Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Volume:646;Page:15661] 
Debate on Crown Entities Public Organisations and State Enterprises 
In Committee 
The CHAIRPERSON (Hon Marian Hobbs) 
: The House is in Committee for the debate on the performance in 2006-07 and current operations of Crown entities public organisations and State enterprises. The debate on the performance of Crown entities public organisations and State enterprises is a series of debates on individual financial reviews of Crown entities public organisations and State enterprises as reported by select committees. The debates on the individual financial reviews should be relevant to their performance in the 2006-07 financial year and their current operations. A member may have no more than two calls on each financial review. A total of 1 hour has been allocated for this debate. At the conclusion of this hour the Chairperson will report progress. This is because a total of 3 hours is allowed for the debate. The remainder of the debate will take place at a later time. At the conclusion of that debate the Chairperson will report to the House. Only the financial reviews that have been reported are available for debate. A list of these is appended to the Order Paper. 
I understand that members have indicated the Crown entities public organisations and State enterprises they wish to debate. The first entity that I understand members wish to debate is the Electoral Commission. 
Electoral Commission  
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 This is an opportunity for Parliament to reflect today on the incredibly difficult job that the Electoral Commission has been given. The Electoral Commission is an entity that a lot of the public probably had not heard of until the 2005 election. It now finds itself thrust into the middle of political debate in election year. Whereas the Ministry for the Environment was discussed at great length last year this year it is the Electoral Commission. Why is that? The Electoral Commission is so busy and has such a high profile because of the Draconian anti-democratic complex and ridiculous Electoral Finance Act. 
Labour has tried to make out in this House that the Electoral Finance Act is a product of much parliamentary consideration. It is not. It is a product of Labour’s deeply held instinct that to survive the 2008 election it needs to learn the lessons of 2005. The lesson of 2005 was that when any of Labour’s critics get much of a run Labour’s political support suffers. So Labour passed the Electoral Finance Act to try to shut its critics down. It has succeeded. 
I want to ask the Minister in the chair Clayton Cosgrove a question about what is probably the most difficult aspect of the Electoral Finance Act that the Electoral Commission has to deal with and that is the length of the regulated period. Traditionally in New Zealand electoral finance has been regulated for 3 months a period that reflects the common-sense understanding among the public that the run-up to an election is the time when all the activities of politicians are focused on electoral gain. Officials have given the Government advice about this over the last couple of years. The officials’ papers as released under the Official Information Act show that there was no advice given to the Government to extend the regulated period from 3 months to 12 months. In fact the official advice made it pretty clear that there was no reason to change the period from 3 months. All the pressure that has come on the Electoral Commission now has arisen from the fact that the regulated period was extended to the whole of election year. This has the effect that for almost a third of the term of any Government the Electoral Commission has become the regulator of political speech—and is it not finding that difficult? 
The Minister needs to tell us why the Labour Government ignored all the official advice and out of the blue decided to extend the regulated period. That is the single decision that has created the most problems for the political parties and for the Electoral Commission. The Electoral Commission has had to deal of course with a lot of complicated issues arising from that. The first one has been about authorisation. At least the Electoral Commission has done its job. It has found that the Labour Party breached the law. After Labour spent all of the 2005 2006 and 2007 years lecturing everybody else about electoral rorts it turns out that the Electoral Commission found that Labour breached the law. What excuse would Labour have for breaching the law? It would have no excuse; it wrote the law. The Minister can explain to us why when the Labour Cabinet considered this legislation at great length and when there was much debate in Parliament through question time and parliamentary debate about the law the Labour Party hierarchy did not know what was in it. That is a frightening aspect of this law. New Zealand First did not really know what was in it. The Greens did not know what was in it. Even now the smaller parties are asking us what is in it and a number of them supported the legislation. 
The breach of the requirements for authorisation was just the first problem with the legislation. Then of course we come to the total debacle overseen by the incompetent Minister of Justice—represented in the chair today by Clayton Cosgrove—which is the debacle over the definition of “parliamentary business”. Here we have a core issue from the 2005 election. The Auditor-General did a report on it. There was an $800000 overspend by Labour. It actually breached the electoral expense cap by some $600000 or $700000 in the 2005 election. Labour spent 2 years rewriting the law about how MPs spend public money and 3½ months after the new law came into practice no one knows what it means. 
The National Party has had to take policy making into its own hands. 
R Doug Woolerton 
: Oh what? 
Hon BILL ENGLISH 
: Because the Minister does not know what the Act means we have had to go off to court. New Zealand First does not know. It put up billboards in Tauranga that were illegal. It is just a question of whether the billboards were taken down before the Electoral Commission had enough evidence to see they were there. We know how bad it is because the Labour Party has had to clean its electoral offices of all pamphlets in the last couple of weeks like National did 2 months ago because no one knows what the definition of “parliamentary business” is. 
This is not a matter of partisan comment; this is a matter of total incompetence in putting together the law. Labour members were so enamoured of their own moral righteousness that they did not read the law they were passing and National has had to go off to the courts to find out what parliamentary business is. If we do not do so we will end up with a ridiculous situation such as Labour has had with material it has published already where it is using public money for parliamentary purposes with the authorisation of some partisan political individual like the secretary of the Labour Party. How ridiculous is that? 
Did the public know when the Electoral Finance Act was being passed that parliamentary money could be used for an election advertisement that was authorised by party officials? What have party officials got to do with parliamentary business? The answer should be nothing but in this new world of the Electoral Finance Act those officials have everything to do with it when we are talking about the Labour Party. Who sends out the emails telling Labour MPs what to do with electoral advertisement material? The ninth floor—the Prime Minister’s office—sends out the emails. That shows exactly the situation that was confirmed in 2005—that is when it comes to spending public money on election advertising there is no difference between the Labour Party and the Prime Minister’s office. They are one and the same—one strategy. 
That fact has been confirmed in the last couple of days. What is the Electoral Commission to make of the opinion of the president of the Labour Party that it is fine for Labour MPs and activists to hand out pamphlets on KiwiSaver from the Inland Revenue Department as part of electioneering? In our view if a Labour activist hands out an Inland Revenue Department pamphlet then that would be an election advertisement. What that shows and this is something the Electoral Commission has to deal with is a deep sense of entitlement amongst Labour members that every aspect of public life can be appropriated by the Labour Party and that public resources produced for the information of the public can be appropriated by the Labour Party for its own electoral ends. 
This of course raises the larger issue that Labour Ministers are directing Government departments to produce information for the public so that the Labour Party can use the information for political purposes. That was exemplified last year in the attempted political takeover of the Ministry for the Environment. The partisan Labour Party in the form of Heather Simpson in the Prime Minister’s office tried to take over that ministry because it was going to be the front end of Labour’s political push in election year. 
So that is what the Electoral Commission has to deal with: a Labour Party that is insanely focused on using every dollar of public money it can to get itself re-elected. That is why the Electoral Commission is under pressure. It will find that its decisions are judicially reviewed and contested in public not because the Electoral Commission lacks competence but because the legislation with which it has to work is complex confusing and chaotic. The Government has made the mistake of putting Annette King up to defend the legislation. Well the Minister of Justice has shown consistent incompetence in understanding the law and in defending it. 
Report noted. 
Foundation for Research Science and Technology 
The CHAIRPERSON (H V Ross Robertson) 
: The next entity that I understand members wish to debate is the Foundation for Research Science and Technology. The question before the Committee is that the report of the Education and Science Committee on the 2006-07 financial review of the Foundation for Research Science and Technology be noted. No speakers?  
CHRIS TREMAIN (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I seek a point of clarification. There was a request to debate this particular topic. The National Party is set down as wanting to debate Industrial Research Ltd. I want to be clear that no other party whose members are within the Chamber requested the topic that is before you right now. 
The CHAIRPERSON (H V Ross Robertson) 
: A party may well have done but the reality is that if no one takes the call we move on to the next vote. 
Report noted. 
Meridian Energy Ltd 
The CHAIRPERSON (H V Ross Robertson) 
: The next entity that I understand members wish to debate is Meridian Energy Ltd. Therefore the question before the Committee is that the report of the Commerce Committee on the 2006-07 financial review of Meridian Energy Ltd be noted. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. There seems to have been a slight mistake on my behalf. Our understanding is that the honourable member Mr Hutchison was to debate Industrial Research Ltd now. Can we seek an opportunity to debate that topic now within the debate? 
The CHAIRPERSON (H V Ross Robertson) 
: Industrial Research Ltd is available for debate although not now. It is available; it is on the Order Paper. If you want to debate it you can. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 May we seek a call for that? 
The CHAIRPERSON (H V Ross Robertson) 
: I have already put the question on Meridian Energy Ltd so we had better put it to the vote while the Clerk checks the situation. 
Report noted. 
The CHAIRPERSON (H V Ross Robertson) 
: The member should have indicated beforehand that he wanted to speak to Industrial Research Ltd. However he is perfectly free to seek leave of the Committee to have a 5-minute speech on it. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I seek leave to debate the review of the Crown research institute Industrial Research Ltd. 
The CHAIRPERSON (H V Ross Robertson) 
: Leave is sought. Is there any objection to that course of action? There is none. 
Industrial Research Ltd 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you Mr Chairperson for the opportunity to speak on the performance and current operations of Industrial Research Ltd. There is no question that the nine Crown research institutes are a very important part of New Zealand’s science platform and innovation platform. 
Indeed an indication of how they have performed over the last 9 years was given by the National Science Panel—the most esteemed group of scientists in the country—at a meeting of the Royal Society of New Zealand last night. The panel said: “Between the vision of the science system and the reality there is a serious disconnect and that indeed is a great worry to New Zealand and of course in terms of the Labour Party’s performance.” It went on to say: “In our view science policy over the past decade in New Zealand has resulted in a gradual disempowerment of science and scientists. As a result science has ceased to play a leading role in shaping the nation’s future.” Once again that is an incredibly serious indictment on the performance of the system and the management of it by the Labour Government over the last 9 years. 
The panel even went on to say: “New Zealand does produce some outstanding science and has a rich heritage derived from its past great scientists but with high transaction and compliance costs and low intake of quality students from our secondary schools means that our capacity to continue to do so is diminishing.” In fact the president of the Royal Society told a meeting of MPs not so long ago that the science dollar that was handed out by the Foundation for Research Science and Technology ended up being worth at the laboratory bench approximately 50c. In other words transaction and compliance costs and the entangled bureaucracy set up by this Labour Government have absolutely diminished the value of those very important dollars. 
Let us look specifically at the Crown research institutes. Between 1992 and 2001 there was an increase in the equity of the Crown research institutes in the order of 106 percent. Over the last 6 years the equity has pretty well remained static. That again must be a damning indictment on the management of this Labour Government. 
If one looks at Industrial Research Ltd which was one of the jewels in the Crown research institutes’ crown up until about 2000 one sees that in 2002-03 its return on equity was minus 2.1 percent the next year it was minus 14.8 percent the next year it was minus 20.2 percent the next year it was minus 6.4 percent and the next year—that is 2006-07—it was a very concerning minus 25.8 percent. Equity itself went down from $27.7 million in 2002 to $19.3 million in 2006-07. What is worrying is the Crown Company Monitoring Advisory Unit commentary which is extremely understated in saying that Industrial Research Ltd’s financial performance was below expectation with a full-year loss of $5.7 million. Over these last 5 years Industrial Research Ltd has been seriously eroded in terms of its return on equity its equity and its ability to support the other very important scientific platforms. 
That has been the sort of management we have had under a Labour Government. I note in the OECD review of New Zealand’s innovation policy a comment made on governance. The appraisal noted concerns about finding suitable directors for Crown research institutes and concerns about turnover of directors. It said that although some steps have been taken to address these problems the Crown research institute boards continue to have a relatively high level of turnover and a relatively high proportion of inexperienced directors. As we stand here today 23 directorships of Crown research institutes are vacant. 
Chris Tremain 
: How many? 
Dr PAUL HUTCHISON 
: Twenty-three directorships are vacant as we stand. Surely any Government worth its salt should have ensured that those directorships were filled in an orderly and timely manner. 
Hon PETE HODGSON (Minister of Research Science and Technology) 
: 
 I would like to respond to some of the remarks from Dr Hutchison. It is unfortunate that the Opposition spokesperson should be so mistaken in his assessment of for example Crown research institute directorships. I will tell members how many directorships are vacant at the moment—there is one. 
Dr Paul Hutchison 
: You must have filled them very fast. 
Hon PETE HODGSON 
: No we did not fill them very fast. We have not filled any in the past few days. You see the member has probably gone to the Act and decided that it states there can be between five and nine directors in a Crown research institute and he has probably decided therefore that he would have nine. We do not operate like that; we use as many directors as we need—usually seven occasionally eight sometimes six. We have a vacancy in Landcare Research at the moment and we certainly have 23 vacancies coming up on 1 July 2008. As usual I would say about half of those will be rolled over; they will be given a second term. On the other hand we will probably replace somewhere like the other half—I am not sure yet but Cabinet will make its decision and we will take the advice off to the Governor-General. 
The question really is how the Opposition spokesperson on Crown research institutes can get stuff that simple that wrong. Why does that guy continue to draw his salary when he gets up in this Chamber and makes a serious— 
Hon Clayton Cosgrove 
: He’s substandard. 
Hon PETE HODGSON 
: He is substandard all right. Let us go back to last night’s report—the manifesto. The member has failed to acknowledge one thing about that report. That panel was set up in 2006. It finished its report in 2007 and decided—for reasons best known to itself—that it would tell the world about it in 2008. It said that it was very keen for there to be less bureaucracy in the application process failing to acknowledge that between writing the report and releasing it this Government has moved to a stable funding system for a fair chunk of science and research. It said that it needed bigger investment—unaware of the New Zealand Fast Forward programme that was announced a month before last which the leader of the National Party called a gimmick even though every other commentator in the country said it was great. You see the National Party is out of touch on science. The report that was released last night has to be described as a little jaded and a little out of time. I think frankly those adjectives apply rather well to the National Party. So I just enjoy the opportunity to take part in this call to debate science again with Dr Paul Hutchison and to say to him: “Dr Paul Hutchison you have a clear interest in science—I acknowledge it and I admire it. But I invite you to keep up with the facts keep up with the details and if you can keep up with this Government.” 
METIRIA TUREI (Green) 
: 
 I seek leave to debate the financial review of Landcare Research New Zealand Ltd which is also a review of the Education and Science Committee. 
The CHAIRPERSON (H V Ross Robertson) 
: The member can do that. I was just going to put the question. The member seeks leave to do that. Is there any objection to that course of action being taken? There is none. 
Report noted. 
Landcare Research New Zealand Ltd 
METIRIA TUREI (Green) 
: 
 Tena koe Mr Chairperson. Tena koutou katoa. I would just like to comment on Landcare Research New Zealand Ltd. It produced a very useful report at the end of last year sometime around December called  
Calculating Biodiversity Offsets for the Mokihinui Hydro Proposal 
. This report was prepared for Meridian Energy which was looking for information about the impacts of its plan to build an 85 metre - high dam on the Mokihinui River. This river is a very beautiful wilderness river just north of Westport—between Westport and Karamea—on the West Coast of the South Island. Landcare was contracted by Meridian Energy to apply a biodiversity offset framework to the development and to provide information about whether the impacts of the development on this river could be offset. It is a very useful and interesting report about how such offsets could occur and the criteria on which offsets could happen. 
Some of the issues around the report include the offset principles that the offsets have to be biodiversity offsets—conservation actions that are designed to compensate for the residual and unavoidable harm to biodiversity caused by development—that the biodiversity offsets are part of the calculations for assessing project viability; that offsets are not possible nor appropriate everywhere; that offsets should be in kind; and that they should apply to the full hierarchy of biodiversity from high-level functioning systems such as the native podocarp forest down to very individual components. I guess there the report is talking about the particular habitat of the whio the blue duck which resides on this river. The offsets must be enduring—that is they must have a long-term impact and reflect the long-term nature or the age of the habitat that is to be destroyed. And the offsets must be additive: they must add to the net biodiversity value of the country as a whole. 
I had the fantastic opportunity to raft down that river—the Mokihinui River—last week. The river is set back into the mountains of the West Coast. It winds down from the mountains through the path of the 1929 earthquake area. In the first part that I rafted down from just seaward of the fork the damage from the 1929 earthquake can be seen as can the very slowly regenerating bush on the scars of the slips on the side of those mountains. In these areas of forest and regenerating forest live some of New Zealand’s rarest birds and other animals. There is the long-tailed bat which is very rarely seen in this country the South Island kaka the kea and as I say the whio the blue duck. Those species have made this wilderness area their home because it is so protected from the actions of humans. It is an unmodified landscape. 
There are no noxious weeds in the Mokihinui River and even the native fish species that live in it live a very safe life because the river is quite difficult to fish in. It is not a regularly fished river so species— 
Hon Member 
: It’s not polluted. 
METIRIA TUREI 
: It is not polluted. My colleague makes a very good point; it is not polluted at all. As I say it has no weeds. It is very much still a wilderness experience. Fish species find that it is a safe place for them to breed and fish species are present that are very rare in New Zealand—for example there is the long-finned eel whose numbers are declining even according to Landcare’s own research in this report by 7 percent a year in this country. The Minister of Fisheries has even had to reduce the total allowable commercial catch for long-finned eels because of the significant damage done to the population through overfishing. The giant kokopu the short-jawed kokopu and the lamprey are all living in this river freely. 
Many of the fish species migrate very far up the Mokihinui River to live and one of the major problems with the proposed dam of course is that it will prevent those species from being able to migrate upriver so that they can mature and prepare themselves for breeding. One of the amazing things about some of our New Zealand species like the eel and some other fish species is that they migrate very far upriver where they live for many years—eels can live for 80 years up there—before they are mature enough to breed. When they decide to breed they breed only once. They leave the river and swim to the ocean and it is reported that they make their way to the seas of Tonga where they then breed and die. The glass eels if you like—the small immature eels—find their way back to New Zealand using ocean currents and ocean temperatures and find their way back up our rivers taking the long journey upriver where they themselves mature until they are ready to breed. 
This report from Landcare Research shows that there is no way—no way—that the damage to those species whether to the long-finned eel the kokopu or to the blue duck the whio will be remedied or mitigated in any way. There is no way that that damage will be mitigated; there are no mechanisms to offset that damage. We need to look only at this report which talks for example about one of the offsetting requirements for the emergent impacts on the river requiring us to go to another similar kind of river to the Mokihinui and dismantle a barrier of a similar size and structure to the proposed dam on it. What is being said there is that the damage caused by building this dam can be remedied only by destroying one exactly the same elsewhere in the country. The report goes on to say there are no other rivers where that could be done. It is impossible to do—impossible to remedy the damage that would be done by the dam. 
What is of real concern here is that despite the good work of one of the Crown entities Landcare Research another Government entity the State-owned enterprise Meridian Energy still intends to pursue such an enormously destructive action on one of New Zealand’s most pristine and wild rivers. The Mokihinui River has been described by the Department of Conservation itself as the seventh most significant river in the country. We have few remaining rivers in New Zealand that are fully free from development of any kind and frankly from poisoning of any kind. I was able to drink from this river while I was on that raft. I could just push my hand into the water scoop it out and put it in my mouth. It was sustaining and yummy. It was clean and not poisonous. It is a clean river but we are about to destroy one of the very few rivers still left in this country where it is possible simply to reach down and drink from it. That is one of the major concerns about the nature of these constructions on rivers such as this one. The biodiversity values are extremely high. The Department of Conservation has recognised that and Landcare Research has recognised that. Even the information that Meridian Energy has proposed and put into its assessment of environmental effects for the purposes of its resource consent application recognises that significant numbers of seriously threatened endangered species will lose their habitat as a result of a dam being built. 
One of the places we visited on this river was a creek called the Rough and Tumble which was a great little creek that flows down into the river. The Rough and Tumble Creek is noted as a blue duck a whio habitat and a number of whio have been sighted there. I think that one of the other major energy companies—it might be Contact Energy but I am not sure—has just decided to invest something like a million dollars into the restoration of habitats and the protection of the blue duck the whio species. The Government invests vast sums of money hundreds of thousands of dollars into the protection of the blue duck and the restoration of its habitat yet other parts of the Government such as Meridian Energy are going out and actively intending to destroy the very natural habitats those animals live in as a matter of course and they expect that somehow that will be remedied by—I do not know; investing more money in something else? But it will not happen like that. Landcare Research has shown that that simply will not work. That damage simply cannot be remedied by paying for it elsewhere. 
This is where the difficulty for the Government is in its so-called sustainability programme with its so-called environmentally aware Prime Minister a Prime Minister who has a newly discovered environmental awareness. That is all great but in practice we see significant destruction of the very wilderness areas that make this country what it is. When New Zealanders go overseas and think about home they do not think about motorways. They think about the beautiful wilderness pristine areas and the clean rivers that we still have—the very few clean rivers that we still have—and that is what brings them home. That is what being a New Zealander is all about yet this Government—and I do not doubt for a minute that National would not do the same given half a chance—is prepared to actively destroy those very pristine places that make this country what it is. 
I applaud Landcare Research for its work in preparing this report. I am dismayed that Meridian Energy has actively kept the report a secret from the public from the decision makers who are looking at Meridian Energy’s resource consent applications and from the various environmental and community organisations that have asked for a copy of it and been told it does not exist. That is a disgraceful act on Meridian Energy’s part. 
Report noted. 
Pharmaceutical Management Agency 
BARBARA STEWART (NZ First) 
: 
 On behalf of New Zealand First I rise to take a call on the Pharmaceutical Management Agency. This Crown entity has a hugely important task ahead in managing the optimal purchase and use of medicine for all New Zealanders. 
This organisation has a huge challenge ahead and I do not think that any one of us can underestimate that challenge. It needs to balance its budget yet ensure that New Zealanders have the best possible access to the best medicines to manage the various conditions they have. It also has to manage the funding of expensive developing pharmaceuticals for various conditions that small groups of people have against the funding that will provide the greatest health gains for many people. It is not an easy balance. 
There are many challenges ahead. How can Pharmac ensure there is timely and affordable access to high-cost specialised medicines that is comparable with access in other countries? We often compare ourselves with Australia in this respect. 
We have seen one of these conflicts recently with the drug Herceptin where the High Court firmly put the ball back into Pharmac’s court with the advice that it had to consult over its decision not to fund patients for a longer time. How many other conflicts like this will we see? This type of court case is extremely stressful for everybody involved and we cannot afford to drag out the recommended review any longer than is absolutely necessary. 
When we look at Pharmac we see that consultation with stakeholders must be one of the priorities that is carried through. We acknowledge the recent Pharmac forum and the positive feedback that Pharmac received from the forum. This type of forum needs to be held on a very regular basis so that explanations decisions and feedback can all be communicated. The Pharmac updates that we receive as MPs always make interesting reading; they focus on recent decisions and information. We will continue to be interested in the Pharmac decision-making process particularly in response to the  
Medicines New Zealand  
strategy. We in New Zealand First believe that this should result in some review of the pharmaceutical budget. The funding framework has to allow for appropriate growth because new innovative medicines become available all the time. This of course raises the age-old issue which we have heard about many many times of the need for greater transparency in the processes associated with funding decisions. 
When people travel to Australia for holidays—as many do—one of the many queries that we all tend to get when they return is why their family member there has access to a particular drug that is not accessible to people here in New Zealand. They find it very difficult to understand. We believe that we need to be assured that the process followed by Pharmac is fair and just and the recommended consultation process will be very valuable in this respect. 
In New Zealand First we often hear too from frustrated companies that the registration of new medicines is an extremely slow process. We need to evaluate alternatives to a stand-alone Medsafe. One option that could be considered is a system based on recognition of the decisions of other respected international regulatory bodies yet at the same time allowing us to maintain the ability to carry out the evaluations where it is considered to be necessary. Why we do not already recognise these decisions remains a mystery and hopefully it can be explained by Pharmac in some future communications. Why should we duplicate the efforts of the US Food and Drug Administration or the trans-Tasman agency over in Australia? It makes one wonder what the value of particular registrations overseas is when we do not recognise them here in New Zealand. It seems to me that it is a real mystery. Recognising them would enable new medicines to go through the registration process a lot more quickly than they do now. We in New Zealand First believe that there is a very interesting year ahead for Pharmac. 
Hon DAVID CUNLIFFE (Minister of Health) 
: 
 I thank the member who has just resumed her seat Barbara Stewart for a very helpful contribution. I will take a short call to make several points. 
The first is that I think most members of this Committee would agree that the Pharmac single purchasing model is fundamentally sound and that it delivers considerable benefits to New Zealanders by stretching our health dollar much further than it would otherwise stretch to the tune of probably $1 billion to $1.5 billion a year. We should reflect upon the fact that according to almost all of the conventional measures that have been shown in this Health Committee report Pharmac is a well-managed and well-run organisation that is doing its job. Pharmac’s 2007 annual review showed that during 2006-07 close to 32 million prescriptions were subsidised—a rise of nearly 12 percent on the previous year. That means an extra 3.3 million were subsidised during the past year and at least 2.7 million people had their medicines subsidised. The scale of this and the scale of the savings that it renders to New Zealanders are such that in any discussion of Pharmac—although any organisation no doubt is capable of improvement—we must be very very careful not to throw the baby out with the proverbial bathwater. 
The second point is that there is always a debate at the margin around the fundamentally utilitarian model of funding allocation in Pharmac’s drug provision which boils down to the greatest medicinal benefit for the greatest number given a relatively fixed level of resource. At the margin there are discussions of how we fund new and innovative drugs that are hellishly expensive but may at the margin deliver extra benefits to a small number of people. That is a very very difficult debate at any level—economics or ethics for example; the philosophy of the utilitarian model versus the innovation model is difficult to get one’s head around. However the system we have which is based on clinical decision-making through the advisory committee the Pharmacology and Therapeutics Advisory Committee process and the use—although no doubt no measure is perfect—of an objective framework through the quality adjusted life years measure is a sound approach because it is a heck of a lot better than the squeaky wheel getting the grease. 
One thing is certain. It is that in the pharmaceutical industry there is an enormous premium attached to lobbying an enormous amount of money washing around in defence of not only intellectual property rights but also monopoly rents by producers and fairly good evidence that in many cases the price of medicines bears no relationship to the cost of production or research but bears every relationship to what it is perceived that the market will stand. In that regard if we did not have something like Pharmac then frankly we would have to invent one because the public of New Zealand needs a defence against those deeply vested and powerful interests nearly all of which are overseas-owned. That is why we have Pharmac. 
Is a model like Pharmac capable of improvement? The Government’s view is that it is fundamentally sound and that once again it has turned in a very good performance—managing its funding to within 0.1 percent of budget adding 11 new medicines and widening access to 28 others. That is a pretty good record of achievement but I note that the  
Medicines New Zealand 
 strategy and  
Actioning Medicines New Zealand 
—the second document for which my colleague Peter Dunne has the primary responsibility for overseeing—suggest several forms of improvement. The first is around the consultation processes. It is not sufficient for any organisation to use the fundamental validity of its business model as a reason not to have good stakeholder relationships. I am confident that Pharmac understands that there is much value to it in improving the transparency and communication levels in those stakeholder relationships. I am comfortable that it is well on that pathway and that that should continue. 
Finally let me say in respect of the point about Medsafe raised by the member speaking previously that I expect that Medsafe’s actions particularly in the area of complementary medicines will be proportionate appropriate and well understood by the sector and that there is more dialogue to be had in that regard. Thank you Mr Chairman. 
Report noted. 
Police Complaints Authority 
Sitting suspended from 6 p.m. to 7.30 p.m. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Tena koe. Kia ora tatou katoa. Being the first Maori woman to be appointed Justice of the High Court and the first Maori woman to be appointed as Queen’s Counsel was a huge honour for Justice Lowell Goddard and a credit to her distinguished legal career—and the fact that she is from up north—but taking over the Police Complaints Authority last year was always going to be a whole new ball game. In stepping up to that task Justice Goddard said that two of her main goals were to ensure the integrity of the New Zealand Police and restore public confidence in the police. That is a helluva job given the Bazley report last year damning the culture of police arrogance the Louise Nicholas case the recent high visibility trials of police rape and abuse and the fact that Maori generally do not bother complaining to the Police Complaints Authority because they know that cops lie for one another and always get off. 
The Law and Order Committee though tells us that Justice Goddard is out there trying to do an extreme make over of the authority from being just a club to jack up excuses for bad cops to being a more proactive and investigative unit. The authority is doing a big clean-up of old files and trying to put in place systems to deal with inefficiencies and unnecessary work. We are glad about moves to monitor the life of a complaint particularly given the many complaints we have had from Maori that the process of laying a complaint is tough enough without it being dragged on forever giving the impression that the police have no intention of actually dealing with the complaint at all. 
We are also encouraged by the authority wanting to focus on matters of high public interest like serious harm deaths in custody corruption serious neglect and misconduct. But we are concerned about suggestions that the authority refers complaints of bad attitude back to the police to handle when clearly there are a lot of complaints of that nature and people are not likely to be convinced that the police are the best people to deal with them. 
It was also interesting to note the fact that the select committee met with Justice Goddard just before she met with Tuhoe to discuss their complaints about the police terror raids last year yet they barely mentioned it in their report which is strange considering that apart from the police rape trials the police terror raids were the most high profile of all complaints in 2007. It is worth noting too that although 40 people have already been interviewed and 10 more are due to come up the Police Complaints Authority is still keen to talk to anyone else who was arrested stopped photographed held at gun-point or has any other complaints concerning police misconduct during those terror raids on Tuhoe in 2007 which suggests that the matter is far from over. So although the select committee has chosen to ignore this investigation the Maori Party will be following it closely to ensure that the deplorable offensive and totally unacceptable treatment of the people of Tuhoe is not swept under the carpet in the way past police complaints have been. 
Following on from the Tuhoe situation interestingly it was also worth noting Justice Goddard’s comments about the success of the Police Ombudsman’s role in Northern Ireland which is particularly relevant given the hatred of the Catholic population towards what has traditionally been a Protestant-run police force the Royal Ulster Constabulary. A recent independent survey stated that 80 percent of both Protestants and Catholics felt that complaints against the police would be treated fairly as well as surprisingly did 85 percent of those police officers investigated by the office—quite an amazing statistic given the historic enmity between the different sectors of the Northern Ireland community and clearly a model worth looking at for us here. 
We also note the Law and Order Committee’s decision not to mention the new statement guiding the Police Complaints Authority—whaia te pono kia puawai ko te tika: seek out justice and let the truth prevail. We mention it here and we wish Justice Goddard and her team strength courage and fortitude in the pursuit of their philosophy and in the challenges that lie ahead of them. Tena koe. 
Hon RICK BARKER (Associate Minister of Justice) 
: 
 I welcome the comments made by the previous speaker Hone Harawira and I welcome his observations. It is true that Justice Goddard has an ambitious plan to improve and strengthen the Independent Police Conduct Authority and it is true that a good deal of progress has been made. I am very pleased to be able to report to the Committee that the number of outstanding files has been greatly reduced—620-odd aged files that could have been classified as a backlog have been closed during the period of February 2007 to February 2008 and this is in addition to the ongoing processing of all current files. The number of complaints that have been referred to the Independent Police Conduct Authority has continued to fall in the last quarter—a drop of about 98. 
Mr Harawira also made the point that the commission under Justice Goddard intends to be proactive and independent. It is also true as he pointed out that the Independent Police Conduct Authority wants to ensure that the New Zealand public has a strong and justified perception of the integrity and the culture of our police force. The authority wants to take big issues very seriously and investigate them very thoroughly. 
I am pleased to be able to report to the Committee that the Independent Police Conduct Authority has had strengthening in terms of resources. It has more investigators a media liaison person and a chief executive and in addition to all of this it is the Government’s intention to strengthen the authority even further. The Government intends to introduce a bill that will enable the authority to conduct its own motion inquiries. That means it will not have to wait and rely upon someone to make a complaint. If the authority feels that something is wrong then it will be able to do something about it itself. Further the results of an authority investigation will be able to be used in subsequent proceedings in certain circumstances and importantly the authority investigators will have all the powers necessary to fulfil the authority’s enhanced functions. 
The final point which I think will be the most interesting and most telling is that in the future the authority will have the responsibility and authority to make prosecution decisions in authority-led investigations. All of this sets out to strengthen the independence and the confidence that the public can have in the Independent Police Conduct Authority. 
I reaffirm what Mr Harawira said: that Justice Goddard and a number of the authority did go and speak with Tuhoe directly as part of the authority’s investigation of the complaint laid by the people of Tuhoe. I think that is a very important step. It shows that Justice Goddard is a person who will have a hands-on approach will lead from the front and will be very directive about this. By being on the marae and hearing people voice their concerns with all the passion the feeling and the anger that they felt she could hear at first hand what the people felt rather than read it in a report. I commend her for doing that and I think it is a very very positive move. 
However with all these things the proof will be in the pudding. I am fully aware that the Independent Police Conduct Authority recognises that people will judge it on the quality of its reports and the quality of its actions. No one thinks that the New Zealand Police are above criticism. Of course people are right to have those criticisms but the criticisms should be constructive and they should be justified. There will be no placing of confidence in the police if we are to have unconstructive irresponsible criticism of the police. 
We want to have a police force that we can look to with pride and with confidence and to know that it is independent and will do an outstanding job for our country. This has in fact been the case with almost every facet of the activities of the New Zealand Police. The Independent Police Conduct Authority is there to ensure that we have the independence and oversight of the New Zealand Police force we need to ensure public confidence in the integrity and the strength of the New Zealand Police. I think that we can look forward to seeing good reports in the future that will give justice and substance to those beliefs. 
Report noted. 
Progress reported. 
Report adopted.