Subordinate Legislation (Confirmation and Validation) Bill (No 3) — Second Reading Instruction to Committee In Committee Third Reading 
Text is incorporated into the Bound Volume 
Subordinate Legislation (Confirmation and Validation) Bill (No 3) — Second Reading Instruction to Committee In Committee Third Reading 
[Sitting date: 14 December 2004. Volume:622;Page:17793. Text is incorporated into the Bound Volume.] 
Subordinate Legislation (Confirmation and Validation) Bill (No 3) 
Second Reading 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That the Subordinate Legislation (Confirmation and Validation) Bill (No 3) be now read a second time 
. The bill was referred by the House to the Regulations Review Committee on 7 October. The select committee presented its report on 3 December recommending that the bill be passed with amendments supported unanimously by its members. The committee called for explanations from the six departments administering the 14 orders to be confirmed or to be confirmed and validated by the bill as introduced. The committee was satisfied with the responses. 
At the Government’s request the Regulations Review Committee considered two matters not addressed in the bill as introduced. The first of these was confirmation of the Deer Industry New Zealand Regulations 2004. These regulations were being made just as the bill was introduced so necessarily missed inclusion. They replace the venerable Game Industry Board Regulations 1985 reflecting the reform of the industry in more recent years. They lapse unless confirmed by the end of the Parliament and this of course is the last scheduled confirmation and validation bill in the meantime as an election must be held by the end of September. The select committee was satisfied that the regulations should be confirmed. 
The second matter concerns amendments that would validate payments made under levy notices issued under the Alcohol Advisory Council Act 1976. The payments were made under notices issued between 1983 and 2004 so it can be said that National started it Labour continued it National continued it National - New Zealand First continued it further National and various odds and sods continued it further still and the Labour-led Government has continued it still down to 2004. So the guilt is reasonably evenly spread around the Chamber and indeed into the heavens above I think one can say at this point. The select committee’s commentary summarises on page 2 the types of deficiencies in the notices. The select committee sought comments on the proposed amendments from key industry groups and established that there was no opposition to them so the committee accepted unanimously that it is appropriate to validate the payments made under the effective notices. 
The commentary notes that two submitters called for changes to the actual principal Act the Alcohol Advisory Council Act but that of course is outside the scope of this particular bill. The select committee invited the Minister of Health at an appropriate time to consider the matters nominated by the Distilled Spirits Association. 
I am grateful to Dr Richard Worth as chair of the Regulations Review Committee and to the members of the committee for their work on the bill. In particular I am pleased that the committee has supported the amendments dealing with the deer industry and Alcohol Advisory Council matters. 
Dr RICHARD WORTH (National—Epsom) 
: 
 For some the Subordinate Legislation (Confirmation and Validation) Bill (No 3) might not be a bowel-gripping topic but for others Dr Cullen included it provides I guess a heady topic of infinite fascination. I am certainly looking forward to taking multiple calls in the context of the Committee stage of the bill when there will be an opportunity to tease out some of the more challenging issues that arise in connection with this legislation. 
Of course it has been reported from the Regulations Review Committee that the structure of the legislation is simple—simple I would say in every respect. Apart from the title and commencement provisions there are only two parts: Part 1 dealing with general and technical provisions; and Part 2 in two subparts the first dealing with confirmation and validation and the second dealing with a more particular form of validation. 
So it is that we are looking at confirmation of instruments made in accordance with the Animal Products Act the Animal Welfare Act the Biosecurity Act the Commodity Levies Act the Customs and Excise Act the Gambling Act the New Zealand Superannuation Act the Social Security Act the Primary Products Marketing Act the War Pensions Act and the Alcohol Advisory Council Act—all of course heady provisions in daily use by significant members of the commercial community. 
An interesting question to ask would be why we have legislation of this particular quality. Would it not be better to have sunset provisions in legislation of this type rather than to have the process that the Regulations Review Committee determinedly embarks upon each year to make studied judgments on whether particular pieces of legislation should be confirmed and/or validated? In this particular case after an exhausting and harrowing process the Regulations Review Committee determined that it was appropriate for this bill to be passed albeit with a number of amendments. So it is that the purpose of this bill is to confirm and validate subordinate legislation made under various Acts. 
This is not one of those cases where whether what we are talking about are regulations in the strict sense of that term is a matter that arises for detailed consideration. Dr Cullen will be aware certainly from his reading that there are issues that are both intensely academic but also very practical as to how regulations within the purview of the Regulations Review Committee’s jurisdiction should be properly looked at. So we see here in effect not regulations—or not so limited certainly in that way—but a series of orders. I need refer only to the Biosecurity (American Foulbrood - Apiary and Beekeeper Levy Order) 2003—usefully reprinted in statutory regulation 2003/283—to make that point. 
We asked the Government departments responsible for administering the subordinate legislation their views on these particular pieces of delegated legislation. We asked the Ministry of Agriculture and Forestry the Department of Internal Affairs the Ministry of Social Development the New Zealand Food Safety Authority and the New Zealand Customs Service and our final port of call was Veterans Affairs New Zealand whether as departments responsible for administering the legislation they considered that there should be the appropriate confirmation and validation orders. Surprise surprise they gave proper explanations and indicated their view that confirmation or validation was appropriate. 
Dr Cullen has referred to the fact that the bill includes—properly—a request from the Ministry of Agriculture and Forestry in connection with amendments that would confirm the Deer Industry New Zealand Regulations. The reason for that request was simply that the regulations were not included in the bill as they were made only 2 days before the bill’s introduction. So there was an explanation from the ministry as to why that had occurred which the committee found acceptable. 
I shall not take up the time of the House at this stage to talk about issues that arose in the context of the submission made by the Distilled Spirits Association of New Zealand. But there are significant issues of substance there and it would be a good outcome if in the Committee stage the Minister indicated what his position was in respect of those questions of anomaly and I do not put it higher than that. 
Dr Cullen’s opening comments in this second reading referred to amendments to validate the Alcohol Advisory Council levies and so he should properly do so. There has been a history of error-ridden lawmaking relating to those notices. The story really starts with the notices issued in the years 1983 to 1987 and again of course in 1989 with the unauthorised setting of levies by litre of alcohol. [ 
Interruption 
] Mr Power reminds me that he was still at school at that time and I certainly remember him as a very promising schoolboy in a high-profile school. He has gone on from there to prove himself in this Parliament as a person certainly worthy of recognition and advancement. 
Mr SPEAKER 
: Could the member come back to the bill. 
Dr RICHARD WORTH 
: I would like to come back to the notices if I might because they were issued as I said in the years 1983 to 1987 then again in 1989. We are talking about the unauthorised setting of levies by litre of alcohol rather than by what is called in the trade proof litre which was the correct unit at that time. That was the first problem. The second was perhaps more serious and it related to the unauthorised setting of differential rates for spirits depending on their alcohol content with a further unauthorised rating on the basis of litre of beverage instead of litre of alcohol in the case of spirits with a lower alcoholic content. The third error related to notices issued in the years 1989 to 2004 where there was a questionable indication of goods and services tax payable on the levies. The final problem with the notices issued in 2003 and 2004 was a failure to follow the statutory formula for calculating the levies. 
Dr Cullen in his comments indicated that he thought the blame might reasonably be spread between the former National Government and the present Labour Government but I trust that that recitation is sufficient to show that the errors have been substantially of this Government’s making and of its advisers. Certainly that is what my catalogue of events indicates. 
So what has happened is that this bill has a new subpart 2 of Part 2. That includes clause 15 “Payments made in accordance with levy notices to be taken to comply with relevant enactments”. For those members of the House and I guess members of the public who have access to this material I tell them that listed in clause 17 are those levy notices lettered respectively from (a) to (u) that are the subject of remedial work in the bill. 
Hon DAVID CUNLIFFE (Minister of State) 
: 
 It is a great pleasure to take a very short call on the Subordinate Legislation (Confirmation and Validation) Bill (No 3). A bill sufficient to overshadow the Budget? A bill sufficient to wake up Ron Mark? This bill is none of those things. However the public can sleep easier in their beds knowing that Richard Worth is alive well and leading the Regulations Review Committee through its intrepid journey to ensure that none of those amendments or regulations are outside the Standing Orders. This is a process that we go through every year where we do not delay from doing the little tinkering and fixing jobs that occasionally the law requires. On that basis I am happy to support the bill. 
DAIL JONES (NZ First) 
: 
 It is a great pleasure to speak on this bill reminding me once again that even the sins of 1983 and 1984 have come back to haunt me. That is when these errors commenced when I was a member of Parliament in 1983 and 1984. It is totally unfair to blame anyone including myself of course for those defaults. The member at the time the former Speaker Sir Richard Harrison was a staunch supporter of the then Alcoholic Liquor Advisory Council from day one and after the royal commission from 1976 onwards and he would find a great deal of amusement in knowing that this problem had occurred. 
As I understand it in the discussions I have had the problem arose because the officials asked parliamentary counsel to draft an amendment to the procedure. Parliamentary counsel said: “Hang on a minute. The procedure you want us to amend hasn’t yet been approved by Parliament.” and someone discovered they had been unwittingly using that procedure since about 1983. So things finally do get caught up with in this place even if it does take about 21 years to work it all out. But this is New Zealand. New Zealand First is not going to make a song and dance of this issue. It is unfortunate and that is what this bill is all about. 
May I say that I was delighted to speak with the Distilled Spirits Association representative who makes calls on us regularly and keeps us up to date with the industry and makes sure that members of Parliament know what is going on. The question raised by the Alcohol Advisory Council is of great concern and I do hope the Minister of Finance who is in charge of this bill will do something to remedy the problem raised. He gives me a nod and perhaps in due course that will be remedied as well. New Zealand First supports this bill. It does not intend to filibuster. It is a simple bill which should go through promptly. 
HEATHER ROY (ACT) 
: 
 It was interesting to hear Mr Cunliffe say that every year the Government does a little tinkering and fixing of legislation in which drafting mistakes have been made. I think that should be a bit of a lesson to us. 
Hon Dr Michael Cullen 
: No. 
HEATHER ROY 
: Dr Cullen does not agree but Mr Cunliffe is worried about the tinkering and fixing so that is important. We should think very carefully about the legislation that we push through the House particularly under urgency. If we did we might not have to look at it again or do as much tinkering and fixing as we are doing under this period of urgency. Of course there is always subordinate legislation that quite rightly fixes mistakes in legislation but I note that further down the Order Paper we have the Gambling Amendment Bill to amend legislation that was passed only last year. 
In terms of subordinate legislation I am particularly interested in the validation of the Alcoholic Liquor Advisory Council levies. The National Party member gave us a very thorough look at the problems that have existed. Of course Dr Cullen quite magnanimously admitted the cross-party fault that has existed with the levy notices that were issued in 1983 through to 1987 and again in 1989. They do quite rightly require fixing. The industry could quite rightly have sought some form of compensation for levies that have been paid but perhaps were not actually necessary. The industry itself although it is keen to see these problems rectified was well aware of the authority that it could have exercised in dealing with these in quite a different way. 
I notice in the commentary on the bill that the Distilled Spirits Association when it gave its submission to the Regulations Review Committee put forward some proposals that have been ruled out as being outside the scope of this bill but I agree with the member when he says the proposals put forward by the association do need a good deal of consideration. I too hope these will be discussed during the Committee stage. In brief the association proposes a new model of product classification in bands based on alcohol content and suggests a requirement that information— 
Mr SPEAKER 
: That is not part of this bill. 
HEATHER ROY 
: Sorry Mr Speaker but I do hope these will be discussed because they are very important points which were raised when the Distilled Spirits Association was asked for comment on this bill. 
Mr SPEAKER 
: That does not make them in order now. 
HEATHER ROY 
: The bill addresses two matters with regard to the validation of Alcoholic Liquor Advisory Council levies: firstly the unauthorised setting of levies in the notices issued from 1983 to 1987 and again in 1989; secondly the unauthorised setting of differential rates according to alcohol content. 
This speech will be very brief because ACT New Zealand is supporting the bill but I want to sound a warning that it is very important that we look carefully at legislation when it is first introduced to the House not when we have to tinker and fix things as Mr Cunliffe has pointed out further down the track. It is very important that the select committee process is respected and that people are able to make submissions at the correct times and they are listened to very carefully when people have very valid concerns about the legislation that is being put forward. ACT New Zealand will support this legislation but we would like to sound this cautionary warning. 
GORDON COPELAND (United Future) 
: 
 United Future did not have a member on the Regulations Review Committee which considered the Subordinate Legislation (Confirmation and Validation) Bill (No 3) but I have great confidence in the people who were on the committee which was chaired I am sure very well by Richard Worth of National and comprised members from the Labour Party the ACT party and the New Zealand First Party. I have read the committee’s report. I note it expresses itself to be very satisfied indeed that the bill is taking the appropriate action in terms of confirmation and validation and therefore I am happy to signal United Future’s support for this reading of the bill and all its remaining stages. 
JOHN KEY (National—Helensville) 
: 
 I rise on behalf of National to support the Subordinate Legislation (Confirmation and Validation) Bill (No 3) but just before we rush this bill through its second reading and remaining stages the House should take a moment to reflect— 
Darren Hughes 
: Before National changes its mind on it. 
JOHN KEY 
: I say to Mr Hughes that there are a whole number of things we would love to discuss but I will try to keep my comments to the subordinate legislation. I want to make a comment about the validation of the Alcohol Advisory Council levies which go back to 1983. I make the point that in reading the commentary on the bill—and I was not a member of the Regulations Review Committee— 
Darren Hughes 
: You can’t get everything right! 
JOHN KEY 
: Lucky I was not. In reading the commentary it seems that it could be debatable whether the levies issued during that period were legal. The errors include for instance “for the notices issued in the years from 1983 to 1987 and 1989 the unauthorised setting of levies by litre of alcohol rather than by ‘proof litre’” and “the unauthorised setting of differential rates for spirits depending on their alcoholic content” and so on. That raises the quite interesting issue whereby people who paid that levy may now feel they were not legally required to do so. Here we are under urgency in the dead of the afternoon and with the Government rushing through a work programme that is sketchy at the best of times having to validate some levies that are at best debatable. I think the House should reflect on that and when we get to the Committee stage National members will be taking the opportunity to have a very good look at those levies just to make sure. 
I do not want to dwell too much on the errors of Parliament back then. I want to address another part of the subordinate legislation before us. I turn to clause 12 which validates the Social Security (Rates of Benefits and Allowances) Order. As Parliament will know those rates are annually confirmed through Order in Council and if through this subordinate legislation Parliament was not to reconfirm them they would lapse. Today we are putting those through and that is the reason in part that National is supporting this legislation. But I want to draw to the House’s attention the likely changes that will take place to some of those social security benefits and in particular to give some idea of what the situation looks like for those New Zealanders who currently have a war pension payable under the War Pension Act of 1954. 
Although it is difficult from the legislation to see exactly which particular people we are talking about I want to give the House some idea. Their current allowance is $159.76 and that will rise to $162.24. I think it is quite interesting that here we are in this Chamber—a war memorial itself—recognising this issue but I want to make the point that that is roughly a $3 increase for those in receipt of war pensions under the Act of 1954. National supports that in the sense that at least those people are getting something but I see the Minister of Finance scrunching up his face and well he might. Those New Zealanders receiving that pension have over the last 5 or 6 years had to go through significant cost increases passed on by a Government that does not care about New Zealanders on fixed incomes. New Zealanders who pay rates bills have found that they have gone up by about 10.2 percent per year because this Government passed the Local Government Act which allows local government bodies to carry out any crazy idea that comes into their head. 
I was delighted if I may say so that the Minister of Finance who also chairs the infrastructure committee chose not to proceed with the Whenuapai commercial airport because that would have dumped a whole lot of costs on the ratepayers of Waitakere. That was a very wise decision if I may say so. My point is that the costs were the costs— 
Simon Power 
: You shouldn’t say so. 
JOHN KEY 
: I should not say so; OK I will say so in the papers. But the point is that the Government is quite happy to say to the pensioners of New Zealand that here are some additional costs—that here is a 10.2 percent increase in their rates bills. Similarly early on in the year the Government passed the indexation of petrol. Many fixed-income New Zealanders will have noticed when they go to fill up their cars that the price of petrol has gone up. It will go up every year because the Government has passed enabling legislation to allow petrol to be indexed. 
We also saw the Associate Minister of Health Jim Anderton introduce a bill to provide a sherry tax—a bill that was passed under urgency I might add. Many of us remember that the Minister came to the Chamber and told the people of New Zealand that he was doing that to stop young New Zealanders from drinking. But not too many young New Zealanders drink sherry. It is not too cool to turn up on Saturday night with a flagon of sherry tucked under one’s arm. So what he did was rob dollars and cents from the pension books of New Zealand. Pensioners sitting at home are unable to afford their sherry. That is why in my electorate two major sherry producers are now having financial difficulties. They cannot sell it. [ 
Interruption 
] 
I say to Mr Hughes that he is a young man and he does not go out on Saturday night with a flagon of sherry tucked under his arm. I am slightly older than he is and I do not drink sherry either but I will tell him that the cost has gone up by about $14.50 because of that tax increase. That is the additional cost. Many older New Zealanders who like a sherry on a Friday or Saturday night cannot afford it because Jim Anderton decided he did not want 16-year-olds to drink it. He has robbed them of their sherry on a Saturday night. 
My point is that we are here in the dead of the afternoon forcing through a subordinate legislation bill. Why are we doing that? Because without it New Zealanders getting a war pension will not get an extra $3. At the same time we have a Government that is very happy to have rates go up by 10.2 percent very happy to have petrol indexed— 
Darren Hughes 
: How will National stop that? 
JOHN KEY 
: If you want a discussion on how National would fix things I am very happy to have it. 
Mr SPEAKER 
: Order! 
JOHN KEY 
: Sorry I was referring to the junior Labour whip who was encouraging me. 
Mr SPEAKER 
: Yes. The junior whip will keep quiet. 
JOHN KEY 
: I think so. The junior whip was getting excited. He wanted me to give the National Party manifesto. I would have been more than happy to take a 20-minute speech on that because New Zealanders want to hear that sort of information. They do not want to hear the drivel of the member for Otaki. 
I go back to my point about the bill which is that we have a Government that is happy to pass on costs to fixed-income New Zealanders across a range of activities whether it is rates petrol sherry—you name it the Government taxes it—as the Government has done 30 times this year. I note that the Minister of Finance had no answer to that on  
Morning Report 
 this morning. He has raised levies and taxes 30 times this year and under this Subordinate Legislation (Confirmation and Validation) Bill (No 3) the poor old war pensioners get three bucks—a $3 increase. We look forward to engaging with the Government on this matter in the Committee stage because we think fixed-income New Zealanders deserve more. 
LINDSAY TISCH (National—Piako) 
: 
 I want to draw attention to Part 2. Rather than talking about it during the Committee stage I want to speak about it now. Clause 11 relates to the Gambling Act. There are two parts in that Act that I want to draw the House’s attention to. National will certainly support the Subordinate Legislation (Confirmation and Validation) Bill (No 3) but I want to look at the Gambling Act and the Gambling (Problem Gambling Levy) Regulations and the value of the weightings given to W1 and W2 in the levy formula. 
The recommendations to Cabinet a couple of years ago suggested that the weighting should be 0.8 based on presentations and 0.2 based on player expenditure. There is not any substantive information around in terms of presentations; many figures are pulled out of the air to justify the weightings based on people who are fronting up for problem-gambling assistance. That is why the Cabinet policy committee back in 2001 suggested those figures. But the regulations state that 0.9 or 90 percent of the levy will be based on presentations and 0.1 or 10 percent on expenditure. It is certainly National’s view that those figures are unrealistic. They cannot be substantiated in any way. Probably a more realistic figure would be 0.7 or 70 percent for presentations and 0.3 or 30 percent based on expenditure or turnover. Those would be fairly conservative estimates but certainly more realistic than what we see in the regulations now. 
The second point I draw the House’s attention to is the levy that has been set. It has been interesting to note that according to the answers to a number of parliamentary questions I have asked the levies have gone up substantially over the last few years. In the 2002-03 year the sum was $9.8 million; in 2003-04 it was $12 million; and in a Department of Internal Affairs document the figure for the 2004-07 period comes out at about $54.5 million. That is a substantial increase in the gambling levy on gaming operators given that they are also required to have harm minimisation programmes and given the increased compliance costs like electronic monitoring and the reduced site rentals. When we look at the combination of all the increased compliance costs and the lack of money going back into the industry we see that the people who lose out are the charities that are dependent on these funds to fund their operations. 
While National accepts that there needs to be a problem gambling levy we submit that the levy is not based on factual material. The Ministry of Health which will take over the handling of the problem gambling levy has not been able to supply me with substantive information on what the figure of $54.5 million over the next 3 years has been based on. Just as with the harm minimisation programmes a programme that is currently available in Australia and that could be used extensively in New Zealand has been overlooked and we are finding that exorbitant consultancy are fees being charged. In fact I am told that the charitable clubs in New Zealand will probably spend about $1 million on their harm minimisation programmes whereas programmes can be bought off the shelf in Australia for less than $10000. 
The point I am making is that there are huge costs that gaming operators are having to contend with. At the end of the day the losers are those organisations out in the community that are dependent on charitable funding to run their operations. 
Bill read a second time. 
Instruction to Committee 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That it be an instruction to the Committee of the whole House on the Subordinate Legislation (Confirmation and Validation) Bill (No 3) that it take the bill part by part. 
Motion agreed to. 
In Committee 
Part 1 General and technical provisions 
Dr RICHARD WORTH (National—Epsom) 
: 
 Tena koutou to members and Mr Chairperson as we gather for the important Committee stage of the Subordinate Legislation (Confirmation and Validation) Bill (No 3). I hope the opportunity will exist to take multiple calls not only on this part but also on Part 2 which is very important. Part 1 is primarily concerned with general and technical provisions. It raises a number of questions that I would like to put to the Minister in the chair Michael Cullen that do not seem to be sufficiently answered by reference to the predecessor legislation. I refer to the provision contained in clause 5 that the Subordinate Legislation (Confirmation and Validation) Act of 2003 is to be repealed. 
The starting point for these issues is really clause 3 which seems superficially to be straightforward. It sets out the purpose of the respective parts of the legislation. It deals firstly with Subpart 1 of Part 2 and simply notes as it properly should that the purpose of the part is to confirm and validate certain subordinate legislation made under certain statutes that would otherwise lapse unless confirmed or validated. Clause 3(2) then deals with validations affected by two provisions: the provision in clause 12 relating to the New Zealand Superannuation Act and the Social Security Act and the provision in clause 13 relating to the War Pensions Act. It is not completely clear whether that validation would also be relevant to new clause 12A inserted by the Regulations Review Committee. As a matter of statutory interpretation it may very well be intended that clause 12A is to be subsumed into clause 12. If that is the case I can see that some complicating problems may well arise. 
The real point in connection with clause 3(2) is expressed in the paragraphs of that clause. The validations do not do these things: “(a) express an intention to give legislative force to the provisions of those enactments; or (b) apply to any reason for invalidating any of those enactments; or (c) override any presumption that would otherwise apply to any of those enactments.” The paragraphs that I have read out are a replication of what is in the Act that is now proposed to be repealed. But their exact scope was not clear to the Regulations Review Committee—although in the result we took no real account of that. I ask the Minister why those provisions have been carried forward and what the legislative purpose is of having those provisions. It seems to me that they have been carried forward simply as a matter of routine as the predecessor legislation has been enacted year by year. 
What is contemplated for example by a validation not expressing an intention to give legislative force to the provision of the enactment? There is no doubt that those validations have a legislative quality. It may be a legislative quality that is more associated with delegated legislation than with legislation that has a primary purpose but the bill does not state that. 
Hon Dr Michael Cullen 
: It is in there. 
Dr RICHARD WORTH 
: The Minister is saying that the primary legislation has those matters in it. That is not the point though. I am asking what is intended by the scope of that paragraph. 
Then there is the second saving which is concerned with the application of reasons for invalidating those enactments. Will that preserve intact the possibility that despite the confirmation and validation procedure that we are being asked to undertake there is nevertheless the prospect of the invalidation of those regulations? If it does we are faced with the situation whereby it may be that some of those pieces of subordinate legislation are not regulations. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 To give an answer the matter is quite complex. I understand that there was a court decision some years ago that confirmation by bill could rule out any other form of challenge. In this case this legislation is intended to make sure that it does not extend as far as that. It is purely and narrowly confined to the confirmation of the actual orders to lift the rates of New Zealand superannuation and benefits etc. 
Part 1 agreed to. 
Part 2 Confirmations and validations 
Dr RICHARD WORTH (National—Epsom) 
: 
 I hope that other members of the Committee like Mr Copeland and perhaps Dail Jones will feel constrained to make some comment on the very important Part 2. I will deal with one aspect which touches clause 9. That clause refers to the Commodity Levies Act in which curiously perhaps “commodity” is defined as meaning “any agricultural farmed forestry horticultural mineral or wild product:”. That legislation provides the basis for those levies to be imposed annually. 
Only four levies have been picked out here: the Commodity Levies (Tamarillos) Order the Commodity Levies (Meat) Order the Commodity Levies (Wool) Order and the Commodity Levies (Winegrapes) Order. All those orders except for the first are from 2004. Of course there are a host of commodity levies that go back to the period generally commencing from 2000. I ask the Minister in the chair Michael Cullen what has happened to the Commodity Levies (Arable Crops) Order the Commodity Levies (Asparagus) Order the Commodity Levies (Avocados) Order and the Commodity Levies (Bee Products) Order. Only three orders are directly picked up as I said. The Commodity Levies (Winegrapes) Order of 2004 does not appear in the predecessor orders except under a different name: the Commodity Levies (Winemaking Grapes) Order the statutory reference of which is 1998/349. 
What we see in the structure of the Commodity Levies Act as it is reflected in Part 2 of this bill and in the orders made in terms of clause 9 is the confirmation of orders following a statutory process. That statutory process is in many respects quite unusual. I just flag for example section 8 of that Act which deals with the issue of conscientious objection. It is very refreshing to see that there may be an ability to refuse to pay a levy for a reason relating to conscientious or religious grounds. That is what section 8 of that Act provides. It states: “Every levy order shall make special provision for the payment of amounts of levy by persons who object on conscientious or religious grounds to paying it in the manner otherwise provided for in the order.” We do not know yet whether challenges will be made to this legislation by people who for conscientious or religious grounds do not want to pay levies in respect of tamarillos meat wool or wine grapes. But that possibility cannot be ruled out. Certainly National is interested to know how the Government would approach a conscientious objector’s claim. Either the levy would be paid or it would not. How is it intended that there would be an adjustment that would reflect in a conscientious way the very purposive provisions of section 8 of the Act? 
Of course Subpart 1 of Part 2 of the bill is much wider than simply a reference to the Commodity Levies Act because it deals with legislation such as the Animal Products Act the Animal Welfare Act the Biosecurity Act the Customs and Excise Act the Gambling Act—which my friend Mr Tisch has spoken on—the New Zealand Superannuation Act the Primary Products Marketing Act and the War Pensions Act. 
It is also in Subpart 2 that the issue of “Validation of payments under levy notices under Alcohol Advisory Council Act” arises. I briefly referred to what seems to be an area that requires clear remedial legislative intervention. The Distilled Spirits Association made it very clear to us that it was not opposed to the supplementary audit of this bill that inserted Subpart 2. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I say just briefly that in terms of clause 9 levies have to be confirmed within that Parliament or they lapse. Once confirmed they do not need to be reconfirmed later. In terms of the other matter I refer the member to clause 15(2) which validates the fact that in effect the levies have been properly collected and therefore are due. Of course if this bill were not passed then the member would be quite correct to raise the issue. There would then be a case to argue that the levies were invalid and therefore should be refunded. 
LINDSAY TISCH (National—Piako) 
: 
 I would like the Minister to explain the weightings in the levy formula if he can. I know that it is a technical matter but I did mention it in the second reading debate. When recommendations were first made—and I have the figures from a Cabinet policy paper—the presentation figures were 0.8 or 80 percent and the expenditure items were 20 percent based on turnover. In the Gambling (Problem Gambling Levy) Regulations of 2004 why do we find that the presentation figures are at 0.9 or 90 percent and the expenditure or turnover figures are at 0.1 or 10 percent? The point I am making is that there is no substantive information in changing the recommendation that was made some time ago to justify why the weightings between W1 and W2 were changed in the problem gambling levy formula. I think that is significant because when we remember that these levies have been set now for 3 years we know there will be a distortion within the industry as to what those weightings will mean in 3 years’ time. I am thinking 3 years ahead to 2007 when we will see major distortions in my view as to what the weightings actually mean. 
All the research that has been done and certainly that I have had access to would indicate a weighting even lower than the Cabinet paper states—even as low as 70 percent—for presentation. I will explain what presentation means. It is the incidence of someone coming along and saying that he or she has a problem. That is what that 0.9 figure has been based on not on whether the person has been assessed as having a problem. It is just a matter of someone coming along and saying he or she has a gambling problem; that is where the presentation and the 0.9 figure comes from. There is no clinical analysis and no one sits down and analyses whether the person does actually have a problem and what sort of help may be needed. If we take that into account then the figure here in this bill of 0.9 or 90 percent is far too high. It cannot be justified by the Ministry of Health and it cannot be justified by the treatment providers whose job it is to be at the forefront of trying to work this problem through. So I question the Minister about that figure. I see him throw his hands up in horror but he should be aware that we are supporting this bill. I just want to be given some clarification of that figure. Maybe the advisers could come back to me at a later time because I know the Minister will discuss the issue with them. I think that when statistics have been used and figures have been taken out of national statistics then there certainly can be some room for error. That is the first point and I am happy if I can have an answer on that at a later date. 
The second point I want to raise concerns the actual percentage of the problem gambling levy. When we look at what the levy states which is in the schedule under problem gambling levy rates we see that the casino operator will pay 0.51 percent the gaming machine operator 1.11 percent the Lotteries Commission 0.14 percent and the New Zealand Racing Board 0.57 percent. That is fine; I have no difficulty with that at all. But I also ask the same question of the Minister about another memo that has different figures for the 3-year period. The figures in the bill are actually lower than those so that is fine—I am happy with that. But I want to know why the figures are lower now than those in the earlier recommendations when the levy calculations were being worked out for the proposed problem gambling levy. We agree that they should be lower for some of the reasons that I mentioned before but once again there has been no justification given in replies to questions I have asked as to how those figures have been worked through. 
When the proposed problem gambling levy was mooted the requirement was for a sum of up to about $56 million over a 3-year period and that figure has come back to $54.5 million. We are comfortable with that. Although as I said earlier there is no justification for the huge increases at least the percentage has come down. In terms of gaming operators whether they be the Lotteries Commission the Lottery Grants Board of which I am a member the Racing Board casinos or non-casino operators huge compliance costs have been put on them. The figures have not been justified; they have been just plucked out of the air. No doubt members are being inundated at the moment by groups especially those in the charitable cultural and sporting areas that are being told by the major gaming operators that less funding will be available to them for their purposes and that they will have to budget accordingly. When we look at where the proceeds of the levy go in terms of funding for organisations we see that it is just another huge compliance cost that adds to the burdens and woes of those groups. The organisations that need to be helped in the community will be the losers from that. 
HEATHER ROY (ACT) 
: 
 I rise to speak to Part 2 and in particular I wish to refer to subpart 2 “Validation of payments under levy notices under Alcohol Advisory Council Act 1976”. I would like to go back to the beginning of the process when the Minister of Health wrote a letter to each of the parties asking for their support for this part. She said: “It has recently become apparent that even though the aggregate Alcohol Advisory Council levy has been assessed in accordance with the Act the levy is not and in fact is unable to be apportioned to the classes of liquor in accordance with the Act. As a result the annual levy notices that fix the levy rates for each class of liquor including the present 2004-05 notice have not set the levy rates in accordance with the Act.” 
It is interesting that we have got to this point 21 years down the track that we have had those notices in place for all that time and that in fact the levies have not been applied appropriately. When looking into this first proposal I spoke to several of the people involved in the industry and asked them what they thought of it. They said that it had really only just been brought to their attention but it seemed they were in general agreement that these loopholes should be fixed. But they were really quite within their rights. It would seem that the law has not been administered legally so they were quite within their rights to have made quite a fuss about this and perhaps to have even sought reimbursement for inappropriate levying. 
There were several problems. The formula to calculate the proportion of the levy rate for spirits requires the use of the quantity of proof litres for spirits but in fact the calculations were made in various different ways and in some cases were made according to the amount of alcohol content particularly in liquor. 
However the industry was keen that these loopholes were rectified and it acted I felt in a very cooperative way. But when the industry was invited to submit to the Regulations Review Committee the Distilled Spirits Association of New Zealand raised some other very valid points. The Regulations Review Committee determined that in fact these issues were beyond the scope of the bill but these are still very relevant points and I invite the Minister in the chair Dr Cullen to perhaps give some indication to this Committee and to the industry itself—particularly the Distilled Spirits Association—as to where the Government might go or whether it will in fact address these other points relating to levies that the association has raised. 
There were three in particular and they are summed up very well in the commentary on the bill. The first issue is the proposal of a new model of product classification in bands based on alcohol content. Secondly it suggested a requirement that information about how levy rates are determined are provided to interested parties. Thirdly there is a suggestion that requirements for officials to consult with and provide advance notice of levies to the industry should be addressed. I would ask the Minister in the chair to give an indication of where he thinks the Government might go and whether it is prepared to take these into account. I realise that it is beyond the scope of this particular piece of legislation but it was this legislation that raised these issues and brought the distillers before the select committee and I invite the Minister to comment. 
ACT will be supporting this bill. We feel that this is a loophole that is long overdue to be fixed and it is very good of both sides of the House I think to say that these issues should have been addressed previously. But I would welcome some comment from the Minister on those points. 
GORDON COPELAND (United Future) 
: 
 I too would like to make a brief comment on clause 17 “Levy notices”. As the Minister in the chair Dr Cullen has pointed out it is an amazing situation in that from Prime Minister Rob Muldoon in 1983 right through to Prime Minister Helen Clark in 2004 these levies have been consistently miscalculated. Since that is a span of some 21 years I think the Government would be wise to figure out exactly how that sort of situation can be avoided in the future. I wonder for example whether the auditors of the Alcohol Advisory Council should have a specific function every year to check to make sure that the levies are being calculated correctly. Although the amounts are relatively small it is in principle a fairly serious matter if a miscalculation continues for 21 years under a number of different regimes. 
The only other thing I noticed in clause 17—and the Minister in the chair may be able to tell me about this—is that the references in the Act are to the Alcohol Advisory Council Act of 1976 but the actual levy notices from 1983 to year 2000 refer to the Alcoholic Liquor Advisory Council levy notice before they then revert back to using the word “Alcohol”. So I am not sure whether that signifies some change in the status of the personnel of the council but it is just a curious fact that we also decided to call something the Alcoholic Liquor Advisory Council levy for all those years and then switch back to something that seems a bit more reasonable. 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I will briefly respond. I understand that that name of the principal Act changed subsequently to use the word “Alcoholic”. On the points raised by Heather Roy and indeed Mr Copeland I can advise that the Associate Minister of Health is looking at those issues particularly those raised by the Distilled Spirits Association; we do expect some change in process over the coming year. To Mr Tisch I say that I will get an undertaking from the Minister of Internal Affairs to come back to him with a response to the questions he has raised. I have to confess that I cannot remember what the reasoning was at this distance of time. 
Part 2 agreed to. 
Clause 1 agreed to.  
Clause 2 agreed to.  
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I move  
That the Subordinate Legislation (Confirmation and Validation) Bill (No 3) be now read a third time 
. There were just two issues I think raised during the Committee stage that I would like to refer to at this point. Mr Tisch raised some questions about the nature of the gambling levy and the reasons for some changes in policy and on those issues I have undertaken to get the Minister of Internal Affairs to come back to him. Heather Roy and Gordon Copeland and others raised issues around the Alcohol Advisory Council levy confirmation and I gave an undertaking that the Associate Minister of Health was looking at the issues raised in relation to that particularly to the issues raised by the Distilled Spirits Association. 
Dr RICHARD WORTH (National—Epsom) 
: 
 We move to the final stage the third reading debate of the Subordinate Legislation (Confirmation and Validation) Bill (No 3) which National along with other parties in this Parliament supports. I would like to deal with two issues against the background of the fact that it is a great outcome—the bill has survived the Committee stage without amendment. It is clearly a testimony to the hard work of the Regulations Review Committee in seeing that this legislation was afforded an appropriate and appropriately close degree of scrutiny. 
I would like to pick up the point that Dr Cullen has made in connection with these problem gambling issues. Although assurances have been offered those assurances are not delivered on in a timely way. The position is really quite simple in connection with problem gambling. We have two indicators: W1 which is concerned with presentation issues and W2 with expenditure or turnover issues and an arbitrary weighting has been assigned. So the W1 weighting carries with it a 90 percent loading and the W2 the expenditure or turnover indicator carries a 10 percent weighting. The problem is of course that in looking at that first weighting—the 90 percent issue—there is an immediate problem as to how that class is to be properly defined. The possibility cannot be ruled out that in the calculation of the levy it may very well be the case that included in that problem gambling group is also a substantial group that is affected by the curse of alcohol. 
So not only is there an issue as to how the class is defined—the arbitrary nature of the class—but also there is the uncertainty of scope. I have noted what the Minister has said in connection with the assurance he has given but I hope there will be a response and a responsive response within narrow time frames. That is the first point I wish to make. 
The second point deals with issues arising under Subpart 2 and the validation of these payments. As other speakers have said the situation has arisen where but for this validation the Government might have been in the position of having to make very substantial repayments. So we spent a significant part of parliamentary time—perhaps not today in the context of urgency but in the context of the process of this bill—having to correct a major administrative blunder by patching work done by the Alcohol Advisory Council of New Zealand. That quite clearly underscores and highlights the need to re-examine and overhaul the primary legislation in its entirety especially in areas relating to the levy. 
From the perspective of entities such as the Distilled Spirits Association of New Zealand the bill raises an important concern relating to ongoing poor internal processes monitoring and advice tendered by Government officials on aspects of the levy and the rates including the Alcohol Advisory Council the New Zealand Customs Service and the Ministry of Health. It is a pity that it was not possible to meet the needs of the Distilled Spirits Association of New Zealand by dealing in a substantive way with issues that it raised which fall outside the scope of the bill. 
A changeover from measuring the alcohol content of domestically manufactured and imported spirits by way of proof litres to litres of alcohol has not been authorised by the Act; neither has the splitting of spirits as a category into spirits over 23 percent alcohol by volume and spirits with less than 23 percent alcohol by volume. What is happening here is that as a result of the slowness to reflect the concerns of entities such as the Distilled Spirits Association the sector has been “unnecessarily” paying out around $2 million per annum in levies since 1986. That would amount to a total of approximately $36 million. It is a substantial sum. I also note the clear stated commitment of Minister Cullen to have these issues promptly addressed by the relevant Minister in his Government. 
As I have said National is supportive of this legislation. It is legislation that comes before Parliament each year. I simply note that it is appropriate from the perspective of the National Party that this legislation be enacted as soon as possible. 
Bill read a third time.