Finlayson ChristopherNEW ZEALAND INTELLIGENCE AND SECURITY BILLSecond ReadingHon CHRISTOPHER FINLAYSON (Attorney-General) on behalf of the Minister for National Security and Intelligence: I move That the New Zealand Intelligence and Security Bill be now read a second time. The bill is the most significant reform of the Intelligence and Security Agency's legislation for many years and it is the Government's response to the first independent review of intelligence and security in New Zealand led by Sir Michael Cullen and Dame Patsy Reddy. The bill explicitly sets out the agency's powers and activities more clearly than ever before and I emphasise this does not mean they are new. We are being just as comprehensive as possible to improve the transparency and accountability of the agencies.I want to thank submitters for their time and efforts and I also want to thank the Foreign Affairs Defence and Trade Committee for its careful consideration of the bill. The committee has recommended a number of changes that in my view are going to strengthen and improve the bill. I acknowledge particularly the helpful contributions in the committee by other political parties particularly Labour and New Zealand First. The report back reflects their constructive approach. Can I also express my thanks to Mr Dunne. Throughout this process he has raised a number of concerns with me. He has been particularly concerned about ensuring that the scope of the agency's powers is not greatly expanded that the approach to national security provides appropriate protection for New Zealanders and that the right mechanisms are in place to hold the agencies accountable for their actions. Those are very valid issues and I think the new warranting regime the robust oversight in the bill and the changes recommended by the select committee have addressed them.The most significant recommendation made by the select committee relates to the approach to the definition of national security". That definition plays a critical role in the bill by determining when agencies can obtain a warrant to target New Zealanders. The bill as introduced contained the definition proposed by the reviewers. However as advised by officials and parliamentary counsel at the time the definition with respect had a number of shortcomings. Its scope was unclear. It seemed to be unnecessarily complex and as a result there were some concerns about its workability. Because of those issues the Government put forward an alternative definition to allow submitters to consider it alongside the bill. That definition would require the proposed activity to be necessary to contribute to the protection of national security and be directed at one or more specified activities of national security concern—for example terrorism or violent extremism. We specifically asked the committee to look closely at how national security would be dealt with in the legislation. After careful consideration and listening to the submissions the committee agreed to replace the reviewers' definition with the officials' definition but importantly they narrowed it to ensure that only those activities of legitimate national security concern for New Zealand are included in the list.So for example the committee limited the espionage and other foreign intelligence activity limb to those activities directed at New Zealand interests in New Zealand or carried out by New Zealanders. It also limited the threats to the international security limb to those threats that have the potential to impact adversely on New Zealand's interest and significantly narrowed the serious crime limb. It also removed the threats to the life and safety of New Zealanders limb since such threats would be captured by other limbs of the definition as well as a few other changes to ensure that the test is appropriately targeted and we can look more closely at that during the Committee stage. I think the new definition is going to ensure that the agencies can continue to deliver on priorities for the Government while guaranteeing that New Zealanders are the subject of surveillance only when absolutely necessary.Another significant change is the removal of purpose-based warrants. Some submitters including the Inspector-General of Intelligence and Security were concerned that the objectives sought to be achieved by purpose-based warrants could already be achieved through the class-based warrant. After testing a range of operational examples officials agreed and so those provisions have been removed. The committee also recommends improvements on how practice or training warrants are dealt with in the legislation. As originally drafted such warrants were included in part of the general warranting regime. In response to concerns from submitters they have been separated out. This has enabled the powers available under them to be narrowed so that only those necessary for training and testing are available. There are also additional safeguards such as the addition of the triple-lock protection for all practice warrants and requirements to report to the Minister and the inspector-general after carrying out activity under a practice warrant.Some drafting changes have also been made in Part 4 of the bill to ensure that New Zealand citizens and permanent residents will have the benefit of the triple-lock protection in situations where activities authorised by a warrant will likely lead to the collection of information about them. This was always the intention and the constructive changes made by the committee puts this beyond doubt.A new development is the creation of a scheme for mandatory disclosure of certain information held by telecommunications network operators and financial service providers termed business records. This information includes for example phone records customer subscriber details bank statements—some of which are often critical in the early stages of an intelligence investigation. It does not include the contents of information. This information is currently provided on a voluntary basis and the new legislation will provide a statutory authority for this work.A major focus for both the reviewers and the Government has been to ensure robust and independent oversight of these agencies. Given their intrusive capabilities and the secret nature of their work this is absolutely essential. As introduced the bill already provided for very extensive oversight. The focus since has been to strengthen oversight by adding practical hooks to make it easier for the inspector-general and the relevant Ministers to perform their functions.The number of mandatory ministerial policy statements has been substantially increased to cover a range of matters including a number of areas of the agency's work where their activities involve a degree of deception or intrusion into the private lives of individuals. Ministerial policy statements regulate lawful activity so failure to act in a manner consistent with a ministerial policy statement will not of itself make an act unlawful. The bill however makes it clear that directors-general and employees must have regard to any relevant ministerial policy statement when making decisions or taking action.The final point I wish to address is the issue of the committee the Intelligence and Security Committee (ISC) and the wider representation enabled by the bill. The bill increases the maximum size of this committee from five to seven members. This was recommended by the reviewers and the select committee has not recommended any changes. The ISC is not a select committee; it is a statutory committee. And I believe that a membership of seven enables a broader political representation than is currently possible. It is up to the Leader of the Opposition and the Prime Minister each to nominate a certain number of members of Parliament to the committee and in my opinion I do not think the bill should be any more prescriptive than this although I know that there is a different view on the other side and Mr Parker and I are continuing discussions on that. But I do think it is important that the Leader of the Opposition and the Prime Minister in future Parliaments have the flexibility to appoint the members they think most appropriate to serve on this committee. I simply add that in my opinion seven is the appropriate maximum membership for the committee for it to remain an effective working committee on intelligence matters.I would also say of course that this bill is subject to a mandatory review clause. The Intelligence and Security Committee has evolved over the years since the concept was first introduced in 1996 and there could well be changes that future Parliaments may wish to introduce. But for the moment as we develop this committee I think we have made a very good start. So once again I thank the committee for their tremendous work and commend the bill to the House."