Volume 648 Week 80 - Wednesday 23 July 2008 
Volume 648 Week 80 - Wednesday 23 July 2008 
[Volume:648;Page:17311] 
Wednesday 23 July 2008 
Madam Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Questions to Ministers 
Foreign Affairs Racing Minister—Confidence 
1. JOHN KEY (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she have confidence in the Minister of Foreign Affairs and Racing; if so why? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 Yes; because he is a hard-working and conscientious Minister. 
John Key 
: Has the Prime Minister now received advice from the Cabinet Office as to how Mr Glenn’s $100000 gift to Mr Peters should be treated by the Prime Minister; if so what was that advice? 
Rt Hon HELEN CLARK 
: Whether that is a gift is not a matter to be determined by me or the Cabinet Office; it is a matter to be determined by the registrar of pecuniary interests. 
Hon Jim Anderton 
: In view of the calls from the Opposition for party leaders to resign or be referred to authorities for receiving donations and claiming not to know about them has the Prime Minister seen any reports of any party leader who knew about donations by the Exclusive Brethren to buy an election and did that party leader claim to have forgotten about them; if so could that member’s record of forgetfulness explain why he is so willing to contemplate having those people in a ministry of his own? 
Rt Hon HELEN CLARK 
: I think the matter is actually worse than that. I think that Mr Key remembered not reading an email he said he had never received. 
John Key 
: Is the Prime Minister aware and can she confirm that paragraph 2.79 of the  
Cabinet Manual 
 requires Ministers to obtain her express permission to keep gifts valued at more than $500; and will she not accept that Mr Peters by his own admission has now admitted that he received a gift of $100000 from Mr Glenn and whether or not she likes it has to determine whether he will be allowed to keep that gift? 
Rt Hon HELEN CLARK 
: I say again that whether the sum is a gift is a matter for the registrar of pecuniary interests. But can I further make the point that immediately Mr Peters was told of the source of that particular donation to a legal fund he declared it to me. The Cabinet Office advised me that the court case of course was one of particular public interest—considerable public interest—and in such circumstances if and I underline that word such a sum of money were deemed to be a gift there would be no reason to require a Minister to relinquish it. 
Peter Brown 
: Can the Prime Minister confirm these facts: that the Minister of Foreign Affairs is doing a competent job; that these allegations are unproven—none have been confirmed to be against any rules or guidelines—that the Minister has kept the Prime Minister informed at every stage; and that he is continuing to perform his role as Minister of Foreign Affairs in the best interests of this country? 
Rt Hon HELEN CLARK 
: It is my understanding that the answer to all those questions is yes. 
Dr Russel Norman 
: Does she agree that the political funding scandal now enveloping the Minister for Racing and Minister of Foreign Affairs shows that if we are to continue with a system of private donations to political parties then it needs to be transparent; if so why did the Labour Party and New Zealand First fail to support the Greens’ call for such transparency in the Electoral Finance Act? 
Rt Hon HELEN CLARK 
: As I told the House yesterday I would be absolutely delighted to see corporate and large private donations banned on the basis that there would need to be State funding. That has been our consistent position. In answer to the chirping opposite of course there was no parliamentary majority for a system of State funding. 
John Key 
: Can the Prime Minister confirm that the question as to whether Mr Peters should be allowed to keep his gift of $100000 from Mr Glenn is in fact quite a simple matter and the Prime Minister should be clearing up that issue within a matter of days not a matter of weeks? 
Rt Hon HELEN CLARK 
: I am not sure that the member listened carefully to the answer I gave. What I said was that the Cabinet Office advises me that if the sum were deemed to be a gift there would be no reason to require the Minister to relinquish it given the considerable public interest in the court case for which that money was paying. 
Ron Mark 
: Can the Prime Minister confirm that the US Secretary of State is visiting New Zealand this weekend after accepting a personal invitation from the Minister of Foreign Affairs and is that not yet another example of the strength of the current Minister’s ability to carry out the Government’s policy of continuing to improve relationships with the United States of America? 
Rt Hon HELEN CLARK 
: It is my understanding that from the very first meeting of the Minister of Foreign Affairs with Condoleezza Rice he has made it very clear that he would like her to accept his invitation to come to New Zealand. She is coming this weekend. I think it is in the interests of New Zealand that she does so and I commend the Minister for the work he has done to build the relationship with the Secretary of State. 
Sue Bradford 
: Does the Prime Minister have confidence that the Minister for Racing acts at all times with the interests of the whole racing sector at heart or does she have any sense as some in the racing industry do that his actions tend to favour those at the high end of the industry which incidentally is the same end from which New Zealand First has received substantial donations? 
Rt Hon HELEN CLARK 
: Obviously I do not have any independent information about where donations come from but I can say to the member that I have had absolutely no advice or indeed even any suggestion of the issue of preference that she has raised. 
John Key 
: Will the Prime Minister in light of everything we now know about the matter categorically rule out the appointment of Owen Glenn as honorary consul in Monaco; if not why not? 
Rt Hon HELEN CLARK 
: I have made it very clear that I consider such an appointment to be highly unlikely. 
R Doug Woolerton 
: What does the Prime Minister see as the strengths of the Minister of Foreign Affairs in dealing with our neighbours in the Pacific? 
Rt Hon HELEN CLARK 
: It has been I think the good fortune of New Zealand that our Minister of Foreign Affairs has from his time as a university student had connections with many people who have risen to the top of their Pacific country’s legal systems political systems and business systems. He has drawn on all those personal contacts and has brought to the portfolio in my view a very high level of interest in the welfare of the Pacific and of course he has been responsible for very significant increases in the development assistance budget for the Pacific. 
John Key 
: Should we take it from the Prime Minister’s answer that Mr Peters the Minister of Foreign Affairs who received a $100000 gift from Mr Owen Glenn could be in a position to appoint Mr Glenn as an honorary consul in Monaco; is the Prime Minister seriously telling New Zealanders that she thinks there is no conflict of interest there that she is not worried about that and that that is now the new standard for her executive—that even if a Minister receives $100000 from someone that Minister can appoint that person to a position? 
Rt Hon HELEN CLARK 
: It is clear that the member does not listen to the answers given. I can say that it is no more likely that Mr Glenn would be appointed honorary consul than it is likely that the gentleman whom Mr Worth lobbied for would be appointed to the position. 
Barbara Stewart 
: Is the Minister of Foreign Affairs also acting with her confidence in his role as Associate Minister for Senior Citizens given that senior citizens have benefited through improved funding for pensions and elder care and the SuperGold card? 
Rt Hon HELEN CLARK 
: The Associate Minister for Senior Citizens most certainly is operating with my confidence and I acknowledge his work in the development of the SuperGold card and of the entitlements available pursuant to it not least of which is the fact that on 1 October people from all over New Zealand who are over the age of 65 and who have that card will be enjoying—provided that negotiations with the regional councils are completed—free off-peak travel on public transport. I think that is a tremendous thing. 
John Key 
: Did Winston Peters ask for the racing portfolio when the Prime Minister allocated the portfolios in 2005? 
Rt Hon HELEN CLARK 
: Yes. 
Gordon Copeland 
: Does the Prime Minister expect that the registrar of pecuniary interests will rule that a gift is a gift or otherwise regardless of whether it was given by Mr Glenn or anonymously but rather on the basis that it was received and retained by a member of Parliament? 
Rt Hon HELEN CLARK 
: Clearly Mr Peters’ word has been accepted across the House—that he did not personally know of or personally receive that sum of money. That has been made quite clear. As to how the registrar of pecuniary interests will rule on whether it is a gift I cannot help the member. But I find it very strange that Opposition members are so certain about these things in the House this afternoon. I listened very carefully to Mr Key on radio this morning and he was clear that he accepted Mr Peters’ word that he had not known what the source of funding to his lawyer was. 
Ron Mark 
: I raise a point of order Madam Speaker. I ask for your guidance and assistance. On a couple of occasions now during the asking of supplementary questions—once in comments made by Mr Key and once in comments made by Ms Bradford—implications of corrupt practice have been made. My understanding is that implications of corrupt practice by an honourable member of Parliament are out of order. I ask for your guidance on how such comments should be treated. 
Madam SPEAKER 
: I thank the member. Yes they are out of order. I did not hear those comments but if they were made then I say to the members who made them please be on notice that they are unacceptable in this House. 
John Key 
: Does the Prime Minister accept that the allegations made against Mr Peters are indeed very serious allegations and that it is bad for her Government—and actually bad for Parliament—to have those allegations swirling around without their being satisfactorily resolved; and will the Prime Minister tell the country why she is not acting to resolve those issues and get to the bottom of them when she could do so? 
Rt Hon HELEN CLARK 
: The answer is simple: because I am not the registrar of pecuniary interests nor the Commissioner of Inland Revenue nor the Commissioner of Police. I have made it very clear that there are proper processes to be followed. I might add the obvious fact that I am not the Speaker. The Speaker receives complaints of privilege; they are matters for the Speaker to consider. I am advised by the Cabinet secretary on what is proper and I listen very carefully to the Cabinet secretary. 
Metiria Turei 
: Does the Prime Minister think that the Government’s failure to get the numbers to progress sustainability measures like the Marine Reserves Bill and the Fisheries Amendment Bill may have anything to do with the large financial contribution to the party of her Minister of Foreign Affairs from Vela Fishing which is involved in serious— 
Ron Mark 
: I raise a point of order Madam Speaker. That is the very implication that I raised in my point of order—that the Minister is involved in corrupt practice. I ask that that question be ruled out of order. 
Metiria Turei 
: My question asked the Prime Minister for her view on potential influences that may impact on one of her Ministers. It is quite reasonable for her as the Prime Minister responsible for her Ministers to consider that issue. There was not an implication of corrupt practice; it was simply a question about the responsibility of Ministers and potential influences on their ability to do their job—which is quite within her responsibilities. 
Hon Dr Michael Cullen 
: There are many Speakers’ rulings on this matter and any suggestion that people are subject to outside interference or direction in relation to how they cast their vote in this House has been ruled out on many many occasions in many many different contexts. 
Rodney Hide 
: It was only in the last sitting period that Mr Peters raised a question about the National Party being venal and corrupt. You allowed that question Madam Speaker. Mr Mallard actually assisted on the basis that it was raised as a hypothetical question. In fact it was a much more strongly worded question than the one that the Greens are raising. I point out that the difference between the two is that one question had documentary evidence and the other one was just an allegation. 
Ron Mark 
: The wording in the question that raised my concern was the inclusion of the words “had anything to do with the large donations he had received”. I would have thought that those words were immediately an implication of corrupt practice and therefore should be ruled out of order. 
Madam SPEAKER 
: As members know and as was rightly raised in the point of order members cannot make implications or imputations in questions that go to matters that could be interpreted as misconduct or corruption. I listened carefully to the member’s question and I would suggest to her that she rephrase the question because I would rule that in that context it could be seen that there is an implication of corrupt practice. 
Metiria Turei 
: Does the Prime Minister think that the Government’s failure to get the numbers to progress sustainability measures like the Marine Reserves Bill and the Fisheries Amendment Bill through the House may have anything to do with the relationship between her Minister of Foreign Affairs and other fishing interests particularly for example those of Vela Fishing which is involved in seriously unsustainable fishing practices including the fishing of orange roughy tuna and Antarctic tooth fish? 
Rt Hon HELEN CLARK 
: If I were for a moment to accept that in respect of New Zealand First I would have to accept it in respect of every party that was unsympathetic to those particular law changes—not least of course the New Zealand National Party. 
John Key 
: Why given the seriousness of the allegations against Mr Peters is the Prime Minister not following her normal course of practice which is to refer this matter to an independent inquiry in the same way she followed that procedure when the Taito Phillip Field matter was being considered even if the inquiry was a bit of a sham? 
Rt Hon HELEN CLARK 
: Issues have been raised in respect of pecuniary interests in respect of tax and in respect of privilege in this House. There are three independent sources of inquiry that can be used for each of those. 
Pita Paraone 
: Tena koe Madam Speaker. Is the Prime Minister aware that the Minister for Racing and her Minister of Finance are regarded as having saved the racing industry through changes to racing’s tax system that gave it equal footing with casinos? 
Rt Hon HELEN CLARK 
: I am pleased that the member quoted that particular matter because I have in my hand a 2005 document entitled  
National’s Plan for the Racing Industry 
 which says that it would align racing betting duty with that paid by casinos at a cost of $25 million. So it would be nice if Mr Key could clarify for the media later whether any donations were received from the racing industry in return for that promise. 
Dr Russel Norman 
: Do any of the Prime Minister’s Ministers receive donations from industries they are meant to be regulating and taxing; and does she expect any Minister including her Minister for Racing who finds himself or herself negotiating tax breaks for party donors to bring that to her attention? 
Rt Hon HELEN CLARK 
: I do think there was in that question exactly the implication that Mr Mark objected to before. I can say in respect of Ministers that they are not expected to receive donations from industry at all. But I will also make the obvious point that when a Minister is appointed in charge of a portfolio there is a legitimate expectation from sectors relating to that portfolio that they will be able to put a case to that Minister—whether it is fisheries forests agriculture health racing or whatever—so that they can have their requests considered. That is the normal business of Government. 
Dail Jones 
: Is the Prime Minister confident that the Minister of Foreign Affairs will continue her Government’s programme of improving our relations with the United States and Pacific and Asian nations? 
Rt Hon HELEN CLARK 
: I certainly am. In respect of each of those three areas it is noteworthy that in the past week or so Mr Peters has been doing our country’s and the Pacific Islands Forum’s business in the South Pacific. He is hosting the United States Secretary of State here this coming weekend and accompanying her to the Pacific. Of course at this time he is in Singapore in respect of a meeting I believe for ASEAN Ministers. 
Peter Brown 
: Noting the content of some of the supplementary questions asked this afternoon particularly those from the Leader of the Opposition does the Prime Minister see the refusals by anyone to rule out the Minister of Foreign Affairs continuing in his role after the election as a reflection of his strong performance in the role a reflection of the total lack of competence on the Opposition benches or a combination of both? 
Rt Hon HELEN CLARK 
: It is my opinion that Winston Peters has acquitted himself well as Minister of Foreign Affairs and I am sure that should he be in a position to be negotiating a portfolio again he will be putting forward a very strong case. 
John Key 
: Is the Prime Minister saying that the new standard for the way she will measure her Ministers is solely on their performance in their portfolio and not in relation to whether they take a $100000 gift—which is clearly in breach of the  
Cabinet Manual 
 regardless of whether she wants to accept that? 
Rt Hon HELEN CLARK 
: I am mystified by that question because Mr Key has agreed elsewhere that he accepts Mr Peters’ word that he did not know the source of donations into that fund. 
Hon Dr Michael Cullen 
: Has the Prime Minister received any reports of somebody arguing that all political donations should be anonymous so that one cannot be influenced by them; secondly that even where a political donation is anonymous the person who received it not knowing who it was should nevertheless declare who it was and what it was; and thirdly arguing that any behaviour by a person before he or she entered Government—such as for example being convicted of contempt of court—should have nothing to do with being appointed as a Minister unless of course he or she is appointed as a Minister in a Labour-led Government? 
Rt Hon HELEN CLARK 
: It seems to me that all those conflicting positions are held by the same person: Mr Key. 
John Key 
: Is the Prime Minister prepared to accept that there is probably quite a lot of difference between a donation that may be accepted by a political party and a donation that is accepted by an individual for his or her own personal use? 
Rt Hon HELEN CLARK 
: Yesterday I cautioned the member from going down that particular route because if he is going to hold Mr Peters accountable for declaring donations into a legal fund as either relevant debt declarations or gift declarations in the interests of the pecuniary interest register then we would want to know why Mr Smith did not declare the debts and did not declare the gifts and whether he knows who puts money into his account. I am well aware that Mr Smith declared a beneficial interest in a trust but he has not declared the debt that he owes—nor has he declared who helped him pay for it; nor has he declared gifts under that section of the declaration. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. I contacted the registrar of pecuniary interests and sought advice as to what disclosure requirements I was to make. The registrar was clear that what I needed to declare was a pecuniary interest in a trust. I have done just that. I seek leave to table the pecuniary interest declaration that I made on that advice which clearly states there was a trust that provided support for that legal action. 
Rt Hon HELEN CLARK 
: It therefore follows from Mr Smith’s point of order that if that were the appropriate course for him to follow and that he does not have to declare either debts or gifts then nor does Mr Peters. 
Madam SPEAKER 
: At the end of Dr Smith’s statement he then sought leave. So leave is sought. Is there any objection? There is objection. 
Ron Mark 
: I raise a point of order Madam Speaker. I just want to make the comment as a point of order that Mr Smith’s point of order was not a point of order. It was a personal statement and should have been dealt with as a request to seek leave to make a personal statement. 
Madam SPEAKER 
: The member is quite right. I gave the member the benefit of the doubt because it was unclear as to whether he was seeking leave or making a personal statement. At the end of his thought I assumed he would in fact get to the point. I gave him the courtesy of waiting. At the end of it he did seek leave. That leave was sought and has been denied. 
Accident Compensation—Agriculture and Forestry 
2.  
SUE MORONEY (Labour) 
 to the  
Minister of Agriculture 
: What reports has he received on the importance of ACC to farmers and other agriculture and forestry workers? 
Hon JIM ANDERTON (Minister of Agriculture) 
: 
 The Accident Compensation Corporation (ACC) provides not just weekly compensation but also ambulance and emergency services ongoing medical care and home help physical rehabilitation lump-sum payments and modification to homes and cars. In the case of a major industry ACC provides those benefits to rural families sometimes for life. This is important to rural people who work in the most dangerous areas of our country and to their families. The Ministry of Agriculture and Forestry reports to me that up to 25 agricultural work fatalities and up to 16 forestry deaths occur each year. The loss of ACC would mean much higher insurance costs for rural families and much reduced cover and security. 
Sue Moroney 
: What reports has the Minister seen about possible alternative schemes; and what would the specific effects be for rural families and other agricultural workers? 
Hon JIM ANDERTON 
: I have seen a report that the National Party has a policy of ripping ACC protection from rural families and replacing it with a privatised scheme. When a similar scheme was introduced in Australia a report by the previous Australian Liberal-National Government found levies in Australia’s competitive market were twice as expensive as those for New Zealand’s primary sector. This research was backed up by an independent PricewaterhouseCoopers report last year. One can see what is in National’s policy for Australian-owned insurance companies that donate to National but one cannot see what is in it for farmers or anyone in our primary rural communities. 
Sue Moroney 
: What flexibility does ACC give to primary sector employers? 
Hon JIM ANDERTON 
: ACC offers an initiative for self-employed people and employers of fewer than 20 staff with good safety performances so that safe workplaces can be recognised with levy discounts. It offers programmes to improve safety in the rural sector such as farm bike safety equipment and the FarmSafe programme. The alternative scheme promoted by the National Party offers premiums up to 250 percent higher reduced coverage and less security for rural New Zealanders. 
Sue Moroney 
: Would ACC offer more protections to farming families if it were a State-owned enterprise? 
Hon JIM ANDERTON 
: This is an interesting question. If it were a State-owned enterprise it would be on the list of assets National says it will not privatise in its first term but because it is not a State-owned enterprise National is not ruling out selling it. ACC would be privatised by National. For the same reason we can expect that anything else owned by the people of New Zealand and not a State-owned enterprise would be sold including Air New Zealand Television New Zealand the Superannuation Fund the roads the hospitals and even the schools. 
Migration—Net Position 
3.  
JOHN KEY (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she stand by her statement that “When I am looking at year after year after year of positive net migration to New Zealand I know this country is very capable of attracting and retaining its best and brightest.”? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 Yes. 
John Key 
: Is the Prime Minister saying that she is unconcerned about record levels of emigration from New Zealand as long as the number of people arriving here from overseas is greater than the number of New Zealanders leaving; if so why? 
Rt Hon HELEN CLARK 
: I have said in the past that there is a “brain exchange” going on. I note that 62 percent of the permanent and long-term departures from New Zealand are of skilled or highly skilled people while a larger proportion of those coming into New Zealand—namely 67 percent—are skilled or highly skilled. So New Zealand is the net winner in those terms. 
John Key 
: How can we be retaining skilled New Zealanders when according to the latest figures more than 45000 people left New Zealand to live permanently in Australia last year making this the highest loss for a June year since records began 30 years ago? 
Rt Hon HELEN CLARK 
: The member is somewhat fixated with numbers to and from Australia. I think it is much more honest to look at overall net migration figures. Net migration figures in the ninth year of the Labour-led Government in the year to June 2008 were positive by 4732. In the ninth year of the National Government the year to June 1999 the net migration figures were negative—by minus 11369. I rest my case. 
Hon Peter Dunne 
: What does the Prime Minister say in response to comments by various migrant community representatives that one of the reasons why people move on is there is not the same level of opportunities in New Zealand as in Australia and that the Government has not done enough in its three terms of office to amend our immigration and resettlement policy to encourage people to make long-term commitments to New Zealand rather than to come here gain citizenship benefits and then move on to other countries? 
Rt Hon HELEN CLARK 
: No I would not agree with that. I think our Government has done a great deal to improve the settlement of migrants. When I became Prime Minister quite a high level of new ethnic communities’ members were experiencing unemployment. That has fallen quite sharply and we are seeing new migrants represented right across the mainstream of employment which I think is a good thing. I think the reality for a number of migrants is that they go to be with bigger communities of their own people in Australia—I think that is quite a powerful pull. But no I could not agree with the assertions that the member quoted from some other source. 
John Key 
: Does the Prime Minister recall that back in 2000 she told the New Zealand Press Association that the main driver for the number of skilled New Zealanders choosing to move to Australia rather than to live in New Zealand was the relative state of the economy; if that is the case is Mr Dunne not absolutely correct—that the reason they are deserting New Zealand in droves is the poor economic management of her Government? 
Rt Hon HELEN CLARK 
: It might be relevant to compare the average per annum economic growth rates of New Zealand and Australia. From December 1999 to December 2007 New Zealand grew on average by 3.4 percent and Australia grew on average by 3.3 percent as compared with the period from 1991 to 1999 inclusive when the Australian economy grew at 3.5 percent a year on average and in New Zealand under a National Government we grew at 2.8 percent on average. 
Question No. 4 to Minister 
RON MARK (NZ First) 
: 
 My question is to the Minister of Police. Which of the policies—[ 
Interruption 
] 
Madam SPEAKER 
: Would the member just continue his question please. 
RON MARK 
: I will start again. Which of the policies released— 
Gerry Brownlee 
: The obvious choice! 
RON MARK 
: Bigger is not better Gerry is it. [ 
Interruption 
] 
Madam SPEAKER 
: Right that is it. The question will be read in silence. 
Police Association—Policies 
4.  
RON MARK (NZ First) 
 to the  
Minister of Police 
: Which of the policies released by the Police Association in its document  
Towards a Safer New Zealand 
 particularly those regarding youth crime and police equipment and training does she agree with if any? 
Hon ANNETTE KING (Minister of Police) 
: 
 I support a number of the policies released by the Police Association. Some of its suggestions are pieces of work that are already being progressed or investigated. Examples include the provision for police to issue temporary on-the-spot domestic violence protection orders increasing police resources through the confidence and supply agreement with New Zealand First the introduction of a new digital radio network and in particular the development of a police professional registration model. 
Ron Mark 
: Is the Minister aware that the Police Association has now joined New Zealand First in its call for Tasers to be issued to every front-line police officer; and that the association supports the lowering of the age of criminal responsibility and is calling for police-to-population ratios to be comparable to those in Australia; and can she confirm that the Government’s confidence and supply agreement with New Zealand First has a view to achieving those ratios comparable to those in Australia by 2010? 
Hon ANNETTE KING 
: I can confirm the confidence and supply agreement as set out by the member. I can confirm also that the Police Association has a lot in common with New Zealand First’s law and order policy. It also has many features that have been implemented by this Government and supported by the Police Association. 
Dr Pita Sharples 
: Tena koe Madam Speaker. E whakaae ana te Minita ki te Kaiwhakawa Matua o te Koti Taiohi ki a Andrew Becroft e mea nei e waru tekau o-rau nga taiohi hara e mauiui ana i te mate waipiro i te mate kai poauau ranei a wai hoki ra whitu tekau o-rau kaore i te kura a no reira ka whakaaro pea te Minita he pai ake te arai i enei raruraru i te mahi whakatuma e ai ki te korero a te Uniana mo nga Pirihimana he whakaaro whakatoi hara a etahi kia hamenetia te tamaiti tekau ma rua tekau ma toru tau ranei te pakeke? 
[An interpretation in English was given to the House.] 
[ 
Does the Minister agree with the Principal Youth Court Judge Andrew Becroft that up to 80 percent of teenage offenders have drug and alcohol problems and 70 percent are not enrolled in any form of education; and would she not consider it more constructive to create front-end solutions rather than engage in what the Police Association describes as the “ideological prejudices of many of those involved in the debate” to lower the age of criminal responsibility? 
] 
Hon ANNETTE KING 
: This Government believes that one needs to take a multi-pronged approach to the problem of youth offending. We agree there needs to be work at the front end which is why Schools Plus is a very important policy for this Government as are our Modern Apprenticeships and other policies that we have implemented to help young people into jobs training and education. We know that early intervention is needed when young people start to go off the rails and also that one needs policies to deal with those who become serious offenders. We have taken the approach of addressing the issue on all those fronts. 
Chester Borrows 
: Why did she tell the media yesterday in response to the Police Association’s policy launch that she was open to the trialling of antisocial behaviour orders whereas when the Rotorua District Council proposed a local bill back in 2006 that would have done just that Steve Chadwick said she was “not convinced it’s a bill I would want to put my name to”; and also 2 weeks ago she told the  
Daily Post 
 that the legislation was unlikely to come before the House? 
Hon ANNETTE KING 
: Unfortunately the member is poorly informed. The trialling of antisocial behaviour orders—a project out of the United Kingdom—has certainly been looked at by this Government in terms of our effective intervention policy and we said we were prepared to look at the project. However a bill is being developed in conjunction with the Rotorua District Council and the local police and it is still being developed. Not only has it been worked through with Steve Chadwick but I have had several meetings about it. The Government awaits that bill when it is ready for introduction. So I say to the member that whoever is giving him the information is not informing him correctly. 
Hone Harawira 
: Tena koe Madam Speaker tena tatou te Whare; ki te Minita e whakaae ana ia ki te Uniana o nga Pirihimana ma te puhiko ara te Taser ka whara tuturu te tangata hara a e mohio ano hoki ia kei Amerika mai i te putanga mai o te puhiko nui atu i te toru rau nga tangata kua whara tuturu kia mate i te mauhere me te puhiko no reira ka tautoko tonutia e ia kia uru mai te puhiko nei ki Aotearoa a he aha te take? 
[An interpretation in English was given to the House.] 
[ 
Does she agree with the Police Association that Tasers are required to “reliably incapacitate an offender” 
and is she aware that since June 2001 more than 300 people in the USA have died following exposure to Tasers during arrest situations; and if so will she still support the introduction of the Taser into Aotearoa and why? 
] 
Hon ANNETTE KING 
: There is no doubt that the New Zealand police need another intervention weapon between pepper spray and shooting someone with a gun. Unfortunately our New Zealand police do not have anything between those tactical options. The trial of the Taser was carried out in New Zealand to see whether it was applicable to the New Zealand situation how it would be deployed and whether it would be deployed and I await the advice of the Commissioner of Police on that evaluation. I am prepared to look at the introduction of another tactical option if it is going to save the lives of the public including those who would otherwise have been shot which has fatal consequences and also the lives of those persons causing problems because often those people are in a disturbed state and the only option has been to shoot those people which obviously has a fatal outcome. 
Organised and Financial Crime Agency—Establishment 
5.  
SIMON POWER (National—Rangitikei) 
 to the  
Minister of Police 
: Was the Organised and Financial Crime Agency of New Zealand (OFCANZ) established on 1 July 2008 as scheduled; if not why not? 
Hon ANNETTE KING (Minister of Police) 
: 
 Although I have not formally launched the agency I am pleased to advise that it is already working on its first file. 
Simon Power 
: Can she confirm that Cabinet considered papers on the proposed Organised and Financial Crime Agency of New Zealand without seeing the dissenting advice of the Serious Fraud Office despite the fact that those papers proposed subsuming the Serious Fraud Office into the new organised crime agency; and why did Ministers refuse to meet with the Director of the Serious Fraud Office before making their decision? 
Hon ANNETTE KING 
: Considerable discussions had taken place around the establishment of the Organised and Financial Crime Agency and when Cabinet came to make a decision discussions had already been held including discussions between the Commissioner of Police and the Serious Fraud Office. 
Hon David Benson-Pope 
: Can the Minister tell the House what steps have been taken to establish the Organised and Financial Crime Agency? 
Hon ANNETTE KING 
: The police have worked hard to establish the Organised and Financial Crime Agency and that work includes appointing the establishment director John Beaglehole in December 2007; putting in place an establishment team which includes a detective superintendent a superintendent and a detective inspector who are working closely with the Serious Fraud Office to ensure a smooth transition; and working with other agencies to identify the most significant areas of organised crime so that taskforces can be most effective. 
Simon Power 
: Why was Cabinet denied the opportunity to take into account advice from the Serious Fraud Office that the proposal to roll it into the new Organised and Financial Crime Agency was based on “facts that are either misleading or even worse untrue” and that “some Ministers will be misled by this paper with potentially very serious consequences.”? 
Hon ANNETTE KING 
: I can assure the member that Cabinet had many many discussions and meetings on the establishment of this agency including discussion on the role of the Serious Fraud Office. 
Simon Power 
: Does she agree with the former Director of the Serious Fraud Office David Bradshaw who said today that “dropping the powers to order suspects to produce documents and answer questions would delay investigations for years and would see cases dropped without the facts coming out”? 
Hon ANNETTE KING 
: If Mr Bradshaw said that today then he does not know what powers have been transferred over from the Serious Fraud Office to the new agency. 
Simon Power 
: How does the Minister respond to the submission by Mr Bradshaw to the Law and Order Committee in which he said that during his 10 years with the Serious Fraud Office the police had never asked it to help investigate serious fraud relating to organised crime and that “If organised crime is now moving into the financial world you’d surely want at the very least the same capability and the same powers.” not less? 
Hon ANNETTE KING 
: I am staggered that Mr Bradshaw said that to the committee. Let me remind the member what powers have been transferred over. Production orders and examination orders will be carried over to the Organised and Financial Crime Agency under the Serious Fraud Office (Abolition and Transitional Provisions) Bill. The powers are essentially the same as those in the Serious Fraud Office Act but judicial approval is needed to exercise those powers. In other words one gets approval from a judge to exercise those powers. They are the same powers. If one tried to introduce those powers now one would not get them through this Parliament because there was no provision for oversight. Oversight of those powers requires a judge giving approval. They are the same powers with the same— 
Simon Power 
: They are not the same. They are a different regime. 
Hon ANNETTE KING 
: The member is screaming out they are not the same; they are the same powers with judicial oversight. What is wrong with that—to have someone else have oversight? It happens every day in the issuing of search warrants and other orders that are given. It is a protection for the people of New Zealand; it ensures that the powers are being appropriately applied. Once approval is given the powers can be applied. What does the National Party find objectionable about that—other than its wanting unbridled power? 
Employment Relations—Reports 
6.  
Hon MARK GOSCHE (Labour—Maungakiekie) 
 to the  
Minister of Labour 
: What reports has he received on employment relations? 
Hon TREVOR MALLARD (Minister of Labour) 
: 
 I have seen a report that shows that under a Labour-led Government and with some very good predecessors income for New Zealand’s lowest paid has gone up by 71 percent—four times more than National achieved in 9 years—notwithstanding National Party opposition to increasing the minimum wage. Since 2002 130000 parents have taken advantage of paid parental leave notwithstanding National’s opposition to the introduction of this scheme to its extension and to the increases in rates. Working families now have at least 4 weeks a year to spend as families as a result of the Holidays Act changes—something that was opposed by National. National is recommending that that provision becomes negotiable and in fact goes back to what it was and is taken away from workers. Real incomes in New Zealand have improved by 25 percent since 2000. Many hundreds of thousands of New Zealanders have done well with these changes and they know that their rights are safe only with Labour. 
Hon Mark Gosche 
: What other reports has he seen about employment relations? 
Hon TREVOR MALLARD 
: I have seen recent reports that show that under a National Government—a receding possibility—employer contributions to KiwiSaver would be gone according to Kate Wilkinson; would be back according to John Key; and then they would be gone again according to Shane Ardern. The ability to fire people at will would be introduced. Workers would face the risk of being fired for nothing or for complaining about being sexually harassed and they would have no right of appeal. I am proud that millions of New Zealanders have a Labour-led Government to ensure their rights are protected. 
Climate Change (Emissions Trading and Renewable Preferences) Bill—Timetable 
7.  
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Leader of the House 
: What is the Government’s timetable for passing the Climate Change (Emissions Trading and Renewable Preference) Bill; and will the second reading be held during this parliamentary session? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: The Government’s timetable for this bill is for it to be passed in 2008. As this parliamentary session must end by 6 October by law we are aiming to hold the second reading and remaining stages before then. 
Hon Dr Nick Smith 
: What changes is the Government prepared to make to the bill to address the major flaws that have been identified by the Green Party in order to secure its support? 
Hon Dr MICHAEL CULLEN 
: As Leader of the House I am responsible for the timetabling of the legislation; I am not responsible for its content. That is the responsibility of the Minister responsible for Climate Change Issues. 
Hon Dr Nick Smith 
: My question was set down for the Minister responsible for Climate Change Issues. It is the Government that transferred the question to the Leader of the House. I thus seek leave to ask the same supplementary question which Dr Cullen says he is not able to answer it of the Minister David Parker who I am sure would be delighted to answer it. 
Madam SPEAKER 
: Leave is sought. Is there any objection? There is objection. 
Hon Dr Nick Smith 
: Why was the Finance and Expenditure Committee given only 3 days to consider over 1000 amendments to this important legislation on the basis that the Government urgently wanted it to be returned to the House when the bill has subsequently sat on the Order Paper for 7 weeks without any progress? 
Hon Dr MICHAEL CULLEN 
: The first part of that question of course is not the responsibility of the Leader of the House. It was a matter for the select committee. As to the second part of the question I am sure the member is aware that at this point the Government does not have sufficient support to pass the bill. 
Hon Dr Nick Smith 
: Will the Government agree to refer the bill back to the select committee given that it is obvious it is going nowhere before the House—because I think we all agree it is crucial for New Zealand that we get the best-designed emissions trading scheme possible—and furthermore given that over 1000 amendments were given and the select committee had only 3 days to consider them the select committee could well use this time to do the job properly? 
Hon Dr MICHAEL CULLEN 
: It is clear from the statements made by the National Party that it wants to pass a bill that does nothing does not affect anybody and makes no impact upon the economy but that can be said to do something about climate change. That is not the Government’s intention. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. My question to the Leader of the House was not about National’s view which is quite rational about climate change and emissions trading—[ 
Interruption 
] So those members can yabber during points of order Madam Speaker? 
Madam SPEAKER 
: Please would the member make his point of order. 
Hon Dr Nick Smith 
: My point of order concerned a specific question that asked whether the Government will refer the bill back to the select committee given that we had so little time to consider such major changes. All I got was a recital on a misrepresentation of National’s policy. 
Madam SPEAKER 
: Does the Leader of the House wish to add to his answer? 
Hon Dr MICHAEL CULLEN 
: I wish to expand upon my fuller version of no. No. 
Hon Dr Nick Smith 
: What assurance can the Minister give that given the importance of this legislation we will have the opportunity to have the second reading during the course of this 3-week sitting period? 
Hon Dr MICHAEL CULLEN 
: The Government has a considerable amount of work to do during this 3-week sitting not the least of which of course is that we have to finish the Appropriation Bill. The Leader of the House is particularly and acutely conscious of the need to finish the Appropriation Bill during this session. 
Hon Dr Nick Smith 
: Is the reason that the Prime Minister has been pussyfooting around the misconduct of Winston Peters that the Government is so desperate to get support for this bill? 
Hon Dr MICHAEL CULLEN 
: I have a very long political memory in the case of Prime Ministers and Parliament going back to November 1981. I do not recall her pussyfooting at any time during that period. 
Accident Compensation—Conflicting Reports 
8.  
DARIEN FENTON (Labour) 
 to the  
Minister for ACC 
: Has she received any conflicting reports regarding accident compensation? 
Hon MARYAN STREET (Minister for ACC) 
: 
 Yes I have seen a report from John Key stating that National’s stocktake of accident compensation would include all accounts and that as well as the work account the earners account and the motor vehicle account could also be privatised. I have also seen a completely contradictory report from Murray McCully stating that “there would be big challenges privatising the earners and motor vehicle accounts which is why the National Party policy does not go there.” 
Darien Fenton 
: Has the Minister seen any other contradictory reports about accident compensation? 
Hon MARYAN STREET 
: Yes John Key said that “levy rates are rising rapidly and going through the roof.” but Murray McCully said that “levies peaked in 2002 and they are now nudging downwards.” John Key said that under privatisation “premiums will go down.” but Murray McCully said that the ability of private insurers to offer lower premiums is now “severely constrained”. Who can the public believe on privatisation when two National MPs are telling two different stories? 
Immigration Service—Mary Anne Thompson 
9.  
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
 to the  
Minister of Immigration 
: What was irregular about the circumstances in which family members of Mary Anne Thompson obtained residence? 
Hon SHANE JONES (Associate Minister of Immigration) 
 on behalf of the  
Minister of Immigration 
: These matters are being addressed in the various investigations that are currently under way. 
Dr the Hon Lockwood Smith 
: Was the Minister of Immigration around the time these irregularities occurred—a Minister who assured the House that he “runs the show” to use his own words and is on top of things—aware of any of these irregularities? 
Hon Dr Michael Cullen 
: I raise a point of order Madam Speaker. That particular quote is well known to members of the House and was made by the Minister of Health in his capacity as Minister of Health. 
Madam SPEAKER 
: Yes I recall it that way. I ask the member to rephrase the question. I do not think that comment probably added anything to the question. 
Dr the Hon Lockwood Smith 
: Was the Minister of Immigration around the time these irregularities occurred—the Minister who is currently the Minister of Health—aware of any of these irregularities? 
Hon SHANE JONES 
: Obviously all of these perplexing events will be swept up in the State Services Commission’s inquiry. As has already been noted in the House the former Minister was briefed on such matters in the context of a staff performance matter. 
Dr the Hon Lockwood Smith 
: Why did the Minister of Immigration around the time these irregularities occurred consider the fact that legitimate applications from Kiribati citizens were being declined because of apparently unlawful decisions in his department to be an employment performance matter? 
Hon SHANE JONES 
: These machinations that Dr Smith refers to no doubt will be addressed in great detail in the multiple number of reviews and if he just goes on taihoa he too will have it revealed to him. The Minister of the time was briefed— 
Hon Dr Nick Smith 
: Just answer the question. 
Hon SHANE JONES 
: I say to Mr Smith this issue unlike himself is not inert and I ask him to give us a fair go. The Minister was briefed in the context of it being a staff performance issue. 
Dr the Hon Lockwood Smith 
: How could the Minister at the time the Hon David Cunliffe—who claims to always be in control of things—consider the fact that staff regularly felt obliged to record “as instructed by” when processing applications because of the frequency with which Government immigration policy was being breached and why did the Hon David Cunliffe consider that to be a staff performance or employment matter? 
Hon SHANE JONES 
: Of course two reviews are of particular importance. The terms of reference dealing with the Auditor-General’s department will be investigating what if anything Ministers said at various points in this process; and secondly the State Services Commission will uncover all the various decisions that were made either irregularly or in other wrongful forms. 
Dr the Hon Lockwood Smith 
: Can the Minister confirm that for over a year the Minister of Immigration at the time knew of these irregularities involving the former head of the Immigration Service but turned a blind eye to them by not asking any further questions about apparently unlawful activity within his own department? 
Hon SHANE JONES 
: This is the third attempt to address the questions put forward by Lockwood—although one thinks of deadwood. The man— 
Madam SPEAKER 
: That is unnecessary—absolutely unnecessary. Would the Minister please just address the question. 
Hon SHANE JONES 
: The former Minister received a briefing in the context of a staff performance issue. He chose not to intrude beyond that statutory line defining the difference between the bureaucracy and the responsible Minister. 
Gifts— 
Cabinet Manual 
 Guidelines 
10.  
RODNEY HIDE (Leader—ACT) 
 to the  
Prime Minister 
: Is she aware of rule 2.81 of the  
Cabinet Manual 
 that states “To avoid creating or appearing to create an obligation gifts in cash or kind are not to be solicited or accepted from a commercial enterprise or any other organisation either in New Zealand or overseas.”; and does she advise her Ministers that having their lawyer solicit and seek funds for their personal legal bills avoids “creating or appearing to create an obligation”? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 I am aware of paragraph 2.81 of the  
Cabinet Manual 
. I would of course note that the manual is not a rule book; it provides guidance. I advise all Ministers to act in ways consistent with that guidance. 
Rodney Hide 
: Does the Prime Minister then believe that Mr Peters has found a way through paragraph 2.81 by having his lawyer Mr Brian Henry solicit and obtain funds for Mr Peters’ legal bills on his behalf and that as long as Mr Peters does not know who was putting in the $100000 he is still acting consistently with the  
Cabinet Manual 
? 
Rt Hon HELEN CLARK 
: I repeat that the  
Cabinet Manual 
 does not set out rules; it sets out guidance. Secondly the member has no basis for the allegations that he has just made about money for legal fees. Thirdly I point out that Mr Brian Henry has stated publicly now on at least two occasions that everything he knows about funding electoral petitions like this one he learnt when he was involved in the National Party electoral petition for Wyatt Creech after the 1987 election. 
Rodney Hide 
: Has the Prime Minister asked Winston Peters whether he knew that Mr Brian Henry was soliciting and receiving funds on Mr Peters’ behalf as Brian Henry has said he was doing and has she asked also on what date Mr Peters learnt that his legal bill had been reduced by $100000; if not why has she not asked Mr Peters those questions—is she concerned about the answers? 
Rt Hon HELEN CLARK 
: No I have not asked those questions. The matter is clear to me. Mr Peters has advised me that he was advised late on Friday of the source of the money going to his lawyer. He had not known the source of that money before then. I believe that Mr Peters like other sensible party leaders keeps a great distance from the issue of soliciting funds. 
Madam SPEAKER 
: Supplementary question Rodney Hide. 
Rodney Hide 
: I think I am out of supplementary questions Madam Speaker. I am happy to take another one. 
Madam SPEAKER 
: The member can have tomorrow’s question today if he wishes. 
Rodney Hide 
: Let us have something to look forward to here in the House. I raise a point of order Madam Speaker. The Prime Minister is consistently and wilfully dodging the questions that Mr Copeland and I have been asking by saying that Mr Peters did not know about the source of the donations. My question specifically asked whether Mr Peters knew that money was being solicited—not the source of the donations but the fact that the money was being solicited. 
Madam SPEAKER 
: I have listened very carefully. The Prime Minister like all Ministers is required to address the question. However Ministers are not required to give the answer that members want to hear. The Prime Minister addressed the question. 
Hon Dr Michael Cullen 
: In light of the questions asked by Mr Rodney Hide did the Prime Minister hear an interview this morning with the former leader of the ACT party the Hon Richard Prebble and can she contrast the nature of the statements made by Mr Prebble with those made by Mr Peters on those matters? 
Rt Hon HELEN CLARK 
: I have certainly seen the transcript of the interview and I heard it myself. As I take it from the interview Mr Prebble was very careful as a party leader not to know of or be involved with the soliciting of donations for his legal defence costs. That seems to me to be pretty similar to what my understanding of Mr Peters’ position is. 
Rodney Hide 
: Does the Prime Minister believe—[ 
Interruption 
] 
Madam SPEAKER 
: The member will please be seated. As members well know and as I have explained in the past there is a market in supplementary questions. I have to be notified beforehand and I have been notified so Rodney Hide has an extra supplementary question. 
Rodney Hide 
: Thank you Madam Speaker and we can still look forward to another one tomorrow. Does the Prime Minister believe that Mr Peters knew that Brian Henry his lawyer was seeking funds to pay for his electoral petition against Mr Bob Clarkson and does she believe that Mr Peters knew that the bill had been reduced by $100000? 
Rt Hon HELEN CLARK 
: I cannot be expected to have any insight into those matters. What I do know is that Mr Henry has made it very clear that the way in which he has operated in respect of this electoral petition is exactly the way the National Party taught him to operate in respect of the 1987 one over the Wairarapa electorate. 
State Housing—Subletting 
11.  
PHIL HEATLEY (National—Whangarei) 
 to the  
Minister of Housing 
: Does she stand by the statement with regard to State housing that “cases of subletting are very rare” that pursuing them would be a “wild goose chase” and that the Minister is “still waiting for Mr Heatley to front up with a single example”? 
Hon CHRIS CARTER (Minister of Education) 
on behalf of the  
Minister of Housing 
: Madam Speaker— 
Gerry Brownlee 
: I raise a point of order Madam Speaker. It might facilitate things if the House were to take question No. 12 now. Clearly the Minister of Housing who was in the House just a few minutes ago has been detained outside somewhere and will presumably be back soon so that she is able to answer the questions. Of course that would be a lot more satisfactory than— 
Madam SPEAKER 
: Is leave being sought to do that? 
Gerry Brownlee 
: I cannot seek leave to do that; it would be by agreement of the House. 
Madam SPEAKER 
: I know that you cannot do so. I am just wondering what the point is. 
Hon Dr Michael Cullen 
: The Minister left because she is due to catch a flight; she had to leave the Chamber. [ 
Interruption 
] 
Madam SPEAKER 
: Now that we have established that members not in the Chamber are catching flights could we please have the answer to the question. 
Hon CHRIS CARTER 
: Yes the Minister of Housing stands by the statement made by the very talented and able former housing Minister in November 2006. Cases of subletting are very rare. Indeed subletting accounted for just 0.06 percent of all tenancies last year. 
Phil Heatley 
: Can the Minister confirm that through select committee processes we have discovered that another 44 new subletting scams have come to light so far this year; if so were these cases serious in her opinion? 
Hon CHRIS CARTER 
: Any cases of fraud are serious and are dealt with promptly and with due process of the law. I remind the House that when I was privileged to be housing Minister in the very first case I think of subletting that that member brought to me it was found that the tenant Maxine Hardy was in hospital and her brother was looking after the house. 
Lynne Pillay 
: What steps is the Labour Government doing to help house some of New Zealand’s most needy families? 
Hon CHRIS CARTER 
: The Labour-led Government— 
Phil Heatley 
: I raise a point of order Madam Speaker. My primary question was fixed on subletting scams. The answer to that question was fixed on subletting scams. The member Lynne Pillay is moving well wide of the mark. Madam Speaker you have never allowed me the scope to move around various Housing New Zealand Corporation management practices when the question down on the Order Paper and subsequent answers have been specific. The member should not be able to ask a general question about the Housing New Zealand Corporation; it must be fixed on subletting. 
Madam SPEAKER 
: Could Lynne Pillay please repeat her supplementary question. 
Lynne Pillay 
: What steps is the Labour Government doing to help house some of New Zealand’s most needy families? 
Madam SPEAKER 
: Now that I have had an opportunity to hear the full supplementary question yes I think that it could relate to the primary question. If I started interpreting supplementary questions very narrowly we would probably not have many of them. Members should think very carefully about whether that is the ruling they wish me to give. 
Hon CHRIS CARTER 
: I say with considerable pride as a member of the Labour-led Government that we have taken many steps to look after New Zealand’s most needy families in the housing area. We have reintroduced income-related rents which has made a profound difference to the thousands of families that are living in State houses and has lifted many of them out of poverty. In addition we have added 7793 homes to the housing portfolio stock we have given out 3000 Welcome Home Loans we have launched a shared-equity pilot scheme we have transformed urban communities like Aranui in Christchurch and Talbot Park in Glen Innes we have modernised 5100 properties and we have done 17300 retrofits. And so it goes on—a list of achievements that a Government can be proud of. 
Phil Heatley 
: Is this a “wild goose chase” given that among the latest 44 scams a New Lynn tenant illegally sublet a house for 8 years 6 months a Mangere tenant for 8 years 3 months another Mangere tenant for 5 years 8 months and a Takapuna tenant for 5 years 6 months? 
Hon CHRIS CARTER 
: I hope those are more genuine cases than that of poor old Maxine Hardy whose case this member brought to the House 2 years ago. We found out that she was in hospital and her brother was looking after the house. 
Phil Heatley 
: Does the Minister have the courage to tell all the needy families— 
Madam SPEAKER 
: Would the member please rephrase the question. He knows that is not appropriate; he is not a new member. 
Phil Heatley 
: Will the Minister tell all the needy families on the waiting list that subletting scams are a small problem or does she think those families would have liked to move into one of those State houses over the last 8 years instead of living in garages or caravans or on the streets? 
Hon CHRIS CARTER 
: I can with a lot of pride say that we have added 7793 houses to the Housing New Zealand Corporation portfolio and I can with shame for that member say that his previous Government sold 13000 of them. 
Phil Heatley 
: Has illegal subletting increased year on year under Labour’s watch or is it that the corporation is now acting on cases of tenants who have been subletting illegally for up to 8 years just because such cases are now being publicly highlighted? 
Hon CHRIS CARTER 
: The member is clearly very sensitive. We are talking about 0.06 percent of tenancies. That is 0.06 percent too many but in the greater context of the whole housing portfolio I think it is a very trivial problem. 
Phil Heatley 
: Can the Minister tell the House whether the corporation has caught up with the high-profile sportsman who sublet his State house while he had a bach in the Bay of Islands; if it has caught up with him what is the latest information on this case does he still owe the taxpayer $32650 and when will that issue be resolved? 
Hon CHRIS CARTER 
: I can confirm that that particular individual is in court facing charges. As every member in this House knows it is entirely inappropriate to talk about a case that is currently before the courts. 
Phil Heatley 
: I would like to table the estimates list of the 44 scams and their details— 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is objection. 
Phil Heatley 
: I would like to table question time denials by the Minister of Housing that subletting rorts actually exist. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is. 
Phil Heatley 
: I would like to table the committee transcript on the tenant who is before the court next week— 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is. 
Capital Markets Development Taskforce—Announcement 
12.  
Hon PAUL SWAIN (Labour—Rimutaka) 
 to the  
Minister of Commerce 
: Has she received any reports on the response to the announcement of the Capital Markets Development Taskforce; if so what do they say? 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 Yes I have. From those who genuinely want to see progress on adding depth and breadth to our capital markets there has been an enormously positive response especially in respect of the quality of the members of the task force and the level of expertise they will bring to the table. 
Hon Paul Swain 
: Has she seen any reports as to why a former Minister of Commerce did not initiate such a brilliant proposal; and what response has there been to the Minister’s statement that Labour’s opposition to any sale of State-owned enterprises would never change regardless of what the task force recommended? 
Hon LIANNE DALZIEL 
: I was actually very interested in the comment of the person who said Labour had shown its attitude to promoting investment in the capital markets by blocking the sale of Auckland airport this year but then went on to say that he would not support the sale of State-owned assets which seems somewhat contradictory. Of course that is explained by the fact that both comments were made by the National Party’s finance spokesperson Bill English. 
Simon Power 
: Who has been appointed to the task force to specifically represent the interests of investors? 
Hon LIANNE DALZIEL 
: The members of the task force have not been appointed to be representative. That was made very clear at the time although I would highlight the fact that one of the members of the task force is the chief executive of our Superannuation Fund which is a major investor in New Zealand. 
General Debate 
Hon TREVOR MALLARD (Minister for the Environment) 
: 
 I move  
That the House take note of miscellaneous business 
. I am going to spend most of the debate today talking about the things that are not protected under any possible future National Government—the things that are Kiwi. But one could not go a minute in this debate without referring to the dark looks the shaking the anger and almost the tears of John Key today after Nick Smith made his intervention. I have never seen a member of Parliament looked at in such a dirty way by his or her leader in the House. I do not know whether Nick Smith did it deliberately—maybe he did do it deliberately—or whether he did it accidentally. What did they call those young boys over there? It was not the “goon squad”. 
Hon Darren Hughes 
: The brat pack. 
Hon TREVOR MALLARD 
: Whether it was part of the brat-pack undermining of John Key or whether it was totally accidental John Key’s knees were taken away from him by Nick Smith in the House today—and we thought it was great. What is also really interesting is how John Key could not handle it. He got angry he shook and he started mouthing. It was a joy to behold from this side of the House. 
But that is not what this debate is about. This debate is about things Kiwi. It is about KiwiRail it is about Kiwibank and it is about KiwiSaver. It is about the things that the National Party in its slowly evolving policy—slowly evolving very slippery policy—is not committed to. As the member of Parliament for Hutt South I thought it was amazing that the National Party opposes spending $200000 on looking at whether we could assemble locomotives in New Zealand. Why does it object to considering the question of putting locomotives together in New Zealand? I think it is a great idea. I do not know whether it can be done or whether the economics will work but considering the question is something that I think is really good. 
I think it is amazing how the National Party - inspired websites have the Rt Hon James Brendan Bolger on them with—do members know what title is underneath? 
Hon Member 
: No. 
Hon TREVOR MALLARD 
: It is “traitor”. That is what the National Party - inspired websites are saying about National’s former leader. I think those members opposite need to have a look at someone like Mr Bolger who can look at the interests of New Zealand in the way he has. It is absolutely clear that having a working rail system is in the interests of New Zealand and the only way of doing that is to have a Crown purchase. 
I thought it was very interesting that we are getting a pattern of privatisation. National says it is not going to sell assets—that it is not going to sell Television New Zealand or the Accident Compensation Corporation. 
Hon Member 
: Into several pieces. 
Hon TREVOR MALLARD 
: No no. But it will privatise the functions. National will not sell them but it will— 
Hon Dr Nick Smith 
: It’s called choice. 
Hon TREVOR MALLARD 
: Oh it is called choice. National will privatise the function. It will not have a public broadcaster but will give the money to the overseas-owned TV3 instead. Well that is an interesting approach. National will not have a New Zealand accident compensation system. Instead National will give the resources to its donors from the Australian insurance companies. 
It is really interesting that National’s tax proposals are now beginning to leak out. People who are low-income earners now know that National will be committed to those changes that are happening on 1 October but not to the ones scheduled to happen in the out-years. So low-income earners will get what they are going to get from Labour but the National Party policy will be that there are no further tax changes for people— 
Hon Dr Nick Smith 
: Rubbish! 
Hon TREVOR MALLARD 
: The member says “Rubbish!”. It is very very interesting that— 
Hon Lianne Dalziel 
: He knows everything doesn’t he! 
Hon TREVOR MALLARD 
: He says he knows everything. Bill English has been consulting people but not Nick Smith. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 When inflation is heading to 5 percent and is gouging the budgets of many low-income New Zealanders and when New Zealand businesses and particularly exporters who are trying to stay competitive so that they can employ New Zealanders are burdened with 4 percent domestic inflation for the last 5 years Trevor Mallard is the best that Labour can do. His economic policy now amounts to a $200000 gift to Trevor Mallard to try to save the Hutt South seat. When interest rates— 
Jill Pettis 
: Why does this member hate workers? 
Hon BILL ENGLISH 
: Well that member must hate workers because under Labour interest rates have doubled. Mortgage interest rates are now twice what they were when Labour came into office and Labour’s solution to that is that member over there. Therefore it is no wonder that consumer confidence and business confidence are lower than they have been for a long long time—the lowest for years. 
House prices are not just not going up; they are dropping—in some places precipitously. We see news in the paper today that the performance of the Australian parent owners of some of our banks is now a real concern to financial markets and what is Labour doing? Labour is mired in the workings of New Zealand First’s finances. The Prime Minister has spent 10 days prevaricating and procrastinating over issues that she would normally deal with in a matter of a day or two. When public concern about law and order is higher than it has been for a long long time because of a rash of violent crimes in Auckland what is Labour doing? Labour is trading insults over who donated what to whom and when. Labour and New Zealand First pushed the Electoral Finance Act through Parliament. Why? Because they wanted transparency around big money in New Zealand politics. That is what they are doing. 
Labour’s flagship legislation the emissions trading scheme is now almost fatally caught up in the parliamentary process. We know that because the Leader of the House told us so today. When Labour has flagship legislation it wants pushed through for which it needs New Zealand First’s support it is not in there negotiating the fine points of how the emissions trading scheme might deal with carbon; it is in there telling Winston— 
Jill Pettis 
: The member has a name. 
Hon BILL ENGLISH 
: —Winston Peters—it will do whatever it can to keep him out of trouble so that they might get his vote for the one piece of legislation that Helen Clark would like to claim as their legacy. 
In short the Government—as has been the case for the last 18 months—is not focusing on the issues that matter. It is focused on a whole set of preoccupations that are nothing to do with the real concerns of normal Kiwis and that is why it is regarded as being out of touch. 
How does Labour think it feels to be one of those working-class voters whom it thinks will vote for Labour but will not when price rises are heading for 5 percent when interest rates have doubled and when house prices are dropping? Well Labour does not care how they feel. What it cares about is how Mr Peters feels. 
Let us deal briefly with Mr Peters. It has now become clear that he did receive donations when he said he did not. That will be a surprise to the public. Regardless of the rights or wrongs of how that happened it will be a surprise to them that when Labour and New Zealand First said that National members are the people who are influenced by big money and that legislation must be passed to stop it it turns out that Labour and New Zealand First members are the people getting half-million dollar and secret donations. 
Hon DAVID PARKER (Minister of State Services) 
: 
 Listeners will recall that the previous speaker Mr English who is the shadow finance Minister and the finance spokesperson for the Opposition when last in Government was of course the Minister of Finance who cut the superannuation rate from 65 percent to 60 percent. 
One of the most important institutions that we have in this House is Hansard and the  
Hansard 
 record stands as a record of what we say. It enables members of the public journalists and members of Parliament to judge what is said today and to compare it with what was said yesterday. It is one of the best ways in which we can judge the sincerity of what people say today particularly as we approach elections when some politicians are known to say what they think the public wants them to say rather than what they really believe. I want to concentrate today on some of the reasons why it is increasingly clear that members of the public are concerned that John Key and National members continually just say what they think the public wants to hear rather than what they really believe. 
I will start with Iraq. Lots of us were at meetings with John Key when he said New Zealand should be in Iraq. He was quoted as saying New Zealand was “missing in action” during the invasion of Iraq yet this year he said “National wouldn’t have sent troops to Iraq”. Again he is telling people what he thinks they want to hear and denying the true agenda. In respect of climate change he will say anything to win. He said in May 2005 and I am quoting from  
Hansard  
here “even if one believes in global warming—and I am somewhat suspicious of it”. That is a direct quote from John Key the Leader of the Opposition. He now says “I firmly believe in climate change and always have”—another incident where he was reinventing history and telling people what he thought they wanted to hear.  
The most recent time he was outed on his true agenda was in respect of accident compensation. There was no comment from the National Party on this issue until they were forced to comment in response to media queries as a consequence of stories in the Australian media following comments to Merrill Lynch. They had told Merrill Lynch and I quote from a Merrill Lynch report that “ 
The National Party has been cautious about its statements on the possible privatisation of the ACC market but are giving the insurance industry a strong message that it is a likely outcome if it wins the election 
”. Having been clearly outed on that and not able to deny it—because of course Mr Key is a former senior employee of Merrill Lynch—National was forced to admit its privatisation agenda in respect of accident compensation. 
Other areas are of increasing concern to New Zealand voters and that is why they are increasingly concerned about this hidden agenda. The next I will mention is the cost of going to the doctor. Tony Ryall is the National Party spokesperson on health. He is a front-bench spokesperson. What did he say? He said that National will not cap the cost of doctors’ visits. His words were in fact “We don’t support Labour’s fees control system. We’ll be knocking it on the head”. That is the true National agenda. National members subsequently denied it but that is their true agenda from their health spokesperson. 
Let us look at student loans. Student loans were said by both Bill English and John Key—and I quote John Key—to be “an unaffordable … and irresponsible cost to the country”. Now they say they will keep them but we know about their promises to students. The last time National was seeking election Lockwood Smith made promises said he would resign if the party did not keep them and then broke those promises but did not resign. 
Let us look at superannuation rates and eligibility. Within the last couple of years both Bill English and John Key in their responsibility as finance spokespeople have said that the eligibility is too generous for superannuation in New Zealand and that we need to tighten up. National members were the ones who cut the superannuation rate from 65 percent of the average wage to 60 percent for a married couple; they would do it again. That is their true agenda. 
Let us look at what they would do in respect of education. John Key says there will be more money for private schools; Anne Tolley says there will be no more money for state schools. She said that to a principals’ association. That is on record and that is the true agenda. 
Let us look at KiwiSaver. It is a flagship policy for Labour and very important economically to increase our savings and the depth of our capital markets. Kate Wilkinson is on record as saying that National would have no employer contribution; John Key says “Oh no no no; that is not our true agenda.” But then what do we hear? We have another ideological burp—the truth from Shane Ardern.  
JUDY TURNER (Deputy Leader—United Future) 
: 
 Personal privacy is a highly valued asset that affords the individual a set of boundaries to protect his or her personal time and personal space. Recently a very public itch has developed over the invasion into our private lives by telemarketers. Typically telemarketers ring at times when one is most likely to be at home which is the 6 p.m. to 10 p.m. after-work downtime or during one’s precious weekends. If one lives in Auckland or another main centre the problem is unrelenting with people reporting four calls in a weekend from the same company. The callers often will not acknowledge who they are even when asked; they will pose as market researchers; ask for 5 minutes of one’s time but take 20; and will not respect one’s clear and polite message of lack of interest. 
A voluntary register has been set up by the New Zealand Marketing Association but a large number of telemarketers are not members and I have received many complaints from constituents who are still dealing with a barrage of calls despite making the effort to sign up on the register. In May last year United Future asked the Privacy Commissioner to give some thought to the problem. Last week she released a report from the commission in which it surveyed developments internationally and in New Zealand over the last 4 years to update and modernise our privacy laws. Amongst the three recommendations is the idea of establishing a national “Do Not Call” database similar to those set up in other jurisdictions like Australia and the United States of America. In Australia the register has been so popular that on the day it went live it crashed due to being inundated by applications. In the United States of America 145 million people signed up in 2003. 
The register would apply to all profit-making organisations and would give telemarketers a number of working days after a person registered in which to become compliant before a series of fines could be imposed. Last week talkback radio callers were very responsive to the suggestion of a New Zealand register; the  
New Zealand Herald 
 ran a poll and had over 4000 voters cast their opinion with 96 percent in favour of a register. It is interesting that the Government has already moved to introduce an amendment bill on one of the three recommendations made by the Office of the Privacy Commissioner but on this issue of a “Do Not Call” register it has been strangely quiet. So too in an election year the National Party has been strangely silent despite the fact there is huge public demand for this choice regarding the volume of telemarketing that people are on the receiving end of. 
In the last 10 days one of the astonishing aspects of the response to United Future’s call for the Government to establish a “Do Not Call” register is the personal stories I have heard not just from the general public but from members of the media who have been interviewing me and from members in this House as well all adding to the damning evidence against this unacceptably intrusive approach taken by many telemarketers. One member of this House told me of receiving a call just last weekend from a telemarketer who refused to answer questions as to whether he or she was in fact a telemarketer. Eventually the member was forced to hang up only to receive a call 2 hours later from this telemarketer’s supervisor demanding an apology for his staff member who was offended at being hung up on. 
Telemarketers have had plenty of time to get a voluntary register to work effectively. It is now time for this House to scratch the public itch and to strengthen our privacy legislation to ensure it is much more relevant to our 21st century context. The call is now out to all political parties to make clear their positions and to let the public know whether they are going to support the call for a register. 
GERRY BROWNLEE (National—Ilam) 
: 
 What a sad sight it was to see the Prime Minister stand in the House today and take no fewer than eight questions from other members asking her to extol the virtues of the Rt Hon Winston Peters in his capacity as Minister of Foreign Affairs for this country. What a sad day it is when the Prime Minister simply casts aside one of the documents that make up the constitution of New Zealand—the  
Cabinet Manual 
—and says “it is not a rule book; it is just a guide”. No one will forget that after the last election it was the Rt Hon Winston Peters who instigated the changes to the  
Cabinet Manual 
 that would enable him to take the position he has today. This is a man who touts himself as being one of the great parliamentarians of our age—a man who never hesitates to take an opportunity in this House to explain to other members how long he has been here how much he knows about the place and how much he claims to respect the institution of Parliament. Yet his very behaviour not only after the last election but now as has been revealed in the last few days in the acceptance of a donation from Mr Owen Glenn which was not disclosed shows his utter and complete contempt for the parliamentary process that operates in New Zealand. 
To have the Prime Minister spending her days working out how she can answer such a barrage of questions requiring complimentary statements about Mr Peters shows what a dreadful state the Government has got itself into. Everyone knows when they go outside of this place that New Zealanders are generally finding life a little difficult at the moment; that New Zealanders from one end of the country to the other are questioning just how secure they are as they go about their daily activities only to pick up the morning newspaper to see more violent assaults more murders more crime and all those other things that threaten the security of families in this country. The Prime Minister sitting in the top office of the Beehive is spending her mornings working out how she will say ever more complimentary things about the Rt Hon Winston Peters. 
Let us think for just a minute about what the issue is here. The issue is that under our system Ministers are supposed to stay completely free of any influence whatsoever—completely free of any influence from those who might be advantaged by any particular law change or other such. This country has for about 25 years now progressively moved to a situation whereby the separation between the Government and the governance and running of various activities that are part of being in Government have been separated from Ministers so that there can be no question about the way in which a Minister delivers in a policy area for which he or she is responsible. 
This donation which has been acknowledged by Winston Peters has exposed the raw underbelly of New Zealand politics and some of the weaknesses that can be in the system. One of the great protections has always been the  
Cabinet Manual 
 which allows the Prime Minister to demand a certain standard of behaviour from members of the executive. Today the Prime Minister cast that aside and simply said: “It is not a book that sets down rules; it is simply a guide.” So the behaviour of members of Parliament who become members of the executive is not prescribed in any rule it would seem but is simply found in a guide. The Prime Minister is the only person who can alter the  
Cabinet Manual 
 and the Prime Minister has discretion about what sort of behaviour is acceptable. 
That is the nub of the problem we have. Mr Peters spent months and months saying he never received a donation—only apparently to find out last Friday that yes he had. Then he went out and said: “But it wasn’t for me”. But it was! When someone gets a legal bill it is his or her responsibility to pay it. For Winston Peters to say that he did not know where that money came from is completely and utterly unbelievable. It is irresponsible and what is worse he is destroying the credibility of this Parliament by continuing to stick to that line. 
Hon MITA RIRINUI (Minister of State) 
: 
Otira kei te Kaihautu tena koe. Tu whakahihi tonu au i te mea ra ko tenei Te Wiki o Te Reo Maori. Na runga i tena kore e taea e tena ki te wero i te tuara o tenei tangata a-waha o Winitana. Mihi tonu atu au ki a ia ki te matenga ake o tona whaea kua tuku atu nei ki te kopu o te whenua i nga ra kua taha ake nei. No reira na runga i tena ka mihi ake ki a ia me tona whanau.  
Hoki mai ra ki te kaupapa i hui ai tatou i roto i te Whare i tenei ahiahi. Tu whakahihi tonu au i te ahuatanga o te kaupapa e pa ana ki to tatou reo. Na runga i tena ka motini hoki au ki nga mema o te Whare kia korero Maori katoa nga tangata e whai muri mai i ahau i tenei wa. Ma te mema mo tera takiwa o Otaki te mema makawe whero a Darren Hughes hei tautoko i taku motini. Na te katoa o te Whare nei e ki ae kua oti ra tena. 
[ 
Greetings to you Mr Assistant Speaker. I stand proud because this is Maori Language Week. Because of that no one can verbally attack Winston to his face but to his back. But I do acknowledge him in the loss of his mother who passed away recently and express condolences to his family as well 
. 
I come back to the business and the reason why we are assembled here in the House today. I remain proud in respect to our language and as a consequence propose a motion that all members of the House who speak after me should do so totally in Maori. The member from that electorate of Otaki the red-haired Darren Hughes will second my motion. The whole House says yes that is done! 
] 
I will take a couple of minutes to translate what I have said. I have listened to the debate and the challenge on the Minister of Foreign Affairs the Rt Hon Winston Peters. I have nothing to criticise him for this week. This is a very sad week for him and for his family with the passing of his mum. I have one thing to say to Winston: “Nga mihi aroha”—my sincere condolences. All I expect from him this week is to korero Maori. I say that to every member of this House and to that end I would move a motion that everybody who speaks in this House after I sit down must speak Maori. I am sure the member for Otaki the Hon Darren Hughes would support my motion because he is a very good Maori speaker. I think he is from that tribe called “Ngati Panewhero”—the people with red hair! 
Na runga i tena kei te Kaihautu mihi kau ana ki a tatou. Otira hoki mai au ki te kaupapa o te Ropu Nahinara. Tenei taku wero ki a ratou kei hea ratou e tu ana i runga i te Tiriti o Waitangi? He aha o to ratou kaupapa kia wharikihia ki waenganui i iwi o te motu kia marama tonu ai kei hea ratou e tu ana? Kei hea o ratou mema Maori? A Horiana mai ra i Ngati Tuwharetoa. A Tau Henare mai ra i Te Tai Tokerau. Kihai ratou te hara mai ki roto i te Whare ki te whakamanahia i to ratou reo to raua reo to tatou reo. No reira karanga atu ki a ratou hoki mai ra ki te korero kia marama ai te Ropu Nahinara he Maori tonu ratou. Kei a ratou te wairua o to tatou reo kei a raua te mana o to tatou reo kei roto i tera ropu torangapu te Ropu Nahinara. 
[ 
Because of that Mr Assistant Speaker I congratulate us. Indeed I come back to the National Party’s policy. This is my challenge to National members: where do they stand in respect of the Treaty of Waitangi? What part of their policy will they place before the people of the country so that it is clear to them what National’s position is? Where are National’s Maori members—Georgina te Heuheu of Ngati Tuwharetoa and Tau Henare of the north? They have not come into the House to honour their collective language Georgina’s and Tau’s language and our language. So my call is for them to come back to explain so that it is clear to National they are still Maori that they have the spirit of our language that Georgina and Tau have control over their language in that political party National 
.] 
Once again I give a translation on my own behalf. I just say that this is a very very significant week for the Maori language. The language has a great history and I stand proud in the House this afternoon speaking in te reo but I have to ask the question of the National Party and I should be asking it of most parties that although there are two significant prominent Maori members in that party I have yet to hear them stand in this House and honour the Maori language. I hear them speak Maori a lot outside but I do not hear a lot of it in here. So I ask the National Party where it stands. Where does it stand in terms of the commitment to the development of the Maori language and Maori development generally? I do not see it I do not hear it and out there in the electorates people are asking what we stand for. 
On that note—ka hoki au ki te reo Maori kia haere tonu nga wero ki nga mema o te Whare. No reira hoki taku mahara ki te Kawangatanga Tuatoru Reipa i raro iho nei i te Pirimia o tera wa a Norman Kirk. Nana te reo i whakamanahia i roto i te Whare tae atu ra ki te Kawanatanga Reipa tuawha i raro ra i a David Lange me nga Minita Maori koira ko te Honore Koro Wetere nana i whakamanahia te reo Maori i roto i te Whare hei reo tuarahi mo te motu. Na runga i tena ka tipu haere ka pakeke haere nga tamariki i roto i nga kohanga reo kei roto i nga kura kaupapa e korerohia nei e te reo. I tenei wa he wero ano taku nei ki tena tangata e noho atu ra ki te mangai korero mo nga take kereme mo te Ropu Nahinara tena koe Chris. Kei te mohio tonu au ko koe ra te tangata kai te hiahia hoki o te Ropu Nahinara kia tu hei Minita mo nga Take Kereme. Taku ano ki te wero i a koe kai hea koe e haere ana kei koe e tu ana i roto i enei tuahuatanga te ahua nei kei te tamariki tonu koe. Kaore koe e piki ake ki nga teitei rangatira pera ra i a Takuta Michael Cullen. Kei a ia te mana kei a ia te tautoko huri noa te motu. 
[ 
So I go back to speak in Maori to resume the challenges to members of the House. My thoughts go back to the third Labour Government under the Prime Minister of that period Norman Kirk. He authorised te reo in the House as did the fourth Labour Government under David Lange with Maori Ministers namely the Hon Koro Wetere who sanctioned te reo Maori in the House and as a second official language throughout the land. Because of that children in kohanga reo and kura kaupapa where Maori is spoken emerged and matured. At this time I have a challenge to that person sitting over there the Opposition spokesperson on treaty negotiations: greetings to you Chris; I understand that you are the person from the National Party who wants to stand as Minister in charge of Treaty of Waitangi Negotiations. My challenge once again to you is: where are you going where do you stand in these circumstances? It seems that you are still a novice. You are not yet at the highest levels that Dr Michael Cullen is at. He has the standing and support throughout the land in these matters. 
] 
I say to the National Party that I have heard on the grapevine—in fact I have heard an announcement—that Chris Finlayson will be the National Party’s Treaty of Waitangi spokesperson and that he will lead the Treaty claims process. I wonder whether he can fit the shoes. Can he do all that work that Dr Michael Cullen has materialised in just a few months? 
Chester Borrows 
: It’s a secret ballot. 
Hon MITA RIRINUI 
: A secret ballot! Then it is the worst-kept secret I have ever known. One thing is for sure—the member who interjected is gone out of Wanganui. I was there the other day and I tell members that he is gone—he will be gone by lunchtime. 
The National Party has a lot of challenges ahead of it. Labour has a strong track record in terms of Maori development and the challenge is going out to National Party members. When they go around the traps they should not only say National will do this and that and will carry on with what Labour has done but they should tell people something new because they are waiting to hear. They know that Chris Finlayson cannot hold his own in the room with Maori leaders. They will eat him alive and spit him out. 
Na runga i tena kei te Kaihautu koinei taku korero ki a tatou i tenei wa whakamanahia ra te reo Maori i nga wa katoa kia ora tatou. 
[ 
On that note Mr Assistant Speaker this is what I say to us at this time: honour te reo Maori at all times. Thank you 
.] 
JUDITH COLLINS (National—Clevedon) 
: 
 The people of New Zealand would like a Government that actually is interested in governing. People are dealing with price rises for petrol. They are dealing with inflation at 4 percent and going up. They are dealing with double the interest rates for the mortgages that they had when Labour came into office. They are dealing with house prices that have tumbled—in some areas of my electorate by over $100000. All the equity has been wiped off people’s homes. That is what they are dealing with and instead what they have from this Government and this Prime Minister is a Government that is intent to do nothing else except cling on to power. Michael Cullen summed it up the other week when he said that this is all about power and by goodness that showed exactly what this Government is all about. 
What we have now is a Prime Minister who in the last few days has spent all of question time trying to get around the obvious. She has answered question after question—patsy questions—from New Zealand First about the wonderful statements about Winston Peters. It sounded like a eulogy frankly. What we have now is a Prime Minister who will not deal with this issue decisively. She dealt with Lianne Dalziel decisively once she was found to have misled the media. She dealt with that eventually. She dealt with David Parker decisively. He resigned as Attorney-General. She dealt with Ruth Dyson decisively when she was picked up on a drink-driving charge. But she did not deal with Taito Phillip Field decisively. In fact Taito Phillip Field must be wondering why it is while he is facing corruption charges that we are now talking about this matter in the House. She did not deal with David Benson-Pope decisively. His career is now over. 
That is one of the awful things. While she is going around saying: “I want to cling to power. I need to do everything I can to support Mr Peters.” what she is actually doing is destroying any hope for his career. In fact one of the things I heard yesterday from the Prime Minister was that this money was paid into the trust account—this account for Mr Henry—and that it was collected as a fighting fund for legal fees. That is not Mr Henry’s version. The reason it is not Mr Henry’s version is that Mr Henry does not have a trust account. I understand that members of the House might not understand this but he is a barrister sole. One of the things about barristers is that they do not have trust accounts. They are not audited. They are not subject to Law Society rules about trust accounts. The reason is that they do not hold other people’s money. They simply render an account and it gets paid. 
I have never in my 20-odd years as a lawyer and in my time with the Auckland District Law Society and the New Zealand Law Society once come across a situation where a barrister’s job is to ring up people in Monaco and ask them to pay $100000 into a fee’s account. I have never once heard anything like that. I have never once had that happen or heard of it—and I have sat for years on the complaints committee of the Auckland District Law Society. I can tell those members opposite that not once did we ever hear anything about barristers ringing up trying to solicit money for their clients’ fees. Never have I heard of barristers ringing up soliciting money for their clients’ grocery accounts or the car loan. Nor have I ever heard about them ringing up bank managers and asking them whether they would like to pay off a loan. It just does not happen in the real world. 
The people in my electorate will be wondering how come it is that they have had $100000 wiped off the value of their $400000 house which is now worth $300000 and is all taken up with a mortgage while we have a Government more concerned with clinging to power than what is happening for those ordinary good Kiwis who pay the taxes that pay for Winston Peters’ travel and that pay for those people there on the Government benches. The people in my electorate wonder about that. 
What we have now from this Government is the so-called new standard of performance. That is what Helen Clark promised in 1999. She said that we would have a new standard of accountability under a Labour Government. My goodness have we seen that? We certainly have. We have seen a new standard—a new low standard. Today we had Helen Clark stand up here in Parliament and tell us that the  
Cabinet Manual 
 which is there to stop any sense or implication of corruption was just a guide. They are not actually rules apparently even though they are talked about as rules. No they are not really rules; they are now a guide. That is the new depth that this Government has sunk to. 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 I raise a point of order Mr Speaker. I just want to clarify with you about speaking times in this debate. I have been using a stopwatch on the speakers and with my colleague Judith Collins you cut her at exactly the 5 minutes. But I timed the previous Labour speaker Mita Ririnui and he went for over 6 minutes before you stopped him. I want to know why members of the Labour Party get such a long period of time. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Mr Williamson I would have thought you have been here long enough to understand that it is Maori Language Week. Normally what would happen is that the member’s speech would be interpreted by the interpreter and the time taken off. In this case Mr Mita Ririnui decided to do the interpretation himself and he is entitled to do so. 
Hon DARREN HUGHES (Deputy Leader of the House) 
: 
E te Rangatira o te Whare ka nui te mihi ki a koe i tenei ahiahi i roto i Te Wiki o Te Reo Maori. 
[ 
To the Assistant Speaker of the House it is an honour indeed to greet you this afternoon during Maori Language Week 
.] 
I would like to acknowledge that it is Maori Language Week and I thank my colleague the Hon Mita Ririnui on behalf of all the members of “Ngati Makawe Whero” for his invitation to complete this speech in Maori  but I am afraid my talents do not extend quite that far. 
I would like to express though my proud pleasure and to say that I have really enjoyed over the last 6 years the privilege of representing Otaki in our Parliament. Labour has governed at every stage with a plan for the future of our country and also for the electorate that I have the privilege of representing. I know that my community is in a better position than it was before Labour came to office; it is a better place to live there are more opportunities for our young people and our families there is more security for our older people and we have better transport on the way. We have been a good Government and we deserve the chance to put our case to the country in this election based not only on our record but on what our plan for the future will be. I am looking forward to that. I am relishing the chance to do that because I know we have had the courage to make the judgments that are required in our country. 
Politics is not just about sitting around and knocking the hell out of members on the other side of the House and turning up 5 years later to say “Look we agreed to that a long time ago.” it is about saying on the day “Here’s what we will do for you right now.” There is no doubt in my mind that when it has come to the critical times for judgment in our country in the last 9 years Labour has been on the right side of those judgment calls that have had to be made and our political opponents who seek to replace us have been wrong at the time wrong to oppose and then finally turned up half-hearted down the track to say “Me too please include me in that.” 
It does not matter what policy one looks at but I have a few here I would like to show members. KiwiSaver is a visionary policy; Labour voted for it National voted against it. Working for Families made sure that three out of four of our families are assisted and many families in my constituency pay no income tax at all with the Working for Families package and National voted against that. Cheaper doctors’ visits: the cost of going to the doctor today is half of what it would be if we were not sitting on the Treasury benches; Labour was in favour National was against. We have just marked one year of our policy for 3 and 4-year-olds to get 20 free hours in our kindergartens and pre-schools; it was voted for by Labour and voted against by National. One of the great things we have done is taken the minimum wage in our country from $7 to $12 over our 9 years in office putting $200 a week into the hands of the poorest workers in our economy; Labour was in favour National was against it. 
When judgment counts and one has to make decisions on the day about policy it is Labour that has been on the right side for working families in our country and National has been on the wrong side. The ultimate judgment test that our Government has had to make—the ultimate most important decision we had to make—was whether to be involved in the war in Iraq. The National Party was wrong on whether we should be involved. The National Party got the judgment wrong it was absolutely incorrect and Labour took the right position. That is the way we should be remembering how we have taken our approach to politics. 
We know that all around the world right now judgment is required. Leadership and experience is required with the difficult issues we face. There are fuel challenges food challenges and credit-crunch challenges with high interest rates all around the world. Bill English talked about what a problem those challenges were for New Zealand offered no solution and pretended that New Zealand was in some sort of isolated bubble while these issues were affecting the rest of the world. These are global challenges but we will respond to them. We will develop policies to make sure that our communities and our people have the chance to step up to the plate in that respect. We have the experience and judgment to do it. 
National members say “Oh it’s just time for a change and that’s our only campaign slogan.” Their only basis for this election is “Well Labour’s had 9 years it’s about time we had a go.” Labour is asking National members: change to what? Because on those critical issues for families businesses and communities in New Zealand they were wrong when it counted in this Parliament and they will be wrong again. We have had the extraordinary thing this week where the National Party did actually release some policy over the adjournment. But its members do not want to talk about its policies. 
Yesterday in the House we had questions on accident compensation—a massive area of Government spending that affects the lives of hundreds of thousands of New Zealanders every year. The National members sat silent all throughout it. When the policy about 20 free hours for our 3 and 4-year-old children to get education was debated in Parliament yesterday the National members sat silent. They did not want to talk about it because they are taking the word “free” out of the free early childhood education policy. Why would one do that? The only reason one would do that would be because one wants to get rid of the concept of 20 free hours for our kids when they are getting their early childhood education. It is the same for accident compensation; privatise a scheme that people come from all around the world to look at! That is the kind of judgment National members are making but they do not want to talk about it—privatisation will be one of the issues. 
When National members are forced to talk about things—because we know the expensive consultants Crosby/Textor are saying “Do not let any of them talk about policy.”—John Key as leader just smiles is bland and takes pot-shots at Labour. When National members have to answer they are all over the place. When Chris Tremain talked about the accident compensation policy on the  
Back Benchers 
 programme last week he was a blithering mess. If the National Party wants to keep putting up people like that I welcome it. 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 I want to start by referring members of this House to some statements that the Rt Hon Helen Clark made in the run-up to becoming the Prime Minister. In November 1999 she said: “If we’re elected to Government then my commitment is that we will deliver a Government people can trust. It will be open and it will be accountable.” She said on 23 April 1999: “My Government will set new standards both in terms of behaviour and performance so that we govern for the people and are accountable to them.” In February 1995 she said: “The style of Government I will lead as Prime Minister will be open and participatory.” 
I welcome all those comments from Helen Clark but I do not believe New Zealanders can stomach for one moment the claims we heard in the House today that the  
Cabinet Manual 
 is but a guide about performance. I was a Minister for 9 years and I knew that that was the rule book—that was the absolute rule book. If one broke that  
Cabinet Manual 
 rule book one was gone and therefore we read it very carefully. I know that Ministers in the Labour Party will have read it very carefully. One is not to accept gifts. One is not to accept donations beyond certain levels without declaring them unless one is happy for one’s career to be over. 
Under the heading of what gets “curiouser and curiouser” I want to ask a couple of questions. Mr Peters claims he did not know about the $100000 paid towards his legal fees from Mr Owen Glenn. Until Friday when he was told he said he did not know. Well here is my first question. Mr Peters went on television back in February and held up a big sign saying “No”. He said he did not receive money from Owen Glenn. Do members not believe that his lawyer or his party president or somebody in the New Zealand First Party would have got to Mr Peters within 5 seconds of the finish of that television interview and said: “Winston Winston please don’t pursue that line any further you may regret it.”? I have to say that if the party president or Brian Henry did not get to Mr Peters straight away after that interview they were setting him up because Mr Peters from that point on kept denying it. Those people could have ended his misery any time from February until today by saying “Winston excuse me. Best you don’t do that again.” Last week there he was at the airport saying: “I do not have my ‘No’ sign with me but what part of ‘No’ don’t you understand?”. If that is not hanging a member out to dry I do not know what is. 
Under the heading of “curiouser and curiouser” how about the cheque that Dail Jones saw that went into the New Zealand First bank account? I have this quotation from him: “I saw the money. It was somewhere between $10000 and $100000 probably closer to $100000.” He then said: “I discovered the donation in the party’s bank account in December and I asked the bank where it came from and they could not tell me.” Now that means the bank is in breach of all the financial disclosure regulations in this country. Banks are not allowed to transact cheques of more than $10000 without being able to trace where they came from. That is in order to stop money-laundering crooked behaviour and so on. So it is not possible that the bank could not tell Mr Jones where that cheque came from—because it was over $10000. 
Suddenly the cheque disappeared again—it was gone. Now we are told it went off to Mr Brian Henry’s trust account. But as my colleague Judith Collins who was a member of the Law Society—in fact she was president of the Auckland District Law Society—said barristers cannot hold trust accounts. So the money had to have gone somewhere else. I put it to members of the Labour Government that if they had a $300000 mortgage and every month their statement came in saying the mortgage was still $300000 until one day in came a statement that said it was only $200000 they would want to know how that happened. They would want to know and if a member still had money owing to his or her lawyer and suddenly the bill changed by $100000 that member would want to know. The fact that Mr Henry left Mr Peters out to dry all this year by not telling him means that something rotten is afoot. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 One of the key issues that has come up again today is the nexus between democracy and money. This has been an extremely troubling nexus for many many years in Westminster System parliaments. The problem is twofold. On the one hand parties that represent large corporations with access to a lot of money are much more likely to get large amounts of money into their coffers and hence be able to run better election campaigns. The other side of it is that if money comes into different parties’ accounts it is very difficult for us to know how it influences the things they do when they are in Government particularly if we do not know that the money is coming into their accounts. 
This is the problem with secret donations and the secret donations regime that we have in New Zealand. Currently someone can give up to $10000 to a New Zealand political party and nobody has to know even under the new law. The problem with that is quite simply this: how does a member of the public looking at it from the outside know that the decision making of that party if it gets into Government is not influenced by its donors? How do people know that the tax breaks the party gives or the grants it makes have not been influenced by the donations it has received? Under our system the public has no way of knowing and that is exactly the problem. The nexus between democracy and money means that the voters of this country have no idea how the Government’s decision making is being influenced by money. 
There was a further problem before and that was the trusts that the National Party used at the last election campaign. The Electoral Finance Act for all its benefits and problems got rid of the ability to use trusts which is a really really positive thing. I think even some members of the National Party were pleased to see the trusts go because they made National look pretty bad. But we have not got rid of the $10000 limit which is a problem. The Green Party thinks there should be a $1000 limit on non-identified donations. If someone makes a donation over $1000 then the identity of the donor should have to be identified to the public so that people know who is funding political parties. We also think there should be a cap on individual donations. People should not be able to give $500000 to a political party because that kind of sum has a tremendous impact on political parties. There should be a cap on how much any individual or corporation can actually give to political parties. 
We also think there needs to be some kind of partial public funding of political parties. One of the tragedies of the Electoral Finance Act is that we did not get partial public funding—or any kind of public funding. That creates the problem whereby political parties are dependent on private donors which is one of the key problems with our system. We also think—and the Electoral Finance Act did provide for this—there has to be some limits on non - political party actors. If there are not those limits then the caps on other spending just do not work. We have seen that overseas. The Canadians have limits and the British have limits on third-party spending; we have to have those caps. 
Most of all the Greens really want people to decide all of this. The Greens have been promoters of citizens’ assemblies. A citizens’ assembly is where randomly selected members of the public are called together to be consulted if nothing more about important matters that political parties are not the right ones to make decisions about. How on earth can we be the right ones to make decisions about the funding of political parties when we are political parties? We have a fundamental conflict of interest. The best people to make these decisions are members of citizens’ assemblies whereby as has been done in Canada on a number of occasions people randomly chosen from each electorate come together to consider the questions that need to be considered and make recommendations. Having a citizens’ assembly instead of this assembly make key decisions or at the very least recommendations around how we should organise our political funding system seems to me the most sensible way to do it; it has been used extensively overseas. 
I also say—and I realised this today—that apparently Matthew Hooton who is of course a big National Party supporter has now come out in favour of partial public funding. I would hope that that would make National members rethink. The problem of public funding has come up today because of the relationship between New Zealand First and the racing industry its position on sustainable fisheries and all the rest of it. I will not revisit that now but I will say that surely it is in all of our interests to have transparency about this matter so that all these allegations are not swirling around New Zealand First as they are at the moment. Would it not be so much better if all of this was transparent and we knew who was funding New Zealand First the National Party the Labour Party and the Greens? If the information was all out there it would make things heaps better. 
Hon SHANE JONES (Minister for Building and Construction) 
: 
 E te Kaihautu o te Whare tena koe. Huri noa i to tatou Whare i tenei ahiahi tena tatou katoa i te ahuatanga o to tatou reo e whakatairangatia ana e whakamaharatia ana hei reo pumau mo Aotearoa i tenei wa. 
[ 
Greetings to you Mr Assistant Speaker and to you also throughout our House this afternoon in respect of the promotion and commemoration of our language at this time as a language of New Zealand for all times 
.] 
I greet my fellow parliamentarians and you Mr Assistant Speaker in Maori Language Week and as a reminder that Maori is one of our official languages. Before I launch off into the less charming aspects of my speech—because they are directed at the Opposition—we should bear in mind that this is one of our official languages of Aotearoa and it is kept alive as a consequence of the zeal and the interest of families to maintain bilingualism. All of my fellow Maori members of the House who are pursuing that—my whanaunga Hone Harawira along with myself and indeed Tau Henare—have been if not zealots in ensuring that our kids carry on the language then very very supportive of it becoming a reality. 
It is very sad that there has been an outbreak of amnesia from the other side of the House in search perhaps—and we see it on the front bench—of some sort of analgesic. However the reality is that they are holding unsuccessfully the proud member of Ngati Wai the leader of Aotearoa Tuatahi to a level of accountability they refuse to observe themselves. Not for them the detection or revelation of the Waitemata Trust and its shadowy funders coming back from overseas to Aotearoa. 
Of course the crowning folly offered by Mr Key is whilst he is chomping on Winston’s hind leg—presumably he is cocking the other one—he refuses to rule out the fact that National mistakenly hopes it can work with him. In addition National refuses to acknowledge that it has been the recipient of handsome amounts of lucre. But why will those members not observe the same level of laxity in relation to Mr Peters that they apply to themselves? 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the member but two members who do not have the floor are interjecting on each other. That is not permitted. 
Hon SHANE JONES 
: I follow Mr Williamson who unfortunately has left the Chamber. Mr Williamson spoke before I did. He recited a potted but stilted version of history. If there is one group of politicians whom the public associate with furtiveness in relation to funding their activities it is the members on that side of the House. They attack Winston Peters forgetting that it was litigation that first brought him here. If any of them go out and repeat as Matthew Hooton was unwisely doing—soon no doubt to be at his cost—ridiculous unsubstantiated dangerously libellous things about Winston Peters on National Radio etc. then they will face the full force of that litigiousness again. 
Of course the last thing that our colleagues from the other side of the House want to do is talk about who is going to pay for their excessive promises in relation to tax cuts and who is going to pay in relation to responding to the special-interest groups—obviously Australian insurance companies which is a joke. They complain about the anaemic nature of the New Zealand capital markets. They complain about the large numbers of Kiwis who are going across the Tasman. 
The first asset they line up to sell to the Aussies is one of the most successful flourishing enterprises with a very handsome endowment of capital invested in a wide array of destinations employing some very competent New Zealanders. The first thing they will do is gouge it then they will bleach it and then they will hock it off. 
I hope that the person who leads along with us the attack to stop that from happening is our friend the co-leader of the Green Party. He if anyone would know the dangers of what could happen if we let too many of them loose and I am sure he could speak at length on that matter. However the first thing National will do is destroy accident compensation. That is why it will not be successful. 
CHRISTOPHER FINLAYSON (National) 
: 
 That was another vintage contribution from Mr Shane Jones: so light on substance so lacking in detail and so short of the facts that matter. When we listen to the contributions of Labour MPs we can understand why Nandor Tanczos said that the general debate each week was the absolute pits. 
The deepest depths of those pits were reached today by Mita Ririnui who launched a personal attack on me. This is the person who appeared on Willie Jackson’s TV programme with Georgina te Heuheu and me a few weeks ago and said that National had never voted for a Treaty settlement. He has been on the Maori Affairs Committee since 2002 and knew the real record but he said that none the less because that is the party line that the Goebbels department on the ninth floor instructed him to give. That is the standard of that Minister. He is washed up useless and abusive. He is a person who is going nowhere like the preceding Ministers in charge of Treaty of Waitangi negotiations. The current Minister in charge of Treaty of Waitangi Negotiations who has sat in Cabinet throughout the 9 years of this Government and saw the lamentable performance of his two predecessors is in just as much trouble as his two useless predecessors. 
As my deputy leader said there are huge issues facing this country at the moment such as rising unemployment and law and order problems. [ 
Interruption 
] For the benefit of the Minister of Justice who knows nothing be it about Rongotai or P trials does she realise that P trials are so out of control in the courts in Auckland that they last for 3 months tying up huge resources? These are the problems that we in the National Party are anxious and indeed zealous to address yet this Government is expending huge amounts of energy trying to explain away the financial issues of New Zealand First. 
I frankly was appalled to hear the Prime Minister this afternoon dismiss the  
Cabinet Manual 
 as a mere guide. I contrast those weasel words with her firm statement in 1999 that if Labour were elected to Government her commitment was that Labour would deliver a Government that people could trust—it would be open and it would be accountable. 
If we look at the firm and decisive way that the  
Cabinet Manual 
 was employed to deal with various Ministers in the early years of this Government and contrast it with what has been going on today we see the difference. Dover Samuels had serious allegations made against him and was immediately required to stand down though he was subsequently reinstated. His real crime of course was being a paid-up member of the George Hawkins faction of the Labour Party. As Judith Collins said Ruth Dyson was required to resign her portfolios immediately when charges were laid against her but she was subsequently reinstated. The same applied to Marian Hobbs Phillida Bunkle and Lianne Dalziel. John Tamihere was required to resign over allegations he had misled the public about a payout from his former employer. David Benson-Pope was not required to resign immediately. The facts dripped out and Labour certainly paid the price for that. Taito Phillip Field was sacked after the last election. There was an inquiry and again the facts dripped out and a Queen’s Counsel was paid hundreds of thousands of dollars for a very flawed report. Then David Parker had allegations made against him and was required to resign his portfolios immediately. He was reinstated to Cabinet as Minister of Energy and Minister responsible for Climate Change Issues when he was cleared. 
That is the appropriate way to deal with these things yet the standards have been lowered in recent times. I cannot better the excellent contributions of Mr Williamson and Mrs Collins because they have raised a number of very important yet unanswered questions particularly about Mr Henry’s role in this affair. Why did not Mr Henry warn Mr Peters not to constantly say that there was no involvement? Where did the money go? [ 
Interruption 
] 
Lianne Dalziel should listen very carefully because this is a very good question that I would like her to answer. Where did the money go? Brian Henry did not have a trust account. Where did the money go? Of course she is not prepared to answer that question. She is worried about answering it because it is a fundamental question. What is the role of Mr Henry as a barrister in all this? 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the member but I just refer members on my right to Speakers’ rulings 57/3. Interjections are to be rare and reasonable. 
Hon Annette King 
: You are being very personal and nasty today. 
CHRISTOPHER FINLAYSON 
: For obvious reasons I am fond of the Minister of Justice on a personal level. But that is her stock response—that I am being very nasty. What I am really doing is asking some very pertinent questions that she should do well to listen to. Mr Henry as a barrister cannot have a trust account and that question remains unanswered. 
The debate having concluded the motion lapsed. 
New Zealand-China Free Trade Agreement Bill 
In Committee 
Part 1 Amendments to Tariff Act 1988 
Hon ANNETTE KING (Acting Minister of Trade) 
: 
 Today I am acting on behalf of the Minister of Trade the Hon Phil Goff who at this point is overseas representing New Zealand’s interests in further trade talks. But I know that he would want me to convey to the Committee his gratitude for the work that was undertaken by the Foreign Affairs Defence and Trade Committee in examining this bill which was recently before the select committee and for its recommendation to this House that there be no amendment to it. 
I think that members of this House have in the main worked very constructively on this bill knowing that it will have a major impact on businesses in New Zealand. It allows our free-trade agreement with China to come into force. The signing of the agreement with China is a very significant achievement for this Labour-led Government. 
Before the free-trade agreement was signed with China our exporters faced extra costs and charges when they tried to sell their products and services to the Chinese market which is a very large market for us. They faced tariffs of up to 20 percent making it harder for them to create the jobs and the wealth that can come from trade. That is because the Chinese tariffs on New Zealand products cost exporters almost $120 million a year. When it is easier because of this legislation for our Kiwi companies to do business we will all benefit. Our companies will be able to expand and hire more staff develop new products and grow our economy. The Prime Minister who has also been very instrumental in this deal which came out of our work with China said that the agreement sets a high standard and that it is a model for how two trading partners disparate in size but complementary in the products and services they offer can take a trading relationship to a new level. 
Support for the free-trade agreement has come from many many different quarters. For example the agreement is supported by the Council of Trade Unions the Dairy Companies Association of New Zealand Federated Farmers Air New Zealand Fonterra the Hospitality Standards Institute Ngai Tahu Meat and Wool New Zealand the National Distribution Union Zespri Business New Zealand the Seafood Industry Council the Wellington chamber of commerce and many others. The agreement is widely supported by many organisations in New Zealand whether they are businesses organisations that represent our tourism industry or part of our union movement. 
The bill has two Supplementary Order Papers. One divides the bill into the Tariff Amendment Bill the Customs and Excise Amendment Bill the Radiocommunications Amendment Bill the Fair Trading Amendment Bill and the Electricity Amendment Bill and a second one amends clause 2 to state that Parts 1 and 4 will come into force on 1 October 2008 rather than by Order in Council. The Committee is about to debate the Supplementary Order Papers and the bill itself. I commend this bill to the Committee and once again I thank members for their very constructive approach across the political divide in supporting this legislation and the advantages that will flow from it for New Zealanders. 
TIM GROSER (National) 
: 
 First of all I acknowledge amongst the Government’s advisers the presence of my former colleague Dr David Walker. I congratulate him and his team on the assiduous effort they have put in over a number of years to produce this agreement which I described yesterday—and outside the House—as of potentially historic importance to New Zealand’s long-term trading prospects. 
Today as we go through the Committee stage I will start by addressing some of the arguments against the New Zealand - China free-trade agreement and I will start with the political case against it—the linkage with human rights—which I think is very important. Some other arguments of an economic character which I think are fairly weak arguments have been used but obviously in terms of the broader public debate and the media attention it was the linkage with human rights issues that attracted attention. It is important to have some commentary around that to put it into perspective. 
In this respect it is important to define what the difference is for the two main parties and I am sure for some of the smaller parties. The issue is not about the primacy of human rights. I do not want to get involved in a philosophical discussion about where in the hierarchy of human needs human rights stand vis-à-vis things like poverty elimination. The underlying reality is that members of this House are absolutely at one on the absolute importance of proper respect for human rights. I think we would all also have the view that the human rights situation in China is far from perfect. So that is not the issue; the issue is whether we should therefore have turned away at the last minute from this trade agreement because that record is not perfect. On that we have taken the view on this side of the House as has the Government that that would have been a catastrophic strategic misjudgment. 
I want to explain in my own language why I think that is the case. On the first point there is another debate there about New Zealand interests. I cannot recall which great diplomat of the past said this but it might have been Talleyrand: “If you don’t look after your country’s interests no one else will.” But that is not the point we are discussing today. We are discussing whether it is even remotely plausible that not proceeding to trade with a country—and a free-trade agreement is simply a mechanism for accelerating trade between two countries so it does not differ intrinsically from the concept of trading with a country—would in some sense help the position on human rights. 
When we start to drill down into this argument we come across I think a position that is completely implausible. First of all I doubt that there is a country in the world—no doubt including our own—that does not have in some dark corner of the closet some issue in respect of human rights that we would rather not hear about and that would not stand up to close international scrutiny. Fortunately we live in a country where such issues would be few and far between but I am sure that they exist according to the views of many people. So if we were to take the view that we should not form free-trade areas or find other avenues for accelerating trade with countries that have a less than perfect human rights record what would we really be doing? 
For a start I would argue that we would be excluding trade with all developing countries because in some generalised sense it is probably fair to say that few developing countries—as much because of the greater problems of poverty and want that face them at this stage in their development—have a larger measure of problems in terms of human rights than others. We would then turn round and say: “Well what about Australia?”. No doubt there would be people who would stand up and say that they did not think too much of the apology that Prime Minister Kevin Rudd made to the first people of Australia and that we should therefore pull out of the CER free-trade agreement. We might go systematically through all the countries of the world and find that actually there is nobody who meets our high standards and that we should therefore not trade with them. That is the first issue. When we drill down into it I think we come up with a completely implausible position. It is essentially an argument for economic autarchy. 
The second aspect of this putting aside New Zealand’s interests is the question of whether it is even likely that this is the right way to advance human rights. I think then that we have to come down to a view that says this: every country that has gone through stages of development has had serious problems in terms of human rights. We can take our children—or in my case grandchildren—to the Tower of London we can go to see the torture chamber and we can find that this of course is now an object of tourist delight. Well we know that it was not put into the Tower of London as an object of tourist delight and that inside the political antecedents of our very own country are torture gross abuse lack of habeas corpus and the lack of the fundamental freedoms that underwrite a decent society such as we have in this country. So all countries have had this in their past or their derived past if you will. 
The idea that we can somehow suddenly achieve the standard of excellence that some submitters expect in one hit—and only when that standard has been achieved will they be in a moral position fit for a free-trade agreement with New Zealand—is frankly not only ludicrous when one drills down into the practicalities of it but also representative of a fundamental misunderstanding about how this all-important issue of human rights is advanced in the real world. Although I would never want to buy into the argument that in some sense human rights are a relative issue and cannot be divorced from the state of economic development I think it is stretching all the empirical evidence to suggest that there is no linkage between higher levels of economic development and increasing respect for international trade. 
I have never been a believer in trade embargoes not just because of New Zealand’s interests but because I fundamentally do not believe that they work. I have often used the following example. Nobody could think of a more extreme trade embargo to achieve political objectives than the American trade embargo on Cuba that has been in place since around 1957—for over 50 years. At the time when Castro took over power American trade was responsible for 90 percent of Cuba’s exports but there has been a trade embargo ever since. I have always taken the view that if Fidel Castro is a God-fearing man—and he may well be because my understanding is that he was brought up by Catholics and may now be returning to that stage in life where he starts to be a God-fearing man—I would argue that he should be down on his knees every day of his life to thank God for the American trade embargo. I do not believe for one minute that he would be in power if the Americans had overrun Cuba with McDonald’s franchises investment American tourists and American trade. That is why I am deeply sceptical about trade embargoes for political reasons. 
Hon ANNETTE KING (Acting Minister of Trade) 
: 
 It appears to me that members would like to roam widely in this debate— 
Tim Groser 
: Initially. 
Hon ANNETTE KING 
: Well I do not know but I suspect that members would like to be able to raise all sorts of things rather than keep the debate very constrained as it is by the part by part consideration. I seek leave for the Committee to take the bill as one question so members can range across the entire debate. [ 
Interruption 
] It can be as long as members want but it means that members can talk about everything. If the Committee does not want to do that that is fine. I noticed from Mr Groser’s very good speech that he wished to roam widely and I suspect that Mr Hayes would also like to as well as my colleague Keith Locke. I seek leave for this bill to be taken as one question. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Leave is sought to address the bill’s five parts as one question. Is there any objection? There is objection. Before I call the next speaker I say that since leave has been declined that means that the Committee will stick very closely to each part for the rest of the debate. I want members to talk about amendments to the Tariff Act in this part followed by amendments to the Customs and Excise Act. 
KEITH LOCKE (Green) 
: 
 I raise a point of order Madam Chairperson. Mr Groser gave quite a talk on human rights. Given that he was not stopped and that many of his comments were directed partly at the views that the Green Party holds in fairness I think it would be in order for some response to be able to be made. 
TIM GROSER (National) 
: 
 I support my colleague Mr Locke on this matter. I think it is entirely appropriate given the importance of this matter for us to start with some general comments. I am well aware of Mr Locke’s views. I have put forward my contrary view I would like to hear his response and then I think we can proceed with a more technical and detailed examination. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I want to give some considered thought to this matter. It is a problem because of the way that the member actually introduced the matter into the debate. I would really like to confine the debate to Part 1 and members may go to general debate when they come to clauses 1 and 2 at the end. I am sorry but I am now ruling that the Committee sticks as was voted on by members of the Opposition party to amendments to the Tariff Act. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I raise a point of order Madam Chairperson. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I have given a ruling. 
Dr WAYNE MAPP 
: May I draw to your attention Madam Chairperson that we have had a general contribution that was intended to presage more detailed comments and subsequent contributions. That was not objected to by the Government and it seems only appropriate that the Green Party member is also able to address this. I certainly understand the need to stick to the individual parts as you quite rightly say but our denying leave to the Minister’s request was not to suggest that we therefore discuss only individual clauses. This is very important legislation and it is appropriate that we deal with the detail. But before we get to the detail I think that members want to be able to have a general discussion and in particular the Green Party— 
The CHAIRPERSON (Hon Marian Hobbs) 
: The member will be seated please. You are challenging my ruling. I will say it very clearly again: the Committee voted to consider the bill part by part. Members know as experienced members of the House that this is not a general debate. The general debate occurs either in the second reading the third reading or in the debate on clauses 1 and 2. Members chose to do this by voting against considering the bill as one question. I was lenient when I listened to the first speaker. I gave the Committee the choice and the Committee made its choice. We will now go ahead sticking to a part by part consideration of the bill. 
Dr WAYNE MAPP (National—North Shore) 
: 
 Madam Chairperson you have directed us to concentrate strictly on Part 1 and indeed on all the subsequent parts. There was no issue of a vote. Leave was sought and denied and we simply said we would follow the rules. No vote was taken on the issue at all. There was never a question of a vote and I remind you Madam Chairperson that it is not an issue of taking a vote; simply any one member can seek leave. 
Part 1 deals directly with the reduction in tariffs. That is how the free-trade agreement works. What is the purpose of a free-trade agreement? It is to introduce free trade. What stops free trade? Tariffs stop free trade. In the trade between New Zealand and China many goods—in particular goods in the agricultural sector—suffer high tariffs. In addition to that there are typically quotas as well. A free-trade agreement by definition—and under World Trade Organization (WTO) rules—is designed to eliminate tariffs between the parties to that free-trade agreement at a faster rate than would otherwise be the case. Otherwise the parties would be going just by their bound commitments under the World Trade Organization and that would not be dealt with until the Doha round itself was dealt with. In this instance China and New Zealand for strategic reasons as much as trade reasons have decided to go for no tariffs and no tariff quotas on all trade between our nations. That will be achieved by 2019. That is the point of Part 1. That is the very particular legislation being introduced by Part 1—an amendment to the Tariff Act and the tariff codes thereof. 
The remarkable thing about this is that New Zealand First is going to vote against Part 1 because it is not fast enough. One of the things I would like to know from the speakers of New Zealand First is how fast they think it should have been. Do they think there should have been full free trade between our two countries by let us say 2010 or 2012? I guess most New Zealand businesses would say that that would be a jolly good thing. But was it actually achievable? Was it ever likely that China would agree to eliminate all tariffs in 2 or 3 years? No that would be an idle pretence. More particularly New Zealand First knows the truth of that. Those members know that this is actually an excellent free-trade agreement. 
If we look at the history of free-trade agreements we will see that seldom if ever—particularly where agricultural products are involved—are tariffs and tariff quotas eliminated completely within a 10-year period. That is an extraordinary precedent and I congratulate the officials led by Dr David Walker on the extraordinary achievement they made on that. A major country like China with major agricultural potential but vulnerable with its small farmers to trade from New Zealand has nevertheless decided to allow full free trade in all temperate agricultural products or in any agricultural products that New Zealand happens to produce—and we are an efficient producer of agricultural products. That is unlike other Asian nations that are always concerned to protect their small farmers. So China a major agricultural producer is willing to accept full free trade of our agricultural products which will be started from 1 October this year. So the first changes will occur very quickly. 
The committee heard from Fonterra New Zealand’s single largest exporter that it has already concluded arrangements worth $300 million. I also say that one of the things I have always found extraordinary in respect of ministry officials and official ministry documents is that they say there might be an increase as a result of this agreement over the 10-year period of maybe $300 million in trade. I have always wondered how that sum could possibly be so small. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I will take a very brief call because I know that Dr Mapp notwithstanding his very comprehensive delivery to the Committee really wants to get this bill through. 
R Doug Woolerton 
: Rubbish! It wasn’t comprehensive at all. 
Dr Wayne Mapp 
: Well that’s because I only had 5 minutes. 
MARTIN GALLAGHER 
: Well I am sure that Dr Mapp does not need much longer than 5 minutes but that is another issue. 
I want to state the obvious in terms of the fact that we are now confined by your ruling Madam Chairperson to being very focused on each part part by part; that is certainly respected. I join other members in acknowledging the excellent help of the officials and certainly the help they gave to the Foreign Affairs Defence and Trade Committee. I note particularly with regard to clause 10 in which new section 15G is substituted that “The Minister may extend a transitional safeguard measure … if the extension is—(a) consistent with the provisions of the relevant free trade agreement;”—either the China free-trade agreement or the Thai free-trade agreement—“and (b) not inconsistent with New Zealand’s other international obligations.” This seems to me to be crossing the t’s and dotting the i’s and I look forward in view of your ruling Madam Chairperson to our now having a very narrowly focused finite debate. That is the point of the Committee of the whole House and I always adhere to it. The broader sweeping debate will now obviously be confined to the third reading. Thank you. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I will continue to elaborate on the points I was making about the way Part 1 initiates the free-trade agreement by reducing the tariff schedules down to zero by 2019. It is a remarkable achievement by the officials to get that outcome in the negotiations. I note that the Government must take some credit for driving the negotiations in that way. Clearly it takes a high-level push from the Government to be able to drive forward that level of success. I know that the Minister of Trade and indeed the Prime Minister were actively engaged with the Chinese Government to that effect. I think we have to consider just what a tremendous achievement that is. 
I was saying when I was closed off—if you will—that the Ministry of Foreign Affairs and Trade said there would be only a $300 million gain per year in a 10-year period—at least by 2019. I have always thought that that is an absurd proposition. I choose those words carefully. Trade is already worth $2 billion. Is the ministry seriously suggesting that the effect of a free-trade agreement a decade from now will be only 10 percent of the current levels of trade? That does not seem credible because it ignores the fact that it is not just about the potential gains we will get by the tariff reduction of 20 percent; it is actually about the relative advantage we will have over all other nations. 
It is a well-known theory of free-trade agreements that one of the advantages countries seek is not just the growth in trade between countries but also trade diversionary effects from other countries. Although China might currently buy meat grain and dairy products from a range of countries it will now divert that trade to New Zealand because we will have a 20 percent price-competitive advantage over all other nations once the agreement comes into full effect. People act before the reality of that full effect which is why Fonterra was able to get the $300 million deal now in anticipation because the trend is already established. People act on the basis of the final effects not just on the initial effects. 
The second point I make as to why that $300 million gain has to be an underestimate is that once trade is boosted total demand goes up. China is growing extraordinarily rapidly—even now at a rate of 10 percent per annum. Even now several hundred million people are able to spend $10 a day or more on advanced products in China. At 10 percent growth per annum that will increase rapidly and the demand that this agreement will generate in China will be far greater than a simple 10 percent increase in trade over the course of a decade. I predict that within 5 years China will be New Zealand’s single largest market. Trade will be largely in agricultural products but it will also be in services tourism and so forth. 
I say to the Maori Party that Maori organisations understand that advantage. That is why they came to the Foreign Affairs Defence and Trade Committee and were so enthusiastic about the agreement. They saw the potential to grow a market and that is what the reduction of tariff barriers does. It does not just divert trade; it leads to total growth in international trade. If we want a comprehensive demonstration of that we have only to look at the European Union. The establishment of no tariffs right across the European community did not just divert trade from say New Zealand to Britain; it hugely increased the economic potential of Europe and Europe has gained immensely over the 50-odd years since the establishment of that free-trade agreement. This agreement will do the same for New Zealand and China and for other countries that join in as well. It will not just lead to trade diversion; it will lead to a massive and total increase in trade and prosperity. That is the gain of Part 1. 
KEITH LOCKE (Green) 
: 
 I think Wayne Mapp is using parallels that are not particularly appropriate here when he talks about the European Union because the example of the European Union is of economies that are at a relatively similar stage of development. 
Hon Member 
: What about Poland? 
KEITH LOCKE 
: In fact the other principle of the European Union—and there is a call about Poland—is that countries that were seen to be lagging behind a bit at its foundation such as southern European countries or Ireland in some respects were given great assistance by the European Union to level up the whole situation. In that sense whether we are talking about the European Union or about CER where we have two comparable economies the opening of trade and the removal of restrictions—and I am not saying each is perfect—we have a much more positive argument when we are talking about comparable economies. That is so particularly when they are neighbouring economies—in our case separated from Australia just by the Tasman Sea and in the case of the European Union adjacent geographically. 
But it is quite different in the case of New Zealand and China because the wages in China are hugely lower than the wages in New Zealand. Wayne Mapp mentioned business organisations here. I can mention one that submitted to the Foreign Affairs Defence and Trade Committee—namely Earth Sea Sky a clothing manufacturer—which was very strongly against the free-trade agreement for that very reason. It is being driven out of business by the low wages in China and it specifically talked about losing its skills base. The skills base is important for a country like New Zealand. The company said that things like the existing accumulated experience in cutting patterns which is a very skilled trade could disappear. The woman in Earth Sea Sky had her own experience of that. Her group is continuing more or less on the basis of her own experience but with related experience as well. 
That sort of hollowing out of New Zealand manufacturing is not in the long-term interests of the New Zealand economy. We want to have a more rounded economy. Wayne Mapp talked about agricultural exports. It may be that we will get some increase in agricultural exports as a result of this agreement but at what cost to the rest of the economy? I think that is the point. It is just wrong to have this ideology of free trade where somehow everyone benefits regardless of the state of each economy the relative wage structures the specialisations etc. This is particularly the case with an economy as dominant as China’s. China not only has low wages but has heavy Government involvement to make sure it can smash any competition including competition from New Zealand manufacturers and force them either to go out of business or to move their manufacturing offshore. So the comparison Wayne Mapp has made is I think completely inappropriate. 
JOHN HAYES (National—Wairarapa) 
: 
 I have heard some nonsense talked in this Chamber and that speech was a significant contribution in that sense. My colleague from the Green Party Keith Locke talked a load of nonsense. 
But before I climb into that I would like to acknowledge the officials who are here today particularly my ex-colleagues from the Ministry of Foreign Affairs and Trade who are led by David Walker. I would also like to publicly thank Simon Murdoch for his leadership in this process. What has been really good about the process is that it has involved officials from across a whole range of Government departments. It is good to see our departments working together in the same way that we in this Chamber are working across political divides this afternoon. So I extend my congratulations there. 
I was particularly interested in the freedom and latitude you gave the previous speaker Madam Chairperson because clearly he was not in any sense talking about Part 1. Part 1 talks about removing tariffs and amends the Tariff Act 1988. As I said in the House last night—obviously our Green colleague did not hear me—there is no fairer trade than free trade. Mr Locke talked about one of the arguments brought to the Foreign Affairs Defence and Trade Committee and I can talk about a group called New Zealanders with a Conscience that gave us a four-page submission outlining their concerns that the Government would get less income because it was going to drop tariffs and that the Inland Revenue Department would fall into deficit. 
That is a particularly serious problem that our committee addressed and the submitter argued that small businesses would close down as a result of these tariffs being reduced. On page 2 of its submission the group says that the agreement “would cause a great drain on the Government purse”. I really have to say that the select committee members across all parties disagreed that that would be the outcome. The point is that as a select committee we decided that this bill—which I think is the most significant piece of legislation to pass through this Parliament in the last 3 years—will contribute to making New Zealand an open and competitive economy and will give us strong links to the rest of the world. China is showing other countries that it too is prepared to engage more strongly internationally by dropping its trade barriers. 
Trade liberalisation policies go back at least 25 years in this country and the moves that we made with the CER agreement 25 years ago have enabled our economy to be in the strong position it is in today to make these tariff adjustments without having a significant impact on companies that operate in our community. I think that the removal of most tariff and other trade barriers with China as foreshadowed in Part 1 will improve resource allocation in New Zealand contribute to economic growth and also lower prices for consumers. 
My Green colleague has gone but the point about free trade is that no buyers pay more for a product than they want to because if they are asked to pay more and they do not want to pay then there is no transaction. That is a fundamental point not understood by New Zealand First not understood by the Green Party and not understood by the Maori Party and it is really important that the community understands that point. For the same reason the economic adjustment faced by industries will be small compared with those adjustments that would have been required when import licensing existed 30 or 40 years ago—when our economy was protected by high tariffs. I have been around many businesses in my community and of the 20 or 30 people I have talked to only one person has said that bringing tariffs down and allowing cheap Chinese machinery imports is going to be a bit of a problem and have an impact on his business. I am thinking now of Rob Saxton in Greytown the town where I live. He is the Stihl agent and his products are quite highly priced but they are of high quality. Consumers choose whether they go that way or go to Bunnings warehouse and spend $10 or $15 on an instrument that is perhaps less robust. This is what free trade is all about. 
CHRIS AUCHINVOLE (National) 
: 
 My colleague Wayne Mapp said yesterday: “Traders are waiting for us to do our legislative work so they can get ahead and reap the gains of the agreement.” That is very very true and it is with pleasure that I rise to speak on Part 1 of the New Zealand-China Free Trade Agreement Bill. Part 1 is the mechanism that reduces the barriers while at the same time providing safeguards. 
The barriers to trade are very very real when one does not have free trade. I reflect on what the previous speaker said: free trade is fair trade. Exporters do not have an easy task but it is an honourable one and it is one that like it or not the rest of us live by. So what will be the effect of this free-trade agreement? The tariffs on 96 percent of New Zealand’s current exports to China will be eliminated by 2019. Two-thirds of all of New Zealand’s goods will be tariff free within 5 years. What a wonderful opportunity has been created and I would like to add my compliments to the officials to the Ministry of Foreign Affairs and Trade and to everybody who has been working tremendously hard to achieve it. 
There are many ways of penetrating a market. There are probably as many ways of penetrating a market as there are exporters involved in the trade. I reflect back on a career in the Dairy Board. With the difficulties associated with quotas with the endless conflict and with the challenges for access it was amazing that we had the trade we did have—and what an effort it took! 
The task of the free-trade agreement is to reduce and eradicate the unnecessary blockages. So how do those blockages occur and why do we have to have the transitional aspects that occur in Part 1? The blockages generally occur through apprehension on the part of manufacturers and local producers. If we look at the Common Agricultural Policy—which was a huge blockage to progress and everybody acknowledged it was not sensible—we see they occur from fears of privation from fears of starvation from the experience of war and from the experience of countries being unable to feed their people. We go right back to the basic law of the provision of food shelter and clothing being a Government’s first responsibility to its people. So food has always been an incredibly sensitive delicate issue and tariffs were a way of giving protection. They have been used clumsily though. 
When I think back to trading in the Pacific I know that the Pacific offers New Zealand exporters tremendous trading opportunity. We have markets that are operated under French— 
The CHAIRPERSON (Hon Marian Hobbs) 
: China? 
CHRIS AUCHINVOLE 
: Well indeed. But as a precursor to dealing with China if one looks to see how trade is conducted within one’s own local theatre one sees that there are many different ways. I can remember doing a chart of tariffs against particular dairy products—this I am sure will interest my colleague Doug Woolerton. The dairy product tariffs in say Tahiti used to run for line after line after line. They had been built up over an awfully long time which meant that they were hard to reduce and hard to remove. 
So we get to China—was it Napoleon who called it the sleeping dragon—and we look at its tariffs. We see China built a wall around itself—not just a wall of stone but a wall of tariffs. Then New Zealand through its negotiation and its approaches started to penetrate that tariff wall which is where we have come to today. 
New Zealand has enjoyed free trade for a very long time. Having the benefit of grey hair and a bit of experience in life I can go back—and I am sure Madam Chair will remember this—to the pre - free-trade times. The domestic life of New Zealand in the 1960s when we were afflicted with tariffs was one where we had very little choice of goods—very little choice of goods at all. In the 1970s people had plenty of money but there was a shortage of goods. There were import restrictions tariffs export restrictions and all sorts of problems. Nowadays the logistics of exporting and importing are able to concentrate on the real elements of trading rather than the artificial ones. 
Hon GEORGINA TE HEUHEU (National) 
: 
 I am very pleased to take a call on the Committee stage of the New Zealand-China Free Trade Agreement Bill. I have heard the snipes coming across the floor from New Zealand First—my colleague Wayne Mapp referred to them earlier—and from Winston Peters who when this deal was originally signed said that it is not good enough and we need more and I am absolutely waiting for New Zealand First members to take a call and to hear what their objections are all about. 
This free-trade agreement has been negotiated with the overriding objective of opening up economic opportunities for New Zealand business in China. A growing part of New Zealand business is Maori business. As my colleague Dr Mapp also mentioned representatives from Maori business came to the Foreign Affairs Defence and Trade Committee and went through what they saw as the huge advantages for Maori business. 
I want to paint just a little bit of the context. This agreement is historic. It represents a challenge and a huge opportunity for Maori. In the current environment where over the last 10 or 15 years we have seen the quite substantial return of significant fish forestry land and other assets to Maori tribes—and that will continue over the next 10 years—this agreement is a major marker for what will happen going forward. Part 1 of the bill deals with the removal of tariffs. That could not be timelier for Maori business potential as we go forward. 
I think we are all particularly in this House and in the private sector pretty much aware now of the growing asset base of Maori. It is estimated to be anywhere between $9 billion and $15 billion and it is growing—it is huge. We also know that its future is dependent on export—exporting goods to China and to the world. We all talk globally now and free trade is what goes with a global economy. Free trade is absolutely critical and the removal of tariffs and other trade barriers is the core of the free-trade initiative that has started with this and will no doubt grow. 
According to Hui Taumata 2005 Maori enterprises are concentrated in export-oriented areas primary production and processing and about 60 percent of Maori commercial assets are reliant on international trade. This is significant. It is significant because 96 percent of Chinese tariffs and trade barriers will be removed by 2019. That is a huge achievement. That is not far away; it is just around the corner. An example of where Maori interests will benefit is in the fisheries industry with the removal of tariffs imposed by China on products such as live lobster and paua which are currently around 25 to 35 percent. We do not really have to think very far forward to see the immediate impact that this removal will have on Maori business and Maori exporters and certainly for the long term as tribes get their assets and organise their governance arrangements. 
There is a big challenge of course. Treaty settlements were one part of this equation and we all thought that was hard; actually the harder part is coming now. We are on to the harder part now: nurturing those assets growing them creating wealth and making sure we have access to world markets. The market in China is the biggest one could want to be in—the absolute biggest. Maori exporters are already going up into China; they have been for at least the last 5 years in a small way but that is growing. As I say there is no doubt whatsoever that free trade is the hallmark for growing Maori potential in the business and export sector going forward. 
SUE MORONEY (Junior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I think I will grant one more call and that is to Tim Groser. I take notes as we go through. I have listened to the arguments and they have become fairly repetitive and rather wide on the question of tariffs. 
TIM GROSER (National) 
: 
 Madam Chair first of all let me give you my personal assurance that I have taken note of your harsh but possibly just ruling. I shall make carefully targeted points about Part 1 which after all is—to use plain language—the meat and potatoes of the agreement. 
The preferential rates are very important and I will illustrate the underlying point about this in a couple of different ways. First of all we take Dr Mapp’s earlier point about the competitive edge and we look at it in terms of one example that comes to mind which is wine. I stand to be corrected but from memory the most favoured nation rate on wine imported in bottles into China is 14 percent. For a country that enjoys as we do the privilege of having the highest per-bottle price in the world—believe it or not—on the largest wine market which is the London market having this competitive edge will be of considerable benefit. There is absolutely no truth in the belief that the countries in Asia that are seeing the emergence of the middle class will not move into consumption of these products and I think New Zealand wine exporters will benefit enormously from this competitive advantage. That is the first basic point that I make about the tariff reductions. 
The second point is that I want to address some criticisms about the allegedly slow pace. First of all I do not consider it slow at all by the standards of most trade agreements particularly coming on top of the major liberalisation that China itself has undertaken in the context of its accession—or readmission according to the official script—to the international trading system. I use the term “roughly a decade” to describe the overall totality of a complex tiered formula that has been negotiated on tariffs. I do not consider it a long period of time at all particularly when we look at the profiling of our major exports in relationship to that timetable. 
The other point I would make is about the automaticity of this process. In Part 2 we will come to the question of safeguard measures and contingency protection devices which qualifies us a little bit but I do not believe in any important way. When we come to look at the automaticity of this process this is a very very important qualifier to any criticisms about the slow pace. What is quite clear—and we have seen this in a variety of different trade agreements; I saw it 20 years earlier in respect of the Australia and New Zealand Closer Economic Relations Trade Agreement—is that when businesses know what the end point is they can get ahead of that end point and accelerate the process. We had literally within weeks a spectacular example of that in the signing of the deal by Fonterra our largest goods exporter worth some $300 million over a period of time. Fonterra took advantage of tariff reductions that literally had not even come into legal effect for the very simple reason that we are here today in this Committee enabling the legislation to go through to have that effect. 
So already we have seen that this is not theory; this is how the market works. If we put in place what looks to some a modest pace finally—within reason—it does not matter. The automaticity of the process is what matters. Then people can get ahead of the programme as we have already seen. 
The second point is in relation to tariff reductions when we measure them with these econometric exercises. I have been involved in many of these exercises. Although they are highly sophisticated in terms of their methodology personally I do not think they are particularly useful. They omit what in earlier times were called x-efficiency gains by economists—or the dynamic effects in more plain language—and almost always seem to me to understate the importance of the tariff liberalisation process. The mere reduction of tariffs is one part of it but the stimulatory effect in terms of actual company business also matters. 
My own view is that this will have what is called demonstration effects which has been much commented on internationally in the literature around trade agreements and which will be particularly strong in this agreement. The reason I believe this is to do with the Confucian nature of the society we have negotiated this agreement with. When China designates New Zealand as a preferred tourist destination—I imagine that if the Australian Government did that we would all fall around the floor laughing along with our Australian cousins—I believe the signal to Chinese businesses will be considerable. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I raise a point of order Madam Chairperson. I have sought this point of order because you indicated earlier that there would be only one more substantive call. I am aware of the rule that states that once you accept a closure motion that is it and it cannot be contested so it is important that I raise the point of order now. 
I raise it in two parts. The first part relates to the general significance of this legislation. It is widely acknowledged and recognised including by the Government that this is the most significant economic legislation to be passed certainly this year and realistically in this term by this Government. I believe therefore that a proper level of debate is required. Part 1 as we all concede is the core of this agreement. To have a debate that is not even an hour long is frankly not appropriate. The second point is that all of the discussions so far by all of the speakers have actually been on Subpart 1 “Implementation of preferential tariffs under New Zealand-China Free Trade Agreement”. There has been no discussion as yet on Subpart 2 which actually covers six clauses in relation to safeguard measures—virtually no discussion on it whatsoever. The reason for that of course is your strict ruling earlier and we understand why you made that ruling in terms of the Standing Orders. We felt that we should therefore deal explicitly with tariffs in Subpart 1 and then we would move on to deal explicitly with the issues addressed in Subpart 2. To accept a closure motion now would effectively deny members the ability to have any debate whatsoever on Subpart 2 of this very very important legislation. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 It seems to me with due respect that the Committee did have the choice of having a very wide-ranging comprehensive debate in which multiple calls could have been taken. Leave was sought for that and leave was denied. Consequently I understand you then had to go back to the Standing Orders and that you were bound by the Standing Orders leave having been denied. 
The CHAIRPERSON (Hon Marian Hobbs) 
: This is a question of debate. At the moment we have had with all due respect a series of very good lectures but it has not been a debate. The debate has not been joined in the Committee. There was time to go on to Subpart 2 but speakers chose to stay on Subpart 1 and to mention only casually Subpart 2. Very many important laws have gone through this Parliament almost without there having been a Committee stage on them. I therefore will not give members further calls on this part. 
JOHN HAYES (National—Wairarapa) 
: 
 I raise a point of order Madam Chairperson. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I hope the member is not going to challenge the point of order. 
JOHN HAYES 
: I draw your attention to Standing Order 109 the gist of which is that the House is not to anticipate discussion. With the greatest of respect Madam Chairperson I point out that you were not at the select committee and a party to the debates and neither was the Minister in the chair the Hon Nanaia Mahuta. There is quite a number of elements to the Tariff Act that are yet to be discussed. I am ready to discuss them and I wish to have the opportunity to do so. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I am sorry but the member had the opportunity to discuss both Subpart 1 and Subpart 2. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 60 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independent: Field. 
Noes 59 
New Zealand National 48; Green Party 6; Maori Party 4; Independent: Copeland. 
Motion agreed to. 
The question was put that the following amendments in the name of the Hon Phil Goff to Part 1 be agreed to: 
to omit subpart 1 heading and substitute the following heading: “Implementation of preferential tariffs under New Zealand-China Free Trade Agreement”; 
to omit from clause 4 the words “This subpart” and substitute the words “Section 5”; 
to omit subpart 2 heading and substitute the following heading: “Application of transitional safeguard measures and provisional transitional safeguard measures”; and 
to omit from clause 6 the words “this subpart amends” and substitute the words “Sections 7 to 11 amend”. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 17 
New Zealand First 7; Green Party 6; Maori Party 4. 
Part 1 as amended agreed to. 
Part 2 Amendments to Customs and Excise Act 1996 
TIM GROSER (National) 
: 
 I want to address the issue in Part 2 of import certificates of origin and to give a view about the ultimate purpose of this issue. In doing so I might say I apologise to you Madam Chair if this appears to be another lecture but when one has a situation where the Opposition is actually supporting the Government it is very difficult. One might want a vicious disputation but that is not going to happen in the passage of this bill. 
A couple of points are very important to the question of certification. The first relates to the rules of origin and the other relates to the use of the devices of contingency protection—in particular anti-dumping and safeguard actions. Without certificates of origin these mechanisms simply cannot operate. 
In respect of rules of origin there has been a lot of criticism of the free-trade agreement strategy centred on the metaphor of the spaghetti bowl. This criticism essentially says that the proliferation of free-trade agreements is creating impossible administrative obstacles for traders. It is an argument made against free-trade agreements of this type. Personally I have for years believed this to be grossly overstated. I do not think that New Zealand exporters will now be confused in their trading relationships with China as a consequence of the rules of origin that will prevail. In many cases this illustrates a lack of understanding about how administratively in practice rules of origin are actually handled. I do not think this is as fundamental a problem as the critics would have it. We can establish ex post facto through certificates of origin that are provided for in Part 2 what are truly Chinese goods in the case of imports into our customs territory or truly New Zealand goods in terms of the substantive provisions relating to rules of origin. 
The second point which I think is probably more real from the point of view of domestic concerns about this trade agreement relates to anti-dumping measures. Certificates of origin are crucial to safeguard all devices of contingency protection. If there is agreement to apply measures or in some cases not to apply measures to goods of one’s free-trade partner then one needs certificates of origin to establish what the goods are. In the course of the submissions we were told—and it was an echo of the debate one hears internationally—that this agreement will not work because of the provisions relating to unfair trade. It is very important I think to define the concept of fair and unfair trade in traditional terms. In this 5-minute call on Part 2 I will not get involved in a broader discussion of the swampland territory we would get into if we expanded beyond the traditional definitions but I will focus on anti-dumping. 
Certainly it is fair that our companies need protection from dumped imports. We have a longstanding procedure in this country to deal with this and I just want to address the criticism that the free-trade agreement will not work. That criticism is entirely misplaced and in the course of this inquiry we asked for some very simple but very powerful analysis to be produced on the application of anti-dumping orders to goods of Chinese origin not just in our customs territory but around the world since China joined the World Trade Organization in 1995. 
Far from substantiating the critique: “Nobody can apply anti-dumping orders to China.” we found that 27 countries—a mix of developed and developing countries including our own—have applied anti-dumping orders or anti-dumping measures to goods of Chinese origin and in each case they would have been required to apply certificates of origin of the type provided for in Part 2 of this bill. Even more important in only one case did the Chinese authorities choose to contest this and as at the time of drafting the select committee report back that was still in the process of going through the World Trade Organization dispute settlement procedures which as members would be aware are highly complex. In other words all but one of these 327 measures have been applied successfully. I think we should have every confidence in the provisions. 
CHRIS AUCHINVOLE (National) 
: 
 The legislation that kicks open the door to the future does not in itself furnish the room beyond. When I looked at Part 2 I thought that this is a very good safeguard measure that has been introduced. Certificates of origin perhaps seen just as a bureaucratic part of an export job are far more than that. 
I remember having a discussion on certificates of origin and the need for them particularly on generic products like consumable butter and that sort of thing. We were designing a new wrap for New Zealand butter and it had to comply with certificates of origin; the French customer in this particular case required the word “beurre” on it. The question from the product division was why butter is butter and we responded: “When did you last buy a wrapped product without English on it?”. We like to see we like to know what we are purchasing and increasingly we like to know where it is from. That is very very important from a consumer’s point of view. 
Keith Locke 
: That’s right. 
CHRIS AUCHINVOLE 
: I know that parliamentary colleagues in the Green Party are making a particular thing of this. 
My colleague Wayne Mapp mentioned stickers. Well there are stickers on apples. I do not know how one shows a certificate of origin on an egg although I have seen stamps on eggs; it can be done. But a certificate of origin is far more than just a stamp of origin. It carries the essence of the country of production with it. In the case of New Zealand it is a brand in itself if one has a certificate of origin. It is a protection for the producer it is a protection for the consumer of the goods and it is a protection for the carriers who transact the export of those goods. 
In reading Part 2 which amends the Customs and Excise Act 1996 and having been involved in export for a while I wondered why we had to have a particular certificate of origin. The answer I guess is in new section 64A(3) to be inserted by clause 14. It specifies: “Goods originate in New Zealand if for the purposes of the China FTA the goods satisfy the requirements of the rules of origin prescribed for the China FTA.” If I have it wrong I would be grateful if the Minister would take a call and explain. I gather there are particular requirements that the certificate of origin meets. 
My colleague Tim Groser who has phenomenal experience of this issue talked about anti-dumping protection. I would agree with him that rather than go into the swampland of discussing that in detail I think there is a case for accepting that there is a measure of protection through the certificate of origin purpose. I think what we are seeing here is a further example of free trade being free but also being protected in the best sense because exporting and importing is not just a matter of transacting. 
I used to explain to the troops as we called them as we went about our work that what the customer wants is not really lots of advertising and negotiation on price. What the customer—the end distributor—wants is the goods he ordered on the vessel he nominated at the agreed price but overall more than anything else he wants the correct certification because it is in fact the documents that are being exchanged. The goods follow along in good faith as does the money but the documents form the crucial part of any transaction of an export nature. We are blessed in this country with a Customs Service that has obligations to the country and to the international linkage with other customs services—which of course sometimes comes as a surprise to exporters. 
KEITH LOCKE (Green) 
: 
 I am glad that Chris Auchinvole has talked about the importance of knowing the origin of products and that we have had all this talk about certificates of origin. That is very good but it seems to me that certificates of origin are only the first step. Sure it enables the country of China to find out that the goods are coming from New Zealand and to get that legitimation and vice versa—and hopefully we will get certificates that these goods are genuinely coming from China—but that is for the bureaucrats. The bureaucrats will know that but what about the people? This Government supported by the National Party has refused to adopt the Australian procedure of having compulsory labelling of the country of origin on food products. It absolutely refuses to go along with that and surely that is in contradiction to everything that the National Party speaker has just said. 
Sue Kedgley had a member’s bill which was supported by the Maori Party and New Zealand First to enable us to be in tandem with Australia. It would have offered consumers—in this case Australian and New Zealand consumers—the choice between particular products based on their country of origin and also the choice to have the right to do so. When we raised those issues in Parliament we got lectures from Annette King and Phil Goff who said that it was only a question of food safety. They said that the Government guarantees food safety that anything coming from China or anywhere else is guaranteed to be safe and that that was all we needed to know. We said that consumers have a right to know and to make a choice on whatever basis they liked. Consumers might not like the human rights situation in the Sudan or Zimbabwe and they might make a choice on that basis if they wanted to. 
So even though the National Party talks about freedom and all the rest of it it will not allow the citizens of New Zealand the freedom to choose on any basis they want whether they accept the product in terms of its country of origin. It is a basic democratic right. 
Chinese garlic is already coming in and selling at a few cents a bunch and it is completely undermining the New Zealand domestic product. Most consumers when buying that garlic do not know it comes from China and they do not know about the conditions it is produced in. They do not know which toxic materials may be associated with it. They know nothing about that because it is not labelled and they should have the right to have it labelled. 
Why should we be against the Australian position—the democratic position in Australia—on this question? It just shows that this free-trade agreement is not about helping the New Zealand people to make proper choices or anything else. 
John Hayes 
: I raise a point of order Madam Chairperson. The debate we are hearing at the moment has nothing to do with Part 2. 
KEITH LOCKE 
: Speaking to the point of order Madam Chairperson this part is all about this issue. Chris Auchinvole went on in his speech about certificates from the country of origin. My debate is that this should be extended and complemented by having consumers know that fact as well as the bureaucrats. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I actually heard and said to the Clerk beside me that the member was taking the debate wider than the certificate of origin as it applies to this free-trade agreement but he had begun with Part 2. I now ask the member to come back more closely to Part 2. 
KEITH LOCKE 
: I will accept your judgment Madam Chairperson. But members should recognise that in the Green Party’s view one cannot separate the question of certificates of origin that are provided to the State machinery in another country from that of the certificates of origin—that is stickers on the food or on the basket of food—that are available to the New Zealand people. 
We could if we wished move an amendment to the effect that these certificates of origin be complemented with a requirement for them to be made available to the people of China perhaps or be made available on Chinese goods being bought by the people of New Zealand through having just that additional bit. I am sure the amendment would be supported by the Maori Party and New Zealand First. It does not need to be the whole certificate but just a little label stating perhaps the abbreviation COI—that is certificate of origin—and the word “China”. It is not a very long word to put on a label: C-h-i-n-a. That could be done so that the procedure does not stop at the level of the State bureaucracy. I think that possibly over the dinner break we might be able to work out a little amendment to that effect although it may be too difficult in that short time. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I was going to talk specifically about Part 2 and about the purpose of Part 2 which I might add is an imposition on the New Zealand manufacturer. This is a change to New Zealand law actually not to Chinese law and it is worth remembering that point. It is worth thinking about the origin of certificates of origin. That point has been addressed significantly by Tim Groser and Mr Chris Auchinvole and addressed tangentially I guess by Mr Keith Locke. 
The whole point of a free-trade agreement is that it regulates trade between two particular countries. That is axiomatic obviously. But we have to know whether the products came from those two countries and to know that the countries do not act as trans-shipment points for products from other countries that would then seek to take advantage of the free-trade agreement and to have a covert free-trade agreement using the good offices—or indeed the bad offices—of one or other of the countries. Certificates of origin are about authenticating that goods have come from one country and are going to another country. 
Historically under the GATT and the World Trade Organization this has been measured by way of percentage. Goods have had to have a minimum of 60 percent which was subsequently changed traditionally to 50 percent and then 40 percent as manufacturing became increasingly globalised. Most manufactured goods for instance would consist of products from literally all over the world and the original view of 60 percent simply was unsustainable. Many goods would have a much greater percentage of overseas inputs so the percentage went down. That is not the contemporary way because as globalisation has further developed what is being looked at now is not so much percentages—which are increasingly hard to measure anyway; they would impose huge compliance costs on the manufacturers in New Zealand and would in many respects negate the advantages of having a free-trade agreement—but the transformation of the goods the process that occurs in the manufacturing of the goods. 
The question is whether a process has occurred through the New Zealand manufacturing that would therefore entitle the goods to have a new origin. It is not about percentages but about whether a manufacturing process has taken place. The same rule now exists in CER and I recall that that was not the case originally. So free-trade agreements have had to evolve as we have had much more global trade. 
A huge number of elaborately transformed goods as the term used to be known consist of goods from literally all over the world and measuring percentages is extraordinarily difficult. That is particularly true of a country like New Zealand. By definition we do not have a comprehensive manufacturing base where all inputs could be sourced in New Zealand and there could be a high degree of reliability that we would reach the 60 percent or 50 percent of whatever is being made. But we can easily identify whether a process has occurred in New Zealand. That is easy to measure and easy to police for both the New Zealand authorities and for that matter the Chinese authorities. 
Looking at it from the other perspective of New Zealand’s importing goods from China there are the same rules. It does not really matter so much because China has a comprehensive industrial structure where basically all the inputs will be manufactured in China and there is a high degree of reliability that the goods exported from China to New Zealand will be Chinese. That is not the case with New Zealand. 
Of course members will note I am talking primarily about industrial goods. Agricultural goods by definition are different. It is relatively easy to determine whether goods are sourced in one country. Even though the labelling may not have to be in the store from a customs point of view it has to be demonstrated that the goods were sourced from one country or another. If we take the situation of agricultural exports from New Zealand to China we still have to be able to demonstrate that the goods actually originated from New Zealand. 
JOHN HAYES (National—Wairarapa) 
: 
 I will speak in the context of Part 2 and follow my colleague Dr Mapp and the assertions he was making. I thought it might be interesting to consider Part 2 where we are amending the Customs and Excise Act 1996 in the context of agricultural produce. For example when I was ambassador in Iran one could find kiwifruit but they were of a particular size and shape that was not quite the same as kiwifruit that originated in New Zealand. One could find wool being passed off as New Zealand wool and Chinese meat in the Iranian market being passed off as New Zealand lamb. The point about the certificates of origin is that they guarantee to the importing country the source of the goods—that the goods had originated there. So in following this process through in these amendments to the Customs and Excise Act foreshadowed in Part 2 we are protecting the interests of New Zealand agricultural exporters. 
It is easy to produce a pound of butter and put a wrapper around it asserting that it is made in some other country. I do not particularly want to finger countries but I promise members that it happens. Other documentation is required also as part of this process—for example halal certificates certifying that meat shipments are of animals killed in the appropriate Islamic fashion. We are giving the importing country—in this case China—a level of satisfaction that the products entering their market under the certification of the New Zealand authorities are what they say they are. In the same way there will be a similar process at the other end of this telescope in China where the Chinese system will be working to give us exactly the same guarantees and certificates so that we can have satisfaction in this market that we are getting products from China. 
In this general context of Part 2 at the select committee we got a submission on this bill from the Christian World Service expressing concern. The Christian World Service felt that poor countries always start on the back foot in trade negotiations which were it said carefully controlled by the richest countries to further their own interests. Well whether a country is rich or poor I think every country works to advance its own interests and we are doing that in the context of Part 2 and the rules we are implementing which will enable those guarantees to be given. The Christian World Service felt that the communities it was working with—for example in the Philippines and Mexico which are increasing agricultural production to feed their people—had seen large-scale migration off the land. But that has nothing to do with the issues we have had to consider under Part 2. It seems to me that we are actually helping other developing countries particularly those around the Chinese border—for example Cambodia and Thailand—so that when products get exported to us from China we know that they have come from China and have not slid in under a barrier from another country that might have lower costs of production than those found in China. 
Hon Member 
: Is that possible? 
JOHN HAYES 
: Yes that is absolutely possible and I have seen it. I think the other parts of Part 2 are relevant—for example new section 64B inserted by clause 14 where we are establishing “Bodies authorised to issue New Zealand certificates of origin”. This is fundamentally important because we need to guarantee to the buyers in other countries that proper process has been followed and that New Zealand as a reliable trading partner needs to have these certification systems in place in a way that gives confidence to our overseas buyers. I think we fully support those arrangements. 
I will come back to the point that our Green colleague was discussing in terms of threats to products like garlic which I think he was talking about. What is really important is that as we move forward with our trade and advance arrangements with the Chinese community increasingly we will have to put into our agricultural processes the systems that can identify the suppliers of products. 
Hon GEORGINA TE HEUHEU (National) 
: 
 I follow my colleagues in speaking on Part 2 which makes amendments to the Customs and Excise Act 1996. Under clause 13 the part provides “for a system of issuing New Zealand certificates of origin in relation to goods being exported to China under the Free Trade Agreement between the Government of New Zealand and the … People’s Republic of China”. 
This is a very important part and I take issue with the Green member who said it was just all about what bureaucrats did. I do not think I am misrepresenting him—at least I hope not—but I took that to be what he was saying and then he said that these provisions were really of no importance. But we have Minister Mahuta in the chair and she as much as anybody knows the importance of the mark of a product the essence of a product. Of course Maori have something similar in terms of our cultural products with the Toi Iho mark which gives a guarantee of quality of high craftsmanship and also of some of the wairua that has gone into those products carrying that mark. 
Immediately it is easy to see why this part is so important. I would be interested in the Minister taking a call just to confirm and reaffirm how important this part is and that it is certainly not just about bureaucrats and what they have to do; it is about a guarantee of quality. In that sense it is a protection for the product it is a huge protection for the consumer—the buyer—and it is a protection for those whose transactions send goods by way of export between the countries involved. As I say it is somewhat like Toi Iho. 
Yes this is about free trade. It is about boosting our ability to trade with other countries around the globe and to remove barriers that inhibit free trade. But it is not about open slather either and we owe it to New Zealanders in the first place and to all those who will be buyers and consumers in China that there is a brand attached to our products that gives all those people an assurance of the quality and of the essence of those products. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
The CHAIRPERSON (Hon Marian Hobbs) 
: We are debating Part 2 of the New Zealand-China Free Trade Agreement Bill. By agreement of the Committee we are considering this bill part by part which has necessitated a narrow debate on each part. The option was offered to the Committee of having a wide-ranging debate; that leave was refused so we are applying the rules of debate quite strictly. There have been six speakers on Part 2 and the final speaker was the Hon Georgina te Heuheu who has 43 seconds remaining. She is not here so are there any other speakers to Part 2? There are not. 
A party vote was called for on the question  
That Part 2 be agreed to.  
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 16 
New Zealand First 7; Green Party 6; Maori Party 3. 
Part 2 agreed to. 
Part 3 Amendments to Radiocommunications Act 1989 
The CHAIRPERSON (Hon Marian Hobbs) 
: This debate includes the Minister Hon Phil Goff’s amendments set out on Supplementary Order Paper 215. 
TIM GROSER (National) 
: 
 I will take a brief call on Part 3 “Amendments to Radiocommunications Act 1989”. According to my understanding the purpose of Part 3 is identical in a sense to Part 5 “Amendments to Electricity Act 1992” in that they are the two principal Acts affected by the mutual recognition agreement covering electrical and electronic equipment. I will make brief comments about some aspects of the agreement in relation to Part 3 and when we debate Part 5 I may take another call to look at some other aspects. 
This is a highly technical subject and we should be aware that this debate is linked to deep concern not just in New Zealand but right throughout the world about the relationship between standards and international trade agreements. Some people popularly refer to such agreements—deeply misleadingly so—as a “race to the bottom”. The opponents’ view which is a complete misreading of what this agreement is about is that by entering via the globalisation framework into trade agreements of this type countries like New Zealand or the United States are in some way agreeing to lower their standards to those of other countries—in this case a very large developing country—and that that is “appalling”. That is actually a completely wrong interpretation of what this agreement is about. 
In terms of both the mutual recognition agreement and the broader context of the World Trade Organization and other trade agreements there is nothing to stop New Zealand adopting the standards it wishes to adopt in relation to consumer safety. There is no race to the bottom. There is no reason for New Zealand consumers to be even slightly concerned that this trade agreement will in some way mean a lowering of safety standards on electrical and electronic equipment—far from it. As far as I am aware—obviously I lack technical expertise in this area—we have standards equal to anywhere in the world to protect New Zealanders from poor wiring. We all know we are talking about something that is—potentially—literally lethal. I assume—because I am not aware of a large political debate in this country over this issue—that we have quite adequate safety inspection systems in place. I know that we have issues relating to poor wiring in terms of electrical fires but I am not aware for example of children routinely being electrocuted while opening the fridge which is fundamentally what this issue is about. When we debate Part 5 I will make some other comments about the whole concept of mutual recognition because it is a very interesting feature of the agreement. I have to say I am surprised in the pleasant sense of the word that we have come to an agreement given some of my own experiences in negotiating mutual recognition agreements. It is quite a credit to the negotiators that this agreement is in place. 
The remaining point I want to make relates to the competitive edge that this agreement gives to New Zealand in terms of the recognitions relating to the conformity assessment processes. As I understand the agreement this will be a first for China. Of course in that sense the whole agreement is a first for China—not in terms of all countries but in terms of developed countries. It is not quite correct to say that China has no other free-trade agreements but this is certainly the first in respect of a developed country. The agreement relating to Part 3 “Amendment to Radiocommunications Act 1989” is indeed a path-breaking effort by China in its first attempt to do this with a small but sophisticated country. We should be very pleased that this agreement is being taken forward. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I will just develop the point that was being made by my colleague Mr Tim Groser who of course brings an enormous level of experience to international trade negotiations. One issue that has come through in amendments to Part 3 has arisen because there was some fear by submitters that through this agreement we would essentially be allowing the importation of dangerous electrical goods from China into New Zealand. It seemed to me at the time that those people were misunderstanding the role of international trade. 
I ask the Committee—and I put this to submitters—how successful China would be if it established a reputation as an exporter of dangerous electrical goods to other countries. It is in China’s interests to demonstrate that it is an exporter of high-quality goods and by and large it has been successful in that. We have only to go to any electrical goods store in New Zealand to find a wide range of Chinese-manufactured electrical goods such as television sets radios DVD players and so forth. In fact China is already one of the world’s largest—if not the largest—manufacturer of television sets. Those sets are mostly not for local consumption; they are mostly for export. A significant number of Apple iPods are manufactured and assembled in China. The truth is that global companies are increasingly using China as a manufacturing base. Quite clearly high electrical standards are required. 
In this instance we are talking about a global trading nation that produces goods of a standard that is safe for New Zealand. I am not suggesting there have been no problems at all—in particular there have been problems in relation to lead paint in toys. But those things are still covered by our safety regulations. Just because we have a free-trade agreement that does not mean we will completely abandon all standards around phytosanitary rules product safety rules and so forth. Countries still have to comply with those rules but this is a particular recognition in relation to electrical goods. 
I know that my colleague Mr Groser very very carefully discussed the nature of the agreement with members of the Government and former colleagues within the ministry. He made a formal recommendation well before the agreement was signed that that part of the agreement was satisfactory for the protection of the consumers of New Zealand. So what we are doing here today is passing that mutual recognition into legislation. I am suggesting and indeed saying to New Zealanders and to members of the Committee—particularly to those parties that are opposed—that this is not a reason to vote against the agreement. To be fair I have not actually heard New Zealand First oppose the agreement on this particular point. It has opposed the agreement on other points but not on this point. The Greens have raised the issue from time to time and Mr Locke raised it in Foreign Affairs Defence and Trade Committee. I will certainly be anticipating their future contributions. 
It is a curious thing that this debate has been going for approximately 2 hours and virtually all the contributions have been made by National members. We think that this is an important agreement. We understand that there will be a third reading tomorrow and we wish to facilitate that process—we want this agreement to pass into law. But I must say I am surprised that parties that are opposed to the agreement have not been taking calls. Surely the people’s Chamber is where parties might actually set out their arguments as to why the agreement is not beneficial for New Zealand. I have to ask those three parties whether they are a little bit embarrassed about not supporting this agreement. It is widely supported. 
Peter Brown 
: Will the member get back to the part? 
Dr WAYNE MAPP 
: It is rightly supported and I say to Mr Brown that this is not one of those parts of the agreement that he need be concerned about. There is safety for New Zealand consumers based on this acceptance of the standards. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Just before John Hayes takes the floor I wonder whether we could really concentrate on what Part 3 actually says. I ask the speakers to read the part. It is actually about New Zealand conformance not Chinese conformance. 
JOHN HAYES (National—Wairarapa) 
: 
 Thank you very much Madam Chair but I would draw to your attention that there is a mirror-image process going on in the Chinese system so that the two sides of the telescope actually connect in the middle. It is of course a minor point. I will address the question that you put to the Chamber which is the question of Part 3. I would particularly like my colleagues in the New Zealand First Party the Maori Party and the Green Party who oppose this bill to look at this document:  
New Zealand - China Free Trade Agreement (And Associated Instruments): National Interest Analysis 
. I doubt that anyone in this House with the exception of those on the select committee will have taken the time to go through that document and to work out what it is talking about. I would particularly like to draw Mr Brown’s attention to page 15 and paragraph 3.1.4 of that document which talks about the need to make sure that our technical regulations in New Zealand—that is that the electricity supply will be 240 volts and so many cycles and have so much insulation—do not constitute a significant barrier to trade in a similar way to tariffs. 
Without formal arrangements it is difficult to engage with other countries at that technical level which is why this bill includes Part 3. What we are trying to say here is that our technical experts in China and in New Zealand need to have a mechanism for meeting together to discuss issues between them. In my electorate where people have recently invented a machine for monitoring milk production through the use of electronic eartags so that for example one can predict mastitis before it becomes a clinical problem one needs to get people on both sides of this trade agreement having common rules and understanding that this equipment satisfies rules in China. If the Chinese people feel they do not then one needs a mechanism for dealing with the debate. Because of that we have to make amendments as required here in Part 3 to the Electricity Act 1992 and the Radiocommunications Act 1989. 
This is the Radiocommunications Act part of the arrangement and it is to create regulation making powers to enable legal action to be taken against people who do not fulfil the requirements of international obligations while purporting to do so and to provide for the seizure sealing or impounding of products in cases of non-compliance with the requirement of the two Acts including in relation to the Environmental Risk Management Authority. This is done in part by Order in Council and also by the Radiocommunications Act 1989. It will enable legal action to be taken against people who break the rules. That is the function of this legislation that we are debating now. It is in the New Zealand communities’ interests to do this. [ 
Interruption 
] I realise that Mr Brown does not have any constituents at least in an electorate sense but I can assure him that if he was an electorate MP like me and if he talked to people and represented their views he would know that Part 3 is a significant benefit to them. I urge New Zealand First members to really think about what they are doing here and to support this element of the bill even if they do not support the whole concept. Opposing this is actually working against the interests of every New Zealander. That is why I say to Mr Brown 80000 people have left the country in the last 12 months—45000 of them to Australia. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Back to the bill please. 
JOHN HAYES 
: It is because we have poor government. That is why in Part 3 we are acting to make sure that our community has good rules and that the community will feel good about living under them. People feel threatened by this legislation we are passing but I say to them that there is no need for that. If those who opposed the bill had actually read this national interest analysis they would see that there is absolutely no way one could oppose Part 3. 
The question was put that the amendments set out on Supplementary Order Paper 215 in the name of the Hon Phil Goff to Part 3 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 3 as amended be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Part 3 as amended agreed to. 
Part 4 Amendments to Fair Trading Act 1986 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to take a brief call on Part 4 “Amendments to Fair Trading Act 1986”. I particularly want to discuss two clauses in this part: clause 21 which deals with the purpose of this part and clause 23 which deals with a new section to be inserted. Members may wonder why I am taking a call on this particular part given that it concerns quite a tight piece of the Act. Part 4 deals with cooperation in the field of conformity assessment in relation to electrical and electronic equipment and components. 
Once again members may wonder why I am taking a call on that particular part. It so happens that I have two companies in my electorate—two somewhat successful businesses. One goes by the name of Vectek Electronics and the other goes by the name of Future Products Group Ltd. Both these companies are involved in the manufacture and export of electronic products. Both companies will be involved in manufacturing and exporting these products to China and both will be affected by those particular clauses in terms of ensuring that they conform with the requirements relating to electrical and electronic equipment. 
I will start with Vectek Electronics which is an amazing business—a phoenix out of the ashes of PDL Electronics from Napier. PDL Electronics was led by a gentleman by the name of Keith Valentine who has been quite a visionary in Napier and in New Zealand circles in terms of electronics manufacturing. He is an amazing gentleman who started the company pretty much from nothing. It is now a business that makes over $20 million from the export of electronic products throughout the globe—to America to Korea to Japan and to China. 
It is interesting that one might not think this business would be able to compete in those markets but it produces power smoothing equipment in the electronics area. Power smoothing is used in factories in Korea and China that produce superconductors and microchips. Those factories require specific power smoothing because as members may be aware there is an abundance of power in China and that power is highly volatile. It requires significant smoothing to ensure that the power delivered into the factories is smooth and that the equipment used to manufacture microchips does not fall over all the time. 
Vectek Electronics is an amazing business that will be affected by Part 4 particularly clauses 21 and 23. It will have to make sure that the power smoothers it manufactures in Napier and exports to China conform to these standards and make the grade. I believe that as a result of the free-trade agreement Vectek Electronics will be in a much stronger position to grow exports from New Zealand and to grow wealth jobs and income in Napier. It is an amazing business. 
The second business is called Future Products Group Ltd. It was started in 1992 by a gentleman by the name of Rob Darroch. It started with two carpenters who were producing supermarket checkouts. This company is now an amazing business that has grown significantly. It currently has exports of around $25 to $30 million and it has a vision of achieving exports to the value of $50 million over the next 5 years. It started with supermarket checkouts but it has now moved into refrigeration units and the electronic equipment behind refrigeration units. It has done a lot of the McDonald’s supermarket franchises. In fact it is now one of the four McDonald’s outfitters in the South Pacific particularly for the McCafés. 
The company has had an opportunity to produce up to 500 McCafés on the west coast of America but within Napier and New Zealand it is unable to meet that demand. So it is now looking at joint manufacture in China of some of the refrigeration units and at exporting some of the product to China in order to add to the manufacture and take up some of its export opportunities. As a company it will also have to deal with Part 4. It will have to make sure that it is conforming to the electrical and electronic equipment standards that are required for export under this free-trade agreement. I think this is a great opportunity for those two companies and I thank you Madam Chairperson for the opportunity to speak. 
A party vote was called for on the question  
That Part 4 be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Part 4 agreed to. 
Part 5 Amendments to Electricity Act 1992 
TIM GROSER (National) 
: 
 Essentially we are dealing with the same underlying issue. This part is enabling legislation to make changes to the Electricity Act 1992 in order to allow the concept that we have been discussing under Part 3 and Part 4 the mutual recognition agreement to take place. So let us quickly rehearse the key point here. This is not about adopting China’s standards; this is based on New Zealand standards. But we are relying in this particular defined area on conformity assessments that the New Zealand standards in respect of imports from China have met the requirements of our own Electricity Act—and vice versa in respect of Chinese standards which are often based on similar international standards. Therefore it is taken as read that our exports are consistent with Chinese standards before they leave the shores. 
That has a number of advantages for our exporters and we heard two excellent examples of that from my colleague Mr Tremain. I am familiar with both of those companies. They are the sorts of knowledge-type companies that this country so desperately needs. Of course we would like to see some of them step up in terms of scale. Frankly in order to transform our country we need to have only about 20 Fisher and Paykel Healthcares if you will—I could use another example—to utterly transform this country and get it back into the top league of developed countries. That will be done by small steps including through this very important agreement to provide the best possible framework for the future export growth of those companies which are based on the creativity of New Zealanders that all of us in this Chamber know exists up and down the country. 
The second point I would like to make is that Part 5 is not just about the New Zealand regulations; it is also about reciprocity—the export of New Zealand. If we look at clause 28(2) and (3) we see specific reference to exports from New Zealand “pursuant to the Conformity Cooperation Agreement”. Clause 28(2)(b) adds some definition to that as does clause 28(3). So we are talking about a reciprocal agreement of mutual benefit to both parties to the free-trade agreement. 
China now seems to have acquired the title “the workshop of the world”. It is an intriguing title when one reflects on the fact that a little more than 200 years ago that title was given to the first country ever to make the transition from an agrarian to an industrial base the United Kingdom—the workshop of the world it was then known as. Now we have a new and giant contender. We will be relying on Chinese electronic goods for many purposes in our own country over the next 25 years as a simple reflection of that fact. 
I do hope that this agreement provides New Zealand consumers not only with greater assurances but with the right sort of framework to see cooperation of an overtly commercial nature develop of the type Mr Tremain was indicating in respect of voltage regulators. The voltage regulators used in semiconductor factories are the most sophisticated types of regulators that exist in the world given the fact that each semiconductor factory requires investment these days of between US$4 billion and US$6 billion. So voltage change is a fundamental issue for those companies and it is great to see a New Zealand company has stepped up to the mark and is working with a giant electronic industry in East Asia and particularly in China. I have no doubt that this agreement will help companies of that type. 
I will make just a few observations about the underlying concept of mutual recognition because I think it is a difficult concept to grasp. It is really an alternative to business harmonisation policy in trade agreements. Once we have dealt with the first-tier issues of overt frontier protection then we try to work out how to reduce barriers to trade by measures behind the frontier. This concept is of that type. 
JOHN HAYES (National—Wairarapa) 
: 
 I am now speaking on Part 5 “Amendments to Electricity Act 1992”. This is very similar to—it is almost a mirror of—Part 3 which deals with radiocommunications but this part clearly influences issues around electrical machinery. The point of it is to create regulation-making powers to enable legal action to be taken against persons who do not fulfil the requirements of international obligations while purporting to do so and to provide for the seizure sealing or impounding of products in cases of non-compliance with the requirements of the two Acts. This also operates through an Order in Council and surely my colleagues in New Zealand First United Future the Green Party and the Maori Party would understand that it is in the interest of New Zealand consumers of electrical products— 
Hon Peter Dunne 
: We’re in favour of the bill. 
JOHN HAYES 
: —sorry; I thought the member’s party was voting against it—and exporters of those products to have that legal safeguard.  
As my colleague Mr Groser has pointed out we are dealing here with a tier-two issue. The trade remedies section of the free-trade agreement has preserved New Zealand’s rights to apply safeguard measures within the World Trade Organization’s umbrella arrangement. That allows either China or New Zealand to address situations where serious injury to a domestic industry is caused by increased exports due for example to reductions in a tariff or non-tariff barrier. China already has a very significant share of our export market and our import market and the drops in our trading barriers really since the mid-1980s have meant that none of the provisions in this bill will have a significant impact on small to medium-sized businesses in New Zealand. So I think there are really significant strategic gains for our country to be had from the adoption of Part 5 and the legislation in it.  
I really urge my colleagues in the Green Party to think about what they are voting against here. They are actually voting against the interests of New Zealand companies and New Zealand citizens. Why would they do that? New Zealand citizens elected them to come here to this Parliament to represent their interests. I cannot see that in a technical matter like this those members can possibly vote against what is being suggested.  
The technical cooperative mechanisms will be needed to minimise the impact of regulations on trade and this process will also enable dialogue between our countries. Both countries will get a much better understanding of arrangements between them because they will have mechanisms for discussing issues that may be concerning them. So I think that Part 5 is effectively a mechanism that will reduce transaction costs for our merchandise trade because both countries will harmonise their requirements or make their requirements the same. In the process of recognising an equivalence of the other party’s technical regulations our regulations and the Chinese regulations will become the same. That conformity between our two countries has to be good; it actually has to be to the benefit of our communities.  
I think that Part 5 provides a particularly good example of that second-tier benefit to our community and I urge the Green Party the Maori Party and the New Zealand First Party to support this part of the bill even if they cannot support the overall concept of the free-trade agreement. Thank you. 
KEITH LOCKE (Green) 
: 
 There was an article in the  
Independent 
 just last week headed “Hidden hooks emerge in China FTA” and I think the article does relate to Part 5. It is about standards—in this case standards for electrical goods—and one chap by the name of Andrew Little who is the national secretary of the Engineering Printing and Manufacturing Union is quoted here. I note that he is a member of the Labour Party and in some minds is pencilled in to be a future leader of that party. But he is rather concerned about some of these fish-hooks. 
Andrew Little is worried and he says his sector is worried about the ability of employers and unions to verify and authenticate the qualifications of temporary Chinese workers. Instead of the Chinese industries being worried about New Zealand exports of electrical goods to China being in conformity with their standards which this part is all about they could say they will take over a New Zealand company run it themselves and import all the Chinese standards here. But as Mr Little says the quality of the work might not be up to our standards if we cannot check properly the skills of the temporary workers who are to be allowed in under the free-trade agreement. There is a quota being allowed in and who knows really? 
The standard of the skills can change in our regulations but there is a clause in the treaty saying that if the skill standard in the New Zealand skilled migrant programme is raised for say electrical manufacturing workers the old standard can continue to apply for up to 3 years to the quota of Chinese skilled workers who are to be allowed in. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Mr Locke you are actually straying away from the part. 
KEITH LOCKE 
: No it is to do with keeping in conformity with the standards for the export of electronic goods to China— 
The CHAIRPERSON (Hon Marian Hobbs) 
: Yes but not to do with the skills. 
KEITH LOCKE 
: In the case of Vector Wellington Electricity Network the lines section of the electrical system has already been taken over by a Chinese firm and that could well be extended into the manufacturing industry. That is a problem. Fletcher Construction chief executive Mark Binns in this article is also worried about the competition from cheap Chinese labour. 
Throughout business there are concerns. The latest  
Exporter 
 magazine has just come out. It has a snap poll and the first comment is “So what? There will be more in it for them than us.”—“them” being the Chinese. Another comment says “I have exported to China and am now working closely with the distributor but the Chinese authorities make it very hard with all the documents and charges for getting products approved.” Another says “I might be old-fashioned”—this is an exporter—“but I want some of our country left for our children and grandchildren. If they are going to eventually earn 50c an hour then I guess I could also go to China and make my fortune now and stuff the rest! But no.” So that is the sort of problem we are up against when we just open the doors. 
This part relating to the electrical standards is well meant but in the context of the total agreement it might actually lead to a further undermining of the standards for our workers and for our industries and not lead to any particular gain for the New Zealand people. 
TIM GROSER (National) 
: 
 I will make just a few concluding remarks about Part 5 in terms of the underlying mutual recognition agreement concept since it is a very difficult concept for people to get their heads around as I was saying before. It is essentially an alternative to what used to be flavour of the month 20 years ago: business harmonisation. We discovered in our first real attempt to do this—with Australia in the context of CER—just how difficult it is to advance harmonised policies because at the end of the day what we are really trying to do when we say “harmonise your policy” is to say “You adopt my policy or I will adopt yours.” In practice there is massive resistance from both sides to adopting an entirely new policy. It is so much more sensible to go down the track of mutual recognition which in common language would be to say that there are more ways to skin a cat than one or that there are different ways—if I use the refrigerator example again—to wire a refrigerator so that it is safe for kids to open and get a glass of milk or whatever it is they want. There are different ways of doing that to achieve the equivalent results. So it is about coming out of that whole concept of equivalence without trying to say there is only one particular wiring diagram we can use to achieve the effect. 
I do not know intellectually what the origin of mutual recognition is but in a practical political sense in the trading arena we sort of learnt this from the Australians. In Australia I found to my surprise that the actual concept of mutual recognition of different Australian states’ standards is actually of relatively recent origin and there are still many areas and services where mutual recognition is yet to be achieved if I am not mistaken. I became familiar with it when I was the lead negotiator for New Zealand on the Singapore free-trade agreement and we introduced into the Singaporean mindset the concept of mutual recognition agreement. It was I have to say a revolutionary concept for the Singaporeans deeply sophisticated though they are in electronic and other matters and generally as a country. We had to arrange to sell them the underlying idea that we are talking about in Part 5. We had to take New Zealand experts to Singapore to educate Singaporean regulators on what the underlying conceptual approach was. It took a bit of time to sell but it was incorporated into the agreement. 
I think it is an excellent advance now to have taken this into a far far more important trade agreement the China free-trade agreement. Essentially it reduces compliance costs and facilitates trade and it is very much my hope that the Chinese in particular will see the point in extending this into other areas. In every case there has to be a high degree of trust amongst the regulators; it does not work if there is distrust between regulators. The problem in this area is that regulators are often specific to sectors so quite a lot of people-to-people exchanges are needed to make this work and a lot of information flow is needed. But I think that potentially the economic returns long-term are very very considerable. 
I hope that the Chinese as well as our own Government will use this entire trade agreement including its mutual recognition elements in a proactive sense. I have no doubt that New Zealand will be seeking to do that. I strongly believe that from a Chinese perspective this agreement makes sense frankly only if the Chinese can use this as a template for their own internal purposes and their own negotiations with countries—countries let us face it that are rather more important to them than their 45th or 48th largest export market or whatever New Zealand is—and I hope that we will come back into a future Parliament and see introduced into it similar legislation that builds on this agreement. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I was not going to take a call on this part but after listening to the honourable member I must make a few points. First of all the Singapore - New Zealand free-trade agreement is hugely advantageous to Singapore. Let us not kid ourselves. Singapore has done very very well out of that agreement. The member sits there and quotes— 
John Hayes 
: Give us an example. 
PETER BROWN 
: Singapore is of similar population size to New Zealand. China’s population is 1.3 billion or something along those lines compared with a country with a population of 4 million. 
Gerry Brownlee 
: What’s Winston doing there? 
PETER BROWN 
: Those members are embarrassed. They can ask questions only about irrelevant subjects at this point in time. If the member who has just resumed his seat thinks that China is going to harmonise its electrical industry because New Zealand has signed a free-trade agreement then I ask him who the hell he thinks he is fooling. I think he might have fooled his own party but I notice that Government members on this side of the Chamber are staying silent. They are not standing up in support because they know in their heart of hearts that this will not deliver as Mr Groser tried to make out. If we wanted to buy umpteen refrigerators from the Chinese they would be making them now for us. They would make them to the standard we wanted sell them and deliver them on Chinese ships. We are fooling ourselves if we think that this agreement will have a major influence on the Chinese electrical industry. It will not. We are but a teardrop in a river. 
I have sat here all night trying to listen so I can find out what this trade agreement is about in detail. I have listened to the National Party people but I have not learnt or gleaned one iota from them. I can only conclude that they themselves do not even know what it is about. They think it is a good thing and I give them credit for that but they do not understand the details. I ask National Party members what is in it for the Chinese. If they think there is nothing in it for the Chinese they really are fooling themselves. I have had some dealings with the Chinese people in other fields of endeavour and I can say that the Chinese look after the Chinese first and foremost. I can say that when it comes to electrical goods the Chinese will be doing exactly the same as they do in any other field of endeavour which is putting their own country their own people and their own economic well-being first. They do not particularly look after their people. In fact the working people in China work under terrible conditions. But I will say that if we wanted to buy refrigerators as the honourable member suggested we might want to then the Chinese would build them by the million if that is what we wanted and to the standard that we want here. But to sign a free-trade agreement on that rather naive basis is beyond words. It is stupid to the maximum. 
I would like the National members to conscientiously address this issue and tell us what is in it. There was an invitation to have a wide-ranging debate and National turned that down. I have not heard one of its speakers stick to the part religiously and tell us what is what including this part. And the member there who is putting his hands together in major parts of his speech talked of his concerns about what New Zealand First is thinking. We do not need a free-trade agreement to have a market in electrical goods with the Chinese. They would saturate us with anything we wanted. If we gave them the order they would allow our firms to go out and employ Chinese to manufacture there. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Mr Brown please keep to the part concerned. 
PETER BROWN 
: I am keeping to the part concerned but I am also actually responding to some of the comments from National members that you Madam Chairperson have let go and I cannot let them go uncontested. 
I have not heard one reason in the debate on this part or any other part why this nation should sign a free-trade agreement with the Chinese. I would like to hear something from the National Party because its members are sitting over there saying that they know it all and that they have all the answers. Well I am saying that in years to come there will be a Tui sign saying: “Free-trade agreement advantage to New Zealand? Yeah right!”. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Before I call Mr Brownlee I just warn him that the debate will be wider when we get to clauses 1 and 2 which is really what that last speech was about. I do not want a repetition so I hope that the member is going to speak on Part 5. 
GERRY BROWNLEE (National—Ilam) 
: 
 Of course I will follow the rules of debate. Madam Chair you will appreciate that one of the rules of debate is that one gets to rebut at the start of one’s comments. So I will take a moment with your indulgence to rebut some of the extraordinary things said by Peter Brown. 
First off Mr Brown confirmed the xenophobic nature of New Zealand First. He then announced to the entire Parliament that New Zealand’s Minister of Foreign Affairs—New Zealand First’s party leader the Rt Hon Winston Peters—is also a xenophobe. He is hanging around Singapore at the present time and trying to impress various foreign dignitaries presumably touting his own CV so that he has something to do later in the year. But the extraordinary thing that came through from Mr Brown’s speech was the suggestion that the Chinese are being cunning here and that they will swamp us with refrigerators and all sorts of electrical goods. So here is the deal: China with 1 billion people is looking to expand its market by doing a deal with a country with 4 million people in it. We are not even the size of a small suburb of Beijing but apparently we will do wonders for the Chinese economy! 
Well I have some news for Mr Brown. Despite Winston Peters’ best efforts New Zealand is still primarily an agrarian economy—we are great producers of agricultural products. One of the things that will surprise Mr Brown and New Zealand First is that a lot of the 1 billion people in China are hungry. They actually want to buy the proteins that we produce they want to buy the milk solids that we produce and they are very interested in the myriad of other products that we produce. They cannot get enough of them. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Mr Brownlee you are two-fifths of the way through your speech and you are not yet talking about the part. 
GERRY BROWNLEE 
: Am I really three-quarters of the way through 5 minutes? 
The CHAIRPERSON (Hon Marian Hobbs) 
: Two-fifths of the way through. That is not a beginning. 
GERRY BROWNLEE 
: Well Madam Chair I am rebutting a whole 5-minute speech for goodness’ sake! 
The CHAIRPERSON (Hon Marian Hobbs) 
: Please come to the part. 
GERRY BROWNLEE 
: I will not keep you a lot longer. I just want to say to Mr Brown that he should wake up and smell the roses. He should stop believing all the nonsense that his leader tells him. Most people know that most of what he says is a load of rubbish anyway. 
The question was put that the amendment set out on Supplementary Order Paper 215 in the name of the Hon Phil Goff to clause 28 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Amendment agreed to. 
A party vote was called for on the question  
That Part 5 as amended be agreed to 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Part 5 as amended agreed to. 
Schedule 
A party vote was called for on the question  
That the schedule be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Schedule agreed to. 
Clauses 1 and 2 
The CHAIRPERSON (Hon Marian Hobbs) 
: Before we begin the debate on these clauses I will read members Speaker’s ruling 106/2. “When debating the preliminary clauses at the end members should have some latitude to summarise and make concluding remarks about the issues they have raised during the committee’s consideration of the bill.” 
TIM GROSER (National) 
: 
 In the discussion on Part 5 which we have just heard Mr Brown said he had not heard one reason from National as to why we need a free-trade agreement with China. He then added—and I wrote it down—“Tell us what is in it for New Zealand.” I know that it was probably not intended as a serious question and I am even more certain that it does not deserve a serious answer. Nevertheless ignoring those simple facts I will proceed in the assumption that there might just be a New Zealand First person listening to this debate who is still wondering what on earth the New Zealand First problem with this bill is. I will try to answer the question as if it were a serious point. 
I think we have to start with an appreciation of the fundamental challenge facing New Zealand economically. The fundamental challenge is to raise real wages. The fundamental solution is to increase total factor productivity and the fundamental best way to achieve that is to increase the export orientation of our economy. We know that New Zealand far from being a small but great trading nation is actually at the absolute bottom of the heap of the 15 small developed countries with a population of 10 million or less in terms of the ratio of trade to GDP. It is of fundamental long-term importance even to those 4 to 5 percent who vote for New Zealand First that we change this over the next 20 years. 
A variety of things must be done in this country if we are to address this underlying economic challenge and one of the issues is to provide markets for New Zealand. Anyone with any actual appreciation let alone any real-world experience of the international trading situation facing New Zealand in the last 30 years is well aware that of all the developed countries in the world large or small this country—our country—has been more constrained by the lack of access to markets for the products we produce competitively than any country in the world. There are myriad studies to back up that judgment. 
So against the background of 30 years of frankly bitter struggle by “New Zealand Inc.” both the major political parties have been in charge of the country and we have had Prime Ministers trade Ministers farming leaders and all manner of New Zealanders—including people like Dr Walker and myself in my former job—trying to find a solution for access for New Zealand markets. Then what happens? A giant emerging economy which is responsible for 24 percent of the population of the world comes to New Zealand’s door and asks whether we would like essentially completely free access in about a decade for whatever we can produce. I am sorry but if one’s answer to that is no one would have to be a prime candidate for village idiot of the year. That is the underlying point of this agreement and it related right back through that logical train to the need to ensure that the young people coming up in our country can make a future for themselves in this country. The right way to do this is to provide competitive opportunities. This is fundamentally important to New Zealand. 
We have a situation where we know that the Chinese people are moving up in the income world. Thirty-four percent of Chinese people are nowadays in the $1 to $2-a-day bracket. This is miles ahead of the other giant developing country India which still has something like 70 percent of its population in the $1 to $2-a-day bracket. We know that China will manage its way through the super-fast growth problems the inflationary issues and the issue of churn in its employment markets. China will continue to grow at a stellar rate. It will need this country—this small country of which we are all so proud—to provide the high-quality foodstuffs that Mr Brownlee just referred to in the first response to this frankly very ill-conceived attempt by New Zealand First to provide a thin rationale for its position. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 Boy when Tim Groser gets his knickers in a twist they sure get in a tangle. Let me say to the honourable member who has just resumed his seat that I have here an extract from  
Exporter 
 magazine. This is what it states: “For some exporters New Zealand’s free-trade agreement with China is a decisive triumph laying a clear pipeline for future revenues. For other China old hands the FTA’s future benefits remain illusory considering the sheer cultural divide and business complexity China poses.” It goes on to state: “Anecdotal evidence suggests Kiwi business owners are not rushing to the middle kingdom. Those already steeped in the Chinese market say the FTA with China should not be seen as a panacea to Kiwi exporters’ aspirations to crack the Chinese market.” If we listened to Mr Groser we would think it was the be all and end all of everything. But I say to the honourable member what is in it for the Chinese? That is what we should be examining. I can tell him that they see a huge advantage. But Mr Groser told us when he was debating the tariff issue that we are going to export more wine and the Chinese are going to drink our wine by the bucket load. Who is he kidding? The Chinese culture does not allow its people to get involved in wine. 
John Hayes 
: You don’t know anything. 
PETER BROWN 
: The Chinese do not drink grape-produced wine in great quantities. I can tell members that now. This is not going to change it. For God’s sake! 
Let me talk a bit about the humanitarian concerns that we share. China operates under a Draconian employment regime; that is the only way we can talk about it. It has very low wages—peanut wages—long hours of work for all ages with no age restrictions; young people old people all working long hours for peanut wages. It has very poor working conditions and little or no employment commitment from the employer. Is that the sort of people we want to have a free-trade agreement with? 
Dr Wayne Mapp 
: You want it to go faster Peter. Get your story right. 
PETER BROWN 
: Well we know that Dr Mapp wants to employ New Zealanders and sack them within 90 days. What about the working-holiday scheme that is in place? This is what it says in the select committee report: “The scheme is non-reciprocal and provides for a maximum of 1000 Chinese entrants per annum. As with other similar schemes the scheme is an arrangement of less than treaty status.” On an earlier page in the same document where it refers to temporary entry it states that it will: “provide for entry of Chinese business visitors and installers/servicers for up to three months in any calendar year. Executives and managers are permitted to enter as intra-corporate transferees for up to three years. Also as intra-corporate transferees senior specialists are permitted to enter for up to 12 months and other specialists—subject to labour market tests—for up to three years.” That is what we have agreed to. That is what we are rolling over. That is what this country is giving in to. I can tell the Committee that the Chinese have more intelligence in their little finger than that group of National Party MPs have in their whatever. 
I know that this agreement will pass tonight but I would have liked to see it pass for the right reasons. I have sat here and listened to National members for 2 or 3 hours now and I have not heard anything worthwhile. They have given me the total impression—and I have tried to approach it objectively—that they are rolling over for the Chinese and they want the country to roll over for them too. The Chinese have 1.3 billion people; we have 4 million people. They are taking us in and making fools of this nation. This party and the Greens and the Maori Party say that we will put New Zealand’s interests first and this free-trade agreement is not doing that. 
KEITH LOCKE (Green) 
: 
 Tim Groser quite a bit earlier on was particularly worried about using this trade agreement in some way to advance human rights concerns—that is in relation to the Green position that it is very bad timing to be signing an agreement a couple of weeks out from the Olympic Games when there is such a huge campaign to try to use this period to improve the human rights of Chinese people by supporting those millions of Chinese who are struggling against the one-party State that rules over them for greater human rights. 
The arguments used by Tim Groser were in contradiction to our foreign policy. One of his arguments was that there are human rights violations everywhere and that if we used trade to advance human rights concerns we would have to use it against all of those countries. We are selective in our foreign policy as to how we use whatever instrument a carrot or a stick to achieve a gain for human rights. In South Africa we used sanctions; in other countries we have used other ways. There is anything from sanctions to rewards. The Green position is not to put any additional sanctions on China. We support trade agreements with China. We support trade with China. What we are against is giving a preferential agreement—free entry of Chinese goods into our country—and signing this agreement right at this time which is the very wrong time to do it. We can have the arguments about the goodness of the agreement as a whole but the timing is completely wrong. The idea that we do not use instruments or rewards in foreign policy to achieve human rights gains is totally wrong. 
There is the idea that economic development and the development of an educated middle class etc. is commonly accompanied by an improvement in human rights and that has happened to some degree in China today. There have been some advances but that does not always happen and it does not always happen if the world tolerates dictatorship. We saw it in Germany which was the most advanced industrial country. That did not mean to say that it was advanced in human rights during the Hitler period. We see it today in the most advanced economy the United States where there has been a huge deterioration of human rights—for example Guantánamo Bay the complete abuse of proper trial procedures high rates of execution etc which have been a very bad model for human rights in the world and that is in the most developed economy. So there is more to it than just saying that industrial development will be good. 
I think that the idea that trade is the answer to everything is wrong too. Sure New Zealand has advanced through being a major trading nation but it is not necessarily the best way forward to say that we will replace our manufacturing economy and we will let Chinese competition through low wages smash that and that we will compensate by increased agricultural exports. That would end up with an economy that is not balanced and that is more at the whim of the international economy and international markets etc. That is not the future. 
The ideology that trade is everything and the proportion of trade to GDP is everything is not the way forward for New Zealand particularly as we approach peak oil. The costs of trade in some respects will increase and countries are looking to greater food sovereignty and such things and rightly so given the way the international market in food has led to huge problems in many countries. There are huge increases in price because the free-trading environment is often substituted for local food production and that has led to much higher costs and devastation for millions of people worldwide. We see that in the big demonstrations and riots that are occurring in several countries. That is partly a result of the ideology that trade is everything and balanced economies are nothing. Thank you. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I guess those closing remarks by Mr Keith Locke say it all! He would say to New Zealand farmers that they are wasting their time and should not produce anything for the international market. He does not think anyone should buy their products. In his view who really cares that New Zealand is the most efficient producer of dairy products in the world and the most efficient producer of meat and who really worries that trading is how we primarily derive our international income? He thinks that farmers should be focused on supplying the New Zealand population. I guess there was a time—a few hundred years ago—when New Zealand had a population of about 200000 and supplying our population was all that was done in this country. It was local agriculture for the supply of those people alone. The truth is that our production then simply did not reach the potential in the slightest sense of this country. 
I remind Mr Locke that this world has 6 billion people. We need food to be grown in the most effective and efficient places in the world in order to sustain that population. If there was not international trade the world simply could not support a population of 6 billion people. I say to Mr Keith Locke that his understanding of economics as shown by those last comments is frankly appalling. 
Keith Locke 
: I’m not against trade. 
Dr WAYNE MAPP 
: He says he is not really against trade but his policies would stop the world being fed. He is simply wrong and his policies are false. 
The second argument by Mr Locke that I feel I have to address is the human rights argument. He said that China is having an Olympic Games and therefore it is a bad time to have a free-trade agreement. What an absurdity! I would have thought the complete opposite of that. China is opening up to the world. Yes there were difficulties in Tibet and interestingly enough this time China understood the world’s message on that and was substantially more restrained than perhaps it would have been in earlier years. 
Tim Groser 
: 1989. 
Dr WAYNE MAPP 
: Yes in particular it was more restrained than it was in Tiananmen Square in 1989 as my colleague Mr Groser has mentioned. So China has learnt that being internationally engaged brings with it international responsibility. Am I saying China is perfect? Obviously I am not. China has a great way to go yet but it has hugely improved compared with how it was in 1989 and in years prior. Almost all of that is because China is now open to the world; the world looks at it and judges it. China has the Olympic Games and this is the perfect time to have a free-trade agreement because it cements into being that opening to the world. 
As for the views of the New Zealand First Party I say to Mr Peter Brown that he should get his story right. His leader said that New Zealand First was opposed to the free-trade agreement because it was not fast enough; he said getting completely free trade in 10 years was not fast enough. I guess I would have to say to the officials that if they wanted a New Zealand First vote they should have negotiated a 5-year phase-out of tariffs and they might have got New Zealand First’s vote then. If that is the argument then Mr Brown cannot say this is a bad agreement because it opens New Zealand up to trade. The story has to be one or the other; it cannot be both. I suggest that Mr Brown talk to his leader and get his story right. 
National does support this agreement for profoundly important economic reasons. Mr Groser set those reasons out superbly. New Zealand’s future is as a trading nation. We have an extremely poor performance amongst small OECD countries and I know the Government knows that. The work by David Skilling shows that amongst the 15 small OECD countries the proportion of our economy that is devoted to international trading is actually the lowest. We should be doing better and we have to do better. The way to do that is to find the points of advantage—to find the trade agreements. This agreement is such an agreement. Indeed I say to the Government that this is a very important agreement and I acknowledge that. When the historians look at the record of this Labour Government they will say this agreement should go down as one of its significant achievements. Why would any party in this House vote against it? Why would a party say to New Zealand farmers to New Zealand businesses and to New Zealand workers that it would stamp out their opportunities? 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I will take a very brief call but it is appropriate for me as chair of the Foreign Affairs Defence and Trade Committee and as one who sat through the select committee process on the New Zealand-China Free Trade Agreement Bill—and I know that the Leader of the House would want me to do this—to fulsomely praise and thank the officials at this stage because the committee received some very comprehensive advice. I point out that we have had a very good working select committee and I acknowledge particularly Mr Tim Groser for his excellent assistance. I also respect absolutely and acknowledge the diversity of views that was represented both in the submissions and by members of the committee. I acknowledge the very fine contribution of Keith Locke albeit we agree to differ on this issue. However his contribution was important. I also acknowledge Peter Brown and I do that in this democratic Parliament tonight. 
The challenge on those of us who are supporting this agreement which is the will of the overwhelming majority of the House is to do everything we can and to work to make sure that some of the concerns and fears that have been expressed do not come to pass. In terms of the glass being half full or the glass being half empty the point of view that the glass is half full offers huge potential for this agreement. 
I will close with a quote from our Prime Minister who stated: “The agreement sets a high standard. It is a model for how two trading partners disparate in size but complementary in the products and services they offer can take a trading relationship to a new level.” Hopefully it will be a win-win situation for both countries. That is our intent. 
Having said that let me acknowledge all members of the select committee for the excellent contribution they made in terms of the report back. We look forward to the third reading of the bill. 
JOHN HAYES (National—Wairarapa) 
: 
 A number of things have concerned me starting with the recent comments by Peter Brown from the New Zealand First Party. He said the Singapore free-trade agreement had significantly benefited the people of Singapore and then proceeded to give absolutely no example to prove his point. I think that was outrageous. 
Second I would also like to address the issues that seem to be disturbing New Zealand First and other parties in this House including the Maori Party who think that China’s lower-wage economy than ours will in some way cause huge damage in our economy. The protectionists in this Parliament say that because the Chinese make television sets toys and clothes more cheaply than we can our people will lose their jobs unless we protect our domestic production with taxes on Chinese products. Well there are countries that do that sort of thing. The international textile trade for example is subject to very very complex trade regulations right across the world. If members think about it they will realise agriculture is considerably protected in many countries—for example Japan and the USA—and that is a direct problem for the people in my electorate who produce agricultural products and want to export them. 
New Zealand First the Green Party and the Maori Party say we should stem the flow of goods into New Zealand particularly the cheap ones. Well I would like to refer them to an economist called Ricardo who many years ago said the best thing a country could do was to get rid of trade barriers. Even if the country could not produce something more efficiently than something produced in another country he said the objective was to remove the barriers to trade because doing that would help both countries. For example China may be far more efficient than New Zealand at producing wide-screen television sets or rice but rather less proficient than New Zealand at producing dairy products. China and New Zealand must stick to producing what each country does best; New Zealand must do that and China must do that. If there are no trade barriers between our two countries then we have both got to be better off and the communities in our country must be better off. We need to address this issue because we must stop our people leaving New Zealand in droves. We must give them higher standards of living here and this trade agreement will do that. 
This trade agreement will not destroy our jobs. It is not possible for this country to stop exporting and to import everything from abroad because we would have nothing to pay for the imports with. If one does not export one cannot import because one has no money to buy the imports with. So it seems to me that New Zealand must export to the global markets and it must pay for imports from wherever those products are cheapest. As I said a couple of days ago in response to Maori Party concerns free trade is fair trade. The transaction does not have to happen if the two parties do not want it. It is quite clear that when two people discuss engaging in a transaction one party can say yes and the other party can say no. The transaction does not have to go ahead. People engage in a transaction because each party will be better off by doing so. Each party wants to engage in the transaction. 
This bill is the most significant legislation that has been put forward in the life of this Parliament. It will provide benefits to our communities long past the life of every person in this parliamentary complex. I support this bill and the National Party supports it wholeheartedly. Again I would just thank the officials involved in putting the detail of the agreement in place. 
CHRIS AUCHINVOLE (National) 
: 
 This bill puts New Zealand first; that is what it sets out to do. I was dismayed to hear Mr Brown saying that he did not consider it to be a good bill that he thought all sorts of fish-hooks were being revealed and that it was basically a bad thing for us to be engaged in. I am sorry that some parties feel that way and I am dismayed that they see things in that way. I appreciate that their concern is genuine and sincere but in my view it is misplaced. The vulnerability that they perceive we have is without foundation but it is emotionally understandable. 
The reality is that New Zealand is already a pretty wide open market for goods from China but China has not been open to us. The great wall was secure in the form of tariffs but the free-trade agreement opens up that wall to our trades our businesses our entrepreneurs our enterprises and our marketing and selling skills—and New Zealand has those skills in considerable quantity. Speaking from experience I say that what exporters need is certainty in terms of the opportunities before them—not deal by deal and not one opportunity at a time but certainty in terms of country to country relationships. For decades our traders have been excelling in the work they do. What an opportunity they now have. As I said I am saddened by the lack of vision in the speech by Mr Brown. China is a very substantial producer and exporter of food and as has already been demonstrated in previous speeches the continuing economic improvement and well-being of the people of China will create an ever-increasing demand for our products. 
Another frequent concern expressed in relation to the free-trade agreement with China which I find ironic is that it could result in a single market taking all our products so we will become dependent on a single market. That is not actually how trade works. The popularity of our products and the demand for our products in China will result in increased demand from other markets. 
Let us reflect back. We used to be single market - oriented. We used to send all our products to dear mother England and that was the basic market. 
Hon Dr Michael Cullen 
: And Scotland! 
CHRIS AUCHINVOLE 
: I thank Dr Cullen. I well remember New Zealand products being consumed at our table but then the UK joined the Common Market. I remember being in Hokianga—and this point relates particularly to the opportunity for free trade—and having a discussion with a neighbour who said we were finished as a country. The reality was that this point was just the beginning of New Zealand embarking on open trade rather than being single market - oriented. 
As a country we have had a celebrated period of remarkable good fortune. This has not come about through Government policy but through good fortune in respect of overseas prices for our products. But we are now in a recession. How quickly things have changed in the last 6 months. We need our exporters to be more dynamic than ever. This bill will allow them that opportunity. We need the money we need to create wealth and this free-trade bill will enable us to increase our opportunities to do that. Thank you Madam Chairperson. 
Hon GEORGINA TE HEUHEU (National) 
: 
 I am very pleased to take a call during this part of the debate and to follow my colleagues and confirm categorically—obviously—that National supports the New Zealand-China Free Trade Agreement Bill and why would we not? It is the only way our country will move forward. It is the only way we will grow our economy. It is the only way we will trade our way in the world. We live in a global economy and a global economy means free trade. Free trade as my colleague said is also fair trade because both parties find their areas of comparative advantage in any event and that is one of the things that this free-trade agreement is all about. 
This afternoon I raised the issue of Maori business. Clearly this free-trade agreement is a landmark event for the growing Maori economy. That economy as we have seen has developed rather slowly over the two previous decades but it is now reaching its zenith. Given the many assets that have been returned to Maori in Treaty of Waitangi settlements—fish land and areas in terms of the farming enterprises being developed—it is critical since a lot of Maori businesses are export focused that we are able to trade with an economy that is becoming the biggest economy in the world. 
This afternoon I put out a quote from Hui Taumata 2005. They saw that the best way for Maori development to improve domestically and internationally is through economic growth through trade with the rest of the world. My colleague Dr Mapp said that our future is with trade. Well if our past has been with trade which it has been—the ability to trade with the world—our future most definitely is. It is a disappointment to me that members of the Maori Party should see no overall benefit in this free-trade agreement particularly when they are so focused on Treaty settlements and on the return of assets to Maori. As I said those assets are in forestry fisheries and land assets. 
My question to Maori Party members—and I hope they take a call this evening—would be: “What are we going to do once all those assets are returned?” Will we sit on them in our little valleys and do nothing? We will trade with ourselves and do business with ourselves? Where would that get us? It is a nonsense—an absolute nonsense. If we think about the other side of the equation about jobs for our people we see that this agreement is a guarantee of jobs for our people. It gives us the ability to trade to create wealth with our assets to take care of iwi and ordinary individuals and to make sure that their future is guaranteed. It is not guaranteed by sitting in one’s valley with one’s assets and not doing anything with them. Do we achieve anything by sitting on our hands? No; I cannot figure that one out. 
As I said I would be interested to hear from members of the Maori Party about that. Perhaps Te Ururoa Flavell might take a call this evening help me with my predicament and tell me why the Maori he seems to represent would not see this free-trade agreement as a historic agreement that will be a landmark in Maori development. I am very proud to be part of the National Party which supports the Government in what it has done. 
Dr Wayne Mapp 
: Let’s not get too carried away. 
Hon GEORGINA TE HEUHEU 
: Maybe my colleague Dr Wayne Mapp gave the Government more praise than he should have. 
Our team was led by my colleague Tim Groser who set out admirably exactly why this free-trade agreement is so important to New Zealand. I endorse everything he said. He ought to know; he has worked in this area for—what; 30 or 40 years? 
Tim Groser 
: Too long! 
Hon GEORGINA TE HEUHEU 
: It is never too long. He has had a full career in this area and he more than anybody in this Chamber this House this Parliament knows just how important this free-trade agreement with China is. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Clause 1 agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 215 in the name of the Hon Phil Goff to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Amendment agreed to. 
A party vote was called for on the question  
That clause 2 as amended be agreed to. 
Ayes 102 
New Zealand Labour 49; New Zealand National 48; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 15 
New Zealand First 7; Green Party 6; Maori Party 2. 
Clause 2 as amended agreed to. 
The Committee divided the bill into the Tariff Amendment Bill the Customs and Excise Amendment Bill (No 4) the Radiocommunications Amendment Bill (No 5) the Fair Trading Amendment Bill (No 2) and the Electricity Amendment Bill (No 3) pursuant to Supplementary Order Paper214. 
Bill reported with amendment. 
Report adopted. 
Taxation (International Taxation Life Insurance and Remedial Matters) Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (International Taxation Life Insurance and Remedial Matters) Bill be now read a first time. 
 At the appropriate time I shall move that the bill be referred to the Finance and Expenditure Committee for consideration. This bill introduces a number of important business tax reforms that are variously aimed at helping New Zealand businesses compete internationally and at reducing business tax compliance costs. They complement each other and also other recently enacted reforms such as the reduction of the company tax rate from 33 percent to 30 percent and the introduction of the new research and development tax credit which was designed to encourage companies to invest more in research and development. The focus of other reforms in the bill is on updating tax law to align it with today’s commercial environment ensuring the law works effectively and as it was intended to work protecting the revenue base and further strengthening New Zealand’s culture of charitable giving. 
The central feature of the bill is the proposed reform of New Zealand’s international tax rules to help New Zealand-based companies compete more effectively overseas. In my view this is one of the most important tax reforms to come before this House because what is being proposed is a complete change of direction in the way we tax the offshore income of our controlled foreign companies—by which is meant foreign companies that are controlled by New Zealand residents. At present we tax all the offshore income of these companies with the exception of income from operations in the so-called grey list of eight countries that our law at present singles out as having tax systems comparable to our own. In that respect we are completely out of step with what happens in much of the rest of the world. Many other countries including our main trading partners distinguish between passive income—such as that from interest dividends rent and royalties—and active income such as income from manufacturing and exempt the latter from tax. Therefore the fact that our controlled foreign companies are taxed in New Zealand on their active income puts them at a competitive disadvantage internationally. 
The cornerstone of the proposed reform of our international tax rules is to exempt from domestic income tax the active income of controlled foreign companies of New Zealand resident businesses. That is intended to encourage businesses with international operations to remain in New Zealand as well as to enable them to compete effectively in foreign markets. The passive income of these companies will still be taxed as it is earned although there will be some exceptions to the rule. For example it will not apply to passive income for controlled foreign companies in Australia which is usually the first port of call for our smaller businesses that are seeking to expand overseas. There will also be an exemption for passive income that is less than 5 percent of a company’s total income. Other important features of the reform include exemption from tax of most foreign dividends paid to companies as well as measures to protect our revenue base when the active incoming exemption comes into force. 
The bill also introduces further measures aimed at reducing tax compliance costs for small and medium-size businesses of which there are many in this country. Lacking the resources of larger companies smaller businesses tend to bear a disproportionate tax compliant cost burden. Reducing tax-related compliance costs is an incremental process consisting of many small steps. There is no single solution to the problem short of abolishing tax altogether. A measure that will help one small business may not help another since businesses vary significantly in their needs operating styles and problems. Compliance cost reduction measures introduced in recent years have included for example the alignment of payment dates for provisional tax and GST. That change was designed for small businesses that prefer to make smaller and more frequent payments of provisional tax to help them with their budgeting. Likewise some of the fringe benefit tax rules were changed with smaller businesses in mind—for example the minor benefits threshold under which the tax is not payable was raised and a tax exemption for business tools was introduced. 
The changes proposed in this bill raise several other tax thresholds. They include for example the PAYE threshold above which employers must file and pay deductions from employees’ salaries twice a month. That threshold is being raised from $100000 to $250000 a change that will allow a greater number of small employers to pay their deductions to the Inland Revenue Department once a month instead of in accordance with the current procedure thus saving them both time and money. 
The bill also clarifies the law to ensure that employer payments for employee relocation and overtime meal allowances are exempt from income tax and fringe benefit tax if certain criteria are met. These changes which were announced last year simplify the law and remove longstanding uncertainty about the tax treatment of these payments which will save time and money for everyone involved. 
The bill also modernises the tax rules relating to the life insurance business which date back to 1990. Since then products and business practices have changed significantly with the result that the tax rules are out of date in several areas. For example many term insurance profits are under-taxed today with profitable business often leading to tax losses. The reason is that term insurance was a very small part of the business in the late 1980s so it was not a big consideration in developing the rules at that time. Today term insurance is a major part of the business and by being under-taxed it enjoys a considerable subsidy under the present tax rules. A further anomaly in the rules is that people who save through life insurance products face a heavier tax burden than do savers who invest directly or through managed funds that become portfolio investment entities. Under the proposed reform the term life insurance business will be taxed on actual profits as other businesses are taxed and many of the tax benefits of the new portfolio investment entity rules will be extended to all savers in life products. 
The petroleum mining tax rules are also being updated to remove potential disincentives to further investment in oil and gas exploration and development in New Zealand. At the same time the bill introduces measures to ensure that New Zealand receives its proper share of the benefits from our growing petroleum mining industry. To safeguard New Zealand’s taxing rights on its own petroleum resources the changes will allow expenditure on petroleum mining operations undertaken through a foreign branch to be offset only against income from petroleum mining operations outside New Zealand. 
As a further measure to protect the revenue base the bill introduces a number of changes to strengthen the definitions of associated persons in income tax law. The definitions are used primarily to counter tax practices that could undermine the intent of our tax laws because of the closeness of the relationships of the people or entities involved whether they are relatives trusts partnerships or companies. The definition relating to land sales is in particular need of strengthening to prevent land dealers developers and builders from circumventing the land sale tax rules by operating through associated persons. It is important to stress that the law that gains on land sold by dealers and others in the business are taxed if the land is sold within 10 years of acquisition is not new. That provision was stated in law as long ago as 1973—35 years ago—when Parliament enacted the current land sale tax rules. This bill closes the gaps in the definitions of associated persons that allow that tax obligation to be sidestepped. The bill also makes the other definitions of associated persons more robust. For example it will no longer be possible to use certain trust structures to circumvent the tax rules. Similarly it will not be possible for companies and shareholders to avoid being associated by fragmenting shareholdings amongst closely related people and entities. 
The bill also introduces further measures to strengthen the climate of charitable giving in New Zealand. These build upon related tax changes that came into force this year removing the caps on the dollar amounts of charitable donations eligible for tax relief. The bill introduces a voluntary payroll-giving system that will operate through the PAYE tax system. People whose employers adopt payroll-giving will be able to donate regularly to charitable and philanthropic causes of their choice through work-based payroll deductions. They will receive the tax benefit of their donations each pay day without having to present donation receipts. The voluntary scheme will be open to employers who file their employer monthly schedules with the Inland Revenue Department electronically. It is a fact that growing numbers of employers see social responsibility and good corporate citizenship as an important part of their business and these measures are designed to strengthen them in that work and to encourage them and their employees in that regard. 
On a similar theme the bill also clarifies the law relating to the tax treatment of honoraria for voluntary work and the reimbursement of volunteers’ expenses. That will make life much easier for both volunteers and charitable organisations which often incur unnecessary compliance costs in trying to understand their tax obligations. 
These are but brief descriptions of the main reforms proposed in this omnibus tax bill. Time simply does not permit a more detailed description of every measure so I refer members to the separate slim 160-page commentary on the bill which describes the changes in more detail and has been distributed to members already. On that note I am happy to commend the Taxation (International Taxation Life Insurance and Remedial Matters) Bill to the House. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In—[ 
Interruption 
] What was that comment? I note the arrogance of Dr Cullen who is very happy to let people know that he was a Commonwealth scholar and did a PhD. He should acknowledge that some other people in this House were also Commonwealth scholars. 
In introducing the Taxation (International Taxation Life Insurance and Remedial Matters) Bill to the House just now the Minister of Revenue Peter Dunne commendably emphasised the positive aspects of this bill but he brushed over the aspects that impose very real extra compliance costs on New Zealand businesses. Despite that National will support this legislation going to the select committee. We support it because there are a number of important moves in it that we see as being very positive. For example we support the move to the introduction of an active income exemption in respect of the income tax treatment of controlled foreign companies or corporations. We support the introduction of tax deductibility for regular payroll donations to charity. It makes good sense. We support the increases to tax thresholds such as the provision for once-monthly payments of PAYE instead of twice-monthly for businesses whose annual PAYE deductions are under $250000 rather than $100000. We support those measures because they make good sense just like the increase in the threshold for the filing of GST returns on a 6-monthly basis does. For that process to be available in the future to businesses with an annual turnover of less than half a million dollars rather than a quarter of a million dollars makes good sense because it will reduce compliance costs. 
Those three measures are positive moves but it is so typical of this Labour Government that on the one hand it gives but because it cannot bring itself to let go of any tax revenue on the other hand it must take away. It just cannot help itself. Let me give members an example of what I mean. The Minister mentioned the active income exemption as one of the most important aspects of this legislation. That is a good move. We support it because it makes good sense and it is consistent with the way that most countries treat their controlled foreign companies. But what of the extra compliance costs for business associated with the shrinking of the grey list from eight countries down to one? I am not saying that that should not be done but we should think about the compliance cost implications. What about the competitive disadvantage we face from repealing the conduit rules? Now other countries that have an active income exemption still have rules like the conduit rules. Does that place us at a competitive disadvantage? What about the extra compliance costs associated with the introduction of the interest allocation rules? We know why the Government is moving to introduce those interest allocation rules but what about the compliance costs? It is no good for the Minister to say on the one hand that all these measures reduce compliance costs—for some of the measures do—when on the other hand a whole range of other measures actually significantly increase compliance costs for businesses. 
The point I am making is that members will need to listen carefully to argument at the select committee to make sure that these issues are very carefully considered because they have significant ramifications for the competitiveness of our foreign-owned corporations and for the control of our foreign-owned corporations. I emphasise that it is not a clear-cut situation where all of this is simply reducing compliance costs. There are measures there that are increasing compliance costs and challenging our competitive position and we need to listen to what the arguments are at the select committee. 
If the interest allocation rules are complex—and they are—I invite members to have a look at the taxation of life insurance businesses that this legislation changes. One of the positive measures—and there are positive measures here as well as I have said before—is the extending of the benefits of the portfolio investment entity rules to all savers in life products. That is a positive move. On the one hand we are giving this positive move but on the other hand the Government seeks to take away because the increased tax imposition on underwriting of risk business for example will probably see premiums go up. People will benefit on the one hand from the portfolio investment entity rules being extended but on the other hand they will face higher costs because insurance premiums will probably go up. The legislation will be complex. There will be compliance issues here. If one looks at the way shareholder base income provisions and the policyholder base income provisions are defined in the legislation and look at the way insurance businesses will necessarily require actuarial apportionment of income between those two accounts one will see that there will be significant changes to their accounting and tax systems at a time when insurers are already dealing with portfolio investment entities and KiwiSaver legislation as well as the changes to the financial reporting standards internationally. 
We have a complex set of provisions around the income tax treatment for life insurance businesses. If anyone suggests that it will not be complex I say they should just take a look at the provisions. They should take a look at the allocation of income between those two base accounts—the shareholder base income account and the policyholder base income account—and look at the way money will have to be apportioned between the two actuarially. That will impose compliance costs and again the select committee will need to listen carefully as to how serious these increased compliance costs will be. I notice Michael Cullen the Minister of Finance laughs as if compliance costs are all a joke. I say to the Minister that these compliance costs are real. Business are making it very clear that these costs are real. He risks a very important aspect of New Zealand business activity if he thinks all of this is just a joke. [ 
Interruption 
] It is not a joke. Compliance cost is real. Little Darren Hughes next to the Minister would not have a clue because he has never had a real job in his life and would not have a clue what some of this stuff actually does. We need to listen carefully at the select committee. 
If some of these complex provisions are not enough to fry one’s brain one should have a look at the new base protection provisions around the “associated persons” provision. Apparently the Government is concerned about the land sale tax rules for land dealers developers and builders caught by the old 10-year rule and I suppose the Government is concerned that where one has associated persons it is possible to get soft deals minimising the tax liability that they should face. We have no problems with these issues being addressed but we must make sure that the benefits we get out of them are not less than the additional costs that we impose over these businesses. These associated person provisions are complex. If any member does not think they are he or she should have a look at how they will work and explain to the House how the tripartite tax associated person provision works—it is complex. We will need to look at it very very carefully at the select committee. 
If that is not enough the new tax provisions for the emissions trading units will be interesting. The Government does not have this legislation through the House yet but this bill contains the new tax provisions for those emissions trading units. Again forestry interests will face some complex issues. For some reason or another some of the forestry interests will be under the provisions of the Income Tax Act 2004—not the current Income Tax Act 2007. I would not mind if one of the Government members would explain why we still have to amend the Income Tax Act 1994 the Income Tax Act 2004 as well as the Income Tax Act 2007. I thought we had rewritten all the income tax Acts and brought all the provisions together into the 2007 Act. But no certainly the forestry interests under the emissions trading provisions in this legislation will be operating under the Income Tax Act 2004. That is a complexity and I would like someone to explain why on earth that is necessary. One of the positive things though is that at least the emissions trading units will be zero-rated for GST purposes. 
So we can see that these are very complex issues. There is a balance of positive moves but there are other measures that will impose significantly increased compliance costs. The select committee is in for a lot of work on this bill. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 One would hate to hear the member when he is opposing a bill if that was a speech in support of one. The member certainly managed to praise with faint damns this particular measure and he managed in the course of that to miss the entire main thrust of the legislation while focusing on some minor issues within it. 
Dr the Hon Lockwood Smith 
: Minor issues? 
Hon Dr MICHAEL CULLEN 
: Minor issues indeed—minor issues indeed. 
Let me come to the most important part of this Taxation (International Taxation Life Insurance and Remedial Matters) Bill. It follows on very nicely from the previous legislation we have been discussing. What this important part on the active/passive distinction is about is whether this country will have an outward-looking taxation system or an inward-looking one. Of course what the member did not tell us was that this part of the legislation replaces the failed legislation that he helped put in place in 1991-92 which did not have any such exemption for active income. There will of course be some who will argue that what this will do— 
Dr the Hon Lockwood Smith 
: But it did have a good grey list. 
Hon Dr MICHAEL CULLEN 
: “Locky” has had his speech. I ask him to strap the budgie-smugglers down and listen for the next few minutes. What some people will argue about this bill— 
Dr the Hon Lockwood Smith 
: What an arrogant Minister! 
Hon Dr MICHAEL CULLEN 
: What is arrogant is continuing to interject when somebody else is speaking. It is high time the member learnt some manners instead of just talking in a poncy fashion. There is a difference between those two things. 
What some people will argue about this bill is that it will encourage people to move manufacturing capacity offshore. The reality is—[ 
Interruption 
] I knew the Greens would; they could not help themselves. As soon as the word “international” appeared in the bill we knew we would be in trouble in terms of the Greens’ vote on this bill. As soon as we had the term “controlled foreign company” they probably thought that it meant an overseas multinational. It means a New Zealand company that controls foreign companies offshore. The fact is that some manufacturing capacity will move offshore to lower-cost countries. The real issue is firstly whether we want New Zealand companies to internationalise or whether we believe we can make our living just by taking in each other’s washing for the foreseeable future. The obvious fact is that New Zealand companies will have to bulk up and internationalise to succeed or we cannot increase our productivity levels within this country. 
The second thing is that if companies succeed in either having some manufacturing capacity offshore or investment offshore or having very substantial parts of their business dependent upon exporting so that the majority of their income comes from offshore activity then our current taxation system with its lack of an active exemption encourages those companies to move all capacity offshore including head office including design and including back-office functions. That is the choice that developed economies—particularly small developed economies such as New Zealand—face. Are we to play a long defensive game trying to keep what little we have instead of trying to expand and develop to develop those international connections and to retain the highest-quality highest-paying highest-value parts of the production system within New Zealand? 
If we opt for the “little New Zealand” policy we will in the end defeat ourselves. We will in the end have a declining economy not an expanding economy. If we opt for an outward-looking approach which requires an active exemption then there is a very real prospect that we will be more capable of succeeding economically than we have done over the last 40 or 50 years. That is the choice that a small isolated economy in the south-west of the Pacific faces. We cannot succeed by trying to mimic the economic patterns of behaviour of the low-income mass production countries in Asia. If we think that that is the route to success then we have really got things profoundly wrong. 
When New Zealand introduced under the previous National Government the current tax rules taxing New Zealand companies on their worldwide income it was theoretical perfection. To take Dr Lockwood Smith’s point it has lower compliance costs because not having an active/passive distinction by itself obviously has lower compliance costs. But the reality is that the lower compliance cost is bought at the expense in the end of poorer economic performance. Once we have an active/passive distinction of any form then first of all that in itself increases compliance costs. But secondly to buttress New Zealand’s tax base so as to not lose all that taxable income— 
Dr the Hon Lockwood Smith 
: That’s right—you can’t afford to let it go. 
Hon Dr MICHAEL CULLEN 
: That is right—precisely! If we want all our taxable income to move offshore so that there is no tax within New Zealand then we do not need buttressing rules around it. Those buttressing rules create compliance costs. The member cannot have it both ways—or maybe he can; I do not know. But he needs to understand that the point about doing this is that it creates a risk. It creates the risk that we lose the tax base offshore and that also will not be helpful for New Zealand. That cannot help New Zealand’s future in terms of its need for money for investment in infrastructure skills and so on and so forth. 
That is the most important part of this bill. It is by sheer coincidence that that part of this bill comes in on the same day as the Committee stage of the New Zealand-China Free Trade Agreement Bill. But the two bills in fact have a great deal of interrelationship in terms of the underlying philosophy about having an outward-looking growing New Zealand economy as opposed to an inward-looking gradually retreating and declining New Zealand economy. 
The second main part of this bill is the insurance changes. The member should support those because at the end of the day the changes here merely align the rules around the taxation of insurance with those of general companies and other financial sector parts of the economy. Yes we know that Sovereign objects to this and we know that a former member of the National Party has been lobbying on behalf of Sovereign. But in fact there has been a great deal of consultation with the insurance industry as a whole and the bulk of the insurance industry is actually reasonably happy with this—nobody is ever happy unless we simply cut their tax. 
Any change will always have some degree of opposition to it but there are long transitional provisions within this bill that protect. This particular part of the legislation is not revenue-positive for quite a large number of years to come; in fact it is actually revenue-negative for some considerable number of years to come. But it is an important change because it leads to a fairer taxation system around insurance and it removes the bias against life insurance in favour of term insurance which the current taxation system provides. The taxation system should be neutral between those two options. It should not be determining a choice between those two options. The choice should be based purely upon people’s own economic and social needs in respect of term insurance versus life insurance. 
Much of the rest of this bill consists of a vast range of technical changes. For those who want to get really excited there are retrospective provisions that go back to 1986 and to get even more excited those provisions relate to the Parliamentary Service. In other words the Inland Revenue Department has caught up with a problem in the law that has remained unamended for 22 years and that should have been amended and now it is deemed to apply from I think 1 April 1986 or from whenever the Parliamentary Service came into operation. 
The other main feature of the bill is significant reductions in compliance costs in terms of thresholds for a whole range of aspects of the tax system as they apply to small to medium sized enterprises. One could always argue that those reductions should go further. Indeed we looked at other options that had more significant revenue costs attached to them but these do have quite significant revenue costs. 
This is not a bill that increases the Government’s tax revenue at all. It reduces the Government’s tax revenue both in the short term and in the long term. A reduction in active exemption obviously reduces the Government’s tax revenue. The compliance cost changes around thresholds reduces the Government’s tax revenue. The life insurance changes reduce the Government’s tax revenue over the next few years. 
This is well-thought-out legislation. It is large and it is complex. The select committee will need to spend a lot of time on this legislation and I am sure it will find reasons for changing some of its details. But let us not pretend that a tax system should not have integrity that protects the tax base of New Zealand but simply resigns all tax to offshore jurisdictions—tax rationality does not say that; that is just pure right-wing ideology. That is not a rational tax system; that is a very silly tax system. 
TIM GROSER (National) 
: 
 I do not think I can afford to fall back on the new MP excuse after 2½ years here. Nevertheless I have to admit to finding it rather daunting to be given a 600-page document that includes explanatory information containing issues of vast complexity in which I have no professional background and then to be expected to make a serious contribution on it. However there are one or two things in the Taxation (International Taxation Life Insurance and Remedial Matters) Bill—that National members support being referred to the select committee for a first reading—that do some sensible things and merit some comment. I will focus on those issues which are very much related to the challenge of globalisation that is facing New Zealand. 
I acknowledge that the bill is a multi-faceted bill and that it simplifies a number of tax thresholds. It helps the voluntary sector in terms of the mechanisms used to make contributions to charities. That is a strong position of the National Party; we were not surprised when it was taken over by the Government but it is the right direction from our point of view. I wish to focus in a few brief comments on one or two of the moves the bill makes in terms of coming to terms with the integration of the New Zealand economy from a tax perspective into the global economy. 
I recognise that some of the terminology is formidable. Until 2½ years ago I thought CFCs were a particularly potent form of greenhouse gas; I now understand that this acronym refers to controlled foreign companies. I have to admit that one day while driving in Auckland and listening to talkback I heard the announcer say: “After the break we’re coming back to a huge argument that’s erupted over the rules for pies.” I thought I might have to rethink my thinking on talkback radio because I had not realised that listeners would be interested in portfolio investment entities. Unfortunately my pleasure was very short-lived when I found they were actually objecting to the fact that the winner of the New Zealand 2007 pie contest had produced a vegetarian pie which in the opinion of many of the listeners was something akin to the end of civilisation as we know it. 
Craig Foss 
: It was from Hawke’s Bay that pie. 
TIM GROSER 
: I am well aware of that and I am sure it was an excellent pie but I have to tell the member the decision was deeply controversial in Auckland however popular it was in the bay. 
The challenge facing New Zealand to adjust its thinking and its policy structures to globalisation is truly formidable. I am sure that this bill takes us in a certain direction I am sure that it is a work in progress and I am certain that further pieces of legislation will be required as we all adjust our ways of thinking our behaviour and our legislation to the fact that we no longer live in a closed economy. I remember a speech that Bill Clinton made in his first presidency—a brilliant Clinton speech—about how even in his lifetime he had gone from seeing a local economy in Arkansas to seeing the shops and services that he had grown up with start to trade more and more with other American states and then move into an international economy. So the most sophisticated country in the world the United States has gone through this process; we are going through this process. In that respect I agree with the comments that Dr Cullen has made—that there is a close linkage between this bill that we are considering for the first time and the very extensive discussion we have just had on the China free-trade area. There is a close relationship—and a need to have some coherence in our country—between the trade and the investment sides of the equation. 
We have just spent a fair bit of time in this House on the trade side so let me reflect on the challenge facing us on the investment side. I first became aware in a personal sense of how poorly New Zealand performs on the investment side—I am talking about outward investment here—when I read a monograph written by none other than Alan Bollard actually when he was with the New Zealand Institute of Economic Research. He chronicled the history of New Zealand attempts to invest successfully outside New Zealand. It does not make pretty reading. I know there are some highly commendable exceptions to that so far be it from me or any member to criticise the pioneers who got out there and frankly made efforts that did not always quite succeed. 
But the fundamental point is this: New Zealand is a poor investor overseas. That is a fundamental problem facing New Zealand. Although I suspect that the key to it lies within the corporate culture of this country and not the Government it nevertheless is incumbent upon the Government to make sure that the policy framework we have in place does not get in the way of successful investment. I think in that respect it is very clear that some aspects of our external tax regime have done precisely that—put in place perverse incentives sometimes in the name of what sounds like good policy such as tax neutrality. But at the end of the day they simply do not aid corporate New Zealand in the task of coming to grips with its challenge to integrate its own operations not just in terms of the trading of physical goods and physical services but also in terms of its own investment operations. 
In case any members are thinking that this is some minor technical point I am making let me just throw some numbers around. It is a bit of an exaggeration but we can say that New Zealand does not have a trade problem in the sense of the current account deficit; New Zealand actually has an investment problem. I think that is overstating it for the very reasons we have just debated in the context of the China free-trade agreement. Actually New Zealand is not performing in line with other small developed countries on the trade side and there is an enormous amount we must do. Nevertheless the point that I think the metaphor makes—which I have heard in a number of contexts; it is not mine—has an essential truth in it. 
If we analyse our current account deficit we can see that the trade account is not in too bad a shape but it is completely overwhelmed by a massive deficit in investment income. We measure the stock of accumulated foreign investment in our country vis-à-vis the stock of investment of New Zealand - controlled foreign companies—and I agree with Dr Cullen that the term itself suggests some appalling multinational corporation from Detroit but actually it may mean a Kiwi company from Hawke’s Bay operating somewhere in Australia or Singapore and these are companies we all very much wish to support—through a measure called the “IIP” or the international investment position which accumulates the stock of our investments in other countries vis-à-vis the stock of foreigners’ investments in New Zealand. 
We have two fundamental problems. The first is the relative size of those two stocks of investment. Broadly speaking from memory we have something like $110 billion of assets overseas versus I think about $250 billion of assets in our country owned by foreigners indicating an unwillingness by New Zealanders such as myself to live on a more straitened income than we might otherwise have done so we have accessed foreigners’ savings to meet our investment needs. But this has generated a stock of investment flow that is grossly imbalanced. Worse still the average rate of return on the stock of New Zealand investments by our controlled foreign companies is immeasurably lower on average than the rate of return of foreigners’ investments in our own country. If we add those two lethal elements together we have a major national problem on our hands whereby even though we continue to perform at least credibly on the trade front we are bleeding on the investment account. 
So we have if you like this fundamental challenge facing New Zealand which is to lift our game on foreign direct investment in other countries. It is vital that we do not just take a tax minimisation account on that but that we look at it strategically. I refer to some of the changes that are suggested in terms of the treatment of active income. The Hon Peter Dunne indicated the way in which the definitions will apply. It is the reciprocal of passive investment. I think there are some interesting starts and I am sure that in the process of this bill being taken to the select committee we will have a lot of evidence that will need to be sifted through very carefully indeed. 
SUE BRADFORD (Green) 
: 
 Although there are some aspects of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill with which Green Party members have no problem including those dealing with the voluntary sector—at least as far as I can identify those aspects at this stage—we are horrified by proposed changes affecting the offshore taxation regime for New Zealand companies. We will oppose these moves and vote against the bill every step of the way. 
In exempting from tax active income earned offshore by a company where a New Zealand resident has the controlling interest this bill is a charter for exporting jobs and closing down our manufacturing sector. The Government is acting as if the shape of the future is one in which we are nothing more than a head office and design centre for enterprises likely to be based mainly in Asia but based in other parts of the world as well. It is insanity that at a time when the impacts of climate change peak oil and an incipient global recession are beginning to kick in our Parliament should be considering legislation that provides serious tax incentives to companies to take their production offshore. 
I thought it was bad enough when I heard stories in years gone by such as for example that of the Swazi Apparel clothing company in Levin which was told by the Ministry of Economic Development officials that it would be best advised to shift its operations to China. It did not matter that this would mean the loss of around 90 jobs with the resulting impact on the local economy not to mention the workers involved. I thought it was even worse when some members of the Labour Government tried to tell us that Buy Kiwi Made should be not only about companies that make things in this country but also about businesses like Icebreaker which had made the decision to take its production offshore. But the bill in front of us tonight really takes the cake. It seems to be driven by a belief that we should actually incentivise people to close down their operations here and that there is no future for manufacturing in New Zealand. 
What a disaster. What a disaster after all the money work and commitment that have gone into the Buy Kiwi Made programme on the part of manufacturers Business New Zealand retailers unions and the Ministry of Economic Development. What a disaster after all the cross-sectoral goodwill and work that went into the long-running Manufacturing Plus project. Why on earth does Labour want to motivate manufacturers to self-destruct in this way? Was the manufacturing advisory group that came out of Manufacturing Plus happy with these new tax proposals—that is if it still exists? The justification given is in part based upon fostering so-called economic transformation. Transformation to what? Being a colony of Australia South-east Asia and China perhaps? Having an economy totally dependent on foreign imports the price of which will keep going up as the price of freight increases exponentially alongside the price of fuel? 
Treasury argues that the current rules create an incentive for companies to move completely offshore—head office and all as Dr Cullen was saying earlier—and that the point of the new rules will be to allow head offices to stay here while the manufacturing part of the business goes elsewhere. Reducing the tax costs for firms looking to expand offshore will it appears to argue make us more competitive and more compatible with the globalised market—above all with Australia. Behind this argument sits the underlying assumption that we should not even bother manufacturing here because we cannot compete. It would appear that it is time for us to internationalise and globalise our jobs and our businesses out of business apart from a few head office staff in Auckland or Wellington. Treasury also argues that the new tax exemption will make New Zealand more attractive for foreign investment and that the fact that headquarters will stay here will create work for headquarters-type people. 
Even more bizarre is the fact that if the Taxation (International Taxation Life Insurance and Remedial Matters) Bill goes through companies manufacturing in New Zealand will still be taxed while those offshore will not. So our loyal local companies will in fact be at even more of a disadvantage comparatively—as if the high dollar was not enough to contend with! The madness of all this takes me back to the early 1990s a time many of us—including some National MPs I suspect—might prefer to forget. That was a time when for example the then Minister of Finance Ruth Richardson took pride in hosting a conference in Auckland aimed at marketing what was left of our assets to overseas companies. That era also saw the final sell-off of rail by Jim Bolger one of the biggest ever rip-offs of New Zealand taxpayers by a foreign company. 
I do not understand Dr Cullen. On the one hand he and his Government have done a great thing by buying back and reinvesting in rail and biting the bullet on the cost because Labour does appear to understand on one level that climate change and peak oil mean we must rebuild our national passenger and freight infrastructure. On the other hand—and simultaneously—he is presiding over the incongruous aberration before us tonight aimed it seems at undermining any desire of New Zealand manufacturers to keep making things here. For a member of a party that—as Dr Cullen proudly told this House recently in response to one of my questions on employment issues—is the party of workers it is odd in the extreme that he does not appear to care a fig for the hundreds of thousands of jobs that may well disappear as a result of the tax incentives contained in this bill. Where does he think the jobs to replace those lost will come from? 
I find it odd that once again I find myself giving Dr Cullen history lessons. Does he not remember what happened when his own Government stripped out our manufacturing base in the 1980s? Can he not remember the acres of empty factories and industrial zones or what happened when tens of thousands of people in the cities and towns ended up jobless? Some people—and above all tangata whenua and Pacific peoples—are still reaping the consequences of those policies of the 1980s in places like South Auckland Northland Tai Rawhiti and the Bay of Plenty 
What the Government is proposing will give Icebreaker a tax cut for making lovely outdoor wear in China but not Earth Sea Sky for making lovely outdoor wear in Christchurch. Norsewear—that formerly iconic brand—will reap a financial benefit for having taken its jobs to Asia while Swazi Apparel staunchly staying local will miss out. The bill will give tax cuts to large firms that send fish to China for filleting and packing but not to small-time fishermen who process locally and who create environmental and social benefits by not carting fish back and forth across the planet. The bill will give Fisher and Paykel a tax cut for the whiteware it makes in Mexico but not for the whiteware it makes in Auckland. 
To all those companies business organisations and trade unions that have been involved in Manufacturing Plus the Buy New Zealand Made campaign and Buy Kiwi Made I call on them to join the Green Party—and any other parties who oppose this madness—to help persuade Labour to change its mind on this one. Globalisation does not have to be about giving up on our manufacturing sector. We simply cannot afford to lose our ability to make things here either for local use or for export. Nor can we risk losing tens—if not hundreds—of thousands of jobs at a time of increasing global economic and environmental insecurity. 
The other aspect of the bill that I feel constrained to address briefly tonight is that dealing with petroleum mining. The first aspect is that the bill prevents petroleum companies from deducting overseas expenses from their New Zealand income and thus ensures that New Zealand will get the tax benefit of mining here rather than having the profit hidden behind expenses incurred overseas. That is fine with the Greens. However looking beyond this the bill will also remove disincentives that may affect investment in oil and gas exploration and development in New Zealand adding up to a huge tax cut over 4 years in the petroleum industry. 
The Green Party really questions why we are giving major tax cuts to these companies at a time when even those who would not normally follow the oil markets can see the massive profits being made. The bill somewhat disingenuously describes these changes—for example allowing development costs to be amortised over the life of the mine and repealing the current distinction between onshore and offshore development—as being necessary to safeguard tax revenue. However in reality what the changes mean is less not more tax income from petroleum mining. Secondly through these measures the Government is manifestly encouraging more mine exploration and development with apparently no regard for the environmental and climate change consequences. 
The parts of this huge bill that deal with manufacturing and the tax cuts for petroleum mining are sufficiently outrageous that from our point of view they totally negate the other beneficial changes that are being promoted. The Green Party will therefore do everything we can to oppose the bill and to warn people of the danger it poses to our economy our workers and our environment. 
CRAIG FOSS (National—Tukituki) 
: 
 As my colleague Dr Lockwood Smith said previously National will be voting for this bill to head to the Finance and Expenditure Committee—with some trepidation. But on the whole it is a very good positive move in the right direction notwithstanding some of the interesting interpretations the Minister of Finance made of his lack of action over the last 9 years trying to pretend they did not exist. 
But one thing was missing from the speeches earlier of both the Minister of Revenue and the Minister of Finance that I fully expected to be part of this bill. There are about 130-odd pages of explanatory note and 450-odd pages of detail but there is no summation of the fiscal numbers here. This goes from changes to charities changes to the controlled foreign company rules the active and passive income rules the petroleum mining rules etc. but putting all that aside for a moment there are some huge implications here. The Minister of Finance particularly made note and tried to convince us that tax revenue would actually go down as a result of this bill. Perhaps it will; perhaps it will not. We would like to see the numbers. 
I have had a quick discussion with the Minister of Revenue’s officials and I believe that those numbers will be forthcoming tomorrow. So that will be beneficial particularly with such a wide-ranging bill because we will need to pick it apart as it goes through the Finance and Expenditure Committee. I understand from the various discussion papers that this bill is formed from that there have been individual summations for costings etc. but it would have been good to hear that in the Minister’s introductory speech. I look forward to hearing about that tomorrow. 
I look forward to this bill going to the Finance and Expenditure Committee and I am certainly looking forward to the expertise around the table from the officials. I have read parts of the bill quite a few times and I freely and openly admit that I still cannot work out parts of it but I enjoyed the Minister’s earlier speech and the stuff about the various changes to “term insurance” and “life insurance”. I need to sit down and read some of those technical changes and digest them over a nice Hawke’s Bay red wine. 
There is a good point about this bill: it seems to follow a good and solid process. There has been a discussion document and representation from various expert groups prior to its getting to this stage. We are talking about it here and it will ease into the select committee process as we go through the end of this parliamentary session unlike the changes to KiwiSaver part 1 and part 2 the fair dividend rate changes and goodness gracious the Climate Change (Emissions Trading and Renewable Preference) Bill that has roared through the Finance and Expenditure Committee without good fair and transparent submissions consultation etc. We are reaping the reward for that because we are bound to see some more Supplementary Order Papers on those measures. In fact this bill deep down includes amendments to some of the fair dividend rate changes and even the KiwiSaver changes and if the Government had taken a bit more time on those consulted a bit more widely and not looked at the electoral clock but instead looked at a good and solid procedural clock then perhaps the bill would be a few pages thinner. 
The bill forms a bit of a suite of bills and I am surprised that the other two Ministers did not mention that because there is some good solid cross-party support for most of the other bills—the Reserve Bank of New Zealand Bill (No 3) the Financial Advisers Bill and the Financial Service Providers (Registration and Dispute Resolution) Bill. 
Debate interrupted. 
The House adjourned at 10 p.m.