. Now in this time and 22 years later with all the resources available to this Government and with its so-called desire to improve the situation the Government should have taken a similar step at the very beginning and incorporated domestic violence legislation as part of this bill. It should have done that if it had any sincerity about the opening words it had in referring to the bill’s introduction. The Government said that it was introducing this bill so that it could “more effectively promote the interests of children and satisfy the needs of all New Zealand families.” Well this bill does not do that. It fails on that very score alone which is the most important one. 
If one is a father or mother and wants to have things resolved the present situation will still continue when applications are made to the Family Court. The Family Court judge will be put under incredible pressure by the wording of an affidavit that is not substantiated in any way at all. I know from practice having acted for fathers and having had to deal with such affidavits from mothers that it is a total failure when it is decided to oppose those in court. I had one case in particular where the judge said halfway through the case: “Look Madam”—because I cannot name the person—“this case does not stand up.” and the case was thrown out halfway through the defended procedure. The courts will still have that problem today. Fathers will be no better off through this Labour Party legislation and more particularly children will be no better off than they have been before as a result of this legislation. 
There is a bit of window dressing here and a bit of window dressing there and New Zealand First tried hard to improve the bill and make suggestions. I appreciate that from time to time the Labour Party accepted those suggestions. As Martyn Finlay a former Labour Minister of Justice used to say— 
Simon Power 
: Oh that’s going back a bit. 
DAIL JONES 
: It is going back a bit but some of us remember these things—it is the duty of an Opposition not only to oppose but also to propose. That is what I enjoy doing at the select committee. 
Darren Hughes 
: What did Peter Fraser tell the member? 
DAIL JONES 
: No I was not here when Peter Fraser was here. I did not even have his picture on the wall so the member can rest assured on that. So that is the duty of an Opposition and that is what we try to do in New Zealand First. If we cannot fix it entirely we still make a go of fixing it partially—if we can. That is perhaps what we did in that select committee. 
But generally speaking that is the crucial failure of this legislation. There have been words changed—parenting orders day-to-day care and such like—but as Judge Mahoney said when he gave evidence before the committee just changing names does not change anything. The same problems continue which is what Judge Mahoney made quite clear. If it is a custody order today or an access order today calling it a parenting order tomorrow does not change it terribly much. It looks nice and it is the sort of window dressing that this politically correct Labour Party likes but that party does not understand what is happening on the floor of the Family Court—as National member Judith Collins said. Those of us who have appeared in the Family Court know that names do not really matter at all. The court is dealing with children in the main and I am mostly concerned in this legislation about custody and access-type cases or parenting cases. But it is the children who matter; and the children who lose access to their fathers today will continue to lose access to their fathers as a result of this bill. It will do nothing to improve their situation at all. 
I appreciate the work done by Barnados and others in very difficult circumstances. They are given the buck to carry as a result of the problems in our society today and what they do is greatly appreciated by me and I am sure by everyone. But they know the strains that exist in the courts and everyone involved in those courts will know the failing of this Government with regard to this legislation. 
It is good to see the opening up of the courts and Dr Muriel Newman has made quite a name for herself in that respect. Some congratulations are due to her for persisting with that effort. I suspect that she is not satisfied yet and possibly never will be but we will hear about that shortly. But clearly there is an improvement in that respect in this bill. 
Finally as far as clause 37 is concerned I tell members that I voted against it in 1977. 
Moana Mackey 
: Really? 
DAIL JONES 
: I did. I checked the records. I voted against clause 37 in 1977 and I will vote against it again today tomorrow and the next day. If Judith Collins’ amendment goes through the House which I will support I will then obviously have a different view of clause 37. But it is odd that under clauses 35 and 36 the parents of children have to be notified if certain things go wrong with them but under clause 37 the parents of children are not notified if things go wrong. That is totally inconsistent and makes an absolute nonsense of the provisions of clause 37. New Zealand First will be voting on clause 37 and on Judith Collins’ amendment according to their consciences. 
METIRIA TUREI (Green) 
: 
 The Greens are fully in support of this bill and are pleased to see that it has finally made it back to the House for its second reading. Firstly I want to thank the Justice and Electoral Committee staff and the officials for all their hard work during the hearings of this bill and particularly during the submission process. The committee worked very hard for a long period of time. I also thank the members of the committee. Together we worked very hard and very well. I acknowledge the chair who managed the committee with a real sense of cooperation rather than conflict despite some of the more obvious difficulties. 
The bill assists members of a family that suffers a break-up that cannot otherwise be amicably resolved. About 90 percent of families that for some reason or another do break down are able to resolve their issues without recourse to the courts. But in that small percentage of cases where families do need some assistance this bill will give them better access to justice for all the members of that family—the child and the adults who surround that child including not just the parents but also the wider whanau who are integral to that child’s life. The Greens are very pleased to see that the emphasis of the bill is on the best interests and welfare of the child as the first and paramount consideration. It is absolutely critical that the children’s interests highly influence the decisions of the court. 
We are also very pleased to see the inclusion of a set of principles in the bill which will help to guide not just the courts but also the lawyers counsellors and the families and parties that need to use the provisions of the bill. The inclusion of a set of principles was strongly supported by a number of submitters particularly those who advocate for children’s rights. These principles give weight to the importance of the parents’ relationship to the child but without imposing specific obligations on the courts to require the child to have prescribed relationships. This approach is critical because family relationships are dynamic and children’s needs change over time. One size does not fit all I guess. 
Some argued in the select committee that an ongoing relationship with the biological parents was absolutely imperative and should be prescribed in some way by the legislation. In my view as a parent these relationships are critical but when a family is in a period of breakdown it is counter-intuitive for the law to prescribe how those relationships should be managed. It only creates more conflict. In fact the process should be open to the variety of relationships that the child needs in order to feel supported in his or her life and where possible to keep open the opportunities for ongoing relationships in the future. That is not a prescription; it is a way to provide a process and an opportunity for all of the people in the child’s life to be involved. 
Particularly in a break-up situation a child may at times have a much closer and more interdependent relationship with other members of the family at the time of the break-up for example grandparents or aunties. In those circumstances it may be in a child’s best interests that those relationships are given greater emphasis—at least for a period of time. 
The Greens are very pleased that the principles in clause 4 do not emphasise specific relationships as such but the continuity and stability of arrangements for the child the ongoing cooperation between the adults in the child’s life the impact and value of the broader whanau hapu and iwi of the child and the child’s identity and language. We think that this really will help to focus the parties and the courts on what is important for the child’s well-being as much as for the adults and their relationship. 
The Greens do not support the amendment that Judith Collins has suggested to clause 37 regarding the consent for abortion. I listened very carefully to the submissions from experts in that field during the select committee process—medical practitioners and people who were involved in counselling and family planning. I and the Greens are confident that the current law along with the experience and practice of the medical practitioners strongly supports young women to advise their parents and ensures that they do have the support they need if a young woman for whatever reason chooses not to tell her parents about her situation. 
The Greens agree that mandatory notification could put these young women off getting assistance during pregnancy and that the consequences of increased young and solo parents and of dangerous and illegal abortions are too high. The Greens support the current situation and will not support any changes to the existing legal framework. 
The bill explicitly addresses concerns raised by many fathers in New Zealand that the Family Court is biased against them. Many fathers made submissions on this issue but after hearing the arguments the Greens consider that the bill meets many of the needs of fathers. It does that firstly by expressly stating that it cannot be presumed that placing the child in the day-to-day care of a particular person will because of that person’s sex best serve the welfare and interests of the child. Secondly it does so by providing that a biological father will be a guardian automatically if he is married to or living with the child’s mother at any time from conception to birth or if his name is on the birth certificate of this child with his and the mother’s consent. I know of many examples among my personal friends for whom this will provide the protection they need to ensure that they are able as fathers to be active participants in their child’s life. The Greens consider that these are very good provisions in the bill and provide a protection that fathers have talked about needing. 
We are also very pleased that the bill will treat same-sex couples in the same way that it treats heterosexual couples. For example guardianship for 16 to 18-year-olds will end if the parents have consented to a de facto relationship—the definition of which includes same-sex relationships. The bill provides for same-sex couples to have access to relationship counselling in the Family Court which is a service that the current legislation excludes them from. Of course the bill also amends the Status of Children Act so that when a child is conceived using assisted reproductive techniques with the consent of her partner the partner of the birth mother is deemed to be a legal parent of the child. That provision includes de facto and same-sex partners. Under the current law same-sex partners must seek guardianship through the Family Court if they want to legally clarify their parental responsibilities. That can be particularly unjust when a same-sex couple has raised children together for some time with each partner equally committed to the role of parent—a role that the current law fails to recognise. I am very pleased to see that those provisions have remained in the bill. 
The current Guardianship Act is tightly focused on the traditional nuclear family. In our view that is simply not appropriate in an increasingly diverse multi-ethnic society. 
One of the other issues that we also support is the increased openness of the courts. This is a very sensitive area because the courts do not deal with the kinds of public interest matters that perhaps a criminal or even a civil court might have but with very intense personal issues. We were very concerned to ensure that any opening of the courts was careful and cautious. We consider that the provisions of the bill provide a careful and cautious approach to openness. We think it will help to deflect criticism against the court for being too closed and secretive and provide much better information to users of the court to assist them in dealing with the issues through the processes. 
Finally the Greens are very pleased that the bill recognises the diversity of families that exist in this country and ensures that the best interests of the child guide the courts’ recognition of the responsibilities of the adults who surround the child. Those adults may be the child’s biological parents but not necessarily. They may also be the step-parents same-sex parents grandparents and other near relatives. It is crucial that the close adults in the child’s life are clear about their respective responsibilities and that those responsibilities are truly reflected in the reality of the child’s relationships with those adults. No law that attempts to mend the damage from the breakdown of a family will fit each family’s circumstances perfectly but in our view this bill at least recognises the realities of children’s lives and the diversities of the families in which they live. 
Dr MURIEL NEWMAN (Deputy Leader—ACT) 
: 
 I rise on behalf of ACT to speak on this Care of Children Bill. I have to say that it is with a great deal of sadness that I take this call. This bill was Labour’s promise to provide justice for children whose families have separated and it has failed to deliver on that promise in spite of assurances made in this House over the last 5 years. We all know that in general children with a mum and a dad overwhelmingly do better than children who do not have access to both their parents—that includes those who have grandparents and wider family members to support them. But at the moment in New Zealand today we have a family law system that ensures that if a family separates then all too often a child is left without an ongoing relationship with his or her non-custodial parent—which overwhelmingly is the father. 
I think it is a chilling fact that more children today lose a father every 3 months in New Zealand because of separation and divorce than lost a father during the entire period of the Second World War. We are perpetrating fatherlessness in this country on a grand scale. It is a tragedy that this Government has not seen fit to do anything at all to turn that situation around. 
I feel that of all the bills I have had to speak on during the time Labour has been in power this one is the most shameful. Here we have a piece of law that will simply carry on the problem. The Labour Government will give all these assurances that the Care of Children Bill will make the situation better but when we read the fine print we see there is no change to the fundamental incentives in our family law that ensure children lose a father on a daily basis. Given all the research that tells us of the effects of fatherlessness on children it is simply a shameful situation in which this Government has failed to act. 
I get quite worked up about these issues because I have brought into this Parliament three member’s bills that have tried to deal with these issues. Each time the Labour Government has refused even to send the bills to a select committee because it has said to this House that it will deal with these issues in its Care of Children Bill. The reality is that it has failed to take on board the heart of these issues. It has failed to take the difficult stances that would mean we could actually make a real difference in this area of social legislation. 
Although I pay tribute the chairman of the Justice and Electoral Committee Tim Barnett who I believe genuinely did his best to try to address some of these issues the point is that he had a Government or a Minister that would not play ball and a Minister who was ideologically opposed to some of the issues that I certainly have been trying to raise. 
The chairman in his contribution said that he—and probably every member in this House—had been moved by the fathers’ groups that had approached him. The fathers’ groups wanted the Government to pass legislation that would not leave them alienated denied access to their children and marginalised as a result. Unfortunately for those fathers’ groups they will hear lots of assurances that things will be better but the reality is that this bill will do nothing to address their desires. 
This bill is Labour’s response to calls to introduce shared parenting in New Zealand. That was one of the members’ bills that Labour voted down. I take this opportunity to remind the House that had this bill included a provision for shared parenting it would have included a rebuttable presumption that just as two parents are equal before a relationship breaks down in their responsibility to their children—whether they both work or whether one stays home to look after the children they are both considered to be equal in the responsibility to their child—so too after a relationship breaks down both parents should be presumed to have equal responsibility to that child unless one parent can prove that the other is not suitable to be a parent. 
 That would mean in effect that the number of cases where a parent has proven to be unsuitable would be in the minority. So both parents after a separation would have equal responsibility to their child. That does not mean equal timeshare or anything like that. It means equal responsibility. In other words they would have to put the well-being and the best interest of their child first which is what our guardianship law is meant to be all about. Rebuttable shared parenting would have put that into our law in a way that would mean that mums and dads would both have to be there to provide ongoing love support and care for their child irrespective of the fact that they no longer live together. 
I ask members when they listen to that whether it is an unreasonable stance or an unreasonable provision to have been brought into this legislation. I say that overwhelmingly the answer should be no. It is common sense. That is why shared parenting is the law in countries like Sweden and Holland why Australia is moving towards it why it is the law in many states in America and why it is a movement that is growing in strength in other countries around the world. It appears to me to be such a shame that the Government could not see the sense in putting that into the legislation which would then have gained the ACT party’s support. 
As it is I remain totally disappointed that the Government could have fixed so many bad things that happen in family law by introducing that presumption but has failed to do so. It would have taken the warfare out of separation and divorce it would have ensured that both parents are responsible for their child in an ongoing way it would have ensured that parents comply with child support it would have taken away the fact that many parents today are like the walking wounded because they are denied any access to their children and it would have ensured that children in New Zealand have the access and support of both parents which many of them do not have today because of our family law. 
Secondly this bill was Labour’s answer to my two member’s bills to open up the Family Court. What do we have in this bill? We have Clayton’s provisions. We have openness in name but not in substance. That is such a shame especially given that two chief family court judges told the select committee that they would be comfortable with whatever level of openness Parliament wanted to vote for and give to the Family Court. 
So we have a situation where we will still have censorship; where lawyers can object to the presence of other members including the press coming into the court; and where there will be name suppression—which to be honest I support at this stage. But what it means is that there will not be full openness in the Family Court so a lot of injustice that currently occurs will be perpetrated by the bill. It is such a shame that the bill does not do what it should have done and it is with great sadness that I say the ACT party opposes it. 
MURRAY SMITH (United Future) 
: 
 It is interesting that as we debate the second reading of the Care of Children Bill we find that the Government and the Green Party can find no fault with the bill and that the Opposition parties of ACT National and New Zealand First can find very little good with it. United Future as the centre party finds itself in somewhat of a dilemma because we find that there is a great deal about the bill that is positive but there are also considerable weaknesses. As the party that represents the family we see that there are medium and long term dangers in this bill that will undermine family life in New Zealand and further erode the position of parents in particular. 
But there are a lot of positive things about the bill and we believe that the environment it creates will provide short-term benefits in terms of family resilience—in particular in the area of disputes which are all too common in regard to family life. In particular we are very pleased to see the statements in clause 4A “Principles relevant to child’s welfare and best interests”. That clause follows the general statement in the bill that the child’s welfare and best interests are to be paramount. We agree that when we are dealing with situations of conflict it is important for our society that the primary focus is the children and what is in their welfare and best interests as opposed to the parents who are in a state of disagreement. That is the right approach. 
The principles that are enunciated have some very good things about them. The first principle is that the child’s parents and guardians should have the primary responsibility and should be encouraged to agree to make their own arrangements for the child’s care development and upbringing. That is a worthy principle. It puts the obligation for the child’s upbringing and responsibility firmly with the parents rather than with the State rather than with medical and other professionals and rather than with people outside that environment. It is important that the role of parents is reinforced that parents are told by society that they have a valuable role and that the Government will uphold their role as the primary instruments in the upbringing of their children. Simply put the State cannot do the job. It cannot do the job because it cannot afford to do the job; it cannot do the job because it lacks the love and compassion and the sacrificial time and finances that parents give to their children in order to raise them in the best way that they can. 
The second principle enunciated is that there should be continuity in arrangements for the child’s care development and upbringing and that the child’s relationships with his or her family family group whanau hapu or iwi should be stable and ongoing. That also is something that society should be commending and that the Government should be encouraging so that we have a situation of family resilience where we have parents who are being encouraged to stay together to bring up their children where the stability of family life is the prime focus of the Government and where the Government takes steps to ensure that children are put into environments that will be stable long-lasting and the best environments for raising our children. Sadly that is not happening. 
The third principle that the Government has agreed to adopt is that the child’s care development and upbringing should be facilitated by ongoing consultation and cooperation among and between the child’s parents and guardians and all persons exercising the role of providing day-to-day care for or are entitled to have contact with the child. This is a principle that United Future in particular pushed right from the outset of this bill before it even got to the select committee and that the Government agreed to support. It is the one that states that it is in children’s best interests that they should be brought up by both their parents—a mother and a father—and that those parents should be working together in a consultative and cooperative way in order to bring up the children. Unfortunately from my experience that is a matter that particularly in terms of the District Court has not always been the case. We have been through cycles in which courts have decided in 90 percent of cases that it is in the best interests of the children for them to be put with their mother and for the father to be excluded from their life. That is an unhealthy and unwelcome position. It is important as this bill states that children have access to both their mother and their father and as much access as possible and that we encourage mothers and fathers to cooperate and consult each other. 
The fourth principle that I want to allude to is that the relationships between the child and members of his or her family family group whanau hapu or iwi should be preserved and strengthened and that those members should be encouraged to participate in the child’s care development and upbringing. That is important again with the role of fathers in our society. One of the tragedies of our society is that we have too many absent fathers. Boys are not encouraged into fatherhood and are not encouraged to play their full role as parents as they ought to be. In terms of the culture that has previously been operating in our Family Court we have found that the court has tended to say: “Well let those fathers go. We don’t really need them. We’ll let the mother do all the caring.” That has been disastrous. The one thing perhaps that children in our society are missing more than anything else is regular ongoing contact with fathers and we need to encourage fathers to provide that role. That role has been grossly underestimated. As a society we need to educate our fathers and convince them that they have an important role in their child’s life and that they should hang in there stick in there and provide that role. 
Another aspect of the bill that I think is of value is the new emphasis on children indicating their views to the court and on the court hearing them. Although I think that at times the rights of children can be taken too far where they go beyond and supersede the rights of parents—as I have previously said parents have the important role in terms of the bringing up of children and the nurturing of them—I think this bill is good in terms of its encouragement for children to be able to express their views in court proceedings in a direct way either to the court or to the lawyer who is acting for the children so that their views are taken into account. To that extent I do agree with the Gillick principle that as a child gets older the amount of notice taken of his or her view should be increased. 
However the thing that I really do not like about the bill and find overwhelming is the whole ideological bent that effectively subsumes the welfare and best interests of the child to other factors. As far as this Government is concerned the interests of the child are OK as long as they do not infringe on the interests of partners of lesbian mothers on the role of medical and other professionals where it conflicts with the parents’ rights and on the rights and interests of women in particular solo women to be able to have children. The Government ignores the welfare and best interests of the child—despite the bill’s very fine principles—when it comes to those three areas. It is this ideological bent which undermines the best interests of the child that I think will cause many aspects of this bill to create bad families and actually enhance the breakdown of families. 
The whole drive in this bill from biological parents to social parents is a quagmire. It is something that will cause huge amounts of problems. Parents are biological parents—the natural mother and the natural father. As soon as we start denying that and trying to invent social constructs of parenthood such as lesbian mothers’ partners we get ourselves into all sorts of difficulties. I have no problem with a husband and wife either legal or de facto who agree to an assisted human reproduction procedure in order to construct a family being known as the mother and the father. But I have a lot of difficulty with partners of lesbian mothers suddenly taking on fatherhood roles—guardianship yes that is fine. 
So there are many aspects of this bill that we think are actually undermining of the family and United Future will not support it because of those pervading aspects. 
MOANA MACKEY (Labour) 
: 
 I am very pleased to be able to stand and support this bill. I also was a member of the Justice and Electoral Committee that looked at it. We spent a large number of hours considering all the very complex issues that have been raised already around guardianship and the best interests of the child. In total we spent 34 hours considering the bill so we certainly did not take the issues lightly. There was plenty of robust debate particularly when Mr Jones was present. 
First I think that the select committee has come up with a much improved bill. The Minister gave us a lot of leeway to look closely at a lot of the issues. In particular we had a great look at all the issues surrounding shared parenting the openness of the Family Court and clause 37—a clause that has caused some controversy. In no way I believe did we feel constrained by ideology as some people have suggested. In fact we gave due consideration to all the issues and we thought about them very carefully. 
The most important part of this legislation is that it puts the child firmly at its centre. That means—and I can speak for the Government members on the committee—that no matter what family situation children find themselves in through no fault of their own we need to make sure that they have all the adequate protections that the children born into traditional nuclear families were granted under the old Guardianship Act. That is really what we mean when we say “putting the child at the centre”. Many of the submitters focused overtly on the relationships that parents had no matter whether they were good parents supportive parents or loving parents or whether the child was doing particularly well. One child actually came to the select committee—a young boy of 14 who was being raised by a lesbian couple. His message to the committee was very strong: “If you really care about me stop telling us we’re not a legitimate family. Stop telling us that we don’t count and that in some way my relationship with my parents is worse than someone else’s.” For the Government members on the select committee that came across very strongly. We thought that if we were serious about putting children at the centre of this piece of law then we needed to stop obsessing about the type of relationship their parents were in. 
One thing that did come across—and Dr Muriel Newman was a strong advocate—was a concern that the court was biased towards mothers when granting custody. We heard from a lot of fathers and about a lot of really sad situations that had occurred—situations that made us worry about what the law was doing. We have put in the legislation that there should be no assumption that one parent according to his or her gender should have custody. The reality is and the Family Court judge said this that often the parenting order or custody order reflects what the day-to-day care or parenting was while the parents were together. The reason that fathers are often the ones who do not come out as the person holding that order is that it is more likely to have been the mother who was at home looking after the child and that is reflected in the custody order. Unfortunately when families get to the stage of needing to have their affairs sorted out by a court it is never easy. It is important to reiterate what was said by Judith Collins and MetiriaTurei—that we are dealing with people at the extreme end of the spectrum who have lost all ability to talk to each other and who often use their children as a pawn in their particular game. 
One big change that we made in the select committee related to the concern we had about the abuse of ex parte orders made under the Domestic Violence Act. In fact the suggestion was made that they were being used to alienate fathers from their children for a significant length of time so that when the order was eventually made the father had been away from the child for so long that the court considered that the mother should have custody of the child. We have put a time limit on those orders so that they cannot be dragged out to the extent they have been. I think that is an important change that we have made. 
The openness of the Family Court was something we talked about a lot. The previous Family Court judge and the present one came to the committee and they supported the opening up of the court to accredited media. I heard what Judith Collins said about opening it to all media. If I recall correctly the concern we had was to keep out of the court people who might be there to intimidate or to try to cause some offence to one of the parties coming to the court. If “accredited” media was not stipulated other people might be able to come along and say that they were from a particular newsletter blah blah and we would not have any control over that. That could be a back-door way in for people who wanted to intimidate either party to the proceedings or the child. That is why we stipulated “accredited” media. We did give that issue some consideration. 
We also considered the matter of shared parenting and it was a real shame that Dr Newman was not able for quite valid reasons to be there for some of our discussions. Where we parted ways was over the fifty-fifty time. I personally do not believe that fifty-fifty time is a good arrangement for children. 
Dr Muriel Newman 
: Not time. 
MOANA MACKEY 
: Dr Newman said: “Not time.” This is somewhat of a replay of our discussions in the select committee. If I am correct in stating the member’s position then she believes that fifty-fifty time should be the fall-back position if something else cannot be sorted out. I completely agree with fifty-fifty responsibility and I believe that that is what this bill supports but I do not support fifty-fifty time. I do not believe that is in the best interests of the child. I think it is in the best interests of the parents which is exactly what we were trying to get away from in this legislation. 
Probably the most important change the select committee made was in recognising that families come in all different shapes and sizes. Under this bill that will be supported. No child will be born into a family that cannot have the same protections as any other family. On the select committee we were accused often of social engineering. I finish by saying that I find it ironic that the people who were accusing us of social engineering were the very ones who were asking us to legislate what a family was. 
KATHERINE RICH (National) 
: 
 It has been very interesting listening to the speeches on this very important issue but I do have some concerns about some of the things I have heard from United Future this afternoon. I fully understand much of the rhetoric about the importance of children having a mother and a father and how the research that demonstrates the success of the traditional family is very important. However when one looks at putting the child at the centre of the legislation as the previous speaker has just outlined then suddenly one has to look at things from the child’s perspective. In particular when a child has gay parents or when a child lives just with his mum or his dad we need to be very careful in the way we discuss the issue. We do not want to give kids the impression that somehow they do not make the grade because they do not have a traditional family and their situation is not as important as anybody else’s. 
Often when I am thinking about parenting I think of some friends of mine in Dunedin—a lesbian couple who have just had a young baby. They tried for quite some time to adopt but that was not possible for them. They both worked for Plunket so nobody would doubt for a moment that they had a very strong commitment to the care of children and an interest in children’s well-being. I look at the way in which they parent their two children and I do not think that anybody in this House could criticise them for their commitment and the way they take on the role of being parents. The people here who start to criticise some parents because of their sexual orientation forget once again to look at the issue from the child’s perspective. A child just wants to be loved and to have parents who are taken up with his or her care and interests. I totally believe that parenting is a two-person job. 
Debate interrupted. 
The House adjourned at 6 p.m.