Volume 611 Week 37 - Tuesday 16 September 2003 
Volume 611 Week 37 - Tuesday 16 September 2003 
[Volume:611;Page:8653] 
Tuesday 16 September 2003 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Speaker’s Rulings 
Privileges of the House and Speaker’s Actions 
Mr SPEAKER 
: Honourable members on Thursday I indicated to the House that I intended to meet with the Commissioner of Police to discuss procedures for police conduct in Parliament House. I wish to inform the House that I did meet with the commissioner yesterday and we agreed to work together on devising such procedures. It is my intention to present the procedures to the House as a parliamentary paper as soon as possible after the forthcoming adjournment. 
Hon ROGER SOWRY (Deputy Leader—NZ National) 
: 
 I raise a point of order Mr Speaker. I thank you for that because I certainly was going to ask whether that meeting had taken place. 
Mr SPEAKER 
: I wanted to tell Parliament first. 
Hon ROGER SOWRY 
: I have had the opportunity to read the ruling you made on Thursday and I thank you for circulating it. It does open up two areas I want to ask you about. The first one relates to when the police indicated to your office that they intended to interview Mr Ardern. The issue I have is: why would the police indicate that to your office if in fact they knew they were not meant to be on the premises; or did they indicate that to your office because of your own public comments on the issue? The second issue is: were the police advised by you or by your office that they could not interview Mr Ardern within the precincts of Parliament; if not why not? On that issue you will appreciate that parliamentarians do have a right to the protection of the Chair and of your office. They also have a reasonable right to have confidence in your staff and to know that you will be advising the police of the appropriate rules regarding the precincts. 
Hon RICHARD PREBBLE (Leader—ACT NZ) 
: 
 I have been giving some thought to your statement on Thursday and reinforced by your statement to the House today it seems to me that this is a matter that goes to the privileges of the House. I suggest to you that the proper course of action for you to take is not to put out a parliamentary paper but to refer the issue and the matters that surround it to the Privileges Committee. I remind you that you were quite willing earlier to seek the advice of the Privileges Committee on Mr Harry Duynhoven. I think this matter affects the privileges of the whole House. While your ruling as Speaker will probably be the ruling that should ultimately be made I do suggest that you seek the guidance of the Privileges Committee. That is something you can do—you can rise and ask that the matter be referred to the Privileges Committee—and I am sure the House will accommodate you. 
Mr SPEAKER 
: I thank the member for that suggestion. Could I give it some thought and come back to the House on it later this afternoon. As far as the Hon Roger Sowry is concerned there is not necessarily a rule against interviewing persons within the precincts. That is a matter that I want to clarify in the discussions I have with the police. I was not aware of the fact that there had been any call to my office. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. This issue is I think the most serious of any I have heard in the House. In recent days you will remember I have defended the office of the Speaker in relation to the handling of the Shane Ardern and Harry Duynhoven cases but since then I have learnt to my grave disquiet of another case in which the evidence points to the office of the Speaker being seriously compromised. It is an allegation that the Speaker’s office directed the police not to prosecute a young man for serious and deliberate vandalism in the grounds of Parliament because a prosecution would embarrass the Government. This young man rode a trail bike on to the grounds of Parliament—to protest he says about the Government’s soft law and order policies and its total lack of concern for the victims of crime. That incident happened on 21 May this year. The young man is emphatic the police told him that charges would not be laid because the Speaker did not want him charged. Further whilst he was being interviewed by police officers another police officer was on the telephone to Parliament. Serious constitutional issues now arise because of that information. 
 An Opposition MP is being charged with disorderly behaviour for a stunt with a tractor on the steps of Parliament a few days after the Prime Minister at a press conference accused him of being disorderly. You yourself said his act was “morally reprehensible”. We can contrast this situation with that of the young protester who deliberately committed vandalism and who wanted to be arrested and charged— 
Mr SPEAKER 
: Will the member please be seated for a moment. Could he come to what the point of order is; this is a recital of some facts. What is the point of order? 
Rt Hon WINSTON PETERS 
: I would have thought it was patently apparent to everyone here including the Clerk and yourself what my point of order is. You have said that you have never involved yourself in police matters and police prosecutions. 
Mr SPEAKER 
: And I haven’t. 
Rt Hon WINSTON PETERS 
: Oh yes you have Mr Speaker. That was the clear statement made last week. I have been through the  
Hansard 
 records and the clear differential between your office and that of the police we all know. But this is the case of a young protester committing vandalism who wanted to be arrested—who wanted to be charged—yet having been photographed at the police station and the process having commenced was told to go home because the Speaker did not want him to be prosecuted. All of the evidence points to this case being dropped for political reasons. Last week some women shed their clothes in this Parliament. They are not being charged with disorderly behaviour despite the fact that it would be difficult to deny such a charge—the evidence having been on television. 
This Parliament is owed an explanation. The case I am referring to was swept under the carpet to avoid embarrassing the Prime Minister and her Government. If the House does not understand what my point of order is then this Parliament has reached a very parlous state. This was a case of deliberate serious vandalism in the grounds of Parliament. It was also a protest and the offender gave himself up to the police. The case did not go to court; it was shut down for political reasons. The man’s allegation is that whilst he was being processed the Speaker told the police he should not be charged—that you in fact shut down this case. 
This information if factual—if true—is a case of direct improper and inexcusable political interference which goes to the heart of our form of constitutional Government. That is the point of order. That covers the issue I am referring to and you Mr Speaker have to accept that you owe Parliament an explanation about what part you played in this matter and what part the offices of the Prime Minister and the Minister of Police played in it. There have been allegations here of double standards of political interference and of using the police as political pawns. That is the Standing Order and point of order I am seeking to make very clear on the facts here—[ 
Interruption 
] 
Mr SPEAKER 
: I do not need any assistance— 
Rt Hon WINSTON PETERS 
: I am not going to be deterred from this Mr Speaker because this is the most serious allegation— 
Mr SPEAKER 
: I want to ask the member to come to the point tersely. 
Rt Hon WINSTON PETERS 
: My point is that it is in Zimbabwe where political interference sees the police prosecuting Opposition politicians—not in New Zealand. It is in Third World countries with dictatorships that we see politicians being prosecuted at political behest not in New Zealand or in the First World. These facts suggest an ability of the Prime Minister to get an Opposition MP prosecuted for taking part in a protest while at the same time your office is involved in stopping another prosecution where guilt was admitted. This information points to the traditions of this House and the office of the Speaker being bulldozed aside in the interests of the Prime Minister’s spin machine. You want to know what I am asking for— 
Mr SPEAKER 
: Please be seated. I have given the member a long time to make a point of order. If members wish to make allegations against the Speaker they must of course give notice of motion. I want to say to the member that I do not have any idea at all of the incident he is referring to—none whatsoever. I invite him if he has anything to give it to me in writing and I will most certainly consider it but I do not know what the member is referring to. 
Rt Hon WINSTON PETERS 
: I am sorry but with respect this matter is far too important now. When by some coincidence we have Inspector Marty Grenfell formerly of the police office in the room with this young man and when it is said in the inspector’s presence that the Speaker does not want this matter prosecuted or progressed any further the matter is far too important for me to leave it to an in-house inquiry conducted by the person against whom sadly these allegations are being made. 
 I want to know whether we will see before this House that police report of 21 May so we can see whether Mr Grenfell was involved because all the evidence points to that being so. I do not want a Privileges Committee inquiry into this matter. I do not want a Privileges Committee hearing stacked as it is against the view that I am putting up in front of this House stacked with Government MPs. This matter should be thrashed out on the floor of this House and now. The incident occurred during the afternoon of 21 May. There are people in the media who know full well about this case because it was referred to them but because there was no prosecution they dropped it. If Mr Grenfell and other police officers are abusing your office by saying that you are involved then let us have the matter thrashed out now. However if they are not then something dramatically more serious in terms of our form of constitutional Government is at stake now. 
Hon MARK BURTON (Deputy Leader of the House) 
: 
 I raise a point of order Mr Speaker. Clearly the member having made an extraordinarily long speech should have raised that matter either with the Speaker directly or in the proper manner through a complaint to the Privileges Committee. The Standing Orders of this House lay a very clear path for the member to follow. The member is in breach of at least two Speakers’ rulings. I refer him to Speakers’ rulings 15/1 and 15/3. It is increasingly becoming a habit of members of this House to attack through the misuse of points of order rather than to use the proper procedures laid down in the Standing Orders. It is appropriate for that member rather than to sling innuendo through a 10-minute speech—in which he still has not put out any real facts—to do it properly by way of a complaint to the Privileges Committee and stop wasting the time of this House. 
STEPHEN FRANKS (ACT NZ) 
: 
 I think I can help. It may have escaped your memory but the young man concerned was a near relative of Kate Alkema who was murdered on the banks of the Hutt River. He was very distraught at the appeal and at the comments made by the judge. He had it in mind to do himself an injury or the court and he decided to come to this place where his action would be more constructively directed towards those who make the law. You might recall that I spoke to you in your office about the matter. I do not believe that the Rt Hon Winston Peters’ point of order is to endeavour to criticise the decision you made then or your involvement then; I believe it is simply to contrast that willingness to be involved with the more recent event. So that may assist you to bear in mind the contrast. Mr Peters may want to correct me if I am wrong but I think that is the incident. 
Mr SPEAKER 
: I will give this matter consideration and I will report back to the House. I want to think about it. I can recall the point that the member made. I certainly can recall that point. It was some months ago and the member did make some very helpful comments to me about it at the time. I will however give this matter consideration and report back. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. I want to respond to Mr Burton’s allegations that somehow I am behaving irresponsibly in this matter. You know and the House knows full well that I did not take the side of others in respect of Harry Duynhoven or for that matter of Mr Ardern. I defended the Speaker’s office. But this sort of information is something totally different and last week when Mr English and Mr Prebble raised this matter no such spurious contentious arguments were put up about their right to do so. Why is it being raised today? That is my evidence about the precedent for this matter. But I come back to my point: if the police said that and if they have behaved thus as I have set out in the facts then this Parliament and your office have been massively abused. But if in fact they were reciting the facts then the very nature of this constitutional Government the institution of the Speaker and Parliament and the separation of powers have been totally breached. That is why it is a severe and important matter. 
Mr SPEAKER 
: I said I would consider the matter and come back to the House on it. 
Hon ROGER SOWRY (Deputy Leader—NZ National) 
: 
 I raise a point of order Mr Speaker. I have one matter following on from that point and a second one concerning the statement you made at 2 o’clock. Concerning your undertaking to come back to the Parliament on this matter you made two comments on the issue raised by Mr Peters. Your first comment was that you had no recollection of the event and your second comment following Mr Franks’ intervention was that you did recall a conversation with Mr Franks on this very event in the Parliament. We need to be satisfied about how that difference occurred. 
The other point relates to the same issue with regard to your memory. You said you had no knowledge of the police speaking to your office about Mr Ardern’s case but in your statement to the House on Thursday you said: “The police indicated to my office that they intended to interview Mr Ardern.” I ask you to clarify when you knew the police had spoken to your office because if you did not know about it at the time and the police were speaking to your office and your office was not telling you that then that goes exactly to the point I made—about members needing to have confidence in the Speakership and the office that surrounds the Speaker. 
Mr SPEAKER 
: I thank the member for that point of order. As I recollect—and I have sought clarity on that—I heard about it just as I was about to rule. I certainly did not know about it at the time. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. I cannot let this matter slide away like that. Do you not recall the vandalism out there which can still be seen? Do you not recall the incident being raised with yourself? You said you could not; now you can. We cannot slide by that but that is not what I am putting into contention. It is that the police said that you had been in contact with them and vice versa and that the case was not going to proceed because your office in the form of yourself did not want it to. But the evidence is out there now for anyone to see and you surely must now recall the incident. 
Mr SPEAKER 
: As I said I will give this matter consideration. I certainly recall the incident the member refers to but I also recall a conversation with Mr Franks. I will take advice on it and come back to the House. 
Hon BILL ENGLISH (Leader of the Opposition) 
: 
 I raise a point of order Mr Speaker. I hope that that consideration will include advising the Parliament just what action you will take in respect of your office. According to the statements you have just made the Parliament is now expected to believe that in the context of the high level of publicity around Mr Ardern’s actions the police rang your office to advise somebody—I presume it was you—that they were going to come to Parliament to interview Mr Ardern and that no one from your office told you of that until Thursday last week when you were just about to rule. Of course prior to that I assume there would have been discussions and investigations into what did happen but that information was kept from you up until just prior to the time when you ruled in this Parliament—late on Thursday afternoon. That is extraordinary. That does undermine the confidence of this Parliament in your office. If this is a matter that everyone who operates in this place knows to be a matter of privilege—that is the access of the police to parliamentarians—then you certainly owe the Parliament an explanation. If this Parliament cannot rely on your staff then everyone in the country will need to be given your personal mobile phone number because that information should have been transmitted to you. That raises fundamental questions about the confidence we can have in the operation of the Speakership. 
Hon MARK BURTON (Deputy Leader of the House) 
: 
 I will say it again: this is an outrageous abuse of parliamentary process. You have made—[ 
Interruption 
] 
Mr SPEAKER 
: Points of order will be heard in silence or members will leave. Every point of order I have insisted will be heard in silence. 
Hon MARK BURTON 
: You have listened to the concerns of members. You have given a ruling that included an assurance to the House that you will come back with a considered response. The further revisiting of the matter is a direct challenge to your ruling and is in breach of the Standing Orders of this House. 
Mr SPEAKER 
: I want to say again I will come back to the House on this matter. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. Who is to be the judge in this matter? That is my point. This is a very serious allegation that has been made by someone and it involves the Speaker’s office and the police. Am I to take it that you will be the judge of this matter? 
Mr SPEAKER 
: I beg your pardon. 
Rt Hon WINSTON PETERS 
: Am I to take it that you think it is an appropriate a proper and a fitting situation that you judge it? 
Mr SPEAKER 
: No I will not. The House will judge it and that is where it should be. 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: 
 I raise a point of order Mr Speaker. I seek clarification from you on a point that Mr Prebble raised. Mr Prebble asked you to consider the reference to the police coming to the Parliament Buildings to interview and depose Mr Ardern which may be a matter of privilege. The point I raise as a matter of urgency for your consideration is that the evidence the police took from Mr Ardern which no doubt will be presented to the court this Friday week could have been obtained as a result of a breach of the privileges of this House. That will have implications for that evidence in another place. I seek your indication that you will give this matter the highest urgency because action will have to be taken if this documentation was taken as a result of a breach of this House’s privileges. 
Mr SPEAKER 
: I will give this matter the highest urgency possible and report back to the House. 
Questions to Ministers 
World Trade Organization—Cancun Talks 
1. Hon RICHARD PREBBLE (Leader—ACT NZ) 
 to the  
Minister for Trade Negotiations 
: With the failure of the World Trade Organization talks at Cancun and New Zealand’s exclusion from the Australia - United States free-trade negotiations what if anything does the Government propose to do to promote our trade interests? 
Hon PETE HODGSON (Acting Minister for Trade Negotiations) 
: 
 Firstly the member’s question is arguably predicated on errors. The Doha round remains alive. Cancun was a failure to agree not a failure as such. Secondly New Zealand has not been excluded from negotiations with the US; it is that we are not yet on the list. 
Opposition Members 
: Ha ha! 
Hon PETE HODGSON 
: Finally New Zealand promotes our trade interests continually and with vigour. 
Hon Richard Prebble 
: I raise a point of order Mr Speaker. I realise I am guilty of laughing along with everyone else but I did not hear the Minister’s answer after he claimed we were not excluded but just not on the list. 
Mr SPEAKER 
: I thought that the Minister addressed the question. 
Hon Richard Prebble 
: The Minister just carried on talking. I put down this question on notice and I would like to hear what the answer is. 
Mr SPEAKER 
: Could the Minister please give the last part of the answer. 
Hon PETE HODGSON 
: I am happy to repeat my answer. I did pause for a time. Finally New Zealand promotes our trade interests continually and with vigour. 
Hon Richard Prebble 
: As New Zealand is the only member of the Cairns group not to be either part of the now G22 group or one of the countries that already has an agreement with the United States to hold bilateral trade talks is it not time for the Government to repair our relationships with the United States so that we can get bilateral talks with that nation? 
Hon PETE HODGSON 
: I think the member misses the point again. We chose not to join the G22; we were not excluded from it. We are welcome to join the group if we choose. We did not want to leave Australia hanging out because it chairs the Cairns group. The reason for that is that Cairns is in Australia. 
Martin Gallagher 
: What has the Government been doing to advance the case for a free-trade agreement in Washington? 
Hon PETE HODGSON 
: There is encouraging support amongst the US business community and in Congress for a free-trade agreement with New Zealand. Our embassy in Washington and the business community in New Zealand have been making considerable efforts to advance our case. We have continued to promote the need for a free-trade agreement in discussions with the US administration including in talks that the Minister for Trade Negotiations has had with US Trade Representative Bob Zoellick. 
Hon David Carter 
: Is the Minister for Trade Negotiations satisfied with his achievements over 4 years; if so what of significance has he achieved for New Zealand exporters? 
Hon PETE HODGSON 
: Yes the Minister for Trade Negotiations is satisfied with progress over 4 years and would instance progress with Chile and Singapore and prospectively with Mexico and Thailand and I think that that in addition to closer economic relations with Australia is not a bad list to be going on with so far. 
Rod Donald 
: Did the Minister support the push by developing nations to take the investment agreement off the agenda at Cancun; if not why does the Government support an investment agreement that gives more power to multinational corporations and takes away the rights of democratic Governments to set their own rules on investments? 
Hon PETE HODGSON 
: I regret to advise that I am not aware of our green room position on that matter. 
Hon Peter Dunne 
: With regard to the rise of the G21 or G22 at Cancun does the Government have any concerns about the impact of the emergence of this group—and its potential ongoing influence in the future—on the future of the Cairns group and particularly given New Zealand’s involvement with that; if so what steps is New Zealand prepared to take to ensure that the Cairns group set of initiatives remains on the table and is progressed through future discussions? 
Hon PETE HODGSON 
: As the Minister himself said—I read it in the paper anyway—we are not sure whether the G22 is a fleeting star or something that will be more permanent. If it is the latter then New Zealand may want to reconsider its position. However that is much further down the track. 
Hon Richard Prebble 
: On 11 February in the Prime Minister’s statement this House was told that the Labour Government’s trade priorities were free-trade agreements with Hong Kong and Chile neither of which has occurred and a free-trade agreement with the United States which thanks to the Prime Minister’s statements will never occur; then we were told it would be the Doha round and that has failed—is not the conclusion that this House reaches that this Government has no trade policy? 
Hon PETE HODGSON 
: Most certainly not. The various agreements the member refers to are all under discussion. The Doha round has not failed. 
Rod Donald 
: Will the Government admit especially in the light of the Minister’s comments that he does not know what happened in the green room that World Trade Organization processes lack transparency deny participation and are anti-democratic; and will the Government now stand with the developing countries so that they are not again put in the position of vetoing a ministerial statement because they were not allowed to participate in the negotiation of that statement? 
Hon PETE HODGSON 
: The reality with international negotiations is that if one seeks to hold them in the WestpacTrust Stadium one is unlikely to get an agreement. 
Rt Hon Winston Peters 
: Why is it that the leader of the United Future party Peter Dunne was not able to save the Cancun round; if not why not—and if not what was he doing there in the first place? 
Hon PETE HODGSON 
: The leader of the United Future party chairs the Foreign Affairs Defence and Trade Committee and was present in that capacity. 
Primary Health Care Strategy—Implementation 
2.  
STEVE CHADWICK (NZ Labour—Rotorua) 
 to the  
Minister of Health 
: What progress has been made regarding the implementation of the Primary Health Care Strategy? 
Hon ANNETTE KING (Minister of Health) 
: 
 Yesterday I announced that funding for the provision of low-cost health-care in pharmaceuticals for those over 65 years of age in any primary health organisation will be brought forward by 1 year to commence on 1 July 2004. This represents another $47 million invested in our primary health-care strategy on top of the $410 million that has already been committed. 
Steve Chadwick 
: When did the over-65 age group last have this level of access to low-cost health-care? 
Hon ANNETTE KING 
: The last time the subsidy for primary health-care was increased for the elderly was in September 1990. Under a National Government the subsidy was reduced in February 1991 and in 1992 it was removed altogether for all people including the elderly except those with a community services card. [ 
Interruption 
] 
Mr SPEAKER 
: I will not have that member shout out like that. He will stand withdraw and apologise. 
Gerry Brownlee 
: I withdraw and apologise. 
Mr SPEAKER 
: I heard the question asked and the question was answered. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. Ministers answering questions are under the same duties as any member who asks a question. Their answers should be short succinct and to the point. For the Minister to give the House a history lesson about a period of Government that she had nothing to do with and had no ministerial responsibility for is quite out of order. She has been the Minister of Health for 4 years—an appalling watch I might say—and should account for her time. 
Hon ANNETTE KING 
: Speaking to the point of order Mr Speaker— 
Mr SPEAKER 
: No I do not need any assistance. The member may say that but he did not listen to the question. The question was asked and it was answered properly. 
Judith Collins 
: How will the proposed closure of local and rural pharmacies due to the Government’s changes in dispensing policy advance the primary health-care strategy? 
Hon ANNETTE KING 
: It is the same stat dispensing policy the National Opposition spokesperson on health commended in a letter to Pharmac. There has been— 
Hon Dr Nick Smith 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: The Minister was asked a question. Would she give a straight answer please. 
Hon ANNETTE KING 
: Firstly I was addressing the stat dispensing scheme the member mentioned in her question. Secondly in terms of pharmacy provision district health boards are working with pharmacists to ensure that the provision of pharmacy services continues around New Zealand particularly in rural New Zealand. 
Pita Paraone 
: What has been done to address the geographical inequalities inherent in the primary health-care strategy? 
Hon ANNETTE KING 
: Unfortunately geographical disparities exist right now in New Zealand. The aim of the primary health-care strategy was first to get additional money into areas of high need and second to ensure that we put more money right throughout New Zealand starting with the young and then the elderly. 
Heather Roy 
: Can the Minister deny that for 2 weeks she has evaded my question as to why she cannot deliver on her Budget promise to deliver $3 pharmaceuticals to young people aged between 6 and 17 from 1 October this year that problems with software have been key in that delay and if that was such a good-news story as she says it was why did she put out yesterday’s announcement at midnight? 
Hon ANNETTE KING 
: The reason that the statement went out at midnight was so that it could hit  
Morning Report 
 which it did and it received an extremely good airing by a very good health reporter. It also made the major dailies so that as many New Zealanders as possible would know what was happening in primary health-care. It was not just a promise but a delivery by this Government. 
Question No. 3 to Minister 
IAN EWEN-STREET (Green) 
: 
 My question is to the Minister of Agriculture but I note that neither the Minister nor his deputy are in the House. I seek the leave of the House to have my question deferred. 
Mr SPEAKER 
: Leave is sought to defer it. Is there any objection? There is. Please ask the question. 
Genetically Modified Organisms—Farmers and Bee-keepers 
3.  
IAN EWEN-STREET (Green) 
 to the  
Minister of Agriculture 
: What assurances can he give organic farmers and bee-keepers that their livelihoods will not be ruined by contamination by GE organisms? 
Hon MARIAN HOBBS (Minister for the Environment) 
 on behalf of the 
 Minister of Agriculture 
: The same assurances I can give to all New Zealanders that their health environment and economic well-being will not be affected adversely following the expiry of the moratorium. 
Ian Ewen-Street 
: Is the Minister intending to forsake the organic and beef product sectors of the economy for the sake of promoting the GE industry; if not will he tell the people who are protesting outside the House at this moment how they can protect themselves from the contamination by the GE sector that is so widespread overseas? 
Hon MARIAN HOBBS 
: I maintain my original answer which is that this Government is concerned about protecting all New Zealanders—be they organic producers or bee-keepers—so that they can follow their rightful industry just as participants in organic produce and organic honey in Argentina are able to do so in their country. 
Janet Mackey 
: What work is under way that gives the Government confidence that the coexistence of GM and non-GM crops is possible? 
Hon MARIAN HOBBS 
: In the short to medium term the Environmental Risk Management Authority’s cautious case-by-case assessment of applications will effectively address any issues relating to coexistence. At the same time officials are addressing issues surrounding the development of an industry code of practice. Any code of practice is likely to be based on the current seed certification scheme. 
Dr Paul Hutchison 
: Why has the Government failed to fund vital bee research at Ruakura including research on organics given that a recent study by the Ministry of Agriculture and Forestry estimates an annual loss to the South Island pastoral sector of $234 million if the varroa bee mite gets established; and how can he convince anyone that he is not planning the ruination of all farmers by taking bee management so carelessly? 
Hon MARIAN HOBBS 
: I cannot answer the question about the Ruakura project but the varroa mite arrived in this country in 1997-98 and the fact that it has not moved to the South Island since that time is absolute evidence of the very excellent work done by biosecurity. 
Hon Brian Donnelly 
: Why has the Government not met recommendation 7.7 of the royal commission report which calls for an industry code of practice to be established to ensure effective separation distances between genetically modified and unmodified crops; and given that such work has not been done what was the point of the moratorium? 
Hon MARIAN HOBBS 
: The point of the moratorium concerned a whole lot of issues other than the establishment of the code of generic practice. We can develop a generic code of practice based on current seed certification and on agreements between organic and conventional farmers but until we know which particular crop we are dealing with we will in the meantime use the ability of the Environmental Risk Management Authority to set conditions on a case-by-case basis to refine what we have for seed certification and protect neighbours from the adverse effects. 
Bernie Ogilvy 
: Has there been any overseas experience with countries exporting both organic crops and GM crops simultaneously; if so has this had any measurable negative impact on organic crop exports to date? 
Hon MARIAN HOBBS 
: Yes we have the experience of Argentina. It is the second-largest producer of genetically modified crops but it also has the second-largest area in the world of certified organic crops. It has continued to increase its exports in both lines into the European Union. It also exports 192 tonnes of its total organic honey production of 245 tonnes into the European Union. 
Ian Ewen-Street 
: In respect of the Minister’s earlier answer is she aware that around 1000 organic farmers in Canada are taking a lawsuit in response to the widespread contamination they have had from GE organisms and their consequent loss of markets? 
Hon MARIAN HOBBS 
: I am aware of Canadian organic farmers who are also succeeding in exporting their crops into Europe. 
Ian Ewen-Street 
: What responsibility will the Government take if the livelihoods of organic farmers bee-keepers and conventional farmers are harmed through contamination by GE crops irrespective of whether those GE crop-growers have violated any laws? 
Hon MARIAN HOBBS 
: It is not the intention of this Government that the livelihood of any bee-keeper or organic grower will be affected by the introduction of GM crops. 
Dr Paul Hutchison 
: I seek leave to table a report entitled  
Bee Industry Stung as Research Abandoned. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is. 
Foreshore and Seabed—Customary Title 
4.  
Hon BILL ENGLISH (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she stand by the statement in the Department of Prime Minister and Cabinet foreshore and seabed proposal that “The foreshore and seabed should be public domain with open access and use for all New Zealanders.”; if so how can customary title coexist with public domain? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 The statement is in a Government proposal not a Department of Prime Minister and Cabinet one. I am advised that it is possible for customary rights to coexist with the legal interests of others in the community. The previous National Government’s customary fishing regulations of 1998 would suggest that this is so. 
Hon Bill English 
: Would the Prime Minister now answer the question I asked which was whether customary title can coexist with public domain and can she reassure the House that if it turns out that customary title could include rights to exclude other New Zealanders she will legislate to limit the extent of customary title? 
Rt Hon HELEN CLARK 
: As the Attorney-General made clear in the House last week customary title would not exclude public access. 
Dail Jones 
: What is the difference in reality between the proposal contained in the main question that “The foreshore and seabed should be public domain with open access and use for all New Zealanders.” and the Government’s proposal of 23 June 2003 to legislate to give clear expression to the Crown’s ownership of the foreshore and seabed for the benefit of all New Zealanders? 
Rt Hon HELEN CLARK 
: As I have said on other occasions my statement from the beginning has been that there would need to be clarifying legislation and that is what we are consulting about. 
Hon Richard Prebble 
: Is it not the Labour Government’s position that the Maori Land Court may issue customary title to Maori for the foreshore and seabed for exclusive commercial development for marine farming and for licensed tourism for the gathering of resources for management purposes and in fact for anything except having fee simple title and the ability to restrict access; and if my understanding is wrong why does she not just front up at one of these hui and explain what the Government’s position really is? 
Rt Hon HELEN CLARK 
: The member has come up with an interpretation of the Government’s position that has certainly never been on my mind. 
Hon Peter Dunne 
: Does not the statement in the original question mean that all New Zealanders regardless of their ethnicity or origin indivisibly but equally own the foreshore and seabed; if it does not mean that then who does own the foreshore and seabed? 
Rt Hon HELEN CLARK 
: The assertion in the first part of the member’s question is precisely what the proposal is putting forward. 
Rt Hon Winston Peters 
: Were the Prime Minister and the Attorney-General Margaret Wilson wrongly reported on 23 June in respect of the statement that they were going to clarify through legislation that the foreshore and seabed ownership would lie with the Crown; was she wrongly reported then alongside her colleague Margaret Wilson in the same press reports; if so what steps has she taken to correct those reports from that day? 
Rt Hon HELEN CLARK 
: My statement was that the Government would need to clarify the legislation and that has been pointed out to a number of reporters. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. The Prime Minister knows full well that those media reports carried the statement that the clarifying legislation would be to the effect that ownership lay with the Crown. The critical words are “with the Crown” not some dreamt-up republican concept that she came up with just today. I ask her to answer the question: were those reports from 23 June wrong; if so what steps did she take to correct them? 
Rt Hon HELEN CLARK 
: The report was wrong in respect of me and I have repeatedly pointed that out. 
Stephen Franks 
: In light of her response to Mr Prebble does she dissociate herself from Dr Cullen’s ingratiation with objectors at hui by telling them that “public domain was in fact abandonment by the Crown of its longstanding and generally accepted ownership of seabed and foreshore” because it was “unnecessarily confrontational with Maori claims to ownership”; and why will Labour not abandon the principle of colour-blind access to the seabed and foreshore just as readily as it abandoned a hui in Northland next time there is a Maori threat? 
Rt Hon HELEN CLARK 
: The day the proposal was launched I recall saying myself that in the current context the assertion of Crown ownership was considered to be divisive and that it was better to work on a proposal that would make it clear that all the people of New Zealand have a stake in this area while also providing for customary rights. 
Hon Bill English 
: How can the Prime Minister be so sure about what rights go with customary title when it is her own Government’s position that that will be sorted out by the Maori Land Court and in fact the only thing the Government has ruled out is fee simple title? 
Rt Hon HELEN CLARK 
: The Government has ruled out two things: one is fee simple title and the other is any exclusion of public access. I would note that Mr English asserts customary title to leadership of the National Party—something others say is in the public domain. 
Mr SPEAKER 
: That last sentence was unnecessary and is struck out. 
Hon Richard Prebble 
: I raise a point of order Mr Speaker. We do have a dilemma with the way the Prime Minister answers questions. I listed for her a number of things that customary title would cover and she said she would never consider any of them. She then gives an answer now to Mr English saying in effect that every single one of the things that I have said must be in. The only problem with my list was that it was not imaginative enough. It appears to me that the Government by saying it is ruling out just fee simple title is saying that every other sort of customary title—which I say to the Prime Minister must include things like marine farming and economic development—must be in. 
Mr SPEAKER 
: That is a debatable matter. 
Stephen Franks 
: I will try again: why did the Prime Minister keep answering last week’s questions and those today about the customary interest the courts will be allowed to create over public domain by saying that could not extend to fee simple title when she knows there are many kinds of interests even saleable titles that fall short of fee simple; and will she please tell us what will stop activist judges inventing or reviving property rights that this House would never pass? 
Rt Hon HELEN CLARK 
: What stops that is clear parameters for their actions. 
Rt Hon Winston Peters 
: Could the Prime Minister advise the House that she will table here in a matter of 24 hours the evidence that she after 23 June sought to correct the journalist who reported at the time that her view and that of Margaret Wilson was that the question of ownership would be clarified by legislation—in short that it would be reposed in the Crown? On what occasions and how many times did she correct the media on that matter and could she provide some evidence to support what she is saying? 
Rt Hon HELEN CLARK 
: I can advise the member that my staff have advised a number of journalists of what the situation actually was. 
Hon Bill English 
: Is the Prime Minister aware that her policy that any restriction on public access is ruled out is new because last week when we asked the Attorney-General about it she refused to confirm that policy; and will the Prime Minister tell her Ministers what Government policy actually is? 
Rt Hon HELEN CLARK 
: If the member had paid attention to what the Attorney-General said he would know that she said that the Government’s proposal would obviously exclude any attempt to exclude the public. 
Climate Change—Reports 
5.  
MOANA MACKEY (NZ Labour) 
 to the  
Convenor Ministerial Group on Climate Change 
: What reports has he received on climate change and extreme weather events? 
Hon PETE HODGSON (Convenor Ministerial Group on Climate Change) 
: 
 New Zealand business leaders were briefed last week by leading Swiss insurance company Swiss Re which advised: “Today global warming is a fact. The climate has changed visibly tangibly and immeasurably.” Swiss Re further advised that global insurance losses from natural catastrophes have skyrocketed from around US$3 billion per annum until the mid-1980s to over US$17 billion per annum in the 1990s. Uninsured losses are even higher. 
Moana Mackey 
: What other advice has the Minister seen from the insurance industry about the future impact of climate change? 
Hon PETE HODGSON 
: Lord Levene chairman of insurers Lloyd’s of London said earlier this year that whilst terrorism had resulted in massive payouts that was outweighed by natural catastrophes. He said that 12 of the world’s 13 worst storm losses have occurred in the last 10 years. 
Hon David Carter 
: What reports has the Minister received on the international carbon price which is significantly lower than the Government anticipated in its discussion documents; and how much are the Government’s nationalised forestry credits worth to New Zealand based on the current international carbon price? 
Hon PETE HODGSON 
: There is as we speak no international carbon price. There is a range of international carbon prices. The Government’s policy has been to cap carbon credits at NZ$25 per tonne of carbon dioxide equivalent per annum. That is simply in case Russia determines that it will carry forward its very significant hot air. 
Ministerial Confidence—Immigration Minister 
6.  
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: How can she have confidence in the Minister of Immigration who states most migrants are making a valuable contribution to our skill base? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 Because it is true. 
Rt Hon Winston Peters 
: If that is true when will the Minister of Immigration admit to this House that she is bringing in thousands of immigrants a year who have no intention of contributing positively to this country and do we believe her or those at the coalface such as Gold and Black Taxis manager Ian Gaskin who on rampant tax-dodging taxi drivers said: “I would estimate that I could have 50-60 percent of my fleet in the dog box because I have a lot of immigrants.”; and when most of the taxi drivers in the Inland Revenue Department’s audit of the taxi industry were African Muslims who had applied for a taxi licence in Melbourne but had to wait 12 months before they became eligible to work so they came here to work for 12 months what sort of shim-sham flim-flam policy is that? 
Rt Hon HELEN CLARK 
: It simply is not true that thousands of people come here with no intention of contributing positively. The member may like to know that a recent Business and Economic Research Ltd study found that migrants in Auckland alone are paying $1.8 billion in tax revenue a year which among other things enables that member to live in comfort here. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. Unlike that member I have had my own business and have had to pay taxes—unlike her who has been on the taxpayers’ teat since she left school. 
Mr SPEAKER 
: That is not a point of order. Please ask the supplementary question. 
Rt Hon Winston Peters 
: If she wants to talk about someone on the taxpayers’ teat she should look in the mirror. 
Mr SPEAKER 
: Does the member have a supplementary question? 
Rt Hon Winston Peters 
: Yes I have a supplementary question. 
Mr SPEAKER 
: Well ask it. 
Rt Hon Winston Peters 
: If immigrants contribute so much has she stopped to wonder why Work and Income is dishing out $8200 per immigrant to jump behind the wheel of a taxi and as well the Ministry of Health Ministry of Justice Ministry of Housing Ministry of Social Development and Ministry of Education are crying out that immigration is placing a strain on their services—a situation that is not surprising given that the long-term unemployment among immigrants in Auckland alone is 12000 people whom she and her wanted Minister brought here? 
Rt Hon HELEN CLARK 
: I can only repeat what the Minister of Immigration has said which is that most migrants make a good contribution. However I defer to the member’s superior knowledge about taxi drivers. 
Tourism—New Zealand's International Rating 
7.  
DAVID PARKER (NZ Labour—Otago) 
 to the  
Minister of Tourism 
: What reports has he received about New Zealand’s standing as an international tourism destination? 
Hon MARK BURTON (Minister of Tourism) 
: 
 A recent Harris poll—a long-running and respected American public opinion survey—shows that New Zealand has jumped from No. 13 to No. 7 in the ranking of countries where American visitors would most like to go on holiday. That marks the most significant gain in the poll. In addition the authoritative  
Andrew Harper’s Hideaway Report 
 for 2003 has named four of New Zealand’s luxury lodges in the top 10 of the world’s best luxury hideaways. Those reports like many others illustrate the success of this Government’s partnership with the industry which is increasingly attracting high-value high-yield visitors to New Zealand. 
David Parker 
: Has the Minister seen any further reports to indicate progress in achieving the tourism strategy objective of promoting New Zealand as a high-quality high-yield destination? 
Hon MARK BURTON 
: Indeed the Tourism Research Council’s latest forecast shows visitor numbers increasing at a very healthy rate of 5.7 percent per annum but perhaps more important visitor expenditure is increasing at nearly double that rate. 
Ron Mark 
: What about poor people? 
Hon MARK BURTON 
: I point out to the member that that industry represents 150000 jobs for New Zealanders. That is why it is important. 
Artworks—Police Investigation 
8.  
Hon BILL ENGLISH (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she stand by her statement about the police inquiry into “paintergate” that “I shall have a good deal more to say about that [the inquiry] when they’ve finished their sort of elephant act in the strawberry patch.”; if so why? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 No I thought better of it. 
Hon Bill English 
: Why did she attack the Opposition for raising questions about the police when she herself in the course of the “paintergate” inquiry refused to be interviewed by the police refused to answer 25 written questions put to her by the police and threatened to sue the police if they did not get on and do the investigation in the way she wanted? 
Rt Hon HELEN CLARK 
: This matter was handled by my lawyers at all times. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. With the greatest of respect that is not and cannot be an acceptable answer. She is being asked as the Prime Minister what the position was. For her to get up and say that the matter has been handled by her lawyers at all times when they are subject to her instructions and are at all times in a client-lawyer or client-solicitor relationship and then sit down excusing herself as somebody commanded by her lawyers may be typical but is not acceptable. 
Mr SPEAKER 
: The Prime Minister said she was acting on legal advice. She addressed the question in that way. 
Hon Bill English 
: I raise a point of order Mr Speaker. She did not say that she was acting on legal advice but there is a more important point. We now have a situation in which the Prime Minister is trying to introduce another standard into the House whereby she will not have to answer questions if she has taken legal advice on the matter. In any situation where she has taken legal advice she can just get up and say: “Well ask my lawyers.” so she does not have to answer the question. I put the question directly to her about her actions—not about the legal advice or the police but to her about her actions. So the idea that we have to accept her answer that we should just ask the lawyers is unacceptable to the House. If that had to be the case then we would have to ask for the lawyers to come in so that we could ask them. 
Mr SPEAKER 
: I would like the Prime Minister to clarify that answer a little. 
Rt Hon HELEN CLARK 
: I acted on legal advice. The police after a full investigation determined not to take the matter any further and I agreed that that was where it should end. 
Hon Richard Prebble 
: Are the House the country and the nation’s lawyers to take it that the police in New Zealand are now being directed by a prime ministerial press statement as to whom they should prosecute and whom they should not prosecute and what in principle is the difference between the Helen Clark regime in New Zealand and that of the police State of Robert Mugabe in Zimbabwe? 
Rt Hon HELEN CLARK 
: The member most certainly should not infer that. I should say that when specifically asked on Monday of last week whether I thought the police should prosecute in the case of Mr Ardern I said I would make no comment whatsoever about what the police should do. I have my own views. I do not intend to air them. 
Hon Bill English 
: Can the Prime Minister comment on the example she thinks is given when she behaves in the way I have outlined in the context of “paintergate” when she effectively condoned a dishonesty offence in her own department and when she refused to take action against the members of the Labour research unit who certainly broke the rules around Parliament in the last few days by putting an obscenity on the door of Shane Ardern’s office? 
Rt Hon HELEN CLARK 
: Those researchers have apologised to Mr Ardern as they should. I should say that such episodes are not unique. A National Party researcher once sent out faxes proclaiming the death of Michael Laws and ended up in court and his accomplice is now in the office of the Leader of the Opposition. 
Prostitution Reform Act—Local Government Administration 
9.  
GORDON COPELAND (United Future) 
 to the  
Minister of Justice 
: What actions will he take in response to the comments made yesterday by Auckland Mayor John Banks that “While it was Parliament’s decision to decriminalise prostitution every council is now in the difficult position of administering the Prostitution Reform Act.” echoing those made last week by Juliet Yates chairwoman of the Auckland City Council’s development committee that the legalising of prostitution has handed the council a job it did not want? 
Hon LIANNE DALZIEL (Acting Minister of Justice) 
: 
 As required by the Act the Minister is establishing the Prostitution Law Review Committee which will include a member nominated by the Minister of Local Government. The Minister of Justice promoted the Supplementary Order Paper that provided for councils to control the location of brothels because the bill was silent on the matter. Auckland City was one of the councils that sought such powers if the bill were to become law. 
Gordon Copeland 
: Is the Minister concerned by the statement last week by the Minister of Local Government that under the Prostitution Reform Act health and safety issues can now be addressed in light of the fact that the list of certified brothel-keepers is to be kept so secret that not even health and safety inspectors will know where all the brothels are; if not why not? 
Hon LIANNE DALZIEL 
: I do not have information in respect of that particular matter. If the member would like I will provide some supplementary information to him. I simply do not have it with me. 
Tim Barnett 
: Has the Prostitution Reform Act provided new powers to any other bodies additional to councils that have made Government policy more enforceable? 
Hon LIANNE DALZIEL 
: Yes the Minister of Immigration moved a Supplementary Order Paper that provided powers to revoke the permits of those on open work permits who are working in the sex industry which enhances the New Zealand Immigration Service’s ability to minimise the possibility of international students and others being targeted by the sex industry. I note that no other Government made such a move. 
Gerry Brownlee 
: Has she had any meetings to discuss with the Minister of Local Government the extensive range of enforcement costs that the Labour Government is imposing on local authorities such as this prostitution regulation alcohol ban enforcements increased community policing and anti - boy racer measures just to mention a few? 
Hon LIANNE DALZIEL 
: Not that I am aware of. 
Peter Brown 
: Is the Minister aware that at one time the Prostitution Reform Bill before the select committee contained fairly rigid clauses that would have implemented zoning at the local body level but one time when the United Future member did not turn up Mr Barnett was successful in having those clauses deleted as a result giving a huge amount of work to local bodies—an issue that the select committee had been trying to address? 
Hon LIANNE DALZIEL 
: The member raises a good point in that this was a member’s bill; it was dealt with by way of conscience vote in the House. 
Marc Alexander 
: Does the Minister concede that the amendments now decried by councils across the country as unwanted and unworkable were the very ones that he promoted in order to cobble together a majority for an otherwise flawed bill; if not why not? 
Hon LIANNE DALZIEL 
: As I said in my first answer Auckland City was one of several councils that asked for the power to regulate the establishment of brothels within communities because the bill at that point was silent on the matter. 
Gordon Copeland 
: Does the Minister now agree that the decriminalisation of prostitution was not supported by the people of New Zealand when we see the local authorities who represent those people bringing in restrictions on brothel-keeping in their areas thus reflecting the true sentiments of their citizens? 
Hon LIANNE DALZIEL 
: No it reflects that the Minister of Justice’s Supplementary Order Paper has achieved its purpose which is the local community through its council determining where brothels ought to be located. 
Lotteries Commission—Internet Gaming Revenue 
10.  
JUDITH COLLINS (NZ National—Clevedon) 
 to the  
Minister of Internal Affairs 
: What is the forecast extra revenue to be generated by the Lotteries Commission’s ability to operate Internet or interactive gaming as passed in the Gambling Bill? 
Hon GEORGE HAWKINS (Minister of Internal Affairs) 
: 
 The move to remote interactive gambling will help to address the decline in sales that the commission has experienced. Any increase in revenue is likely to be modest and gradual. 
Hon Roger Sowry 
: I raise a point of order Mr Speaker. That was a classic example. The question was about the forecast extra revenue. If a forecast was done and I am certain it was then the Minister surely could either say he was not going to give the forecast or give it. But he should not give an answer—especially when he had several hours’ notice of the question—where he does not give the forecast. 
Mr SPEAKER 
: Now that the member raises that point I want to say that I heard about three or four interjections that distracted me when the Minister was giving the answer. They should not have been made. Now that my attention has been drawn to it perhaps the Minister could expand on the answer. 
Hon GEORGE HAWKINS 
: I can say that those figures are not worked out yet. I am not a soothsayer. 
Judith Collins 
: If he cannot answer that question what reports has he received about the expected number of problem gamblers likely to use the Internet gambling to be provided by the Lotteries Commission? 
Hon GEORGE HAWKINS 
: We already have Internet gambling in New Zealand at the TAB and that has not produced a large increase in problem gamblers. 
Luamanuvao Winnie Laban 
: What controls does the Gambling Act place on Internet gambling? 
Hon GEORGE HAWKINS 
: The Gambling Act allows only the TAB and the Lotteries Commission to operate remote interactive gambling. Lotteries are generally the least harmful form of gambling even when they are offered on the Internet because of the delay between the time of entry and the draw and because the interactive element is minimal. 
Peter Brown 
: Noting those answers does the Minister accept the view of many many professionals worldwide that accessibility to gambling leads to more problem gambling—and interactive gambling will make gambling more accessible—if so how does he justify overruling the select committee without any democratic mandate to do so? 
Hon GEORGE HAWKINS 
: I remind the member that a majority of this Parliament passed that bill with a majority of 10. Parliament did that; no one else. It could have voted the legislation down if it had wanted to. 
Sue Bradford 
: Why did the Government refuse not only to take the advice of the select committee but also to take the advice of the expert academics and problem-gambling treatment providers who were assembled at the third international conference on problem gambling held in Auckland last week who passed a resolution calling on the Government to reject New Zealand - based Internet gaming because of the harm it will do and has done in many overseas jurisdictions? 
Hon GEORGE HAWKINS 
: I took the view that there was more good for the population at large and because many good features were put in place to help those with problem-gambling addictions. 
Hon Peter Dunne 
: How does the Minister reconcile the introduction of interactive-gaming facilities by the Lotteries Commission with the fact that last week alone New Zealanders spent over $20 million buying Lotto tickets in pursuit of a jackpot? 
Hon GEORGE HAWKINS 
: I think last week showed that most New Zealanders want to have a little flutter occasionally. We realise that gambling does cause harm to perhaps 1 to 3 percent of the community. I am sure most people participating on Saturday night thought the result was excellent. 
Judith Collins 
: What does the Minister say to the comments made today by Major Campbell Roberts from the Salvation Army that “Salvation Army centres along with members of the NZCCSS are seeing daily major impacts on New Zealand families through gambling excess.” and that they are “devastated that without public consultation and in disregard of the recommendations of the select committee these new amendments were introduced and passed.”? 
Hon GEORGE HAWKINS 
: I say he ought to look at all the evidence including the comments of Dave Macpherson who is welcoming a reduction of approximately 80 pokie machines in Hamilton alone. 
Biodiversity—Waitaki River 
11.  
JEANETTE FITZSIMONS (Co-Leader—Green) 
 to the  
Minister of Conservation 
: Has he sought or received any advice on the biodiversity values of the lower Waitaki River; if so what action does he propose to take? 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 Yes I received and noted the report. 
Jeanette Fitzsimons 
: Does he believe that further losses of endangered black stilt wrybill plover and black-fronted tern as well as degradation of water quality and reduced salmon and trout fishery are justified in order to provide for less than 5 years’ growth in electricity demand? 
Hon CHRIS CARTER 
: A full report has not yet been done on the mitigating factors that could occur regarding any water applications in respect of the Waitaki River. 
Nanaia Mahuta 
: What is the role of the Department of Conservation in respect of proposals for the utilisation of the Waitaki River? 
Hon CHRIS CARTER 
: My department has a statutory duty to advocate for the conservation of aquatic life and freshwater fisheries and this includes advocacy for the protection of the conservation values of the Waitaki River system. The department will participate fully in the new two-stage process recently announced by the Government in order to get the best results for conservation. 
Gerry Brownlee 
: Why is his department so relaxed about the State-owned enterprise proposal effectively to flood private land and effect some degradation upon the Waitaki River when it is completely uptight about the prospect of putting a dam in the Dobson valley on the West Coast? 
Hon CHRIS CARTER 
: Each application stands or falls on its own merits. No two applications are the same. 
Jeanette Fitzsimons 
: Has he asked for any calculation of the cost to his department of attempting to restore the habitat that would be destroyed by predators and four-wheel drives if Project Aqua was allowed to take out 73 percent of the water of the Waitaki River and will he insist that all those costs be included in the economic assessment of Project Aqua? 
Hon CHRIS CARTER 
: As I indicated earlier no in-depth study has yet been done on any mitigating factors that might occur regarding developments on the Waitaki River. 
Hon Dr Nick Smith 
: How can the Minister say that any hydro proposal will be considered on its merits when he said that he was not prepared to consider the Dobson project at all and can he now answer Mr Gerry Brownlee’s question as to why the flooding of private land in the Waitaki valley is of no concern to him but where the land is public land as in Dobson he has a very different view? 
Hon CHRIS CARTER 
: As that member should know having once held the responsibility of being the Minister of Conservation to flood an ecological area such as the Card Creek ecological area would involve changing the Conservation Act. That is a very different matter from current proposals for the Waitaki River. 
Auckland International Airport—Border Control 
12.  
DIANNE YATES (NZ Labour—Hamilton East) 
 to the  
Minister of Customs 
: How is the Customs Service preparing to deal with any increase in passengers at Auckland International Airport this summer? 
Hon RICK BARKER (Minister of Customs) 
: 
 The good news is that arrivals from overseas are already ahead of an all-time high and are expected to go higher. The 36 percent increase in capacity at Auckland with new airlines into New Zealand such as the Emirates Airlines and Royal Brunei Airlines will put considerable pressure on customs and other border agencies. The service is working with other agencies airlines and airports to make adjustments to flight schedules staff layout and other procedural changes to help minimise delays. It will be a very busy summer holiday. 
Dianne Yates 
: With this influx of passengers at Auckland International Airport will customs be able to maintain border control and protect New Zealanders from terrorism and the smuggling of illegal drugs and other prohibited goods? 
Hon RICK BARKER 
: New Zealanders can be assured that customs is and will continue to be vigilant in maintaining border security. All inbound and outbound air passengers pass through customs control. Current matching of information with other countries border control agencies and profiling techniques ensure that people who smuggle drugs and contraband are more likely to be intercepted than ever before. If members have any doubts they should see page 2 of the  
Contraband 
 newspaper put out by customs which shows that seven people convicted in recent months of importing drugs into New Zealand received extensive jail terms of up to 12 years. 
Gerry Brownlee 
: Why does the New Zealand passenger arrival form not require visitors to this country to disclose criminal records? 
Hon RICK BARKER 
: I cannot answer that question off the top of my head but I will certainly get an answer for the member. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. This is extraordinary. This form has recently been reprinted. I am quite certain that the Minister would be aware that there has been an error and that that particular question has been left off some half a million of these forms to accommodate the vast numbers who are coming into the country. For him to say that he is unaware of it and that he will get back to us later is quite frankly just skirting the scrutiny of the House. 
Mr SPEAKER 
: The Minister gave an answer to the question. 
Urgent Debates 
Collapse of World Trade Talks in Cancun Mexico 
Mr SPEAKER 
: I have received a letter from the Hon Richard Prebble seeking to debate under Standing Order 376 the collapse of the world trade talks in Cancun Mexico. This is a particular case of recent occurrence involving ministerial responsibility and given that the Government was a participant in the talks I consider that it requires the immediate attention of the House. I therefore accept the application and call on the member to move that the House take note of a matter of urgent public importance. 
Hon RICHARD PREBBLE (Leader—ACT NZ) 
: 
 I move  
That the House take note of a matter of urgent public importance 
. This is a matter that we as a Parliament need to consider carefully. It has been suggested by the Government that there are few countries in the world that stood to gain more from a successful Doha round than New Zealand. The converse of course must also apply: there can be few countries in the world more affected by the fact that the Doha round has collapsed. The reason that I say that is that if members care to examine this Government’s trade policy—[ 
Interruption 
] 
Mr SPEAKER 
: I am sorry to interrupt the honourable member. This is a serious debate and it is to be heard in relative silence. If members have to go to a select committee would they please do so quietly. 
Hon RICHARD PREBBLE 
: New Zealand’s trade policies effectively collapsed in Mexico as well. The Prime Minister told us earlier this year in a statement on 11 February that the Government was seeking to achieve a number of things in trade policy this year. Every one of them has now failed. The Government said it would get a free-trade agreement with Chile and was seeking one with Hong Kong. Those talks are going nowhere. We know that. 
The Government then told us on 11 February—and it now seems amazing that the Government was thinking that—that it had stepped up our promotion of free-trade negotiations with the United States following the positive reference to New Zealand in the US trade representative’s letter to Congress on his intentions to negotiate with Australia. In February it was the Government’s No. 1 trade policy to get a free-trade agreement with the United States but now thanks to the extraordinary lack of diplomacy by our Prime Minister—and I remind members that she decided to issue a statement saying that if Vice-President Gore had won the last presidential election then matters in Iraq would be very different—and as a result of her statements and others made by this Government we find that New Zealand does not even appear in the 2003 trade policy agenda and the 2002 annual report of the President of the United States on the trade agreements programme which I have in my hand. When we look through that list we see that over 20 nations will get bilateral talks with the United States and New Zealand is not on the list. It is my understanding—and I would like to hear from members on this—that the Government does not now believe that it will be able to get a free-trade agreement with the United States so the second leg of the Government’s trade policies has collapsed. 
We were then told by the Minister for Trade Negotiations that what the Government really wanted was the Doha round and that that was where it would get better trading access for our agricultural exporters in particular. Then we were hearing stories about how Mr Sutton was going to be in the “green room”—how he was going to be pushing hard for extra trade concessions for our forestry industry and how confident he was. Well now we find that the Doha round has collapsed. If one reads the statements in the media it would appear that this round of the World Trade Organization talks might never succeed. I would like to hear from Ministers about that but it is my understanding that the differences between the Third World nations and the United States put them as far apart as ever. 
The question that New Zealand wants answered is what is the Government’s plan now? One of the most important tasks a New Zealand Government should be carrying out is promoting our trade interests. My charge is that this Labour Government has been the most unsuccessful Government in promoting our trade interests of any that I can ever remember. This Government has failed in every single thing it has put up. Surely it is time as the  
New Zealand Herald  
states today in its editorial for the New Zealand Government to decide to repair our relationships with Washington. I make these remarks not just to the Government but to both old parties. It is time we repaired those relationships and the initiative must come from New Zealand. To the United States New Zealand does not count as a trading nation. From that country’s point of view the benefits it would get from a free-trade agreement with New Zealand are minor but from New Zealand’s point of view of course they would be enormous. 
I can still remember my geography teacher Mr Mayhill saying: “Boys if we ever get a free-trade agreement with the United States they’ll have cows in the grounds of Parliament.” That is the sort of degree of difference it would make—[ 
Interruption 
] Well we have them now I suppose with the “fart tax”—[ 
Interruption 
] 
Madam DEPUTY SPEAKER 
: There is too much cross-talk. 
Hon RICHARD PREBBLE 
: I realise that what I am saying is a challenge to both parties. I believe that New Zealand ought to recognise that the breaches we have had with the United States have come from this country. We ought to realise that we could rejoin ANZUS and that the advantages to us on defence grounds alone are reasons for rejoining ANZUS. We ought to acknowledge publicly as a Parliament that the United States has taken nuclear weapons off its ships and then a free-trade agreement would be possible. But the Government should also be frank with this House. A free-trade agreement between Australia and the United States that excludes New Zealand has always been the ultimate nightmare and that is the situation we now find ourselves in through failures of diplomacy failures in statesmanship and failures in leadership by this Labour Government. 
I say to the House that we have no coherent trade policies at all. This Government that prides itself on its foreign affairs is prepared to send peacekeepers anywhere in the world but where is it promoting the interests of this nation? The failure of our trade talks will affect the standard of living of every New Zealander. Does any member of the House doubt that? It appears not and I do not think that even the Greens doubt that. 
Where is the coherent policy of this Government? Where was its plan B for the failure of these Doha talks? The fact that those talks have failed in Mexico has not come as a great surprise. I will not blame the Government for the fact that the Doha talks have failed; I blame the Government for the fact that it does not have a plan B. If we look at the Cairns group of countries what has happened—as the Minister says quite correctly—is that the developing nations who are part of the Cairns group have gone off and joined the G22 group. Apparently we could join that group but it is not really credible for New Zealand to claim that it is a developing country. It could claim that it is a “de-developing country” but not a developing one so we are left with Australia amongst the other six or seven Cairns trading nations. 
What members should appreciate is that every one of the countries left in the Cairns group apart from New Zealand now has an agreement with the United States—either a bilateral free-trade agreement or an agreement to negotiate one. There is only one nation in the Cairns group without such an agreement and that is New Zealand. What sort of diplomacy did it take for New Zealand to be the only country that is not getting a free-trade agreement? If one looks at this list one can see that all sorts of extraordinary countries like Morocco have managed to get an agreement with the United States. Our Prime Minister’s desire to get a one-liner on the 6 o’clock news has done that at the expense of the standard of living of every single New Zealander. 
I just say this to the Government: I know that the Government was a bit surprised when the President of China announced that he was coming to New Zealand. The reason he is coming is because people from China think as people often do that New Zealand and Australia are close together—he is actually going to visit Australia but he is coming here at Labour weekend. 
Darren Hughes 
: Does the member ever get sick of talking New Zealand down? 
Hon RICHARD PREBBLE 
: The member says I am talking New Zealand down. Here is a member of Parliament elected at age 8 who is not prepared to do anything about the trade interests of New Zealand. He is prepared to go on campaigning on Cold War slogans at the expense of every one of his constituents’ standard of living. That member does not like the fact that he is supporting a Government that has done more to sabotage our trade interests than any other Government in the history of New Zealand. If he does not agree with that I ask him which Government in New Zealand has been as unsuccessful as this one? Government members are shouting because they do not like that. 
What proposal will the Government put to the Chinese when they come to New Zealand or has it not been able to get agreement from the Green Party or the United Future party on a coherent trade policy? The duty of a New Zealand Government representing a trading nation in a global economy is to put forward coherent successful trade policies. We are entitled to ask the Government what those coherent and successful policies are. When will we see a free-trade agreement with Chile? What date will that be? Why does the Government believe it will be able to do anything in APEC? It has not managed to promote those talks one iota in the last 4 years. 
I tell the House that New Zealand has never been more isolated and has never had fewer real friends. We have never been in a more perilous position with regard to our trade than the one we are in now thanks to the Minister of Customs and Helen Clark. Helen Clark should be giving some real leadership to this nation. She should say that it is about time that New Zealand settled its differences with the United States and that we will put New Zealand’s interests first rather than her deciding to get some sort of support at cocktail parties with her socialist friends in Europe. 
What we want from this Government is coherent sensible trade policies so that the interests of our farmers and forestry-owners can be promoted and the standard of living of every New Zealander lifted. That is what this House demands. I will sit down now but I invite the Prime Minister to put forward a coherent plan as to how this country will promote its trade interests. 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 I am happy to accept the member’s invitation. Hope springs eternal. When I saw that the member had put out a press statement stating that he wished to have an urgent debate to decide what stance the Government should take after the collapse of the world trade talks in Cancun firstly I thought that undoubtedly he had beaten the National Party to the post with the letter and that proved to be true but secondly hope sprang eternal because I thought that the member might have some serious reflections to offer on the issues at Cancun which he has not offered to date. I hope the leader of United Future will come back to the House because he was actually there and I think might have some quite interesting things to say about what did happen at Cancun. 
In respect of Richard Prebble all I will say is that it is amazing that 146 countries were participating in the World Trade Organization meeting at Cancun 30 were in the green room yet it all seems to be Jim Sutton’s fault! I do not quite follow the logic. However I can say that I did speak at great length with Jim Sutton yesterday at about lunchtime after he had come out of the failed meeting—and it was a failed meeting and we should all speak very frankly about that and the implications for the trade round—and after he had observed the press conferences and spoken to the media himself. I congratulate the Minister Peter Dunne and all the members of the New Zealand delegation on the effort they put in. That delegation included representatives of Federated Farmers the business community and the Council of Trade Unions; the Hon Peter Dunne as I have mentioned; and New Zealand officials. They worked long and hard and are disappointed with the results as I would think is just about everybody who was at Cancun except for the wreckers—unfortunately at least one went from our country—the ones who have refused to see any benefit in a successful trade round. They do not appear to be interested in the fact that the Uruguay round probably delivered benefits of about a billion dollars a year to the New Zealand economy. “What’s a billion between friends?” seems to be the attitude of Miss Kelsey and co. 
The Minister told me that there were a lot of positives at Cancun. First there did appear to be genuine progress on agriculture. We have not yet heard a lot of the detail of what went on the table in the green room but I recall when I was in Europe earlier this year getting the clear impression that the European Union was going to be able to move its position. The European Union Trade Commissioner and the Agriculture Commissioner eventually did deliver significant progress on change to the Common Agricultural Policy. That enabled them then to go to Cancun to make some real offers. My understanding is that the real offers they made still lie on the table to be picked up at what I hope will be future meetings in this World Trade Organization round. So that is a positive. 
The second positive from New Zealand’s point of view was that significant progress was made on issues around fishing. We have been crusading against subsidised fishing because subsidised fishing has led to the predation of the world’s precious fish stocks. The European Union indicated considerable movement on that. That is positive. That still lies on the table. 
So it was not over key issues of interest to us that the talks failed; the talks failed over what have been called the Singapore issues—issues I understand first raised by the European Union at a Singapore meeting some years ago then also picked up and supported by countries like Japan and Korea. That basket of issues covers investment competition trade facilitation and procurement. It appears to have been put up for the negotiations on the basis that if the wealthy countries are to give something in terms of access to their agricultural markets then they should get something in return. In return they want liberalised investment rules and other progress from their point of view in the areas I have mentioned. That was where the talks came unstuck this week. I am told that eventually the European Union pulled investment and competition off the table. At that point in the view of our Minister officials and delegation it should have been possible to move to a deal. But there did not seem to be the negotiating flexibility from some in the developing world to talk around the two remaining issues of trade facilitation and trade procurement. 
I would say that from New Zealand’s point of view those are worthwhile issues. For example one of them gets to the heart of open and transparent procurement policies for Governments. It gets at the heart of corruption and good governance issues and those are things that should be on the table for discussion if we are talking fair-trade rules. It is the way of the world that if the wealthy countries are to open up their agriculture markets then they are going to want some quid pro quo and the least they could ask for is something in those areas. However I understand that there was not the flexibility among the smaller and lesser-developed countries to move on that and that is very very unfortunate. 
Our Minister also reports that he thinks the emergence of the G22 group was a positive. The major developing countries got together to put a coherent case. I think that if it had been left to them they probably could have concluded some sort of deal with the more affluent countries. I might say for the United States that it was not pushing hard on the investment and competition issues; those were not its core issues and it had already gone a considerable way to creating a good context for these talks by the movement it had made on the HIV Trade-related Aspects of Intellectual Property Rights issue some weeks ago in Geneva. So I think the United States did its best to contribute to a positive meeting in Cancun. 
It is unfortunate that the talks concluded when they did. The crunch issues came at a point where the meeting was due to end. The chairman closed it down. One then has to ask where it all goes from there because the next formal ministerial meeting of the World Trade Organization is not scheduled until December next year in Hong Kong. This round was due to finish on 1 January 2005 so a meeting in December next year cannot deliver unless there is a lot of other meetings before that. It may well be that it is simply inevitable now that the round will be extended. It should be remembered that the Uruguay round took many years to be concluded. I am told that the key officials will have a significant meeting again in December and that it is possible there may be a mid-year ministerial meeting next year. There is also bound to be a series of mini - ministerial meetings. 
But I think after what has happened everyone needs to go back to his or her capital and reflect on why the talks fell over. I think that from the World Trade Organization’s point of view there needs to be much more proactive diplomacy out bridging and brokering the issues. I can say of our former colleague Mike Moore that no one was better than him at bringing people together to crunch through key issues. I think that made an enormous difference at the Doha meeting. I think the message now from all interested and concerned countries to Dr Supachai is for him to get out on the road endeavour to bridge the gap and see where the flexibility is. It really is not good enough for some countries to go to the meeting at Cancun then say at the final analysis that they cannot move from their view that trade procurement and facilitation cannot be discussed. It is just too inflexible a position. We will never get a multilateral round if that is the way it is going to be. 
As I have said the Uruguay round delivered significant benefits for New Zealand but it did not come easily. I think that round ran over about 9 years. It had a critical ministerial meeting in Brussels in 1990 which everyone had high hopes for and that one fell over just like this one fell over. But that does not mean the end of a round. 
I think that from the point of view of a small country—which New Zealand is—the most gains we can make are always through multilateral trade negotiations. That is why under any Government in New Zealand the multilateral round will always be the highest trade priority. I should say that this is an area where there has been considerable bipartisanship across both sides of the House. I would be concerned if the ACT leader’s speech today signals that that kind of bipartisanship is off the agenda because I think one of the strengths of the New Zealand position has been that whether it is a Labour-led or National-led Government there is a very strong commitment to the multilateral round. 
Hon Richard Prebble 
: What a silly speech! Why not answer the question? Where is the Government’s trade policy? 
Rt Hon HELEN CLARK 
: The member wants to know about the Government’s trade policy. It starts with stressing the importance of multilateralism and trade. I know that the leader of ACT does not seem to like multilateralism but I thought even he might have made an exception for trade. Multilateralism at the level of the World Trade Organization has been the paramount objective for us and continues to be. We will work to make this round a success because that is in the interests of the whole world community. 
We will also continue to work within APEC on the regional trade goals. I think the failure of the Cancun talks actually makes the APEC meeting a pretty critical one because countries will now go back to meet in their regional economic groupings—whether the European Union APEC the African Union or whatever—and we need to think regionally about what messages and pressures we can send to the World Trade Organization from the APEC leaders’ summit coming up in October in Bangkok. 
We have also at the regional level continued to pursue the work that the previous Government began on the AFTA/CER link. Mr Sutton has been at a meeting about that only recently. Bill Birch did good work on that and continued to do it under our Government. We continue to work. We did conclude a far-reaching closer economic partnership with Singapore and we are now endeavouring to link that up with Chile because of the strategic advantages of having a trans-Pacific trade agreement. We have launched a study on negotiations with Mexico and also with Thailand. New Zealand is showing in many ways that it is interested in opening up trade at all three levels—the multilateral the regional and the bilateral. 
I come to the issues that the member raised about the United States. I want to say to him just this. He referred to the two old parties. The reality is that for 19 years Governments from both sides of the House have supported a nuclear-free New Zealand. One of the great ironies of this House is that some of us remember when a nuclear-free bill promoted by the then member for Auckland Central now the leader of ACT brought the Muldoon Government to its knees because Marilyn Waring wanted to cross the floor and vote for it. For 19 years that policy has held sway in New Zealand. It has become a central feature of New Zealand foreign policy and many would say a central part of the New Zealand identity—that we are proud to be nuclear-free. Our friends in the United States understand the importance of that to us. I believe that we also understand that they consider it to be unfinished business but for 19 years we have been able to put that issue aside and I say we should continue to put it aside. 
Our Government will look for opportunities—and there are many—to work with the United States. No country could have been stronger in its support than what this small country has done on terrorism: members of the SAS putting their lives on the line; frigates in the Gulf of Oman and Orions there now; a Hercules in Kyrgyzstan; a provincial reconstruction team going to a province of Afghanistan; and engineers now going to Iraq. These are substantial contributions for a small country and they are valued by the United Sates. We know that as a result of policies previously advocated by the then member for Auckland Central this country took a path on the nuclear-free issue that led to the ANZUS alliance being non-operational for us. What I say without fear of contradiction is that the fact that we are not operational in ANZUS has not stopped us from doing the right thing to help our friends and we will keep doing that. 
I say that we do have a friend in Ambassador Zoellick who has looked to make room for this country at some point to come into a list for negotiation. This Government—this country—has always wished the Australians well in their negotiations because we believe that they do open up a path for New Zealand. I point out that when Ambassador Zoellick sent the letter to Congress about Australia going on the list he specifically noted the links between the economies of Australia and New Zealand and hence the importance that New Zealand paid to those negotiations. We will keep working at that. 
I invite the Opposition to be supportive of the New Zealand national stance and not to undermine it. In my view there is nothing more treacherous than poor-mouthing one’s country off shore to its material disadvantage. We know that we have gone the extra mile to be a friend to the US at a time of need. We know that is appreciated and we will keep working for a trade relationship that reflects two things: first the overall very strong historic friendship between this country and the United States of America; and secondly the fact that we are strong allies on trade. No one has worked more closely with Trade Representative Zoellick than our Minister or with that administration than our Government and I am proud of that. 
Hon BILL ENGLISH (Leader of the Opposition) 
: 
 That speech exemplified the problem. The ACT leader asked the question “What is the Government’s trade policy?” and the question was not answered. For all the bipartisan support for trade the end result of all the learned multilateralism all the head-spinning refined foreign policy is a big fat zero. Nothing has actually happened. 
Bipartisan support is always there because trade is so important to New Zealand. I stand today not just as the leader of the National Party but representing one of New Zealand’s most trade-oriented electorates—the fishermen the farmers the foresters and the support industries that all go with that export trade. We know how important it is for New Zealand. If we are ever going to close the economic gap with Australia which is my ambition strong growth is needed in exports year on year of something like 9 or 10 percent. So it is incumbent on every New Zealand Government to work as hard as it can for trade. 
But I cannot help feeling that we have been somewhat misled domestically about the Government’s progress on trade. One free-trade agreement has been signed since the 2002 election. That was the Singapore free-trade agreement which was negotiated by Lockwood Smith and Jenny Shipley and signed by the new Government. 
Rod Donald 
: What a disaster. 
Hon BILL ENGLISH 
: The Greens say it was a disaster. That is it. Nothing else has happened. Is there anything in the drawer? That is what comes out of the events of today. There is nothing in the drawer either. There is no trade agreement that has made any progress there is no little revelation around the corner from the US and now there is no hope of a quick resolution of the Doha round. 
I just want to talk briefly about those events. I know that the Minister for Trade Negotiations has spent an enormous amount of time trying to bring this Doha round forward. I believe that if Mike Moore were still in the chair much more progress would have been made because he was an active lobbyist. He did know how to work with the developing countries. He could create an argument that a whole range of interests could sign up to. Unfortunately that has not happened. 
I remain relentlessly optimistic. Whatever happened in Cancun the Doha round needs to get back on its feet because it is in our interests that it does so. The Uruguay round did get back on its feet. I do not think resolving this round is going to be anything like as simple because so many developing countries are exerting a much more assertive influence in the World Trade Organization. 
It is exactly that complexity that we should be wary of. The Prime Minister loves it. She is in her element understanding all the nuances and subtleties of what went on and why. But the fact is it is going to take an enormous effort to get the World Trade Organization round up and going again because the politics of it are now so enormously complicated. That is the limit of being totally wedded to multilateralism. If we listen to the Prime Minister we find New Zealand’s economic fortunes are now bound to the World Trade Organization and getting 149 countries to agree when by any measure that is getting a whole lot harder. We are according to the Government’s policy virtually helpless. If we believe that that is the top priority there is almost nothing we can do about it except carry on as Helen Clark does and function as a well-informed and articulate commentator. We can watch it all go past while the prospects for our primary and export industries fade away. 
What is the alternative to multilateralism? Well there is not any. Let us not be fooled. Through the 4 years of this Government we have had an endless number of syrupy statements that are meant to leave the public with the impression that our relationship with Australia is very good that our relationship with the US is terrific and that that means we are going to get a free-trade agreement some time. Well I can say to the member what I did not say when I was out of the country. I spent a week going around Washington. While I was there I was asked what I thought the prospects of a free-trade agreement were. I was very measured in my response because I do not believe we should bag our country when we are out of the country. But I can tell members that there is no show of a free-trade agreement. There will not be a free-trade agreement with the US. It does not matter whether Mr Zoellick is a nice man. They are all nice people. They are all very interested in and friendly with New Zealand. It is just that we are completely irrelevant to their strategic considerations and they are not going to waste 5 minutes on negotiating a free-trade agreement with us. 
Let us move to Australia. The single-biggest foreign policy failure of this Government was to let Australia go to the table to negotiate with the US without New Zealand. We could have had a CER/NAFTA agreement but the relationship between New Zealand and Australia did not allow that to happen. New Zealand for all the attention it has paid to that relationship over the years let it slip from its grasp. For all the Prime Minister’s alleged brilliance in this area in fact it has turned to ashes. We are not a part of that negotiation it is not a path for New Zealand to a free-trade agreement and the US is not interested. Actually nor is anyone else. China? I heard that when surprisingly the Government did find that the Premier of China was coming there was mention of a free-trade agreement. Maybe we should start doing that with China. Well that is about— 
Simon Power 
: The Chinese-Franco-German axis. 
Hon BILL ENGLISH 
: Yes that is right; what about the rest of them? There is nothing on the trade horizon. That is the awful message I have to take back to the exporters and primary producers of New Zealand. The failure of the Doha round at this point has exposed the Government’s failure in every other respect. I do not blame it for the problems at Cancun. Why would we? I am sure Jim Sutton has put in every effort that he could; so have the trade officials. I am sure the Prime Minister has put in every effort that she could. But when we do not have success in the multilateral forum we have nothing else and that is where Labour has gone wrong. It must cover the strong possibility that the Doha round takes a very long time and does not come out with the result that suits our interests. 
I say to the Prime Minister that bipartisan support for the New Zealand Government’s effort on trade is contingent on her sticking with our national interests. That is the top priority not multilateralism. That is not what we are here for. We are not here to support multilateral institutions first and foremost; we are here to secure trade advantages for our exporters and producers. That is what serves our national interests. If the multilateral institution does not serve our national interests the Government has an obligation to pursue the bilateral opportunities that other countries are pursuing such as Australia which has done so quite vigorously. That is not to say there should be less effort on multilateralism; it is simply to acknowledge that it may well fail and the result may not serve our interests. 
I invite the next Government speaker to reassure us in that respect. New Zealand’s trade negotiations are not one long job application for Helen Clark to the United Nations. That is why she says multilateralism is the top priority—because for her it is. But for New Zealand the top priority is our national interests. So I am looking for that reassurance—[ 
Interruption 
] I tell Helen Clark not to talk here about the polling on behalf of the Labour Party. I am looking for reassurance from this Government that it is pursuing our national interests and will do so without fear or favour. [ 
Interruption 
] That reassurance has not been given. I never heard it in the Prime Minister’s speech. All I heard was dedication to the multilateral institutions which have merit but are dreadfully complicated for us to negotiate. Given that New Zealand as a small open economy one of the most open in the world achieving trade gains must be a top priority for the Government and it has achieved none. What could have been a worse result after 4 years in Government than what we have? We have nothing—no trade agreements and none of the relationships we need to bring about critical trade agreements. 
DAIL JONES (NZ First) 
: 
 We have heard a speech from the Prime Minister today that was full of excuses and nothing else. The leader of the ACT party Richard Prebble asked the Prime Minister to give us some indication of the Labour Party’s trade policy. I still do not know what the Labour Party’s trade policy is. I am sure no one in this House knows what the Labour Party’s trade policy is. I would be interested to hear from any Labour member even by way of interjection just what the Labour Party’s trade policy is. What did the Prime Minister say during her speech that gave us any indication that she knew either what trade was or what policy was and that she had the ability to put them both together and tell us about them? As has been said already in this debate this Labour Party has no idea on trade. The only thing we can say about the Prime Minister’s speech is that she is just carrying on from where everybody carried on before. She has added nothing new at all. Now it has all ground to a halt. 
 New Zealand First is delighted to be taking part in this debate and we thank the Hon Richard Prebble for his letter to the Speaker. The letter makes it clear that the Government’s whole trade policy has now collapsed and makes the point that New Zealand alone amongst the Cairns group is either not a member of the G22 group of developing countries or does not have a prospective bilateral deal with the USA. I would have expected the Prime Minister to give us something more certain about just what was happening. 
Maybe the answer about the G22 group is in the press release put out by Catherine Bell on behalf of the Minister for Trade Negotiations. May I say from the point of view of the New Zealand First spokesperson on trade that I do appreciate all the information I get from the office of the Minister for Trade Negotiations. His office is very diligent in making sure that I am on its mailing list. But from the statement from Catherine Bell of Monday 15 September and in the context of the G22 group it seems that there is now a G21 not a G22 and that that is because New Zealand is no longer a member of it. The Minister’s own press statement says that New Zealand worked extensively with all participants of the World Trade Organization meeting especially with the United States the European Union the Cairns group and the G21. So I take it there is no longer a G22; there is a G21—New Zealand is not part of it anymore. The Cairns group excludes us. So is there some admission now of the abject failure of this Labour Government when it comes to trade? 
Hon Richard Prebble 
: More and more isolated. 
DAIL JONES 
: Yes we are more and more isolated. Even the Minister says in the press statement he has put out that we are no longer part of the G22. 
The Prime Minister may not even have read the Hon Richard Prebble’s letter but it is an interesting letter that deserved a reply. One can only assume that as the Prime Minister has no idea on the subject whatsoever she failed and was totally unable to answer it. Her speech was just excuse after excuse. As the previous speaker said it was a nice commentary the sort of thing that one might read in a column in the 
 Independent 
 or perhaps the  
National Business Review 
 but not the sort of thing that the people of New Zealand want. 
We are probably the greatest trading nation in the world per capita. We depend almost entirely on overseas trade and have done since the first export in 1882 of refrigerated meat on the  
Dunedin 
 as I recall it. We are totally dependent on trade and on continuing the development of trade for New Zealand. Mr Sutton the Minister of overseas trade in this last year or so has spent 100 days overseas. He has spent about $230000 of taxpayers’ money on his trips overseas and he has absolutely nothing to show for it. This Labour Government is an absolute failure in the area of trade. It is not as though it has not been given every opportunity by New Zealand to try to achieve a result but no it is an absolute failure. 
Of course what this minority Labour Government likes is “la terza via”—the third way. It is interesting that the third way was the creation of the leader of the Italian Communist Party; in trying to make Italian communism more acceptable he dreamt up the phrase “la terza via”. It was then taken up by Blair and the like to describe their left-wing socialism. If the Labour Party is very keen as we have read recently to go the third way maybe that explains why Labour has no policies whatsoever because “la terza via” and the ways of a failed Italian communist party hold nothing for the future of New Zealand. 
The New Zealand Labour Party should have another think about the way in which it is operating its overseas alliances. One of the major issues facing New Zealand must be our links with our traditional allies— Australia the United States and the like. When it comes to trade when it comes to our relationships with those countries they must be satisfied that New Zealand is making a proper contribution to the South Pacific and as much of a contribution internationally as we can. I refer of course to defence areas. We recently had a visit from Australian members of Parliament. Their first view of New Zealand was of the New Zealand First sign just by Mangere Airport. They all knew what New Zealand First was because they had seen our sign depicting Winston Peters and our three policies. They said that New Zealand First had made an impression on them as soon as they got off the plane. 
Hon Annette King 
: All paid for with taxpayers’ money. 
DAIL JONES 
: We know how to use the money. We know how to use money and we have shown how efficient we can be in our use of it. The Australian members of Parliament and their officials talked to us about New Zealand’s contribution and they mentioned defence. Really our contribution to defence is so little that I believe that internationally in the South Pacific we must be regarded by Australia and the like as bludgers especially under this Government with no air support system with a minor army and with inconsequential support for the navy. How can we expect Australia the United States and other countries to take us seriously and to have proper and meaningful trade links with us if we are not willing to play our part in the area of defence? New Zealand First has made quite clear in our defence policy the funds that we will contribute to defence. 
As I said the Prime Minister gave no idea of what Labour’s trade policy is. New Zealand First has set out its trade policy in our  
Keeping New Zealand First (2002) 
 election manifesto. We have made it quite clear that we will develop in conjunction with the export sector an export credit guarantee scheme that works. We have announced a tax abatement and concession policy to ensure that viable exporting opportunities and innovation are not lost. We are prepared to set up a 20 percent tax rate on new export net income. New Zealand First will ensure that the New Zealand Trade Development Board or any alternative “maintains and expands our present markets whilst developing emerging markets and on the promotion of industries where we have a clear comparative advantage”. New Zealand First will further promote innovation by tax-incentivised research and development comparable with that of other First World nations and will ensure that technology transfer occurs within both the public and the private sectors. 
Those are a few examples of a trade policy—New Zealand First’s trade policy. I did not have even one example from the Prime Minister of this Labour Government’s trade policy. It just does not have a trade policy at all. It is non-existent. I am sure that if she had a trade policy she would have told us about it but this Labour Government is bereft of any policy whatsoever. I sat here and I listened and I waited and I waited as did all the other members in this House. This Labour Government is going down in the polls. It is not surprising that the public is finding it out in all areas. One area that we should be looking forward to is the exporting of products that are GE free. There is nothing about that from Labour. There is no consideration of it. All these matters must be given careful consideration. New Zealand First is giving consideration to them and it looks forward to implementing them when it is the Government. 
ROD DONALD (Co-Leader—Green) 
: 
 The Labour Government must accept its share of responsibility for the collapse of the Cancun World Trade Organization meeting yesterday. Labour could have rediscovered its internationalist roots Labour could have acted on its claimed commitment to social justice and democracy but it did not. Instead Jim Sutton was seduced into playing with the high rollers in the green room. The Government said it was a great thing that we had one of the 26 trade Ministers who were allowed on the inside—never mind the 100 countries that were shut out from the green room process. The Minister who was answering on behalf of Jim Sutton today could not even tell us what had happened in the green room and of course he is not alone; most of the World Trade Organization countries do not know what happened in the green room. That is because the process is anti-democratic and that is because there is no transparency in the World Trade Organization. 
But Mr Sutton wanted to be on the inside did he not? Instead of standing with the world’s developing countries instead of standing with the G21 instead of even being a member of the G21 and backing its calls for an end to the rich-world production subsidies and for the removal of investment and other so-called new issues that came out of the Singapore meeting he went on the inside. He sided with the rich countries by supporting the final text which not only gave the Europeans the Americans and the Japanese the soft option on subsidies but also tried to extend unfair trade rules into investment and new issues. Labour was at the crossroads at Cancun and it took the low road. And for what? We have to ask that. Surely it was not just so that Jim Sutton got a ticket to the green room to be with the inner circle of Ministers. There has to be more to it than that. How much of Labour’s trade strategy is influenced by it wanting to be friends with the United States of America? 
Certainly Labour chose not to listen to the developing countries—and they have been shouting for a long time. Mr Jim Sutton claimed to be deaf to their calls. Those countries are not wreckers as Helen Clark claims. They have put their collective feet down because they can see the reality. They have suffered the reality of the World Trade Organization working for the rich against the poor. That is the truth of the World Trade Organization. Jane Kelsey a very eminent commentator who has been at the meetings describes them as a turning point because “the perception that economic globalisation is inevitable and irresistible” is now no longer a perception. It certainly never was a reality. That perception has been shattered. There is no inevitability about globalisation because we have just witnessed a historic moment; we have just witnessed least-developed countries and developing countries—from Africa from the Caribbean from the Pacific and Malaysia—all refusing to give way to the bullying and the threats that have marred every meeting since the World Trade Organization was established in 1995. They have said enough is enough. They have said they are not prepared to succumb to the pressure from the big countries that want everyone else to do as they say and not do as they do. 
The Labour Government could have been on the right side. It could have said that it wants to support the developing countries in their calls for greater fairness for greater transparency and for more democracy. What did the Labour Government do? What did Jim Sutton do? He went along with the big boys. He accepted their whole approach of bullying of coercion and of demanding that the smaller nations of this world do as they are told or else. There were quite a few “or elses” at this World Trade Organization meeting; at least one country left the new bloc because it was threatened by the United States. 
Ultimately the countries that walked away had no choice. The draft ministerial text was so provocative that it strengthened their resolve. I quote from the impassioned speech of one Minister Sir Ronald Sanders from Antigua and Barbuda: “My Government has a duty to care for its people. Were we to accept this document we would deserve our people’s condemnation for we would not only have gained no relief for them; we would have condemned them to a life of perpetual underdevelopment and that my delegation will not do. I have to advise that this draft does not enjoy the support of my Government.” That is not the statement of a wrecker; that is the statement of a man who has expressed with considerable sadness that an international body could not do the right thing despite it having plenty of opportunity to do exactly that. 
But the problems of the World Trade Organization go way beyond this particular meeting; they go back to a whole string of failures. This year World Trade Organization members failed to meet the deadline for the General Agreement on Trade in Services round failed to meet the deadline for the industrials round and failed to meet the deadline for the non-industrials round. If ever the writing were on the wall it has been on the wall since March when only a few zealous Governments like the Labour Government in New Zealand were prepared to buy into the World Trade Organization agenda and everyone else was holding back. 
On top of the outcome problems there is the whole issue of process. This Labour Government could have earned some credibility if it had sided with the developing world and the major international organisations that are concerned about the need to improve internal transparency and participation in the World Trade Organization. Did the Government sign up to that call? To be honest I do not know because of the lack of transparency and the lack of democracy but I would suspect by the statements that the Minister has been making that New Zealand did not. Therefore we as in the Government—because I do not accept responsibility for its behaviour—has to accept some responsibility for the basic challenges that were not addressed at this meeting in relation to the need to tackle the lack of internal transparency the lack of participation and the lack of democracy at the World Trade Organization. Those calls were not coming from fringe groups or from protesters on the outside; they were coming from recognised international organisations on the inside of the meeting—Oxfam International Public Service International World Wide Fund for Nature International and a number of other very credible organisations—which clearly were not listened to by the likes of the New Zealand Government and that is why this round has failed. If anyone has wrecked the round it is New Zealand and the countries it associates with because New Zealand was happy to go along with a process that effectively perpetuates a democracy deficit. 
To bring that deficit home to this Parliament might I share with the House how a World Trade Organization - style rules-based decision-making process would operate in this Parliament. The Speaker of the House and the chairs of the committees—and any friends whom they might choose—would draft all the bills. Then the Speaker and the committee chairs would chair the discussions on their own proposals but the documents to be discussed would not be provided in sufficient time for adequate prior consideration. So many meetings would be scheduled at once that not everyone could get to them and in any case they would all be in Queenstown so very few MPs could afford to go anyway. And on it goes. Is that a decent process for making rules that govern the way the world works? It is not. 
I do want to say before I finish in case anyone in this House has any doubts that the Green Party is not anti-trade. I used to be an importer; I was a New Zealand manager of Trade Aid for 6 years. So I support imports—appropriate imports imports that have been made in conditions where the workers are well paid where they work under decent labour standards and where the environment is looked after. That is why we respect fair safe and sustainable trade. That is why we are opposed to what the World Trade Organization is doing. It is undemocratic. It is dominated by corporations. It forces countries to trade when they do not want to. It undermines national sovereignty. It puts trade ahead of human rights ahead of labour standards and fair wages and ahead of environmental protection. It stops countries from protecting their own people—both workers and business people—from unfair trade. 
I have to say that even within the rules that exist this Labour Government always has to go one further. I understand that it wants to get rid of the last of the tariffs that exist to protect the clothing sector—and I am glad Darren Hughes is in the House to hear me say this. I wish MPs like him would do more to protect the jobs of workers in his own electorate people who have lost their jobs because the Government wants to axe the last tariffs that are keeping going 18000 jobs in New Zealand in the clothing sector. I say to this Government it should not be so callous and it should not destroy those jobs. 
Hon PETER DUNNE (Leader—United Future) 
: 
 I was at Cancun as the chair of the Foreign Affairs Defence and Trade Committee. I want to do something rather unusual at the start and compliment the previous speaker on his speech. In its neo-socialist rhetoric and relevance it was equivalent only to the speech given to the plenary session by the Foreign Minister of Cuba who spent most of his time regaling the meeting with the history of American imperialism against his State for the last 50 years. At the end of his contribution which came during a rather sleepy session the entire plenary session erupted in applause chanting and cheering at that good old dose of socialist rhetoric then slumped back into the irrelevance of the rest of the occasion. 
That I think sums up the contribution of the co-leader of the Greens. The world that he described is not the world that most of us reside in—or would want to reside in. The reality that he promoted to us as having occurred at Cancun is reliant on the reports of Professor Jane Kelsey—who was there as the correspondent for iwi radio believe it or not—which bear a most extraordinary sense of irrelevance. She was not sighted even once during the proceedings. Perhaps that is hardly surprising because the Mexican security barrier did not let the protesters within 10 kilometres of the actual event so they spent most of the time talking among themselves making up the story and feeding it back to willing stooges like Mr Donald in New Zealand for him to report to this House. 
 I want to make a couple of comments about where things stand at the moment. This meeting was an intermediate meeting following on the Doha development initiative that had been adopted at Doha a couple of years ago. So expectations that arising out of Cancun we would see some permanent solutions were never going to be fulfilled— 
Rod Donald 
: I raise a point of order Madam Speaker. The honourable member who was speaking often leaps to his feet and takes offence at any suggestion that he acts as a stooge or puppet for any particular industry. In kind I ask him to withdraw and apologise because I do not like his claiming that I am a stooge of anyone else. 
Madam DEPUTY SPEAKER 
: The member is quite correct. The member will stand withdraw and apologise. 
Hon PETER DUNNE 
: I am more than happy to do so. The context in which my comment was made was not one of suggesting external influence but something else altogether. 
Hon Richard Prebble 
: I raise a point of order Madam Speaker. I apologise to the member for interrupting but the Standing Orders of this House are quite clear. If one is to raise a point of order it must be raised at the appropriate time. One cannot wander out of the Chamber then decide to come back 3 minutes later and complain about a passing remark made in a speech. I say that the Green member was completely disorderly in breaking up what was quite a good speech from the United Future member—one that those of us in the House were quite enjoying listening to. 
Rod Donald 
: Three minutes had certainly not elapsed. I had left the Chamber but came straight back through the door as soon as I heard those words. It is not for the member to comment on whether I am in the Chamber but I would like listeners to know that I was on the way to a Business Committee meeting. 
Madam DEPUTY SPEAKER 
: The point of order has been ruled on. 
Hon PETER DUNNE 
: I will resume where I left off. I am reminded as I do so of Eamon De Valera who was arrested in 1913 during an Irish civil rights meeting. He was thrown in jail for a year and on the date of his release sent a message to his supporters to gather at the same hall he had been in when arrested. He came to the meeting got to his feet and said: “Now as I was saying when I was interrupted …”. It has not been quite a year but it felt a little like that. 
The point that I wanted to make and was making at the time of that interruption was that this meeting was always going to be an intermediate step along the process. The Doha round still has another 18 months or so scheduled before it is due for completion. What Cancun has been in effect is not the end but certainly a stall. It would be wrong to go to the point of saying that the multilateral structure has collapsed that world trade is in chaos and that this country’s relationship to it is in chaos. What has happened is that the process has stalled and it now needs to be restarted. Some issues arise from that to which this House ought to pay some consideration. 
First the emergence of the G21 or as it briefly was the G22 before Turkey had a change of heart is in my view not a temporary phenomenon. When we look at the World Trade Organization of 146 nations and see that more and more developing countries are joining—I think Cambodia and Nepal acceded to the protocol during the meeting—we know that the power of those countries and their willingness to become involved in the debate will increase in the future not diminish. So I am not one of those who say that the G21 is a passing fad. It may well reorganise itself and become something a little bit more cohesive but I believe that as a group it is there to stay. 
That imposes a couple of immediate issues. Firstly there will be a tension between the Europe-America-Japan bloc and that G21 group—or whatever number it eventually ends up with. That will be the traditional rich/poor divide. But secondly and I think of more relevance to New Zealand is the question of where the Cairns group—where New Zealand Australia and other agricultural producers have had their influence over the years—now will lie in relation to the G21 and the Europe-America bloc. New Zealand and Australia in particular over the years have made since the time of the initiation of the Uruguay round a lot of progress in terms of promoting agricultural issues. There is still a long way to go. European protectionism is still as heavy as ever despite claims by the Europeans that the Common Agricultural Policy is no longer that but is now a rural redevelopment policy and will not shift in terms of its total value for 10 years—“And in any case if you do think it will shift we can’t make that decision; it is for our sovereign member Governments to make.” 
In spite of that intransigence over the years we have been able to advance our issues progressively. The difficulty we will now face if the debate shifts away from that issue about agricultural protectionism removal of export subsidies etc. into a wider debate about development relationships between the rich and the poor countries is that the issues that we as a nation have been advancing over the last 15 years run the risk of being to some extent sidelined. There is an irony within this as well. Given the state of world dairy production and its export level of which New Zealand contributes about 40 percent to some extent there is a perception—and I am not actually arguing this—that we could be the victims of our own success. The Europeans in particular are very good at saying: “Look you people come here and talk to us about freeing up agriculture and about giving greater access for dairy products but you’ve got a virtual monopoly anyway. You can’t have it both ways.” So we need to be mindful of that pressure alongside the intransigence that I referred to earlier creating a potential obstacle that the advent of the G21 in my view only increases the risk of. 
The question that arises not just for New Zealand but for nations of our type regardless of our bilateral relationships is what ought to be our future strategy with regard to the World Trade Organization. Clearly withdrawal in the way that Mr Donald advocated is not an option. We cannot go back to an environment where a series of bilateral relationships—in the absence of any multilateral structure—prevail. The tariff walls the protectionist boundaries that have been in place for so long will simply rise again. There does need to be a coherent World Trade Organization. 
I think that the organization itself needs to take more decisive leadership. In my view it was noticeable during this meeting that the secretary-general was very much a passenger in the proceedings taking place. The driving forces were the European Trade Commissioner Mr Lamy and the Mexican Foreign Minister Mr Derbez who was in the chair for that meeting. The first issue that needs to be resolved is the need for more steel within the World Trade Organization to try to drive forces to conclusions and not simply to leave it to everyone to try to make up his or her own mind. In a setting of that nature that will never be possible. The second issue that has to be addressed starting from now is that officials need to resume negotiations in Geneva to start to put together a framework that can be the basis of a ministerial meeting to be convened sometime in the next year or so—probably in Hong Kong I believe from the suggested dates so it is not quite Mr Donald’s Queenstown—to bring some fruition to this round prior to its expiry date. 
The difficulty that emerged at Cancun in my perception was that Mr Derbez the Mexican Foreign Minister and his European counterpart Mr Lamy held to themselves by and large the development of the draft text. It was released only at 11 o’clock on Saturday morning Mexican time to all the participants. So it had a degree of secrecy about it and I think that within it it contained the seeds of its own failing. There needs to be a more transparent process in terms of working together. 
The issues between the rich and the developing countries do need to be addressed but New Zealand’s challenge is to ensure that the issues of concern to us and to similar nations through the Cairns group remain on that agenda. There is goodwill amongst elements of the Europeans—the British in particular—and amongst elements of the Americans but a concerted approach needs to be brought together to try to make progress in that regard. Otherwise what happened at Cancun will not be the temporary roadblock that it is being perceived as at the moment but could well become the start of a permanent derailment of that system. If we got to that point then we would have some very severe problems. But the reality that Mr Donald tries to paint is not a path any nation in its right mind would want to go down. There does need to be a rules-based approach to international trade relations. In the absence of a World Trade Organization a similar body would have to be reinvented to try to get that structure that is there. 
So I think it is right that this House expresses some concern about the state of affairs in the wake of the Cancun meeting but it is an over-exaggeration to say that all is doom and gloom and there is no future. I do think that as a nation we collectively need to redouble our efforts both at the official level and at the political level to ensure that when these talks resume as they inevitably will we can start to see some concerted move towards progress that will lead to a resolution of these issues in a way that is favourable to New Zealand. But it would be a mistake to ignore the mounting power and influence—and I guess assertiveness—of the developing countries. They have now reached the point where they are taking a role within the World Trade Organization; they do not expect to be passengers. They expect their issues to be listened to and we have to figure out where we stand in relation to that. 
Dr DON BRASH (NZ National) 
: 
 It would be impossible to overstate the importance of trade to this country as it is important to any small country. But it is particularly important for New Zealand with a population of only 4 million people and its heavy dependence on imports for a range of goods and services. We have a huge stake in a successful trading environment. Over the last 10 or 15 years the ratio of exports to gross domestic product (GDP) in New Zealand has increased markedly. That has to be a major reason that the growth in our standard of living measured by GDP per capita has roughly quadrupled over the last three or four decades. In the 1970s and 1980s growth in per capita incomes was only about a half of 1 percent. In the last decade growth in per capita incomes was more than 2 percent and the increase in the ratio of exports to GDP was a very important part of that. 
We are crucially dependent on the success of the multilateral trading system. There is no question at all that we therefore had more at stake with regard to the success of the World Trade Organization Doha round than arguably any other country in the world. I agree with Mr Dunne’s comments that Mr Donald is in that respect absolutely incorrect. There is no future in the kind of trading environment that the Greens espouse. We need to be part of a multilateral trading environment and if we are not New Zealand is in serious trouble. I agree with Mr Prebble’s comments that we cannot blame this Government for the failure of the Cancun meetings. That was clearly a problem that we did not contribute to. It would have been better if Mr Mike Moore had been there; I agree with other speakers about that. The current head of the World Trade Organization does not have the contribution to make that Mr Moore had. Again I do not blame the present Government for the fact that he is no longer there. 
The question is this: what is plan B? As far as I can see there is no plan B. The multilateral talks look as though they will fail. They are certainly not likely to succeed in the time framework envisaged at Doha and there is no plan B. The Government might have had in place a regional trading strategy—the APEC strategy perhaps—but there is no sign of that being likely to be successful either. 
We move back from multilateral to regional and now to bilateral trade agreements. What has happened there? Absolutely nothing. Reference has been made to the agreement with Singapore. I was present when the Singapore trade deal began. It was at a lunch hosted by my colleague Dr the Hon Lockwood Smith in the Beehive when National was in Government in 1999. George Yeo the Minister for Trade and Industry from Singapore was present for lunch and Lockwood Smith asked why New Zealand did not do a bilateral free-trade agreement with Singapore. Mr Yeo expressed surprise at that suggestion. He said there were not very many barriers to trade even then between New Zealand and Singapore. Lockwood Smith agreed. He said that we ought to be able to make an agreement work. Most of the work that led to that agreement was done while the previous National Government was still in office in 1999. So we have a bilateral deal between New Zealand and Singapore that is clearly of huge benefit to both countries. 
What else do we have? As far as I can tell there is absolutely nothing else at all. The Government began an agreement with Hong Kong but that has been in abeyance since it began and there is no sign at the moment of it coming to a satisfactory conclusion. The Government has begun an agreement that is to lead to a free-trade deal with Chile. As far as I can tell there is little prospect of that reaching a successful conclusion either. I turn to the United States. We were on the brink of doing a deal with the United States when the previous National Government was in office—the so-called P5 agreement involving Australia New Zealand Singapore Chile and the United States. The then Ambassador to the United States the Rt Hon Sir James Bolger advised when I was in the United States in 1999 that we were very very close to having a deal with the United States and the other countries of the P5 at that time. Alas 4 years later there is no sign at all of that agreement being feasible. 
As my colleague David Carter pointed out worse than that we have damaged our relationship with the United States so irrevocably that the prospect of a free-trade agreement between New Zealand and the United States while this Government is in office is almost exactly zero. I have in front of me a record of the Prime Minister’s comments on 24 March this year when she said: “It is probably true that at the leadership level the personality interests and inclinations of leaders play as big a part if not bigger than they ever have before. It is a bit hard for example to see an Al Gore presidency having delivered this” with reference to the United States’ attack on Iraq. Then just a week later in the  
Sunday Star-Times  
of 30 March 2003 she commented: “I don’t think that September 11 under a Gore presidency would have had this consequence for Iraq. But I think in this [Bush] administration there were forces that always wanted to go after Iraq and September 11 tipped the balance.” Do we wonder that our relationship with the United States has been severely damaged by this Government and the comments of this Prime Minister? The prospect of getting a trading relationship with the United States under this Government has been irrevocably damaged. We will depend upon the return to office of a National Government to have any prospect at all of doing a free-trade agreement with the United States. All of us in this House must seriously regret that fact. 
The bleak prospect for a free-trade agreement with the United States worries me for two different reasons. One reason is the loss of the direct trading benefits that would arise from having a free-trade agreement with the United States—the additional trade opportunities for our dairy exporters and other exporters. At the moment our cheese exports face a quota in the United States that limits them to less than 1 percent of the US cheese market. If we had a decent free-trade agreement with the United States we would have a huge boost to our economy and to our dairy industry in particular. As my colleague Mr Prebble pointed out we might well have cows grazing on Parliament grounds. The second reason I worry is that the dynamism of a closer link with the United States would extend far beyond the direct trade benefits. We could not continue down the track of the dopey policies we are currently following in terms of labour legislation the Resource Management Act the Land Transport Management Bill the Holidays Bill increased taxes and so on if we were linked in a close dynamic relationship with the US economy. 
We are losing those benefits by not having a close relationship with the US and that is a tragedy of enormous proportions. If we want to crank up our growth rate and improve our living standards we simply cannot afford to throw away the benefits that a closer relationship with the United States would give us. But sadly this Government has done so. 
Hon PETE HODGSON (Minister of Energy) 
: 
 The previous speaker began well enough by spelling out the importance of trade to this country and to all small countries and went on to suggest that the ratio of exports to gross domestic product (GDP) had improved over recent times. I felt that those early comments were most interesting and useful. Then the member reached for the National Party research unit notes and dropped in behind the safety of them repeating as his leader had done earlier in the debate that he wanted to know where plan B was. He wanted to know what was in the cupboard after the World Trade Organization. Away he went. He ranted and raved and gave the same lines again and again. 
 Then the member went a little further and said that only under a National Government could a free-trade agreement with the US be secured in response to which I would gently ask him where he was in the 1990s. After 9 long years there was no free-trade agreement just one that was close. Then the member went still further and got into pure drivel. He said that only if we had a free-trade agreement with the US could we keep our compliance costs low and could we get our tax rates down. By that stage the member had moved from reasoned debate and the National Party research unit’s speech notes through to pure unreconstructed ideology. 
Now is a good time to thank those New Zealanders headed by the Hon. Jim Sutton who have just spent the last week or so in Cancun. The Hon. Peter Dunne was there; so were a lot of officials representing New Zealand’s diplomatic and trade skills. And we do have a lot of them. It is useful to put on the parliamentary record my appreciation anyway for the work they do. I add to that my appreciation for the attendance and I am sure the hard work of members of the business sector—Business New Zealand—of a couple of representatives from Federated Farmers who I know were there and of the fishing industry and so on. 
The fishing industry was a really interesting case in point because around the back a group of countries got together on fishing. Admittedly they were mainly seller countries—like Iceland Norway Canada and so on. New Zealand of course was there. It is clear that some progress can be made on fishing. Indeed progress is being made on fishing just by the formation of that group because it is quite sector-specific. I think that is interesting. I do not know how far that group will go but the fact that it has been formed is very encouraging and I congratulate those New Zealanders who were involved in that as well. Fishing I would imagine would be worth something in the order of $100 million to $140 million or 150 million per annum to us if we could remove the tariffs on that. It is a shame I am sorry to say that Japan as I understand it was not part of that group. 
However I think the issue is whether the Doha round is fatally damaged or not. I thought the Prime Minister made some interesting remarks when she spoke about the earlier Uruguay round. It went on for about 8 or 9 years and had its time extended because it failed and failed as it went through—until it succeeded. The success of the Uruguay round is still being felt in New Zealand because the implementation phase is still running. I do not think it finishes for another year or so. But in any case it is worth a very substantial amount of money to our economy—certainly in the order of a billion dollars or more. The fact that we now have the Doha round which takes things further is encouraging and the fact that the Cancun meeting failed to reach agreement is discouraging. It was interesting to hear the comments of Peter Dunne that maybe there will be a ministerial meeting preceded by a bunch of diplomatic and officials’ meetings— 
Hon Richard Prebble 
: What’s plan B? 
Hon PETE HODGSON 
: Maybe there will be a meeting in Hong Kong in the middle of next year. 
I offer up to the House my experience with regard to the climate change negotiations which are the largest multilateral negotiations on the environment ever held. What happened in December 2000 in The Hague was that 17000 people went to a meeting to seek to reach an agreement and after about 12 days failed. It was quite a spectacular failure. The Europeans I felt had taken far too hard a line there and came back 6 months later to Bonn. Instead of 17000 people there were more like 1700 people there. The world agreed on the rules for Kyoto there and pushed those rules through in Marrakesh 6 months later. So one can have failure followed by success. 
Richard Prebble asked what plan B is. What do we do now? That was from the National research unit notes. I will just reiterate the Government’s position. This Government’s position is very similar to the position taken by all Governments in New Zealand and it is that multilateral negotiations—for example the Uruguay round—are at the top of our list and always will be. We will always put the most effort— 
Hon Richard Prebble 
: What’s plan B? That’s plan A. 
Hon PETE HODGSON 
: That is plan A. Then inevitably to the extent that plan A fails or to the extent that plan B or C may help plan A to succeed we drop down to regionalism and to bilateralism or in the case of Singapore and Chile to trilateralism. That is what plans B and C are. Then we have plan D—actually plans D through to Z as well—which are to do with getting rid of non-tariff trade barriers. For example the acceptance in the Chinese building code of New Zealand  
Pinus radiata 
 is no small deal. So on all those fronts—plans B to Z—this Government previous Governments and future Governments are operating have operated and will operate across a multitude of areas. That is the way of the world and we will continue to do it. 
Not only is that the case but it is also the case that our officials though perhaps small in number are quite skilled. The little that I have seen of our officials in action fills me with some confidence and pride in their work. It was good to see the work of Jim Sutton acknowledged. It was good to see people say that Mike Moore might have made a difference. It was good to have Bill English being relentlessly optimistic. That is the way forward for New Zealand and for New Zealanders. It was sad that the Hon Richard Prebble began his remarks by setting out to poor-mouth New Zealand New Zealand’s efforts and New Zealand’s success. I thought that was sad and I thought the member could have done a little better. 
I think the key issue for New Zealand is that while the Cancun meeting was clearly a failure the process is not a failure—or at least not yet a failure. If the Doha round has to be extended beyond January 2005 so be it. The Uruguay round was extended and no doubt some other trade round in the future will be. The talks seemed to fail because the less developed nations in particular did not seem to be well enough prepared—and that is understandable; that happens at a lot of the international forums I have attended and I am sure other members have found that as well—and did not come with enough flexibility. In other words they came to make a point. Well they have made a point. The fact that they were not able to agree on an open and a transparent procurement policy for example—itself a corruption-buster—is quite a sad thing but none the less that is what happened. It seems to me that what we must do in this country is to work with those less developed countries with which we have the greatest contact to see whether they can come better prepared and with a more flexible position to the next round wherever it may be. 
I think the G22 group was a positive step forward with Brazil China and India leading it. New Zealand was invited to join. We declined. The reason that we declined is that we are part of the Cairns group and if we had pulled out Australia would not have been able to pull out. We could not have made it a G23 group because Australia could not make it a G24 group and the reason Australia could not make it a G24 group is that it is in the Cairns group which it chairs. So that is where New Zealand’s position is for the moment on the G22 group. I personally hope that the G22 group will go from strength to strength and will itself be a positive force for the lesser developed countries but at the moment anyway it is not clear whether it will have a long life. The long and short of it is that the G22 group made a big difference and the fact that the EU made so much movement in its Common Agricultural Policy—not that it can afford to keep it as it is—was really useful and as I understand it the gains that were secured in Cancun are still on the table. 
So I say to the ACT party that it ought to think very carefully if it wants to break away from a multilateral approach to international negotiations in this country. That would be a very very serious thing to do. I say to the National Party there is a plan B C D E and so on as there was when that party was in Government. I congratulate Jim Sutton and all those who went to Cancun with him and hope they will have better luck next time. 
The debate having concluded the motion lapsed. 
Credit Contracts and Consumer Finance Bill 
Instruction to CommitteeCWH 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: 
 I move  
That it be an instruction to the Committee of the whole House on the Credit Contracts and Consumer Finance Bill that it take the bill part by part and consider any schedules as one question 
. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
New Organisms and Other Matters Bill 
Instruction to CommitteeCWH 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
 on behalf of the 
 Minister for the Environment 
: I move  
That it be an instruction to the Committee of the whole House on the New Organisms and Other Matters Bill that it take the bill part by part and consider any schedules as one question. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 60 
Labour 52; United Future 8. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Green Party 9. 
Motion agreed to. 
Credit Contracts and Consumer Finance Bill 
In Committee 
Clause 1 Title 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: 
 This is the Committee stage of the Consumer Credit Bill which has found itself morphed into the Credit Contracts and Consumer Finance Bill. We will refer to it as the “TripleCFB” during our debates. I have a team of experienced members of Parliament who will debate this bill. We are seriously concerned about a number of factors and we will spend quite a considerable amount of time on the debate. I have at least five members on my team and they will each want to take a couple of calls on the quite important matters here. 
During this debate we will focus on the compliance costs associated with the bill. We will also talk about and attack the new hardship provisions because we believe that they will add to the cost of consumer credit in New Zealand. We have discussed this issue with a number of financial institutions and it is quite clear that the cost of credit will go up. What is worse the cost of credit for people who can least afford it will increase. 
We have also discovered a major loophole in the bill which will see a significant credit cost to a lot of borrowers omitted from the disclosure regime. We will discuss that later in the bill. We signal to the Minister that she will want to discuss the loophole with her officials because it completely undermines this bill. If the bill is all about making sure that borrowers know the full cost of what they are undertaking the loophole that we have discovered could have a very serious implication for that purpose and we know that that Minister will want to make changes to the bill. 
We have proposed a number of changes to the title of the “TripleCFB” because we do not believe that it correctly identifies what is being proposed. This bill should be called “An Additional Compliance Bill” because it will put a huge compliance cost on those involved in the financial service industry which will be passed on immediately to the consumers of credit. 
I give the Committee just a couple of examples of additional compliance costs. New credit documents will be required to be drafted by all financial institutions and the institutions will have to revamp their compliance regime in respect of consumer credit matters. It is very worrying that there will have to be quite a new set of procedures and practices in relation to the setting of fees because this bill provides for a legal challenge to fees provided by institutions. It also provides for a legal challenge to the terms and conditions of loans advanced by institutions. 
Jill Pettis 
: What about the title? 
Hon TONY RYALL 
: We have had a little chirp from the cheap seats asking about the title. If that member would listen to a debate for a change instead of looking at her papers and piping up from time to time with those irrelevancies for which she is known she would realise that we have put forward amendments because this title reflects additional compliance. I am trying to explain that to her. Obviously I need to do it in monosyllabic terms to try to tell her about the difficulties—four syllables—associated with this bill. One of them is that there will be an additional compliance cost associated with the fact that borrowers will be able to go to court and for something called “reasonable cause” or “sufficient reason” request that the terms and conditions of their loans be set aside by the court. That is a very serious implication because a lot of those finance institutions factor their books— 
The CHAIRPERSON (Hon Clem Simich) 
: Could the member please come back to the title? 
Hon TONY RYALL 
: The point is that the Committee should look at my amendments. It is clear that in the amendments we are talking about additional compliance and disclosure of regulations. I have moved those amendments I am allowed to talk to them and I say that the additional cost associated with a bill that will undermine certainty about the value of debt needs to be reflected in the title of the bill. I have two amendments. One refers to “additional compliance” being added to the title because that is being proposed— 
Mark Peck 
: No submissions. 
Hon TONY RYALL 
: The member says there were no submissions about additional compliance. Well members should look at the submissions made by the Financial Services Federation and the Bankers Association. 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 I am absolutely delighted to be able to follow on from my learned colleague the Hon Tony Ryall. He has done an excellent précis of the concerns that we have around this bill. To follow on from the excellent words he had to say I say that many submitters expressed huge concern about compliance cost. There was to be a compliance cost somewhere in the region of hundreds of thousands of dollars for some of the provisions. [ 
Interruption 
] OK. Members want me to speak to the bill. 
We are identifying the bill as the “CCCFB” bill. However we could call it some other titles as well. We could call it the “Additional Compliance Bill”. We could also call it the “Consumer Credit Disclosure Bill” because it is all about disclosure for people entering into what are called consumer credit contracts so disclosure is the predominant emphasis in this bill. It is about being open transparent and accountable in our transactions. However given the emphasis from this Government on disclosure we could also call it the “Do as we say not do as we do Bill”. I give a number of reasons for saying that it is the “Do as we say not do as we do Bill” because doing as the Government does would certainly mean that we would be happy not to disclose documents—as occurred in the “corngate” affair. That was where the Government did not do what it purports to want other people to do—which is to have full disclosure. It is all about the “lie in unison” issue in immigration. 
Jill Pettis 
: That’s got nothing to do with it. 
SANDRA GOUDIE 
: Well yes it has because I am saying that the title is the “Do as we say not do as we do Bill”. I am saying that “to do as we do” would mean that one would be able to lie. 
Hon Harry Duynhoven 
: That’s not on. 
SANDRA GOUDIE 
: Well no it is not actually. The “lie in unison” immigration matter was not on either nor was the lack of disclosure under “corngate”. 
Mark Peck 
: That’s got nothing to do with the title. 
SANDRA GOUDIE 
: OK. The title was as I said the “Do as we say not do as we do Bill” and that is what I was referring to—all those other activities of the current Government when it says “Do as we say—have full disclosure—but we won’t necessarily do that ourselves.” In this bill one is required to have full disclosure so I will go back to the title of the “Consumer Credit Disclosure Bill” and we will stick with that. It means that Labour members will be a lot happier with that and a lot more comfortable about their own past activities in relation to the other title I put on this bill. 
If we look at the “Consumer Credit Disclosure Bill” there is absolutely no certainty that one will get full disclosure. The reason for that is that under “full costs”—[ 
Interruption 
] 
Mark Peck 
: Full cost has nothing to do with the title. 
SANDRA GOUDIE 
: Yes it has because we are talking about consumer credit disclosure. Hello! Gosh do we need a dictionary here? Perhaps I could have a dictionary. “Disclosure” means providing information and that means that one is required to provide full disclosure. It is my understanding that that was the requirement of this bill and is what one wants to achieve—the protection of all those consumers who might enter into those credit contracts. They do not understand usually what is going on—they do not fully understand what is being disclosed to them—so that is why I am calling this bill the “Consumer Credit Disclosure Bill”. That is why this bill is being produced—so that there will be more disclosure to consumers. 
Do members understand the meaning of the definition of disclosure? Perhaps the Minister would like to take a call and elucidate on what disclosure actually means. I keep referring to the word “disclosure” because that is the word I am emphasising in my new title for this bill. Disclosure certainly is not paramount in the legislation—not when the bill refers in clause 15(1) to “disclosure of as much of the key information …”. Key information is not necessarily full disclosure. Under “full costs” the definition does not necessarily mean that one will get full disclosure either. 
This bill is meant to be about disclosure. That is why I am suggesting that the title should be the “Consumer Credit Disclosure Bill”. It should be but is it? That is the real question. Perhaps the Minister would like to take a call and give us her interpretation of what “disclosure” means why the definition of “full costs” does not necessarily mean full disclosure and why only key information comes within the definition for disclosure. So I think that my title for the bill—the “Consumer Credit Disclosure Bill”—is adequate. 
MARK PECK (NZ Labour—Invercargill) 
: 
 I move  
That the question be now put 
. 
BRENT CATCHPOLE (NZ First) 
: 
 The chairman of the Commerce Committee is trying to shut down the debate and I am disappointed. 
The Consumer Credit Bill has been renamed the Credit Contracts and Consumer Finance Bill. That is quite a mouthful. The bill as it stands is trying to stop oppressive credit contracts and buy-back schemes. Probably a better title would be: “Prevent Buy-back Scheme Bill”—or even “buy-back scams” as they have come to be known. That would be a much better title because these buy-back scams are one of the reasons that this bill is being rushed through the House. 
Hon Judith Tizard 
: Rushed! 
BRENT CATCHPOLE 
: The Minister screams out “Rushed!”. It has taken a long time to get the bill back into the House and there has recently been a rush to get it back. That has happened in response to the buy-back scams that have been going on particularly over the last few months. The Minister is nodding in agreement because she knows that these scams have come about in the last few months? 
Hon Judith Tizard 
: I concede that. 
BRENT CATCHPOLE 
: The Minister agrees. I think the title should be the “Prevent Buy-back Scheme Bill”. 
If we do not accept that suggested title perhaps we should look at an alternative title: “Credit Contracts (Offered in Languages in Which They Are Advertised) Bill”. There was a concern that advertisements for consumer credit were sometimes advertised in a language other than English or Maori. This issue is covered in Part 6. It was discussed in the Commerce Committee—I am coming back to the title Mr Chairperson—and there was a belief that credit contracts should be offered in the same language in which the consumer credit was advertised. If we do not put that wording into the title then people will continue to believe that only English and Maori are to be used for the credit contracts. They will think that creditors can advertise consumer credit in whatever language they like but the contracts will be written in either Maori or English. Without that new title this bill is quite worthless. 
I say again that the title should be changed to: “Oppressive Contracts Buy-back Scheme Bill” because that is really why the bill has been rushed back into the House. I think the Minister will agree that that has happened because we need to deal with the problem of these scams. 
JILL PETTIS (Junior Whip—NZ Labour) 
: 
 I move  
That the question be now put 
. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 The “CCCF Bill” has had a number of iterations. It started out as the Consumer Credit Bill but as my colleague Mr Ryall has pointed out there are a number of titles that could be floated and I want to build an argument as to why they have merit. I think an apt title is “Increased Compliance Bill” and I want to build an argument to demonstrate why I feel that is so. The “Nanny State Bill” would be an apt title. I will deal with that when we come to the hardship provision which I think is an absolute nonsense. The hardship provision will undermine the legislation’s credibility as far as the finance industry is concerned and will do immense harm. 
The bill could also be renamed the “Disclosure Bill”. When one thinks about it this bill is all about disclosure. But disclosure would not relate to the Prime Minister would it? Remember “corngate”? Members will recall all the “disclosure” we have gone through. 
The CHAIRPERSON (Hon Clem Simich) 
: Can the member— 
BRIAN CONNELL 
: I am relating my comments to the title. The title “Disclosure Bill” goes to the heart of confidence—the “Corngate Disclosure Bill”. Remember the one memo that was held back—the only one that was not disclosed? Well that one memo turned into 105. If one were talking to the Prime Minister one would not know what else could be disclosed. God only knows! I put it to the Committee that the country needs a conservative— 
The CHAIRPERSON (Hon Clem Simich) 
: The title is a very narrow debate. 
BRIAN CONNELL 
: I am talking about disclosure. 
Hon Harry Duynhoven 
: Let’s have a few declarations here. 
BRIAN CONNELL 
: Harry Duynhoven—the “One Rule For Me” member—calls out. The Credit Contracts and Consumer Finance Bill deals with disclosure around interest rates fees payment schedules and legal fees. I accept that that is fair and reasonable though it begs the question that small business is not covered in the title. Why is the title not extended to “Credit Contracts and Consumer Finance (Including Small Business) Bill”? That would be fair and reasonable. With the benefit of time I am sure we could find a more concise title. We do need to be told why small business is not covered. About 80 percent of small business in this country is run by owners who employ five people or less. Why are they not being afforded consumer protection like individuals? I want to expand on that point and build my argument as we go through the Committee stage. 
The provisions on foreign languages in terms of contracts are clear enough. People should understand what they are signing and what they are contracting into. That is why I go back to the suggested title of increased compliance costs. Every time someone goes to a solicitor a compliance cost will be built into the credit consumer arrangement that people are entering into. That is something I want the Committee to dwell on as we go through this bill. Certainly the hardship provisions will create uncertainty. The way the Credit Contracts and Consumer Finance Bill is constructed at the moment it will bring that uncertainty to the retail sector of large banking organisations across this country and I do not think that was ever the intention. The bill will drive up compliance costs and that is a matter the National Opposition wants the Committee to think about. That is why National is giving this bill very limited support and is suggesting that it be sent back to the Commerce Committee for further work. 
The Minister in the chair should take a very good look at the legislation as it is constructed at present because it contains loopholes that will do enormous harm to the finance industry. 
JANET MACKEY (NZ Labour—East Coast) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Hon Clem Simich) 
: I think members have clearly indicated that they wish to continue discussing the provisions of the bill. 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I rise on behalf of the ACT party to oppose this bill and to address the title. I would like the Minister to explain to the Committee why there has been a change to the title. Up to this stage we have debated a bill titled the Consumer Credit Bill 2002. This morning the bill is back on the Order Paper as the Credit Contracts and Consumer Finance Bill still showing 2002. We are actually in 2003 in case people in the Labour Party have not noticed. 
The commentary on the bill as reported back from the Commerce Committee does not provide a good enough reason for the change of title. The commentary tells us that part of the reason is that Part 5 which we will be discussing later on addresses non-consumer arrangements and non-consumer contracts. I shall refer briefly to some of those reasons. A previous speaker mentioned the need for a dictionary when considering the words used here. All of those things do concern consumers but does the Government now consider that small business is not a consumer? That could be the only reason for changing the title. The bill should be called the “Leaving Small Business Out in the Cold Bill” because that is what it does. I call on the Minister to take a call to give a valid explanation of the change in the title of the bill. 
A previous speaker for New Zealand First said the bill is being rushed through. I do not think that Minister could rush to anything—except an art award that would be seen on television. If she were really passionate about the bill’s ability to address consumer finance we would not have waited so long for it to be introduced. After all the Ministry of Consumer Affairs discussed the issue in 1999. It has taken for ever and the title still includes the year 2002. 
The bill could be called the “Loan Sharks Bill” because it will make it much easier for loan sharks. The bill has absolutely nothing to do with protecting consumer finance. It has to do with paving the way for loan sharks. It should be called the “Loan Sharks Bill” because it will make it much harder for those poor people to get access to credit. Credit will be more expensive. Rich people can afford lawyers so they will be fine. However loan sharks will move into the underworld of advancing credit. In terms of complying with the legislation in respect of recovery of payments their way will be a brick through the window or sending the heavies around to deal with a debtor. 
I call on the Minister to give us a valid reason why the title of the bill was changed. It was introduced as the Credit Consumer Bill and was referred to the select committee. It was reported back with recommendations and changes but some changes made it worse. It has been reported back as the Credit Contracts and Consumer Finance Bill. 
The hardship provisions will make it easier for some people to get out of repaying credit. They can apply to the court if there has been a relationship break-up or some form of hardship. [ 
Interruption 
] Why does that member not take a call? Why does he not stand on his hind legs? I know it is difficult for us to see him even when he is standing on his hind legs but why does he not get up and take a call instead of bleating? 
DAVID BENSON-POPE (Senior Whip—NZ Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put 
. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 1 be agreed to: 
to insert after the word “Finance” the words “Additional Compliance”. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 1 be agreed to: 
to insert after the word “Finance” the words “Disclosure and Regulation”. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Clause 1 agreed to. 
Part 1 Preliminary provisions 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: 
 This part is very important and we will seek to take a number of calls on it because we have quite a lot of substance to cover in this part. 
We have moved some amendments in respect of the commencement date. It is clear from the submissions from business that it is concerned about the additional compliance costs associated with the bill. This bill will require financial institutions to get new contracts drawn up to put new procedures in place to train their staff and to seek additional legal advice about how they deal with the fact that people can now make a claim to the court to set aside a credit contract if there is some sort of ground to do so. There is a phrase in the bill about “some other reasonable cause” for people to do that. So there needs to be a significant amount of time to allow that work by the financial institutions to happen. The Government has almost accepted that that is a valid point because in the amendments to the bill—and the Minister may want to take a call on this—the provisions in respect of the new credit contract procedures are split out and clause 2 states that they can be brought in at a later date. 
The National Party believes that Parliament should set—I will wait until the Minister has finished conversing with the Chair—a date for that provision to come into force. We have moved an amendment stating that it should not happen until 2 years after the bill obtains the royal assent because we believe that is an appropriate time in which to allow business to get its procedures up to speed. We have talked to a lot of business people and they say 18 months would do it but we think 2 years would play it safe. We know the Government accepts that something needs to happen and we agree with immediate action on buy-back schemes. But this is an arrangement that will affect every finance company in New Zealand. We think that we should state in the law what the time line is so we have moved an amendment on that. 
We have also moved a number of other amendments to this part. The most important amendments which I want to draw to the Minister’s attention relate to clause 5. Declaring the fees associated with a credit contract is fundamental to this bill because it is premised on disclosure. The Minister wants to disclose as much as possible. Yet the bill does not disclose the fees that brokers charge for their involvement in a financial arrangement. So for example if a person borrows $5000 from Easy Loans or somewhere like that every charge that Easy Loans makes will be declarable. But if a person goes to a broker—who may want 10 percent of the charge—that charge is not included in the disclosure regime. Nowhere in the bill does a broker’s charge have to be disclosed. 
National Party members think that is a big loophole because we have been advised that most finance companies in New Zealand that deal with consumer finance will consider moving to broker arrangements rather than keeping their branch offices. That is because the broker’s fee does not have to be included—it is not part of the credit arrangement. But we say it should be. The broker is not party to the contract but the broker’s 10 percent fee is a cost of the credit and its disclosure is not included in the bill. So if what we are trying to show people is the full cost of their borrowing—and that is what we are trying to do—we should have a requirement that when a finance company knows about a broker’s fee it should be included in the classification. 
We know that finance companies are getting ready. I spoke to someone today and I was told that within 48 hours the finance companies could change the whole way in which they run their business in order to have everybody become a broker. When people line up for financial arrangements and look at the official documentation that the Minister is proposing on disclosure the broker’s fee is not included. Some brokers’ fees are taken without the finance companies being aware of it but some companies are aware of those fees. We have put up an amendment that will mean that if a financial institution is aware of a broker’s fee that should be a credit fee that is disclosed because it is part of the overall cost of borrowing the money. Some financial institutions tell me that 90 percent of their business comes through brokers; others have hardly any of that business. 
We think that if the Government seriously wants to deal with its purpose of disclosure it needs to make amendments to this bill. We are prepared to have this debate suspended for a day so that correct amendments can be drawn up. I say to the Minister that I have noticed the officials nodding the whole way through my point about that. 
Dr DON BRASH (NZ National) 
: 
 I am delighted to speak on the bill. My learned colleague the Hon Tony Ryall has drawn the attention of the Committee to what we believe is a significant loophole in the bill. If his legal advice is correct—and we have no reason to believe that it is not—the loophole almost totally negates the purpose of the bill. 
There is not much doubt that our consumer credit law in New Zealand needs updating. For that reason the National Party is basically willing to support some updating of the legislation but it is crucially important that in doing that we achieve what we want to achieve. Clearly that is not being done at the moment in the way the bill has been drafted. My learned colleague has suggested amendments to the bill that we believe would more accurately reflect the desire of this Parliament. I also support the notion that the best way of dealing with consumer credit is to mandate a high level of disclosure and not to mandate a lot of silly rules and regulations. 
I express my regret that notwithstanding the support of that principle a huge increase in compliance costs is involved in putting this bill into place. People such as the members of the Financial Services Federation have expressed their considerable concern about the compliance costs involved in the legislation. In some respects we should not be too surprised at the compliance cost increase because this Government has a sad record of increasing compliance costs in almost every bill it brings down. 
Just a few weeks back—in fact about 10 days ago—KPMG and Business New Zealand released a major piece of work dealing with the compliance costs faced by 760 businesses in New Zealand. They discovered that 98.2 percent of those 760 businesses believed that over the previous 12-month period compliance costs had increased. Only four of the 760 businesses believed that compliance costs had gone down. It seems to me that this bill will continue in the pattern of significantly increasing the compliance costs that businesses—in this case financial institutions—will face and I am bound to say that that is a matter of considerable regret. The faster we force financial institutions to put the bill into practice the greater those compliance costs are likely to be. I certainly support my learned colleague in recommending a transitional period of 18 months to 2 years for bringing in key parts of the legislation. 
I point out one other important part of this bill which worries me a great deal and that refers to the hardship provisions. I was not able to catch your eye Mr Chairman when speaking on the title but I think it is important I make the point that although the addition of these hardship provisions sounds as if they are something useful and constructive for borrowers in New Zealand in fact the result will almost certainly be the reverse. By giving borrowers the right to renegotiate their loans rather than leaving that to the discretion of the lender we are significantly increasing the risk that financial institutions face when they make loans. What will they do in response? There is only one thing they can do which is to turn down loans they judge to be risky. They will also increase the costs of loans they make because the bill as drafted will be increasing the risk they face. I think that that is a seriously retrograde step. 
It is very similar to what the Government is also proposing to do with redundancy payments. It is proposing to give greater security for a larger lump of redundancy payments. What effect will that have? It will put secured creditors at greater risk. So what will they do? They will pull the plug more quickly because they will recognise there are more charges ranking ahead of them. I think that increasing the risk that lenders face is a serious issue. Although it may seem like a sensible helpful thing to do for New Zealand borrowers the reverse is almost certainly the effect. 
PAUL ADAMS (United Future) 
: 
 It is my pleasure to rise on behalf of United Future which will be supporting this bill. I personally believe that it is a very important bill as it affects the vast majority of New Zealanders. We can ask people about the many powers that work in their life but most people will never mention the power of interest. They will often mention the power of love they may mention the power of a dream or many other powers but they will very seldom mention the power of interest. 
This bill is about the consumer. It is called the Credit Contracts and Consumer Finance Bill. I agree with the previous speaker that compliance cost is an issue but with this legislation we are really trying to bring to people’s attention the issue of interest costs—so that they really do know exactly what they are getting into. We are trying to show them the full cost of borrowing. I believe that if we are honest the majority of members often do not understand the true costs of borrowing. 
Let me give an example because I think this legislation is good and very important. But on the other side of this coin I also think we have a responsibility to educate people and to show them what they are really getting into. Let us have a look at credit card debt. Let us say that a person has a credit card balance of $3900. People may say that that is not a problem and I believe that our current national average balance is normally far higher than that. Apparently our national average credit card debt today is around $4500 to $5000 but I have done my calculations to be conservative on the amount of $3900. The person will make just the minimum monthly repayments until the balance is paid off. Those minimum monthly repayments will be at the rate of 2 percent of the unpaid balance. How long do members think it will take to pay off that amount at an average interest rate of 18 percent? Most interest rates on our major cards are still around the 18.75 percent mark. Well it would take 37 years and 7 months to pay it off—if that person were still alive. He or she would have paid a total of $10931 of which $7931 would be interest and $3000 principal. If that person were educated to pay even at the rate of 4 percent of the minimum balance the time factor for paying off that card would be reduced to 10 years and he or she would save $6200 in interest. 
Interest is an incredible cost to people. If we could just encourage them as many have spoken of to start saving—and I realise that this is not to do with the bill—and if they managed to put that same $3000 into a bank account at 10 percent interest without adding anything else to it at the end of the same period of time they would have $126454. People need to understand the cost of interest in their consumer contracts when they enter into them. Most people never ponder the power of interest. 
Another trap and I do not know whether we can cover it adequately in legislation is that many people will top up their home mortgage as the next-best thing to free money. A person who has a $150000 mortgage at an interest rate of 11.5 percent can go to a bank and say that he or she wants to borrow $10000 to buy a boat. The bank will say: “No problem at all. You don’t even have to increase your repayments. We will just extend the length of your mortgage by 9 months.” People often think that that is the nearest thing to free money they will ever get but what actually happens? 
Deborah Coddington 
: Do banks do that? 
PAUL ADAMS 
: Most banks will do that. Let us have a look. The mortgage repayments would be about $1600 per month so someone who borrowed an extra $10000 would have already paid $51895 in interest at the end of the third year and only $2674 in principal. When the bank gives the person the $10000 sum the mortgage repayments remain the same. Before the mortgage is altered the total interest to be paid over the whole contract would be $234064 but because the person has now topped up the mortgage the interest paid over the 20 years and 9 months will be $314948. I hope that the person who buys a boat with an extra $10000 catches a lot of fish because the extra borrowing is going to cost $90884! 
We really need the legislation we are dealing with now to try to show people the true cost of interest. We have educated them to be borrowers instead of savers and I think many would agree that that is a mistake. United Future believes that this legislation goes a long way to showing people the pitfalls and traps in borrowing. 
BRENT CATCHPOLE (NZ First) 
: 
 The first point I would like to raise with the Minister has to do with the commencement date. The Commerce Committee heard a large number of submissions from the banking industry the finance industry and all sorts of major industries in this country to the effect that the commencement date needs to be extended for 2 years minimum so that they can get their software installed and their systems in place and so be able to handle these changes. I hope that the way this bill is written means that the Order in Council will allow a 2-year delay. 
Mark Peck 
: Have you read the Supplementary Order Paper? The Supplementary Order Paper actually does it. 
BRENT CATCHPOLE 
: That is wonderful. I thank the member. It sounds like we might be doing that but I am just making the point that—[ 
Interruption 
] I will not take his word for it at this point. I am making the point that a delay of at least 2 years is needed to allow the finance industry to bring in these changes. 
The next part I would like to refer to is the definition of credit contract. For some reason that definition has been removed from the definitions clause and put into a new clause—clause 6A. This clause precedes clause 6B which defines buy-back transactions. Why these two definitions were separated from the definitions clause and put into separate clauses I am not quite sure. I would like the Minister to clarify that for us. It seems a rather odd way of doing it but I hope the Minister will take a call and give us an explanation. 
I refer now to the definition of cash price. Cash price as stated in the bill is the lowest price at which a person could have bought property or services had he or she paid cash or if a person could not pay cash it is the fair market value. We all know how cash deals can be discounted but a fair market value is something that could be disputed. A clearer description should have been given. Also we have heard quite a lot about compliance costs. This bill does require quite a lot of compliance costs but I think that the way the legislation is going to handle a number of very serious credit issues is good. Therefore compliance costs will probably be balanced out with fewer loans being forfeited. 
 I have been searching through this bill and I find that there is one more issue that has not been raised—that is loans to students. Student loans are not covered in this bill and surely students should have the interest rate on their loans explained to them right upfront. Many of them are paying off the interest and are not getting anywhere with the loan itself. That is a huge millstone around students’ necks. It is something that I think should have been incorporated in this bill so it is made very clear to students how much their loans will cost them in the long term. We heard some extensive figures from Paul Adams. I am not quite sure that those figures are correct but certainly I know that the figures in relation to student loans mean that students are left paying off just their interest for a long time before starting to get on top of their actual loan. That is a huge disincentive for them to stay in this country and to continue to work here. 
So I summarise by saying that this part of the bill could have had a few improvements made to it. If those improvements had been made the bill would have been a lot better. However I am glad that the meaning of the buy-back scheme is covered because that is an important and a serious part of the bill. 
MARK PECK (NZ Labour—Invercargill) 
: 
 I move  
That the question be now put 
. 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I rise to address Part 1 which deals with the purposes of this bill. One of the purposes—and I have to agree with the National Party on this; it has discovered a serious loophole in this legislation—is to provide for the disclosure of adequate information to consumers. What that does not deal with is a situation where a broker is involved in a deal. Let us suppose that a consumer wants to borrow $5000 and goes to a broker. The broker takes 10 percent—$500—and the borrower or consumer gets $4500. How that works is that the person who is actually lending the money sends a cheque for $500 to the broker. That $500 does not get declared so the purposes clause is inadequate. There is no ceiling on the percentage commission a broker can charge. 
I have been told of a brokerage in Hawke’s Bay that routinely charges 20 percent commission. That 20 percent commission will never be declared so there is no way that this bill should proceed as currently written because every small finance company will now set up its own brokerage. 
Mark Peck 
: No we won’t. Has the member read the bill? 
DEBORAH CODDINGTON 
: The little member over there says: “No we won’t.” Perhaps he can take a call. [ 
Interruption 
] If he would like to wait he could take a call and explain to the Committee why they will not want to do that. If I was a small finance company that is exactly what I would be doing. Those percentages will not be declared and this bill will not protect consumers. The Hon Tony Ryall raised a very valid point and that is why we have the Committee of the whole House to address these matters clause by clause. It is not for the chairman of the select committee to pipsqueak away saying: “No we won’t! No we won’t!” 
The other issue I want to deal with under the purposes clause is the hardship provision. The select committee wrote to all submitters and asked them to come back on that provision. The creditors were uniformly opposed to it but we have seen it come through anyway. That is increasingly how this Labour Government operates. It has a farce of a submissions process and the submissions are ignored. What we will see is a drastic change to credit in this country whereby if debtors decide that it is all just a bit too hard and they cannot pay back what they borrowed then they can apply to have the terms of their contracts changed. 
Darren Hughes 
: What are the rules in Cambridge? 
DEBORAH CODDINGTON 
: That member talks about Cambridge. I do not think that he would ever be invited to go a university like Cambridge or Oxford. 
The bill refers to any hardship such as illness injury—[ 
Interruption 
]—what is more they want me to go back—loss of employment or the end of a relationship. United Future the family party supports this bill. 
What will we see from this bill? We will see more relationships ending so that people can claim that as a reason for getting out of paying their debts. If the creditor declines their application what do they do? They can claim— 
Darren Hughes 
: We’ll show this  
Hansard 
 to your husband. 
DEBORAH CODDINGTON 
: I do not have a husband. They can apply to the court to have the terms of the contract set aside. This Labour Government might be genuine; I will give it the benefit of the doubt. Those members might be genuine in trying to help consumers but in the long run those hardship provisions will not protect consumers. The cost of credit will go up and consumers will be hurt by that. 
DARREN HUGHES (NZ Labour—Otaki) 
: 
 I move  
That the question be now put 
. 
Sandra Goudie 
: This is an important debate. 
The CHAIRPERSON (Hon Clem Simich) 
: Yes. I call Sandra Goudie. 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 Thank you Mr Chairman. 
Darren Hughes 
: I thought you said it was important. 
SANDRA GOUDIE 
: Absolutely! Every contribution made in this Chamber is important particularly in light of the fact that some very substantive points have been raised by a number of people on this side of the Chamber. The Minister and her colleagues would do well to listen to what is being said and maybe seriously consider the recommendations of Supplementary Order Papers on this bill. 
I refer to the purpose of the bill. After all it is all about disclosure and I made that point in my speech on the title. The whole deal around this bill is about full disclosure but that is not absolutely apparent. When we look at the definition of “full costs” we see that it does not necessarily include the brokerage fee. The opinions we have sought to substantiate the points raised by my learned colleague the Hon Tony Ryall say that brokerage fees are excluded from the definition of “full costs”. 
David Benson-Pope 
: Oh! Ten-dollar Ryall! 
SANDRA GOUDIE 
: I invite the member to read the bill and take a call. Perhaps the Minister would care to take a call and give us her interpretation of the definition of “full costs” and whether it includes brokers’ fees. That is a fundamental point. I see the Minister nodding so it is great that she is taking that on board. Hopefully we will see a more positive response to the Supplementary Order Papers from my learned colleague the Hon Tony Ryall. 
Darren Hughes 
: Nobody takes him seriously. 
SANDRA GOUDIE 
: QC! 
I want to raise another aspect of the purpose of the bill which is to protect the interests of consumers in connection with credit contracts. What we are looking at doing is providing full disclosure to persons entering into consumer credit contracts because often they do not understand what they are entering into. As a result community law centres are being inundated with people who are unable to fulfil their obligations to the consumer credit contract. There are times when they are being ripped off and they do not understand. 
Kingdom Resources was one of those who mentioned the need to educate these people. Legislation will protect them from themselves only to a certain degree—at the end of the day it is their responsibility so consumer education has been identified as an ongoing issue. Although disclosure is great how will that information be relayed to consumers so as to educate them about the broader services that will be available to them? That has not been clearly expressed in the purposes clause of the bill in the overview or the interpretations. One wonders what consumer education will be entered into and what funds will be put aside to provide some sort of educational services for consumers entering into consumer credit contracts. 
I notice that substantial funds have been put aside so far for the Commerce Commission but I do not believe that any of it relates to the education of consumers. It is an ongoing issue and it will continue to be an issue with the introduction of this Act despite the best efforts of many people to try to protect these people from themselves. Essentially it is protection from themselves because they do not necessarily have the education the understanding or even the language skills to protect themselves when entering into these contracts. 
Will this bill really do it for them? At the end of the day what will be materially different for them—apart from the fact that they will be able to challenge a contract through the hardship provisions or if there is a lack of disclosure? I put it to the House that in so far as it is provided by this bill disclosure will be there but those people will still have a problem. There will still be people entering into consumer credit contracts who do not understand what they are doing. There will still be a continuing problem because they do not understand the cost of what they are purchasing. 
One example was given of a lady who went to what is called a “beat the budget blues” course. She did not believe what she was being told— 
DAVID BENSON-POPE (Senior Whip—NZ Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 2 be agreed to: 
to insert in subclause (2)(b) after the word “Council” the words “but no sooner than two years after the Royal assent”. 
A party vote was called for on the question  
That the amendment be agreed  
to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 141 in the name of the Hon Lianne Dalziel to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Amendment agreed to. 
The question was put that the following amendment in the name of Hon Tony Ryall to clause 3 be agreed to: 
to omit from paragraph (a) the word “protect” and substitute the words “improve the protection of”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 3 be agreed to: 
to add the following paragraph: 
(e)to ensure creditors’ rights are also respected. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 5 be agreed to: 
to add to the definition of  
credit fees 
 the following paragraph: 
(f)any commission or fee charged by a broker and known to the creditor. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Part 1 as amended agreed to. 
Part 2 Consumer credit contracts 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: 
 The National Party in Opposition is very concerned about Part 2 because it will increase the cost of borrowing for the people least able to carry that additional cost. The burden and the risk to the value of the debt will be reflected in a higher cost for people to borrow money. The most offensive clauses are the clauses with regard to unforeseen hardship whereby people will be able to go to the court for anything called a “reasonable cause” to have the terms of their loans set aside by the court. What does “reasonable cause” mean? Is culturally insensitive borrowing a reasonable cause? 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Hon TONY RYALL 
: After the Committee rose at 6 o’clock my colleague Mr Connell the MP for Rakaia and I had a brief discussion with the Minister in the Chair Judith Tizard on our concerns about the absence of the coverage of brokers. The Minister’s explanation—and we spent quite some time over the dinner break looking at it—makes us think that the officials have got this wrong. The Minister told us that the meaning of a credit contract is that any payment made out of proceeds to any party has to be declared as part of that credit contract. 
Hon Judith Tizard 
: Not “any” party. 
Hon TONY RYALL 
: That is what you said. 
Hon Judith Tizard 
: No I said “as defined in the Act”. 
Hon TONY RYALL 
: OK but the way the Minister described it to us was that officials had told her that under the meaning of the Credit Contracts Act any payment made to other parties under the contract would make it a credit contract. We have gone through that provision and it refers to interest charges credit fees or both payable under the contract. Obviously a broker’s commission is not an interest charge. The point we are making for the Minister of Commerce is that brokers’ fees are not included in what has to be declared as part of the cost of the credit. 
If we are to accept the officials’ advice a broker’s commission under this bill has to be either an interest charge or a credit fee. It is obviously not an interest charge so I ask whether it is a credit fee. The definition of credit fees in clause 5 is “fees or charges payable by the debtor under a credit contract … or for the benefit of the creditor in connection with a credit contract …”. The operative word in the definition is “creditor”—that the credit fee goes to the creditor. That is the issue. It is for the benefit of the creditor. A broker’s fee is not for the benefit of the creditor; therefore a broker’s commission is not a credit fee. 
The reason I am raising this—and Minister Dalziel should be aware of it—is that the Government is making a big thing of the fact that all key information will be declared so that borrowers know the facts of what their debts and obligations are. We are making the point that brokers’ commissions will not be declared. The Minister says they will because her officials have told her. We are telling the Minister that her officials are wrong. With respect for the officials I say that the Ministry of Consumer Affairs is not one of the senior ministries in the public service. I also say to the Minister that we have been advised by people who have used the best legal advice they can buy in order to tell us that there is a big loophole here and that brokers’ commissions are not included in the bill. 
I do not know what more the Opposition can do to tell the Government that this is a problem because the Government is saying in its very purpose—and we support the intention of the purpose—that people should have disclosure. They should know the full cost of their borrowing. We support that 100 percent. But we say to the Government that it is not working. Brokers’ commissions are not included. We base that on the fact of the wording in the bill. A credit fee is the result of a contract and is to the benefit of the creditor. Members should read the provision. A broker is not the creditor. The broker is not part of the contract. The Government admits that because it refers in another provision to the broker as the person who arranges the contract—not being party to the contract but arranging the contract. 
We are making the point that the purpose of the bill is to declare to the borrower where the money is going. The point is that a broker’s commission has to be declared. If a person went to say Wanganui Finance and borrowed $5000 and if that transaction was organised by a broker then the borrower might find that $500 is taken off that amount and sent to the broker or that $500 is added on to his or her debt. That money does not go to the borrower; it goes to the broker. We say that is key information that should be included in schedule 1 and it should be declared because it tells the person where the money is going. 
The purpose of this bill is to enable a borrower to go to different lenders get their offers look at where the money will go and at the interest rate and work out where the best deal is. Surely knowing how much money will go to the broker is part of making the best deal. I can understand that the Minister has to accept her officials’ advice—and she might be asking for it in writing—but if people read the letter of the bill clause 9(1)(c) say that they are relying on a broker’s commission being a credit fee and then look at what a credit fee is they will find that the two do not match up because the definition of credit fees in clause 5 is that they are “fees or charges payable by the debtor under a credit contract ... to ... the creditor in connection with a credit contract ...”. 
Hon Judith Tizard 
: “or payable by the debtor”. 
Hon TONY RYALL 
: —“or payable by the debtor ... to … the creditor”— 
Hon Judith Tizard 
: “or for”. 
Hon TONY RYALL 
: —“or for the benefit of the creditor”. A broker is not the creditor. 
Hon Judith Tizard 
: No but if you’re using a broker and you’re paying the broker directly—not through the creditor—then you know perfectly well what you’re paying because you’re paying it directly to the broker. 
Hon TONY RYALL 
: But that information is not being required to be declared. That is the point. 
Hon Judith Tizard 
: But you’ve got to write the broker a cheque. 
Hon TONY RYALL 
: The Minister should take a call. The definition in clause 5 states that credit fees “means fees or charges by the debtor under a credit contract or payable by the debtor to or for the benefit of the creditor”. The creditor is the loan company. 
Hon Judith Tizard 
: Yes. 
Hon TONY RYALL 
: I know what the problem is here. The Minister thinks the broker is the loan company. The broker is not the loan company; the broker is— 
Hon Judith Tizard 
: The broker is the person getting business for the loan company. 
Hon TONY RYALL 
: That is right and the legislation is not requiring— 
Hon Harry Duynhoven 
: Is this member meant to be a lawyer? 
Hon Lianne Dalziel 
: He’s an accounts clerk from a bank. 
Hon TONY RYALL 
: That Minister should take another pill. 
Hon Judith Tizard 
: That is absolutely out of order. 
Hon TONY RYALL 
: Look we are trying to help the Government on this bill! I am telling the Minister that the advisers are wrong and that she should get another legal opinion. It is not too late. She can cackle away but the point here is that when the Opposition makes an important point about what is wrong with this bill the Government is not prepared to listen. 
I tell members that this Government is not telling poor people the full cost of their borrowing even though it says it is. There is no way in which brokers’ charges will be declared through this legislation and that is the loophole. I say to the Minister that businesses will rearrange their affairs on the basis of that loophole so that they do not have to declare the cost. What will happen when that occurs? Will the Minister say: “I’ve got a letter from Consumer Affairs saying that was never going to happen.”? Well that is not going to wash. The fact is that the responsibility of Ministers is to weigh the advice they receive and get further advice if necessary. Just because the advice comes from one set of officials does not mean it is right. I have been in the Minister’s position and can tell members that sometimes Ministers have to go and get advice from somewhere else when they know that a valid point has been raised and they want reassurance. 
I tell the Minister that there is no coverage of brokers’ fees in this bill. A broker’s fee is not a credit fee because a broker is not the creditor. The operative word in the definition of credit fee is “creditor”. We accept that they might be able to make a payment but that payment does not have to be declared—and that is what we want. If the Minister had that in schedule 1 “Key information concerning consumer credit contract”—and we would like to support that schedule—then people would declare the broker’s fee if they knew it so they could work out where all the money has gone and make comparisons. At the moment that is not there. 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: 
 I think the member is trying to be helpful but I also think he is not reading the bill very carefully. I do understand that he was not on the Commerce Committee. I need to point out to the Committee that this bill does not require disclosure of any commissions. Brokerage fees are included in the definition of credit fees and are required to be disclosed if they are payable under the credit contract and are payable to the creditor or payable for the benefit of the creditor. If those conditions do not apply the creditor does not necessarily have a way of knowing the brokerage fee because the debtor has gone to the broker. The debtor would find it out directly from the broker because that would be part of the service. 
Hon Tony Ryall 
: Brokers often pay the commission because they have a letter of engagement and if they’ve got knowledge they should have to declare it. 
Hon JUDITH TIZARD 
: I am happy to accept the officials’ advice that obviously if those conditions do not apply the creditor has no way of knowing the brokerage fee. We do have a provision in the bill under which extra disclosures can be required by regulation if necessary and I am very happy since we do have a long run-up on this for those extra disclosures to be required. But the point of this bill is that commissions are not included in the disclosure. 
Hon Tony Ryall 
: Well they should be. The importance of— 
Hon JUDITH TIZARD 
: Perhaps the member should have brought that up at the select committee. It is a fairly fundamental issue. I thank the Committee for its assistance. 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I rise to address Part 2 of the Credit Contracts and Consumer Finance Bill. In particular I want to speak to clause 9 “Meaning of consumer credit contract” which states: “(1) A credit contract is a consumer credit contract if—(a) the debtor is a natural person;”. That is the provision that excludes businesses from the bill. As Simon McArley a senior partner in KPMG Legal wrote in the  
National Business Review  
in October last year: “Small business appears to be the loser in this review of credit legislation.” That is a really important point because we have heard a lot of talk about compliance costs. The Minister in the chair Judith Tizard will say that small business was left out of the provisions in order to reduce compliance costs but that is simply not the case. After six discussion papers we still cannot get this legislation right. 
The Government sees that there is a power imbalance between lenders and borrowers and it wants to redress that so-called imbalance and provide the vulnerable with more clout. Of course there is a power imbalance between lenders and borrowers. Lenders should always be in the more powerful position when they lend money. Often it is not their money. It often belongs to a bank or a finance institution and is money that people have invested. Often those people are mum and dad investors who are investing money for their retirements something that this Government is deemed to be encouraging and which other parties in the Chamber say they are encouraging. When money is lent there is always a lender of that money. There is never a borrower without a lender. The lender should always be in the more powerful position. 
I go back to my point that this bill excludes those who borrow for business purposes. They are left to fend for themselves. It is often said that New Zealand is a country of small businesses. Some 80 percent of businesses in this country employ fewer than five people. Those businesses share the same concerns and problems as the average consumer in New Zealand. What is so different about the concerns of the average consumer from small businesses? Most small-business people borrow money as a consumer in order to support their businesses. What about the small-business person’s spouse? As Simon McArley wrote: “Ignorant of the inside workings of the business [they are] asked to incur personal liability for the business debt.” The courts have long recognised that those guaranteeing spouses required special protection but that is not provided by this legislation. Perversely even the limited guaranteed disclosure provided by the Credit Contracts Act will be taken away as Simon McArley noted. 
As I said earlier in the debate on this bill the bill protects big business as they have the resources to hire hard-nosed lawyers and engage them to ferret out unfair terms and wield commercial leverage but I say that the reality is that mini-businesses—80 percent the vast majority of businesses in this country—are in no stronger position than the average consumer and this legislation leaves them to fend for themselves. It does not reduce compliance costs. It is difficult to see how leaving small business out in the cold is a consequence of making big business seek legal advice rather than providing clear and practical disclosure from their banks. 
Can the Minister explain that? How does exclusion from a simplified statutory procedure for obtaining remedies as that is meant to be reduce costs? It does not. It increases compliance costs. 
This is typical of this Government which talks about reducing compliance costs on the one hand and on the other hand works so hard behind businesses’ backs at increasing compliance costs. We see it again and again with legislation that comes before the House. 
BRENT CATCHPOLE (NZ First) 
: 
 First of all I would like to pick up on the required disclosure standards. The initial disclosure requirement is set out clearly in clause 15 but in the clauses dealing with continual disclosure there is a provision that they will be removed if there are no variations. We heard a number of submitters who wanted to see the removal of continual disclosure if there were no variations but to me a change in interest rates is a variation. I think if an interest rate is changed because the Reserve Bank has changed its interest rate it is a variation to the interest rate being charged. Therefore people need to look very closely at that provision and treat it with caution. If that variation is not being disclosed during the process or at a later stage when the interest rates rise the debtor is at a disadvantage. 
I would like to touch on clause 24 “Right to cancel consumer credit contract”. This clause contains the phrase “within 3 working days”. Members can imagine that 3 days is a long time. For example a student can buy a stereo on Saturday morning rev it up for a party on Saturday night and take it back on Monday morning saying: “I want to cancel the contract.” That is a rather bizarre example but it was one that was raised at the Commerce Committee. Even more bizarre might be the other example that was given to us at the committee of somebody taking home a bed sleeping in it for 1 night and then taking it back. Nobody would want to buy that bed after that. One could consider those 3 days to be an awfully long time. 
I would like to raise the issue of the fees. The Minister in the chair Judith Tizard has stated that commissions are not counted. I ask her whether she was saying that commissions are not counted in this legislation. The Minister is not saying that. I am pleased about that. Clause 40 “Fees or charges passed on by creditor” is about the that are charged by the agents that negotiate the contracts. There is a provision that the fees do not have to be disclosed but the creditor cannot collect more than the amount being passed on to the agent. But if the fee is not disclosed how does the debtor know how much is being charged and how much is being passed on? It would be very difficult for the debtor to work that out if it is not being disclosed. 
I will be disappointed if the Minister does not have another look at this. If the debtor has no knowledge of that amount the creditor could be collecting a percentage over and above for the service. That would be totally against the intent of the bill. I would like to hear the Minister’s comments because I am sure she was saying that commissions are not counted in the whole contract because they are being passed on to somebody else. If fees are not being disclosed then we have a serious problem. 
The debtor has the right to repay the full amount but it is not clear to me whether there is a huge service fee included in that repayment. I would like to see the bill tightened up in that area because I believe it does allow commissions on that service fee. 
DAVE HEREORA (NZ Labour) 
: 
 I move  
That the question be now put 
. 
PAUL ADAMS (United Future) 
: 
 I was not going to take a call on this part but I will do so to enlighten my friends in the National Party and the ACT party on this matter. I would have thought they would accept that it is OK for a business to make a profit and they are becoming very confused about this fee. Let me give members some practical examples. A commission is allowed—in other words a brokerage fee. So if someone goes to a mortgage broker and he negotiates a mortgage on behalf of a client it is quite acceptable that he gets a fee for doing that. 
I will give an example of this type of fee in the car industry. A car dealer may have an arrangement with a finance company whereby it can buy money at say 8 percent. Therefore when the company sells that money to a client at a 1 percent mark-up it is making a 1 percent profit—in other words a brokerage fee. That amount is completely disclosed to the consumer. Consumers will see exactly what interest rate they are paying but this legislation does not state that consumers must be informed of the profit that the seller is making on selling them the money. That also applies to many extended warranties—such as when a customer buys a fridge or a television or even a car. 
Customers will often be asked whether they would like to pay a $200 fee or whatever to extend the warranty on that purchase. The total cost they are paying for the warranty will be completely disclosed in the contract. What will not be disclosed—and this is where the confusion has arisen—is the proportion of that $200 that is profit for the business that is selling that money. I personally and as a United Future member do not see any necessity for disclosing to a purchaser the profit margin made by various segments involved in a purchase. What is important and what this legislation does cover is that purchasers know exactly what interest they are paying and what interest they are paying if they have an extended warranty and have hire purchase on that extended warranty. The amount of interest is totally disclosed. I think the confusion has arisen in terms of the profit in the brokerage fee. It is not a necessary part of what needs to be disclosed to consumers but all the interest they are paying for the purchase is completely disclosed. I think that is very fair. 
Dr ASHRAF CHOUDHARY (NZ Labour) 
: 
 I move  
That the question be now put 
. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 The issue of brokerage is so important I want to revisit it. I refer the Committee to Subpart 2 “Required disclosure”. Clause 15 states: “Every creditor under a consumer credit contract must ensure that disclosure of as much of the key information set out in Schedule 1 as is applicable to the contract is made to every debtor under the contract”. For a moment I want to skip back to clause 3 “Purposes” which states: “The purposes of this Act are—(a) to protect the interests of consumers in connection with credit contracts consumer leases and buy-back transactions of land; and (b) to provide for the disclosure of adequate information to consumers under consumer credit contracts and consumer leases”. I ask the Minister in the chair to think about this: the purpose is defeated if brokers’ commissions are not declared because they do not form part of the contract. 
Hon Judith Tizard 
: They do. 
BRIAN CONNELL 
: They do not. They are simply a fee for service. They do not form part of the contract. I have been in the industry and I ask the Minister to have a look at this again go back to her advisers and say that she thinks they may have it wrong. I fear that some of the finance companies will change their constitution over night and will start becoming brokerages. That will simply defeat the purpose of what the legislation is trying to do. It will avoid disclosure and the very people whom this bill is trying to protect will escape this clause. If we are dealing with this as a very serious matter then I ask the Minister to rethink it. I understand from the Minister that there is an opportunity to revisit this. My passionate plea is: “Let’s do it once and let’s do it right.” There is no need to go back to this if we address this issue seriously and deal with it right now. 
The other issue that concerns me—and others have mentioned it—is that of compliance costs. Having worked in the industry I know that what has been suggested here particularly under the hardship provisions is going to drive the industry mad. It will not be enforceable unless there are huge changes to forms to audit systems and to financial systems. Imagine the back-office systems that are in play here! Imagine trying to deal with systems—hard-drives and floppy discs. The whole thing will need to be reworked. Back-office functions have been established and set up under a technology called credit scoring. Credit-scoring systems are very complex yet this bill is undermining the industry because it will not be able to price for risk—because it will not be able to evaluate the risk. How does the industry evaluate the risk that suddenly someone will say: “I’ve had a bad-hair day and I want to get out of my contract.”? How does it deal with that? How does the industry evaluate the risk of someone saying: “He doesn’t love me any more so I want to get out of my contract.”? We are simply not constructed as an industry to be able to deal with that type of issue. We need to think this through. Again I go back to the point I raised in an earlier call when I asked the Government to go back to the steering committee with this and rethink the issue. It is a very very important issue. 
Hon Judith Tizard 
: The select committee went through it in some detail. 
BRIAN CONNELL 
: Well if it did I can only assume the issue was not clearly understood because it is still on the table for debate. [ 
Interruption 
] There is “one rule for MP Harry Duynhoven and one for the rest of us” calling out again. There he goes again. 
 Why does he not do something constructive—like resign? Oh he did did he not? We forgot about that. [ 
Interruption 
] 
The CHAIRPERSON (Ann Hartley) 
: Order! 
BRIAN CONNELL 
: I think the member was inviting me to take out dual citizenship. I refer now to compliance costs and I know the member is upset because it is a very sensitive issue for him. He does not really understand it. He has been a ticket clipper all his life. I can tell the Committee that this is an issue—[ 
Interruption 
] I raise a point of order Madam Chairperson. I understand that a running commentary is outside the Standing Orders. 
The CHAIRPERSON (Ann Hartley) 
: Yes it is. I have called for order. 
BRIAN CONNELL 
: I am simply trying to say in a constructive way that the issue of compliance is something that has not been thought through and clearly understood. The issues around the operations of back-office systems the complex computer systems and credit-scoring systems that underscore that are important. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the question be now put 
. 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 I want to raise a matter under Part 2 that is completely different from what we have been debating. Members have been talking about required disclosure and disclosure standards. It is clear that the whole point of having disclosure standards is to protect consumers who are entering into credit contracts. Clause 29(1) states: “Disclosure must—(a) be in writing in a disclosure statement; and (b) contain the information required by this Act;”. Further subclause (d) states: “not be likely to deceive or mislead a reasonable person …”. How far do we go in trying to ensure that every person entering into a credit contract is a reasonable person? I have already talked about the concerns expressed by some submitters about trying to protect people to the nth degree from entering into contracts they do not understand. Who defines a reasonable person? Can they then go— 
Hon Judith Tizard 
: The court. 
SANDRA GOUDIE 
: The court. Well I want to follow up on the provision about not deceiving or misleading a reasonable person. I refer members to the comments I made earlier about the Kingdom Resources organisation which recently offered a course “Beat the Budget Blues” attended by a lady who simply did not believe what she was being told about hire purchase agreements. So she went back and checked her agreements. To her amazement she found that the information given at that course was correct. I put it to the Committee that she was a reasonable person but did not understand the credit contract even though she believed that she did. 
Other people out there will believe they are reasonable people and that they understand these things but under the definition of “reasonable person” and if they feel they have been misled they can seek a remedy under the oppressive conduct provisions. The Committee will be debating those provisions later on in other parts of the bill. This is a concern and it should not be a subjective test about who is a reasonable person. 
Hon Lianne Dalziel 
: It’s an objective test. 
SANDRA GOUDIE 
: No it is not. There is no definition covering it. It becomes subjective. Everyone could be deemed a reasonable person and could interpret whether he or she has been misled and then call in the oppressive conduct provisions. We will discuss that issue later and perhaps the Minister in the chair the Hon Lianne Dalziel will take a call and expand on that a little bit more. We would certainly appreciate that from the Minister. 
Hon Lianne Dalziel 
: I’ve already taken a call. 
SANDRA GOUDIE 
: We have not seen the Minister take a call on this provision. 
Hon Tony Ryall 
: Yes she did. She moved a closure. 
SANDRA GOUDIE 
: Is that the best she can do? Perhaps she could give us the benefit of her legal expertise and explain the meaning of “reasonable person”—given the absence of a definition in the bill. 
I would like to talk about compliance costs. They are jolly substantial especially if— 
Government member 
: They’re not. 
SANDRA GOUDIE 
: The member says they are not but that is because the Government does not understand the costs associated with business. Many of the submitters outlined the figures involved. For example the big banks said that costs would run into millions of dollars. They will have to provide new forms modify their procedures make systems changes and train staff. They will probably have to give some sort of outline and assistance to people who seek their services. This bill will not stop loan sharks. They will still be out there. That problem has been referred to in earlier speeches. 
If members look at the business compliance cost statement in the explanatory note of the Consumer Credit Bill as introduced they will be able to answer: “Yes” “Yes” “Yes” to most of the questions raised about where the costs will be incurred. They will see under documentation requirements that there will be compliance costs and they will vary depending on the lender. I put it to the Committee that all lenders who have those forms will have to modify their procedures and as we all know information technology is pretty expensive—certainly for the bigger providers. 
Staff training will be another cost. There will be an increased need in the short term but staff movements will incur ongoing costs in training and retraining. It will not be just a short-term cost as predicted in the business compliance cost statement. The cost statement mentions required calculations for finance rate and total cost of credit. It is estimated those costs will decrease but I put it to the Committee they will not. 
JILL PETTIS (Junior Whip—NZ Labour) 
: 
 I move  
That the question be now put 
. 
STEPHEN FRANKS (ACT NZ) 
: 
 I am driven to comment on this legislation purely for the sake of placing a mark in the ground. Some law changes are made out of a strong sense of commitment and ideology that in hindsight look absolutely stupid. Some are made out of simple stupidity. There has to be something absolutely stupid to be following an Australian precedent into Australian-style cost levels into generating Australian-style levels of income for lawyers. They come from something that is supposed to be to the advantage of consumers; a subpart called “Changes on grounds of unforeseen hardship”. 
In this Credit Contracts and Consumer Finance Bill this flagship reform that some utterly stupid Ministers are putting through we have provisions that state that if a debtor experiences the end of a relationship or an illness or injury or loss of employment then he or she may apply to the lender to get a change in the terms of the deal. Of course they can. However this Government thinks there are free lunches everywhere and Father Christmas exists so do fairies at the bottom of the garden. The Government thinks that a lender can be exposed to the risk of having a scumbag debtor fend off enforcement and fend off the collection of the debt by going along to the court and saying: “I’m in hardship. My marriage has broken up. I shouldn’t have to pay this back.” 
Of course people can do that but someone bears the cost. Every debtor bears the cost. It is built into the interest rate into the charges into the documentation fee and into the credit assessment. What does it do for a start to people who are in a relationship? It makes them slightly less desirable than those who are not. What does it do to the provisions in the agreement about meeting costs on enforcement? It means there is more enforcement cost to be spread across all those decent folk who want to borrow money and who are not in the category that causes this risk. 
We are looking at a bill that deals with a non-problem. Have any of us been besieged by legitimate concerns about the existing Credit Contracts Act? 
Hon member 
: Not one! 
STEPHEN FRANKS 
: Not one! I spent 22 years as a commercial lawyer and I think I would have seen one or two in all that time where I thought the creditor had been a bit harsh. Indeed they leaned over backwards. After this they will stand on their rights and of course they will do all the back-covering steps. They will send all the letters at the expense of borrowers. There is nothing free. There will be a whole category of borrowers who simply cannot get finance because they will be priced out or they will look too risky. Why would people lend to someone who is sick if later on that person could say that because of the illness he or she does not have to repay on time or that the interest rate is too high? Why would they lend to someone in a wheelchair if that person could then say that injury is a problem? Why would they lend to someone who is in a threatened level of employment if they had a choice knowing that the person could come along and hold up the enforcement of the debt? 
 This provision is typical ignorant socialism. This is the kind of stupidity that a giggling Minister of Commerce—also a Minister of Immigration who cannot run that portfolio—shows when she is trashing a perfectly sound Credit Contracts Act. The Minister is giggling because she has no answer. She will not take a call she will not speak and she will not answer the arguments. She has no evidence that this bill will do a thing. Why did every creditor—the good ones and the bad ones—oppose this bill? This Minister will go down in history as one of the most stupid Ministers not just doctrinaire not just ideological but simply stupid. 
This stupid Government has caused enough grief for ideological reasons. It has the Resource Management Act. It has the Employment Relations Act. It has enough anti-business yet it comes in with this bill and starts stuffing up the loan market for consumers. It was said during the introduction of the bill that there has been a huge expansion in access to credit. Does that say there is a problem? Does that say the market needs this intervention? 
Hon HARRY DUYNHOVEN (Minister of State) 
: 
 I move  
That the question be now put 
. 
LINDSAY TISCH (NZ National—Piako) 
: 
 I want to pick up a very important point that my colleagues Sandra Goudie Brian Connell and Tony Ryall have brought to the Committee’s attention and that relates to clause 9. It is in clause 9 that we look at the meaning of “consumer credit contract”. The issue was very evident in the speeches of Tony Ryall who has an understanding of financial matters and of Brian Connell who in his work in the finance sector has for many years worked with credit contracts variations of contracts and other contracts of various sorts. 
I was not happy with the Minister’s response and I ask that she take a call on this very important part about the broker’s commission. The point I make is that when borrowing money the borrower wants to know what it actually costs. When a person is borrowing X dollars there could be insurance charges associated with that and establishment costs to set the loan up. Those costs are acceptable and are happening all the time but if a borrower is dealing with a broker there is also a broker’s charge associated with that. That is what we are talking about—the total cost. 
In the days when I worked for the Rural Bank we had to look very closely at the contracts. At that stage back in the 1980s we were lending concessional money because the bank was a Government-owned agency at that time but the bank moved into a commercial environment when the Rural Bank was sold and the National Bank took it over. I was there when we moved from concessional interest rates through to market rates. Interest rates shot up very quickly and there had to be disclosure. That is the point I am making and the Minister has an opportunity to comment. If I am in a position where a broker is involved why is the broker’s commission not included in the meaning of “consumer credit contract”? Why has it been discarded? 
This bill is about protecting people who want to borrow and that is fair enough. The question earlier on—and Stephen Franks made this point—asked what was new about this bill that was not in the current Act? Because if one has been dealing with credit contracts over a number of years one would realise that the bill we are dealing with here does not substantially change things. In fact if we look at some of the submissions that came in it does not substantially change what was wrong with the Act under which we now work. So the question is: what is wrong with the existing Act? 
Sandra Goudie 
: There is no evidence that it is wrong. 
LINDSAY TISCH 
: There is no evidence in the submissions and I have read through them. What is actually wrong with the current Act? 
The point my colleague Sandra Goudie made which is very important when dealing with business was about the huge compliance costs that all businesses are having to deal with—“regulatory creep” I call it. Businesses will have to face huge compliance costs if we implement this bill in its current form. We are a party that is opposed to huge compliance costs and to regulatory creep. We want to limit those costs and that is why we will be voting against Part 2 of this bill. We do not agree with it. The concept of the bill overall is fine but Part 2 misses the point that we think is so important for people who are borrowing—the creditors the debtors lessees lessors and people involved in the finance industry. 
I will bring members back to the point and read out Clause 9(1)(c) because it is significant. It states: “A credit contract is a consumer credit contract if—(c) interest charges credit fees or both are or may be payable under the contract …”. It does not include brokerage and that is the point I keep making. If we are talking about the one-stop shop and about the total costs that will be involved for the borrower—and that is what I am interested in: what will it cost me to get into this contract?—then the clauseshould include the brokerage fees. Speakers on this side have clearly articulated that if we want to protect the interests of the borrower then we need full disclosure. That is why we are voting against Part 2. 
JUDY TURNER (United Future) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 47A be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to.  
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 47B be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to.  
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 47C be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to.  
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 47D be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 47E be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 141 in the name of the Hon Judith Tizard to Part 2 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 2 as amended be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Part 2 as amended agreed to. 
Part 3 Consumer leases credit-related insurance and buy-back transactions of land 
JUDITH COLLINS (NZ National—Clevedon) 
: 
 We in the National Party always like to be positive. In this part we can be positive and that is always such a joy for us. 
Just like the previous speaker from the ACT party Mr Franks I have spent 20-odd years as a lawyer. The Credit Contracts Act was brought into Parliament in 1981 and stood the test of time for 20-odd years. I remember when that Act came into play. Before that we had the Moneylenders Act which was much more cumbersome much more difficult and very easy to offend against—supposedly without any great harm to the person at the receiving end of it. It was great to have the Credit Contracts Act and it is with some sadness that I see that it will be done away with by this legislation. 
Part 3 deals with some of the issues relating to that. In particular I would like to speak about the buy-back transactions in respect of land. I take that matter very seriously and I see that the Minister does too. One of the odd idiosyncrasies of life is that whenever Parliament feels it is taking a step towards stopping some great unfairness methods are brought into play to work around that unfairness and create another one. Unfortunately that has happened in the south Auckland area where my electorate is. A significant number of people there prey on the less fortunate—I see the Minister agreeing and I thank her for that—by coming along with an offer that is just too good to be true. Quite often people have trouble paying their mortgage paying debts or as often happens particularly with Pasifika families there is a funeral overseas and suddenly they need money and someone comes along with this great offer and the offer really is just too good to be true. It is: “I will take away the mortgage for you. I will take away these problems and now you can go back to renting. When you feel better about it all and you’re in a better state of mind and the husband wife or somebody is back working again then you can buy back the house.” 
There are all sorts of problems with that; the Credit Contracts Act does not really deal with them and that is why this part of the bill is one we feel we can support. It applies the credit contract provisions to those buy-back agreements. They almost always involve a situation whereby the person who is selling or entering into the buy-back agreement—the person who originally owned the home—is in a state of distress. Very often those people will never ever be able to buy back that home. Unfortunately the person who helps them to enter into that just-too-good-to-be-true offer knows that and that is one of the problems. I am really pleased that the Minister is supporting me on that issue with her nods. 
Another issue we could look at here is consumer leases and I am just a little bit concerned about that. As I have said before whenever there is a law to protect people people will work out a way to get around it and it has happened here. That will apply to consumer leases of 1 year or more or where there is an option to purchase the goods. 
One thing we believe in and it is in this bill is that there must be good disclosure of the facts. Unfortunately sometimes those facts are not particularly well disclosed and the Credit Contracts Act did a very good job particularly with the finance rate it brought in. Those of us who were lawyers many people in the finance industry and I am sure in the car resale business and many others understood what that finance rate was all about. It was all about putting the true cost of interest into transactions so that people no longer ended up thinking that they were paying 10 percent interest when with application costs and everything else put on they were often paying a true rate of interest in the late 20s or 30 percent area. That is what had been happening but at least under the Credit Contracts Act that issue was addressed. This part will bring those provisions into consumer leases and that is a very good thing. 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 I would like to follow up on the words from my esteemed colleague Judith Collins and say that it is good to see that the finance rate has been included. A lot of submitters were incredibly concerned that it had been omitted and I remember a deliberation in the House in which Paul Adams from United Future applauded the fact that it had not been included. It is quite interesting to see that the finance rate is now there and I applaud the Minister for recognising that it is an important aspect of the bill. 
One of the other things I would like to talk about is that the disclosure requirements for lease arrangements are to a degree the same as those in schedule 2 for consumer credit contracts. Again the disclosure requirements are important. One submitter said that one of the starkest ways to bring home to consumers the meaning of a credit contract or credit lease or whatever would be to have nothing on the first page of the contract other than the total sum payable—in large black letters. Members heard my esteemed colleague Judith Collins explain the difficulties that people can get themselves into. Any reasonable person—and we certainly have some concern about the definition of that because there is not one—can get himself or herself into difficulty. If the total sum payable is printed in large black letters on a blank page then that gives people a very clear message about what they are getting themselves into. A number of people out there do not have the knowledge or indeed the literacy or numeracy skills to fully appreciate what sort of transaction they are entering into. It is a major concern. 
No research has ever been provided to show why this bill is necessary and why it has been necessary to legislate to the degree attempted in order to protect people from themselves. Nothing has been provided in the way of research to show that a new bill or Act is justified and that issue has been raised by a number of submitters this evening. It is a material omission that the bill is not based on sound research but on someone’s concern that consumers were not being protected enough and who wanted to strengthen the protection provisions through this newly named Credit Contracts and Consumer Finance Bill. 
I would like to raise the issue of compliance costs yet again because it is a significant part of what is happening with regard to this bill. I did not cover all the business compliance cost statements that were identified in the preamble to one of the original bills but as Stephen Franks has already said those costs will be passed down to consumers. Dealing with claims by consumers will be a cost but at the moment there is no way of knowing to what degree that will impact on businesses. The “oppressive” provisions will place a cost on both consumers and lenders but no one has any way of calculating it. It is one of the risks imposed by the bill and it could be incredibly substantial. 
There will be a cost to lenders in monitoring the compliance of their programmes with the law and due to stronger enforcement that could again be substantial—a fact that has been noted by a number of submitters. There is real concern about increased costs because of unknown factors in relation to what is “oppressive” and what that will mean in terms of litigation. There are significant opportunities for people who are not satisfied with the contracts they have entered into to bring about litigation by saying that they were misled. It could be as simple as them saying that they are reasonable people and that they were misled when they entered into the contract. We will get into that issue further as we debate the other clauses of the bill. 
Hire purchase providers have also identified increased short-term costs but I put it to the Committee that those costs will be ongoing. 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I will take just a short call on this part because sense seems to have prevailed with Part 3. I would like to ask the Minister in the chair the Hon Judith Tizard whether she could clarify what I think is the confusing issue of the “occupier” in buy-back transactions of land. There is a definition of “occupier” in clause 6B of an earlier part which I will refer back to even though we have already debated it. It sets out that the occupier is the person who agrees to transfer an estate in land to another person in exchange for borrowing money from that person. That is fine so far. The land handed over is security for the money loaned and is the principal place of residence for the occupier at the time the occupier enters into the transaction. That is all fine. 
But clause 58B sets out the disclosure provisions of buy-back transactions. The onus is very much on transferees to disclose and to make sure that occupiers understand the transactions they are getting into and all details of those transactions. In fact the onus is on the transferee to ensure that the occupier has independent legal advice and so on—which is fine—but then clause 58B(2) states that every transferee must ensure that a copy of the terms is given or sent to every occupier under the transaction. I find that confusing because up until that point we had been dealing with “an occupier” but suddenly we get to “every occupier”—presumably under the one transaction therefore one piece of land is being dealt with. 
That raises the question of how the transferee is to know—or is he or she presumed to know—whether there is one occupier or more of the land in the transaction. Is the transferee liable because he or she did not know or did not try to find out? That also raises the question of what happens when the hardship provisions are enacted by the occupier or whoever the occupiers are. Can one occupier try out the hardship provisions or can every occupier use the hardship provisions as an excuse for not paying back the debt or whatever is owed under the terms of the contract? I consulted the expert Judith Collins who is a lawyer—because I am not—and she was confused too. As I said this is just a short call and perhaps the Minister in the chair could take a call and explain whether it should be one occupier or several occupiers. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 Thank you for choosing me Madam Chair. I appreciate it. It is a first that seniority is being— 
Lindsay Tisch 
: She didn’t see me standing. 
BRIAN CONNELL 
: I am sure that you did not overlook my colleague Mr Tisch Madam Chair. I want to take a relatively short call on this part as well because I also find myself agreeing with the Government on this part. I will not go so far as to say that I am giving out bouquets but I think it is sensible. However for the sake of the  
Hansard 
 record I want to deal with the issue of buy-back transactions and to make it very clear what I am talking about. 
A buy-back scheme is a transaction whereby the title to a home is transferred to a company or an individual and the original owner enters into an agreement to stay in the property usually by paying rent. The person who transfers the title also has the right to buy back the property at a later date if he or she can. That part is not included in the definition but it is of course the issue. I believe that the provision in the bill is dead right. It is really an issue of trust because the people who parade such schemes generally fit into the category of “loan shark”. They prey on people who generally are ignorant of finance. To those people finance is simply another world and they rely on others for their advice. To abuse that trust describes the worst kind of individual I can think of. That is simply preying on the weak who should be protected in law. Therefore I commend the Minister for the clause. 
The people who enter into those agreements should also be getting advice by going to people like my colleague Judith Collins—in her former life of course—to seek independent legal advice. The key is that it has to be independent legal advice and people need certainty that that is what they are obtaining. But of course on this issue the legal profession also has a responsibility. Like seeking finance going to a lawyer is also a unique and sometimes a frightening experience for those folk. The cost of obtaining legal advice is an issue that I will flag as part of the compliance cost concerns I have about this bill. With that said I believe that another part of the key information that should be disclosed is whether the advice that people receive is independent and of sufficient quality to walk people through this complex area with some certainty. 
Another clause I would like to talk about very briefly is clause 57(2) which deals with insurance. The test of whether something is reasonable has already been raised. But I can say without fear of contradiction that insurance will be paid for in some form somehow. That will occur either through an insurance policy that the lender insists on or by including insurance in the price of the finance. Those who understand financing and pricing will understand the concept of pricing for risk. All lenders have a risk profile and across that credit fits into categories ranging from “A” being a credit that has a low risk and therefore is marginally priced right through to “F” which is high risk and therefore carries a very high pricing structure. Somewhere in between of course is Utopia where shareholders’ funds are being protected because the risk profile is medium around the “B” and “C” areas and while those areas are less aggressively priced than in the case of the lower categories the price is enough to be profitable. That of course is how the finance companies build shareholder wealth and profitability. 
I reiterate that the clause relating to whether something is reasonable will give people false hope because somewhere in the contract there will be a cost for insurance. 
DIANNE YATES (NZ Labour—Hamilton East) 
: 
 I move  
That the question be now put 
. 
BRENT CATCHPOLE (NZ First) 
: 
 Part 3 is the real guts of the bill where the Government had to act swiftly because of the buy-back schemes. Those schemes came about in fairly recent times and they hit with a vengeance. I am pleased to observe tonight that a large number of members both in the Opposition and in the Government are supporting this part. It is a very important part intended to protect the unwary from the extraordinary lengths to which some people will go to in order to trap them into a situation that they will have no way of getting out of. That is basically what the buy-back transactions of land are all about. They are set up in such a way that the individual who borrows the money against his or her property has no way of refinancing it and getting the property back. 
Hon Lianne Dalziel 
: They have transferred their property. 
BRENT CATCHPOLE 
: The person has transferred his or her property and basically the conditions are set so that it makes it very very difficult for the person to get it back. 
I would like to touch on the point concerning independent legal advice. We agonised for quite some time in the Commerce Committee over how we could ensure that a person who was trying to borrow money would get independent legal advice. In many cases a person has turned up with perhaps a parent or a friend who has tried to assist the borrower and in those cases neither person has had financial or legal knowledge. We have put in a clause requiring that there must be legal advice. Sometimes the person lending the money recommends the legal advice and that is an area where a person can fall into a trap. If the borrower accepts that advice then he or she is in dire straits. We agonised over that provision to try to make sure that that situation did not happen. I certainly hope it does not happen under the circumstances provided for in the bill because it is a very serious issue. 
With that I say New Zealand First strongly supports this part of the bill. We support the bulk of the bill but this is a very important part that needs to be acted on quickly because of the circumstances that have developed very recently and very swiftly. Unfortunately I do not see any remedies in this bill that will solve the existing problems that people may have. Although the Minister has stopped any further transactions like that I believe that this legislation will not resolve the situation for those who have already lost their homes or are already tied up in an existing agreement under the previous Acts. Unfortunately I feel that this legislation does not quite capture those people. I would like to get an assurance from the Minister that it does but I have a feeling that this part is weak and does not quite resolve that problem. 
Another issue is the cost of getting legal advice. The cost of approaching a lawyer adds to the cost of the money that a person has to borrow. That is where independent legal advice will sometimes fall down and the person will try to rely on a relation who has some legal knowledge. But occasionally that will fall down too. 
Deborah Coddington raised an interesting point about the hardship provisions. According to the way that a buy-back scheme is set up if a hardship provision is invoked under the bulk of this legislation then there will be some serious difficulties for the people who have lent the money. 
DAVE HEREORA (NZ Labour) 
: 
 I move  
That the question be now put 
. 
LINDSAY TISCH (NZ National—Piako) 
: 
 I have a question for the Minister about clause 48 in particular which relates to consumer leases. Clause 48(1)(d)(i) and (ii) refers to the lessee having an option to purchase the goods. I want to question the Minister specifically in relation to leasing a car in a situation where at the end of the lease the person does not have the opportunity to purchase the vehicle. I have always operated leased vehicles so I can use that as a specific example. 
I have had an option to be able to buy a vehicle by putting some money down and having the lease spread over maybe 3 years. At the end of the 3 years there has been a residual value and at that time I could then buy the vehicle. That has been an option. The other option which I have always exercised has been to lease the vehicle just on a monthly payment basis which includes the lease per month plus GST. Then at the end of the period after I may have had the vehicle for 2 years and done 60000 kilometres or whatever the lease arrangement is I can then hand back the vehicle and drive out with a brand new car. I have had the option of choosing a vehicle that has a residual value or a vehicle that does not. Many people do that so maybe the Minister or her advisers can help me. In the situation that I am referring to does the circumstance arise whereby at the end of the lease period I will not have the option of buying the vehicle at the residual value? Is that covered by the bill? 
Clause 48(1)(d) states: “when the lease is entered into 1 or more of the following applies: (i) the term of the lease is for 1 year or more:”—that is fine; it is very clear—“(ii) the lessee has an option to purchase the goods.” The question is whether the lessee has the option to purchase the goods. That is what I am asking. I know that there are a number of individuals—business people—who fall into that category. I do not know from reading clause 48(1)(d)(ii) whether those people are covered specifically by that provision. 
Leasing is big business. A lot of my work before I came here to Parliament was in restructuring businesses. One of the things we did was to look at leasing as an option. We looked at leasing computers fax machines and Eftpos machines for example. Why would people want to spend $3000 on buying an Eftpos machine when they could lease one for about $65 a month? As technology has moved so quickly why would anyone want to have a depreciating asset when that person could lease it and claim the total cost back as a cost against the business or even lease it for personal use? There is also though with some of those lease arrangements the opportunity to purchase the equipment which takes us back once again to clause 48. I do not know whether that is covered by clause 48. 
I am asking the Minister a very simple question. The advisers could say yes or no just to that question; I would be comfortable with that. 
Hon Judith Tizard 
: Businesses aren’t. 
LINDSAY TISCH 
: OK. But a lot of individuals fall into that category; a lot of individuals lease vehicles. Why would people want to spend $30000 or $40000 on buying a car when they can lease one for $300 or $400? Even if they are not in business that is still a cheap option. Leasing is an optional way of funding one’s operation whether it be for personal or business use. We can look at a number of examples of that. Computers and fax machines fall into that category.It covers other equipment as well and a lot of the vehicles on the road today are not owned by the people who drive them. Leasing is an absolutely huge business. 
So the point I make to the Minister is this: if there is no residual value at the end of the lease period that gives me the opportunity to buy the item am I actually covered by clause 48? I am quite happy to sit down if the Minister can answer that question for me. 
Hon RICK BARKER (Minister for Courts) 
: 
 I move  
That the question be now put 
. 
LINDSAY TISCH (NZ National—Piako) 
: 
 I want to carry on speaking about this issue because I have not had an answer. I will take a break while the Minister confers with her advisers and then I will sit down. I am asking a very simple question: if there is not a residual value at the end of the lease—[ 
Interruption 
] Why does Mr Benson-Pope not stand up and take a call himself? If there is not a residual value at the end of the lease does clause 48(1)(d)(ii) cover the situation where I do not have the option to purchase the goods at any time during the lease or at the expiry of the lease for the residual value? That is the question. 
Hon Judith Tizard 
: I think that the member needs to read clause 48(1)(d) carefully. The legislation will apply when the lease is for a term of 1 year or more. Other circumstances may or may not apply but that does apply because clause 48(1)(d) actually states: “ 1 or more of the following applies:”. 
LINDSAY TISCH 
: That is right and “the lessee has an option to purchase the goods.” My question is about what happens if I do not have the option to purchase the goods—and there are a lot of leases where people do not have that option. I ask that question. 
Hon Judith Tizard 
: It does not matter. The issue is whether the lease is for more than a year. 
LINDSAY TISCH 
: That is part of it. That is in subparagraph (i): “… for a year or more:”. People can have leases for 2 or 3 years. If I lease a car for example I go for a 2 or 3 year lease but I do not have the— 
Hon Judith Tizard 
:Then it is covered. 
LINDSAY TISCH 
:It’s covered? 
Hon Judith Tizard 
: If it is for 2 or more years it is definitely covered. 
LINDSAY TISCH 
:So the Minister is saying that I am covered? 
Hon Judith Tizard 
: The member is covered if the term of the lease is for 1 year or more. 
LINDSAY TISCH 
: But a lease of under 1 year is not covered? 
Hon Judith Tizard 
:No. 
LINDSAY TISCH 
:It is not covered if it is under 1 year? 
Hon Judith Tizard 
:Not unless other provisions apply. 
LINDSAY TISCH 
: OK. So if I lease a vehicle for less than a year I am not covered. 
Judith Collins 
: What about a renewal? 
LINDSAY TISCH 
: Yes. What about renewals? A lot of leases are actually for less than 1 year. So those people are not covered by this particular clause. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 141 in the name of the Hon Judith Tizard to clause 58 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Amendment agreed to and Part 3 as amended agreed to. 
Part 4 Enforcement and remedies 
JUDITH COLLINS (NZ National—Clevedon) 
: 
 This part deals with enforcement and remedies. I have had a look through the provisions and they are quite substantial. I think the Minister is trying very hard to make sure that the penalties are substantial enough to stop the crooks out there from trying to rip off the people who are in fact the least able to look after themselves and that is very good. 
Brian Connell 
: The most vulnerable. 
JUDITH COLLINS 
: They are the most vulnerable as my colleague says. The only problem is that the people who will get hit by the greatest force of these provisions are the people who set themselves up in business or try to get into the business of hiring or buy-back schemes but who are not necessarily the crooks. The crooks are the people who will operate through corporate identities. They are often based off shore they will not be here and in fact will not be worth suing when they are sued. That is one of the big problems. When I look at the provisions in this part and agree with many of them—and I absolutely agree with the intention of the part—the fact is that this will not catch the real crooks and that is a shame. 
When we look at the costs involved for the individual person who has been cheated out of his or her money or who has been the victim of a scheme that does not comply with this bill we can see that the ordinary person will not be able to afford to take a case to court. I note that there is provision in the bill for the Commerce Commission to take prosecutions and I think that is great—except has anybody in this Chamber ever tried to get the Commerce Commission to take a case? I can tell members that it is quite hard to do unless one is a Minister. That is because of course most of the people we are dealing with here are the little people of the world who are not in fact able to trot along to the Commerce Commission have a wee word and say: “Now this is a big issue for you.” They are not the people who will ring the Sunday newspapers and say: “Boy have I got a story for you!”. 
 The fact is these are the very people who will never be able to take this matter to court who will never be able to get the Commerce Commission to raise an eyebrow and who will never be able to get even anybody other than their good hard-working MP to take a scrap of notice. That is because they are the people who will always be the subject of these sorts of scams and schemes. It worries me that we have this. 
I was chatting before to my colleague Sandra Goudie about this and she said: “Well what about legal aid Judith?” and I said: “Well that would be a fine thing.” That is because legal aid in a civil matter like this would be available only if the legal aid subcommittee felt there was a very good chance of getting the money back. When one is dealing with fraudsters and scam artists there is almost no chance of ever getting the money back. So reality tells me and experience tells me after 20-odd years of experience as a lawyer that for most people there is no chance at all of getting any money back under these provisions—no matter how hard we in Parliament try to get people to understand what is going on here. 
That is why it is so important that no matter what we do with this bill once it has passed into law—as I am sure it will be—we have in place proper provisions whereby we advise people what they must be aware of. If we have to go into their churches if we have to go into their communities or if we have to go to the newspapers or on television in order to let people know that these sorts of schemes are out there that they are abounding and that they are ripping people off then that is the best way to stop people from being taken to the cleaners. We have to let them know those sorts of schemes are out there and if the deal looks too good to be true then it is too good to be true. If we let people know that that is of more use than any of the provisions in Part 4 or any of the provisions about enforcement remedies. I absolutely believe there is little or no hope that people will be prosecuted under these provisions unless they happen to have fallen foul of the provisions because they thought they were doing the right thing—but they were not—and so the real crooks will get away. 
One of my big concerns is about the cost and the ability to bring the cases. We can bring all the cases we like and we can impose all the fines we like but if the fines cannot be paid the people will not get paid. 
BRENT CATCHPOLE (NZ First) 
: 
 I raise a point of order Mr Chairperson. I would just like to bring to your notice that there is some feedback in the House and it is getting a little bit louder and louder. While my colleague was speaking there was a buzzing sound and a whistling sound starting to come through. I just bring that to your notice. 
The CHAIRPERSON (Hon Clem Simich) 
: I thank the member for raising that matter. 
PAUL ADAMS (United Future) 
: 
 Just before I begin on Part 4 I ask to be given the liberty to cover a couple of points that Lindsay Tisch mentioned under the last part. On this whole bill we are dealing with financiers who are people in the business of selling money. As I said in debating the first part this is where I think we sometimes need to educate the public and that is part of what this bill is attempting to do. 
For example the member mentioned leases. Whoever is leasing a car is just selling money. The residual value of a vehicle establishes the price the lease company will receive for it at the end of its contract. That takes out a lot of risk for the company because it knows the price it will get for that car instead of having to take the risk of getting what the market may pay in 3 years’ time. There is a huge difference between repayment amounts and the cost of a contract. 
As I touched on in the earlier debate if the sum of $10000 was borrowed on a house the total cost with 17 years remaining on the mortgage was $80884 whereas a hire purchase agreement taken out for 3 years cost an extra $375 per month and the total interest to be paid was $3450. Those are huge amounts and I would like to see the public educated further on what those sorts of transactions actually cost them. 
I have a Supplementary Order Paper on Part 4 relating to buy-back schemes. I think that a majority in the Committee would agree that those schemes have been a disaster for people who have had their houses taken away from them through virtually no choice of their own because they have not had information or they have been deceived. Unfortunately we are also aware that a lot of cases involve family members or people who are very close to the families concerned. 
But my comments really are with regard to Part 4 and specifically toclause 77(1A) which deals with offences. I intend to move a Supplementary Order Paper to amend this clause. As it currently reads a conviction for the offence of breaching clause 58E could bring a term of imprisonment of a period not exceeding 3 months. Given the weight of the offence I argue that this penalty provision is totally inadequate. I therefore propose an amendment that the term of imprisonment be increased to a term not exceeding 1 year. 
My amendment is based on the reasoning of consistency under the law. When one considers that the penalty for a similar offence relating to the fraudulent procurement of title such as a breach of section 225(1) of the Land Transfer Act is imprisonment for a term not exceeding 3 years the present penalty provision in clause 77(1A) is clearly deficient and incompatible. 
Secondly the need for a more stringent penalty is further underscored when one compares it to the penalty for an offence of arguably less weight and when one considers that the penalty for theft of an object not exceeding the value of $100 is the same as the penalty for someone convicted of a fraudulent title grab. That is patently disproportionate and I hope the House agrees undoubtedly that the penalty needs strengthening. 
The financial and emotional consequences for the consumer after being ripped off by a buy-back scheme swindler can be extremely harmful and long term. This bill needs a punishment to fit the crime. The amendment I put forward in my Supplementary Order Paper meets this need and provides a greater deterrent for those contemplating this devious and malicious crime. I ask the other parties to support my Supplementary Order Paper. 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 We open the bill at Part 4 “Enforcement and remedies” and under Subpart 1 “Preliminary provisions” the first thing we see is compliance programmes. So here we go in Part 4 we immediately get into the costs—the compliance costs—for lessors. Clause 59 provides that they must have a compliance cost programme to ensure that their employees and agents are following the procedures or have implemented automated procedures that are designed to ensure compliance with the Act and the regulations—we must not forget the regulations—and to ensure that there are in place methods for systematically identifying deficiencies and the effectiveness of the programme. Here we have a direct compliance cost staring us right in the face in this bill. This will be substantial because this is an ongoing cost not just a one-off cost. It is not just an interim cost but is an ongoing cost for monitoring the effectiveness and compliance in accordance with the Act. 
Then further on in Part 4 clause 62 deals with the jurisdiction of disputes tribunals. Given some of the complexities of these issues we are concerned about the capability of those people taking part in a disputes tribunal and dealing with some of these issues. I am aware of the effects of disputes tribunals—particularly in the agricultural sector—and they are not always as judicially objective as they might be. The experience of participants adjudicating through a disputes tribunal is sometimes questionable. There has been considerable concern expressed through my office about the way and the manner in which disputes tribunals operate. That is certainly an area that I would say needs to be addressed and probably given an overhaul in time to come. 
The other matter I want to refer to is clause 69(2) and the ability to take a person to court. One of the submitters actually talked about double jeopardy. This concerns clause 69(2) which talks about persons being able to take a provision to the courts. Anyone can take an objection to the courts in relation to the courts’ general power to make orders against a person. It talks about double jeopardy by making clear that exemplary damages cannot be awarded in respect of a breach that has already been the subject of a statutory damages order. Inappropriate risk of double jeopardy continues to exist because it would still be possible for non-compliance to result in a criminal law sanction as well as in either exemplary damages or statutory damages and that was a concern. 
It was felt that it was not appropriate for clause 83 to give “Any person”—and that is the term used in this bill—the ability to seek a banning order given that the bill already makes ample provision for enforcement by borrowers and by the Commerce Commission. It is laudable to see that the Commerce Commission has been strengthened. I note that the Minister sought an additional vote for 2003 with regard to the Commerce Commission and that is a laudable effort. There is a concern which I have already expressed about needing more vote for educational purposes but that might come in time. 
However in coming back to this part I say that it is not desirable for the provisions in clause 82 for example potentially to be able to be used by one lender against a competitor and that is a possibility. It may be that groups and organisations representing self-appointed guardians of the public interest could be in such a position to seek such orders also because the provision could be used spuriously. It may be that someone has been convicted previously and that was an error on the person’s part but he or she has seen the light. I tell Mr Adams that perhaps that person has come to God and realised there are better more honest ways of functioning in his or her life. Although that person is going to operate in a much more socially conscious and morally based manner he or she could still be victimised by the provisions of this bill. 
BRENT CATCHPOLE (NZ First) 
: 
 Part 4 deals with enforcement and remedies and I would like to touch on clause 76A “Enforcement of buy-back transaction prohibited”. I am pleased that the enforcement of buy-back schemes is prohibited but I wonder whether this clause actually picks up those people who are already trapped in a buy-back scheme. Such schemes have been set up under a previous Act and I wonder whether this provision will protect those people. I have the feeling it will not. 
The next point I would like to raise relates to clause 80 “Reasonable mistake defence”. It is quite easy to claim a reasonable mistake if people have it planned the right way. When people are caught they can plead there was a reasonable mistake. There are ways of proving that even though they had set out deliberately to make a mistake. I have the feeling that that provision is a let-off for some people particularly those people dealing in financial areas. They are the ones who have no scruples and the ones who are likely to use that defence having set themselves up to deceive people and then claim it was a genuine mistake. That will be a tough one to police. 
The next clause I will look at is clause 82 “Power to order certain persons not to act as creditors lessors transferees or buy-back promoters”. Certain people and companies will be able to set themselves up with very complex schemes to avoid being affected by this provision. Once again it is those unscrupulous people who will have extraordinary ways of avoiding being detected and who will move on to another company or organisation—fronted by somebody else perhaps—to run exactly the same scheme. It will be very difficult to police. 
I come back to Paul Adams’ amendment. He wants to raise the penalty for an offence from 3 months to 1 year. That is commendable and as he says it makes the “time suit the crime”. Unfortunately this Government has a tendency to allow this sort of period— 
Brian Connell 
: Soft on it! 
BRENT CATCHPOLE 
: It is certainly soft on crime. This sort of period falls into the category of home detention. That is no penalty at all for this particular crime because people who have been convicted will sit at home and continue their transactions there. 
Judith Collins 
: Sit at home and do Internet gambling. 
BRENT CATCHPOLE 
: Yes they could sit at home and do Internet gambling as Judith Collins mentions. These people will be able to sit at home and continue their illegal transactions and schemes. It is no real penalty—3 months or 1 year is not a penalty particularly when people have the right to apply for home detention. The fine of $200000 or both penalties together might be a little bit of a slow-down but these people are dealing with quite extraordinary figures in their finances and I suspect that even $200000 would be a drop in the bucket for many of those operators and it may well miss the mark. I tell Mr Adams that it was a good attempt but unfortunately the law as it stands today will mean it will have very little effect as far as penalties of 3 months or 1 year are concerned. The important thing is that this part has a provision to enforce the fact that buy-back transactions are prohibited. We commend that provision and I certainly hope it is capable of protecting those who are already in such schemes. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I move  
That the question be now put 
. 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: 
 It is very clear from the debate from the Opposition side that we are mightily concerned about the compliance costs associated with this bill. Our concern is that compliance costs will add to the cost of finance for consumers—and it is quite clear that it always will as Mrs Collins said. The issue revolves around requiring extra burdens on lenders in terms of what they must be prepared to carry with legal sanction scrutiny from the Commerce Commission as proposed in this part or actions from other parties. All carry an element of risk and an element of cost. That cost will always be passed on to the consumer and that is the point the National Party in Opposition has been making throughout this debate. Compliance cost is a very big issue. 
Part of the Government’s claim that it is dealing with compliance cost issues is the regulatory impact and compliance cost statement that formed part of the explanatory note of the original Consumer Credit Bill as tabled in the House. I have to say to the Minister that that was a very poor exposition of the costs and benefits associated with this bill because not one figure is provided of either the financial costs or the financial benefits of this deal—not one figure. In the whole provision only one number is mentioned and that is in respect of the $250000 in the definition of what a commercial contract amount would be in terms of the level of disclosure. That is the only figure mentioned. If the Government seriously believes that Parliament should take notice of the compliance cost and regulatory impact statement provided to it then Parliament should be treated with respect and the Government seek to quantify those costs. 
Opposition members have taken quite a lot of time in the last few weeks to go and talk to a large number of these consumer lenders. They are not just the major banks which the Ministers might wine and dine; they are a whole lot of people who run small localised finance companies that provide credit to New Zealanders. The average amount that those people lend might be $3000 to $5000. They might employ two or three staff. The capital is essentially the owner’s plus some— 
Hon Chris Carter 
: This is exciting stuff. 
Hon TONY RYALL 
: It is exciting because it is quite an important point. It should be exciting for the Government because we are saying to the Government that we should get the full costs and benefits in this bill. 
The issue is that we have talked to a whole lot of consumer finance companies around New Zealand and it is quite clear from them that there will be significant costs associated with this bill. I suspect that is the reason the Government has not provided any figures in this legislation. Some of the costs associated with this part will require additional forms to be printed additional staff training to be undertaken and additional compliance regimes to be implemented by the various businesses. All that costs money. 
People who run a finance company have to take into account a whole lot of risk. One of the risks that Opposition members of the Committee are not happy with is that the Commerce Commission might be able to take a class action against all lenders. We think that the Commerce Commission should have to act on the specific offenders. It is clear that the Government is seeking to target unscrupulous moneylenders. It is going to target what I would refer to as the second-tier moneylenders. The “pay-day Charlies” who stand at the gate to the factory and collect the loan repayments on pay day are not going to be controlled by this legislation. 
DIANNE YATES (NZ Labour—Hamilton East) 
: 
 I move  
That the question be now put 
. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 I would like to start by making a comment on the amendment that Mr Adams has put forward. One year hardly seems enough and I question why we would bother. We know that this Government is soft on crime. I do not think a sentence of 1 year which would mean that people would be out in 2 months—if they even get to jail; they would probably be on home detention along with Mr McDonald—would keep those types of people awake at nights. If Mr Adams is to do it he should do it seriously and I suggest he talks to his colleague Mr Alexander about what a real sentence means. 
The issues I want to raise are contained in clause 59 “Compliance programmes”. In particular there is a misconception that the compliance costs will be something that organisations carry easily. Most finance companies that I have experience of whether they are big or small businesses have structured themselves to get economies of scale. Most often they have combined their resources and established back-office functions. Those functions are essentially all those functions that used to be done in the branches or at the back of the shop. They have now been put into a centralised site and are highly automated. I am concerned if we go down this track that there will be a huge amount of reprinting of forms that new systems will have to be created and that once those systems and forms are in place there will have to be training of staff. Because most of those programmes are automated there is no human input. Once people have restructured and have had to print new forms and create new systems there will have to be training of staff. The compliance costs associated with employing more staff and training them are extremely clear. Then there will have to be a new audit process to satisfy consumers and those who administer the law that those things are in order. 
Establishing back-office functions is not something that is done easily. In most cases they are multimillion dollar sites. Most of the major banks in this country operate out of one site and work collectively. It is not just one site per bank but one site for many banks. 
Hon Chris Carter 
: He should get a life. 
BRIAN CONNELL 
: It is an issue that Mr Carter does not understand and will never understand but it is a real issue for those organisations. Of course what will happen to consumers is that the cost of this compliance will be priced into the loan. The compliance costs will be passed on to consumers and I fear that the very people we are trying to protect will be priced out of the marketplace. 
The other issue that concerns me is the hardship provisions. Of course the compliance costs that run with those are enormous. Banks price for risk but where there is uncertainty—and this will lead to uncertainty because security will be eroded—price will be factored into the loan and the consumer will be the worse for wear. Some people will not get finance. Banks finance companies and consumer credit companies will simply become risk adverse and they will take the easy option of telling consumers that they are not worth banking not worth lending to; they will tell consumers that they cannot take the risk and will say no. That is exactly what will happen. 
The next thing I want to raise is legal recourse. The bill calls for jurisdiction of the district court and of the High Court. That is all very commendable but the reality is that it is good in theory not in practice. The very people who will be seeking redress—the very people who will be ripped off by the loan sharks that we are seeking to deal to—will be the people who (a) are too frightened to go near a lawyer (b) do not have the money in the first place and (c) do not have the aspiration. 
DAVID BENSON-POPE (Senior Whip—NZ Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
BRENT CATCHPOLE (NZ First) 
: 
 I raise a point of order Mr Chairperson. During the vote members of the Government were calling out across the Chamber. That is against the rules of the House. 
The CHAIRPERSON (Hon Clem Simich) 
: The member is quite right and I am sure that member has learnt if not his lesson the way it should be done. 
The question was put that the amendment set out on Supplementary Order Paper 141 in the name of the Hon Judith Tizard to clause 77 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Amendment agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 139 in the name of Paul Adams to omit and substitute subclause (1A) in clause 77 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 60 
Labour 52; United Future 8. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Green Party 9. 
Amendment agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 139 in the name of Paul Adams to add new subclause (3) to clause 77 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 60 
Labour 52; United Future 8. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Green Party 9. 
Amendment agreed to. 
A party vote was called for on the question  
That Part 4 as amended be agreed to 
.  
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Part 4 as amended agreed to. 
Part 5 Reopening of oppressive credit contracts consumer leases and buy-back transactions 
JUDITH COLLINS (NZ National—Clevedon) 
: 
 Part 5 like many parts of this bill has some very laudable provisions and some laudable purposes but again we come to the reality of the situation. 
Clause 92 “Meaning of oppressive” states that oppressive “means oppressive harsh unjustly burdensome unconscionable or in breach of reasonable standards of commercial practice.” That is pretty much the same as in the 1981 Act. The fact remains that although that Act has been in place now for over 20 years there have been very very few provisions in contracts such that a court has held that the actions of the lender or the creditor have been oppressive. The reality is that as I have said before tonight and I will continue to say these sorts of provisions should be in place for the little people of the world the people who are most vulnerable when it comes to contracts but those very same people are those least likely to take these matters to court least likely ever to be able to afford to take these matters to court and least likely ever to be able to try to prove that something is oppressive or that a contract should be reopened. 
When the Credit Contracts Act first came into play there was a lot of concern expressed by lenders as there will be under this legislation as to the stand-down period in credit contracts—the period when people could reopen the credit contract or decide they did not want to go ahead with the financing. There was a great deal of concern as I recall among the banks that contracts might be overturned and for a little while they thought everyone would have to draw down their loans about 3 days before the settlement of a house purchase just in case the court were to decide that something was oppressive or unfair. There was all this uncertainty and I note that my colleague Mr Richard Worth who was also a lawyer by profession before coming into Parliament— 
Clayton Cosgrove 
: A bush lawyer. 
JUDITH COLLINS 
: No a very very good lawyer. The fact is the banks were very concerned that they were going to end up on the wrong side of the law and they said that that would have to happen. It took a couple of weeks as I recall for them to work out that one cannot do business like that. One cannot do business on the basis that something might go wrong. 
It concerns me and it concerns the National Party that no matter what we do with a bill like this we will constantly be encouraging an increase in compliance costs to the point of over-compliance of lenders/creditors taking extra care. Those costs will always be added on to the borrowers. The fact is that in any of these transactions any cost is always a cost to the borrower. It is a cost to the borrower by way of either a lending fee or a borrowing fee or it is a cost to the borrower by way of an interest rate. The fact is that the costs of the creditor of the financier are and must be added to those of the borrower. 
The reality is that as much as we try to help the little people of the world who are borrowing under these agreements all the people out there who need to go ahead and do business we will simply make it harder. We will make it harder for them firstly to get loans and secondly to pay them. That is the problem. Nobody is actually forcing people to take loans—unless one counts the Hon George Hawkins who is introducing Internet gambling through the State. All that will happen is that we will be making it harder for people to get loans to go about their business harder for them to get loans to buy cars and harder for them to get loans to buy houses and we are putting on to them extra costs. That is one of the tragedies of it. We are rushing around trying to be kind but we could have a programme of letting people know through schools television and radio what these issues are. If we want to stop buy-back schemes we should be educating people and we should be letting them know about the problems they will encounter. 
BRIAN CONNELL (NZ National—Rakaia) 
: 
 I would like to speak to clause 93 which deals with the reopening of credit contracts and consumer leases. [ 
Interruption 
] Now that I have Mr Chris Carter’s attention let me continue. The clause states that the court may reopen a credit contract or a consumer lease if in any proceedings it considers that the contract or lease is oppressive. What does that mean? That opens the floodgates! The Government had advice from a number of submitters that it should not go down this track but did it listen? 
Richard Worth 
: No. 
BRIAN CONNELL 
: Can it listen? No. 
Richard Worth 
: Excellent advice ignored. 
BRIAN CONNELL 
: Excellent advice was ignored. The Ministry of Consumer Affairs told the Government that it should not do this. An article in the  
Independent 
 refers to these as radical hardship provisions. I think they are just stupid provisions. They will create uncertainty in the marketplace undermine the confidence of lenders who will increase costs by pricing for risk because they do not know whether they will get their money back and undermine shareholders’ confidence in the company and the people who most want the money will be priced out of the marketplace. The  
Independent 
 article that I referred to stated: “This could adversely affect a creditor’s ability to raise funds by selling the receivables generated by the consumer credit arrangements.” That is simply because they have been factored out. 
Richard Worth 
: Could the member read that again? It is a telling comment. 
BRIAN CONNELL 
: I certainly can. It is an extremely telling comment: “This could adversely affect a creditor’s ability to raise funds by selling the receivables generated by the consumer credit arrangements.” This is the worst type of nanny State socialism I have seen in some time. Mr Carter knows that I am right. That is why he has stopped yelling out. He is hanging his head in shame. He does not want to be associated with this type of nanny State nonsense nor do any other people in the Committee which is why it has suddenly gone quiet. 
The  
Independent 
 articles goes on to state that the provisions may increase costs. Let me make it perfectly clear: they will increase costs; they will increase compliance costs and increase them hugely. The article states: “They may allow debtors to frustrate legitimate creditors’ actions taken to enforce credit contracts and”—another telling comment—“unscrupulous debtors could try to take unfair advantage of these provisions to extend contracts for their own benefit.” It will be:“I have had a bad hair day. I do not like the contract any more. I want to get out of it.” 
The provisions get down to specifying relationships. If someone’s relationship has gone sour suddenly he or she does not have to front up to face up to his or her liabilities. What utter nonsense! It will do huge damage to the marketplace as security starts to dwindle. I have said it before and I will say it again: this will result in some institutions the decision makers in those institutions becoming risk adverse. They will simply say that no they would rather not take the risk than be exposed to this type of nanny State socialist nonsense. 
R Doug Woolerton 
: Sounds like a Clayton’s bill to me. 
BRIAN CONNELL 
: It is worse than that. I think the Government thinks it is doing the right thing; it is an issue of absolute ignorance. The Government could not be told. A number of submitters went to the select committee and said “Don’t do it!” but the Government ignored them. I have asked the Minister in the chair before and it would only be magnanimous of me to suggest again that we suspend this debate for a day or maybe 2 days while the Government gets its head around this issue and fixes up what is clearly an anomaly. I do not think the Government meant to do it. I think it is an oversight in drafting. Do members really think it is creditable that one gets down to saying that the Credit Contracts Act will deal with relationships that have gone sour? 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I move  
That the question be now put 
. 
BRENT CATCHPOLE (NZ First) 
: 
 Part 5 deals with the reopening of oppressive credit contracts consumer leases and buy-back transactions. When the Commerce Committee considered this part we were confident that this would cover buy-back schemes but I have my serious doubts that this does. Clause 91“ Application of Part” states: “This Part applies to—(a) every credit contract (whether or not it is a consumer credit contract); and (b) every consumer lease; and (c) every buy-back transaction.” That sounds great. 
 However if we read on we see clause 93 “Reopening of credit contracts consumer leases and buy-back transactions”. If we then move to clause 96 we can see that it is the one that traps us for existing buy-back transactions. Clause 93 “Time and circumstances relevant to reopening credit contracts consumer leases or buy-back transactions” states: “a buy-back transaction is not oppressive if the contract lease transaction term or act would not have been considered oppressive at the time and in the circumstances that it was made or performed.” Therefore this clause traps those people who are already in the buy-back schemes and unfortunately this clause gives the lenders the way out and those people basically suffer the loss of their property. Sadly that clause is left in there because it really does leave it wide open for those schemes. 
During our deliberations we considered that the Commerce Commission would be able to take proceedings on behalf of some consumers because the bill particularly Part 5 deals largely with commercial arrangements and commercial deals. If the Commerce Commission can take cases on behalf of small businesses then that is well and good. But sadly I think that clause 96 may well be the death knell for those people who have already entered those contracts before this bill comes into place as a transaction is not considered to be oppressive if it would not have been considered oppressive at the time the transaction was put in place. This section of the bill on buy-back schemes was put in at a very late stage during the Commerce Committee deliberations—after those buy-back schemes had been in operation for a number of months. A large number of people were trapped because it happened very quickly. They were genuinely under the consumer credit legislation previously. So this particular clause is giving the out to those contracts and it means that the 1981 Act is the one that was covering those—[ 
Interruption 
] I think I might have lost some of the Ministers over there! I would like the Minister to take a call on this and I ask that she check with her advisors because this clause here does not allow these particular contracts to be reopened because they were not oppressive at the time that they were set in place. This bill makes all sorts of attempts to try to capture them but it does not. This clause lets them out and it means that the people who have already been trapped in that situation do not have the recourse to recover their property. 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: 
 This is a very important section and I shall pick up on a comment made by Mr Brent Catchpole of New Zealand First. Last month I received a phone call from some constituents in Mount Maunganui—[ 
Interruption 
] Unlike four of those five members opposite my home telephone number is in the phone book. Anyway those people rang me because they were victims of a buy-back. Labour members might think that is funny but those people were victims of a buy-back—a scam. They had been encouraged by a close friend of the family to enter into an arrangement whereby they would assign the title of their home to a trust of some sort or to a third party and in return they would receive a weekly income of $300. That may not sound like a lot of money to some members but when a person is on a pension $300 a week is an awful lot of extra money. They subsequently found out that the title to their home had been transferred from the company they had entered into this arrangement with to another party based in Hawke’s Bay—so it has got even more removed now—and subsequently the third party in Hawke’s Bay claimed that they had no knowledge that there was a rip-off involved in the buy-back arrangement. It is an absolutely dreadful circumstance. 
Fortunately we have been able to arrange for those people to have legal representation pro bono by a prominent solicitor in Tauranga and I do know that they are working with the Government’s agents to try to work through the situation. I acknowledge the excellent work the Government did in very quickly trying to attack the people behind the buy-back schemes. However Mr Catchpole suggested that people such as my constituents in Mount Maunganui would not be considered to be under an oppressive contract. I draw the Committee’s attention to clause 96. Mr Catchpole said that because the contract might not have been deemed to be oppressive at the time it was signed they would have no rights. But I would say particularly in the case of my constituents that that buy-back arrangement was harsh unconscionable and a breach of the reasonable standards of commercial practice. 
I tell members that my constituents are covered by this part of the law and they must be entitled as the Minister is indicating to the full force of the law. They are retired people who have saved up for their entire lives to have a house in a very nice part of Mount Maunganui and they were led to believe that their money would be safe by entering into an arrangement that transferred the title of their property. They have been duped and ripped off. The likelihood is that those people will lose their house. Those sorts of people should be taken to the cleaners and I tell Mr Catchpole that clause 92 applies to them. 
I would like to see this Government move to really rack up the penalties in respect of those people. The people who perpetrated that buy-back scheme are despicable deceitful dishonest and crooked. They should not be involved in any sort of commercial transaction like that again. 
 Never again should those people be involved in any arrangement like that whatsoever. So in supporting this part I say quite clearly that I do consider that the people who were subject to those unconscionable buy-back arrangements are covered by this part. The Minister agrees—no doubt with the support of official advice—and I think that the Committee should be very very determined to support the efforts of the authorities in cracking down on these buy-back arrangement people. 
Hon RICK BARKER (Minister for Courts) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
Part 5 agreed to. 
Progress reported. 
The House adjourned at 9.56 p.m.